China.Hawaii Chamber of Commerce ®
Hong Kong.Hawaii Chamber of Commerce ®
Hong Kong.China.Hawaii Chamber of Commerce ®

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How to Do Business with China, through Hong Kong & Setting up Business in China?
Hawaii Failed Business Image and Continue Missed Opportunities

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  Listen to MP3 Business Beyond the Reef” to discuss the problems with imports from China, telling all sides of the story and then expand the discussion to revitalizing Chinatown - Special Guest: Johnson Choi, MBA, RFC. President - Hong Kong.China.Hawaii Chamber of Commerce (HKCHcc) and Danny Au, Manager, Bo Wah Trading

BRENDA FOSTER, PRESIDENT OF THE AMERICAN CHAMBER OF COMMERCE IN SHANGHAI; "An Update of the Business Climate in China" to the Hong Kong China Hawaii Chamber of Commerce (HKCHcc) at the Pacific Club 2/14/2008

(approximate $ exchange rates: US$1 = HK$7.8, US$1 = RMB$6.8)

Aug 31, 2009

Hong Kong: The assets of the Exchange Fund, which is used to back the Hong Kong dollar, totaled HK$1,863.9 billion at the end of July, the Hong Kong Monetary Authority (HKMA) said on Monday. The figure was HK$30.7 billion higher than the total at the end of June, with foreign currency assets rising HK$39.1 billion while Hong Kong dollar assets fell HK$8.4 billion, the city’s de facto central bank said in a statement. The rise in foreign currency assets was mainly a result of purchases of foreign currencies with Hong Kong dollars and valuation gains on foreign currency investments. These increases were partly offset by a decrease in securities purchased but settled in the following month. The decline in Hong Kong dollar assets was mainly a result of a decrease in Exchange Fund Bills and Notes issued but not yet settled and fiscal draw downs, which were partly offset by valuation gains on Hong Kong equities held by the Exchange Fund and an increase in bank borrowings.

Kenneth Lau attends the Heung Yee Kuk consultative assembly on the Guangzhou-Shenzhen-Hong Kong rail link in Yuen Long. Rural leaders in Pat Heung have urged the government to consider moving a village whose residents have refused to make way for the multibillion-dollar railway project that will connect the city to the national high-speed network. Kenneth Lau Ip-keung, a Heung Yee Kuk member who yesterday met representatives of villages that will be affected by the Guangzhou-Shenzhen-Hong Kong express rail link, suggested the government move the community of Tsoi Yuen Tsuen - a strategy not used since the 1970s.

Five historic buildings – including the Old Tai Po Police Station – will be restored under a government scheme which aims to preserve Hong Kong’s heritage architecture. The Development Bureau said on Friday it was inviting proposals from non-profit-making organizations (NPOs) to help with restoration work under the Revitalizing Historic Buildings Through Partnership Scheme. The five buildings will be part of the second batch to be restored under the scheme. Along with the police station in Tai Po, the Blue House Cluster in Wan Chai, the former Fanling Magistracy building, the Old House at Wong Uk Village in Sha Tin, and the Stone Houses in Kowloon City. The government said successful NGOs applying under the scheme would receive a one-off grant, worth a maximum of HK$5 million. This is to cover the renovation and start-up costs for up to the first two years. Nominal rents would also be charged for the buildings. Commissioner for Heritage Jack Chan said the government hoped to use the buildings in a more innovative way. “By transforming them into unique cultural landmarks, we hope to promote active public participation in the conservation of historic buildings and, in particular, create jobs at a district level,” Mr Chan said. The Development Bureau will arrange open days with tours in September for applicants to visit the buildings. The deadline for applications is December 28. The revitalization program was first mentioned by Chief Executive Donald Tsang Yam-kuen in his October 2008 policy address. For more information, see: 

The Hong Kong police force has long been dubbed Asia's finest, our firefighters have won numerous medals at the World Firefighters Games and our immigration officers provide speedy service that lets us clear immigration in just eight seconds, a source of pride given the long queues in other cities. But this summer something has gone wrong with our disciplined services officers. Thousands of policemen threatened to stage a protest on the streets, ambulancemen said they might not provide some paramedical services to patients, and immigration officers publicly mocked their customs counterparts for idling at border control points. Meanwhile, the public was left puzzled and uneasy about all the demands for pay rises, and open arguments about salary differences between the officers during a global downturn that has seen many people suffer pay cuts and lay-offs. It all stemmed from police frustration at a long-awaited report on a review of the disciplined services grade structure, released last November, and the government's handing of it. The row has highlighted the crucial and unique role played by the services both in the post-handover special administrative region and the previous colonial structure. Hong Kong does not have its own army, and PLA troops are only in the city for defense. Law and order is maintained by the six official disciplined services - the police force, Fire Services Department (which includes the Ambulance Command), the Immigration Department, Customs and Excise Department, Correctional Services Department, Government Flying Service - and the Independent Commission Against Corruption, considered the de facto seventh service. With 53,005 officers, the services account for 32 per cent of all civil servants. They are recognized as guardians of the city's stability. But their pay scales and mechanisms have not been reviewed by the government for 21 years, despite many reforms. Until the November report, the last study was the Rennie Review, conducted in 1988 when the political and social landscape were very different. To add to the frustration, the overdue report was seen as a let-down. Tony Liu Kit-ming, chairman of the Police Inspectors' Association, said: "While the management and unions in the force had very high expectations of the review, we realised that the government had just given us false hope." Throughout the two-year consultation on the review, he said, many views and suggestions had been given to the government, and the lack of any objections had led them to believe that the government agreed. "But in the end we found our views had just vanished - like into a black hole," he said. A key complaint by the police was that their request for a pay mechanism independent from that of the other services was rejected. However, the report did recommend pay rises for nearly all grades of disciplined services officers. A police station sergeant with 30 years of service and earning HK$37,265 - already not a bad salary for a person with only secondary-school education, which is all most veteran junior-rank policemen have - would get a rise of nearly HK$3,000, to HK$40,900. By comparison, a fresh university graduate in recent years has typically been able to command only about HK$16,000. If all the recommendations in the report were implemented, they would cost the taxpayer an additional HK$700 million a year. When they were unveiled in November - at the height of the financial turmoil - Civil Service minister Denise Yue Chung-yee said the increases should be deferred "until Hong Kong's economy has returned to stability". The unions took a wait-and-see attitude. But their patience evaporated in June when, as news on their pay rises was still pending, the government announced a pay cut of 5.38 per cent for senior civil servants and a freeze for middle and lower ranks. "This is an injustice," Mr Liu said. "Why does the minister, with a salary of HK$180,000, have the same level of pay cut as a senior inspector on HK$50,000?" Thousands of off-duty policemen prepared to take to the streets in protest, which they called off only after a personal pledge by their commissioner, Tang King-shing, to fight for early and backdated implementation of the recommendations in the grade structure review. Political commentator Lo Chi-kin said Mr Tang's intervention was "a significant turning point" in the disciplined services pay dispute. "The commissioner took the role as union head, which totally deviated from the established procedures for handling pay issues," Dr Lo said. Mr Tang as commander of the force had the responsibility to present a clear stance on the labour rights of policemen and on the legitimacy of the police protest and its effects on society. He did neither and "dramatically switched his role to union head", Dr Lo said. Police are not allowed to go on strike. Demonstrations are allowed, but none has been held in the past three decades. Also, no trade union is allowed in the force, which is why the four bodies commonly referred to by the media as police unions - an accurate reflection of their function - are officially just "associations". The impact of Mr Tang's words quickly began to be felt outside the force with other services, which are allowed unions, agitating for their leaders and bosses to back them as well. At times, the discord descended into name-calling, with some disciplined officers lampooning firefighters for playing volleyball or having barbecues while on standby in fire stations, and the immigration union saying at a press conference that they were treated as a third-class department. An Immigration Department officer told journalists that customs officers were "always idling". The starting salaries for immigration staff are the lowest of all the services. They start on HK$24,050 - compared with HK$27,155 for officers of the same rank in the customs, fire services and correctional services departments, and HK$29,460 for a new police inspector. Chief Executive Donald Tsang Yam-kuen's June 25 declaration of his family links to the police and "deep affection" for the force only served to deepen the divide. "My father was a police officer, my younger brother was a police officer, my sister-in-law was a police officer, my uncle was a police officer," he recalled, in urging the police to reconsider their protest. While the march was called off, a police unionist confided that Mr Tsang's words had spurred ill-feeling in the force, with many thinking he had made them a joke among the other disciplined services, while not helping them in their pay fight. "This is an example of the poor political spin-doctoring skills that the chief executive's aides provide," the unionist said. Firefighters' union chairman Chiu Sin-chung was moved to declare at a press conference in the middle of this month: "The chief executive is not our relative, but all disciplined services are his limbs, his brothers. We believe the chief executive does not wish to see the brothers in discord and criticising one another." He went on: "As a responsible labour union, we will not threaten residents or confront the government to get what we want. This is selfish behavior." This summer of discontent seems set to simmer for several more weeks, with Miss Yue due in either September or October to present for discussion a proposal for Exco's final decision on the implementation of the review. Disciplined services unions have realised that the review will not result in any structural change, but are determined that any pay rises should be backdated to November and that the government should promise a proper salary review every six years. Without these, the dispute can only heat up again, resulting in a more vociferous union movement in all the disciplined services. The Government Disciplined Services General Union has scheduled a forum for Wednesday and has invited heads of the services to attend, to listen to their grievances before the Civil Service Bureau submits its proposal. Dr Lo believes that something else is needed - an open clarification from Mr Tang of his role in the pay review, as his intervention deviated from established procedures and put chiefs in other disciplined services under pressure.

