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Nov 27 - 30 2008 Happy Thanksgiving
The global financial crisis would not stop Hong Kong pushing ahead with major infrastructure projects, Secretary for Commerce and Economic Development Rita Lau Ng Wai-lan said on Wednesday. Ms Lau was speaking at a luncheon seminar organised by the Vancouver Board of Trade. She is in the British Colombian city as part of an official visit to Canada. “Despite the gloomy global economic outlook, and an expected budget deficit next year, we will maintain our public expenditure on infrastructure as well as social services for the disadvantaged,” Ms Lau said. She said Hong Kong was currently working on important infrastructure projects. “Within the next two years, we will start the construction of a new cruise ship terminal at the old Kai Tak Airport site, the Hong Kong-Zhuhai-Macao Bridge that will span 29.6km across the three cities,” Ms Lau said. She said the Guangzhou-Shenzhen-Hong Kong Express Rail Link which would shorten the commute time between Hong Kong and Shenzhen to 14 minutes. Another project, the West Kowloon Cultural District, would become the arts and cultural centre of Hong Kong. “We will also continue to reinforce Hong Kong’s position as a global financial centre, and continue to stick to the principle of “Big market, Small government” by providing business with the best possible environment to grow and prosper. The government believed infrastructure projects will help boost the economy and reduce unemployment during the global financial crisis. Ms Lau said recent announcement by Premier Wen Jiabao on the US$586 billion (HK$4.5 trillion) investment package further strengthens our confidence in overcoming the current financial and economic turmoil. “The economic stimulus in the package ranges from building affordable housing to infrastructural projects, from advancing development of medical care, culture and education to ecological and environmental projects,” Ms Lau said. She said Beijing was determined about promoting and managing growth carefully. “And Hong Kong will certainly benefit from this,” she added.
Hong Kong and Peru signed a Cooperation Arrangement on Trade and Investment Facilitation on Thursday in Peru, a press release from the Information Services Department of Hong Kong Special Administrative Region (HKSAR) government said on Friday. According to the press release, Hong Kong Secretary for Commerce and Economic Development Rita Lau signed the cooperation arrangement with Peruvian Foreign Trade and Tourism Minister Mercedes Araoz Fernandez. The signing ceremony took place at the margins of the Asia Pacific Economic Cooperation's Ministerial Meeting in Lima, Peru. Lau said both sides had concluded the cooperation arrangement following the signing of the Joint Statement on Strengthening Trade and Economic Relations between the two economies on May 30. "The successful signing of the cooperation arrangement will be instrumental in fostering closer trade and economic ties between the two sides," she said, adding that the cooperation arrangement laid the foundation for future discussion of a bilateral free trade agreement (FTA) between Hong Kong and Peru. The Cooperation Arrangement on Trade and Investment Facilitation mainly aims to facilitate and promote bilateral trade in areas including exhibition and trade fairs, financial services, investment, tourism, rail, maritime and logistics transportation, and sanitary and phytosanitary measures. It also covers cooperation between the two economies in areas of intellectual property rights, customs and competition-related matters, as well as technical assistance and capacity-building in areas of mutual interests. Hong Kong's overall staff turnover rate for the third quarter of this year fell to 4.23 percent, a first quarterly drop since 2003, according to a manpower statistics survey which was made public on Tuesday. Conducted by the Hong Kong Institute of Human Resource Management, the quarterly survey aimed to track manpower movements in the city's labor market. The survey told that the overall turnover rate for July to September was 0.13 percentage points lower than in the second quarter. This is the first time that such figure in the third quarter dive since 2003, showing that job seekers were taking a more cautious approach about job changing.
China Southern Airlines (1055) said yesterday its parent company will get a 3 billion yuan (HK$3.4 billion) capital injection from the central government, with the money considered to be injected into the listed entity. The Guangzhou-based carrier said it will suspend trading of its shares until it receives confirmation from the government. During the suspension, the company will release weekly progress reports. Meanwhile, Shanghai-based China Eastern Airlines (0670) disclosed 1.83 billion yuan worth of jet fuel hedging contract losses after speculative exaggeration of the loss figure affected its share price. "We believe the jet fuel hedging losses of CSA and CEA will be much less than Air China, as Air China has more international flights and bigger exposure to international jet fuel hedging," said Kelvin Lau at Daiwa Institute of Research. Beijing-based Air China (0753) last week said its jet fuel hedging contract losses widened to 3.1 billion yuan from 1 billion yuan in the third quarter. "We believe the government's capital injection plan is already in the processing stage, which has little to do with the hedging strategy. The capital injections are to help the carriers pay their debts and interests," Lau said. In a stock exchange filing, CEA said its mark-to- market fuel hedging losses amounted to 1.83 billion yuan by October 31, dispelling the earlier wildly inaccurate speculation of US$690 million (4.7 billion yuan). CSA did not disclose its jet fuel hedging loss. CEA H-shares yesterday advanced 15.4 percent to close at 75 HK cents, while CSA gained 12 percent to 93 HK cents before its share suspension. Air China climbed 5.6 percent to end at HK$1.70. A joint official statement promised on Monday to ensure close supervision of China's 100 billion yuan (14.7 billion U.S. dollars) stimulus package to prevent waste and fraud. Two dozen inspection teams will soon be sent to locations around China to follow projects funded by the package. The inspectors will "check whether the money is used to build office buildings or guesthouses of party and government departments," said the central government notice. Projects built for "image or achievement" that "waste both money and manpower must be strictly prevented," said the notice, jointly issued by the Communist Party of China Central Commission for Discipline Inspection, the National Development and Reform Commission (NDRC), the Ministry of Supervision, the Ministry of Finance and the National Audit Office. It also asked inspectors to pay close attention to project quality and stop any "jerry-built projects." Investment in smokestack industries or those with excess capacity should also be prevented, according to the notice. The notice put central and local government departments under scrutiny and asked inspectors to determine if funds were being held up, misappropriated, intercepted, embezzled or falsely claimed. Emphasizing that the funds must be used "safely, transparently and efficiently," the notice said inspectors will check all aspects of fund use, including project planning, assessment and approval, procurement and construction. "Officials who are found to be negligent, cheating, taking bribes in fund management or intercepting, misappropriating and embezzling project funds will receive party or administrative punishment or even face criminal charges," the notice said. The notice also asked central government departments to act promptly to implement the stimulus package. The NDRC must "lose no time" in formulating investment plans and the Ministry of Finance must allocate money to relevant projects within one month after the plans were made, according to the notice. Announced by the State Council (cabinet) on Nov. 9 as an additional central government investment this year, the 100 billion yuan package is expected to be used in social welfare projects, infrastructure construction, environmental protection and industrial restructuring.
Nov 26 2008
Hong Kong's economy could shrink during the whole of next year for the first time since the Asian financial crisis in 1998, according to a forecast by the Bank of China (Hong Kong). Its estimate of a 1 per cent contraction is far more pessimistic than most forecasts, which predict average growth of about 1 per cent next year. However, Fitch Ratings earlier slashed its forecast from growth of 4.5 per cent to a 1.2 per cent contraction. The government also said the risk of recession persisting through next year had increased as the global economic downturn showed no sign of ending. Government data showed the economy shrank 1.4 per cent in the third quarter, after a fall of 0.5 per cent in the previous quarter. A recession is usually defined as two consecutive quarters of economic contraction. In its monthly economic review, the bank predicted that the most difficult times would come in the first half of the year, adding that the recession would probably extend into the second half if the global woes turned out to be more severe than estimated. "In this case, the Hong Kong economy could slip into negative territory on the full-year basis for the first time since 1998, registering a minus 1 per cent contraction," it said. It predicted that by the end of next year, the unemployment rate would probably rise to 5.5 per cent or more, up from the bank's estimate of 4 per cent at the end of this year. The bank revised its prediction for growth this year down to 2.9 per cent. The government has cut its full-year growth forecast to between 3 and 3.5 per cent from 4 to 5 per cent. In its third-quarter economic report released yesterday, the government said: "Economic conditions are likely to be difficult in early 2009, and the prospect of a turnaround in the latter part of 2009 remains highly uncertain." The administration expected domestic demand to slow, while the performance of exports was likely to remain lacklustre. Meanwhile, speaking at a public function last night, Financial Secretary John Tsang Chun-wah laid down three principles for his budget next year: creating jobs, enhancing the city's competitiveness, and introducing policies to maintain sustainable economic development. He began meeting lawmakers yesterday to hear their views on ways to tackle the financial crisis. The Liberal Party and the Hong Kong Federation of Trade Unions proposed distributing shopping vouchers to stimulate domestic consumption. The FTU suggested everyone be given HK$2,000 in vouchers quarterly or every six months. Lawmaker Paul Chan Mo-po, who represents the accountancy sector, said the scheme should target a specific group instead of everyone. About 6,000 shops will pay only half their normal rent in January and February, courtesy of their landlord the Housing Authority. The authority's Commercial Properties Committee decided on the temporary measure yesterday to help tenants in its shopping malls cope with the economic downturn. The Link Management, meanwhile, which in recent weeks had resisted pressure to cut rents, reiterated that its top priority was to attract more shoppers to its malls and to persuade them to spend more. More than half the Hong Kong people nearing retirement are postponing making the big leap due to insufficient savings, a survey conducted by insurer Aviva has found. "It may seem tempting to delay or suspend saving up for retirement during these difficult economic conditions, but we urge people to take a longer term view," Aviva Hong Kong managing director Simon Phipps said. In a sample of 1,000 people in Hong Kong, 55 percent of them expected they could not retire from work at age 65 - the normal retirement age - due to inadequate savings. The same percentage expressed regret at not having taken action sooner to prepare for retirement.
China will spend 120 billion yuan (17.6 billion U.S. dollars) to build a second railway linking the northwestern Xinjiang Uygur Autonomous Region with inland cities, according to information from a meeting of the Xinjiang committee of the Communist Party of China on Tuesday. Construction is expected to begin next year, with investment from the central and local governments and other sources. The new line will be parallel to the existing Lanxin Railway linking Gansu, Qinghai and Xinjiang. Only passenger trains will run on it. When the new line is completed, the old Lanxin railway, running1,892 kilometers, will be used by cargo trains only.
Although Gome Electrical Appliances (0493) has still released no information about the current situation of company chairman Wong Kwong-yu, mainland newspapers reported yesterday that the police and securities watchdog have joined hands to investigate any possible illegal acts. "Wong is still detained and under investigation by the police and also the China Securities Regulatory Commission," an unnamed source involved in the investigation was quoted by the China Business News as saying. The 21st Century Business Herald said Wong's detention was not only related to alleged market manipulation but also the alleged bribing of a former Commerce Ministry official to gain approval for Gome's Hong Kong listing. "Wong, as well as financial controller Zhou Yafei, has since October been restricted from going abroad," the Shenzhen-based financial paper said. They were detained last Friday, it said. Shares of the firm remained suspended yesterday. Hong Kong stock exchange data shows that US pension fund Capital Research and Management increased its stake in Gome on November 19 to 8.02 percent, from 7.9 percent, for HK$18.2 million.
Nov 25 2008
The Legislative Council subcommittee
was expected to start its investigation into the Lehman minibond debacle in late
January, its chairman said on Monday.
The MTR Corp is spending HK$11 million to attract customers to its shopping malls during the festive season. The city's premier public transportation system, which runs 11 plazas, will set aside HK$6 million as rebates in the form of coupons and a lucky draw next month. The remainder has been allocated for November promotions. Sales volume in December is expected to be 5 to 10 percent more than the same period last year while the number of people at all plazas is projected to rise 10 to 15 percent next year. Despite reduced prices at shops, chief shopping center manager Candy Ng Chui-lok remains optimistic over sales and traffic volume, saying people are not really short of cash but are just unwilling to spend. "It's true shops are reducing prices to attract customers. People are overshadowed by uncertainties in the financial tsunami, but they are still willing to spend money on things they believe are worth buying," Ng said. Spending on decorations at MTRC plazas this year increased 15 percent to HK$23 million.
The mainland's second-richest person, who made his fortune building up the nation's largest home appliance chain, has been detained on suspicion of market manipulation, state media reported on Monday.
Nov 22 - 24 2008
The Hong Kong Monetary Authority stepped into the money markets seven times yesterday, selling HK$18.213 billion of the local currency against the US dollar to defend the peg system.
The Hong Kong Monetary Authority
said on Friday it had now received 18,672 complaints alleging misconduct in
relation to the sale of investment products associated with Lehman Brothers.
The economic turmoil would not affect work on a statutory minimum wage law, Secretary for Labour and Welfare Matthew Cheung Kin-chung said yesterday.
Agents from the Independent Commission Against Corruption (ICAC) raided the Kowloon Tong headquarters of Climax International (0439) on September 22 and arrested as many as 10 of its officers for bribery and theft, the company admitted yesterday. Climax, which makes paper products such as photo albums, gift items and stationery, said an investigation by the ICAC is continuing. None of the current board members are under arrest by the ICAC, and the company itself has not been notified it is under investigation, Climax said. The company explained that it contacted all the officers on record, including board members, as well as all senior management who were working for the company within 12 months of the raid. Except 10, all confirmed that they were not under arrest. All 10 have resigned or had their duties taken over by their deputies, according to Climax. The company's daily operations continue as normal despite the arrests, it said. The ICAC declined to comment. Shares of Climax have been suspended from trading since the morning of September 23 and will remain suspended.
Nov 21 2008
Hong Kong's inflation rate fell to 1.8 per cent year-on-year in October – down from 3 per cent in September, statistics released on Thursday showed. Despite deteriorating economic conditions, the Hong Kong government has no plan to cut public spending, Chief Executive Donald Tsang Yam-kuen said early on Thursday (HK time). Mr Tsang was speaking to a meeting at the London School of Economics in Britain. He said government spending would help reduce the impact of the current economic downturn and stimulate demand for goods and services. “We adhere to the principle of “big market, small government”. For us, that means containing public expenditure to below 20 per cent of gross domestic product, as much as possible. The less the government intervenes, the more is left for the private sector to contribute to GDP,” he said. He also said Hong Kong would adhere to its strengths and maintain its commitment to free and open market. “We will keep a low and simple tax regime. Salaries tax is no more than 15 per cent and profits tax is 16.5 per cent. There is no GST, no VAT, no death duties and no capital gains tax,” he said. He said that overall Hong Kong’s banks were in good shape. Secretary for Home Affairs Tsang Tak-shing on Thursday said the government had reserved HK$3 billion this year for construction projects in local districts. A Hong Kong man has been jailed for eight years in Yunnan for running the mainland’s biggest online gambling racket which hauled in more than US$1.25 billion (HK$9.7 billion) in bets, state media said on Thursday. Tam Chi-Wai employed more than 3,000 people to run his illegal websites and perform other duties such as hiding the profits in clean bank accounts, Xinhua news agency said, citing the High Court in southwest Yunnan province. The court upheld an eight-year sentence handed down by a lower court in June, and fined him 20 million yuan (HK$22.7 billion), Xinhua reported, without saying when the final judgment was delivered. Tam’s online gambling network earned more than 278 million yuan from about 8.68 billion yuan in bets before it was busted, making it the biggest such racket detected in China, Xinhua said. He began his empire nearly 10 years ago in Myanmar, which borders Yunnan and where many Chinese go to bet in casinos as gambling is illegal in China. Tam then started developing his internet gambling network in the mainland with servers based in various southern Chinese cities.
Arbinet-thexchange, which exchanges bandwidths between telecommunications carriers and internet service providers, has opened a new internet protocol exchange in Hong Kong for the Asian market, with a focus on the mainland. The exchange was set up at Mega-iAdvantage data centre in Chai Wan. Sellers include China Telecom (SEHK: 0728), Chunghwa Telecom, Korea Telecom, Singapore Telecom and Telekom Malaysia. Buyers include online gaming and video streaming firms. "We chose Hong Kong as our Asian exchange centre as the market is fully deregulated, with nearly all international ISPs present here," said Danny Wong, regional sales director of Arbinet's data services division. "We may add one more IP exchange centre in Singapore or Malaysia to serve the Southeast Asia market." "Hong Kong has emerged as the second-largest internet hub in Asia and is a vital gateway to China," said Alan Mauldin, the research director of TeleGeography. "Our research has indicated intra-Asian internet traffic has grown nearly 65 per cent annually between 2004 and 2008." The Nasdaq-listed company expects its first group of internet protocol bandwidth buyers to connect in Hong Kong by year-end. Arbinet generates revenue by charging commission on exchanges of voice and internet protocol capacity. A few years ago, it set up its voice capacity trading centre in Chai Wan. Mr Wong also said Arbinet could help internet service providers diversify their voice and internet protocol networks to avoid data traffic congestion in times of emergency. He said the internet disruption an earthquake off Taiwan caused on December 26, 2006, might not happen again, as many new submarine cables had been installed to diversify the network in the past two years.
Nov 20 2008
Unemployment rose only slightly last month but the number of jobs available dropped more than 13 per cent, heralding worse to come. Unemployment rose to 3.5 per cent, just 0.1 percentage point up from the September figure but still the highest level in 11 months. The government said the effects of the global economic meltdown had yet to be fully reflected. At the same time, the Labour Department said the number of private-sector vacancies registered in October fell by about 9,000 from 67,000 in September to a little more than 58,000, a reduction of 13.4 per cent. The figures released each month are an aggregate of the previous three months, meaning the period before the crisis began to bite in September is reflected in the latest result. The figures were released against the background of a growing wave of layoffs this month, with 4,000 Hong Kong workers being sacked from the stalled Sands resort development in Macau, HSBC (SEHK: 0005, announcements, news) shedding 450 in layoffs announced on Monday and trading giant Li & Fung saying yesterday it would cut 150 jobs this year. "There is quite a big risk that the jobless rate will worsen," Financial Secretary John Tsang Chun-wah said. "If companies do not need to lay off staff, don't. But if staff need to be made redundant, I hope companies can do whatever they can to help them find new jobs." A government spokesman said the increase in unemployment was fairly widespread across sectors. "Looking ahead, unemployment is expected to rise further in the near term as the global financial turmoil and its contagion effects are felt," the spokesman said. The marginal rise in unemployment was accompanied by a drop of about 2,200 people without jobs month on month as the size of the workforce expanded to a record 3,678,500 from 3,677,200, up 1,300. Total employment grew by 3,600 from 3,543,100 in September to 3,546,700 last month, Census and Statistics Department figures show.
HK woman first Asian in New Zealand cabinet - Sworn into power as part of New Zealand's new government, Pansy Wong is New Zealand's first Asian-born cabinet minister, reflecting the growing clout of its fastest growing ethnic group. Born in Shanghai and raised in Hong Kong, Wong was appointed minister for ethnic affairs and women's affairs following the November 8 general election victory by Prime Minister John Key's centre-right National Party. The 53-year-old Wong was elected to parliament as New Zealand's first Asian legislator in 1996. "I've proved that we can hack the pace in parliament, so that more Asians feel they can do it,'' she said. The election saw six legislators of Asian origin voted into parliament, highlighting the rapid growth of New Zealand's Asian population. Hong Kong is facing severe competition from Singapore to be a centre of education excellence in Asia, according to a study by the Hong Kong Institute of Education. Crisis to send property prices back to 2004 - The residential property market is likely to suffer further damage from the global financial crisis over the next year, according to analysts and property consultants.
Nov 19 2008
The cost of the final phase of the reclamation of Central has risen by HK$2.2 billion to HK$5.7 billion, local radio reported on Tuesday, citing sources close to the government. Banking giant HSBC has announced it will slash 450 jobs in Hong Kong - the lion's share of 500 jobs it is to cut in Asia in a second round of layoffs - as a senior executive warned that no one's job was safe during a recession. The layoffs involved almost all levels of employees in every division, from branch managers to cleaners. Hong Kong staff were told of the job cuts yesterday in an e-mail from Hongkong and Shanghai Banking (SEHK: 0005) Corp executive director Peter Wong Tung-shun, while those losing their jobs were advised by their department managers. The sacked staff are receiving the equivalent of eight months' salary as well as their pensions. In his e-mail, Mr Wong said the "exceptionally difficult" decision was a result of organisational changes, as well as the deteriorating economy and a cautious outlook for next year. "In this day and age no guarantee of job security can be given," he wrote, adding that HSBC would help affected employees to seek new jobs "within the bank or externally". HSBC, which is one of Hong Kong's largest employers with 18,000 staff, dismissed about 100 back-office workers in September as part of a global move to slash 1,100 jobs. The fresh blow to employment in the beleaguered banking industry came just over a week after Singapore's largest lender, DBS Bank, announced it was sacking 900 staff, mostly in Hong Kong and Singapore. Unionists said the HSBC layoffs, which were unusual in that they also involved branch managers who had rarely been sacked in the past, might send the wrong message to smaller banks that employees were just readily disposable assets. The Hong Kong Banking Employees Union criticised the sector for "betraying" workers who had been asked to make sacrifices amid fierce competition in recent years and the current controversy over losses from failed Lehman Brothers-related minibonds. "They have been dedicating themselves to their work all along but their employers just treat them as sacrifices to the financial tsunami," union deputy secretary general Tam Kin-sun said.
City Telecom (CTI), a Hong Kong telephone operator, said annual profit surged 333 per cent - thanks to stronger demand for its fixed-line integrated telecommunications services and higher customer spending. Profit for the year to August rose to HK$125.2 million from HK$28.9 million the year before as revenue increased 14.17 per cent to HK$1.3 billion from HK$1.14 billion. Despite the strong earnings growth, CTI halved its final dividend to 2 HK cents to save cash for planned increases in capital expenditure. The company plans to triple spending to as much as HK$650 million in the next two years from HK$211 million in the previous financial year to expand its network coverage to two million homes and 1,800 commercial buildings from 1.5 million homes at present. CTI added 118,000, or 17.3 per cent more, fixed-line subscribers, including internet users, in the year to August, taking the total to 801,000. Average monthly spending rose 9.1 per cent to HK$191 per user from HK$175. However, operating costs surged 18.2 per cent to HK$934 million owing to aggressive promotions and higher expenses to sign up customers. CTI said it had no imminent plan to follow some other big corporations in sacking staff. "So far, we have no plans for any job cuts, and we are considering new hires despite the adverse economic environment," said chief executive William Yeung at a press conference yesterday. Meanwhile, the company has scrapped a plan to form a consortium to bid for a nationwide broadband licence in Singapore. Shares of CTI dropped 9.18 per cent to close at 89 HK cents yesterday. China Unicom (SEHK: 0762) (Hong Kong), a mainland telecommunications service operator, said its two largest shareholders had set January as the month in which they planned to complete their previously announced merger. After the merger of China United Telecommunications Corp and China Network Communications Group Corp, the resulting corporation will hold a combined 70.4 per cent of Unicom, the company said in a statement to the Hong Kong stock exchange. Unicom bought China Network's subsidiary China Netcom Group Corp, the country's second-biggest fixed-line carrier, last month. "The proposed parent merger is expected to enhance management efficiency of the parent companies and further facilitate the integration between Netcom and us," Unicom said. "We intend to establish a unified national network of sales, distribution and services." Unicom said the proposed merger was pending approval from regulatory authorities. Last month, Unicom, originally a mobile-telephone carrier, paid 1.508 shares for each Netcom share. The transaction was valued at HK$123.9 billion, based on stock prices on October 14. The move was part of the effort by the mainland government to consolidate smaller phone carriers to enable companies to offer both mobile and fixed-line services. Licences for third-generation wireless services would be issued after the revamp was completed, the government said last month. Analysts said the integration would enable Unicom to offer better services to its more than 100 million mobile subscribers, although it would be behind rivals in the southern regions. Unicom has about 129 million mobile-telephone users, 107 million fixed-line users and 24.5 million broadband subscribers. After the deal, the company will own and operate a fixed-line and broadband network in the 10 northern provinces. Shares in Unicom fell 1.04 per cent yesterday to close at HK$9.50. Two female undercover police officers cracked an international syndicate that arranged for local women to become prostitutes in Japan, Taiwan and Britain, a district court judge was told. In the dock yesterday was Law Wai- kon, 34, who pleads not guilty to two counts of causing the prostitution of another person. He also faces two alternative charges of trafficking in women. Prosecutor Roderick Wu Kam-fun told the court in his opening statement that, between December 2006 and June 2007, a number of recruitment ads appeared in a Chinese-language newspaper stating: "Make quick money overseas by being public relationship officers in Japan, Taiwan and the United Kingdom. Completely safe and confidential. The recruitment package includes air tickets, meals and accommodation." The ads listed a contact number. In January 2007, a female officer called the number which was answered by a man calling himself "Mr Ho." Over the phone, he discussed the pay and the nature of the job. Three days later, the undercover officer met Ho inside a Mong Kok shopping mall. Law was identified as being Ho. He is alleged to have told the officer she could earn tens of thousands of dollars a month if she worked in a bar in Chiba-Ken in Japan. Law is also reported to have said someone would pick her up at Tokyo airport and instruct her on how to pass customs. She would be paid about HK$1,400 for each session of drinking, singing and going out with customers. An extra pay of HK$2,300 would be paid for sex with customers. The prosecutor said the officer was assured that most customers were Japanese, and that other girls from Hong Kong, Taiwan and Macau were working there. The officer told Law she needed more time to consider the job. In March last year, police sent a second woman officer to meet Ho. During that meeting, Law told her not to worry about the job. On May 30, 2007, the second police officer called Law again and agreed to accept the job. On the same day, she met him in Mong Kok, where they went to a travel agency to book a flight to Japan. On June 11, Law handed over the air ticket to the officer. He also gave her some birth control pills and lubricant. In addition, he provided her with information about Japan and instructed her to use a false name and a fake address for immigration purposes. While they were talking, a senior police officer arrived and arrested the accused. The trial continues today before Deputy District Judge Abu Bakar bin Wahab. The accused remains free on cash bail of HK$30,000.
The Hong Kong government has lost as much as HK$2.44 billion on its holdings in Hong Kong Exchanges and Clearing (0388) since the Exchange Fund bought additional shares in the bourse operator last September.
Nov 18 2008
The government has vowed to revitalise the market for Hong Kong films in the region, hoping to restore the glory of a film industry once known as the "Hollywood of the Orient". The government said it would also strive for a closer relationship with Guangdong film studios which, it was hoped, would co-produce Cantonese-language films with Hong Kong studios. This website is powered by netDrive 4. As mentioned briefly in the chief executive's latest policy address, the Hong Kong Film Development Council will launch a campaign called "Hong Kong films, new action" to promote local films in Taiwan, Singapore and Malaysia. The council's secretary general, Wellington Fung Wing, said the performance of Hong Kong films and audience habits in regional markets would be surveyed. Delegations of council members and filmmakers will visit Taiwan, Singapore and Malaysia in the next few months to re-establish relationships with industry professionals. Film industry representatives would also be invited to attend the Entertainment Expo in Hong Kong next spring. "During the peak, every Hong Kong-made movie was sold and screened at cinemas in Taiwan," Mr Fung said. "But since 2001 or 2002, the value of Hong Kong films has dropped to a very low level. Producers would rather not sell the films. This is similar to the situation in Singapore and Malaysia." He said the increasing cost of promotion and the number of television movie channels, which discouraged people from visiting cinemas, were among the reasons why regional distributors were less keen on Hong Kong movies. The number of annual Hong Kong productions dropped from nearly 300 in its heyday in the early 1990s to 50 last year. Mr Fung said the figure was expected to be even lower this year. Meanwhile, the council will send about 60 people involved in the film industry to Guangdong next month to discuss the possibility of co-productions with studios there. Mr Fung said there was a huge demand for Cantonese-language films in Guangdong but not many films were made there. "They want closer collaboration with Hong Kong's creative talent," he said. Most co-productions had been between Hong Kong and major mainland studios based in Beijing, but "there's still a great opportunity [for Hong Kong films] to survive if we can consolidate these markets". The council also plans an overall review of the Film Development Fund's functions early next year. Since October last year, 13 applications for film-project funding had been received and seven approved. Mr Fung said the council was happy to see a variety of projects seeking funding, ranging from romance to animation and action. He said several film projects were helmed by first-time directors. The council had also approved HK$1.81 million for a film-animation education programme at secondary schools, which would start with the new school curriculum next autumn. Mr Fung said there would be strong growth in demand for animation content and Hong Kong would benefit from such a program. Film funding approved this year: 1. McDull Wudang (Bliss Pictures) Director: Brian Tse Lap-man; Funds approved in January 2008: HK$3,598,800. 2. Claustrophobia (Runaway Films Production) Director: Ivy Ho; Cast: Ekin Cheng Yee-kin, Karena Lam Ka-yan; Funds approved in February: HK$1,618,255. 3. Coweb (Joy Charm Enterprise) Director: Xiong Xin-xin; Cast: Sam Lee Chan-sam, Jiang Luxia; Funds approved in June: HK$2,993,179. 4. Room-mate (Big Pictures) Director: Lee Ka-wing; Cast: Chen Po-lin, Gigi Leung Wing-kei; Funds approved in July: HK$2,419,674. 5. Strawberry Cliff (Glory Top Properties) Director: Chris Chow Chun; Cast: Eason Chan Yik-shun, Leslie-Anne Huff; Funds approved in September: HK$3,017,435. 6. Prince Tears (Far-Sun Film Company) Director: Yonfan Yon Fan; Cast: Joseph Chang, Fan Chih-wei; Funds approved in September: HK$2,390,000. 7. Luen Yan Sui Yu – English title not yet available (ET Media Group) Directors: Derek Tsang Kwok-cheung, Jimmy Wan Chi-man; Cast: Khalil Fong Dai-tong, Jaycee Fong Cho-ming,Eason Chan Yik-shun; Funds approved in November: HK$2,351,592.
Nov 17 2008
China cities and provinces are fast- tracking investment plans to support a 4 trillion yuan (HK$4.54 trillion) stimulus package announced by the government last week. Hubei province will spend 512.85 billion yuan to develop eco-cities around the capital Wuhan by 2020, Xinhua News Agency reported yesterday. Provincial authorities have pinpointed nine focused areas including energy reduction, "circular economy," eco-agriculture, ecological forestry and clean energy, involving 459 projects. Stephen Green, head of China research at Standard Chartered Bank, said in a research note that the Ministry of Finance has "instructed local governments to revise their 2009 budgets, encouraging them to increase capital spending projects." He added: "All ongoing projects that can be fast-tracked are being fast- tracked." Shanghai will accelerate urban infrastructure construction with a 500 billion yuan investment through 2010, Shanghai Daily reported Saturday. The massive capital injection is meant to boost internal demand and stabilize economic growth amid the global financial turmoil, the city's construction and transport authority announced. The Shanghai Construction and Transport Commission, overseer of the city's infrastructure development, will focus on promoting the planned and ongoing projects in five major areas, the paper reported. In Hainan, the local economic planning agency has been quoted as saying that the province will invest 207 billion yuan over the next three years on agriculture, real estate, technology and infrastructure. Beijing, meanwhile, will spend 90 billion yuan to develop the construction of three subway lines over the next two years, according to a report by Beijing Daily published on Friday, citing the transport authority. China's top banking regulator rated the country's banking industry as healthy with total assets increasing rapidly, bad loan rates dropping and capital adequacy ratio (CAR) rising. "The performance of Chinese banks has reached a historic peak," said Jiang Dingzhi, vice chairman of the China Banking Regulatory Commission (CBRC), at a financial forum in Beijing on Saturday. Total banking assets amounted to 59.3 trillion yuan (8.68 trillion U.S. dollars) by September, said Jiang. The figure had increased more than fourfold from a decade ago during the southeast Asia financial crisis. Profits after tax of Chinese banks reached 446.7 billion yuan, a 12-fold increase from the 36.4 billion yuan reported in 2002. "Profits continue to rise rapidly this year," said Jiang without giving specific numbers. CBRC statistics showed the bad loan rate of major commercial banks had dropped for the sixth consecutive year to 5.5 percent from more than 20 percent in 2002. "The bad loan rate will go down further after the Agricultural Bank of China (ABC) completes its join-stock transformation reform," said Jiang. As the last of the four major state-owned commercial banks to be transformed into a joint-stock company, ABC signed an agreement on Nov. 6 with Central Huijin Co., an investment arm of the government, for a 130-billion-yuan capital injection in preparation for an eventual listing. The bank's non-performing loan rate stood at 23.5 percent by 2007. At the same time, the CAR of 192 commercial banks nationwide had exceeded 8 percent by the third quarter, the capital accounting for 85 percent of the country's total. Only eight banks met the 8 percent criterion back in 2003. The CAR is used to track a lender's capacity to tackle financial risks. A bank's CAR should not fall below 8 percent, the minimum standard set by China's central bank. Jiang said China may have to face a more formidable economic environment with the global financial crisis. "However, we have strong confidence in our ability to carry out a good job in risk management and control for the banking industry." China's 586-billion-dollar economic bailout, announced over the weekend, will be a windfall for San Francisco businesses, it was reported on Wednesday. The bailout "could not have come at a better time for Bay Area business delegations looking to make their mark here," the San Francisco Chronicle said. China's pumping more money into export growth and green tech "plays right into the sweet spots of San Francisco's China SF initiative and the Bay Area Council's U.S.-China Green Tech summit," the paper said. Both groups are in Shanghai this week meeting with the locals, hoping to gin up business in those exact areas. "This reinvigorates our efforts. It makes them more timely and vital than ever," Michael Cohen, director of San Francisco's Office of Economic and Workforce Development, was quoted as saying. The China SF Initiative, focused on getting Chinese companies to open satellites in San Francisco among other things, was officially unveiled by Mayor Gavin Newsom on Wednesday. The initiative has already bagged two Chinese firms. Trina Solar, a solar power parts company listed on the NYSE, will set up a U.S. base in San Francisco, and the English-language China Daily, with a circulation of 200,000, will open its first West Coast bureau in the city, according to the Chronicle. City officials are not shy in boasting that they beat out San Jose and Los Angeles, respectively, for the honors, said the paper. "If we can hit that elusive tipping point and get enough Chinese companies to sign up with us," said Cohen, "in 10 or 15 years San Francisco really will be the North American gateway for China's business." Nov 15 - 16 2008
Unemployment among construction workers is expected to rise next year to levels not seen since the Sars outbreak in 2003, a building industry group said. The warning by the Hong Kong Construction Association followed an announcement by Las Vegas Sands in Macau on Thursday that it was laying off 9,000 workers, including 4,000 from Hong Kong. The association called on the government to increase small-scale projects to create more job opportunities for construction workers. "The situation now is bad, yet the worst will come in February and March next year, when construction work for all major hotels in Macau ends," said association president Conrad Wong Tin-cheung. The city has 60,000 construction workers, 10,000 of whom work in Macau. "If they all return to the city and fail to get a job, unemployment in the trade will shoot up to 13 per cent - the level during Sars - from the present 6 per cent," Mr Wong said. Twenty per cent of local construction projects this year, worth HK$8 billion, were already on hold due to financial difficulties, he said.