Fortis Insurance Co (Asia) is demanding that former regional director Inneo Lam Hau-wah, who was at the center of the recent PCCW (0008) privatization controversy, immediately pay back HK$34.92 million he borrowed from the company to make payments on a luxury Bel-Air apartment.

Air China (0753) is not planning to increase its stake in Cathay Pacific Airways (0293), easing market concerns over a mandatory general offer if it did.

Shui On Land (0272) said first-half net profit fell 45 percent because of the deferral of profit contributions from its high-end residential project Casa Lakeville and the lack of equity interest sales to strategic partners.

Emperor Watch & Jewellery (0887) plans to open up to 10 new shops in the mainland next year despite reporting a huge drop in first-half net profit yesterday.

President Ma Ying-jeou comforts a woman made homeless by landslides after Typhoon Morakot struck her village of Hsinkai, Pintung county, in southern Taiwan. Taiwan's president has not ruled out a chance meeting with the Dalai Lama when the Tibetan spiritual leader visits next week, officials said on Friday, a move that would sour the island's recent closer ties with the mainland. Beijing brands the India-based Dalai Lama as a separatist and has lashed out at Taiwan’s opposition, which invited the Dalai Lama subject to President Ma Ying-jeou’s approval. China’s reaction is also seen as a blow to Mr Ma, elected last year pledged to improve relations with Beijing, but only in the short-term. Neither side has discounted the possibility of a chance encounter during the Dalai’s Sunday-Friday visit to comfort victims of deadly Typhoon Morakot, the island’s worst storm in 50 years.

China: Hunan, one of China's top indium producers, has shut almost all crude indium production this month after environmental checks, trading sources said on Friday.

China's legislature yesterday adopted the first law on the country's armed police force, which reaffirms the central government's control over it and clarifies its duties. First established in 1982, the People's Armed Police is a special half-police, half-military force entrusted with the umbrella mission of "protecting internal security". However, its chain of command and administrative status have not always been clear. The high-profile use of the PAP in major events, from the Sichuan earthquake to riots in Tibet last year and Xinjiang this year brought its duties and rights under public scrutiny. "The passing of the PAP Law will not only provide a clearer legal basis and legal protection for the PAP when they carry out their safety missions, but will also provide legal guidance for the PAP to rein in their behaviour when carrying out their missions," National People's Congress Standing Committee law-drafting-office director Wang Shangxin said yesterday. Commander of PAP Wu Shuangzhan was quoted by Xinhua as saying yesterday that the PAP had been deployed more frequently in recent years on missions to restore social stability. As it had to handle more and more difficult situations, the law was urgently needed. The new legislation of the PAP, originally administered under the country's Defence Law, will divide its roles into eight main categories, from the protection of key personnel and strategic facilities to the handling of riots, violent crimes, terrorist attacks and other threats to society. The new law spells out limits on an armed police officer's power, including that they must not illegally detain or search a citizen, and must carry identification when on duty. But, ultimately, it reaffirms the joint and paramount jurisdiction of the State Council and the Communist Party's Central Military Commission over the PAP. A telling difference between the final draft of the law, which was passed yesterday, and the first draft in April, is a clause stating that all deployment of the PAP must follow a protocol set by these two top decision-making bodies. Although the protocol is not new, it now underlines the central government's determination to keep deployment of the PAP closely in its hands, mainland analysts have said. The passing of legislation in China normally requires three readings at the National People's Congress, but the PAP Law was passed yesterday after the second reading. Mr Wang said this was because discussions had been carried out for years on the law, which is built on existing regulations, with no real changes. Descended from internal guards and border patrols in earlier years of the People's Republic, the 680,000-strong PAP is considered a unit of the military, but subject to "unified leadership and management, with command divided by levels". The State Council is mainly in charge of daily deployments and the budget of the PAP, while the military is in charge of personnel affairs, political education and training.

China said on Friday it has revised its tariffs on imported auto parts after losing an appeal against a WTO ruling that it was breaking international trade rules. Effective from Tuesday, all imported auto parts will be taxed at the same rate regardless of the percentage of foreign-made parts used to make a vehicle, according to a notice posted on the website of the National Development and Reform Commission. The notice gave no details or reason for the change. However, Beijing was required to amend its regulations after the World Trade Organisation ruled against its policy of requiring foreign automakers to buy more than 40 per cent of the components used in any locally made vehicle from local suppliers or pay more than double the usual tariff on imported parts. The WTO ruling last year that such policies violate international trade rules was a rare coup for mainland’s trading partners. Beijing lost an appeal against the ruling in December. Mainland argued that the higher tariffs were needed to prevent automakers from evading steep vehicle import duties by importing cars in large chunks. The US, the 27-nation EU and Canada contended that the tariffs encouraged car parts companies to shift production to mainland, costing Americans, Canadians and Europeans their jobs. Failure to change the policy could have resulted in the imposition of sanctions.

China Mobile chairman Wang Jianzhou says smartphones using the company's operating system will be introduced soon. HTC Corp, the No 1 maker of mobile telephones using Google's Android and Microsoft Corp's Windows operating systems, will supply one handset model to China Mobile (SEHK: 0941) this year and six next year, said Wang Jianzhou, chairman of the mainland's leading mobile network operator. Taiwan-based HTC would manufacture a smartphone for China Mobile, the world's biggest telephone firm by market value, based on the country's TD-SCDMA technology, Mr Wang said yesterday. China Mobile plans to expand into the smartphone market as growth in subscriber numbers slows. Shipments of smartphones, mobile telephones that enable users to make voice calls, check e-mail and browse the internet, were forecast to exceed voice handsets by 2014, RBC Capital Markets Corp said in a report. China Mobile has climbed 3.3 per cent this year, lagging behind the benchmark Hang Seng Index's 43 per cent; HTC's 8.7 per cent advance this year trails the Taiwan Weighted Index's 48 per cent increase. Last week, China Mobile posted its first decline in profit since 1999. It said it would co-operate with vendors including Dell and HTC to develop handsets that used its own operating system. Smartphones based on China Mobile's operating system, which uses Android technology, would be introduced "soon", Mr Wang said last week. China Mobile added 15.96 million users in the three months to June, compared with 22.5 million a year earlier. It had 493 million subscribers at the end of last month, more than the combined populations of the United States and Japan. The stock fell 1.19 per cent to HK$79.05 in Hong Kong yesterday, while HTC closed up 1.81 per cent in Taipei.

Riled residents on Shanghai track attack - The construction of a high-speed rail link between Shanghai and the nearby city of Hangzhou is raising protests among residents who say the trains will run too close to their apartments - the latest hiccup in the long-debated project.

Cash for patriotism the reel deal for movie fans - Beijing officials will offer nearly 1 million discount coupons in a bid to get residents to flood theaters to watch patriotic films opening next month to celebrate the 60th anniversary of Communist China.

Bank of China (Hong Kong) said Thursday its half-year profit fell by 5.6 percent from a year earlier, dragged lower by falling interest income amid the deepening economic downturn. The bank's net profit for the six months ending June 30 amounted to 6.69 billion Hong Kong dollars, down from 7.09 billion Hong Kong dollars in the same period last year.

China's State Council, the Cabinet, warned Wednesday of overcapacity in emerging sectors such as wind power, saying the country would move to "guide" development troubled by overcapacity and redundant projects. Overcapacity has persisted in the steel and cement sectors, while redundant projects have surfaced in the emerging sectors of wind power and polysilicon, said a statement issued after an executive meeting of the State Council, presided over by Premier Wen Jiabao. "Overcapacity and redundant projects remain prominent because of slow progress in industrial restructuring in some of these sectors," the statement said. "Guidance" would be particularly enhanced on the development of steel, cement, plate glass, coal chemical, poly silicon, and wind power sectors, it said. The guidance would include strict controls on market access, reinforced environmental supervision, and tougher controls over land use. Banks were ordered to lend money for these sectors in strict accordance with present industrial policies. Relevant government agencies would also strengthen monitoring over industrial capacity in these sectors, and jointly release information on topics such as the current scale of operations, public demand, and government industrial policies, said the statement.

Aug 28 - 30, 2009

Hong Kong: The Practicing Pharmacists Association on Thursday warned parents not to overuse the anti-flu drug Tamiflu – because it might result in serious side effects for patients.

Paul Chu waves farewell to the media yesterday at HKUST's campus in Clear Water Bay. Hong Kong should seek the chance to position itself as something more than a financial hub following the financial meltdown, says the soon-to-retire head of Hong Kong University of Science and Technology. It would be in the city's best interest to co-operate with the mainland on the development of top technologies similar to those from Silicon Valley, Paul Chu Ching-wu suggested yesterday. The United States and Japan were devoting more attention to technological development after the crisis savaged their financial sectors and Hong Kong should follow their lead, he said at a media luncheon. "[The economies] of China and Hong Kong will recover faster than those in other areas. But we should seek the chance to position ourselves best," he said. Focusing on a single field could make society unstable, he warned. "The economic base of Hong Kong is very narrow. When it does well it does very well. When it's not doing so well, the situation turns really bad." An HK$18 billion Research Endowment Fund, approved this year, was a good initiative that boosted researchers' spirits. But the government should make sure resources went to outstanding projects, he said. "Hong Kong is a wealthy society. But it is impossible for all its eight universities to become top universities by international standards." There should be "mission differentiation" among universities, with each receiving resources to develop its key strength, the president said. The renowned scientist saw great potential in technologies that helped conserve energy. Semi-conductors - his research area - could help reduce energy loss during its transmission and save tens of billions in US dollars. Physical constraints meant it might not be possible to place solar panels in the city, but Professor Chu said local researchers could help mainland partners develop materials to transform sunshine into energy. Hongkongers had to seize the opportunity to co-operate with the mainland - the world's fastest growing economy. "The window of opportunity is already narrowing," he said, referring to great advances by mainland cities. In September, Professor Chu will hand over to Tony Chan Fan-cheong after eight years as president. His biggest regret was that the "University of Science and Technology hasn't turned into Massachusetts Institute of Technology yet". Eight years ago, his friends in the US bet he would not come to Hong Kong; now they bet against him returning to the US, he joked. The generosity of Hongkongers, such as their contributions to typhoon-stricken Taiwan and quake-hit Sichuan , had touched him. Professor Chu said the next stage of his life was conducting superconductivity research in the US in the hope of discovering a semi-conductor that worked at room temperature. "There are some goals that a person goes after in life. I still want to pursue my dream in the scientific field," he said. "I hope young people will find their aspirations and create something new for mankind."

A Japanese-American gambler who lost more than US$110 million in Las Vegas casinos is waging a Nevada court battle, the outcome of which could affect Hong Kong legal judgments against such high-rollers. Terrance "Terry" Watanabe, who lost the money in casinos owned by Harrah's Entertainment, is asking a Las Vegas court to throw out charges that he defaulted on gambling debts. He alleges the casinos plied him with alcohol and prescription drugs to keep him intoxicated while playing. He also claims that under the casinos' system for granting credit to high-rollers, his "markers" were, in essence, loans and that he should be given greater leeway in paying them. The Clark county district court has scheduled a hearing today to consider motions filed by the Nebraska philanthropist, who once ran a direct marketing business importing toys and novelty items from the mainland and Hong Kong. He is asking the court to dismiss a grand jury indictment against him for writing 38 bad cheques to pay gambling debts of US$14.7 million. If successful, Mr Watanabe's move could prompt a rethink of the way that Las Vegas casinos have, for decades, enforced gambling debts via the courts. It is a system that has been recognized repeatedly over the years in Hong Kong legal judgments against local, Macau and mainland high-rollers. By all accounts, Mr Watanabe, 52, was a "whale", or a gambler of epic proportions. His lawyers estimate his play at Harrah's Caesars Palace and Rio casinos in Las Vegas accounted for around 20 per cent of revenue at both properties in 2006 and 2007. Harrah's - the world's largest gaming company by revenue - created a unique "chairman" level in its customer loyalty programme, issuing Mr Watanabe a membership card signed by Harrah's chairman and chief executive Gary Loveman. Mr Watanabe's gaming history statement for 2007, issued by Harrah's and filed with the court, shows he lost US$112.01 million gambling at seven of the company's casinos that year. About half of that amount was from playing slot machines. "Terry Watanabe was among the most noteworthy gamblers in the history of Las Vegas," court documents filed by his lawyers said. Spokesmen for Harrah's did not reply to an e-mail and a phone call seeking comment. In the 1980s and 1990s, while running his family's Oriental Trading Company, which he sold to a private equity group in 2000, Mr Watanabe made about 20 trips a year to Hong Kong and the mainland. He would occasionally bet on horse races at the Hong Kong Jockey Club or visit casinos in Macau, but nothing on the scale of his recent Las Vegas activity, a source close to him said. Mr Watanabe was indicted by a Clark county grand jury in April on felony charges of theft. The judge in the case is scheduled to hold a hearing today on motions filed by Mr Watanabe's lawyers seeking to throw out the charges. Mr Watanabe's lawyers claim Harrah's Caesars Palace and Rio casinos plied him with alcohol and prescription painkillers over the course of several months in late 2007. While visiting the casinos during this period Mr Watanabe was "significantly and visibly intoxicated", to the point that his speech was slurred, according to filings by his legal team. He walked into doors and took naps at the tables while gambling, the filings said. Gaming watchdogs can take disciplinary action against casinos who allow visibly intoxicated people to gamble or supply them alcohol. But perhaps the bigger legal challenge being mounted by Mr Watanabe's lawyers is to the Nevada casino industry's system of issuing credit and collecting debt. High-rollers visiting Las Vegas usually sign credit agreements with casinos specifying a maximum amount of credit that can be issued. Each time a player draws down funds against the credit line he signs a specific "marker" for the amount, which is paid in chips. If the player loses and doesn't pay, casinos can then deposit the markers with the bad cheque unit of the local district attorney's office, which, under Nevada law, is empowered to take legal action to reclaim the debt on behalf of the casinos. Since at least the early 1990s, Nevada casinos have used Hong Kong courts to enforce gambling debts incurred in Las Vegas by punters from the city, Macau and the mainland. While casinos are illegal in Hong Kong, there are multiple precedents for local courts accepting the Nevada laws governing casino credit agreements. They allow Las Vegas creditors to enforce a debt against a punter's Hong Kong assets. High-profile cases have included that of Macau legislator, junket operator and developer David Chow Kam-fai. In 2000, he was sued in Hong Kong for nearly US$5 million in gambling debts related to a 1995 credit agreement he signed at the Sheraton Desert Inn in Las Vegas, which was subsequently acquired by casino developer Steve Wynn. Mr Chow and Mr Wynn settled out of court in 2004. This month, a High Court judge ruled that high-roller Henry Mong Hengli must pay US$3 million in casino debts to Mr Wynn's Wynn Las Vegas, which he ran up last year. Mr Watanabe's lawyers are seeking to dismiss the charges partly on the grounds that the credit markers he signed should not have been treated by Nevada authorities as "bad cheques" that were repayable on demand. His lawyers contends that he had a standing agreement with Harrah's that allowed him at least 60 days to repay markers - terms which made them more akin to loans. Should the judge agree with that argument, it could have a far-reaching impact on how courts in Nevada, and, in turn, Hong Kong handle casino debt cases. While Mr Watanabe may be one of the biggest whales in the pond, other high-rollers will no doubt be watching.