Pressure on the Hong Kong dollar to
strengthen beyond its fixed exchange rate may have been caused by investors
halting carry trades - purchases of overseas assets funded with loans from SAR
banks - according to Joseph Yam Chi- kwong, head of the Hong Kong Monetary
Authority. The Hong Kong Tourism Board (HKTB) on Thursday launches its "Meetings and Exhibitions Hong Kong" (MEHK) office, as the first step in a series of measures to ensure that Hong Kong stays ahead of the competition in the global MICE (meeting, incentive, conference and exhibition) sector. In its 2008-09 budget, the Hong Kong government has earmarked an additional 150 million HK dollars for the HKTB to strengthen its MICE promotions over the next five years. HKTB Chairman James Tien said, "We believe this is the time we must ramp up our effort to maintain our market share and keep our business strong, as we face an economic challenge of a lifetime." "Working in concerted effort with the Government and trade partners, we will launch targeted promotions in high-potential markets, cultivate new business contacts and build awareness of Hong Kong's MICE brand, so that we can lessen the impact of the downturn and be ready to make a head start when the climate is right," Tien said. Yvonne Choi, the Permanent Secretary for Commerce and Economic Development, said Hong Kong is well-positioned to be a popular destination for MICE events, with its prime location, world-class infrastructure, sophisticated services sector and proximity to the Chinese mainland. "We are also a safe city with a sound legal system and a level-playing field for business. Importantly, visitors from over 170 countries enjoy visa-free entry to Hong Kong," she added. The MEHK office will consist of three teams to offer dedicated services for the Meetings and Incentives, the Conventions and the Exhibitions segment respectively. The MEHK office will also appoint marketing representatives in high-potential markets, such as the Chinese mainland, India, South Korea, Japan, the United Kingdom and the United States.
China faces a "formidable challenge" in keeping the world's fourth-largest economy on track amid a worsening global environment, a top planning official said yesterday, as cooling capital investment signalled a deepening slowdown. The warning by Mu Hong, a vice-chairman of the National Development and Reform Commission, came as the National Bureau of Statistics said growth in fixed-asset investment in urban areas eased last month from September. Fixed-asset investment rose 27.2 per cent in the first 10 months from a year earlier, lagging the 27.6 per cent gain through September, the bureau said. But the figures suggest a 24.4 per cent increase in October, down from 29 per cent in September. "We are confronting a formidable challenge in our effort to effectively prevent the economy from slowing rapidly amid a severe situation at home and abroad," said Mr Mu at a briefing in Beijing. Yesterday's data was consistent with weakness seen in a slew of data released this week that pointed to slowing growth in industrial output and retail sales, declining fiscal revenue, easing producer and consumer inflation, slowing import and export growth, and sluggish property prices. Ha Jiming, the chief economist at China International Capital Corp, said last month's data suggested the economy was deteriorating fast. "The economy is facing an even bigger challenge, and the government's stimulus policy will not easily change the economic trend," he said. Barclays Capital Research attributed falling prices and weak property activity to a moderation in capital spending. Spending on property development cooled, rising 24.6 per cent in the first 10 months from a year earlier after gaining 26.5 per cent through September, the statistics bureau's figures show. Prices and sales are falling in major cities. "We believe government-supported investment is likely to show more visible growth in the last two months of this year, more so in 2009," wrote Barclays Capital economists Wensheng Peng and Yan Zheng. Meanwhile, the Ministry of Housing and Urban Construction announced the government would invest 900 billion yuan (HK$1.02 trillion) to build affordable houses over a three-year period, Xinhua reported. Vice-Minister of Housing and Urban-Rural Development Qi Ji said the massive construction plan could stimulate related investment of about 600 billion yuan each year and provide more than 2 million jobs. Mr Mu reiterated the need to boost consumption and described the nation's "economic fundamentals" as healthy. "We have a market of 1.3 billion people, which has great potential, and we also have great potential to boost investment and consumption," he said. "We still have a lot of room to manoeuvre to ramp up domestic demand." On Sunday, the State Council announced a 4 trillion yuan stimulus package to invest in infrastructure, health care, education and environmental protection to offset slowing growth. But economists cast doubt on the government's plan to boost spending as fiscal revenue declined last month for the first time since 1996. However, Mr Mu said the central government would contribute only slightly more than 25 per cent of the economic stimulus package. The central authorities would provide 1.18 trillion yuan to fund increased spending on railways, roads, health care and housing, he said. The rest would come from local authorities, companies and other sources including overseas investors. US government health officials have ordered dozens of imported foods from China held at the border as possible health risks. Most are cultural treats, including snacks, drinks and chocolates. It is unusual for the Food and Drug Administration to put such a broad hold on goods from an entire country, not just a few rogue manufacturers. Thursday's order, which covers products made with milk, is a precaution to bar foods contaminated with the industrial chemical melamine, which can cause serious kidney problems. "We've continued to get information from others in the international community, and reports from China, about [melamine contamination] moving into different commodities," senior FDA enforcement official Steve Solomon said. "Most of the products ... are finished products like cookies, cakes and candies. "The impact will be on various ethnic communities looking for specific products." Under the directive, FDA inspectors at US ports of entry will detain foods from China made with milk and certain ingredients derived from milk. Importers must pay to have products tested by an independent laboratory designated by the FDA. Only products found to be free of melamine will be allowed into the country. The order also applies to pet foods and some bulk protein products, the focus of a melamine-linked recall last year. The FDA action shifts the burden of proof to Chinese companies, which must supply evidence that their products are safe. Most consumers should not be affected, as major US food manufacturers get their milk ingredients domestically. A lawmaker chided the FDA and called for more Chinese products to be held for testing. Sina Corp, the nation's largest online portal, expects revenue to grow more than 52 per cent next quarter despite an economic slowdown and predictions of tougher times ahead.
Nov 14 2008
Raymond Ho Chung-tai – chairman of Legislative Council sub-committee inquiry into the sale of financial products linked to Lehman Brothers – said on Thursday the investigation could take up to a year. On Wednesday night, Legco passed a motion under section 13 of the Powers and Privileges Ordinance. This empowers the sub-committee, chaired by Mr Ho, to probe the affair. During the investigation, lawmakers can summon bankers and finance staff to answer questions. Banks might also be requested to submit documents containing sensitive material. Mr Ho said they would ensure the investigations were transparent. Most meetings would remain open and public. However, if investigations involve sensitive documents, they might have closed-door meetings, local media reported.
The Centre for Food Safety (CFS) said unsafe levels of melamine had been found in mainland-made fish feed used at a farm in Hong Kong. The centre said the level detected was 6.6 parts per million. Hong Kong limits concentration to 2.5 parts per million. “According to the fish farmer, the feed in question... was sourced in the mainland and delivered to Hong Kong by himself,” a CFS spokesman said in a statement late on Tuesday. The discovery led to testing of fish from several farms across Hong Kong, but none was found to contain dangerous levels of the chemical, the statement said. Fish feed is the latest product to test positive for melamine after it was found in mainland eggs sold in Hong Kong, causing concern over how far the chemical has infiltrated the food chain. The chemical is normally used to make plastics but some mainland farmers have been using it to bulk out food products to make it appear as though they contain more protein. The Che Kung Festival Fair stalls were ready for public bidding on November 28, the Food and Environmental Hygiene Department (FEHD) said on Thursday. The popular event is held annually to commemorate a Taoist deity, Che Kung, who was a Sung Dynasty general before he immortalised after saving the people at Sha Tin Valley from a plague many years ago. The Che Kung festival fair will run from January 23 to February 9 for 17 days at Chui Tin Street Soccer Pitch in Sha Tin. The auction will be on November 28 at Wo Che Community Hall from 2.30pm. A government spokesman said bidding for dry goods stalls would be done before wet goods stalls. “The opening prices for the 44 dry goods stalls and four wet goods stalls are HK$2,520 and HK$790 respectively,” he explained. Bids are allowed for more than one stall. Che Kung festival is centuries-old and is celebrated by thousands of Hong Kong and mainlander people. Many believe he brings good luck to horse racing and thus, many flock to his temple during his birthday on the second or the third day of Lunar New Year. For more information, call FEHD’s Sha Tin District Environmental Hygiene Office at tel 2634-0134.
English continued to play an important role in the working life of Hong Kong, a new survey conducted by the Hong Kong Polytechnic University (PolyU) said on Thursday.
Hutchison Telecommunications International (SEHK: 2332) Ltd has decided to pay shareholders a HK$33.6 billion special dividend after failing to find a suitable acquisition target in Asia over the past 18 months. Hutchison Whampoa (SEHK: 0013), which owns 60.4 per cent of the telecommunications firm, is expected to reap HK$20.3 billion from the special dividend of HK$7 per share. HTIL also declared a bulk dividend of HK$15.9 billion last year to Hutchison after selling a controlling stake in Indian mobile unit Hutchison Essar to Britain's Vodafone Group for a sky-high HK$86.4 billion. Hong Kong Exchanges and Clearing (0388) said its earnings during the third quarter plunged as much as 43 percent from a year earlier to HK$959.6 million on sluggish market activity. The Link Real Estate Investment Trust (0823) said it will invest HK$1.1 billion on asset enhancement over the next three financial years to boost footfall in its shopping malls, but has not responded to a government suggestion that it help tenants of small shops or react to demands for rent reductions. The market for trade finance has severely deteriorated over the last six months, and the situation is likely to deteriorate further in the coming months, WTO chief Pascal Lamy warned on Wednesday. Reporting to WTO heads of delegations, Lamy said the deteriorating market for trade finance had been confirmed by experts and representatives of private banks, international financial institutions and export credit agencies at a meeting he chaired earlier in the day. He said two key problems were identified at the meeting: one is a shortage of liquidity to finance trade credits, the second is a general re-assessment of risks caused as much by the financial crisis as by the slowing down of the world economy. "The world economy is slowing and we are seeing trade decrease. If trade finance is not tackled, we run the risk of further exacerbating this downward spiral," Lamy said. According to the WTO chief, the market currently estimates the liquidity gap in trade finance at about 25 billion U.S. dollars, which is a sizeable sum. He said a priority task is to enhance capacity to mitigate the effects of the increased perception of risks and to provide the market with earmarked liquidity for trade finance. Both the international financial institutions and the export credit agencies should expand their contributions to cover risk and provide additional liquidity under existing instruments, and they should be supported by public authorities, Lamy said. Lamy also called on WTO members to resist calls for protectionist measures and to promote "further organized, regulated and balanced trade opening" through the Doha Round of global trade talks. "My sense is that we are not that far away from our objective of concluding the round, even if a number of tough nuts remain to be cracked, notably in the agriculture and industrial modalities, which would be a stepping stone towards a final Doha deal," Lamy said. "My sense is that we can achieve modalities in these two areas by the year-end. I remain of the view that it is doable," he added.
Products of a mainland dairy giant at the centre of the melamine milk crisis have returned to store shelves after a two-month halt for quality assessments, one of the group's subsidiaries in Xingtai , Hebei province , says. Xingtai Sanlu Dairy Company marketing director Cao Zhanwu confirmed yesterday that Sanlu-brand milk had been on sale in Hebei , Shandong and Henan since November 1. He said another Sanlu subsidiary started selling milk and yogurt as early as mid-October, but without the Sanlu name on its products. With most of the Sanlu Group's 30 or so subsidiaries still out of action pending inspections, Mr Cao said Xingtai Sanlu was the only company still using its parent company's branding on the mainland. He said the company was confident of winning customers back, and market research before the November 1 relaunch supported its belief. "We believe that up to 70 per cent of our former customers will be back," he said. About 30 per cent of customers who responded to company questionnaires and random street surveys said they would like to buy Sanlu products in the future, Mr Cao said. Sanlu, based in Shijiazhuang , was the first mainland company exposed as producing milk power containing melamine, an industrial additive used to make dairy products appear protein-rich in quality tests. Xinhua reports 1,272 infants remain in hospital with illnesses related to the tainted milk. China yesterday quickened its pace of economic stimuli by cutting tariffs and raising tax rebates for nearly 4,000 export items in efforts to restore consumer confidence and spur economic expansion. Aimed at helping small and medium- sized enterprises, the State Council announced it will further increase tax rebates on 3,770 export products, including those related to labor-intensive goods, machinery and electronics. The new measures, effective December 1, cover products accounting for 27.9 percent of the country's total exports. At the same time, tariffs on exporting certain steel, petrochemical and grain products will be scrapped, while tax on certain fertilizers will be reduced, the Cabinet said. The tax-rebate increases - the third in three months - will be one of the four areas China will focus on to foster domestic demand and steadily boost the fast- growing economy, Premier Wen Jiabao told a Cabinet standing committee yesterday. Beijing will further approve fixed assets investment amounting up to 188.5 billion yuan (HK$213.9 billion), as well as the 300 billion yuan earthquake relief fund allocation and forestry eco-system rebuild plan in Wenchuan, he added. The measures were announced after macro-economic data released in October showed a declining growth trend, prompting economists to push for more aggressive moves by the central government. There will be about 2.5 trillion yuan of new money injected into the economy on top of the original plan, JPMorgan chief economist Frank Gong said. "The new money will help GDP by 6.5 percentage points in the next couple of years, helping to cushion the slowing economy to attain an 8 percent growth target," Gong added. The central bank yesterday said money supply and total credit last month grew by 15 percent and 14.4 percent, slowing from the 15.3 percent and 14.7 percent rise in September, respectively. Foreign direct investment for the first 10 months climbed 35.1 percent from a year earlier to US$81.1 billion (HK$632.6 billion). China will spend 450 billion yuan (HK$510.67 billion) over the next two years to ramp up airport infrastructure projects nationwide. In addition to 100 billion yuan already set aside for ongoing works, China will add 30 billion yuan this year to fast-track construction, China Central Television reported. China's General Administration of Customs on Wednesday announced that the country's trade surplus in the first ten months of this year stood at 215.99 billion U.S. dollars, with the trade surplus of October reaching 35.24 billion U.S. dollars. Figures also showed that the country's combined export from January to October reached 1.2 trillion U.S. dollars, up 21.9 percent year on year. The growth rate was 4.6 percentage points lower compared with the same period last year. The administration said that China's exports topped 128.3 billion U.S. dollars, while its imports reached 93.1 billion U.S. dollars in October. Nov 12 - 13 2008
The CITIC Pacific (0267) saga may soon emerge from the darkness. Sources said its parent CITIC Group has decided to take up new shares in return for a US$1.5 billion (HK$11.7 billion) capital injection - rather than a loan - for the blue-chip firm to deal with its troubles over unauthorized foreign currency contracts. As legislators prepare to vote on a resolution to invoke special powers to probe the Lehman Brothers saga – more than 300 people who invested in Lehman Brothers-related financial products protested outside the Legislative Council on Wednesday morning. A subcommittee on issues arising from Lehman Brothers-related minibonds and structured financial products will submit a motion to the Legco later on Wednesday, requesting the power to examine anyone in its inquiry. Legco sub-committee chairman Raymond Ho Chung-tai said on Wednesday that Hong Kong people had invested around HK$20.1 billion in financial products associated with Lehman Brothers. Outside Legco, protesters, chanted slogans and waved placards, urging law makers to support the resolution, local media reported. The protesters had bought mini-bonds and financial products linked with Lehman Brothers, but suffered losses after the US global investment bank filed for bankruptcy in September. Many Hong Kong investors also claim they were misled by bank sales staff into believing the products were secure investments. After intensive lobbying by these investors, Democratic Alliance for Betterment of Hong Kong (DAB) chairman Tam Yiu-chung on Tuesday night said nine legislators would vote in favour of the resolution. The resolution would invoke the Legislative Council (Powers and Privileges) Ordinance on Wednesday. This would then allow a Legco subcommittee to probe the affair.
There are over 200,000 households in Hong Kong who rely totally on social welfare payments, the Legislative Council was told on Wednesday.
The property slump in Hong Kong and on the mainland as well as the sale of a key asset have taken a toll on the financial results of Lai Sun Garment. Lai Sun Garment, an industrial property firm, saw its net profit crash 83.4 per cent year on year to HK$45.8 million in the year to July, despite a 25.3 per cent rise in turnover to HK$14.3 million. The huge fall in net profit was due to an 84.7 per cent drop to HK$39.6 million in profits booked from associate companies. Lai Sun Development, a Hong Kong property and hotel firm 11.2 per cent owned by Lai Sun Garment, saw its net profit fall 32.2 per cent to HK$1.01 billion for the year to July, while revenue fell 9.1 per cent to HK$826.5 million. The decrease in revenue was due to the sale of an associate firm that owns the Ritz-Carlton hotel in Hong Kong, whose sale generated a one-off gain of HK$699 million. Lai Fung Holdings, a mainland property firm 40.6 per cent owned by Lai Sun Garment, saw net profit fall 56 per cent to HK$206 million.
Alibaba.com, the mainland's largest business-to-business e-commerce company, plans to pursue its expansion strategy despite the gloomy economic outlook.
Nov 10 - 11 2008
Hong Kong investors will this week step up their campaign against what they say is a land grab by the Philippine government on the holiday island of Boracay. Their action comes days after a masked gang forced their way into the island's Sandcastles Resort and evicted staff and guests at gunpoint, trapping resort owners Greg and Viveca Hutchinson and their children inside. "We've heard [over the years] of people we know who have been killed and this is getting too close to home," said Mrs Hutchinson, who vowed: "We are not leaving." The growing lawlessness on Boracay has rattled Hong Kong residents and investors. Artist Ray Yip, who bought land on the island about 30 years ago, believes its reputation as a little slice of paradise is under threat. "Up to about 10 years ago it was really, really fantastic," said Yip. "But I have heard too many stories about murder, arson, all types of bad things happening ... it looks like this will take it down another couple of notches." Tomorrow a delegation of Boracay landowners will hold a news conference in Hong Kong in the hope of garnering international support for their campaign against a 2006 proclamation by Philippine President Gloria Macapagal-Arroyo that the entire island belongs to the state. "It's very unfair," said Stephen Arseno, a lawyer and landowner who has been fighting the government's move in the courts. "This is an international issue because there are so many foreigners invested in Boracay. The Philippines does not want a reputation for being a place where property rights are not respected." Last month the Philippines' highest court upheld the proclamation, which split Boracay into agricultural land, which can be owned by private interests, and protected forest, which cannot. Many of the island's resorts and developments fall within areas classified as forest. Even on land zoned as agricultural, the occupants must reapply to purchase it. "We are coming to Hong Kong to try to reassure investors that we will keep trying to protect their rights," said Mr Arseno. He said investment had slowed to a trickle. Yip faces having to pay for his land a second time as a result of the recent ruling. "It's a very strange rule," Yip said. "Of course no one has paid; no-one would be that silly. We've all banded together against it." The government claims its aim is to protect investors by formalising property rights which were previously informal and unenforceable. The storming of Sandcastles Resort provided a dramatic demonstration of the difficulties the government says it is trying to address. Standard Chartered Bank admitted yesterday it had used substandard methods to sell derivatives issued by bankrupt firm Lehman Brothers to some customers. Benjamin Hung Pi-cheng, Standard Chartered executive director and chief executive officer, said the bank had concluded an initial investigation. Although it had not found any systemic problems, there were cases where sales methods had been below the bank's internal standards. "The bank is willing to bear full responsibility and will handle [the cases] accordingly," he said. Meanwhile, Bank of China (Hong Kong) settled with two customers yesterday. Standard Chartered customers have been complaining since September along with thousands of investors who bought Lehman-related products from other banks. The bank sold Lehman-issued derivatives, but not minibonds, to 2,200 customers, 10 per cent of whom were elderly, Mr Hung said. It is initially dealing with customers aged 65 and over with little investment experience. Some elderly customers were financially well-educated, he said. The bank had formed an independent group covering sales issues and would conduct individual and thorough investigations of each case. Mr Hung did not disclose the total amount invested, or what compensation, if any, had been agreed. Elsie Ho, representing a group of Standard Chartered complainants, said so far two investors out of about 150 who registered with the group had reported settling with the bank. She was surprised to learn that more than 2,000 customers were involved, instead of the 300 she had estimated. The Monetary Authority referred 24 more cases to the Securities and Futures Commission yesterday, bringing the total to 96. BOCHK (SEHK: 2388) settled with two customers, named only as Mr Wong and Ms Tseng. Mr Wong was seen leaving the bank smiling yesterday. The customers were satisfied with the arrangements, said the Democratic Alliance for the Betterment and Progress of Hong Kong, which had been helping them. The group Allied Victims of Lehman Products will hold a candle-light vigil this evening.
Major Hong Kong banks lead by HSBC (SEHK: 0005, announcements, news) and Standard Chartered cut their prime lending rates on Friday following a sharp drop in interbank rates, as central banks in Europe and Asia slashed interest rates. HSBC said it would reduce its best lending rate to Hong Kong customers by 25 basis points to 5 per cent, its lowest level since November 2004. Bank of East Asia (SEHK: 0023) said it would cut its best lending rate in the city by 25 basis points to 5.25 per cent. Standard Chartered, and HSBC’s subsidiary Hang Seng Bank (SEHK: 0011, announcements, news) , unveiled quarter-point cuts in their best lending rates. All the cuts become effective from Monday. DBS Bank meanwhile said it would keep its rates unchanged but would keep monitoring the market situation. The past week has seen a series of rate cuts in the Asia-Pacific region, as well as in Europe, with South Korea, India, Australia and Taiwan all reducing rates as central banks struggle with the biggest financial crisis in decades. “The interbank rate level has come down, so there is room for an interest rate cut under these conditions,” a spokeswoman for HSBC said. Citigroup said the rate cut was “mildly positive” for an economy that could soon tip into recession, but was offset by a global recession, banks’ credit tightening and weak confidence among consumers, businesses and homebuyers. “A 25 basis point prime rate cut cannot resolve these problems,” Joe Lo, Citi’s senior economist, said. Hong Kong interbank rates (Hibor) fell further on Friday, tracking US dollar Libor (London interbank offered rate) rates, which were pushed lower by the Bank of England’s aggressive 150 basis point cut and the European Central Bank’s 50 basis point reduction on Thursday. The one-month Hibor was fixed on Friday at 1.19214 per cent, its lowest level since February 2005 and down from a recent peak on October 10 at 4.99286 per cent. The three-month Hibor was fixed on Friday at 2.23714 per cent, the lowest level since September 17 just after the collapse of US investment bank Lehman Brothers. A surge in interbank rates globally in the wake of Lehman’s collapse has squeezed banks’ profit margins. As a result, until HSBC’s unexpected move on Friday, Hong Kong banks had kept their lending rates unchanged, and raised mortgage rates, despite official interest rate cuts. Hong Kong tracks US monetary policy because of its currency peg to the US dollar and the central bank, the Hong Kong Monetary Authority (HKMA), has cut its benchmark rate twice in the past two months, mirroring US rate cuts. Hong Kong banks, however, have some leeway to lag US rate moves and ignored those two rate reductions. In Hong Kong, a spate of fund injections into the money market by the HKMA – the latest on Friday afternoon to curb an appreciating Hong Kong dollar – has also put downward pressure on interbank rates. Savings rates offered by Hong Kong banks are virtually at zero and HSBC and Hang Seng did not cut deposit rates on Friday, but Standard Chartered said it would adjust savings rates. Hong Kong’s exports and retail sales have slowed sharply in the past few months as global demand for Asian goods has slowed and local consumers have been hit by heavy losses on the stock market. Consumers’ declining confidence has also pushed down property sales and a number of economists forecast Hong Kong will soon enter a recession after a five-year boom.
DBS Group, Southeast Asia's largest bank, said it will cut 900 staff in both Singapore and Hong Kong this month amid global financial crisis and falling profits. Chief executive Richard Stanley said the layoffs will account for 6 percent of its workforce. "To be a streamlined organisation, I believe we must run a tighter ship,'' he said. "We have been vigilant on costs but as the economy enters a more difficult and uncertain phase, many financial institutions around the world and in Asia have made headcount reductions,'' Stanley added.
Cathay Pacific Airways (0293) may report a full-year net loss on worsened income in all segments, after the carrier warned of disappointing yearly earnings on Wednesday, analysts said.
Fresh evidence of the impact of the global economic crisis on the mainland economy emerged yesterday, with Guangdong's governor warning output growth in China's export hub had slowed dramatically this year. Huang Huahua said gross domestic product growth this year would fall to 10.2 per cent. Since 1979 the province has averaged growth of 13.8 per cent per year. Last year its GDP rose 14.5 per cent. Mr Huang said output had fallen sharply in the first nine months of the year because of the global crisis, the worst snowstorms in 50 years in southern China and domestic economic policy changes. He said Guangdong was facing severe trading pressures as more businesses reported losses. The province accounts for 28 per cent, by value, of mainland exports, but growth in Guangdong's exports fell 10.9 percentage points, to 13.5 per cent, in the first nine months of the year. Provincial authorities deny there has been a wave of factory closures, but Hong Kong business associations and officials say at least 3,000 Hong Kong-owned firms in the Pearl River Delta region have shut in the past 12 months and thousands more could fold in the next few months.
While Hong Kong health authorities remain vigilant about melamine levels in food imports – two egg exporters from Hubei province were being investigated on Friday. Premier Wen Jiabao said rich nations must abandon their “unsustainable lifestyle” to fight climate change and expand help to poor nations bearing the brunt of worsening droughts and rising sea levels. Mr Wen told the opening of a conference on Friday the financial crisis was no reason for rich nations to delay fighting global warming. “As the global financial crisis spreads and worsens, and the world economy slows down apparently, the international community must not waver in its determination to tackle climate change,” Xinhua news agency quoted him as saying. The two-day meeting is to push Beijing’s call for rich nations to fund a huge infusion of greenhouse gas-cutting technology for developing countries. But foreign officials at the meeting raised doubts about Beijing’s proposal, which could stoke contention over who pays and how much. China is widely believed to be the biggest emitter of carbon dioxide, the main greenhouse gas from industry, power plants and vehicles lifting global temperatures. But Wen threw the onus back on rich nations, with their much higher emissions per person and long history of polluting the air. “Developed countries shoulder the duty and responsibility to tackle climate change and should alter their unsustainable lifestyle,” he told the meeting. Mainland officials have said wealthy nations should divert as much as 1 per cent of their economic worth to paying for clean technology transfers and helping the Third World overcome damage from the rising temperatures bringing more heatwaves and droughts, more powerful storms and rising sea levels. This would mean a total US$284 billion a year if members of the Organisation for Cooperation and Economic Development (OECD) paid up based on the size of their economies last year. Over 190 nations have agreed to seek a new treaty to curtail greenhouse gases from industry, vehicles and land-clearing. China wants technology aid to feature in that pact, which negotiators hope to seal in Copenhagen late next year. Climate officials gathered in Beijing welcomed China’s growing activism on the issue but questioned its proposal, especially with an economic downturn draining coffers. “It is undeniable that the financial crisis will have an impact on the climate change negotiations,” said Yvo de Boer, who heads the UN Climate Change Secretariat. “If we go to citizens under the current circumstances... and say ‘I’m increasing your tax burden in order to pay for climate policy’, that might not go down very well,” he told reporters. Denmark’s Climate Change Minister, Connie Hedegaard, who is helping guide negotiations leading to Copenhagen, said other governments wanted to see what the mainland offers in future emissions goals in return for help and big emissions cuts by rich nations. Few rich nations have lived up to vows to give a sliver of their GDPs to development aid, giving little hope for any similar approach to climate change, she said in an interview. “I think we will not be able to do this at an adequately big scale unless we also activate market forces,” she said of technology transfers.
Agricultural Bank of China receives 130 bln yuan capital injection - ABC Thursday signed an agreement with Central Huijin Co. for a 130-billion-yuan capital injection. Nov 8 - 9 2008
The auditor of Las Vegas Sands Corp, operator of the Venetian Macao and Sands casino hotels in Macau, has questioned its ability to avoid bankruptcy if it fails to obtain fresh funds. The Hong Kong Monetary Authority yesterday extended the loan maturity of its collateralised lending and hinted at lower interest rates, moves designed to encourage banks to lend to their peers and other industries. The de facto central bank said extending the maximum maturity on loans to licensed banks from one to three months would reduce bank funding pressures as the year-end approached. "As banks provide acceptable collateral for borrowing, the interest rate charged could be lower than the interbank rates," said HKMA chief executive Joseph Yam Chi-kwong. "We hope it can push down the interbank rates." He said interbank rates had fallen significantly after the HKMA injected liquidity into the system and introduced several measures to ease credit since the end of September. However, activity in three-month interbank lending has not returned to normal, prompting the HKMA to refine the collateralised lending program. About HK$10 billion in collateralised lending has been provided to banks so far. "All we have done has been aimed at providing a low-interest-rate environment for banks and we hoped it could be passed on to retail (customers) and corporates," he added. Interbank rates fell further yesterday after the HKMA injected HK$3.875 billion into the system. It was the ninth such move since the middle of September, bringing the aggregate balance of the banking system to HK$37.815 billion. The one-month interest rate fell to 1.25 per cent yesterday from 1.3 per cent previously, while the three-month rate fell to 2.3 per cent from 2.4 per cent. However, the Hong Kong dollar remained strong, trading at HK$7.7506 to the US dollar. Analysts said the HKMA's liquidity injection and the refinement of collateralised lending would help ease interbank rates further. But the moves would not fully restore bank confidence about lending. "Banks still have to evaluate the credit risk when providing lending," said Law Ka-chung, the Bank of Communications (SEHK: 3328)' chief economist and strategist in Hong Kong. "The key for lenders to regain confidence is for the external market to stabilise." Mr Law added that interbank rates had fallen in the past few days, mainly tracking the decline of US interest rates. "The real possibility is that banks tightening credit will adversely affect economic prospects and, in turn, their own asset quality, and that this process might feed on itself, creating a downward spiral," Mr Yam said in his Web column. He said the HKMA had done its part and "stands ready to provide more liquidity to the banking system" if needed. "It is time for the banks to deliver as well." He added that it was understandable that banks had to manage credit risk and price credit flexibly in light of changing conditions and risks.
A travel agency is offering free Hong Kong tours to 3,000 people from Guangzhou in an attempt to bolster the weakening economy.
The long-drawn takeover of troubled dairy firm Sanlu will see two contenders splitting the Hebei province-based company's assets between themselves. Beijing's Sanyuan is set to acquire seven milk production facilities in Hebei province, while Heilongjiang province-based Wondersun is expected to buy Sanlu's factory in the northeastern region, the 21st Century Business Herald reported. None of three dairies could be reached for comment. Sanyuan's shares were suspended from trading on Sept 26. Since then, the firm has twice requested continued suspension. It disclosed for the first time in its Oct 28 suspension request that it was in talks that could lead to the acquisition of Sanlu's assets. Sanlu has been the target of takeovers by various dairies and beverage manufacturers since news of a nationwide tainted-milk scandal involving its products broke in September. Sanyuan was among the first batch of those gunning for the beleaguered dairy and was widely tipped to be the front-runner in the takeover bid. Talks between Sanyuan and Sanlu were reported to have broken down last month over disagreements that included debts. Sanlu's 2007 revenue, at 10 billion yuan, was about 10 times larger than that of Sanyuan's. Sanlu's total assets also amounted to 1.62 billion yuan as of end 2007, compared with Sanyuan's 1.32 billion yuan. It is not clear how Sanlu will proceed to dispose of its remaining assets following a sale to Sanyuan and Wondersun. Nov 7 2008
Hong Kong Tycoon Cheng Yu-tung thinks Barack Obama can bring about a positive change in economic policies, but other Hong Kong business leaders worry that Obama may hurt Hong Kong exports by slapping protectionist tariffs on mainland products.
The Hong Kong Monetary Authority pumped money into the banking system for the third time in a week late Tuesday, selling HK$814 million to stem the appreciation of the local currency against the US dollar.
China is considering spending as much as 5 trillion yuan (HK$5.67 trillion) on transport infrastructure projects over the next three to five years, including roads, waterways and port terminals.
China's telecom industry saw rising business volume and profit in the first three quarters of this year as telephone and Internet users increased steadily, the Ministry of Industry and Information Technology (MIIT) said Wednesday. Chinese President Hu Jintao and Premier Wen Jiabao on Wednesday sent messages to congratulate Barack Obama on his election as President of the United States. "China and the United States share broad common interests and important responsibilities on a wide range of major issues concerning the well-being of humanity. To grow long-term healthy and stable China-U.S. relations serves the fundamental interests of our countries and peoples and is of great significance to the maintenance and promotion of peace, stability and development in the world," Hu said in his message. "The Chinese government and I myself have always attached great importance to China-U.S. relations. In the new historic era, I look forward to working together with you to continuously strengthen dialogue and exchanges between our two countries and enhance our mutual trust and cooperation on the basis of the three Sino-U.S. Joint Communiques, with a view to taking our constructive and cooperative relationship to a new high and bringing greater benefits to people of our two countries and the rest of the world." In his congratulatory message sent to Obama on the same day, Premier Wen Jiabao said "a sound China-U.S. relationship meets the common aspiration of the our two peoples and the need to maintain peace, stability and prosperity in the Asia-Pacific region and the world at large." Wen also expressed belief that with joint efforts of the two sides, the China-U.S. constructive and cooperative relationship would make new progress. Meanwhile, Chinese Vice President Xi Jinping extended congratulations to Joe Biden on his election as Vice President of the United States.