A union representing rank-and-file civil servants yesterday called on the government to extend retirement age from 60 to 65, saying the extra years in the service would help them make ends meet in old age. Although it is estimated that public coffers could initially save more than HK$500 million a year if the plan is carried out, senior officers and an academic believed it would block the career path of middle-age officials. At a meeting with Chief Secretary Henry Tang Ying-yen, Federation of Civil Service Unions chairman Leung Chau-ting said that many retired rank-and-file civil servants received small pensions and keeping them in the civil service could keep them off welfare. The government estimates that HK$17.5 billion will be paid to 109,750 pensioners in the current financial year. The total pension liability exceeds HK$427.6 billion. The Civil Service Bureau estimated that about 3,400 civil servants would retire each year up to 2012-13. If these officers work for another five years, it is estimated that an annual spending of about HK$540 million would be deferred, while the government's pension liability would also be reduced as the payout period would be shortened. However, Mr Leung's proposal was given short shrift by other civil service unions. Senior Government Officers Association senior vice-chairman Philip Kwok Chi-tak said that "having the old hands at the helm for all eternity would affect the grooming of the next generation". James Sung Lap-kung, a public administration academic at City University, said Mr Leung's proposal was not realistic, because senior civil servants could earn more in the private sector after retirement. A spokeswoman for the Civil Service Bureau said the government had no plans to change the retirement age of civil servants.

Sir Harry Fang at a fund-raising gala film premiere on March 5, 1981, at the Palace Theatre with Emily Shum (left), Anson Chan and (far right) his wife Laura Fang Ip. Throughout his long professional life, Sir Harry Fang Sin-yang, who died on Monday aged 86, was gripped by a passion to help the disabled. His success in doing so was recognised at the highest level. The professor of orthopaedic surgery at the University of Hong Kong was the first Asian to become president of Rehabilitation International. It was typical that when he was hit by a stroke at the age of 78, he kept a diary about his struggle to cope. He noted every step of his long road back to a fruitful life. The affable doctor laughed. "I'm benefiting from some of the programs I helped create." With his good humour, ready smile and ability to listen to anyone, Harry Fang was hugely popular. They had a name for him, one in which he took great pride: "the father of rehabilitation". For most of his distinguished career, he concentrated on making life better for the disabled, including those incapacitated by crippling disease. "For those I can't cure," he said, "at least I can improve the way they live, help them to enjoy a full and better life." He did that for thousands of people in Hong Kong and millions more on the mainland, helping them look forward to a quality of life that never used to be possible. Rehabilitation is now taught in medical institutions throughout the mainland. Kit Sinclair, past president and ambassador of the World Federation of Occupational Therapists, who worked closely with Sir Harry for more than 20 years on rehabilitation projects, described Sir Harry as "the grandfather of rehabilitation in Hong Kong and [the mainland]". "He dedicated his life totally to trying to improve the lot of people with disabilities," she said. "Sir Harry had the vision and foresight to prepare doctors in China to take up roles in rehabilitation through a truly innovative training program. He was inspirational in his breadth of thinking; of ways to spread rehabilitation techniques to every corner of China. His goal was to train 2,000 rehabilitation workers by the year 2000. This he accomplished by 1997." Dr Sinclair said Sir Harry's commitment to the principles of rehabilitation, his dynamic personality, his enthusiasm about people and the betterment of their lives had been a great inspiration to all who worked with him. Ruby Ho Shui-wan, who has been manager of the occupational therapist department at the MacLehose Rehabilitation Centre and chairwoman of the Hong Kong Occupational Therapy Association, agreed. "He was a dedicated man, a visionary," said Ms Ho, who worked with him for two decades. "He was so terribly charming and nice that people would do anything he asked. Sir Harry saw the need for rehabilitation in China. He knew the mould [in the mainland] should not be the same as in Hong Kong because in rural areas of China methods and daily interaction are so very different. "He initiated and created workshop community-based rehab in 1986. In Guangzhou, they set up a place for people to learn how to become occupational therapists, with students from many different provinces. Then fully trained occupational therapists would be able to help people all over China." Barbara Duncan, communications director of Rehabilitation International, said Sir Harry had founded many organizations on his own. "He collaborated with Beijing to build, from ground up, the Chinese Disabled People's Federation. Once he put his magic hands on it, people poured through the doors." Sir Harry, who was an uncle of former chief secretary Anson Chan Fang On-sang, traced his family roots to Anhui province. He was born on August 2, 1923, during his father General Fang Zhenwu's posting at the Kuomintang headquarters in Nanjing. In the 1930s, General Fang believed that the Nationalists should be fighting alongside the Communists against the Japanese - a view seen as undesirable at the time. He was killed by Kuomintang agents, Sir Harry suspected, in 1942. The rest of the family, led by Sir Harry's mother, fled Nanjing and lived for a time in Shanghai before reaching Hong Kong in 1936. Sir Harry studied at Queen's College and went on to study medicine at HKU. During the occupation, he fled Hong Kong and continued his studies on the mainland. He later gained a master's degree in orthopaedic surgery at the University of Liverpool, England. It was while working in the wards at Queen Mary Hospital in the 1950s that Sir Harry began his intense interest in making life better for those with untreatable conditions. It was an era of fast-rising prosperity (SEHK: 0803) for Hong Kong, and he felt keenly that those who fell by the wayside should be cared for adequately. A high-rise construction worker had fallen and was hopelessly crippled. He would never walk again. Sir Harry not only helped the man gain rightful compensation, but also helped renovate his resettlement estate flat so the wheelchair-bound man could move from bed to toilet to kitchen. Then he found him a job in a factory. But realizing he had helped only one person, he was spurred into public service. "There were so many others who needed help," he recalled 45 years later. The best way to help the strickened lead full lives, he believed, was to teach them to look after their own needs. To do that, society had to offer special schools, therapy programs and trained staff. Sir Harry made full use of his 1974 appointment to the Legislative Council. By 1977, the government had published its first paper on rehabilitation and later laid down a 10-year plan. When he landed a five-year term on the Executive Council in 1978, Sir Harry used his influence to expand treatment and to emphasise top quality education for therapists. His work gained further momentum after he became president of Rehabilitation International in 1980. The UN declared 1981 the year of the disabled and, two years later, announced the decade of the disabled. Sir Harry was delighted; the doctor had fought for both moves. Sheila Purves, project director of the Hong Kong Society for Rehabilitation, which Sir Harry founded, described him as the epitome of leadership. "He would launch an ambitious project and give you his enthusiasm. He worked so hard we always had to run to keep up. "Dr Fang truly realized that surgery and hospitals weren't enough. What would happen to these young people after their surgery? Rehabilitation centers were needed in Hong Kong. Just because they were injured didn't mean they could not have a productive life." For many years, Sir Harry said, treatment for people with such ailments as cerebral palsy had been non-existent in Asian societies. Such patients led lives without hope or purpose, lying in a bed and waiting to die. Sir Harry believed that the survival spirit in people could conquer grave injuries or disabilities, and, with proper treatment, they could become useful, contributing members of society. A great way to do that, he believed, was through sport; he was the founding father of the Far East and South Pacific Games for the Disabled and was awarded the Paralympic Order in 2001 from the International Paralympic Committee. His idealism rubbed off on others. He organised Hong Kong's first disabled sports day, in 1970, founded the Paralympic committee in 1972 and, by 1982, was able to watch athletes from more than 20 countries take part in the Far East and South Pacific Games for the Disabled at Sha Tin. "Sports are competitive," he said. "They stretch people to the limit, goad them to excellence. A disabled person winning a gold medal for Hong Kong becomes a hero and gains widespread recognition." It was a matter of immense satisfaction for him to note that Hong Kong's disabled athletes had won 2,000 medals through the years. Sir Harry himself also won awards, including a knighthood in 1996 and the Grand Bauhinia Medal in 2001, both in recognition of his lifelong work for the disabled. Ms Duncan, calling Sir Harry a true humanist, said: "You could be the queen or someone like me, and he would treat you the same. He received diplomas, honorary degrees, a knighthood and every sort of honor one can think of, but he never changed. "The special thing about Harry was he truly understood the need for regional representation. New York and Geneva weren't going to cut it. Harry really got down to the everyday communication and regional representation which is so important. He saw openings and took them." After suffering his first stroke, Sir Harry suddenly found himself in a similar condition to many of those whom he had helped over the years. Ever optimistic, he insisted on following the lessons he had preached, and returned to work as soon as he could. But Sir Harry had a second stroke in 2003, and remained in hospital until he died. St Paul's Hospital superintendent Dr David Fang Chun-sang, a nephew, said Sir Harry was truly the founding father of equal opportunity. "Equal opportunities for sports, recreation and work for the disabled, among other things," he said. "He held the helm for society for 40 years and he has set the bar for the future. The effort must go on." Sir Harry is survived by wife Laura Fang Ip Hung-cho, a son and four daughters.