Nov 6 2008
The global downturn may be starting to bite but Hong Kong's luxury restaurants are confident the appetites of the wealthy will still stretch to Christmas dinners at prices of up to HK$136,000 a head. On the day that the government was announcing details of its food voucher plan for the needy, the five-star Langham and Langham Place Hotels were offering to fly in a top chef from London to cook a banquet for five in a hotel suite or client's home for about HK$680,000 - or HK$136,000 a head. Meanwhile, swanky restaurant Aqua is advertising what it calls the ultimate Christmas feast - a flamboyant seven-course dinner at HK$10,000 a head. The offer, throughout December, includes limousine transfer to the restaurant in Peking Road, Tsim Sha Tsui, and a gift for each guest. The menu, by chefs Eugenio Riva and Tatsuya Iwahashi, includes Australian Coffin Bay oysters with Beluga caviar, premium black truffles, Ise lobster, Boston lobster, foie gras, guinea fowl breast and Kobe beef. All this is washed down with wines including Bollinger Grand Annee 1999 champagne and a Chateau d'Yquem 1996 from Bordeaux. Angela Lee, Aqua's director of sales and marketing, said it had been designed to be extravagant and was aimed at a "very small number of affluent people who want to really splash out and enjoy a truly memorable Christmas experience". Bob van den Oord, vice-president of sales and marketing at the Langham hotels, said the HK$136,000- a-head Christmas feast prepared by chef Andrew Turner was aimed at people for whom money was no object. The menu created by Turner, chef of The Landau in London, features crispy tora fungus with liquid Beluga Almas bon bons and saffron ponzu, slow-cooked Kobe beef fillet studded with white truffle, foie gras, pickled matsutake and Baron du Lustrac 1800 essence. Without wine, the bill totals HK$30,000 a head but the chef's wine recommendations - including a HK$300,000 bottle of Le Montrachet 1978 DRC - add HK$500,000 to the bill, bringing it to HK$680,000. Elsewhere the Grand Hyatt is offering a Christmas Eve dinner with carols at Grissini for HK$1,600 per adult or Christmas dinner at HK$980 per adult and HK$580 per child. The InterContinental's festive feasts range from a Christmas Eve buffet at HK$888 to HK$2,788 for an eight-course dinner on New Year's Eve. Richard Li Tzar-kai and China Netcom Group Corp have offered to buy out PCCW (SEHK: 0008)'s minority shareholders for up to HK$14.9 billion, an offer analysts consider too low to get enough support. Mr Li's Singapore-listed flagship, Pacific Century Regional Developments (PCRD), and Netcom would buy 3.55 billion shares they did not own at HK$4.20 each, and planned to take the company private, PCCW said in a statement last night. After the deal was completed, PCCW would pay a dividend of between HK$16.9 billion and HK$17.5 billion to the three shareholders - PCRD, Netcom and Mr Li - it said, adding that it might use HK$12.66 billion of bank borrowings to fund the payment. A source said the dividend payment would be mainly used to repay the loan taken out by PCRD and Netcom to pay minority shareholders. "The offer price seems below market expectation," said Patrick Yiu Ho-yin, an associate director at CASH Asset Management. "PCCW investors bought the shares at a much higher price and they won't accept such a lowball offer." The offer price represents a 52.73 per cent premium over the close of HK$2.75 before trading was suspended on October 14, although it is well below its HK$5.10 level in the beginning of the year before the financial crisis deepened. The offer price is also lower than the HK$5 a share that sources said private equity firms had valued the company's telecommunications and media assets in their bids earlier this year. PCCW rejected the offers last month, saying the bids were unattractive. "I think one thing they have in their favour is that due to the environment, hedge funds will be less likely to buy up a blocking stake and push for a bump," a source said. "The only way he could really justify an offer below HK$5 is with evidence that the company's value has seriously deteriorated over the past two months - an argument which I think he'll struggle to make." PCRD, which owns 22.54 per cent of PCCW, will pay HK$11.07 billion while Netcom, which holds 19.84 per cent, will contribute HK$3.84 billion in the buyout offer. PCCW said it would be privatised if the deal received support from more than 75 per cent of minority shareholders and less than 10 per cent of veto votes. Mr Li, together with PCRD, will hold 61.47 per cent and Netcom 33.33 per cent after the deal is completed. "We hope the shareholders note that this is a serious and rational offer in this difficult market," a spokesman for PCRD said last night. "PCRD and China Netcom work together to have an offer at HK$4.20, which has significant premium to the last trading day in this market. We believe shareholders should take this opportunity to accept the offer." PCCW shares reached the peak in February 15, 2000, at HK$131.75 when the then internet company was about to take over Cable & Wireless HKT, Hong Kong's biggest telephone company. If shareholders approve the privatisation, it will end the company's 40-year history as a listed firm. Hong Kong Telephone, HKT's predecessor, was a founding constituent of the Hang Seng Index when it was launched in 1964. PCCW was removed from the index in June. PCCW failed to privatise Sunday Communications, a mobile unit, in 2005, and property arm Pacific Century Premium Developments (SEHK: 0432) this year.
The government's HK$100 million handout to NGOs to deliver food assistance will help at least 50,000 people, authorities say. The funds were one of the 10 measures unveiled by Chief Executive Donald Tsang Yam-kuen in July in response to rising inflation in the city. Hong Kong will lose nearly a third of its transit passengers between Taiwan and the mainland under the new cross-strait daily direct flights deal, the head of the travel agents' association predicts. "The impact of this new deal is greater than the previous agreement, which allows direct flights only on Fridays, Saturdays and Sundays," Hong Kong Association of Travel Agents chairman Michael Wu Siu-ieng said. Assuming that each direct flight would carry about 200 passengers, of whom 30 per cent would be mainland travellers and the rest Taiwanese, Hong Kong was expected to lose 10,080 transit passengers a week after the number of direct flights increased from 36 to 108 a week. "It will affect Hong Kong's tourism, retail and hotel industries," Mr Wu said. "It adds further pressure to our business, and it's not a good time now as we are already battling the financial turmoil." The Hong Kong Tourism Board said the number of visitors from Taiwan would be affected and it was assessing the impact of the latest arrangements on Hong Kong. "In the face of increased direct flights across the strait, the board has been working with the travel industry to promote Hong Kong to Taiwanese vacationers, to try to mitigate possible losses in arrivals," board chairman James Tien Pei-chun said. Mr Tien said the board would devise multi-destination itineraries involving Hong Kong, Macau and Guangdong cities for Taiwanese visitors, and combination itineraries including Hong Kong and Taiwan for mainlanders. Li Kui-wai, an associate professor at City University's economics and finance department, said although the number of business travellers from Taiwan might drop, Hong Kong was still attractive to Taiwanese travellers because it was inexpensive. A Hong Kong government spokesman said the impact on Hong Kong would be short term and the regional economy would benefit from closer relations between the mainland, Taiwan, Hong Kong and Macau. The government said Hong Kong would benefit as a financial centre as cross-strait ties improved.
The Hong Kong Monetary Authority was forced to step into money markets for the second time in a week to defend the Hong Kong dollar peg system, selling HK$853 million of the local currency against the greenback on Monday night.
Taiwan and the China Tuesday signed agreements in Taipei to prepare for full direct links, in a historic deal marking a watershed in cross-strait relations that have been warming since May. Chen Yunlin, chairman of the Association for Relations Across the Taiwan Strait, which represents the mainland in talks with the island, and his Taiwanese counterpart Chiang Pin-kung of the Straits Exchange Foundation, signed four agreements in Taipei following two hours of talks in the Taiwanese capital. The agreements will allow the two sides to operate daily direct flights, direct cargo flights, direct shipping and direct postal exchanges in addition to forging cross-strait food safety co-operation. Before May, when mainland-friendly Taiwanese President Ma Ying-jeou took office and adopted an engagement policy, it had been impossible to hold such exchanges due to strong differences between the two sides, which have remained at loggerheads since they split at the end of the civil war in 1949. "I believe history will remember this particular moment," said Mr Chen after the signing. "Despite all odds, we have made great efforts in bringing peaceful development for the two sides of the Taiwan Strait." The deal is noteworthy for Taipei's decision to cast aside old security and sovereignty concerns by allowing planes from the two sides to fly into each other's air space directly without having to enter Hong Kong air space as currently required. "It will help save fuel consumption by 40 to 45 per cent, thus greatly helping companies to reduce costs and time," said Mr Chiang. Estimates by local operators put the amount saved at NT$3 billion (HK$708 million) a year. A flight from Taipei to Shanghai would take just 2 hours and 22 minutes, a reduction of one hour, he said. Other major breakthroughs include expanding the current weekly charter flights to daily charter flights, allowing the number of such flights to increase to 108 from 36 and servicing 21 cities on the mainland, up from the current five. Taiwan will continue to use its existing eight flight points. The mainland also agreed to open cargo charter services, with each side designating two or three airlines to operate them. The two sides will operate a total of 68 round-trip flights a month, with Taiwan opening its Taoyuan and Kaohsiung international airports, and the mainland opening Shanghai and Guangzhou airports for the operation. For the first time in nearly 60 years, Taiwan will also allow freighters from the two sides to ply between its 11 ports and 63 mainland ports. So-called flag-of-convenience vessels owned by shipping companies of the two sides but registered in Hong Kong or in other countries will also be allowed. The two sides agreed to extend postal exchanges from printed mail to small packages, parcels, express mail and postal remittances, meaning that such items will no longer have to be sent via Hong Kong. Analysts said the deals not only signalled closer ties between the two sides, but also paved the way for cross-strait peace in the future. "Tension between the two sides is tipped to ease after they signed the agreements, which also represent the institutionalization of cross-strait talks," said Lin Cheng-yi, research fellow at Academia Sinica. The mainland and Taiwan signed their first set of agreements during their historic round of talks staged in Beijing in June, a deal made possible after Mr Ma took office. Mr Chen said yesterday there would be a third round of talks in Beijing in the first half of next year. He has already invited Mr Chiang to the city for these discussions.
The Ministry of Agriculture said China has become the largest waterfowl producer in the world. It breeds and produces three quarters of the world's duck and geese annually.
Nov 5 2008
Chief Executive Donald Tsang Yam- kuen has painted a gloomy picture of the future - one of an increased risk of recession and a sharp rise in unemployment. Speaking after the first meeting of the Task Force on Economic Challenges, he also dismissed talk that the body was a talking shop. "Being a small, open economy, the risk of Hong Kong going into a recession in 2009 has increased. Unemployment is expected to rise as a result of an economic downturn in 2009," Tsang said yesterday. He said the task force would focus on financial services, trade and logistics, tourism and consumption-related services - the four sectors expected to be hardest hit next year. He said the city must not abandon its role as a financial center because there have been some shocks to the system. "It's the pillar of our economy. If it works well all the others can be improved," he said. He said the SAR government is taking a two-pronged approach to tackling the crisis. Daily situations are being tackled by the current mechanism led by the financial secretary, together with the Monetary Authority, the Securities and Futures Commission and other financial institutions. "The task force will look at the wider implications of this global development to see whether there are further pitfalls for financial centers such as Hong Kong, and particularly, opportunities for Hong Kong," Tsang said. Standard Chartered Group executive director Mervyn Davies, one of the 10 members of the task force, believed their ideas will be turned into action. Former Airport Authority chairman Victor Fung Kwok-king said Hong Kong remained strong and Morgan Stanley Asia chairman Stephen Roach said the global economy was in for a rough six months. HSBC general manager Margaret Leung Ko May-yee said the most important thing was to help the businesses ensure their products met demands. Loan Guarantee Scheme (LGS), enhancement measures to the small and medium enterprises (SME), will be implemented on Thursday, said the government of Hong Kong Special Administrative Region (HKSAR) on Monday. Ten participating lending institutions (PLIs) on Monday completed the legal procedures with the government and are ready to take on SGS applications for the enhancement measures. The Trade and Industry Department of Hong Kong will start to accept applications from the PLIs on Nov. 6. The enhancement measures aim to provide greater support to SMEs in the middle of the global financial turmoil. For SGS, the sub-ceilings for the Business Installations and Equipment Loans (BIE) and Working Capital Loans (WCL) will be removed, while the overall maximum amount of guarantee for each SME is maintained at 6 million HK dollars (775,000 U.S. dollars). In addition, the maximum guarantee period for WCL will be extended from two years to five years. Each SME will also be allowed to recycle the guarantee once after it has fully paid up the loan backed up by the guarantee, which means each SME will be able to obtain a maximum amount of guarantee of 12 million HK dollars in its lifetime. Moreover, the indicative ceiling of guarantee exposure for each PLI will be increased from 1.25 billion HK dollars to 1.5 billion HK dollars in order to provide more quota for the PLIs in granting loans. (7.74 HK dollars = one U.S. dollar)
Semiconductor Manufacturing
International Corp, the mainland's largest contract chipmaker, is cutting its
capital expenditure by about 80 per cent as it expects orders to drop this
quarter. Nov 4 2008
Citic Pacific (SEHK: 0267), the troubled Beijing-backed conglomerate, said yesterday it was in the process of negotiating with its parent Citic Group over a US$1.5 billion standby loan, which may involve an equity sale. "The details of the standby loan facility [and the possible equity issue, if agreed] will be published as and when appropriate," Citic Pacific said in a stock exchange statement. The announcement came amid speculation that the company was close to receiving funding from Citic Group after disclosing that it may lose up to HK$15.5 billion from unauthorised foreign currency bets. Sina.com, one of the mainland's biggest news websites, reported that Citic Group might inject infrastructure assets into Citic Pacific in return for a 10 per cent stake. Citic Pacific's top management might be changed as well, Sina.com said. Citic Pacific, which owns major stakes in Cathay Pacific (SEHK: 0293), Hong Kong tunnels and Macau Telecom, disclosed on October 20 that it might lose as much as HK$15.5 billion on unauthorised currency bets on the Australian dollar. Citic Pacific is also in talks to sell all or part of its 56.67 per cent stake in Dah Chong Hong Holdings. Team agrees on minibond buy-back formula - A taskforce set up to asses the value of Lehman Brothers derivatives has decided on a formula for calculating the buy-back cost of minibonds. Ann Kung, chairwoman of the taskforce, formed under the Hong Kong Association of Banks (HKAB), said member banks and the government had agreed on the formula, proposed by accounting firm Ernst & Young. The government welcomed the decision. Roger Tam Kwok-wah, press officer to the Secretary for Financial Services and the Treasury, said: "This reflects they are making good progress. "We understand that HKAB will continue to work vigorously on the details so they can go ahead with the buy-back in December." The decision on the formula meant that holders of all failed derivative products, and not just some of them as previously thought, would know how much banks would pay to buy them back by the beginning of next month, sources said. The formula would take into account the risk factor, they said, referring to any possible further devaluation that could occur after the valuation was made. Some 43,700 Hongkongers invested HK$15.7 billion in minibonds and other high-risk derivatives linked to Lehman Brothers. Most of their investments became worthless when the US investment bank collapsed on September 15 and thousands of investors claim they were misled by the banks that sold them. Minibonds are high-risk, credit-linked derivatives sold as proxy investments in well-known firms.
Nov 1 - 3 2008
The Consumer Council said on Friday
that it may sue banks which allegedly mis-sold Lehman Brothers’ mini-bonds as
risk-free investments. Wynn Resorts said on Thursday its third-quarter profit rose 14 per cent as growth in Macau helped offset slower business in Las Vegas and an increase in bad debt reserves. The company, created by casino mogul Steve Wynn, reported net income of US$51.1 million, or 49 cents per share, compared with US$44.7 million, or 41 cents a share, a year earlier. “China is pretty stable for us. Las Vegas ... is a little murky,” Mr Wynn, the company’s chairman and chief executive officer, said. He said the biggest area of softness is mid-week business in Las Vegas.
Hopes are growing in Macau that Beijing will relax controls over mainlanders visiting the former Portuguese enclave. The travel curbs and the global financial crisis have dealt a double blow to Macau's economy, knocking it off the track of stellar growth and onto the brink of recession. But optimists see a state leader's encouraging words, two upcoming elections and the smooth debut of a national security bill as signs Beijing will ease travel curbs. Vice-Premier Li Keqiang on Sunday said the central government would "fully support" Macau Chief Executive Edmund Ho Hau-wah and his administration when the two met at an expo in Chengdu. Mr Li said the central government would "actively help Macau cope with the impact of the global financial turmoil" and "firmly uphold Macau's prosperity and stability". Macau government economist and legislator Lao Pun-lap said he was hopeful that Beijing would take Macau out of its economic "winter" for the sake of stability ahead of two key elections.
A former Beijing district court president was sentenced to death with a two-year reprieve yesterday on bribery and embezzlement charges. The First Intermediate People's Court of Beijing also confiscated all the belongings of Guo Shenggui, ex-president of the Xicheng District People's Court. Guo illicitly amassed a total of 7.97 million yuan (HK$9.05 million) between October 1998 and May last year. He solicited and took bribes from more than 10 people, and in return he helped them win lawsuits or land lucrative construction projects. He also embezzled public funds, Xinhua reported. Guo, 60, was stripped of his title and put under investigation last June.
*News information are obtained via various sources deemed reliable, but not guaranteed
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Hong Kong:
Thousands of passengers were stranded in Hong Kong yesterday as a result of the
closure of Bangkok's Suvarnabhumi international airport.
A bitter legal battle at late tycoon Henry Fok Ying-tung's company took another
turn yesterday after Ho Ming-sze sued a fellow board member for allegedly
accusing him of destroying the firm's finances - and then hiding the mess by
sacking a senior manager. Mr Ho, the late tycoon's adviser, claimed that Manson
Fok, one of the tycoon's sons, had penned a letter which compared him to some of
the most reviled figures in Chinese history, including the notorious Gang of
Four and Dowager Empress Cixi. That letter was allegedly circulated among
shareholders and other board members at the Fok Ying Tung Ming Yuan Development
Company. The firm was set up to realise the late billionaire's dream of creating
a miniature Hong Kong in the Pearl River Delta, known as Little Nansha. Dr Fok's
alleged accusations included claims that Mr Ho stopped visiting Henry Fok before
his death in 2006 when he realised the billionaire was not mentally fit to sign
documents "for the purpose of transferring property to the plaintiff". The
letter claimed that Mr Ho had been plotting to take over the company's Nansha
development, the lawsuit said. Mr Ho denied the alleged accusations, including
claims that general manager Edward Lam Sik-lau was fired to stop him exposing a
financial catastrophe created by Mr Ho and others involved in the project. Mr
Lam is an uncle of the HK$3.5 billion company's chairman, Michael Fok Hin-keung,
one of the tycoon's sons. "[Mr Ho] has been seriously injured in his character,
credit and reputation, and has suffered considerable hurt and embarrassment,"
said the November 25 claim filed in the High Court. Efforts to reach Manson Fok,
chief of surgery at Macau's Kiang Wu Hospital, for comment on the lawsuit were
unsuccessful. The legal action came about one week after Mr Ho - who resigned as
company chairman on November 6 - filed a separate legal action in a bid to
reverse the decision of the firm's general meeting on the same day to remove
Otto Lin Chui-chau and Ng Sau-shan from the board. Mr Lin is chief executive of
Nansha Information Technology Park and Mr Ng is and aide to Mr Ho. Meanwhile,
the letter, written in Chinese, suggested that Mr Ho and several directors
behaved like the Gang of Four by consolidating their power and then unleashing
disastrous policies that sparked disarray at the company, the lawsuit claimed.
The Gang of Four gained prominence in the Cultural Revolution in the 1960s and
were blamed for a decade of chaos that enveloped China. Mr Ho claimed he was
also compared to the Dowager Empress Cixi, who ordered the execution of rival
politicians during the Qing dynasty (1644-1911). Mr Ho's lawsuit claimed Dr Fok
had an "ulterior motive for revenge" because he was close friends with the fired
manager and had a vested interest in the Nansha development. "[Dr Fok] published
the words maliciously knowing the same to be untrue and/or being reckless as to
their truth or falsity," the claim said, adding that Dr Fok "calculated that the
pecuniary and/or other advantages to himself would outweigh any compensation
[for defamation] that may be awarded to the plaintiff". Unspecified damages are
sought. 
Nearly half of the 14,900 stalls managed by the Food and Environmental Hygiene
Department pay 60 per cent or less of the open-market rental, with one in Ngau
Tau Kok Market paying as little as HK$112 a month - only 1 per cent of the
market price. The Director of Audit's report on the management of public markets
found the department recorded a deficit of HK$160 million for its management of
104 public markets across the city, with 24 per cent of stalls vacant. The loss
was not only due to the high vacancy rate but also cheap rentals, with deficits
recorded in some vibrant markets with high patronage. "According to a recent
survey by the Rating and Valuation Department, about 15 per cent of stalls'
tenants were paying full open-market rental," the report said, adding that 48
per cent of the stalls were paying 60 per cent or less of the open-market
rental. It found the low rentals were caused by concessionary rentals offered to
former licensed itinerant hawkers, who on average paid only 6 per cent to 7 per
cent of the open-market rentals for small stalls and 50 per cent for large
stalls. In Ngau Tau Kok Market, a stall owner selling wet goods paid only HK$112
a month, while the market price was HK$11,900. In the same market, a stall owner
selling dry goods paid HK$128 a month but another owner selling similar goods
with the same sized stall paid HK$3,900 a month, the report said. It added that
the cheap rentals were also caused by the 30 per cent across-the board rental
reduction in 1998, during the Asian financial crisis, a subsequent rental freeze
and reduced rentals for stalls that had been vacant for a long time. Thirty-four
markets had a stall vacancy rate of more than 30 per cent, with 11 having 50 per
cent of their stalls vacant. Five years ago the Director of Audit demanded the
department review whether to close down or privatise some public markets. The
report also noted the department had failed to recover the annual HK$11 million
air-conditioning cost from 31 markets and demanded it work out an arrangement to
recover the cost.
Cisco Systems, the world's largest
supplier of networking equipment, has completed its most extensive collaboration
with a local academic institution as it helps launch a new laboratory today for
the Hong Kong Polytechnic University. Researchers at the advanced enterprise
infrastructure laboratory, part of the university's department of computing,
will use a range of networking technologies from Cisco to develop e-commerce,
unified communications and wireless applications that businesses in Hong Kong
could adopt. The project involved more than HK$7 million worth of equipment,
software and services sponsored by United States-based Cisco and partner
Macroview Telecom, a leading networking systems integrator in Hong Kong. Barbara
Chiu Cheuk-mun, the general manager of Cisco's operations in Hong Kong and
Macau, described the facility as "one of Cisco's most significant collaborative
efforts with the education sector in Asia". The laboratory, which has platforms
for fixed-line local area network (LAN), wireless LAN infrastructure, network
security and digital signage systems research, has already started participating
in several major initiatives. One of these projects is called the "Intelligent
Airport", which aims to develop advanced wired and wireless networks for future
airport terminal operations. The effort is being led by scientist Ian White,
head of the school of technology at the University of Cambridge in Britain.
Another project with DHL Global Forwarding aims to design innovative systems for
the logistics industry. "The university believes the emphasis on applied
research will enhance learning, equipping student researchers not only with
professional competency but also practical experience in developing solutions
for use in the real business world," said Henry Chan Chun-bun, an associate
professor in the university's department of computing. Macroview founder and
chief technology officer Tang Pak-hung says the laboratory and "the technical
depth in application programming it provides" will help attract more students to
take up information technology studies. "We hope it will help nurture the future
IT leaders of Hong Kong," said Mr Tang. 
China:
China has postponed a summit with the European Union next week over a visit to
Europe by the Dalai Lama, the EU said in a statement yesterday.
China dairy giants Mengniu and Yili
say they have recovered to 70 percent of the sales volumes they enjoyed before
the country's tainted-milk scandal broke earlier this year. Mengniu deputy
president Yao Haitao said they were confident sales would be back to normal by
the end of next month or early January. He also revealed they were planning to
build 27 "mega-dairy farms" with 10,000 cows in each in a bid to avoid a repeat
of the scandal. Yao spoke at an exclusive briefing for the Hong Kong and Macau
media in the Chinese dairy capital, Huhhot. He denied reports the scandal had
cost the company three billion yuan (HK$3.39 billion) but said the actual figure
had yet to be finalized. Yao said the company had sufficient funds although
senior management had taken salary cuts of 30 to 50 percent. He admitted Mengniu
applied for help from the central government's 4 trillion yuan financial crisis
bailout package. He said the melamine scandal happened because the chemical that
causes kidney stones was added to raw milk by those selling the milk to the
company.
China’s central bank announced on Wednesday a steep cut in its interest rates –
by four times the usual margin – in a signal that it would pull out all the
stops to boost weakening economic growth. The benchmark one-year lending and
deposit rates will both be reduced by 108 basis points, compared with the usual
27 basis points in mainland rate cuts, the People’s Bank of China said. “It
means the government is moving on more fronts to stimulate growth,” said Stephen
Green, a Shanghai-based economist with Standard Chartered Bank. It was Beijing’s
fourth interest rate cut since mid-September. Earlier this month, mainland
announced an unprecedented 4 trillion yuan (HK$4.5 trillion) spending package to
lift the economy, which grew at its slowest pace in five years last quarter. The
central bank move came a day after the World Bank said it expected mainland’s
economy to grow by 7.5 per cent next year, a 19-year low. After the rate cut
which comes into effect from Thursday, one-year lending rates in mainland will
be 5.58 per cent, while one-year deposit rates will drop as low as 2.52 per
cent. With inflation at 4 per cent in October, it means that borrowing money
from the bank is currently very cheap. At the same time, putting money in the
bank will be a guaranteed way to lose cash, providing the mainlanders with a
strong incentive to spend and thus boost domestic consumption. “They are
continuing what is the best policy prescription in these times, which is
increased fiscal spending and easier monetary policy. This is a good move,” said
Patrick Bennett, Asia foreign exchange and rates strategist with Societe
Generale in Hong Kong. “China is out to save itself here. The rest of Asia is
strong, but all policy makers in the region and on the planet need to take their
own steps. China is showing good leadership by what it has done.” Like other
countries, mainland has watched its economy slow dramatically since the
bankruptcy of Lehman Brothers in mid-September opened a new, dark chapter in the
financial crisis, shaking confidence and prompting banks to cut credit lines.
The PBOC said the easing, which follows interest rate cuts on October 29,
October 8 and September 15, was meant to ensure sufficient liquidity in the
banking system to ensure growth. To that end, it also carried out big cuts in
banks’ reserve requirements. The ratio for big banks will decrease by 1
percentage point, while that for smaller banks will be cut by 2 percentage
points, effective December 5. The five biggest banks will have to hold 16.0 per
cent of their deposits in reserve at the PBOC, down from 17.0 per cent. The
requirement for other lenders drops to 14.0 per cent from 16.0 per cent. “All my
colleagues were shocked by such a big easing. It signals the government may
believe the economic situation is really serious for it to call for such a
drastic move,” said Liu Dongliang, a currency analyst at China Merchants Bank (SEHK:
3968) in Shenzhen. “No doubt it will be negative for the yuan’s exchange rate in
the medium and long run, though the central bank may work to keep the currency
stable in coming days.”
Visitors look at a Cadillac
Escalade SUV at the Auto China 2008 auto show in Beijing earlier this year. With
the global economy slowing down, makers of luxury goods are hoping the mainland
shoppers will rescue them with their spending. 
Fred Nauleau in his cellar in Manas -
Fred Nauleau, late of the Loire Valley, blinks up at the relentless sun above
his adopted home of Manas, beside the snowcapped Tian Shan mountains. He's
standing amid giant new warehouses and processing facilities - the boxy,
workaday headquarters of a winemaking empire that he has helped build in less
than a decade from his redoubt in the western reaches of the mainland. It's an
ambitious project in a nation where most people still call the unfamiliar drink
"red liquor". "In 2000, most of these buildings weren't here," says Nauleau, a
phlegmatic and compact 42-year-old with bright blue eyes and a shock of unruly
brown curls. "In the beginning, it was quite difficult." The fertile plains of
Xinjiang province - closer culturally and geographically to Istanbul than
Beijing - have lured speculators since the days of the Silk Road. Nauleau is
part of a new generation of adventurers who are gambling that its land can
produce top wines. They're betting on geography: Xinjiang, more than three times
the size of France, sprawls across the 45th parallel, which slices through
Bordeaux, Piedmont and Oregon. Xinjiang's temperate climate produces vast fields
of sunflowers and cotton, as well as table grapes and melons renowned for their
sweetness. Xinjiang produces enough tomatoes not only to feed China but also to
send to Italy. Nauleau is the winemaker at Vini-Suntime International, which
bills itself as the largest wine producer in Asia. It has 10,117 hectares of
vineyards on the mainland, six wineries, and a total bottling capacity of 200
tonnes of wine per day. Some of that wine is sold in the US under the label
China Silk, which was launched in 2006. It is sold in 14 states and expected to
be available nationwide by the end of next year, according to Vini-Suntime's
president, Steve Clarke. Most of the company's product is consumed on the
mainland, which has begun to look beyond its traditional favourites - beer and a
ferocious grain alcohol known as baijiu - to drink more wine, including some of
the world's best. In a sign of growing interest among Chinese collectors, Hong
Kong earlier this year scrapped its tax on wine and later held a record-breaking
wine auction. In January, a mainland company bought a Bordelais chateau called
Latour-Laguens, the first acquisition of its kind by a Chinese firm. In May,
British wine merchant Berry Bros & Rudd released a report predicting that in 50
years China will be the world's leading supplier of wine, including cabernet
sauvignon and chardonnay to rival French offerings. Some question the scale of
that prediction, although China's 1.3 billion consumers, with a proud culinary
culture, make the country an important new player. China's 400 winemakers
already make the mainland the world's sixth-largest producer, ahead of Chile and
South Africa. Outside China, however, there is little knowledge of the country's
brands, which include Dragon's Hollow, Grace Vineyard, Great Wall, Chateau
Junding, Catai and China Silk. The greatest challenge for Chinese winemakers,
however, is not quantity. "The joke about Chinese wine was always, `Have you
tried Chinese wine - leaded or unleaded?'" says Jim Boyce, a Canadian who lives
in Beijing and runs Grapewallof china.com, a blog covering the country's growing
market and production. Many of China's wines are unsatisfying to western
palates. "Very, very thin, not quite clean, red Bordeaux," wrote critic Jancis
Robinson about wine she tasted on visits in 2002 and 2003. Since then, Chinese
wines have been slow to improve because high-end buyers look abroad, and
ordinary mainlanders have so little experience of wine that they're content to
buy the cruder offerings. "The incentive for improving the wine is quite light,"
Boyce says. "But I think improvement is coming. Chinese people pick up trends
very quickly and they get sophisticated about new things very quickly. You are
already seeing that in the number of wine bars opening up." China has a longer
connection with wine than is commonly believed to be the case. In 2004,
scientist Patrick McGovern of the University of Pennsylvania uncovered what he
called the world's earliest evidence of deliberate winemaking, from a Neolithic
village named Jiahu, in Henan province. That find, which dated from between
6,000BC and 7,000BC, replaced what McGovern had previously considered the oldest
evidence of winemaking, from about 5,400BC in what is now northwestern Iran.
Wine fell out of favour in 20th-century China, but Xinjiang continued to produce
a variety of table grapes and raisins. Modern winemaking began only in the late
1970s after Deng Xiaoping launched China down the path of reform. The new
industry attracted some surprising entrants. Vini-Suntime was founded in 1998
with the backing of a conglomerate that owns everything from coal fields to
hotels to petrol plants. From the beginning, it had a global outlook: it
imported technology from France, Italy, the US, Germany and Switzerland, and
exported bulk wine to the US, France, Cuba and other countries. Desks in the
sales department are piled with books with titles such as Speaking Russian and
Speaking Japanese. Lured by the prospect of travel, Nauleau arrived in 2000
after a career in vineyards and wine labs in France. He was no stranger to
developing countries, having previously helped get wineries off the ground in
Bulgaria. But he was taken aback by what he found on the mainland. "The workers
were very young. They had experience in the baijiu industry or fermentation, but
not in wine," he says. "I had to show them how to connect a pump. I installed my
desk in the cellar and had a big whiteboard and said, `OK, you have to connect
the A8 to B10 and so on'. "I stayed here because I was so surprised with the
quality of the grapes," he says. He learned Putonghua, met and married a woman
from the area and, except for three years back in France, he has remained ever
since in Manas, a low-rise town about an hour's drive from Urumqi, the
provincial capital. It's not quite Bordeaux. Xinjiang sits farther from the sea
than almost any place on the planet. That makes the climate drier and prone to
more dramatic swings than other winegrowing regions. Many of China's wine
producers are based in Shandong, on the eastern coast. But even there they are
beset by vine diseases in the damp and humid climate. Nauleau and other Xinjiang
winemakers have come to see their location as an ideal place to develop Chinese
wine. "We have less than 200mm of rain a year. That means we rely on irrigation,
and the water comes mostly from the Tian Shan mountains. So we can control the
amount of water," he says. "The grapes are sweeter because of the difference in
temperature between the day and night. And there are more than 1,600 hours of
sunlight per year. Because the climate is dry, there are very few pests, so no
need for pesticides."bWinery worker Ding Fanhua, 24, knew little of wine before
he landed his job, and now helps oversee a crop made up of varieties found in
Bordeaux: cabernet sauvignon, merlot, syrah and cabernet franc. "There was a lot
of snow last year, so the grape output this year will be down," Ding says,
crouching to examine some small plump fruit. "This year the weather is hot and
there is little rain, so the grape colour and sugar level will be good." A
glimpse of the future of Chinese wine can be seen in Nauleau's cellar, where he
has cabernet sauvignon and merlot ageing for at least one year in barrels made
of French and American oak. Some of that wine ends up in France, mostly in
Chinese restaurants. When he returns to France for visits, he is proud to offer
fellow winemakers his creations. "I buy them a bottle and they are quite
surprised," he says. "They don't know - nobody knows - about Chinese wine, that
it can be good." 
Energy: Nuclear and wind power to get
subsidy - A wind power plant in Inner Mongolia in this photo taken on September
30, 2008. The Chinese government will subsidize China's top nuclear and wind
power providers with $11.76 million by the end of 2008. The central government
has decided to allocate 800 million yuan ($11.76 million) by the end of this
year to subsidize China's top nuclear and wind power providers, China Radio
International reported. The improvement is part of the government's 100 billion
yuan additional fiscal package, which should be spent by the end of this
quarter, to prevent an excessive economic slowdown. "The subsidy is mainly
targeted at key technology for national nuclear power and wind turbine
producers", said Huang Li, a deputy-director in energy saving at the National
Energy Administration. Huang expected the move could promote localization of the
technology for nuclear and wind power generation.
Taxi drivers are ready to surrender their
hard-fought fuel price fare rise after the average price for LPG fell below HK$3
a litre yesterday for the first time in almost two years. 
The Hang Lung Group (SEHK: 0010) has no
plans to fire staff but may cut pay, starting with management, the property
group's chairman said yesterday. Ronnie Chan Chi-chung, speaking after the China
Economic and Business Forum 2008 at Hong Kong Polytechnic University, said Hang
Lung was still hiring trainees, but may cut salaries as property sales had been
lagging. "The first thing I can tell you is - this year the salaries of our four
executive directors are going to be colder than water. Of course, ours are going
to be cut first. It was like this last time. When performance was poor, we cut
[salaries]. When times are bad, cutting salaries - I think that's very
reasonable," he said. The group will decide later whether to give out bonuses.
With no debts and up to HK$6 billion in reserves, the company was in good stead,
Mr Chan said, and planned to start projects on the mainland next year. Last
week, Cathay Pacific (SEHK: 0293) slashed bonuses, usually a month's salary, by
half or to HK$8,000, whichever was greater, while raising salaries by an average
2 per cent for its 13,160 employees. Dragonair adjusted salaries according to
staff pay scales. Sauce maker Lee Kum Kee has cut 30 jobs, Li & Fung has fired
150 staff, ATV 47, and the Las Vegas Sands Resort 4,000.
Chinese People's Liberation Army troops stand in their formation during troop
rotation at a barrack in Hong Kong, south China, Nov. 25, 2008. The Chinese
People's Liberation Army garrison troops in HKSAR conducted on Tuesday its 11th
troop rotation since it assumed Hong Kong's defense responsibility on July 1,
1997. 
Greek President Karolos
Papoulias (1st L, front) holds a welcoming ceremony in honor of Chinese
President Hu Jintao (2nd L, front) in Athens, capital of Greece, Nov. 24, 2008.
Visiting Chinese President Hu Jintao and his Greek counterpart Karolos Papoulias
agreed on Monday to lift the bilateral comprehensive strategic partnership to a
new height. During his talks with Papoulias, Hu first thanked Greece for its
support for the Beijing Olympic Games and the Paralympics. The Greek side also
rendered support for Beijing in the torch lighting and relay, he added.
Sino-Greek relations now stand on a new historical starting point and are faced
with broader prospects, the Chinese president said. In recent years, China and
Greece have seen rapid growth in two-way trade and bilateral cooperation in sea
transportation has entered a new era, he added. In 2007, their two-way trade
stood at 3.4 billion U.S. dollars, and in the first seven months of this year it
reached 2.4 billion dollars.
The US government agreed to a US$306
billion rescue plan for Citigroup, agreeing to shoulder some losses from toxic
debt in the latest attempt to bolster a financial services industry in turmoil.
Citigroup’s package may also prove a template for other banks that are expected
to face growing losses as economies worldwide sink into recession.
The re-development of the Staunton
Street in Central would be largely scaled down – with more emphasis now on
preserving the area’s historic value, Urban Renewal Authority project chairman
Barry Cheung Chun-Yuen said on Monday. Speaking at a press conference, Mr Cheung
said that under a new proposal, the plot ratio would be reduced from about eight
– permissible under the approved scheme – to about 4.2. He said a planned
high-rise building on Wing Lee Street would be scrapped. But the post-war
tenement buildings would be preserved. Mr Cheung estimated the new plans would
result in a loss for the authority of over HK$170 million. But he said the
authority had agreed to government plans to preserve the historic value of the
area. It had also carefully noted the public’s views on the plan. 
The government is determined to press
ahead with expansion of the airport - including a third terminal and third
runway - in the next five years, despite a continuous decline in air traffic
since the start of the financial meltdown. Preliminary findings from a study of
a master plan for Chek Lap Kok to 2030 would be made public in July, a
government source said, adding that the target to double runway capacity from 55
to nearly 100 aircraft movements an hour had not changed. He also said that the
third terminal and runway were among projects to be finalised in the next five
to six years, under the plans. Passenger numbers and cargo volume at the airport
have been declining since August. Cargo fell 7.5 per cent year on year in
September and 9.2 per cent last month, while passenger numbers shrank 4.7 per
cent and 1.4 per cent. International cargo terminal operator Hong Kong Air Cargo
Terminals also announced this month that it handled only 222,166 tons of cargo
in October, a year-on-year drop of 9.8 per cent. The Airport Authority blamed
the global financial crisis for the reduction in visitors, imports, exports and
transshipments. But the source said the temporary decline would not stop the
government from expanding the airport to maintain its regional advantage. Apart
from the much-discussed third runway, key plans under study include building a
third terminal and further developing the middle field area of the airport. The
building of new cargo handling and airline catering facilities was also being
considered, the source said. The existing master plan, to 2020, proposes
increasing the number of aircraft gates by building an elongated "X" shaped
midfield concourse that would provide 49 so-called frontal-parking stands -
those connected by air bridge to the concourse - and 10 remote or unconnected
stands. "Critical mass is what counts in aviation," the source said. "We have to
keep the traffic level in order to secure the airport's regional hub status. "We
are talking about long-term planning, otherwise people will pull out their
business to other airports in Zhuhai or Shenzhen." Hung Wing-tat, transport
expert and associate professor of civil and structural engineering at
Polytechnic University, said the airport's development plan should not be
shelved because of the financial turmoil. "Hong Kong is expected to recover more
quickly, given its close relation with the mainland's strong economy," he said.
Law Cheung-kwok, associate director of the Aviation Policy and Research Centre
of the Chinese University of Hong Kong, said the scale and pace of future
airport developments, such as a new terminal and additional gates, would largely
be driven by demand. A spokeswoman for the Airport Authority said that while the
operating environment for the rest of the year would continue to be difficult,
plans and projects to equip the airport for growth would proceed.
The foundation stone at the site planned
for the HKUST Fok Ying Tung Graduate School at Nansha Information Technology
Park. Two years after the death of tycoon Henry Fok Ying-tung, his vision of
turning Nansha into a science hub has yet to come to full fruition. Work has yet
to start on the HKUST Fok Ying Tung Graduate School in Nansha, a mega-research
and development project jointly spearheaded by a company set up by Fok and the
University of Science and Technology, nearly two years after the foundation
stone was laid. The tycoon donated HK$800 million to HKUST in 2005, of which
HK$500 million would be reserved for developing the graduate school. The aim is
to develop the institute into a research and education base for the Pearl River
Delta region, and foster knowledge exchange between Hong Kong and the mainland.
HKUST had expected the campus, situated in the Nansha Information Technology
Park, to be completed by this year, but the foundation stone is all there is to
be seen. Construction of dormitories started recently but there are only three
piling machines at the site. No workers were there on Saturday. A source
familiar with the situation said the HK$3.5 billion Fok Ying Tung Ming Yuan
Development Company, set up by Fok to finance the development of Nansha, had
only allocated HK$45 million for construction of the school despite being given
approval two years ago to bankroll the project. Construction of the school,
dormitories and other support facilities would cost HK$280 million. Fok was
known for his pioneering efforts in developing Nansha as the future hub of the
Pearl River Delta. The source said many had "not exactly" shared Fok's view,
including Michael Fok Hin-keung, his son, who now chairs the development
company. "He is an accountant who focuses on the near-term return of investment
of the Nansha project," the source said. Another source close to the family said
Michael Fok, who succeeded Ho Ming-sze, Henry Fok's closest adviser, as company
president last year, had seldom visited Nansha before his father's death. "It
was natural that he did not know much about his father's vision and strategy for
developing Nansha." 
World leaders are being urged by the
International Chamber of Commerce to take Hong Kong as a role model in providing
export insurance, as a step to help traders worldwide obtain credit from banks.
Chamber chairman Victor Fung Kwok-king, who heads the Greater Pearl River Delta
Business Council and is a member of the Taskforce on Economic Challenges in Hong
Kong, is writing to leaders of 130 countries, appealing for them to expand
export insurance amid a global tightening of liquidity. He said the
international trade market was facing a lack of trade financing facilities. "I
know the world will be very much worried about shrinking demand, the retailers
[in particular]. But that, I would submit, is the second problem. We now have
orders that we cannot ship...That's a fire burning on your feet." Mr Fung was
concluding the two-day Regional CEO Forum for Asia-Pacific held by the ICC in
Hong Kong, which was attended by more than 150 corporate leaders from 10 nations
on Friday and Saturday. Two weeks ago, the Hong Kong government announced a
doubling of the statutory maximum liability of the Export Credit Insurance
Corporation to HK$30 billion so that it could underwrite more insurance for
exporters and protect them against non-payment risks. Mr Fung said banks had
been supportive of the measure and he was confident they would be willing to
lend money to businesses with guarantees from the corporation. The ICC has,
through the World Trade Organisation, put this local case forward for the Group
of 20 nations to study. With Mr Fung having written to six world leaders to
promote the Hong Kong model, the ICC will provide a sample letter, supported by
analyses, for its national committees to lobby the governments of 130 countries.
"We may not succeed with everybody, but let's say a big percentage, or half of
the countries around the world, start doing this. We have a chance now to
maintain trade flows," Mr Fung said of the global campaign. He said the
expansion of export credit insurance would be especially important for
developing economies and small and medium-sized businesses. The ICC had been
working with development banks to help increase the availability of trade
financing in emerging markets, he said. He also warned against a potential rise
in protectionism, as political pressure pushing forward protectionist policies
was likely to emerge amid the financial crisis. ICC secretary general Guy Sebban
said even some countries that took part in the G20 summit this month in
Washington had shown closed minds towards trade. "Some governments tend to
protect themselves...In some cases we see people trying to please public
opinion," he said.
Hu Jintao, Kevin Rudd and Najib Razak
don Peruvian ponchos for a group photo at APEC in Lima on Sunday. President Hu
Jintao has left Latin America with one free trade agreement in hand, another in
the works and a deeper Chinese footprint in a region long seen as the US
backyard. Mr Hu, who left the region Sunday, received a hero’s welcome at every
stop in his swing through Costa Rica, Cuba, and Peru in the latest clear sign of
the giant Asian economy’s growing clout in the developing world. Chinese trade,
cultural and military ties with Latin America remain small compared to US
influence, but Mr Hu’s trip underlined that they are growing fast and should
force US policymakers to sit up and take notice, analysts said. Mr Hu visited
Costa Rica to launch talks on a free trade pact and announced the conclusion of
a similar agreement with Peru, reaffirming Beijing’s friendship with communist
ally Cuba in between. On a state visit in Lima held before a weekend summit of
Asia-Pacific nations, Mr Hu on Thursday pledged a higher Chinese profile in the
region. “China is willing to work together with South American and Caribbean
countries toward an equal, mutually beneficial, comprehensive partnership,” he
said in an address to the Peruvian parliament. Mainland trade with the region
has grown about ten-fold over the past decade as China’s quest for new sources
of raw materials has expanded and Latin American purchases of mainland-made
goods have also climbed. A few years ago, Mr Hu set a target of US$100 billion
in trade with Latin America by 2010. It shattered that mark last year. With the
trade ties has come expanded diplomatic influence. Beijing last year enticed
Costa Rica to cut relations with Beijing’s rival Taiwan, reportedly purchasing
300 million dollars in Costa Rican government debt in return. Other conditions
work in Beijing’s favour as well, notably the diversion of US attention by the
US administration’s wars and Mideast preoccupation. Meanwhile, left-wing
governments more ideologically sympathetic to Beijing have come to power in
Bolivia, Ecuador and Nicaragua, not to mention longtime US bugbear Venezuela
under Hugo Chavez. “US attention on the region has never been weaker. Now is a
good time for China to challenge US influence,” said Farid Kahatt, an expert on
Latin American diplomacy at the Catholic University of Peru. 
The central government is poised to
announce a raft of policies to boost consumption and head off a looming economic
slowdown. The National Development and Reform Commission was working on a
stimulus package that would raise the taxable income threshold and increase
salaries for state workers, the mainland-based Economic Observer quoted
unidentified sources as saying. It was not clear how much the package would
cost, but it also includes reductions in the fees for several public services,
including telecommunications and parking fees. The report quoted an official
from the NDRC, the mainland's top economic planning agency, as saying the
package comprised entirely new measures from ones Beijing has already announced.
It had been revised several times by the State Council, and details could be
made public at a top Communist Party economic work meeting as early as the
beginning of next month. The package comes two weeks after Beijing announced 4
trillion yuan (HK$4.5 trillion) in new spending over the next two years to
counter the sharp economic slowdown amid the global financial crisis. A large
portion of the spending will go to big infrastructure projects in railways,
agriculture and housing development. Official statistics showed that industrial
output growth slowed to 8.2 per cent last month, the lowest level in seven
years. Fiscal revenue dropped 0.3 per cent from October last year, the first
decline in 12 years. Although the central government has said it is committed to
improving social welfare through offering better health care and giving people
higher incomes, it has stopped short of offering details. Despite its economic
development over the past three decades, China is lagging behind other
developing countries such as India and Thailand in social welfare spending. The
central government has been allocating about 11 per cent of its total fiscal
spending to social welfare programmes in recent years, far below the level of 30
per cent to 50 per cent for many developed countries. Due to a lack of social
security and rising living costs, mainlanders have been notorious savers because
they can be suddenly faced with large bills for expensive medical services and
education. The new stimulus initiative will also raise the subsistence allowance
for the poor and the housing allowance to give more people access to the housing
market. However, Tang Xiujuan , an associate professor from Guangzhou
University, said the draft package would have a limited effect on boosting
consumption by lowincome families and those working in the private sector.
Professor Tang noted that groups including civil servants and those working at
some state-owned companies would stand to benefit from the package. "But for
many others, it will come down to the nature of the places they work at or how
much money their company makes to dictate if they can have a pay rise or more
housing allowance," she added. Professor Tang said the government should work
out a more specific set of policies that targeted each group of people to boost
overall consumption. Other analysts said the package would go some way to
cutting the country's dependence on the world market for growth, but worried it
would further strain the country's fiscal outlook, which has been taking a
beating from falling exports. 
China's provincial governments will add
an additional 10 trillion yuan (HK$11.3 trillion) to China's 4 trillion yuan
stimulus package, state television said yesterday. The central government
earlier this month announced a 4 trillion yuan stimulus package, including rail
and infrastructure projects as well as increased social spending, as the country
strives to offset drop in demand for exports by bolstering domestic demand. Many
economists expect that part of the nation's 4 trillion yuan package will come
from provincial expenditure. "Provincial governments have announced accompanying
stimulus programs amounting to 10 trillion yuan. Among the largest investment
plans are that of Yunnan province, at 3 trillion yuan, and Guangdong at 2.3
trillion yuan," Central China Television said. Meanwhile, Premier Wen Jiabao,
during a visit to the wealthy and export- oriented Yangtze Delta, urged domestic
companies to keep up their confidence in coping with the economic slowdown. The
central bank governor Zhou Xiaochuan said China will need to pay more attention
to the growth model of the economy, after the global financial crisis. He
re-emphasized that small and medium enterprises, the service sector, rural
projects and energy-efficient projects were priorities for financial support.
China's annual GDP growth rate slowed to 9.0 percent in the third quarter from
the second quarter's 10.1 percent. "There are big risks to growth, the economy
will slow, but an aggressive policy response will limit the downturn ... We
think China's fiscal response will prove effective. The state still plays a
large role in the economy. Government spending amounts to some 25 percent of
GDP," Merrill Lynch economists Lu Ting and Timothy Bond wrote. Meanwhile, top
economic planning agency the National Development and Reform Commission is
drafting a series of policies to boost domestic consumption, according to an
Economic Observer report. The scheme, to be discussed at the December economic
planning meeting, would include hiking the income tax threshold, increasing
minimum wages, and housing compensation.
CNOOC Limited (0883), China's largest offshore oil producer, in the next 11
years will explore deep-sea oil fields in the South China Sea with potential
crude oil resources of 3.1 billion tons. CNOOC and its international partners -
including Devon Energy, Anadarko Energy and Husky Energy - together will earmark
around 200 billion yuan (HK$226.9 billion) for the 2009 to 2020 project that
will explore crude oil reserves at 1,500 to 3,000 meters deep. "Deep-sea oil
exploration will be the next hot spot for oil resources exploration," said Li
Fanrong, president of CNOOC Shenzhen. As for making prudent budget and
investment decisions, Li said "if two out of 10 wells produce a discovery it
will be enough to cover cost." Deepwater reserves in the South China Sea are
estimated to be 20 times more than conventional water reserves, according to
chief development engineer Luo Donghong. It costs about US$50 million (HK$390
million) to US$80 million to drill one deepwater well, Luo said. Normally a
deep-sea project takes one to two years to explore, two to three years to
evaluate, and three to five years to develop. The Beijing-based oil producer
said it has a strong cash position given the record high crude oil prices during
the first seven months this year. At the end of the first half, CNOOC had 44
billion yuan in cash and bank deposits. CNOOC will begin an appraisal of Liwan
field 3-1-2 well this month, with partner Husky Energy providing drilling
services to assess the scale of the reserve. Liwan field 3-1-1 well, 1,500
meters deep, was the first deep-sea well explored in the South China Sea with
100 billion cubic meters of natural gas. 
Banks are unlikely to cut their prime
lending rates in the near future even though the Hong Kong Monetary Authority
yesterday pumped a daily record of HK$18.2 billion into the banking system.
However, a banker did not rule out the possibility that lenders would be "forced
to cut prime lending rates because of political pressure". Banks lowered prime
lending rates by a quarter percentage point earlier this month, a reduction
attributed to the drop in interbank rates. The de facto central bank yesterday
made seven separate injections into the interbank market, bringing the aggregate
balance to a record HK$84.272 billion. HKMA chief executive Joseph Yam Chi-kwong
said there was no limit to the expansion of the aggregate balance and expressed
hopes the ample liquidity would help keep the interbank interest rate low. "This
may help translate into lower commercial rates and ease the cost of borrowing,"
Mr Yam said. "In the face of an economic slowdown, low interest rates are
unlikely to fuel excessive credit creation and inflationary concerns." Benjamin
Hung Pi-cheng, the chief executive of Standard Chartered Bank (Hong Kong), said
people who borrowed based on short-term interbank rates would benefit from the
low interest rate environment. "But there's not much room for banks to lower the
prime rate in the near future as the interbank rates of three months or above
still stand at about 2 per cent or more." Despite the infusion, the Hong Kong
dollar traded at HK$7.75 to the US dollar in the late session, while one-month
and three-month interbank rates stood at 0.95 per cent and 1.95 per cent
respectively, compared with 1.05 per cent and 2.05 per cent previously. Mr Yam
said the HKMA's massive injections were because of the strong demand for Hong
Kong dollars amid the deleveraging of previously long US dollar positions and
repatriation of funds by corporations or investors to meet their commercial
needs or on liquidation of overseas investments. He said there did not appear to
be any "market anomalies". Under the linked exchange rate system, the HKMA is
obliged to buy or sell Hong Kong dollars to keep the unit within the HK$7.75 to
HK$7.85 range. "It is likely that the HKMA will continue to make injections as
the local unit and the interbank rates have not changed too much after the
injections," said Dennis Wong Wai-hung, a senior manager at Hang Seng Bank (SEHK:
0011). The monetary authority has injected about HK$80 billion into the banking
system since the middle of September. 
Home Affairs chief Tsang Tak-sing
(left) chats to Kwong Siu-hing and Thomas Kwok yesterday. Sun Hung Kai
Properties (SEHK: 0016), Hong Kong's second-largest developer, says it has no
plans for layoffs and staff will receive their year-end double pay and bonus
next month. Asked if the firm would cut staff bonuses, vice-chairman and
managing director Thomas Kwok Ping-kwong said: "I hope not, as I will get it as
well." The group has a workforce of about 30,000. On Wednesday, Cathay Pacific (SEHK:
0293) and its affiliate Dragonair cut staff bonuses by half but announced an
average pay rise of 2.3 per cent. Henderson Land Development (SEHK: 0012)
chairman Lee Shau-kee said on Tuesday it was too early to say if there would be
layoffs at his company. Mr Kwok said Hong Kong, a city full of talented
professionals, would remain a financial centre in the long run. For the past 10
years, the city had experienced two "ups and downs", he said, referring to the
Asian financial crisis in 1997 and the outbreak of severe acute respiratory
syndrome in 2003. "One should not be too pessimistic when hit by a [financial]
tsunami, and not be too optimistic during a bull market," he said. However, Mr
Kwok said it was hard to assess the impact on Hong Kong as no one knew "how deep
and how long" the crisis would be. Despite the unstable economic outlook, Sun
Hung Kai would not suspend its new investment plans. He said all projects except
three small industrial sites that were under construction would proceed at full
speed. "We have to remain calm," he said, adding that no hasty decisions should
be made. He said the group would release its residential project Peak One, in
Sha Tin, next week. Faced with falling prices in the secondary market, he said
the group would take into account current market transactions before finalising
prices for its new projects. Last month two of Asia's best-known companies,
Hutchison Whampoa (SEHK: 0013) and CapitaLand - Singapore's largest developer -
decided to stop investing in new projects in the face of the global economic
downturn. Asked whether Kwong Siu-hing, the 80-year-old matriarch of the Kwok
family, would continue to chair Sun Hung Kai Properties, Mr Kwok replied: "She
hasn't said she will step down." 
When a political leader is
unpopular at home, there is no escape overseas, as Chief Executive Donald Tsang
Yam-kuen found. On his visit to London, Mr Tsang was asked by a Hong Kong
student at the London School of Economics and Political Science (LSE) whether he
would follow in the footsteps of his predecessor, Tung Chee-hwa, who stepped
down in 2005 after receiving low popularity ratings. "Tung Chee-hwa's main
shortcoming was in how he handled public relations," a final-year law student
said in a question-and-answer session after Mr Tsang made a speech. "It seems to
me that I can't help noticing the similarity between Mr Tung and you, and that I
find both of you have a certain degree of indifference towards public opinion. I
was just curious on whether you are worried that you are following in the steps
of Mr Tung?" Trying to lighten the mood, LSE director Howard Davies, who hosted
the function, joked that Mr Tsang would probably not welcome the student's
return to Hong Kong after his studies - a suggestion dismissed by Mr Tsang. Mr
Tsang, who has told lawmakers in the past that he treated popularity ratings as
"passing clouds", denied ignoring public opinion and said it was impossible for
any policies to be "100 per cent perfect". "Very often, in an open society,
those who are against and unhappy with the policy speak loudly; this exactly
happened in Hong Kong," he said. Saying he and his colleagues tried every day to
gauge public views, Mr Tsang said that rather than believing popularity ratings
were unimportant, he always tried to find solutions to public concerns after
considering people's views towards the government. The audience was given a
glimpse of a possible remedy to his plunging popularity when Mr Tsang talked
about being "full of admiration for the American system", when he answered a
student who questioned the slow progress towards the introduction of universal
suffrage. In his speech to more than 300 LSE students, Mr Tsang said that
although the financial crisis would last for some time, measures introduced by
the government, including infrastructure projects, would aid economic recovery.
You may not feel it in the pocket but
prices - especially for food - fell as inflation slowed for a third month. With
commodity prices cooling and the government waiving some public- housing rents
and providing electricity subsidies, consumer prices rose 1.8 percent in October
from a year ago, the government said yesterday. A market median estimate by Citi
was for 1.9 percent after inflation of 3 percent in September. People did not
notice changes for the better. Law Hing-ying, a mother of three, said: "Meat and
rice are still very expensive." And university student Chan Ngai-sze noted:
"Products like cosmetics are not cheaper than before," while "food is not cheap
either." Hong Kong couldsuffer deflation in the middle of next year because the
SAR fell into recession in the third quarter and the global economy continues to
weaken, said Core-Pacific Yamaichi economist Benny Lui. "The headline inflation
is likely to be negative next year," Lui said. "If the global economy continues
to be weak next year, the chance of deflation in Hong Kong will be high."
A plan to introduce compulsory drug tests
for young people is not designed to boost prosecution figures, insists Secretary
for Security Ambrose Lee Siu- kwong. Lee - who says the `stop-and-test' proposal
will help tackle the growing problem of youth drug abuse - made the comments as
he announced that seizures of ketamine have increased by 30 percent over the
past year. He was speaking after a Fight Crime Committee meeting to review the
overall crime situation. In the first 10 months of the year, 106 kilograms of
ketamine were seized, up 30.9 percent from last year's 81kg. Heroin seizures
also increased by 40 percent to 49kg and the number of serious narcotics offence
increasing 8.9 percent to 2,491 cases. But the seizure of ecstasy-type drugs
dropped 72 percent to 16,086 tablets. Lee sought to dispel fears that the
proposed compulsory drug testing will lead to prosecutions. He said the tests
will help identify young drug abusers suitable for treatment and rehabilitation.
The fight-crime group will now set up a select committee to draw up a
consultation paper, in the hope that the proposals may be implemented next year.
The government is cracking the
whip to get Hong Kong's 18 district councils to quickly spend the HK$300 million
given them in January. The councils should cut red tape to speed up small and
medium works in the districts, Secretary for Home Affairs Tsang Tak-sing said
yesterday, adding this will create more jobs. In the light of the financial
turmoil, he called for the adjustment and simplification of guidelines and
procedures on the use of public funding for improvement works. He said
collaboration between the councils and project consultants, and
inter-departmental coordination, could be improved to help speed up the
projects. Only half of the improvement works have started, which Tsang said was
too slow. Minor works include upgrading sports facilities, cultural facilities
and beautification of the districts. Tsang is also pressing ahead with
renovating more than 1,000 30 year-old buildings.
Visitors place flowers at a memorial
in Qingchuan, Sichuan province, on the six-month anniversary of the earthquake.
An official at the heart of the Sichuan earthquake zone has committed suicide,
state media said on Friday, a setback for reconstruction work and a sign of the
ongoing emotional toll from the disaster as winter sets in. He Zonghua jumped
from a 15th-floor hotel room in the centre of a city that became a teeming
refugee camp after the May 12 disaster which killed more than 80,000 people and
left 1.8 million homeless, Xinhua news agency said. He was the second quake
official to kill himself in two months. A third died from a burst artery caused
by overwork, the China Daily said, as depression, stress and the challenges of
rebuilding created excessive psychological pressure. Psychologists have warned
that the period three to six months after a major disaster can be particularly
difficult and the government has arranged counselling and training for hundreds
of local leaders to help them cope. The latest victim was head of human
resources in the general office of the Mianyang government. He had suffered from
severe depression and complained of insomnia and bad health before he died.
Colleagues also said he appeared anxious, though he did not lose any relatives
in the quake. Mainland authorities won praise for a rapid response from both the
government and ordinary citizens, spurred to an unusual outpouring of
independent support. But many in the quake zone are overworked as they grapple
with the mundane but painful task of rebuilding in an area hit by regular
after-shocks. In October, a county agriculture and disaster relief director, who
lost his 12-year-old son and other relatives, hanged himself and left behind a
note saying “I feel too much pressure from life and work every day. I cannot
hold on any further”. There is still a staggering amount of work to be done,
said Wei Hong, vice governor of Sichuan province. The region needs 3 trillion
yuan (US$439 billion) by 2010, far more than the already generous funds which
have been promised, he told a news conference about rebuilding efforts. The most
immediate concern is the especially cold winter forecast for the area. Some
refugees are still living in tents with little insulation and others struggle to
get enough food and warm clothing, said Wei Hong, vice governor of Sichuan
province. “Some senior citizens and children are in need of basic equipment to
keep them warm. People in some quake-stricken areas even face the tough problem
of provisions for this winter and the coming spring,” he said. 
President Hu Jintao and Peruvian
President Alan Garcia meet at the government palace in Lima. President Hu Jintao
finalised a free-trade agreement with Peru during the final stop on a
three-nation swing through Latin America that has underscored China's growing
clout in the region. Mr Hu and Peruvian counterpart Alan Garcia, host of this
weekend's summit of leaders from the 21 countries of the Asia-Pacific Economic
Co-operation forum, made the joint announcement after negotiations ended. Quick
implementation of the pact would benefit both sides, Mr Hu said. He also urged
that a more co-operative effort be devoted to mining and that Peru make it
easier for Chinese enterprises to invest in that industry. China and Peru also
signed 11 other agreements covering economic and technological issues, health,
customs, poverty relief, finance, mining, agriculture and other areas. Mr Hu and
Mr Garcia attended the ceremony and also witnessed the opening of three
Confucius Institutes at Peruvian universities. Mr Hu's trip comes as China,
which has dramatically stepped up its economic and political diplomacy
worldwide, sets its sights on the emerging economies of Latin America. Trade
between China and the region remains relatively small but is growing rapidly.
State media on the mainland reported this month that exports to Latin America
had grown 52 per cent in the first nine months of this year, to US$111.5
billion. China has been seeking new sources of energy, minerals and other raw
materials, with Latin America emerging as a potential key new supplier. In an
interview this week with Peru's El Comercio newspaper, Mr Hu hailed the growing
trade. Peru's opposition La Republica newspaper devoted nearly the entire front
page of its Wednesday edition to a photograph of Mr Hu under the Chinese
characters for "welcome". Mr Hu also welcomed the fact that "a number of Latin
American and Caribbean nations have offered their understanding and support to
China regarding Taiwan and Tibet, giving warm support". The welcome mat for Mr
Hu in the region is fuelled in part by hope that increasing engagement with
China can help ease the effects of the global financial crisis. On this trip, he
has demonstrated the ability of China, with its US$1.9 trillion in foreign
exchange reserves, to play that role. In Cuba, Mr Hu brought millions of dollars
in aid and promises of closer trade ties. In Costa Rica, besides the free-trade
talks, Mr Hu and President Oscar Arias signed a number of business deals
including a joint venture in which China will help modernise Costa Rica's
state-owned oil refiner. Mr Hu's travels also symbolise Beijing's rising
influence in a region that had long been considered a diplomatic stronghold of
Taipei. Last year, Costa Rica became the first Central American country to break
off Taiwanese ties in favour of Beijing, a step that led to the free-trade
talks.
Beijing has warned the mainland is
facing major unemployment problems due to the global economic crisis.
"Currently, the employment situation is critical, and this impact [of the
financial crisis] is still unfolding," said Minister of Human Resources and
Social Security Yin Weimin. "We have called on all levels ...to place priority
on the stabilization of the employment situation." Yin announced measures to try
and stave off unemployment and to help those who lost their jobs, particularly
among the 230 million rural workers. He warned the impact of the global economic
downturn would be felt the hardest in the first quarter of 2009. "Up until now,
there have been no large-scale layoffs or any wave of rural migrant workers
returning home. [But] the number of rural migrant workers returning home is
gradually increasing." With up to 24 million people seeking jobs every year, the
government is hard pressed to fulfill its goal of seeing the creation of 12
million new jobs annually. Yin said joblessness had been most acute in the
coastal provinces as light industry and textile companies closed, went bankrupt
or stopped work. Thousands of workers in those regions have already gathered in
recent weeks outside shuttered factories, demanding unpaid wages. Yin said the
government would provide financial aid to companies to help them maintain
employment. The unemployment rate stands at four percent. A four trillion yuan
(HK$4.52 trillion) economic stimulus package announced earlier this month would
also help create jobs. And an emergency- response system to deal with worker
disputes and unrest will be set up. Zhang Xiaojian, vice minister of social
security, warned the government will face difficulties finding employment for
university graduates, with over six million expected to graduate next year.
Three new themed "lands" are planned for Hong Kong Disneyland's expansion,
although how they will be financed remains a key stumbling block, say sources
familiar with the situation. Funding for three new lands could amount to at
least HK$5 billion, since building a major attraction like the Pirates of the
Caribbean ride is estimated to cost between US$150 million and US$200 million.
The theme park now features Fantasyland, Tomorrowland, Adventureland and Main
Street USA, which occupy about 80 hectares of the 126-hectare site. Some
progress has been made in negotiations between the government and Disney, the
theme park's two joint venture partners, the source said, and both parties
wanted to see the expansion go ahead. But it is understood that changes to the
shareholding structure that would result from Disney's offer to shoulder the
entire funding exercise are unresolved. The lack of a proportionate injection of
funds from the government would water down its majority stake, and further
progress would depend on whether it was willing to inject matching funds or
accept a smaller stake. The government has a 57 per cent stake in the theme
park, with the rest held by Disney. On Monday, Secretary for Commerce and
Economic Development Rita Lau Ng Wai-lan was in Los Angeles and met Disney
management. A Disney spokesman said the company had no comment to make. John Ap,
associate professor of tourism management at Polytechnic University, said he
expected the new lands would help the theme park capture the young adult market
and strike a balance with its generally tamer fare for families and children.
"Hong Kong Disneyland opened without its three iconic rides - It's a Small
World, Pirates of the Caribbean and Haunted House," Dr Ap said. As much
preparatory work as possible had been done for the theme park expansion, such as
securing the necessary permits, in anticipation of funding, sources said. That
meant work could start within a few months of project approval.
The decline in Hong Kong office rents
follows a very strong period when Central rents soared 503 per cent to HK$120 a
square foot this summer. Souring business sentiment and expectations of further
lay-offs as Hong Kong's financial sector continues to reel from the impact of
the global credit crisis could see office rents in Central decline by up to 60
per cent over the next two years, analysts warn. Their grim revisions to earlier
relatively optimistic forecasts that the city's commercial property market might
be spared the worst of the crisis follow news that the mainland's economic
growth is decelerating faster than expected and mounting job losses in the local
financial sector are likely to continue. "Many hedge funds are about to shut
down because of heavy redemption calls and volatile stock markets in Asia, and
investment banks need to scale down further because of fewer initial public
offerings in the pipeline," said CLSA head of property research Aaron Fischer.