Bilateral trade between the mainland and India is expected to receive a big boost as China Low interest rates and risk aversion have drawn more investors to the property market despite the low yields it offers because rent rises are failing to match the demand-driven increase in capital values, agents say. Hong Kong Lands Registry data show 13 deals of more than HK$100 million were closed in the commercial property market in July, and total deal values reached HK$3.05 billion for the month, an increase of 68.5 per cent on the HK$1.81 billion worth of transactions in June. A total of 114 transactions of more than HK$100 million were done so far this year, with transaction values reaching about HK$25.7 billion - down 49 per cent on deal values of HK$50.3 billion for the same period last year, according to property consultancy DTZ. The July result was a 20-month high for sales values in the sector, according to Centaline Property Agency's research department. And more recent transactions show there is still no sign that investor appetite for commercial property is set to slow, agents say, citing the purchase announced last week by a Taiwanese investor and China Railway (SEHK: 0390) Logistics of 12 retail and office floors at Grand Millennium Plaza in Sheung Wan for a total of about HK$1.3 billion. Sino Land bought the 87-unit Fraser Suites serviced flats project in Wan Chai for HK$580 million last week. Hong Kong's second-largest developer, Cheung Kong (Holdings) (SEHK: 0001), has also been in the market with its associated companies in recent weeks, buying two small sites in Hung Hom and North Point for a total of HK$580 million. Henry Lam, a director of investment at Knight Frank, believes developers have returned to the acquisition trail because of strong sales in the last few months and limited land supply in urban areas. The outlook for the residential market was also encouraging, he added. "Demand for high-end residential flats in Hong Kong is unlimited due to the influx of mainland buyers and high land prices." The latest surge in investment activity follows a sluggish start to the year and bolsters suggestions that a turnaround is under way in investment sentiment. "Investors share different views about the market outlook as the property market is at a turning point. So you can see many investors offload their properties, while others are aggressive in acquisitions," said Alvin Yip Kwok-ping, the co-head of investment for China at DTZ. The year-to-date outcome was dragged down by a sharply lower number of deals completed in the first quarter because of the blow to confidence and economic growth from the global financial crisis. Sentiment had begun recovering in recent months, said agents. Kent Fong Chi-kit, the co-head of investment at property agency Cushman & Wakefield, said while investors and industrial enterprisers were the most active in looking for investment opportunities, foreign funds continued to focus on disposing of their properties. Gross yields on property deals in recent months ranged between 3 and 4 per cent, with a notable exception being the sale by Wing On Travel of the Rosedale on the Park hotel earlier this month at a yield of 6.5 per cent. Until recently, investors had remained willing to make aggressive bids to secure low-yielding properties, said Mr Fong. "They are cash-rich, and record low interest rates have helped them to generate higher net rental yield," he said. But Mr Fong now doubted whether the investment trend would be sustained at present levels despite lagging yields. "Rental yields of many retail shops have dropped to just 3 per cent or so, and net returns for investors will be reduced once interest rates begin rising again. In the meantime, it is unlikely that we will see a significant rise in retail rents in the short term," he said. Mr Lam believes a lack of reliable alternative investments and risk-aversion arising from the global financial crisis could continue to support investment in the market. "There are not many reliable investment alternatives available in financial markets," he said. That assessment was backed by Wong Chung-kwong, the general manager of the property unit of Capital Strategic Investment, which has responded to demand from investors by taking profit on its portfolio. "Rents on offices and retail properties have not rebounded significantly while their capital values have jumped sharply. I don't understand the reasoning behind the increase in capital values. Perhaps the investors are cash-rich and lack alternative investment targets," he said. Meanwhile, the booming market has provided Capital Strategic an opportunity to offload what it calls "non-core" properties. Last week, it sold an office building at Stanley Street in Central for HK$150 million in a deal that yielded just 2.3 per cent for the buyer. Now it is looking to buy back into the market, eyeing deals of HK$1 billion to HK$2 billion. Agents said Nexxus Building in Central and the remaining office floors at Grand Millennium Plaza in Sheung Wan are the major targets of investors in the short term.

HSBC Holdings (0005), which is committed to further development in China, has vowed to support Shanghai's bid to become a financial center like Hong Kong. "I sincerely hope that Shanghai will become a financial center, as China is able to have two centers, given its size," Vincent Cheng Hoi-chuen, chairman of HSBC's Asia-Pacific unit, said yesterday. Cheng said that competition in the banking sector between Hong Kong and Shanghai will only emerge in the capital market, and the two places should collaborate to sustain their development. "There should be enough capacity for companies to list in both or either market at the same time, despite more and more companies planning to go public in the capital market," Cheng said. He added the HSBC group will continue to commit resources to the mainland, tapping the country's growth potential. The group's latest venture is HSBC Life Insurance, which started operations yesterday in Shanghai. The firm is a 50-50 joint venture with Beijing-based National Trust. The new insurer, which currently employs 180 people, plans to hire 320 more staff within a year, said chief executive Terry Lo Kin-wing.

China: China Vanke, the country’s No 2 property developer, plans to raise up to US$1.6 billion via a new share offer amid a property revival, though the issue is likely to dent a wobbly stock market. A rebound in real estate prices has bolstered developers’ earnings and spurred them to raise funds for new projects. But worries about hefty new share issues have weighed heavily on mainland’s stock market as it struggles to stabilize following a two-week, 20 per cent slide earlier this month. The market was battered by concerns that valuations had become stretched after a heated 90 per cent rally earlier this year, as well as signs of tightening market liquidity as Beijing clamped down on bank lending. Mainland’s benchmark stock index initially slipped on Thursday following news of Vanke’s offer, falling as much as 1.2 per cent, but later clawed back to end morning session 0.4 per cent down. Vanke’s shares opened 2.7 per cent lower, and was down 0.2 per cent at 10.79 yuan. “The Vanke plan has investors worried about more possible fund raising and the pace of IPOs isn’t letting up, so confidence is waning in the short term,” said analyst Wu Nan, from Xiangcai Securities. Beijing is keen to bolster housing investment, to take over from spending on infrastructure as a driver of economic recovery. Housing investment rose an annual 11.6 per cent in January-July. The rebound poses a dilemma on house prices, however, as the government wants higher prices to encourage development, not speculation. Some economists are warning of a “false prosperity (SEHK: 0803) ” in an economy that is just recovering from the shock of the global crisis, while stoking worries over bubbling asset prices. In mainland’s property market, even some white-collar workers with relatively high incomes find it difficult to afford homes. Several developers have announced fund raising plans, with China Baoan Group on Wednesday saying it would raise 1.15 billion yuan in a private share placement. Vanke will use the offer proceeds to support housing projects and supplement its working capital. The housing rebound has driven up earnings in the sector, with developer Poly Real Estate Group announcing a 35 per cent jump in its first-half net profit. Vanke posted a 22.5 per cent increase in its first-half profit earlier this month and raised its this year target for housing starts. “The market has been looking forward to Vanke’s share offer for some time as we think it’s good for [the company’s] rapid development,” said Fang Yan, analyst at Guosen Securities Co. But the new offers have added to market jitters. Two big IPOs have been approved by regulators this month: a 6.4 billion yuan offer by China CNR Corp and a 16.85 billion yuan IPO by Metallurgical Group of China. China State Construction Engineering Corp, a building and real estate firm, last month raised US$7.3 billion in the world’s biggest IPO in a year, making it mainland’s biggest listed developer. Vanke’s planned offering is pending approval by shareholders and the China Securities Regulatory Commission. Vanke will price its new shares at no less than the weighted average of its locally-listed A shares over the 20 trading days up to the eve of publication of the issue prospectus, it said.

The former mayor of the thriving southern Chinese city of Shenzhen, who is under investigation for graft, was on Thursday stripped of his seat in the national parliament, state media said. The standing committee of the National People’s Congress stripped Xu Zongheng of his position due to “serious disciplinary violations”, Xinhua news agency reported. Xu, 53, was removed as Shenzhen’s mayor in June and placed under internal Communist Party investigation, a move that usually leads to the filing of criminal charges. According to Hong Kong news reports, Xu is being investigated for his links to leading Chinese tycoon Huang Guangyu, who was arrested earlier this year on suspicion of economic crimes, including manipulation of the stock market.

China has boosted efforts to become the dominant player in green energy - especially in solar power. Mainland companies' strategies have resulted in the halving of the price of solar panels on the United States market over the past year. Suntech Power Holdings, China's biggest solar panel maker, said it was selling solar panels in the US for less than the cost of materials, assembly and shipping to build market share. Backed by strong government support, Chinese firms are preparing to construct US plants to assemble their products to bypass protectionist laws. "I don't see Europe or the United States becoming major producers of solar products - they'll be consumers," said Thomas Zarrella, chief executive of GT Solar International, a US firm that sells equipment to solar panel makers. Since March, mainland authorities at the national, provincial and even local levels have competed with one another to offer solar companies ever more generous subsidies, including free land, and cash for research and development. State-owned banks are flooding the industry with loans at considerably lower interest rates than available in Europe or the US. Suntech, based in Wuxi in Jiangsu province, is on track this year to surpass Q-Cells of Germany to become the world's second-largest supplier of photovoltaic cells, behind only First Solar in Tempe, Arizona.

Workers clean up the logo for the Bank of China in Beijing. On Thursday, mainland's third-largest commercial bank by assets, said that its first-half profit slipped 2.5 per cent as lower interest rates hurt its margins. Bank of China, the country’s third-largest commercial bank by assets, said on Thursday that its first-half profit slipped 2.5 per cent as lower interest rates hurt its margins. Profit fell to 41.1 billion yuan (HK$46.70 billion), or 0.16 yuan per share. That compared with a profit of 42.2 billion yuan in the first half of last year. However, the second quarter saw a 21 per cent improvement in net profit compared with the first quarter of the year, the Beijing-based lender said. All the mainland banks have been squeezed by the narrowing of the spread between benchmark interest rates and financial market rates following repeated rate cuts by mainland’s central bank to boost economic growth amid the global financial crisis. Bank of China said its net interest income fell 8.3 per cent from a year earlier to 74.7 billion yuan. Net fee and commission income edged 2.6 per cent higher to 22.95 billion yuan, it said. An increase in government-supported loans aimed at stimulating the flagging economy helped to offset some of the decline in interest income, the bank said. Bank of China said its total loans rose nearly 31 per cent in January-June, while total assets jumped 18 per cent in the same period, to 8.2 trillion yuan. The bank reported a 14.4 per cent rise in net profit last year, down sharply from a 31 per cent rise in 2007.

China's sovereign wealth fund will increase new overseas investment this year by around 10 times from the previous year on signs the global economy has bottomed out, one of the organization’s top managers said in a newspaper interview. Gao Xiqing, president of China Investment Corporation (CIC), also said he was examining making new investment in Japanese companies and property on prospects of a recovery in the country’s economy, according to the interview that ran on Thursday in Japan’s daily Asahi newspaper. Sovereign wealth funds have been hit hard by ill-timed investments into western banks and CIC has been no exception, losing big on its ill-timed 2007 bets on Morgan Stanley and Blackstone. But there have been tentative signs they are coming back to the international capital market, with CIC and cash-rich funds from countries like Saudi Arabia expected to lead the way. CIC’s new investment overseas, which shrank to US$4.8 billion last year due to the deepening financial crisis, will increase by around 10 times this year to several tens of billion dollars, Mr Gao said. On whether Beijing will shift more from its US$2 trillion foreign reserves to CIC, Mr Gao said he couldn’t reply because it was a decision for the Beijing government. Created in September 2007, CIC manages US$200 billion of the country’s foreign reserves, now the world’s largest. Mr Gao said the organization held nearly 90 per cent of its management funds in cash or a similar form at the end of last year. That will change since financial markets are no longer in a state of crisis, although the global economy has yet to clearly recover, he added. Asked whether the fund will continue to emphasise natural resources companies, Mr Gao said it depended on whether investing in them would yield profits. CIC plans to invest up to US$2 billion in US mortgages as it eyes a property market rebound, a report said earlier this month.

Telecom Corp (SEHK: 0728) and Reliance Communications begin operating a new kind of Silk Road - the first direct terrestrial cable link between the two countries. The fiber-optic cable system, which was constructed separately on each end by the two carriers in a span of 15 months, was opened yesterday to bring high-capacity, enterprise-class connection to both countries' major cities and rural areas. Han Yihu, managing director at China Telecom, described the terrestrial link as "a landmark" that would "improve opportunities for international business development" in India and the mainland. Neighboring countries like Nepal, Bhutan, Sri Lanka, Pakistan and Bangladesh are also expected to benefit in the long term, due to the increased communications network bandwidth and global connection options. "India and China represent the largest growing economies in the world, and the current global economic environment requires ever increasing high-bandwidth, converged applications to be run between these markets," Reliance Communications president Punit Garg said. Bilateral trade last year between India and China was up 34 per cent year on year to US$51.8 billion. In the first half this year, bilateral trade was down 32 per cent year on year to US$19.61 billion due to the economic slowdown. Owen Best, president at Reliance Globalcom, the international business unit of New Mumbai-based carrier Reliance Communications, said the new cable system has an initial capacity of 20-gigabit per second. But it is designed to ramp up to the multi-terabit per second range. One terabit per second is a unit of data transfer rate equal to 1,000 gigabits per second. The China Telecom-Reliance cable crosses the Himalayan mountain pass of Nathu La, linking the Tibetan border town of Yadong on the mainland to the city of Siliguri in the Darjeeling district on the Indian state of West Bengal. Nathu La, part of the ancient Silk Road trade route, was re-opened in 2006 following a series of trade agreements between Beijing and New Delhi. The pass had been sealed by India since 1962 after the Sino-Indian border conflict. Previously, the only available option for high-bandwidth network connection between the two countries was via undersea cable routes through Hong Kong or Singapore. The disruption to major communications services in the Asia-Pacific due to recent typhoons and earthquakes has clearly exposed the risk of depending on those cables without redundant links on land, Mr Best said. The Reliance side of the terrestrial cable system stretched about 250 kilometers from the border pass. The length on the China Telecom side was not known. The project was part of a December 2005 deal between the two carriers to provide direct telecommunication services between India and the mainland. Calls between the two countries were routed via the United States or Europe.