CLSA is now the most bearish research house, revising down its forecast to a 60
per cent drop in rents in Central in the next two years, from 38 per cent
previously. It anticipates a drop in the average rent from HK$120 per square
foot to HK$45. Swiss investment bank UBS, previously counted among the more
bullish of research houses in the city, warns that rents in Central grade A
premises will drop by 25 per cent over the 12 months to September next year,
against an earlier forecast of just a 5 per cent decline. Credit Suisse agrees
that the outlook has worsened sharply. "We were too optimistic on office rents
amid the sharply worsening conditions in the financial industry over the last
six weeks," it said in an update on its outlook for the Hong Kong property
sector last week. Reassessing its outlook for office demand, Credit Suisse
revised down an earlier forecast for rents to decline by 15 per cent, saying it
now expected rates to fall by 35 per cent following downward revisions to
forecasts of Hong Kong's economic growth and sharply deteriorating conditions in
the city's financial services sector. Listed property owners have also begun
cautioning the market and their shareholders that revenue may suffer. Hongkong
Land, the largest office landlord in Central, said last week "commercial
property leasing in Hong Kong - which had remained strong in the first half of
the year - have shown signs of reduced activity". It warned that "the
medium-term outlook is considerably less certain in the light of the
deteriorating economic conditions". Data compiled by Bloomberg shows 166,167
jobs in the financial sector had been cut globally between January 1 and
November 18. The number has yet to include the 52,000 job cuts announced by
Citigroup on Monday, and market watchers expect the job cuts to accelerate in
the months ahead. The downturn in the rental market being forecast by analysts
will follow an exceptionally buoyant period that saw Central office rents soar
503 per cent to HK$120 per square foot this summer from the 2003 trough, when
the Sars outbreak gripped the city, according to CLSA. But as financial services
and support industries account for about 75 per cent of Central office space,
analysts believe a meltdown in the sector will lift vacancy rates and drag rents
down significantly as landlords compete for dwindling tenants. Mr Fischer
believes the headcount reduction in Hong Kong's financial sector - which has
already fallen by several thousand - is likely to be in line with cuts in the
United States or Europe, which could mean an overall cutback of 10 to 20 per
cent in staff levels in the sector. Meanwhile, hiring expectations declined
significantly to 32 per cent in the fourth quarter, from 57 per cent and 42 per
cent, with respondents in the second and third quarters saying that they planned
to hire new staff. 
China dairy industry – at the centre of the country’s latest food safety scandal
– will be overhauled to improve every step from cow breeding to milk sales, the
government said. The major shake-up will cover all aspects of the dairy supply
chain, including production, purchase, processing and sales within the next
year, Xinhua news agency reported on Thursday. “The crisis has put the
mainland’s dairy industry in peril and exposed major problems existing in the
quality control and supervision of the industry,” an official with the National
Development and Reform Commission, Beijing’s top economic planning body, was
quoted as saying by Xinhua. Details posted on the website of the State Council
said the Health Ministry would revise the quality and safety standards of dairy
products, while the Agriculture Ministry would draft examination standards to
check for melamine and other toxins in animal feed. A tracking system would also
be established to record the flow and delivery of dairy products. Milk, and milk
products tainted with the industrial chemical melamine, have been blamed in the
deaths of at least four infants and have sickened more than 50,000 others. The
government has detained an unknown number of people in connection with the
scandal, but so far there have been no court cases. The huge scandal highlighted
widespread practices of adding the chemical, typically used in manufacturing
plastics, to watered-down milk to falsely mimic higher protein levels.
Investigations have also uncovered the common practice of adding melamine to
animal feed after melamine-spiked eggs were discovered. Melamine poses little
danger in smaller amounts but larger doses can cause kidney stones and
ultimately renal failure. The government plans to step up regulation of milk
collection stations, where dairy farmers sell their raw milk, and “firmly crack
down on and outlaw illegal milk vendors, firmly crack down on any illegal acts
involving adulteration,” according to a statement from the National Development
and Reform Commission. By the end of next year, milk stations nationwide would
be required to meet standards on hygiene, testing methods, operational
procedures and personnel, it said. The plan laid out a goal of strengthening
relevant laws and regulations by next year. By 2011, the goal is to increase the
number of farms with more than 100 cows from 20 per cent to 30 per cent. Much of
the mainland’s supply of raw milk now comes from small dairy farmers with a
handful of cows, which makes it difficult to standardise quality. Temporary
subsidies will also be provided to dairy farming areas hit hardest by the milk
scandal, especially Inner Mongolia, and the provinces of Hebei, Shandong,
Shanxi, Liaoning and Henan.
President Hu Jintao and Peru's
President Alan Garcia signed a bilateral trade agreement in Lima on Wednesday.
Peru and China have successfully concluded talks for a free-trade agreement that
will strengthen ties between two of the world's fastest-growing economies,
Peruvian President Alan Garcia said on Wednesday. The pact would be Beijing’s
second agreement with a resource-rich country in Latin America, whose exports it
needs to fuel a roaring economy. The deal could be signed as early as March
after final details are worked out. China and Chile signed a free-trade
agreement three years ago.” “The two countries are very complementary and there
are many areas for cooperation,” said President Hu Jintao, who is visiting Peru
as leaders from 21 economies gather this week in Lima for a summit of the Asia
Pacific Economic Co-operation forum, or APEC. The APEC meeting will consider
possible fixes for the world economic slowdown. Mr Garcia, who has aggressively
pushed trade, signed a trade pact with the United States last year, and a deal
with Canada is awaiting approval. “We are sure this will generate lots of
development for Peru and China,” Mr Garcia said. Ten bilateral accords signed
between the countries on Wednesday from health to technology would facilitate
the pending trade agreement, he said. China is the second-largest market for
Peruvian exports after the United States. Peru ships mostly copper, iron ore and
zinc to the Asian giant, while China sends mobile phones, machines and other
high-tech items to Peru. Officials say a trade pact with the Beijing could raise
Peru’s rate of economic growth by 1 percentage point a year. The tighter ties
comes as mainland firms have committed to about US$6 billion in investments in
Peru’s mining sector over the next three years. Peru’s economy, the fastest
growing in Latin America, has been expanding for seven years. Last year, it grew
9 per cent. It is expected to slow next year.
Shanghai Mayor Han Zheng pledged to listen to grievances and try to resolve
problems during a two-hour meeting with representatives of cab drivers and
transport workers on Tuesday, mainland media reported yesterday. The
representatives - 10 taxi drivers, four bus drivers and two bus conductors - had
a free-ranging discussion with the mayor following taxi strikes in several
mainland cities this month. The strikes, a headache for the central government
and a source of social unrest, are in response to what the drivers call extreme
work pressure, high cab rental fees and competition from unlicensed cabs.
Yesterday in Chongqing , several hundred drivers were on strike to protest
against a proposed increase in the number of cabs in the city, Xinhua reported.
They returned to work in the afternoon following talks with district officials,
it said. No demonstrations have been staged in Shanghai, but the country-wide
turbulence caught the attention of the mayor, who has promised a safe and
harmonious social environment for the 70 million tourists expected to visit the
2010 World Expo. Official figures said more than 10 per cent of the 100,000 taxi
drivers working for Shanghai's 150-plus cab companies quit their jobs each year,
mainly because of low salaries, passenger miscommunication and competition from
illegal cabs. At the meeting, some taxi drivers said they had to pay 600 yuan
(HK$680) to their companies each day, saying they worked about 18 hours a day,
to take home just 2,000 to 3,000 yuan a month. Others called for the government
to crack down heavily on illegal cabbies because the unlicensed drivers were
eating into their business. "Do you know how rampant the illegal taxis are? They
have everything, including taxi meters and company titles," one cab driver told
the mayor. "Sometimes they give kickbacks to security guards so that they line
up on streets to wait for passengers at night, but we are not allowed to do
that." Mr Han said the government would take measures to protect transport
workers in an effort to maintain the healthy development of the transport
industry. He said Shanghai would set up a 24-hour complaint hotline for taxi
drivers and establish a regular hearing with transport representatives to
improve communication with government officials. The authorities would also
solicit public feedback on plans to improve management of public transport. City
transport officials used a compactor to crush 21 impounded illegal taxis as "a
warning to others" last week, and more than 18,000 illegal taxis have been
seized since the beginning of this year, local media reported. Following a
two-day strike by cabbies in Chongqing early this month, drivers in Lanzhou ,
Gansu province , and Sanya , Hainan province , went on strike last week to
demand lower monthly cab rental fees and crackdowns on illegal cabbies. Xinhua
reported that the five-day strike involving hundreds of taxi drivers in Sanya, a
popular tourist spot, eased on Saturday when the city government said it would
act against illegal cabs. The city has about 1,200 licensed cabs and about twice
as many unlicensed ones. Three Sanya transport officials resigned because of
dereliction of duty, and 20 taxi drivers were detained for attacking drivers who
did not participate in the strike and smashing cabs.
The current
recession will last up to three years and next month will bring even more bad
news, casino magnate Stanley Ho Hung-sun said yesterday. The crisis was worse
than others in the recent past, and it would last longer. "If you had asked me
in the past, I would have said three or two months, but when this downturn will
end, even I can't tell," Mr Ho said. He later said: "I hope that I'm wrong, but
this time, I think it will take two to three years to recover." Mr Ho was
speaking to reporters after taking part in a tennis tournament at the Chinese
Recreation Club yesterday. About 90 per cent of Hong Kong companies will be
preparing their year-end figures at the end of next month. "Their wins and
losses, all of it will be exposed," he said. "I fear there will be more bad news
than good news. "I have been praying. Every night I hope it will get better, but
I don't know whether I should hope. I really worry about December. I'm fearful."
Real estate prices would fall next month, but Mr Ho advised against buying
property yet. "I wouldn't be confident enough to [buy] yet," he said. There
would be little movement in the property market as people held on to what they
had and waited for December to pass, he predicted. Despite fears of more mass
layoffs after Citibank and HSBC (SEHK: 0005, announcements, news) announced job
cuts, Mr Ho said he believed real estate firms would not lay off staff - yet.
"As far as I know, [the real estate industry] won't, but if it has no choice,
then it will have to," he said. But his companies would not cut jobs. "My
companies won't need to," he said. Mr Ho said he believed the stock market would
rise to 15,000 points after next month and continue rising. Meanwhile, Henderson
Land Development (SEHK: 0012) chairman Lee Shau-kee refused to make any
predictions about the stock market, saying the financial crisis had made the
situation too complicated. Mr Lee, who has been described as Asia's Warren
Buffett, has had a mixed record of predicting the market's direction. He said
yesterday: "The financial meltdown makes the [stock] market very choppy and
unstable, I have no idea about its outlook." Mr Lee said that the market
capitalisation of his private investment company, Shau Kee Financial
Enterprises, had decreased significantly. Asked whether there will be any
layoffs in his companies, Mr Lee said: "I [haven't thought] about that, it's
just too early to say."
A
woman is dwarfed by the huge model of Noah's Ark, whose facilities include a
hotel, hostel, restaurant and museum. A large model of Noah's Ark, described as
the world's first "full-size" replica, will open to tourists in Ma Wan Park in
January. Construction of the model will finish by the end of next month and the
ark will initially be open to tour groups. After a three-month trial, individual
members of the public will be allowed to visit. There are five levels inside the
ark, which will house a restaurant, an exhibition hall, an education centre and
a museum for children. The top floor will have a hotel and a hostel overlooking
the sea. According to the Bible, Noah built the ark and loaded a male and female
of every animal species on board to save them from a flood. The replica is on Ma
Wan Island and faces the Tsing Ma Bridge. It is part of Ma Wan Park, the first
phase of which opened in July last year. The ark covers an area of 270,000 sq
ft. Sculptures of 76 pairs of animals appear to walk out of the ark into a
garden. "We used a material called GRC, which is a mixture of concrete and glass
fibre, to build the ark," said Ma Wan Park project manager Angus Cheung
Kam-cheung. He said GRC was used instead of real wood because it was more
environmentally friendly and durable. The ark took five years to build. Five
non-governmental organisations will operate the ark's facilities, including the
Chinese YMCA of Hong Kong; The Media Evangelism, a Christian charity; Angela
Luk's Education Foundation; the Boys' Brigade Hong Kong; and St James'
Settlement. "Under the financial tsunami, every Hongkonger is facing
challenges," said the park's general manager, Spencer Lu Chee-yuen. "The opening
of the Noah's Ark is timely, as it serves as a symbol of hope." Since it opened,
Ma Wan Park has attracted 300,000 people. Its management and the tourism
industry are still discussing the ark's entrance fees. "We won't link the
entrance fees directly to the construction cost," Mr Lu said.
Las Vegas Sands, which is seeking
project financing, is laying off about 11,000 construction workers in Macau
after the financial crisis forced it to suspend work on a project. Mainland and
Macau government actions were partly to blame for Las Vegas Sands Corp's
decision last week to halt work on a US$3.7 billion Cotai casino complex,
president and chief operating officer William Weidner said. "There have been
some changes in the central government's attitude towards Macau," Mr Weidner
said on Monday. "We don't think it's necessarily all that prudent to put more
money in until we see how that attitude works its way out." Las Vegas Sands said
last week it would lay off up to 11,000 construction workers in Macau after the
financial crisis forced it to suspend the building of a 6,400-room resort
opposite the Venetian. However, regulatory uncertainty in Macau appears to have
partly driven the decision as the company said work would proceed on a US$5
billion casino resort in Singapore. Mr Weidner suggested Macau's policy missteps
and lax regulation of the gaming industry shared the blame for projects being
delayed or shelved. "Macau because of what has happened has kind of created for
itself unfinished or semi-finished projects. I don't think we're alone in not
completing developments." The central and Macau governments since June have
restricted the ease and frequency with which mainland passport holders,
including non-permanent Hong Kong residents, can travel to Macau. The
restrictions have slowed visitor arrival growth to 2.07 per cent in September
from 17.27 per cent in the first eight months. Likewise, casino revenues
declined 10.03 per cent in the three months to September from the previous
quarter.
Migrant workers return home to
Xian, in Shaanxi province, after being laid off by factories in Guangdong.
Chen Siyi (left) and Liu Xiaoli
have enrolled at Ohio State University in Columbus. Students from China are
enrolling in US universities in record numbers, encouraged by aggressive
recruiting combined with China's booming economy and growing middle class. Their
enrolment grew by 8 per cent in autumn 2006 and by 20 per cent last year,
according to Institute of International Education figures. Individual
universities are also reporting high growth this year. Mainland enrolment
quadrupled this year at Lehigh University in Pennsylvania. George Fox University
in Oregon, accepted 65 mainland students, more than double its figure last year.
Purdue University in West Lafayette, Indiana, already boasting a strong
international student programme, is enrolling 290 mainland students, up from
127. The figure was more than quintupled at Ohio State University, America's
largest campus, with 115 undergraduates from the mainland compared with 20 last
year. Liu Xiaoli, an Ohio State freshman from Beijing, said mainland
universities offered solid academics but could not compete with the overall
experience of an American college, including more opportunities for out-of-class
activities, an open learning environment and diversity. "In China you can seldom
find people from the US, but in the US you find people from all over the world."
The influx is part of a solid and welcomed rebound in the number of
international students coming to the United States, with its 4,000 colleges and
universities. Numbers of international students had dropped alarmingly due to
competition from other countries and tighter visa procedures after the 9/11
terrorist attacks in 2001. But the latest report from the Institute of
International Education shows 7 per cent more foreign students at US
universities than a year ago, at an all-time high of 624,000. India again sent
the most students, followed by the mainland and South Korea. Enrolment from
Saudi Arabia jumped 25 per cent, putting the country back into the top 10 for
the first time since 1982, thanks to a new Saudi government scholarship program.
A snapshot survey the institute did of campuses this autumn found that 55 per
cent reported increases in students from the mainland, the highest increase from
any country. "The misperceptions have finally been laid to rest - that it's
impossible to get a visa," said Peggy Blumenthal, the institute's chief
operating officer. Students choosing schools "are looking strictly at academic
issues, because there's no reason to believe they'll have any more trouble
getting to the States than getting to Australia". Kansas State University
enrolled 199 mainland undergraduates, up from 65 last autumn. "There is a whole
emerging middle class of Chinese - well over 300 million, many of them with
one-child families - who are interested in sending their son or daughter abroad
with higher educational experience," Duane Nellis, Kansas State provost, said.
"We're capitalising on that to enrich our campus community." International
students and their families contribute more than US$15 billion annually to the
US economy, according to a separate survey by Nafsa, an association of
international educators. And as they typically pay higher out-of-state tuition,
they're an important revenue source for colleges at a time when the supply of
college-age US students is cresting. Out-of-state students pay an average of
US$515 more per credit hour at Michigan State University, where the number of
new undergraduate mainland students soared from 95 last year to 327.
Universities also like the international students' cosmopolitan flair. "We're
thrilled about the cultural benefits, the educational benefits it brings to our
resident students," said Mike Brzezinski, Purdue's associate dean of
international programmes. "It gives them a study abroad experience right here on
campus." The number of Americans studying abroad is also at a record high, the
Institute of International Education reports, increasing 8 per cent to 242,000
in 2006-07 - the latest year for which figures are available. Students continued
the trend towards more untraditional destinations, with increases of more than
20 per cent each to the mainland, Argentina, South Africa, Ecuador and India.
The number of new mainland students still represents a fraction of overall
enrolment: just 2 per cent of the Ohio State freshman class, for example. They
must meet the same entrance requirements, including passing an English-language
test. hen Siyi, a freshman from Changsha , Hunan province , planning to study
finance, was especially impressed by Ohio State's array of 32 libraries. But
like Ms Liu, she has no interest in staying after graduation. "I probably will
go back to China to work there and find more opportunity there. I don't know any
reason for me to stay here over staying with my family.
Jerry Yang, seen here listens to a
question at the Web 2.0 Summit in San Francisco earlier this month, announced on
Monday that he is stepping down from the post of Yahoo CEO. 
Citigroup plans to cut around 150 jobs
at its wealth management unit in Asia excluding Japan as part of a global
restructuring, a source familiar with the plan said on Tuesday.
Victor Fung Kwok-king, chairman of Li &
Fung, said yesterday the trading giant would lay off staff as a last resort in a
bid to lower its operating costs by 10 per cent. But he denied earlier reports
that 1,000 employees would be let go. "The report about Li & Fung planning to
lay off 1,000 staff is absolutely incorrect. Actually, the number of Li & Fung
staff at the end of this year is greater than at the beginning of this year," Mr
Fung said. According to the company's 2007 annual report, Li & Fung had more
than 13,000 staff worldwide. According to a staff union representative, 450
employees in the company's toy division were expected to be made redundant by
Christmas. A company source said there were some "isolated cases" of layoffs at
business units that were hit hard by the economic downturn but hiring had
increased in some lower-cost markets. Much of Li & Fung's revenue comes from the
United States and the European Union, both hard hit by the financial crisis. "As
a responsible company, in the current environment, we need to carefully manage
our costs and manpower. Our aim is to lower our costs by 10 per cent, through,
for example, a reduction in business travel. If there is no other way, then we
would consider cutting staff," Mr Fung said. Asked about plans by his fellow
members of the government's taskforce on the economic crisis to discourage
redundancies, Mr Fung, said the taskforce is exploring ways to help the local
economy. But companies should act responsibly, he said. In a statement on
November 8, the company said it was reviewing its cost structure. Measures
included a hiring freeze in most locations, a reduction in discretionary
expenses and, as a last resort, layoffs. "While extensive efforts have been made
to place employees in other divisions, those who cannot be placed elsewhere in
the company will be made redundant," the statement said. "At this stage, it is
envisaged that a limited number of employees will be made redundant."
Hong Kong is about to start talks with Guangdong on a cross-border traffic
scheme which could see hundreds of left-hand drive cars flowing onto the city's
crowded highways on a daily basis. The scheme would extend the limited existing
mechanism which allows Hong Kong drivers to motor between the two places - at a
price. Officials say it is designed to dovetail with future Pearl River Delta
integration projects such as the Hong Kong-Macau-Zhuhai Bridge. Experts
yesterday gave the proposal a mixed reception, some saying it would clog up
already jammed roads, while others said it was a non-starter because mainlanders
would rather use the public transport system. And while Hong Kong businessmen
might like more convenience, the price tag of close to HK$1 million for a
mainland car license may be prohibitive. The plan was unveiled by the Secretary
for Transport and Housing Eva Cheng Yu- wah during a visit to Singapore. Cheng
said several hundred quotas would be given to cars, both private and company
owned, every day at the beginning of the program, which would expand gradually
to include the Hong Kong-Zhuhai-Macau Bridge upon its completion, if successful.
She said an expert committee will discuss details such as environmental
requirements for mainland cars and vehicle insurance. Cross-boundary car
licenses are highly sought after because of the limited quotas. Hong Kong
residents need to invest at least US$1 million (HK$7.8 million) in the mainland
and the licensed cars can only cross at specific border control points. Chinese
Manufacturers' Association general committee member Lui Ming-wah said the scheme
would make it more convenient for Hong Kongers to drive to the mainland, but he
did not think it would attract many mainland drivers. "The public transportation
system in Hong Kong is very well developed and driving in Hong Kong isn't very
easy because roads are crowded and small. Mainlanders would rather take the MTR
or taxi to get around," he said. Polytechnic University civil and structural
engineering associate professor Hung Wing-tat expressed fears about road safety.
"Left-hand and right-hand driving are totally different. It is okay if mainland
cars only stay on highways, but once they get into the city accidents could
happen," Hung said. 
President Hu Jintao
is welcomed by Cuban Vice President Jose Ramon Machado Ventura at Havana airport
on Monday. President Hu Jintao arrived in Cuba on Monday (Tuesday HK time) for a
two-day visit to promote further economic ties with the island struggling to
recover from three hurricanes and the ongoing effects of the global financial
crisis. No sooner had Mr Hu landed than Cuban television said the two countries
had already signed accords for China to continue purchasing nickel and sugar
from Cuba and to provide agricultural products to the Caribbean country. More
agreements on economic, education and other matters were expected to be signed
during a visit Cuba hailed as an indication of the close relations between the
two communist-run countries. Mr Hu, making his second trip to Cuba, was greeted
at Havana’s airport by First Vice President Jose Ramon Machado Ventura, a dragon
dance performed by Cuban youths, and some 50 members of the local Chinese
community who waved Cuban and Chinese flags. “My visit is aimed at increasing
friendship and co-operation between our two nations, and working together with
our Cuban comrades to build a promising future,” Mr Hu said in a statement. Mr
Hu offered “sincere good wishes that the Cuban people achieve continuous new
advances in the construction of socialism.” China is Cuba’s largest trading
partner after Venezuela at US$2.3 billion (HK$17.8 billion) last year and is
looking to increase that number. The Asian giant currently buys about 400,000
tons of sugar annually from Cuba and is estimated to get close to half of Cuba’s
annual nickel production of 75,000 tons a year.
When paramount leader Deng Xiaoping
decided 30 years ago to build the nation's first special economic zone in
Guangdong, to serve as the engine of opening and reform, the city of Shenzhen
did not exist. In 1979, the area was just a string of small fishing villages and
collectively owned rice paddies. Transforming this sleepy patch - home to just
30,000 people - into a free-market enclave open to foreign investors and private
enterprise, would require the mobilisation of the People's Liberation Army, the
only option for completing the political and physical demands of such a task. In
1982, 20,000 soldiers with engineering expertise were called up from across the
country and sent to Shenzhen. Their goal: to build a trial base for reform. That
autumn, Zhou Shunbin , a 27-year-old soldier from Sichuan , arrived in Shenzhen,
where he would bear witness to the city's transformation from a backwater into a
booming metropolis. "When we arrived by train in Shenzhen, many soldiers were
shocked to find no proper roads or buildings around the train station," he said.
"We thought we had arrived in the wrong place. Was this really Shenzhen, the
special economic zone? Why did it look poorer than the countryside? Many
soldiers asked each other these questions." Mr Zhou recalled that tough time,
saying only young soldiers with strict discipline could survive the daunting
task of building up a barren land. "We treated it as a military mission to
fulfil," he said. "In the beginning, the living and working conditions were
really bad. We found there was no place to stay and had to build huts using
reeds. The weather on the coast was also very hot and wet. Many of us quickly
became ill. "Mosquitoes, flies, rats, snakes and lizards were everywhere. You
could find everything imaginable in the huts. "Sometimes, in the middle of the
night, you would suddenly find a green snake lying beside you on the bed. Many
of us were from northern China. We had never witnessed such a horrible scene
before. And the rats were unbelievably big. I heard a soldier caught a 4kg one
and some Guangdong soldiers cooked it up." The first major project handed to Mr
Zhou and his fellow troops was to clear a river blocked by mud and the bodies of
dead animals. "We rushed into the stinking water and cleared it by hand within a
few hours. Some Hong Kong visitors covered their mouths and said `PLA soldiers
are really remarkable!'" Later, they blasted mountains to clear land for
construction. "There were no concrete roads or skyscrapers in Shenzhen until
1983 and the landscape in the city has changed dramatically since then, with
almost every corner becoming a construction site," Mr Zhou said. "When I moved
to Shenzhen, I thought I would go home soon after fulfilling my mission, and
never expected to see so many dramatic changes in the city in a period of two
decades. "At that time, we felt proud to be PLA soldiers. We did everything
local residents couldn't do: building roads, blasting hills, constructing
skyscrapers and working on anti-typhoon projects. "The only object for us was to
complete each task in time, to construct the city as soon as possible and get a
commendation from the army leaders." By the end of 1982, the 53-floor Shenzhen
Guomao Plaza had been completed, taking less than a year. Deng had a name for
the phenomenon - "Shenzhen speed". "Before arriving in Shenzhen, we had no
experience of building skyscrapers. We hadn't even heard of mosaic yet," Mr Zhou
said. "We sent experts to Hong Kong for several days to learn how to use the new
materials and build modern-style buildings." Thanks to the soldiers' work, for
which they were paid about 40 fen a day, the Shenzhen Special Economic Zone
flourished, with buildings sprouting like mushrooms. Officials asked the central
government to allow the soldiers to settle in the city. They hung up their
uniforms on September 13, 1983, becoming Shenzhen's first immigrants. "They were
tough but wonderful years. We came when we were young and now we are old," Mr
Zhou said. "But it's great to have contributed my golden years to the city. I
have no regrets in life having seen this place go from a village to the giant,
pioneering city."
A model displays a Nissan concept
car on the media day of the 6th Guangzhou International Auto Show in Guangzhou,
capital of south China's Guangdong Province, Nov. 18, 2008. The 6th Guangzhou
International Auto Show will be opened on Nov. 19.
Jean-Jacques Beraud, owner of
Chateau La Brande, hopes his wine can get a share of the mainland market. The
financial storm sweeping across the globe has raised the importance of Hong Kong
and the mainland in the eyes of French wineries, as they make more of an effort
to explore new markets. Boris de Vroomen, co-chairman of the Hong Kong Wine and
Spirits Industry Coalition, said that although the market growth rate this year
would not be as impressive as last year, business was holding up quite well in
the face of the economic crisis. The latest government figures show that Hong
Kong imported a total of 15.8 million liters of red wine, valued at HK$1.69
billion, in the first nine months of this year. In the same period last year,
the city imported 12.1 million liters of red wine, but the value was only
HK$841.2 million. Despite the financial turmoil, the scrapping of the 40 per
cent tax on wine in February helped to significantly boost the value of imported
reds. Census and Statistics Department figures show the total value of imported
red wine from March to July last year was HK$478 million. The figure jumped to
HK$988 million in the same period this year, five months after the tax was
scrapped. Mainland China is the biggest wine re-export market for the city. Of
Hong Kong's total 2.9 million liters of re-exported wine in the first nine
months of this year, 2.1 million liters valued at HK$220.8 million was
re-exported to the mainland. In the same period last year, only 1.9 million
liters of wine, valued at HK$230 million, was imported into Hong Kong and
re-exported to the mainland. "One needs to be extremely optimistic to say there
will be no impact on the wine business. But business is holding up quite well so
far in Asia and Hong Kong. It is quite a difficult time in the US and Europe,"
Mr de Vroomen said. "I'm still optimistic about the wine business in China and
Hong Kong. The situation in Asia is more resilient here than in other areas."
The trade was confident that its earlier forecast of the mainland's wine imports
rising from 4 million cases last year to 50 million in 2017 was still within
reach. "This estimation still stands and has not been affected by the financial
crisis. The average per capita consumption is still low in China," Mr de Vroomen
said. New collectors were emerging in mainland China and many of them were
buying fine wine in Hong Kong. This provided an excellent opportunity for the
city, especially with the scrapping of the wine duty this year adding a further
boost, he said. Herve Berland, managing and commercial director of Chateau
Mouton Rothschild, a renowned Bordeaux winemaker, agreed. "China is now in the
top five countries of the world, with an annual consumption of around 3,000
cases of Chateau Mouton Rothschild which are ranked second or third in the top
five most wanted fine wines in China, while Lafite remains in the lead," he
said, referring to another Bordeaux label. The crisis has also created an
opportunity for less famous French wines and low-cost labels to enter the
market. Edouard Miailhe, owner of Chateau Siran which supplies wines to a number
of five-star hotels in Hong Kong, Macau and on the mainland, said its business
had been affected by the financial turmoil. Chateau Siran, a winery in Bordeaux,
produces a range that includes first-class wines and Bel-Air de Siran, which is
less expensive. "We gave exclusivity of Bel-Air de Siran this month to a Hong
Kong wine importer to buy all our bottles, which will be used for capturing
market share on the mainland. The crisis gives us a chance to promote our
cheaper wine to the Chinese market," Mr Miailhe said. 
Toys made in China are subject to more
stringent safety rules in the United States, particularly with regard to
substances in products and design. Some Chinese-made products have been subject
to more stringent safety rules in the United States and anti-dumping duties in
the European Union despite the promise of global leaders at the G20 summit to
reject protectionism. The EU slapped an import tariff of up to 60 per cent on
candles and a 50 per cent levy on non-alloy steel wire products from China on
Saturday, the same day the 20 major economies agreed not to impose any fresh
trade barriers and inconsistent rules under their World Trade Organisation
commitments in the next 12 months amid the global financial crisis. Click here
to find out more! Chinese exporters have also been struggling to survive a
controversial US rule promulgated on Wednesday that tightened safety
requirements on children's consumer products from the manufacturing floor to
retail shelves. "I hope this is not protectionism," said Danny Lau Tat-pong,
chairman of the 1,000-member Hong Kong Small and Medium Enterprises Association.
"And I hope they will keep their promise." He added the EU and US moves would
add to the cost burden of mainland manufacturers, with many on the verge of
collapse as a result of bleak consumer demand. In response to a complaint by
European manufacturers that Chinese-made candles were selling at prices so low
that mainland exporters were getting an unfair advantage, the EU found in its
investigation that Chinese candles accounted for 37 per cent of the EU market,
worth €810 million (HK$8.04 billion) last year. A 25-strong mainland
manufacturers' alliance complained against the new US legislation, which
mandates producers to come up with a certificate of compliance on meeting the
safety standards on every product in every shipment in terms of substances used
in products and product design. They must relay a copy of the certificate to all
distributors and retailers who buy from them. Penalties have been raised sharply
to US$100,000 from US$5,000 per violation and to US$15 million from US$1.25
million for multiple violations. The rule applies to products for children aged
below 12. The alliance's leader, who did not want to be named, said no
manufacturer was ready for it. "I find more questions than answers. What
products should be tested and how often should they be tested? Answers are still
up in the air." He questioned why the threshold was set at children under 12 and
why products for other consumers were not included. "What happens to protection
for children above 12? Why doesn't the rule cover lipstick or jewellery, which
may also contain lead?" The rule states that producers must post on website
details such as address, contact numbers and names of importers, suppliers and
laboratories for three years, which the alliance complains is an infringement on
privacy.
Chinese President Hu Jintao (2nd L,
front), accompanied by his wife Liu Yongqing (1st L, front), shakes hands with
an official of Costa Rica upon his arrival in San Jose, capital of Costa Rica,
Nov. 16, 2008. Hu Jintao arrived in Central American nation Costa Rica for a
state visit on Sunday.
Hong
Kong's roads are safer following the scrapping of a police policy that saw
officers let go hundreds of drink-drivers who should have been arrested. Figures
obtained by the Sunday Morning Post (SEHK: 0583, announcements, news) show that
since the policy was scrapped, an average of two extra drink-drivers a week have
been taken off the roads. This website is powered by netDrive 4. The revelation
came as police prepared to wrap up today their annual pre-Macau Grand Prix
traffic blitz, which has seen an increase of almost 17 per cent in the number of
infringements logged per day compared with last year. By Tuesday, police had
issued 4,892 fixed-penalty tickets and summonses and arrested 31 drivers for
drink-driving since Operation Fossington began on October 31. Last year 5,565
drivers fell foul of police during the 16-day crackdown. On September 21, police
scrapped a policy under which drivers over the legal limit of 22 micrograms of
alcohol per 100 milliliters of breath but under 27mcg per 100ml were released
with a warning. The policy had been adopted unilaterally 13 years earlier. Last
year, 107 people over the legal limit were warned and released. In the eight
weeks since the scrapping of the buffer, 18 people who would previously have
been allowed to go have been arrested. Lawmaker Miriam Lau Kin-yee, under whose
chairmanship the Legislative Council's transport panel has overseen a gradual
tightening of drink-driving laws, was glad to hear the removal of the buffer was
working. "It's good news," Ms Lau said. "I don't think we should tolerate
drink-driving at all." She had expressed bewilderment at the police force's
unilateral adoption of the policy. It had never been mentioned to her panel
prior to the Post revealing it three months ago. When police chiefs announced
the scrapping of the policy, they said it was being done to pave the way for
random breath testing, which Legco authorised in June. Before the Legco vote,
the law only allowed police to test drivers who were driving erratically,
speeding or had been involved in an accident. When random testing comes in,
police will be able to specifically target drink-driving. First offenders will
be disqualified from driving for three months and be forced to attend a driving
improvement course. "We have passed the legislation and now we are just working
out the mechanics of how it is going to be enforced," Ms Lau said. Ian Foster, a
committee member of the Hong Kong Automobile Association, also welcomed the
enhanced enforcement of the law against drink-driving. "We will support anything
the police do to get these people off the roads," Mr Foster said. "If you get
into a vehicle after, say, four or five beers, you're basically just sitting
there with a loaded shotgun. It is that dangerous." While education was part of
the solution, Mr Foster said that a strong deterrent was also essential. "People
will keep trying to do it unless there's a real deterrent so that they know
there's absolutely no way they will make it home without being stopped by the
police."
Lin Miaoke,
the girl who became an instant star with her performance of Ode to the
Motherland at the opening ceremony of the Beijing Olympics, will make a guest
appearance at a Christmas charity event in Kwun Tong today. Hongkongers will,
for the first time, hear the pretty nine-year-old sing. Miaoke was at the centre
of controversy when it was revealed that she had lip-synched to the voice of
another girl deemed not pretty enough to appear. However, anyone expecting to
hear her rendition of Ode to the Motherland will be disappointed. "She will sing
Jingle Bells and a Chinese song which will not be disclosed until the
performance," said Maureen Fung Sau-yim, general manager for leasing at Sun Hung
Kai Properties (SEHK: 0016), which runs the APM mall where Miaoke will appear at
1.45pm. Seven-year-old Yang Peiyi, the girl whose angelic voice was heard around
the world but who did not make the Olympics stage, has not been invited. "We
originally wanted to invite Zhang Zilin, the first-ever Miss World from China,
but then we thought there should be children for a Christmas function. We are
glad that we can have Miaoke and we have only invited Miaoke," Ms Fung said.
Lam Tsuen, home of an 11-metre-tall "wishing tree" - will celebrate a
once-in-a-decade religious festival this week. The traditional Tai Ping Ching
Chiu or Da Chiu, which starts on Thursday, is a long-established religious rite
where the indigenous Hakka families give thanks to Tin Hau, the goddess of
fishermen, in the hope of good weather and a fruitful harvest. Many return from
abroad for the festival. While some rural villages celebrate the festival
annually, Lam Tsuen, with its cluster of 26 villages covering 150 hectares,
gathers just once every 10 years. This year's celebrations are expected to be
the biggest yet, costing HK$4 million to HK$5 million. Lam Luk-wing, who has
been on the organising committee for more than 40 years, said a 3,200-seat
four-storey arena built out of bamboo will be the focus of the entertainment. It
will be located in the square near the wishing tree. There will be a mini-street
lined with 16 hawker stores selling auspicious local handicrafts and snacks. The
six-day programme will be packed with rituals and religious activities such as
lion dances, bai sun ceremonies and prayer sessions every morning, noon and
night conducted by a team of 60 Taoist priests from Yuen Yuen Institute
monastery. A big draw will be afternoon and evening Chinese opera performances,
with famous artists singing love ballads and staging historical epics. Lam Tsuen
Rural Committee chairman Chung Wai-keung said one of the major challenges was
catering for about 7,200 meals a day. "A team of chefs will cook on-site. Except
for the meals on day one and the official celebration on Sunday, food will be
free of charge and served on a first-come, first-served basis," Mr Chung said.
"During this sacred period, all villagers have to observe the traditional rules,
such as no slaughtering livestock or felling trees. 
Like the sickly sweet glazed
rings they sold by the thousands, news of the sudden closure of Krispy Kreme
Doughnuts' outlets in Hong Kong left behind a puzzling aftertaste. How could the
Krispy Kreme brand possibly fail in a city where fast food has been a phenomenal
success and where western chains like McDonald's, KFC, Starbucks and Burger King
have been so triumphant? This website is powered by netDrive 4. Why did the
queues that lined up in 2006 when the second-biggest doughnut chain in the
United States was brought to Hong Kong melt away before the shutdown at the end
of last month that appeared to take customers and staff by surprise? The factors
behind the failure are unclear. But two key events in the dying months of the
enterprise raised pointed questions about exactly what the franchise was serving
up. The first was the announcement by Krispy Kreme of a "zero trans-fats" policy
in its US restaurants in January. The second was a Consumer Council report in
May that revealed the doughnuts sold in Hong Kong contained high levels of
trans-fats. In other words, a doughnut bought in Hong Kong might look like those
from the company's hometown in North Carolina, but by the spring of this year
the ingredients were a world apart. A single doughnut sold in Hong Kong, the
report claimed, contained 2.2 grams of trans-fats, more than the World Health
Organisation's recommended daily intake. And, as Krispy Kreme regulars will
testify, many found it hard to stop at one doughnut. Trans-fats are one of the
biggest food health issues to emerge in recent years. Also known as hydrogenated
or partially hydrogenated fats, they are manufactured fats produced by
converting liquid oils into solid fats. 
Beijing can't let the global credit crisis derail financial reforms that have
benefited people and helped the nation's banks weather the turmoil, said Yi Gang
, vice-governor of the People's Bank of China. "Although there have been doubts
in the market on whether China's financial reforms should continue after this
crisis led to massive government bailouts and nationalisation of financial
institutions, China's bank reforms can't backtrack," Mr Yi said at a conference
in Beijing yesterday. The worst financial crisis since the Great Depression has
caused about US$966 billion of losses for financial institutions worldwide. The
US Treasury has initiated a US$700 billion rescue plan for financial
institutions. "The US and Europe may need to rethink financial innovations that
exceed real economy needs and have pushed risks beyond control," said Zhao Xijun,
a finance professor at Renmin University in Beijing. "China's financial services
are under- developed by comparison, so we need to push ahead with reforms."
Mainland banks sold shares, accepted foreign strategic investors and enhanced
risk management over the past three years to avoid repeating the bad-loans
crisis earlier this decade, when the government spent US$650 billion rescuing
them. Limited buying of subprime debt has helped banks avoid bigger losses.
"State-bank reform has been a success, benefiting people and greatly enhancing
financial services," Mr Yi said. "China's banks might have taken an unimaginable
shock from this financial tsunami if they hadn't completed shareholding
reforms." Reforms based on market principles must continue to help shield banks
from future risks during economic cycles, he said. Banks would also be "tested"
when the nation's currency gradually became convertible and when interest rates
were further liberalized. "The economic downturn has already started, and banks
must be well prepared," Mr Yi said. The mainland's economy expanded at the
slowest pace in five years between July and September as the global crisis
trimmed exports and industrial production and sent developed economies into
recession. Beijing announced a 4 trillion yuan (HK$4.54 trillion) stimulus
package on November 9 and relaxed monetary policy to spur growth. "China's banks
are on the right track and they have learned a lot about risk management over
the past few years, so such reforms should move forward," Professor Zhao said.
As a result of the stimulus package, Beijing would suffer a large fiscal
deficit, Su Ning, a deputy governor at the central bank, said yesterday. One
trillion yuan of that total would come from the central government budget, he
said, urging other governments to put a special focus on fiscal policy. "In the
next two years, we are expecting [an] enormous fiscal deficit so I sincerely
hope that all the countries across the world could co-operate also in the fiscal
arena," he said. Similar measures were expected to be unveiled by many
countries, Mr Su said. "So maybe when our finance ministers get together they
could pay less attention to monetary policy and should pay more [attention to]
work on fiscal policy." The central bank had worked to improve its monetary
policy to promote stable growth in the face of challenges including imbalances
in the balance of payments, he said. Mr Su acknowledged that the impact of the
crisis on China's growth and financial stability "could not be taken lightly".
To ward off the impact of the crisis, authorities had adopted a proactive fiscal
policy and a "moderately loose" monetary policy, he said. President Hu Jintao is
in Washington today with leaders from the Group of 20 nations to discuss the
crisis. 
US President George W. Bush looks
past President Hu Jintao to Saudia Arabia's King Abdullah. They are standing in
front of Spanish President Jose Luis Rodriguez Zapatero (left), Turkish Prime
Minister Recep Tayib Erdogan, Indian Prime Minister Manmohan Singh and Canadian
Prime Minister Stephen Harper at the G20 Summit in Washington.
Shops, like this one in Stone Nullah
Lane, Wan Chai, are closing down as the city slips into recession and consumers
tighten their belts. Hong Kong's economy has fallen into recession. Government
data for the three months from July to September, released yesterday, shows that
the economy shrank 1.4 per cent, following a fall of 0.5 per cent in the
previous quarter. A recession is commonly defined as two consecutive quarters of
economic contraction. Other Asian economies, including Singapore, are already in
a recession. The dire outlook was reflected in the government's decision to cut
its official full-year growth forecast to between 3 and 3.5 per cent from 4 to 5
per cent. "Hong Kong's small, open economy and trade dependence exposed it to
the impact of the financial crisis, which derailed the economic upturn Hong Kong
enjoyed in the past four years," government economist Helen Chan said. "The risk
of a more prolonged and protracted global economic downturn has increased." She
said it was still too early to predict how the economy would perform next year,
although Fitch Ratings yesterday slashed its 2009 growth forecast from 4.5 per
cent to minus-1.2 per cent amid fears about the city's exposure to the financial
crisis. "When global growth slows a little, Hong Kong slows a lot," said James
McCormack, head of Asia sovereign ratings at Fitch. Year on year, real economic
growth eased dramatically to just 1.7 per cent from 4.2 per cent in the second
quarter. The government expected growth to slow further this quarter amid
worsening joblessness, deteriorating trade and waning domestic demand. Charles
Li Kui-wai, associate professor of economics and finance at City University,
said 1.7 per cent growth was quite disappointing since the third quarter was
generally a peak period for economic activity. "At best, fourth-quarter growth
will be zero, while the first quarter of 2009 should be negative," Dr Li said.
General Chamber of Commerce chief economist David O'Rear agreed and said
full-year growth should be closer to 3 per cent. Nearly all of the city's
economic indicators suffered in the last quarter. Exports grew by 1.4 per cent
versus 4.4 per cent in the second quarter, the worst since the first quarter of
2002. "For many advanced economies, including the US and European Union, a
recession is already under way. The export- dependent economies in Asia will all
be affected. Hong Kong's export performance is likely to remain rather
lacklustre in the near term," Mrs Chan warned. Mr O'Rear said the combination of
the current downturn and lacklustre exports was a "two-pronged problem" facing
Hong Kong. Private consumption spending rose a mere 0.2 per cent, down from 3.2
per cent in the second quarter, while investment eased to 3 per cent from 3.5
per cent in the second quarter. The 3.4 per cent unemployment rate was likely to
worsen. "There are no grounds for optimism with unemployment," Mrs Chan said.
The government kept its forecast for this year's underlying inflation at 5.5 per
cent. 
Hard Rock Cafe said yesterday that it
would close its sole Hong Kong restaurant temporarily this month, laying off
about 60 people, as about 140 others lost their jobs at Lane Crawford and Asia
Television. The themed restaurant will close on November 24, when the lease on
its Tsim Sha Tsui premises expires. But Hard Rock Cafe Hong Kong said it was
committed to reopening when times got better and was pressing ahead with plans
for two new restaurants next year. In another round of layoffs, ATV sacked 47
employees from departments including production, engineering and news. This came
days after the station cut 16 production and support staff from the sports and
celebrity-gossip sections last Monday. Meanwhile workers at Lane Crawford who
have been given notice said a "double-digit percentage" of the luxury retailer's
staff had been affected. With 1,000 employees, a 10 per cent cut would mean 100
people, but the firm refused to comment. Hard Rock Cafe Hong Kong's financial
controller and general manager Kenneth Chiu said the chain was committed to
reopening the restaurant, "but that depends on the environment ... I don't think
we will retreat."
Hundreds of bargain-hunters lined up at
Tai Lin Radio Services shops yesterday for tickets to its clearance sales, as
the 62-year-old chain winds up amid the financial crisis.
The multimillion-dollar Christmas
hampers once exchanged by the rich and famous appear to have fallen victim to
the financial crisis, but shops and hotels are hoping a range of less pricey
gift packs will persuade people to spend. Major retailers of Christmas hampers
say that although the catalogues were prepared more than six months ago - before
the financial meltdown - more mid-priced hampers have been introduced to give
consumers more options. InterContinental Hong Kong's HK$9,888 limited-edition
"ultimate travel" hamper, among the most expensive available, includes
delicacies such as bird's nest, abalone and caviar, as well as a bottle of 2000
Dom Perignon. Upmarket food store Great Food Hall - which in 2006 rolled out a
HK$475 million hamper that included a private jet, and that was never sold - has
toned down its extravagance and this year is offering hampers ranging from
HK$288 to HK$8,888. Mandarin Oriental's most expensive "deluxe gourmet" hamper
costs HK$6,780, about HK$1,000 more than its most expensive one last year. It
says the increase in the cost of imported food has kept prices high but believes
people will still set aside a budget for Christmas gifts. Hampers from the Four
Seasons cost about the same as its offerings last year - the most expensive is
HK$5,888 - but the hotel says they contain fewer imported items. The priciest
hamper from The Peninsula is HK$4,288. 
Lower rents brought about
by the financial tsunami have encouraged at least one foreign investor to expand
his business in Hong Kong. French high-end chocolate retailer La Maison Du
Chocolat recently opened its second store in Hong Kong, at the upscale Elements
mall in Tsim Sha Tsui. "The rent has fallen 20 percent now, which may be a good
opportunity to consider opening more outlets," general director Geoffroy
d'Anglejan Chatillon said yesterday. La Maison, which charges between HK$20 and
HK$45 for a morsel of chocolate, opened its first Hong Kong shop in Pacific
Place in June. "The business over the past few months is 30 percent above our
forecast. It's a surprise to us," d'Anglejan Chatillon said. The chocolate shop
currently has 17 outlets in the world's most expensive cities such as New York,
Paris, London and Tokyo. "We had planned to open shop in this part of the world
four years ago and we were looking at Hong Kong, Shanghai and Beijing. In the
end, we chose Hong Kong because we think it is a better gateway to the mainland
market," he said. D'Anglejan Chatillon agreed that while rents have come down
they remain higher than Tokyo and several other cities. He said millions of
euros have been invested in his two local shops. "But, since we sell luxury
items, that allows us to afford the high rent. We are looking for locations to
open two more shops in Hong Kong with luxury pedestrian traffic," he said.
Meanwhile, Singapore-based food court chain, Food Republic, is also planning to
further expand its business in Hong Kong. The chain opened its first food court
here in Tai Koo's City Plaza in 2006. It opened four more outlets this year,
including three recently, at Olympian City in Tai Kok Tsui, Plaza Hollywood in
Diamond Hill, and Silvercord in Tsim Sha Tsui.
Troubled blue-chip CITIC Pacific (0267)
may survive because of the HK$11.625 billion bailout plan from its parent CITIC
Group, but there is still a long way to go to restore investor confidence,
analysts said. Following yesterday's announcement that CITIC Group would inject
capital or issue convertible bonds worth HK$11.625 billion in CITIC Pacific and
take over a large portion of its toxic forex contracts, shares in CITIC Pacific
rose as much as 17 percent before closing at HK$6.62, 9.24 percent higher than
its last close on November 1, while the index slumped 5.5 percent. "It's the
best deal we could make after extensive talks with CITIC Group. They took the
largest part of the [forex] contracts and we will be left with few of them to
hedge our Australian business. We will monitor the situation carefully," a CITIC
Pacific spokeswoman told The Standard. The company also clarified that it would
issue convertible bonds rather than shares for direct subscription as the former
can be done more quickly. Despite efforts to revive the steel-to- property
conglomerate's fortunes, analysts remain skeptical about its future and are
concerned over a significant dilution effect from its efforts to raise capital.
"We believe the proposed deal provides the only option for CITIC Pacific. It
will be able to survive, thanks to strong support from CITIC Group and the
Chinese government, but the interests of shareholders will be significantly
diluted," said Merrill Lynch's Christie Ju. Citigroup analyst Anil Daswani said
the magnitude of the company's derivatives losses had damaged investor
confidence and led to a re-rating. He cut CITIC Pacific's target price to
HK$3.75 from HK$6.66 despite the rescue deal, and maintained a "sell" call.
China's industrial output last month
grew at its slowest pace in seven years. Factory production rose 8.2 percent in
October from 11.4 percent the previous month. Analysts said this showed China's
two economic growth engines - exports and the property market - need more
intervention and underscored an urgent need to boost consumption. The slowdown
in industrial production was unexpected, economists said, especially after the
good performance in September. Premier Wen Jiabao agreed. He was quoted by the
China Information News - the official paper of the National Bureau of Statistics
- as saying: "The impact of the global financial crisis on China's economy is
much worse than many had expected." This is Wen's most pessimistic assessment
since the economic meltdown began in the wake of the US subprime crisis. China
needs to focus on expanding domestic consumption through massive investment in
infrastructure projects and bank lending, according to JPMorgan chief economist
Frank Gong. Gong said government spending and possibly treasury bonds and new
loans from banks would be crucial to boosting domestic demand. "From past
experience, treasury bonds and new loans account for 70 percent of total
spending. Money from savings could be used for private investment and spending,"
he added. Gong estimated that 2.5 trillion yuan (HK$2.84 trillion) of the 4
trillion yuan stimulus package announced on Sunday would be new money. The rest
of the package comes from an unspent 1.5 trillion yuan allocated to
infrastructure projects under the current five-year plan. According to the
statistics bureau, key product categories either registered single-digit growth
last month or declined. Vehicle production fell 0.7 percent to 730,000 in
October and crude steel production declined 17 percent from a year earlier,
while slowing industrial production was reflected in exports as they increased
by only 6.8 percent year on year. This pointed to weaker demand from major
trading partners including the United States and Europe, which are experiencing
an economic slowdown. In the first 10 months, industrial output increased by
14.4 percent on an annual basis, the bureau said.
Chinese President Hu Jintao (C)
and his wife Liu Yongqing (1st R) arrive in Washington, capital of the United
States, on Nov. 14, 2008, for a summit to discuss issues concerning financial
markets and the global economy.
The Chinese government's
4-trillion-yuan stimulus package has come as a breather for many multinational
companies who are trying to weather the current economic storm. The government's
announcement of the huge investment plan on Sunday is expected to provide
additional opportunities for foreign investors in China. "This plan is
important, not only for stimulating the domestic economy, but also for
rebuilding people's confidence in the economy," said Cyrille Ragoucy, CEO of
Lafarge Shui On Cement, a joint venture between Lafarge and Shui On Group. China
has presented itself as "a role model for its stronger Western counterparts to
follow", said Noel Girard, strategic marketing director of Schneider Electric
China. The State Council plans to invest heavily on a wide array of
infrastructure and social welfare projects, including construction of new
railway lines, roads, airports and the rebuilding communities devastated by the
earthquake in Sichuan in May. The package may also spur demand for machinery and
construction materials. The government is slated to spend 600 billion yuan on
railway infrastructure next year involving 20 million tons of steel and 120
million tons of cement, Yang Zhongmin, an official from the Ministry of
Railways, was quoted as saying by Xinhua News Agency. Companies like Lafarge
have already commenced steps to increase their cement output. In the last two
months it has started working on new production lines in Guizhou and Sichuan,
with two more underway. "Lafarge wants to keep its focus on emerging markets,
like China. They will become main contributors of our global business," said
Ragoucy. Caterpillar, the world's leading construction and mining equipment
manufacturer, also sees significant opportunities for it from the stimulus plan.
"China represents a significant portion of the global sales opportunity for many
of Caterpillar's key products. The stimulus plan creates more opportunities for
us," said Thomas J. Bluth, vice-president of Caterpillar. A major highlight of
the package is the government's commitments to railway construction. The
government plans to build 10,000 km of railways in 2009 and 2010, involving an
expenditure of about 2 trillion yuan. "The 2 trillion yuan investment in the
railways represents big opportunities for us to supply railway equipment,
including high-speed trains, locomotives, propulsion and signaling systems,"
said Zhang Jianwei, president and chief country representative of Bombardier
China. Bombardier is a Canadian rail transportation equipment maker. The railway
expansion plan has also come as welcome news to Swiss engineering group ABB,
which launched a joint venture in Nanjing in April. The firm, ABB Traction
Converters Ltd, specializes in the design, manufacture, sales and service of
traction converters and auxiliary converters for the rail sector. "We are very
lucky (to have the joint venture in place) ... and hope to make the new
infrastructure constructions more efficient and reliable," said Brice Koch,
president of ABB China. Marianne Friese, secretary general of the European Union
Chamber of Commerce in China, is of the view that the fiscal package, "in
combination with policies of increased regulatory transparency and greater
openness toward foreign investors" will help China sustain growth.
State Grid Corp of China has
initiated an emergency procurement plan this year worth 2.7 billion yuan in line
with the government's policy to boost domestic demand.
Software giant Microsoft said it will
spend $1 billion on research and development (R&D) in China over the next three
years, reiterating its long-term investment after the company's recent
anti-piracy effort angered many users in the country. Zhang Yaqin, chairman of
China Research and Development for Microsoft, said the spending is mainly
targeted at staffing and resources for R&D. He said the investment does not
include the $300 million the firm is spending on its new research center in
Beijing. The investment plan came along with Microsoft's appointment of Simon
Leung, a former executive at Motorola Inc, as the new chairman and chief
executive of the firm's China operations. The position had been vacant since
September 2006 when Tim Chen, Microsoft's last China CEO, left to head NBA
China. The appointment and investment announcement came at a time when
Microsoft's Windows Genuine Advantage (WGA) program, which turns a user's screen
black if installed software fails a validation test, has enraged many Chinese
users. A Chinese lawyer even filed a complaint with the Chinese government
suggesting that the company should be fined $1 billion for hacking into the
computer systems of millions of users who have bought genuine software. Leung
said Microsoft would increase its cooperation with the Chinese government in the
future, denying that Microsoft faces any serious challenges in the country.
Although it is the world's second-largest PC market, China still accounts for a
tiny portion of Microsoft's global business due to piracy, which has helped
Microsoft gain a dominant market share in China but at the same time foiled its
further efforts to translate that into revenue, according to industry insiders.
Although Microsoft has convinced government organizations and PC vendors to use
genuine software in recent years, the use of pirated software remains high among
individual consumers. Microsoft has intensified its battle this year against
piracy in the consumer market. The company made a complaint to the Chinese
government earlier this year that led to the detention of Hong Lei, the author
of "Tomato Garden", a highly popular visually enhanced pirated version of
Microsoft Windows XP. It also announced a promotional plan in October to reduce
the price of its Office 2007 software from 699 to 199 yuan during the week-long
National Day holiday. But many Chinese consumers still feel the price of
Microsoft's products is far too high. Microsoft said it would establish an
executive management committee for China "because of the strategic importance
and huge business potential of the region". Its membership includes both Leung
and Zhang, as well as Eugenio Beaufrand, COO of Microsoft China, and Liu
Fengming, the company's vice-president who is responsible for legal issues.
Zhang said Microsoft's most comprehensive organizations outside the United
States are in China. He said the establishment of the committee would help the
company better coordinate its resources in the country. Microsoft opened its
first R&D center in China in 1995. Now the country is home to its largest R&D
workforce outside the United States, with 1,500 full-time research employees and
another 1,500 working on a project basis. Microsoft said earlier that it would
double the number of its full-time research employees in China to 3,000 over the
next three years. Last year, the company invested about $280 million in its R&D
activities in China. These investments are said to have helped Microsoft win
support from the Chinese government and boosted sales in the Chinese market.
Chief Executive Donald Tsang Yam-kuen has
proposed to mainland authorities that they introduce four measures to help local
companies cope with the financial turmoil. Returning from a tour to Dongguan ,
Guangdong, yesterday, Mr Tsang said the government had spelled out the hardships
faced by Hong Kong-based firms on the mainland. "In the face of the global
credit crunch and economic downturn, the government is highly concerned about
the difficulties faced by Hong Kong enterprises on the mainland," he said. Mr
Tsang said he had suggested that the mainland government ease requirements on
the export-processing sector, such as giving it an export-tax rebate and
introducing policies to help the transformation of the industry. He also
proposed that the mainland relax enforcement of the Labour Contract Law, a new
national law effective from January this year which requires more compensation
for workers than before. "Hong Kong enterprises are concerned that in complying
with the Labour Contract Law, labour costs will surge, flexibility in managing
human resources will be undermined, and labour disputes will arise," Mr Tsang
said. Another proposal was measures to help manufacturers sell their products on
the mainland, in view of the shrinking export market. He also asked the mainland
banks and relevant authorities to relax credits extended to Hong Kong firms
operating on the mainland. The chief executive visited a metal ware factory with
more than 1,000 employees in the town of Fenggang, and met about 20
representatives of Hong Kong-invested businesses in the Pearl River Delta. The
trip came one day after the Dongguan city government announced a 3 billion yuan
(HK$3.4 billion) rescue plan to assist foreign-invested small and medium-sized
enterprises. Mr Tsang also had a working breakfast with leaders of five major
chambers of commerce in Hong Kong to hear their views on how to weather the
financial crisis. Stanley Lau Chin-ho, deputy chairman of the Federation of Hong
Kong Industries, said obtaining loans was the biggest difficulty currently faced
by local businesses on the mainland, and he hoped the chief executive's appeal
for more lenient credit could be accepted by the mainland authorities. However,
Mr Lau also noted that some export products were unsuitable for transfer to the
national market. "Even if they could, the firms would need a lot of support from
the government to build up sales channels," he said.
Stephen Weaver, centre, president
of Las Vegas Sands Corporation Asia, attends a press conference in Macau on
Thursday. Around 9,000 construction workers are to lose their jobs as US gaming
giant Las Vegas Sands cuts back on a huge development in the gambling haven of
Macau, the head of Sands Asia said on Thursday. Stephen Weaver told a news
conference in Macau that most of the jobs would be lost in Hong Kong and
mainland. Las Vegas Sands, which operates two casinos in Macau including the
giant Venetian complex, announced this week it was halting part of the US$12
billion development on the Cotai Strip. It said it was having trouble accessing
credit during the global financial crisis but would continue to seek financing
that would enable it to complete the project, which includes an 1,800-room
Sheraton hotel and three casinos. Mr Weaver, the firm’s Asia president, said the
troubled casino company is in talks with a syndicate of banks to raise between
US$1.5 billion and US$2 billion. Sands, one of the casino companies hardest hit
by an economic slowdown that has ravaged the gambling industry, warned last week
it was in danger of violating loan agreements.
Cross-border co-operation between
Shenzhen and Hong Kong would be boosted under five new agreements signed on
Thursday, Chief Secretary Henry Tang Ying-yen said. Shenzhen residents should be
given free access to Hong Kong to stimulate the local economy, says a member of
Chief Executive Donald Tsang Yam-kuen's handpicked task force to deal with the
economic crisis. "Tourism is very important to Hong Kong's economy," Lawrence
Lau Juen- yee said in an interview with Xinhua News Agency, adding the
administration should also provide a visa-on-arrival service for Taiwan
residents. Lau was an economics professor at Stanford University before becoming
vice chancellor of the Chinese University of Hong Kong. He said anybody who has
lived more than five years in Shenzhen, has a household registered there and has
no criminal record should be entitled to free access. On other economic issues,
Lau attributed recent closures of retail and restaurant outlets to high rental
charges. He suggested a portion of the rent for those with longer leases should
be linked to the economic environment. "Tenants will pay more if they have
better business but will pay less when the economy suffers. This will benefit
both sides, at least tenants can continue to run their business while property
owners can still receive rent," he said. But he said there was no way to tackle
the credit crunch for small and medium- sized enterprises. "Banks lend to SMEs
because they provide properties and orders as collateral. Banks won't lend if
they don't have any collateral." He agreed with the government that Hong Kong
should still focus on financial development to attract capital from all over the
world though he did not think the current economic situation was as bad as it
was 10 years ago during the Asian financial crisis. "There were foreign hedge
funds speculating in the Hong Kong market in 1998 but you don't have that now
and many stocks have fallen to reasonable price levels," Lau said. He said the
economic situation in the mainland today was much better than in 1998. "China
has foreign reserves of US$2 trillion (HK$15.6 trillion) against only US$100
billion 10 years ago," Lau said. He said the negative macroeconomic impact to
the mainland can be offset by an increase in internal demand. The Task Force on
Economic Challenges had its first meeting last week and will meet again next
month to tackle the financial tsunami. Meanwhile, the government said the
multibillion-dollar loan scheme to provide 70 percent loan guarantees to help
SMEs can be implemented as soon as the Legislative Council's Finance Committee
approves the funding on November 28. Secretary for Commerce and Economic
Development Rita Lau Ng Wai-lan told a special Legco meeting the government
would announce more measures if needed.
Children get into the festive
spirit at the switching on of the Christmas lights in Tsim Sha Tsui East last
night. Hong Kong's holiday shopping season had its unofficial kick-off last
night when Christmas lights were turned on in Tsim Sha Tsui East. Shopping malls
are embracing the Yuletide spirit, and preparing for a busy buying season -
despite the global financial crisis. Harbor City in Kowloon would have its own
merry and bright lighting ceremony tonight at 6pm, said Canis Lee, assistant
general manager of leasing for Harbor City Estates. Spending there appeared to
have remained "relatively stable" last month, and, with customer visits and
spending increasing this month, the outlook remained positive not only for
Christmas, but for Lunar New Year and Valentine's Day, she said. "For the coming
few months, we are optimistic about the consumers' buying mood," Ms Lee said.
Harbor City would spend about HK$13 million on Christmas promotions - with half
of that amount going towards decorations and the rest funding promotional
events, performances and a Christmas Eve countdown party, she said. Decorations,
performances and promotions were also planned for the IFC Mall, which will hold
its lights ceremony at 5pm next Wednesday. "We hope to be able to create an
environment that shoppers - whether they come to actually shop or they just come
to browse around - will be able to feel the happiness during Christmas, and they
will be able to temporarily forget what's been bothering them," said Sonia Lui,
IFC Mall senior marketing manager. "That's why we did not reduce our budget for
Christmas this year," she said. The shopping centre is expecting to distribute
15,000 gifts this year compared with 10,000 last year, Ms Lui said. The gifts
are for anyone who spends HK$5,000 or more. "I cannot say if spending will be
better than last year's Christmas, but we do hope we can achieve the maximum,"
Ms Lui added. Meanwhile, Pacific Place "will have a series of programs" starting
on December 1.
Former Taiwanese president Chen
Shui-bian is now known as 2630. That is the number he has to use as long as he
remains locked up in the Tucheng Detention Centre outside Taipei.
A vendor offered bidding prices at the Victoria Park Lunar New Year Fair stalls
auction on Wednesday at the Queen Elisabeth Stadium in Wan Chai. In a sign the
international financial crisis is impacting on the local economy, fewer people
are bidding for stalls at next year's Victoria Park Lunar New Year fair.
Auctions of stalls for five Lunar New Year fairs in Victoria Park and Kowloon
start from Wednesday. The stalls traditionally stock food and other products.
The winning bidder of the largest food stall, surnamed Yip, said he has been
running stalls at the fairs for the last 10 years. Mr Yip said he was worried
business would be affected by the financial crisis. He expected revenue could
drop by 20 per cent compared with last year. Some 180 wet-goods stalls, 284
dry-goods stalls, eight thematic stalls and three fast-food stalls at the
Victoria Park Fair will be bid for on Wednesday and Thursday, local media
reported. The auctions for Lunar New Year Fair stalls in Hong Kong and Kowloon
will be held at Queen Elizabeth Stadium in Wan Chai on Wednesday and Thursday,
and from November 14, 17 to 19.Opening prices range from HK$7,840 to HK$191,820.
The auctions for four Kowloon fairs will be held on November 14, 17, 18 and 19.
On the first bidding day, prices bid for the fast-food stalls at the Victoria
Park Fair were lower than last year. One of the largest fast-food stall’s
opening prices was HK$190,000 and the highest price bid for it was HK$350,000 –
less than last year’s HK$390,000. For the new eight thematic stalls selling
traditional Chinese New Year’s food and gifts, there was only one bidder for an
opening price of about HK$28,000. No one has bid yet for the other seven stalls.
A worker outside the site of Macau's
new Sands casino. Macau Chief Executive Edmund Ho Hau-wah yesterday quashed
hopes that the Macau government would come to the rescue of troubled casino
developer Las Vegas Sands after the company was forced to suspend construction
of a US$3.3 billion Cotai resort complex. "The government has no plan to help
[Sands] with its financing," Mr Ho said at a press briefing after delivering his
annual policy address to the Legislative Assembly. He said that if the company
collapsed, the government would take over the running of its casinos until it
found a buyer. "The government will allow no gaming operation to go under. If
any casino company closes down, the bricks and gaming tables there can't be
moved away, and the government can get in," he said. Cash-strapped Sands said
yesterday that it would raise up to US$2.15 billion this week and cancel or
postpone US$1.8 billion in planned spending to avoid defaulting on bank loans
and the risk of bankruptcy. Most of the cuts will come from the temporary
suspension of construction on a 6,400-room complex across the street from the
Venetian Macao. The complex had been scheduled to open next year, containing the
world's largest Sheraton hotel as well as Shangri-La, Traders and St Regis
properties. The company has already spent more than US$1.2 billion on the
resort, which would employ more than 10,000 full-time staff. The suspension will
be bad news for the construction industry. Sands said yesterday that it still
owed US$385.5 million in construction payments related to the project. In
addition, construction workers accounted for most of the 15,950 foreign staff
employed by the company in Macau at the end of June. The company said it was
forced to suspend the project after efforts to raise US$5.25 billion in new
loans failed, confirming reports last month in the South China Morning Post (SEHK:
0583). Chairman and majority shareholder Sheldon Adelson said Sands might seek
to revive the resort with project financing, and it was in talks with an unnamed
mainland bank for up to US$700 million in loans. "We're moving along quite
aggressively and we're hoping we can solve this problem," Mr Adelson said. "The
Macau government has encouraged the Chinese banks to go along with us and we'll
see ... whether or not we get that [ financing]." But Mr Ho insisted: "The
government will not intervene in a private firm's financing plans." He predicted
casino revenue would average 7 billion patacas a month next year, down 25 per
cent. "There will certainly be pressure [on gaming firms], but they will
maintain a certain level of business income," he said. But he added that there
was no plan to cut the gaming tax rate. Mr Ho also said travel curbs from the
mainland would not be eased or further tightened in the short term.