Foreign aviation suppliers are competing for business opportunities arising from China's plans to build a jumbo jet. The nation is set to unveil a model for the commercial jet in two weeks. Commercial Aircraft Corporation of China Ltd (COMAC), which is in charge of the domestic jumbo jet project, will present a miniature of the homemade passenger jet C919 at the Asian Aerospace International Expo and Congress in Hong Kong between Sept 8 and 10, the expo organizer said. It will be the debut appearance of C919, it said. For the first homemade jumbo jet, the letter C represents China as well as COMAC, the first 9 implies forever in Chinese culture, and 19 means the jet will have 190 seats. As COMAC is pushing ahead with the homegrown passenger aircraft project, it has also accelerated talks to pick global partners for the program. The company has been intending to invite global cooperative partners to participate in its development plan. Wu Guanghui, chief designer of the program and deputy general manager of the Shanghai-based COMAC, said earlier that the aircraft will be designed and assembled in Shanghai, but will source parts and components globally, which is a model adopted by the two dominant aircraft groups, Boeing and Airbus. He said his company will choose international suppliers through bidding, but priority will go to foreign suppliers that design and manufacture products with domestic companies in China. The work of choosing suppliers is expected to be completed this year, Wu said in March. During the past 40 days, executives from major global aviation suppliers have paid intensive visits to COMAC, after the latter issued the invitation for tender on July 10 for engines and airborne equipment to be used on C919. Visitors included top managers of Honeywell, HP, Zodiac, Liebherr and Moog, according to the COMAC website reports. Because foreign suppliers are encouraged to enter into partnerships with Chinese manufacturers, Goodrich Corp made an attempt on Aug 12 to sign contracts with Xi'an Aircraft International Corp (XAIC) to form its first two overseas joint ventures, to manufacture landing gear and engine compartment components. "We believe they will give us an opportunity, as joint ventures, for both XAIC and Goodrich to participate in the C919," Goodrich President and CEO Marshall Larsen said. Meanwhile, China is speeding up independent development of aero-engines, so that China-made engines can power C919 as soon as possible. The first domestically developed engine for C919 is expected to be ready in 2016, and efforts will follow to develop a series of aero-engines, Wang Zhilin, deputy general manager of AVIC Commercial Aircraft Engine Co Ltd (ACAE), said yesterday. ACAE General Manager Zhang Jian said the company has completed its engine development plan, which is being examined by experts and will soon be delivered to the State Council for approval. he Guangzhou-based 21st Century Business Herald reported yesterday that the C919 project could bring nearly 200 billion U.S. dollars to suppliers by 2050. Citing industry information, the report said China needs 1,600 new jumbo jets, worth 150 billion to 180 billion U.S. dollars, by 2020. By 2050, China will need more than 3,000 new planes, which, together with other smaller aircraft and freight planes, will be worth 350 billion to 400 billion U.S. dollars. Zhou Jisheng, deputy designer of the C919, was quoted as saying that the parts on bidding, such as engines and airborne equipment, could amount to 50 percent of the cost for manufacturing a jumbo plane in the case of the Boeing 787. Therefore, suppliers could get nearly 200 billion U.S. dollars from the C919 project, the newspaper said. The homemade jet has been set to take its maiden flight in 2014, and acquire airworthiness approval and be delivered to customers in 2016. COMAC will develop cargo carriers and business jets in the future. China has been the world's fastest-growing aircraft market. According to statistics released by the Civil Aviation Administration of China, more than 193 million passengers traveled by air last year, compared to 186 million in 2007. The combined fleet of the country's air companies has risen to 1,961 from 1,591 civil aircraft in 2007.

Aug 27, 2009

Hong Kong: Just over half of health workers surveyed in Hong Kong do not want to be vaccinated against the H1N1 virus because of fears of the side effects and doubts about its effectiveness.

Out-going Hong Kong Monetary Authority (HKMA) chief executive Joseph Yam Chi-kwong said on Wednesday that Hong Kong’s currency peg to the US dollar should be retained. Mr Yam made the comments at a farewell press conference on Wednesday afternoon. He will officially step down on Sunday after 16 years as head of the HKMA. During his tenure, the Hong Kong economy has weathered many storms, most notably the 1997 Asian financial crisis and last year’s global credit crisis. The HKMA chief executive and other government officials have consistently defended the peg, saying it has been a bulwark against currency speculation for over 25 years. However, some commentators believe it should be replaced by a different system – or possibly one linked to the mainland’s yuan. The Hong Kong dollar is pegged at 7.80 to the US dollar but can trade between 7.75 and 7.85. The HKMA is usually obliged to intervene when the Hong Kong dollar hits 7.75 or 7.85. Mr Yam said the peg was still working well. “Hong Kong has developed a very healthy currency system. Besides, the market has also developed confidence in the system,” Mr Yam said. “I am sure the government and my successor will continue to support it,” he said. Mr Yam also said he did not have any specific plans in the short-term. “I intend to go to travelling in October,” he said. “But if the mainland or Hong Kong’s financial sectors want my help, I will certainly consider it. I have great enthusiasm for the finance industry,” Mr Yam added. He said he did not need to offer advice to his successor, Norman Chan Tak-lam. Mr Chan will officially become chief executive of the HKMA on Monday. “Mr Chan has a wide knowledge of the financial and banking systems in Hong Kong. I am sure he will do a good job,” said Mr Yam.

Minibuses will soon be required to install equipment limiting speed at 80km/h. The speed limiters, which will cost between HK$6,000 and HK$8,000, will be made part of licensing conditions either in the 2010 or 2011 legislative years, government sources said. The devices will prevent a driver from accelerating past a benchmark speed as a precaution following a spate of deadly accidents involving minibuses. The sources said three German-made speed limiters have been approved by the government as they meet standards set in the United Nations/Economic Commission for Europe International Vehicle Regulation and the European Community Council Directive. Higher speed settings will be allowed for green minibuses that need to travel on expressways. About 400 buses serving less than 40 routes can get this exemption, the sources said. The devices, which will have mechanical and electronic versions, will be sealed to prevent tampering. The government will be asking minibus manufacturers to help with the installation, the sources said. The Transport Department is drafting laws that it hopes will be passed by 2011 at the latest which will penalize minibuses not equipped with the devices. Public Light Bus General Association chairman Ling Chi-keung said they will meet with the department on Friday to discuss the details of the scheme. "We need to know if the manufacturers will provide maintenance and other details," Ling said. "We also want to discuss a grace period for old minibuses." On top of the speed limiters, black boxes similar to those on planes will also be made mandatory for new minibuses, the sources disclosed. But previous black box trials on old minibuses proved the equipment was susceptible to damage and tinkering. The sources said new rules on black boxes will ensure they are located in an appropriate location that will protect it from wear and tear and tampering. Training sessions on driving behavior and attitude for people wanting to enter the trade will also be made available. On July 27, a minibus collision on the Yuen Long highway killed four and injured 13. Two other women died on June 12 in a Mong Kok crash involving a minibus and a double-decker bus.

Parents with children moving into Secondary Four classes in September under the new "3-3-4" education system will have to fork out between HK$2,000 and HK$3,000 to buy textbooks that meet the new syllabus.

Troubled conglomerate Citic Pacific said on Wednesday its first-half net profits plunged 43.4 per cent because of reduced contributions from its steel investments.

Harry Fang Sin-yang - a leading pioneer of scientific medical rehabilitation in Hong Kong - died at the age of 87 on Tuesday after a prolonged illness.

Yacht Club bids to host top race - It's the Formula One of yachting, and Hong Kong wants a piece of it. The Royal Hong Kong Yacht Club hopes to bring America's Cup-class racing to Victoria Harbour. And the government, having lost to Singapore and Qingdao the chance to host a leg of the world's other top-notch yachting event, the 2008-09 Volvo Ocean Race, is backing it. With the America's Cup having descended into farce with holder Alinghi and challenger Oracle embroiled in a messy legal dispute ahead of their showdown in February in Dubai, the Louis Vuitton World Series has been conceived to give the rest of the world a chance to compete in America's Cup-class yachts. The Yacht Club has not said how much it would cost to stage the event but has applied for help from the government's Mega Events Fund towards the cost of hosting a seven-day World Series regatta in November next year. A person with knowledge of the club's application said it was for HK$10 million. Sailing superpowers New Zealand and the United States have agreed to compete in the World Series, and the club is planning to enter a joint Hong Kong-mainland team. The regatta, which would be the biggest sailing race held in Hong Kong, meets the requirements of the HK$100 million fund, which include attracting visitors to the city and bringing economic benefits. Chan Pak-ling, the Yacht Club's public relations and communications manager, said one of the prerequisites for applying the fund was to have attendance of at least 10,000 for the regatta. The club is confident thousands of Hongkongers would turn out. It has proposed the regatta village be set up at Central's Pier 10, now under construction on reclaimed land in front of City Hall. "This is like the Formula One of yachting and it is an honour for Hong Kong to host such a race," Ms Chan said. "New Zealand and the United States have already agreed to come with their top sailors, who have America's Cup experience." The club was hoping teams from Australia, South Africa, Italy, France and Britain would also take part, she said. A senior Home Affairs Bureau official with responsibility for sport said the government welcomed the proposal as an opportunity to host world-class competition. "We are still studying the proposal, but a race like the America's Cup in Hong Kong has plenty of merit," he said. The club's funding application will be assessed next month.

Leading business executives have left the political party that aspired to be their voice in the Legislative Council, leaving the sector without a united force to represent its interests. Debate is likely to become more polarised as a result, say observers of the political scene. The executives are among the 60 per cent of Liberal Party members who have jumped ship or been struck off its membership roll for not paying their dues since its electoral rout last year and subsequent split. The loss of 624 members has left the party with just 412, making it the second-smallest of Hong Kong's five major political groupings. Some business executives have joined Economic Synergy, a group set up in June by legislators who quit the Liberals, but one observer of the political scene believes some people in business have grown disenchanted with politics. The decline of the Liberals is a big turnaround for a party that, little more than a decade ago, aspired to become the city's ruling party. Founding chairman Allen Lee Peng-fei said the party had only itself to blame for the exodus. It had flip-flopped too often under pressure from Beijing and the Hong Kong government. Among the big names to have left the party since September are Airport Authority chief executive Stanley Hui Hon-chung; Herbert Hui Ho-ming, a former deputy chief executive of Hong Kong Exchanges and Clearing (SEHK: 0388, announcements, news) ; designer Kan Tai-keung; Henderson Land Development (SEHK: 0012) executive director Suen Kwok-lam; and Michael Li Hon-sing, executive director of the Federation of Hong Kong Hotel Owners. Steven Poon Kwok-lim and Lau Wah-sum, former legislators who co-founded the party in 1993, quit in November. Most lost their membership because they did not pay their annual dues of HK$150 on time. Party chairwoman Miriam Lau Kin-yee said memberships would be terminated once fees were three months overdue. "Prior to September last year, this requirement was not so strictly enforced," she said. Ms Lau, one of three surviving Liberal Party lawmakers, said the party believed that a smaller, but more committed and united membership was "perhaps better than having a larger membership that is mostly inactive". Membership plunged from 1,473 in 1997 to 253 in 1998, mostly because members had not paid their dues. The party had 881 members by May 2006, when it disclosed its membership list for the first time. The party plans a membership drive at the end of this year. James Sung Lap-kung, a political analyst at City University, said the business sector lacked an organised and strong force to represent its interests in the wake of the party's demise. "Compared with the pan-democrats and the pro-Beijing camp, the Liberal Party has been seen as a centre-right force in Hong Kong's political spectrum," Dr Sung said. "Political debate will become more polarised after its influence wanes." Dr Sung said it was important the business sector had a political voice. The Liberals won seven functional constituency seats in last September's election but all its candidates for direct election were beaten. Among them were James Tien Pei-chun, then the party's chairman, and Selina Chow Liang Shuk-yee, then its vice-chairwoman, who lost seats they had won in 2004. Both resigned in the wake of their defeat. The electoral setback called into question the party's future and the business community's participation in politics. Things got worse for the party when, days after the poll, one of its legislators, Lau Wong-fat - the chairman of New Territories rural affairs body the Heung Yee Kuk - resigned. A month later three more legislators - Jeffrey Lam Kin-fung, Sophie Leung Lau Yau-fun and Andrew Leung Kwan-yuen - followed him out of the door amid a struggle for the leadership of the party. The trio launched Economic Synergy in June. They were joined by Mr Suen, the Henderson director, and kuk chief Mr Lau. The group's convenor, Mr Lam, said it had recruited more than 100 members, including former Liberals. Mr Lee, the founding chairman, said the party had missed an opportunity to exploit Mr Tien's resignation from the Executive Council in 2003 in protest at the government's decision to put forward national-security legislation to enact Article 23 of the Basic Law. Many observers saw the resignation as the Liberals' finest hour. "James Tien failed to capitalise on a golden opportunity ... to broaden the party's appeal beyond the business sector," Mr Lee said. Mr Lee quit the party that year over policy differences. Ivan Choy Chi-keung, a political scientist at Chinese University, said the political zeal of many businesspeople was not enduring. "Some people who joined the Liberal Party in the 1990s may have decided to fade out from the political arena after finding that the reward for pursuing a political career is not that big," he said. Mr Poon, a former Liberal vice-chairman, said he left the party because he had not played a role in its affairs for a decade. "My mission has ended. My departure has nothing to do with the party's defeat in last year's Legco election," he said. Among business executives still in the party are Henderson Land executive director Alexander Au Siu-kee, Wharf Transport Investment director Frankie Yick Chi-ming, chairman of the Federation of Hong Kong Industries Cliff Sun Kai-lit, and Cheung Kong (Holdings) (SEHK: 0001) executive director Justin Chiu Kwok-hung.

The extra cost of using cleaner diesel in Hong Kong's ferries is likely to be much less than ferry operators have claimed, the environment watchdog says. Ultra-low-sulphur marine diesel, which went on trial in five ferries yesterday, would cost about 60 HK cents a litre more than conventional diesel, not up to HK$3 as the companies had estimated, the Environmental Protection Department said. But one of the operators said the cleaner fuel would still push up its operating costs by 10 per cent, increasing pressure for a fare rise. A department spokesman said clean diesel now cost HK$4.50 a litre, compared with HK$3.90 for conventional marine diesel, subject to oil-price fluctuations. Hong Kong & Kowloon Ferry said that price difference would lead to a 10 per cent rise in operating costs if all its vessels used the fuel. "The additional cost would erode our meagre profit and increase pressure for a fare rise," general manager Nelson Ng Siu-yuen said. Launching the nine-month trial of the cleaner fuel yesterday, the Environmental Protection Department said it would pay up to HK$10 million in incentives for ferry operators to take part. The money was for fuel subsidies and technical monitoring. The trial would provide data on operating costs, and the impact on maintenance and technical performance to help officials decide whether all ferries should use cleaner fuel. The fuel, 100 times lower in sulphur, will be supplied to five selected ferries by an oil barge operated by Sinopec (SEHK: 0386) in Cheung Sha Wan. These are New World First Ferry's Xin Hui III and VIII between Central and Cheung Chau and Xin Ying running from Central to Mui Wo; Hong Kong & Kowloon Ferry's Hoi Ming connecting Central and Peng Chau; and a Hong Kong and Yaumati Ferry car-carrier between Kwun Tong and North Point. The Star Ferry did not join the trial, saying its own trial of cleaner diesel in 2006 resulted in loss of power, higher fuel consumption, and engine corrosion. "We will still keep track of the trial results of other ferry operators," general manager Johnny Leung Tak-hing said. The department spokesman said there had been no mechanical problems for government vessels since they started using the cleaner fuel in 2000. He said there were other solutions to resolve the operators' worries about the lubricating effect of sulphur in the engines. The spokesman said that if all local passenger ferries switched to the cleaner fuel, the total sulphur emissions from the marine sector could be cut by about 12.5 per cent. Other sulphur emissions come from domestic vessels such as barges and fishing boats, as well as ocean-going vessels and cross-border ferries. The Marine