Twenty units at Great Republic Lofts in
Los Angeles are on sale in Hong Kong. Property investment group IP Global has
launched the sale in Hong Kong of its latest portfolio - 20 loft-style
apartments in a central development in Los Angeles - despite some analysts
warning of an uncertain economic outlook for the United States. Hong
Kong-incorporated IP Global specialises in property investment in emerging and
recovering markets and bought some of the units in the distressed development at
what it said was a significant additional bulk discount. It now seeks to offload
them to cash-up for other investment opportunities. "The turmoil in global
financial markets and concerns over property values in the US have created
opportunities for smart investors seeking credit-crunch-resilient property hot
spots," said Tim Murphy, managing director and founder of IP Global. Up for sale
are units in The Great Republic Lofts, with sizes ranging from 665 square feet
to 981 sq ft. Prices range from US$328,000 to US$484,000, which, Mr Murphy says,
are on average 30 per cent below the price at which the development was marketed
in June last year and up to 10 per cent below the market prices of comparable
properties. The project would for now be launched only in Hong Kong. Mr Murphy
said response was so far encouraging since 10 of the 20 units up for sale were
sold within five days of the launch. He said California's history of fast
recovery from economic slumps because of its diverse industry and impressive
economy was a plus for investors, while the highly regulated and
consumer-protected market had limited supply that made an investment in the
state's property market all the more attractive. IP Global is also working on
securing access to developments in other US hot spots including New York and Las
Vegas. Jimmy Fong Man-bun, deputy senior director of Savills (Hong Kong)
residential sales, agreed that now might be a good time to go in search of
bargains in the US property market since prices had fallen substantially over
the past two years, and the market could undergo a quick rebound. He suggested
investors could look for scarce and quality properties in big cities such as New
York, Chicago and San Francisco, which generally offered higher growth potential
and were in greater demand. Since the Hong Kong dollar is pegged to the US
dollar, buyers need not worry about wild fluctuations in exchange rates, and
investors would be better protected from capital value fluctuation if developers
offered a guaranteed return, he said. However, some analysts expressed caution
about the economic outlook for the United States, and said the country could
have a long way to go before emerging from its current crisis. "I believe that
there are further corrections to come and therefore it is too early to buy -
unless there is an opportunity to purchase at a price that reflects forced sales
or distressed values," said Nicholas Brooke, chairman of Professional Property
Services Group. Mr Brooke added that careful due diligence on the history of the
asset and any outstanding obligations going forward was important in buying
overseas property. "Any buyer needs also to be particularly conscious of not
becoming over-extended just because the entry price appears attractive as the
cost over time may become expensive," he said. "As cash is king, ideally income
should exceed cost and any subsidisation should be avoided to preserve
resources." 
Teenagers suspected of taking drugs
across the border may be subject to compulsory drug testing when they arrive at
the Hong Kong checkpoint. The move was among the recommendations announced
yesterday by the Task Force on Youth Drug Abuse headed by Secretary for Justice
Wong Yan-lung to curb drug abuse. Wong said the number of young people going to
the mainland to take drugs was alarming as official figures show one in six
young drug abusers, or 17 percent, took drugs across the border last year. The
report said that abuse of psychotropic substances has replaced heroin as the "No
1 enemy" in Hong Kong's youth drug scene. In the recommendation, young drug
abusers will be given a warning and police will inform their parents when they
are caught for the first time. Rehabilitation and treatment may also be offered.
Prosecution would only follow if they are caught repeatedly. To ensure young
drug abusers would not go to the mainland to take drugs, the task force would
also consider introducing an extra-territorial coverage of the legislation.
Another major initiative is the push for voluntary drug testing schemes in all
schools. Currently only a few international schools are adopting the
arrangement. The task force, set up in October last year as one of the
initiatives announced in the Policy Address, will come up with a discussion
paper next year. "The primary purpose of the compulsory drug testing scheme is
to enable early intervention for treatment and rehabilitation. Prosecution is
our last resort," Wong said. Officials believe the measures would have a
deterrent effect on youth if their parents are notified. A government source
admitted the new arrangement may draw criticism and even legal challenges from
those who see it as an infringement of human rights or privacy. "However, we
need to strike a balance between human rights of individuals and public
interest. For example, it is widely acceptable to subject drivers to
breathalizer test to crack down on drunk driving," the source said. The source
also admitted there were concerns among schools and parents about possible
labeling effect if their students and children were found to have taken drugs.
"The government will map out a mechanism with schools and parents to help those
children instead of simply forcing them to accept the policy without giving them
further support," the source added. Committee on home school co- operation
chairman Wong Po-choi said he agreed with the proposal if the goal was to help
students cope with drug addiction, and not merely to punish them. "But keeping
children off drugs is everyone's responsibility, including parents and teachers.
Parents should have a higher awareness of drug-related issues; we're finding
that they lack this." Christian Zheng Sheng College principal Chan Siu-cheuk
wanted to see solid solutions in addition to the testing schemes. "I want to see
them as a means rather than an end to prevent youth from taking drugs." 
Macau Chief Executive Edmund Ho Hau-wah, in probably his last policy address,
announced a HK$13 billion package of infrastructure development, tax and
mortgage concessions and cash handouts to boost the economy.
Despite global turmoil, Salesforce.com's
Marc Benioff says he has not changed his expansion plans. The growing adoption
of online subscription-based business applications on the mainland is
encouraging major software-as-a-service (SaaS) players to push forward their
expansion plans in the country, despite the global economic crisis and its
impact on corporate technology spending. United States-based Salesforce. com,
the leading global SaaS provider, is looking to build up its presence on the
mainland "slowly but surely", with a focus on educating the market and enlisting
domestic partners, according to Jim Steele, the company's president of worldwide
sales. "If we're going to make China a huge part of our business, we're going to
have to invest heavily in resources there," said Mr Steele, without providing
details of any financial commitment. "Ultimately, to be successful, we have to
partner with Chinese companies." Salesforce, which supplies on-demand customer
relationship management (CRM) software through the internet to more than 47,700
firms and 1.1 million total subscribers worldwide, is currently ahead of SaaS
rival NetSuite in obtaining significant market share on the mainland. In
September, US-based NetSuite opened its Asia-Pacific office in Hong Kong to help
launch its service on the mainland next year. Both companies see growing
opportunities on the mainland, despite a softening of information technology
investment caused by the economic crunch. "In these uncertain times, people need
solutions that isolate them from risk. And we offer the type of solution that
does that," said Marc Benioff, the chairman and chief executive of Salesforce.
"We haven't made changes to our [expansion] plans." Mr Benioff said the company
was opening its first data centre in Singapore to address the requirements of
the Asia-Pacific market, covering both large and small companies in the region.
The market opportunity, according to research company Celent, is huge. "While
the global SaaS market is expanding at an annual rate of 25 per cent a year,
China's SaaS market is growing at a rate of 33 per cent every year," Celent said
in a report. It estimated the SaaS market on the mainland would reach US$3.8
billion by 2011, up from about US$1.8 billion last year. The worldwide SaaS
market is projected to hit US$19.3 billion by 2011. Celent said the advantages
of the SaaS model over traditional licensed packaged software included lower
capital expenditure, lower maintenance cost, more rapid implementation and lower
application risk.
Adam Yan, chief executive, eFuture Information Technology - EFuture Information
Technology, the largest vendor of software to the mainland's retail industry,
aims to maintain revenue growth at "50 to 70 per cent per year for the next
three years, including acquisitions", chief executive Adam Yan said. The
company, which Mr Yan founded in 1997, makes core technology systems for
retailers such as department stores, supermarkets and chain stores. Its systems
are used in areas ranging from store management to finance, logistics, inventory
control and customer relations management. More than 30 of the top 100 retailers
on the mainland, including China Resources (SEHK: 0291) Vanguard and Lianhua,
are its clients. Others include B&Q-Kingfisher China, Gucci China, China
Duty-Free Stores and Beijing Wangfujing Department Store Group. The company also
provides solutions for manufacturers such as Procter & Gamble and Johnson &
Johnson and their distributors. It has more than 950 retailers and 200
distributors as clients. EFuture has 20 offices and over 600 staff. Last year,
sales reached US$11.53 million, up 76 per cent from 2006. The firm made a loss
of US$3.8 million owing to the accounting treatment of its convertible bonds.
Adjusted earnings before interest, tax, depreciation and amortisation rose 86.59
per cent to US$2.91 million. The company expected sales to grow more than 65 per
cent this year to between US$19 million and US$20 million, and adjusted ebitda
at more than 72 per cent to between US$5 million and US$6 million. Mr Yan said
the global slowdown would affect consumer spending. "The export sector is
hurting badly with thousands of factories closing in the Pearl River Delta and
provinces like Zhejiang and Jiangsu. But domestic demand remains strong and will
drive growth for the next few years," he said. The retail industry has benefited
from the country's high gross domestic product growth in the past few years. For
the first nine months, sales of consumer goods reached 20 trillion yuan (HK$22.7
trillion), up 22.1 per cent from a year earlier. Growth from 2006 to last year
was about 16 per cent. To ease the impact of the slowdown in exports, Beijing is
taking steps to increase domestic demand. Besides spending over 2 trillion yuan
on railway infrastructure, it launched a rural land reform that allows farmers
to lease out their land for 30 years. "This in effect allows them to sell their
land. As they get rich, they will spend," said an industry insider. "And it is
expected 200 million of the 730 million farmers in the country will eventually
leave their homes to go to the cities. The growth from urbanisation will drive
GDP." Mr Yan expected the mainland's GDP growth to slow, but believed it would
stay at 8 to 9 per cent for the next few years owing to land reform and other
government measures. In fact, rather than shrinking its operations, Mr Yan has
made ambitious plans to grow eFuture. "We want to grow our market share to 18 to
20 per cent in the next three to five years from the current level of 8 per
cent," he said. The company is expanding to more than 200 third-tier cities in
the country. It is also fine-tuning its solutions to make them more
professional. However, there are still many challenges ahead for the company.
Apart from the harsh economic environment, eFuture is feeling pressure from both
the high end and the low end of the market.
Home prices in downtown Dongguan, the
mainland's leading manufacturing city, continue to fall as Hong Kong-owned
factories in the area close down and lay off staff. The closure of the factories
led to thousands of workers losing their jobs, and the outlook remained bleak
with more factories expected to follow as the global financial crisis hits
mainland export markets, property agents said. Technicians and middle and senior
management at the Hong Kong-owned manufacturers constituted a significant
portion of total homebuyers in the city, agents said. And with these would-be
buyers losing their jobs, demand for homes was drying up, said Susanna Wang
Yingjun, chief of Centaline China's Dongguan office. According to Centaline
research, home prices in Dongguan last month fell 2.6 per cent month on month to
4,939 yuan (HK$5,606) per square metre. That compared to prices that ranged
between 6,000 and 7,000 yuan per square metre at the market's peak in July.
House prices jumped to 6,864 yuan per square metre in July last year, a 20 per
cent increase from June. Last month, Hong Kong-owned Chong Yik Toy, BEP
International Holdings, Smart Union Group (Holdings) and Peace Mark (SEHK: 0304,
announcements, news) (Holdings) declared bankruptcy, leaving more than 8,600
factory workers in various Guangdong cities without jobs. Xinhua reported that
more than 3,600 toy factories in Guangdong shut down from January to July this
year and at least 2.7 million workers in southern China are likely to lose their
jobs, according to an estimate by the Dongguan City Association of Enterprises
with Foreign Investment. Ms Wang said prices in Dongguan reached a peak in July
last year but started slowing by the end of the year when the government issued
measures to regulate the market. She said home prices fell sharply in the first
quarter of this year when major property developers cut prices in the city by
one-third to lure buyers. Agents said another factor hitting the city's market
was abundant supply. There were units in 15 developments offered for sale
yesterday, eight of which are in the downtown area. About 298,000 square metres
of residential space was sold last month, an increase of 32 per cent from
September but down 22.76 per cent on sales in October last year. The major
increase was in the Golden Week holiday at the beginning of last month, ahead of
the news of factory closures. 
Kim Mak of the Hong Kong Jockey Club signs the memoranda. Hong Kong will fund
five more reconstruction projects in the earthquake-stricken areas of Sichuan ,
including a comprehensive rehabilitation centre for quake victims and an Olympic
school to train local sporting talent. During his visit to Sichuan yesterday,
Chief Secretary Henry Tang Ying-yen attended the signing of a letter of intent
on the construction of the Sichuan-Hong Kong Rehabilitation Centre and a set of
memoranda on four medical and education projects funded by the Hong Kong Jockey
Club. Work will start on the five projects, together costing more than 600
million yuan (HK$683 million) by the end of this year and all are expected to be
completed in the next one to three years. "The global financial crisis is
affecting everyone in the world, but the situation of the quake victims in
Sichuan is not likely to improve without the help of others," Mr Tang said. The
rehabilitation centre will form part of the Sichuan Province People's Hospital,
and will provide wide-ranging rehabilitation services including orthopaedic
treatment, physiotherapy and occupational care, and clinical psychological
counselling. As one of the first batch of 20 projects funded by the Hong Kong
government, it will also serve as a training base for medical professionals in
the province. Patients with multiple amputations, paralysis or suffering serious
trauma will be the centre's main target groups. The four other Jockey
Club-funded reconstruction projects are the reconstruction and expansion of
rehabilitation facilities at Mianyang No 3 City Hospital, reconstruction of
Mianyang Youxian Zhongxing Junior Middle School, construction of new buildings
at Deyang No 5 Middle School and the expansion of Dujiangyan High School into an
Olympic school. The Olympic school will cater for more than 4,000 students and
provide general education and sports training for top young athletes selected
from across the province. The Jockey Club will earmark about 400 million yuan
for the four projects. Club chairman John Chan Cho-chak said the most important
thing at this stage was to rebuild lives and bring hope to the Sichuan people.
"We particularly hope to introduce special rehabilitation facilities in
hospitals and schools, to enable young people disabled by injuries from the
earthquake to resume their studies as soon as possible and continue their
rehabilitation therapy," he said. Chen Yu, 15, an amateur weightlifter at the
Dujiangyan Sports Centre, hopes to study and train at the Olympic School. "We
have around 40 weightlifters sharing just eight barbells. And our training room
is too small to accommodate all of us at the same time. You cannot imagine how
excited we were on learning this news," he said. Mr Tang said Sichuan party
secretary Liu Qibao would visit Hong Kong next week to discuss post-quake
reconstruction work.
Green Island Lighthouse
compound was built in 1875 and was not automotated until the 1970s. The
government on Friday declared the Green Island lighthouse compound a "monument"
under the Antiquities and Monuments Ordinance, a spokesman for the Development
Bureau said. The compound comprises an old lighthouse built in 1875, a new
lighthouse built in 1905, former European quarters and a light keeper’s house.
“Both the old and new Green Island lighthouses have served thousands of vessels
for many decades and contributed to Hong Kong’s maritime history,” the spokesman
said. The Green Island lighthouse started operating on July 1, 1875, three
months after Hong Kong’s first lighthouse was set up at Cape D’Aguilar. Upon the
completion of the new lighthouse in 1905, the old lighthouse lost its original
function. The new lighthouse was fully automated in the 1970s and is still in
use.
Companies from different sectors are being forced to lay off employees amid a
weakening economy and the prospect of mounting losses. Local real estate agency
Ricacorp Properties said it has axed 30 percent of employees since June, while
two international banks began sacking workers as part of plans to cut more than
12,000 jobs worldwide. "The number of staff was reduced to 1,000 from 1,400 in
the middle of this year,' Ricacorp managing director Willy Liu Wai-keung said
yesterday. Last month alone, about 200 people were laid off, he said, as the
agency is down to 80 branches from 120 in June. The firm said October commission
income was HK$22 million, down 3 percent from September, marking a low since
November 2005. But Liu said Ricacorp has stopped laying off staff for now.
Centaline Property Agency said it has no plans to cut staff. "We plan to run the
business by the current scale even though we are still suffering losses,"
Centaline chairman Shih Wing-ching said. "I think the worst of the market
turmoil, which was in September and October, is over." But he would not
speculate when the downturn would end. Midland Holdings (1200) corporate affairs
managing director Kitty Ip Kit-yee said the firm reduces jobs through natural
attrition. She said more than 100 employees had quit each month since July,
while Midland stopped adding staff from September. It has 3,100 staff, down from
3,800 in January, as its local branches have been reduced to 283 from 350.
Meanwhile, Goldman Sachs has begun telling 3,200 employees, or 10 percent of its
workforce, they are losing their jobs, Bloomberg quoted a source as saying. And
Citigroup has been notifying staff who are affected by the bank's plan to
eliminate 9,100 positions over the next 12 months, about 2.6 percent of its head
count.
Boston University, based in the United
States, said on Friday it would award Chinese director Zhang Yimou an honorary
doctorate. Zhang was the chief director of the dazzling opening and closing
ceremonies of the Beijing Olympic Games. The award ceremony will be held at the
university campus on May17, 2009, the university's vice president Laurie Pohl
told an audience at the Beijing Film Academy, the director's alma mater. Few
Chinese artists have been awarded honorary degrees by well-known U.S. schools.
One exception is Beijing opera master Mei Lanfang who attained an honorary
doctorate from Pomona College in 1930. Boston University President Robert Brown
said in a letter to Zhang that the degree marked his "successful pursuit of
artistic excellence" that had "enriched audiences around the world." Hugo Shong,
the university trustee who recommended Zhang for the honor, said the degree
recognized Zhang's status as a Chinese cultural symbol. Zhang is known for films
such as "Raise the Red Lantern", "Hero" and "House of Flying Daggers". His last
film was the 2006 historical epic "Curse of the Golden Flower", after which he
devoted his time to the Olympics.
China will allow insurance funds to invest in non-listed companies so as to
increase their investment opportunities, China Insurance Regulatory Commission
(CIRC) spokesman Yuan Li told reporters on Friday. The State Council, or
Cabinet, has given its approval to the idea and the CIRC was drawing up relevant
measures, Yuan said. Trial programs would start with major domestic insurers,
which had the ability to cope with investment risks, Yuan said, without
elaborating. Insurance funds now could only take equity stakes in major
infrastructure projects, such as the Beijing-Shanghai express railway, according
to Yuan. CIRC would not restrict domestic insurers' moves to invest overseas
because of the global financial crisis, he said. But CIRC would work to help the
insurers avoid risks from such investments.
Chinese Olympic gymnastics champion
Yang Wei (L) poses with his bride Yang Yun, a retired national gymnast on a fire
balloon during their wedding ceremony in Sanya, Hainan province November 6,
2008. 
Beijing's top Taiwan negotiator, Chen
Yunlin, and his wife bid farewell after their five day visit to Taipei on
Friday. Chen Yunlin, Beijing's top negotiator on Taiwan affairs, left Taipei on
Friday after a turbulent visit that produced landmark trade agreements but also
sparked angry protests by thousands opposed to China’s claim of sovereignty over
the self-ruled island. Mr Chen completed the highest-level visit to the island
by a Communist leader since the end of the Chinese civil war in 1949. His visit,
which included deals to open new trade and transit links and a brief meeting
with President Ma Ying-jeou, eased official ties between two sides that had in
the past come to the brink of war in one of Asia’s most dangerous flashpoints.
But protests from thousands of anti-Beijing demonstrators dogged Mr Chen almost
every step of his visit illustrating the obstacles that remain in the way of a
rapprochement. Beijing’s shift to charm diplomacy came after new leadership took
power on the island under Beijing-friendly Ma and recent Taiwan investment of
about US$100 billion in China. “Economically, the two sides, Taiwan and China,
have become integrated into possibly one entity in the future,” said Raymond Wu,
a political risk consultant in Taipei. The mainland has claimed sovereignty over
Taiwan since 1949, when Mao Zedong’s Communists won the Chinese civil war and
Chiang Kai-shek’s Nationalists (KMT) fled to the island. Beijing has vowed to
bring Taiwan under its rule, by force if necessary. “We believe the road ahead
is still very long,” Mr Chen said before leaving. “We expect to find this and
that difficulty, but we will overcome those to fulfill expectations of
compatriots of both sides.”
Workers start to put up
Christmas decorations outside Harbour City in Tsim Sha Tsui yesterday. Some
malls have increased their budgets for Christmas decorations. Undaunted by the
financial crisis, commercial property owners remain determined to show their
enthusiasm for the Christmas season by, in some cases, spending more this year
on lighting and decorations. "Christmas only happens once a year, and is an
important occasion," said a spokeswoman for Sun Hung Kai Properties (SEHK:
0016). "We want to decorate our properties and give the season a festive
atmosphere, cheering people up, especially in view of the current economic
circumstances. "Not only will we not reduce the scale and budget of our
Christmas promotions and decorations, but we have in fact increased the budget
this year [by 8 per cent to HK$13 million]." Such efforts are not being deterred
by repeated government warnings of a looming deterioration of the economy and
rising unemployment. Karen Tam of Harbour City Estate said: "We have not reduced
the budget, we have not shortened the duration of lighting, and we have not
downsized the scale of Christmas lighting or decoration. "In fact, we will
invite major celebrities this year to grace our kick-off," she said. 
Xinghua Vice-Mayor Gu Guoping displays a
hairy crab. Sales of hairy crabs, a popular delicacy, plunged by up to 70 per
cent last month as customers fretting about the financial crisis held onto their
money. Lau Pak-kin, the owner of Hung Fuk Company, a hairy crab wholesaler and
retailer in Kowloon City, said sales had slipped by two-thirds and he had to cut
prices to attract customers. A Mr Ho at Perfect Kingdom, a hairy-crab retailer
and wholesaler in Kwun Tong, said sales had slumped about 70 per cent last month
compared to October last year. The crabs, prized for their thick, creamy roe and
named for the hair-like growths on their claws, are at their best in the ninth
and tenth months of the lunar calendar - roughly corresponding to October and
November. "The gloomy economy must have affected our business. Many want to keep
more money in their pockets," Mr Lau said. He said the quality of crabs was good
but he had cut the price of large crabs from about HK$240 a catty (600 grams)
last year to about HK$200. Thomas Woo Chu, executive managing director and
general manager of Hsin Kuang Restaurant, which has more than 20 local outlets,
said the consumption of hairy crab dishes had fallen by 10 per cent last month
compared to one year ago. Meanwhile, officials of the Xinghua city government,
Jiangsu province, yesterday promoted the province's hairy crabs at the Kowloon
Shangri-La Hotel, praising their quality.
Adding to the decline in transactions and
prices at Residence Bel-Air is a rush by investors to quit their properties,
with one deal closed at HK$7,360 per square foot recently. Once the favourite of
property investors and home-seekers, Residence Bel-Air in Pok Fu Lam is being
shunned as prices and sales plunge in the secondary market. Prices fetched by
sales at the Cyberport development last month were down more than 40 per cent
from their peak in the first quarter, data shows. Despite the big fall in
prices, buyers remained in short supply and transaction volumes last month were
50 per cent lower than those recorded in September. Property agents said the
success of Bel-Air had been built on its attractive investment returns when it
was launched in February 2003. But it has now become a victim of that success as
investor demand dries up. As was the case with many other Hong Kong housing
properties, the decline in prices and deal volumes was also the result of
slowing demand as buyers stayed out of the market in the face of falling stock
prices and the uncertain outlook for property and the broader economy. Adding to
the decline in sales and prices was a rush by many owners to give up their
properties, the agents said. "But the trigger point for the fall was a
transaction of a 1,688 square foot unit in Phase 2 clinched at the end of
September when an investor cut prices sharply to HK$7,700 per square foot," said
Phoebe Leung Yuk-ching, a manager at Midland Realty's Bel-Air district. 
Chen Yunlin, of the Association
for Relations Across the Taiwan Strait, meets Ma Ying-jeou. Taiwanese President
Ma Ying-jeou and the most senior mainland official to visit the island since
1949 held a symbolic but historic meeting in Taipei yesterday amid fresh
protests by supporters of Taiwanese independence, which continued late into the
night. The five-minute meeting, rescheduled to try to avoid the rowdy
protesters, saw Mr Ma shake hands and exchange gifts with Chen Yunlin, who
represents the mainland in talks with Taiwan. The first contact between
high-ranking officials of the two sides since Taiwan and the mainland split at
the end of a civil war in 1949 came two days after the signing of deals on
direct daily flights, shipping and postal exchanges, and food safety
co-operation, that will pave the way for full cross-strait links in the future.
Mr Chen's visit has been dogged by protests. Early today thousands of riot
police were still trying to remove a hard core of 100 protesters from in front
of the hotel where the meeting was held. They hurled rocks and sticks at police,
and some threw firebombs. Police responded by beating protesters with batons and
shields as they dragged them away one by one. Several people, including police
and journalists, were injured earlier in clashes involving some of thousands of
protesters massed around the Grand Hotel. Most were supporters of the opposition
Democratic Progressive Party. Mr Ma condemned the DPP for inciting hundreds of
its supporters to besiege another hotel on Wednesday as Mr Chen attended a
dinner there. Mr Ma was deeply embarrassed by the demonstration, which trapped
Mr Chen inside for eight hours until riot police removed the protesters. All
attention yesterday was focused on how Mr Chen would address Mr Ma. While the
master of ceremonies at the Presidential Office was allowed to announce "here
comes the president", Mr Chen made no attempt to use that title, and did not
even use Mr Ma's name. He merely addressed Mr Ma as nin, the polite form of
"you" in Chinese, as he presented him with a painting of a horse after the
island leader had given him a vase. The character for Mr Ma's surname is also
the one for horse. In reporting the brief meeting, Xinhua and China Central
Television called Mr Ma "Taiwan's leader".
DPP supporters clash with police at
a protest against Beijing envoy Chen Yunlin in Taipei yesterday. Thousands of
pro-independence supporters in Taiwan, hurling rocks, bricks and full water
bottles, clashed with police yesterday in a protest against mainland negotiator
Chen Yunlin in which dozens were injured. Blowing air horns and chanting slogans
through loudhailers, the protesters shouted, "Safeguard our sovereignty" and
"Get lost, communist bandit Chen" as they rallied near the Taipei Guest House,
where Mr Chen was to meet Taiwanese President Ma Ying-jeou. The protesters,
mobilised by the Democratic Progressive Party (DPP), turned violent when they
found Mr Ma had met Mr Chen and left the meeting venue after bringing the
scheduled time forward from yesterday afternoon to the morning. "Back off. Back
off," they shouted, as they pushed down four layers of barbed-wire barricades,
blocking one access to the presidential office. Despite repeated appeals for
peace and calm by DPP organisers, protesters attacked police with clubs and
bricks, leaving at least 42 officers injured, Taipei police said. Police
precinct chief Tsai Chuang-po, whose lips were bloodied after he was hit in the
face by an object, shouted: "Peace. There's no need to get violent." Another
officer suffered an eye injury when one of the lenses of his glasses shattered.
A Taiwanese journalist was hit on the forehead by a piece of rock. "It just
landed ... from out of nowhere," she said as she was taken to hospital, the
wound needing eight stitches, and she was also treated for concussion. Eleven
other journalists were slightly injured after being hit by objects. One man was
chased and beaten by a group of protesters who suspected he was a plain-clothes
policeman. The victim was kicked and punched until he collapsed on the ground,
where he was stripped of his shirt and shoes. A number of protesters, including
some DPP lawmakers, were also injured, even though party chairwoman Tsai Ing-wen
had pledged that the protest would be peaceful. Ms Tsai, standing in a truck
labelled "Democracy Tank", said: "This is not the end, but the start, of [our
protest] against the impotent [Ma] government and tyrannical Chinese government.
There will be more protests in the future." She said the DPP was doing this "for
the future of Taiwanese people" and "defending Taiwanese sovereignty and human
rights". As she spoke, several hundred protesters, led by some DPP elected
officials, moved towards the Grand Hotel, where Mr Chen was staying. "Let's go
there to tell him Taiwan is Taiwan and China is China," shouted a protester who
led the crowd. But the protesters were blocked several kilometers from the
hotel, where police laid more barbed wire. 
Barack Obama supporters celebrate
victory in Hong Kong. Joyce Lewis, an American living in Hong Kong, sang out
loud and happily yesterday. The corporate technology executive wasn't seeking
attention, but Barack Obama had been named her next president, and friends asked
if she wanted to sing for the crowd at Election Central - a special bi-partisan
event held at the Hong Kong Club building. "As an African-American and a fellow
Chicagoan I am so happy," Ms Lewis said as she stood before hundreds of people.
She then invited the group to join her as she belted out a tender, high-pitched
version of God Bless America. Just six months ago, Ms Lewis moved from Illinois,
where she volunteered for the Obama campaigns for the Senate and the White
House. Yesterday, she shared her talent, touching the crowd with a brief,
powerful song that can summon feelings of hope, unity and patriotism. Senator
Obama's win "is a lifetime, jubilant moment", she said after performing. "It is
so special. It's probably the best moment in political history I will ever
experience." There was a lot of joy at Election Central, where many Democrats
and fewer Republicans came together and watched election returns on the internet
and CNN. At about noon, the crowd listened as the cable network announced that
Senator Obama had secured Virginia - and shortly thereafter, the American
presidency. Most of the group cheered in the large 15th-floor area, which was
decorated with American flags, and red-white-and-blue balloons and banners.
Anthony Spires, 38, a Chinese University sociology professor, was left
speechless once the news of Senator Obama winning the presidency became
official. It's "obviously very exciting - just disbelief", Mr Spires, who grew
up in Georgia, said. "It's going to change our country for the better, I hope
... He [Senator Obama] represents a different generation, a different outlook on
the world." Jaime Smith, 30, a clothing designer originally from New York, said
she clapped and "welled-up a little bit" when she heard Senator Obama triumphed
over rival John McCain. "I think he's [Senator Obama] a great candidate, and I'm
really excited about it," Ms Smith said. "And it's amazing to have a first
American black president. That's a big day in history." Baby Hefti, 50, who owns
a jewellery business in the city, couldn't contain her tears - and she's not
even American. "This is history happening now. We need change," Ms Hefti, who is
of Swiss-French descent, said. "Of course, he's [Senator Obama] going to be just
the president of America, but it affects all of us around the world," Ms Hefti
said. "And we need somebody like him to just change things." Local Republicans
at the event tried to take the loss in their stride - many of them giving up
expectations when Senator McCain couldn't secure Ohio or Pennsylvania during the
morning hours. Chris Exline, a Republicans Abroad board member, had placed a
McCain-Palin sign in his shop's window in Wan Chai. He said he would remove it.
Still, the loss, Mr Exline said, was "distressing, and it's scary". "The reason
that it's so scary is that I've just been hit with a 15 per cent increase in my
income taxes," Mr Exline said. "I now, as a person who is in the trading
business, have figured out that there are now more protectionist measures that
will be implemented in there. "And, like an American, there is change - but I
think change is the only thing that I'll have at the end of a day," said Mr
Exline, as he offered up a jingling handful of Hong Kong coins. "That's all I
got left," he joked. "I just got change." A mock election at Election Central
found that 90 per cent of people who voted yesterday favoured Senator Obama,
said Kathy Chiron, president of the League of Women Voters in Hong Kong. It's
not known how many of the estimated 60,000 Americans living in Hong Kong voted,
or how they decided to vote. Joseph Donovan, the US consul general, also
addressed the crowd. He concluded: "It's been a very long and hard-fought
political campaign, but I would also like to announce one other victor today,
and that's the American democratic process."
The proposed increase in the old age
allowance to HK$1,000 a month will cost the government an extra HK$511 million
this financial year, it said.
The latest episode in the long-running
PCCW (0008) saga - starring Richard Li Tzar-kai as the dealmaker trying to get
Hong Kong's largest telecoms firm off his hands - looks set to prove just as
dramatic as previous installments, as analysts expect minority shareholders to
balk at Li's low-ball privatization offer.
Top mainland envoy Chen Yunlin was
trapped inside a Taipei hotel early today as violent protesters clashed with
police in a bid to break into the building. The mainland negotiator had been
having dinner with the chairman of the Kuomintang, Wu Poh-hsiung, at the Grand
Formosa Regent hotel and was still unable to leave at midnight. Dozens of
protesters and some officers claimed they were injured during the protest, which
was the most violent so far since Mr Chen arrived in Taiwan on Monday. Taiwanese
police will go on red alert in a showdown today between the pro-independence
camp and the government of President Ma Ying-jeou over Mr Chen's landmark visit.
On the eve of the historic meeting between Mr Ma and Mr Chen, the main
opposition Democratic Progressive Party vowed to move tens of thousands of
opponents of the Ma government to lay siege to the Taipei Guest House, where the
two are to meet this afternoon. "This is the darkest week of Taiwan's history
because the government is incapable and reluctant to protect the sovereignty of
Taiwan," said DPP chairwoman Tsai Ing-wen, who vowed to rally 100,000 people to
protest against Mr Chen and the mainland-friendly president. Mr Chen, who heads
the Association for Relations Across the Taiwan Strait (Arats), led a 60-member
delegation to Taiwan on Monday for a five-day visit, during which he signed four
agreements with his Taiwanese counterpart, Chiang Pin-kung, on direct daily
flights, air cargo, shipping, postal exchanges and food safety co-operation. But
his talks in Taiwan were viewed by pro-independence and anti-mainland groups as
a result of under-the-table dealing between Beijing and Mr Ma with the final aim
of handing the island back to the mainland, despite Mr Ma's insistence to the
contrary. Government authorities have deployed up to 7,000 police officers to
protect Mr Chen, mindful of the attack on his deputy Zhang Mingqing by
independence advocates when he came to Taiwan in midOctober for an academic
visit. Tight security has been enforced since the first day of Mr Chen's visit
to ward off any potential assailants. But wherever Mr Chen has gone, there have
been protesters, waving the island's Republic of China flags and shouting, "Get
lost, communist bandit," prompting police to remove or disperse them. Ms Tsai
said she would face whatever consequences, including being arrested, for staging
the protest rally if it ended in violence. DPP spokesman Cheng Wen-tsan said
each of the party's lawmakers and elected officials was assigned to mobilise at
least 10 tour buses of supporters to lay siege to the Taipei Guest House. He
said the party had already applied for permission to stage a march around the
building. DPP officials in Kaohsiung said they would send 50 buses loaded with
supporters to Taipei, while officials in Tainan, Chiayi and Taichung all said
they could send at least 20 buses of supporters. The showdown today is
inevitable as Taipei police said they had already approved the protest
application. And Mr Chen said he was aware of the protests against him. 
China and Algeria voiced commitment
Wednesday to step up bilateral strategic and cooperative relations and called
for intensified cooperation in fields such as infrastructure, energy and
resource exploration. 
A woman admires a candy dragon made of
sweet potato sugar at Shiziqiao Food Street in Nanjing, Jiangsu province,
November 3, 2008. The five-day-long food festival started on Monday in the
eastern Chinese city. 
Flat prices are slashed at an
agency in Quarry Bay. Tightening credit by banks has been cited as a reason for
the decline in transactions. Now is no time to buy flats, says Stanley Ho, as
sales fall by 18pc. Tycoon Stanley Ho Hung-sun yesterday advised against buying
flats, while the latest statistics showed the number of property sales last
month fell by almost 18 per cent. Mr Ho, president of the Real Estate
Developers' Association, said it was not the right time to buy property,
although he expressed confidence in the long-term performance of Hong Kong's
economy. Asked if he would buy in the current property market, he said: "No. [I
think you] shouldn't buy anything now." He said it would take at least six
months for the housing market to find a clear direction. "Seeing such big
turmoil, we have to observe [for] at least half a year," Mr Ho said. He called
for people to have confidence in the resilience of the Hong Kong economy in the
long run. "In Hong Kong, I have seen all the turbulence [over the years]," he
said. "The most important thing is that people should have confidence. I myself
am very confident." According to the Land Registry, property transactions in
Hong Kong last month fell 17.8 per cent month-on-month to 6,054 deals, the least
since January 2006. But agents said the worst was yet to come, predicting that
the total number of deals in the market would drop to the 5,000 level, which is
close to the lowest mark of 4,622 lodged in February 2003 during the severe
acute respiratory syndrome outbreak. The figure of 6,054 transactions was 54.2
per cent lower than last October. The decline came as demand softened in both
the primary and secondary flat markets and investors stayed away from the office
sector. The value of total transactions dropped 19.6 per cent to HK$18.9 billion
as weaker demand - especially in the high-end sector - affected sales. Among the
total transactions, the number of home purchases dropped at a faster pace, with
a 22.3 per cent fall month on month, or a 58.1 per cent decline year on year to
4,719. The total value of residential transactions last month was HK$16.3
billion, down 13.1 per cent from September and 62.9 per cent from October last
year. "The property market has been seriously hit since the global credit crisis
worsened at the end of September," Patrick Chow Moon-kit, a research manager at
Ricacorp Properties, said. "Sales activity declined dramatically in October, and
that will be reflected when the Land Registry announces the figures next month."
The official figures for October better reflect market activity in September
because of the four-week lag between a transaction and its registration. Mr Chow
said the total number of property transactions to be reported by the Land
Registry next month could drop to between 4,700 and 5,000. "This will be the
second-lowest since February 2003," he said. Tightening credit by Hong Kong
banks was cited as a reason for the decline in transactions. Mr Chow said market
sentiment was better than during the Sars outbreak or the 1998 financial crisis.
But he still expected prices to fall 15 to 20 per cent in the next six months.
Millions of jobs at risk in delta, HK's
trade representative warns - Thousands of Hong Kong-owned enterprises in the
Pearl River Delta region will shut down and millions of workers will lose their
jobs if nothing is done to help them in the face of the global financial
meltdown, the city's trade representative in Guangdong warned yesterday. The
director of the Hong Kong Economic and Trade Office in Guangdong, Peter Leung
Pak-yan, said the worst was yet to come. He said he expected as many as 3,000
factories to close in the first half of next year, especially around Lunar New
Year, as the impact of the financial meltdown sank in. Mr Leung also warned that
the closures would have a knock-on effect, endangering even more delta
enterprises whose survival depended on Hong Kong-owned factories. Defending Hong
Kong-owned factories in the delta as responsible businesses, he said: "Many of
them would not have to fold if there was no credit crunch. "They are healthy and
energetic. The credit crunch affects their cash flow. So what we have to do now
is to make credit easier and suspend fees and freeze minimum wages so they will
have more cash on hand." Over the past month, Hong Kong-owned Chong Yik Toy
Company, BEP International Holdings, Smart Union Group (Holdings) and Peace Mark
(SEHK: 0304, announcements, news) (Holdings) have gone bankrupt, leaving more
than 8,600 factory workers in various Guangdong cities without jobs. Rising
labour costs, expensive raw materials and the rising yuan have been hitting
exporters in the delta for some time, but a credit squeeze is now worsening the
situation. Many cross-border manufacturers survive on loans as they compete for
foreign orders with thin margins. Xinhua reported that more than 3,600 toy
factories shut in Guangdong from January to July. At least 2.7 million workers
in southern China are likely to lose their jobs, according to an estimate by the
Dongguan City Association of Enterprises with Foreign Investment. The Hong Kong
trade office has sent a list of suggestions to the Ministry of Commerce in
Beijing after holding an emergency meeting with 22 business groups last week.
The suggestions included asking local governments to provide information to
banks to make it easier for the factories to get credit, and freezing minimum
wages for three years. Guangdong decided last month to put on hold,
indefinitely, a plan to allow workers to take part in factory decision making in
the face of opposition from tens of thousands of entrepreneurs. 
Tycoon Lee Shau-kee has reshuffled his
investment portfolio amid the volatile equity market and reduced his stake in
one of his favorite companies. The billionaire, who realized HK$616.9 million
from selling 31.82 million shares of China Life Insurance (2628) on October 30,
said he bought 1.25 million shares in Bank of East Asia (0023) yesterday for
HK$20 million. The chairman of Henderson Land Development (0012) said this was a
portfolio adjustment, locking in profit on China Life shares he bought five
years ago at HK$3.625 each. Lee gained HK$501.5 million from the share disposal
- six times the original investment. According to Hong Kong Exchanges and
Clearing, the billionaire sold the stake at an average HK$19.387 per share for a
total HK$616 million. The sale reduced the number of China Life shares held by
various Lee companies to 351.54 million. He bought about 435 million shares when
China's largest insurer listed in 2003. Meanwhile, Lee bought about 14.26
million units in Sunlight Real Estate Investment Trust (0435) at HK$1.903 per
unit last Thursday for a total HK$27.13 million. He now owns a 30.21 percent
stake in Sunlight REIT, from 29.56 percent. Lee had intimated plans to change
his investment portfolio in September but declined to reveal details. Shares of
China Life have plunged 48 percent from HK$39.85 on January 2 to HK$20.75 at
yesterday's close. BEA shares have sunk 69.5 percent to HK$16.20, from HK$53.10,
while the price of Sunlight REIT has dived 51 percent to HK$1.14, from HK$2.34
at the start of the year.
'Turning back the tide is
impossible now' - The momentum created by the cross-strait deals will be hard to
stop, analysts say. Beijing's top negotiator with Taiwan, Chen Yunlin, centre
left, shakes hands with his Taiwanese counterpart Chiang Ping-kung as they
exchange signed trade agreements after talks at the Grand Hotel in Taipei.
The country's main planemaker,
Commercial Aircraft Corp of China, has sealed a deal worth up to US$750 million
(HK$5.85 billion) to sell five of its ARJ21 passenger jets to General Electric's
aircraft leasing arm - its first major overseas deal for the home- developed
78-seater. The corporation signed a formal agreement with GE Commercial Aviation
Services for the ARJ21 at the Zhuhai air show, which opened yesterday. GE took
an option on another 20. "It is the first time that an aircraft that is
researched and developed by China is sold to the United States - such a high-end
market," said COMAC chairman Zhang Qingwei. The ARJ21 is expected to obtain
flight certification from Chinese and American aviation authorities by 2010,
with the aircraft to be delivered soon after that is secured. The first test
flight will be in Shanghai on November 16.
Toy exhibitor's stand at the recent
Canton Fair, which runs until Thursday. Cookware seller Qu Yanpeng does not have
to open a newspaper or turn on the TV to understand the impact of the global
financial crisis. She could tell from the lack of visitors to her booth at a
recent trade fair. Qu, a sales manager for well-known Chinese cookware brand
Supor, said that she had less than 20 clients on the first day of the ongoing
Canton Fair, as opposed to about 100 on previous occasions. She was echoed by
Cloyce D. Palmer, a buyer of agricultural equipment from the United States.
Palmer said businesspeople from his own country were conspicuous by their
absence from China's largest trade fair. In addition, he had no plans to buy
anything this year, since US distributors cancelled their orders before his
trip. This reflects how China's manufacturing sector is feeling the impact of
the financial crisis as demand from developed economies shrinks. Although
exports remain robust, the growth rate has declined, and fears mount that the
crisis may spread to non-financial sectors.
China Huadian Corp, one of the
country's five leading power producers, said it will invest more than 50 billion
yuan ($7.31 billion) in an integrated energy complex in the Caofeidian
industrial area in Tangshan, North China's Hebei Province.
The Commercial Aircraft Corporation of China (COMAC) will sell 25 ARJ21-700
regional jets to GE Commercial Aviation Services of the United States.
Shanxi village's cave dwellings are
no longer a sign of its poverty but the source of its new-found prosperity - At
the start of the 21st century, the Shanxi mountain village of Hougou seemed
destined to waste away like so many rural hamlets on the mainland. It had few
mineral resources to speak of, and farm harvests were usually poor because it
lacked other water sources to supplement the region's scant rainfall. Villagers
still lived in yaodong, the traditional cave dwellings common in northwest
China, and the annual per capita income was just 400 yuan (HK$453). Not
surprisingly, many young people, Zhang Zhifang among them, left to find a better
life in the cities. "At that time, our entire family of five earned about 2,000
yuan a year," recalls Zhang, who went to work in the provincial capital,
Taiyuan, eight years ago. "I made that sum as a waitress in three months."
Hougou's fortunes have now been revived thanks to a previously untapped
resource: its rich cultural heritage. Although some yaodong are little more than
hovels, Hougou has some of the mainland's most sophisticated cave dwellings.
"The architecture in this village is unique," says TV producer Fan Yu, who first
visited Hougou in 2004 to make a documentary about its cave dwellings. He was so
captivated by Hougou that he spent four years working on a book about the
village's cultural heritage, An Ancient Village Sealed Off by the Dust. Fan says
the village is at least 700 years old and its most splendid cave dwellings are
the legacy of ancestors who made their fortunes by trading tea, silk and salt,
and those who became important officials after passing imperial exams. "When
these wealthy forefathers returned home, they wanted to build grand homes with
intricate brickwork and wooden carvings they had seen elsewhere. However, they
still had a strong attachment to cave dwellings. The result was a combination of
cave dwellings and traditional courtyard houses," he says. These affluent
ancestors also left other architectural treasures. Besides a number of Buddhist,
Taoist and Confucian temples, there is also a shrine honouring the Dragon King,
the deity said to control rainfall, and an opera stage decorated with exquisite
wooden carving and murals (above right). A cave temple dedicated to the Zhang
clan points to the influence of the family, which is said to have first settled
in Hougou. More than half of the 250 villagers share the family name.
Victor Fung suggested greater protection
for exporters - Taskforce to focus on four vulnerable sectors - The risk of
economic recession in Hong Kong next year has heightened, Chief Executive Donald
Tsang Yam-kuen cautioned yesterday. His remark came after the first meeting of
the taskforce on economic challenges, which he set up to discuss ways to cope
with the global financial turmoil. "Being a small and open economy, the risk of
Hong Kong going into a recession in 2009 has increased," Mr Tsang said after the
three-hour meeting. Four sectors were particularly vulnerable, he said. "It is
expected that those sectors relating to financial services; trade and logistics;
tourism and consumption-related services; and real estate and construction will
be hit rather harder in the next year or so. "The taskforce has agreed to focus
its work on those four sectors, especially the financial services sector, which
is the anchor of all economic activities." Despite recent calls by lawmakers
that Hong Kong should consider reducing its reliance on the finance industry, Mr
Tsang said the financial sector would remain as the pillar for other sectors.
"We will not detour from the proper track just because there are crashes in the
financial system," he said. "New York has to do New York's job, London has to do
London's job, and Hong Kong has to do Hong Kong's job." The International
Monetary Fund's Asia and Pacific Department head David Burton, who briefed the
taskforce on the global financial crash and its impact on Asia, agreed that Hong
Kong's economic growth would slow "very substantially" next year, but remained
confident about its fundamentals. "By and large, Asia is very well placed - with
a strong macro framework, its high levels of reserves, and its [strong] banking
systems - to withstand these sorts of pressures," he said. "Unlike others, I
would emphasise that Hong Kong itself is extremely well placed to weather these
pressures because it has very strong fundamentals indeed." He hoped the global
economy would start to recover in 2010. Mr Burton said he did not see any need
for Hong Kong to reform its financial system or rules governing financial
institutions. He also praised the government's expansion of the
deposit-guarantee scheme. One of the topics addressed in the meeting was how to
help small- to medium-sized enterprises. Victor Fung Kwok-king, chairman of the
Greater Pearl River Delta Business Council and the International Chamber of
Commerce, suggested that the government-owned Hong Kong Export Credit Insurance
Corporation (ECIC) should expand the amounts and areas of insurance it provided
for exporters. "This would be of great help to SMEs," he said. "Banks would feel
much more relaxed about lending money to SMEs if borrowers had ECIC insurance.
In the long run, if insurance services could be extended to Hong Kong
manufacturers who operate on the mainland, this would provide a way for them to
sell products in the national market." He also said the taskforce would study
ways to speed up Hong Kong's economic integration with the mainland. Another
member, Margaret Leung Ko May-yee, HSBC (SEHK: 0005, announcements, news) global
co-head of commercial banking, did not answer directly whether banks could relax
on credit to SMEs, but said the key to the survival of SMEs was sufficient
demand for their products. The taskforce was to meet again next month, Mr Tsang
said. 
Jockey Club plans Olympic
school in Sichuan - The Jockey Club will earmark 400 million yuan (HK$450
million) to finance four reconstruction projects in quake-hit areas in Sichuan ,
including turning a school in Dujiangyan into an Olympic school providing sports
training for mainland and Hong Kong athletes. The Olympic school, which will
accommodate an estimated 4,500 students, will be formed at Dujiangyan Middle
School. Club chairman John Chan Cho-chak said it hoped to help athletes from 39
counties in Sichuan whose training had been severely affected by the massive
earthquake in May. "The club has long been committed to promoting sports
development, and the establishment of the Olympic school can benefit athletes
across the country, including those from Hong Kong who can benefit from exchange
programmes," Mr Chan said. The Olympic school project will cost 139 million
yuan. The other three projects to be funded by the Jockey Club are the Mianyang
3rd City Hospital, Mianyang Youxian Zhongxing Junior Middle School and Deyang
No5 Middle School. The four projects, which will cost a total of 400 million
yuan, are expected to be completed in 27 months. The funding comes from the HK$1
billion donation pledged by the Jockey Club in July for reconstruction of
quake-hit areas in Sichuan. Mr Chan said the club was exploring the feasibility
of funding other projects in the near future. The club was studying with Sichuan
authorities whether any of the four projects would be named after the Jockey
Club, he said. Mr Chan and Chief Secretary Henry Tang Ying-yen will witness the
signing of a memorandum of understanding with the Sichuan provincial government
on Friday. Mr Tang is scheduled to leave for Sichuan's capital, Chengdu ,
tomorrow. He will meet officials there to discuss Hong Kong's participation in
post-quake reconstruction work. He will inspect projects to be funded by the
Hong Kong government and facilities operated by Hong Kong NGOs. 
Allan Zeman shows off his new Hong Kong
passport and home-return permit at his office in Lan Kwai Fong. The businessman
says that, if he didn’t live in Hong Kong, he would live on the mainland.
Born-again Chinese - Allan Zeman is proud of his new nationality and doesn't
care who knows it - I'm Chinese. I'm Chinese. That's what I am," says Allan
Zeman, with his trademark grin. "I might not look Chinese, but I'm Chinese." The
Ocean Park chairman and colourful businessman is known for his flamboyant
publicity stunts - such as impersonating a Brazilian carnival dancer or a ghost
- but he is also known for his passion and devotion to a cause. This time, his
cause is proving he is a Hongkonger and not just a gweilo who happens to live
here. He has done so by relinquishing his Canadian citizenship and becoming
officially Chinese. "[It's] just my style, I'm committed. If I do something, I'm
really committed to it wholeheartedly," says the German-born Jewish-Canadian
businessman who has lived in Hong Kong for 38 years. A few days before this
exclusive interview, Mr Zeman had expressed his wish to talk to a Chinese
reporter about his new identity. So three of us - a Chinese reporter, a Chinese
photographer and an expatriate multi-media journalist - arrive at his spacious
and tidy office in Lan Kwai Fong. Mr Zeman proudly shows us his new personal
documents - the Hong Kong passport, the light pink home-return permit and the
three-star Hong Kong identity card - and says he is happy to be "a real local".
"I have always considered myself a local. I understand the culture. I understand
what local people want," he says. He understands the mainland too, he adds,
having set up his first mainland office in Changsha 30 years ago and then asking
a staff member to give him his Chinese name, Shing Chi-man. "I was in China
before anyone in Hong Kong was in China ... I was there doing business and so I
understood the changes taking place." Now he has the Chinese nationality of any
native Hongkonger, but just how similar is he to a native? "There is definitely
a difference in thinking. I understand two sides and wear two hats," he says,
adding that he believes travel broadens the mind. "Many [Hongkongers] have never
been outside Hong Kong so their thinking is still quite narrow." And what of
that other barrier, language? Mr Zeman speaks some Cantonese and Putonghua, and
says he will continue to learn them from everyday experience. If his new
nationality and commitment to public service are not enough to demonstrate his
fondness for Hong Kong and all things Chinese, during the course of a 90-minute
interview he says the words "Hong Kong" more than 120 times, "China" at least 60
times and "Chinese" no less than 22. "I love China, I love Hong Kong. This is my
home," the tycoon says, with remarkable regularity. He is still adjusting to his
changed status, he says. Our interview had to be rescheduled for four days later
than planned because his Hong Kong passport was not available for the photo
shoot; he had to apply for a US visa - something he never had to do with his
Canadian passport. "When I got my passport, I then found out that, to go to the
US, I needed a visa," he says. "The Canadian passport is very good; you can
travel almost anywhere in the world without a visa, but suddenly I felt very
strange ... it's like being reborn." It also felt strange when he received
written proof from the Canadian consulate that he was no longer Canadian. He
says he felt "kind of stateless" or "a man of no country" for a while. At the
China Travel Services he was dressed in his suit alongside a large crowd of
mainlanders getting their home-return permits. Despite his many years here, it
was "really funny", he says. Mr Zeman had better get used to standing out from
the crowd. On a recent trip to Beijing, travellers at the airport thought it was
crazy to seem him lining up in the queue for Chinese nationals. But the reaction
was only positive when he went to Immigration Tower to apply for his Hong Kong
passport, he says. "Many of the immigration officials were very surprised, very
excited to see me there ... because everybody recognises me, of course, I guess,
from Ocean Park and Lan Kwai Fong. They were very excited that I was actually
doing this and I could just feel they were honored," he says. "And I myself felt
I was doing the right thing when I saw that. I felt very welcomed by Hong Kong
people." He said that it further confirmed to him that he had made the right
decision. Mr Zeman first came here for business when he was 19. From the moment
he stepped off the plane at Kai Tak airport, Hong Kong seemed like another
world. He remembers that the smell of the harbour was terrible - the absolute
opposite of the city's Chinese name, which means "fragrant harbour". But the
hustle and bustle of Hong Kong, the cheung sam-wearing ladies and the expat
British - "career civil servants with pipes, short pants and polyester suits" -
had all created an exciting new experience for the young entrepreneur. "Whoa! I
could be on the moon right now but this is totally divorced to anything that I
have been used to," he says he thought at the time. "My God, I want to be part
of this community." Unlike many expatriates who think they will return to their
home country one day, Mr Zeman says he adopted Hong Kong as his home from day
one and never thought of moving. "I always said if I had to move, I would
probably move to [mainland] China," he says. "Though they [expats] spend their
whole life here, they still can't make the transition that they are living in
Hong Kong and this is home." He says that, unlike many expatriates who never
travel outside Hong Kong Island or Tsim Sha Tsui, he knows every area. Aside
from his well-known business interests, Mr Zeman is also prominent in government
circles, sitting on various advisory bodies. He says it is important for him to
"give back", especially by convincing young people that Hong Kong has a bright
future. He has also become more involved at the cutting edge of Hong Kong
politics, having campaigned for two Legislative Council candidates - Regina Ip
Lau Suk-yee and Lau Chin-shek - leading up to the election in September. Mr
Zeman says he does not have any plans to join a political party, including the
Communist Party. But his political stance is quite obvious. "I was quite
disappointed to find out in a survey that 70 per cent of young people are
pro-democrat and 30 per cent are pro-Beijing, because the government is very
misunderstood," he says. He was not thrilled to see bananas being thrown in
Legco, although he says that is the style of the League of Social Democrats.
There are other ways to show one's disapproval, and such behaviour "doesn't
really teach" young people. Asked if he is pro-government or pro-Beijing, he
answers: "I am pro-Hong Kong." "I understand all the sides. I understand people
marching, I understand why," he says. "Civil servants are always protecting, or
trying to protect, the public's money so sometimes they take certain decisions
which seem unreasonable to the public. For both sides, they can go about it in a
much simpler way." On universal suffrage, he thinks Hong Kong needs to study the
different systems and nurture more young politicians first. "It's not possible
for it to happen overnight. Remember, 1997 is only 11 years ago. I think that
we're at the point now where we are maturing, our parties are maturing," he
says, pointing to the problems in the Liberal Party. "Even if we had a
universally elected chief executive at the moment, Hong Kong would not have
escaped the financial meltdown that is taking place in the world. That would not
have changed anything," he says. "We are very lucky because we have China to
back us up; China sitting on US$1.9 trillion in reserves. We are part of China
now; China will do everything within its power to make sure that Hong Kong does
not go down."
David Burton says the mainland, which
heavily depends on exports, should keep reforms going to achieve a balanced
economy. IMF official sees mainland as oasis of stability in global turmoil -
China will provide an oasis of stability in a world haunted by financial crisis
and recession, an International Monetary Fund director said yesterday. David
Burton, the head of the IMF's Asia-Pacific department, said that despite China's
own economic slowdown, the country had many ways to shore up its economic
growth. Mr Burton said China's export-driven economy had been dragged down by
dwindling demand from the United States and Europe, and it could even miss the
IMF's forecast of 9.3 per cent growth next year. But the country was still
sitting on almost US$2 trillion in foreign exchange reserves and had a
relatively strong financial system. "The global economy is slowing sharply and
[the mainland] and Hong Kong are going to be significantly affected," Mr Burton
told the South China Morning Post (SEHK: 0583, announcements, news) before
meeting Chief Executive Donald Tsang Yam-kuen yesterday. "With its robust
reserves, I have no major worries about China, which will be a source of
stability for the globe for the next year or two." He said both the mainland and
Hong Kong would be well positioned to get through the crisis. Mr Burton said he
would discuss with Mr Tsang the latest financial developments in the US and
Europe. He pointed out that America's US$700 billion rescue package prevented
the US financial system from collapsing, although confidence was shaken. He
welcomed Beijing's decision to cut interest rates three times in six weeks and
its move to pump liquidity into the private sector by lifting the limits on bank
lending. He also supported Hong Kong's decision to guarantee bank deposits for
the general public, which created a level playing field with Europe and the US.
"Steps were taken and were the right ones to ensure full confidence in the
financial system," he said. On the fiscal front, Beijing intends to plough
hundreds of billions of yuan into infrastructure, such as railways and urban
facilities, as well as post-earthquake reconstruction in Sichuan, while offering
subsidies to lower-income groups and rural areas, in addition to public housing.
Monetary measures have intensified, with the savings deposit interest rate cut
27 basis points to 3.6 per cent as recently as last week to boost consumer
spending. Economists widely expect restrictions on the property market will be
relaxed soon to spur sales. Mr Burton called on Beijing to press ahead with the
development of its domestic consumer market, financial reform and yuan
appreciation in the near term. "China's economy heavily depends on exports,
which are slowing sharply because of a slowdown in the US, Europe and Japan. It
should keep reforms going to achieve a balanced economy." The National
Development and Reform Commission forecasts the mainland's economic growth will
slow to less than 9 per cent next year from 10.1 per cent this year. The
economy, which recorded the lowest growth in five years at 9 per cent between
July and September, advanced 9.9 per cent in the first nine months of the year.
Chiang Ping-kung (left)
welcomes Chen Yunlin as he arrives at the Grand Hotel in Taipei yesterday for
talks with the island to help enhance peace. The most senior mainland official
to set foot on Taiwan in six decades has called for the building of mutual trust
to pave the way for further co-operation across the Taiwan Strait. Leading a
60-strong delegation comprising mainland officials and high-profile businessmen,
Chen Yunlin , chairman of the Association for Relations Across the Taiwan Strait
(Arats), yesterday arrived in Taipei. He will pursue agreements, including
increasing the number of direct flights to 108 a week, operating direct
shipping, postal exchanges and co-operating to ensure cross-strait food safety,
despite protests by anti-mainland and pro-independence supporters. "Please allow
me to convey the goodwill wishes of 1.3 billion mainland people to their 23
million compatriots in Taiwan," said Mr Chen, whose association represents the
mainland in talks with the island in the absence of formal ties. "This visit has
not come easily. Only through talks shall we establish mutual trust and only
through co-operation shall we create a win-win situation for the cross-strait
economy," he said in a luxury hotel after landing in the Taiwanese capital amid
tight security. The government of mainland-friendly Taiwanese President Ma Ying-jeou
had to adopt tight security to ensure the safety of Mr Chen after his deputy,
Zhang Mingqing , was attacked by pro-independence supporters during a visit to
the southern city of Tainan last month. More than 5,000 police were deployed to
safeguard Mr Chen as he travelled from the airport into Taipei, where he is to
hold talks and sign agreements today with his Taiwanese counterpart, Chiang
Pin-kung of the Straits Exchange Foundation. The security measures infuriated
pro-independence supporters who did everything they could to voice their
protests against Mr Chen's visit. They believe his trip is the first step
towards cross-strait unification. Pro-independence groups, including the main
opposition Democratic Progressive Party, have accused the Ma government of
trying to sell out Taiwan. They have also claimed that the talks in Taipei are
just economic sweeteners aimed at wooing Taiwanese. The protests were joined by
Tibetan independence supporters and Falun Gong followers, who unfurled banners
accusing Beijing of political persecution. The DPP and other pro-independence
groups also started a five-day protest with a sit-in in front of the legislature
in Taipei. Mr Chen hinted at the welcoming ceremony that he had not been
affected by the protesters. "It was sunny when we boarded the plane in Beijing,
but drizzling when we arrived at Taoyuan airport and the Grand Hotel. Despite
the drizzle, the breeze is comfortable, signifying a success in our talks," he
said. Mr Chiang said Mr Chen's visit and the talks marked an important step to
further development of cross-strait relations. The Taipei talks, made possible
after Mr Ma of the Kuomintang took office in May, followed a historic round in
Beijing in June, during which the two sides agreed to operate weekend charter
flights, and to co-operate on tourism. Cross-strait talks had been suspended by
Beijing since 1999. Foundation vice-chairman Kao Koong-lian yesterday said the
two sides were expected to sign a deal today that would raise the number of
weekend charter flights from 36 to 108 a week, and the mainland would also agree
to open 16 airports in addition to the existing five.
Primary pupils get into the spirit of
their Halloween party at Quarry Bay School in North Point yesterday. Halloween
is upon us ... and it's got the administrators of the Precious Blood
Kindergarten in Happy Valley spooked. Apparently the spectre of a kindergarten
teeming with terrified tots has proved too much. They have cancelled the
school's annual Halloween celebration, allegedly because of complaints about how
scared the students, aged three to six, were after last year's party. However, a
source at the Catholic kindergarten said they believed the celebration had been
cancelled for religious reasons, an allegation that was denied by other
representatives of the kindergarten. "It's not because of religious reasons,"
said teacher Nathan Cattanach. "We've had the Halloween party for the last three
years. But this year we are cancelling it because the children were very scared
after last year's. You've got all the axes and the blood and people in costume
and the kids were a little unsettled by it. We will try to replace it with
something else. The idea is to mix it with another learning activity to soften
it a bit." Another teacher at the school said it had received complaints from
parents concerned about their terrified tots. However, other preschools
contacted by the Post told a different tale. "We have not had any complaints
about our Halloween party," said Wu Chiu-ha, chairwoman of St Teresa
Kindergarten, which runs a number of schools in the city. "The parents are all
very supportive of the party. They dress the children up in wonderful costumes."
She said the event was a fun way for children to learn about other cultures and
traditions, with the school's American English teacher telling Halloween tales
from her home and elsewhere. "It's not a religious issue for us," Ms Wu said.
"Halloween is just a happy party ... it's just for fun. Spokeswoman on early
childhood education Yung Hau-heung had strong views on the issue. "I'm a
Christian so I don't like Halloween," she said before refusing to answer any
more questions. 
Ocean Park cut admission prices by a third yesterday as the economic outlook
continued to grow gloomier. The reduction came as provisional figures from the
Tourism Board showed arrivals for the first 25 days of the month were down 1.9
per cent compared with the same period last year. Admission to the park for
local adults will drop from HK$208 to HK$145.60. Ticket prices for children
between the ages of three and 11 have been cut from HK$103 to HK$72.10.
Admission for residents aged 65 or above, and residents and non-residents under
three, will remain free. All guests will also enjoy up to 20 per cent off on
food and drinks, and souvenir items. A park spokeswoman said: "We haven't seen
any effect on the number of visitors [from the economic downturn] so far, but we
will monitor the situation closely." A spokesman for Hong Kong Disneyland said
its business had not yet been affected by the economic downturn. Tourism Board
chairman James Tien Pei-chun said it had revised its forecast of an 8 per cent
increase in visitor arrivals for the year to between 6 and 8 per cent. But he
said the total might well turn out to be below 6 per cent. Arrivals for the
first nine months stood at 21.76 million, or 6.9 per cent more than the number
for the same period last year.
Hong Kong has asked mainland authorities to trace the source of melamine
discovered in three egg samples.
Premier Wen Jiabao and
Russian Prime Minister Vladimir Putin look at a scale model for the development
of Astana in Kazakhstan. Premier Wen Jiabao said yesterday that China's
financial markets would remain stable enough to allow it to help ex-Soviet,
Central Asian countries weather the global economic crisis - assistance that
would strengthen its increasing influence in the region. Mr Wen, who was
speaking to prime ministers at the Shanghai Co-operation Organisation (SCO),
said ensuring the security of China's economy would be the country's most
important contribution to global financial stability. The organization is a
security grouping, dominated by Moscow and Beijing, whose other members are
Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. "It is necessary to exercise
greater interaction between our financial and business communities," Mr Wen
said. "SCO members must work ... to enhance the co-ordination of monetary
policies and improve financial controls." According to Xinhua, Mr Wen proposed
that SCO members must strengthen co-operation and discuss countermeasures to
weather the impact of the financial crisis. On SCO co-operation, Mr Wen
suggested increased investment in an interconnected infrastructure network and
joint energy, transport and communications developments among member countries.
China sits on the world's largest reserve of cash, giving it significant clout
in the energy-rich Central Asian and Caspian Sea region, which is believed to
contain the world's third-largest energy reserves. Russia and China have used
the SCO to try to keep the west out of Central Asia, but they also compete for
regional dominance. The Kremlin's hand, however, has been weakened by the
financial crisis, which has ravaged markets and left top Russian companies in
trouble. At yesterday's meeting, Mr Wen said Beijing would consider issuing
loans to members of the organisation to ensure food security and support joint
economic projects. "Because of the increasing relevance of food security, China
stands ready to assist SCO member organisations in the establishment of
important technical facilities for agriculture," Mr Wen said. Food prices have
soared because of increasing energy costs and disappointing grain harvests.
Impoverished Tajikistan has been worst hit. The crisis has also prompted Moscow
to ask China for loans to help energy companies pay their obligations to global
lenders. The loans-for-shares deal would oblige Russia to supply 15 million
tonnes of oil a year to China from 2011 to 2030 in exchange for US$25 billion in
loans to the state-controlled Rosneft oil company and Transneft pipeline
operator, Russian news reports said. Russian Prime Minister Vladimir Putin
sounded an aggressive note at yesterday's meeting, blaming "economic egoism" for
precipitating the current crisis without naming the United States. 
Mainland mobile operator China Unicom
(0762) said net profit for the first three quarters jumped 35 percent after last
year's one-off charge was not repeated and it cut down on sales and marketing
expenses in advance of the industry restructuring. Net profit rose to 6.99
billion yuan (HK$7.92 billion), in line with analyst expectations, from a
restated 5.18 billion yuan during the same period last year. Revenue from
continuing operations rose 2.8 percent to 48.45 billion yuan. Unicom recently
completed its merger with fixed-line operator China Netcom, as well as the sale
of its smaller CDMA mobile network to China Telecom (0728). Nomura analyst
Kelvin Ho said revenue growth momentum will most likely continue to be slow in
the fourth quarter, for both Unicom's mobile business and its newly-acquired
fixed-line operations. 
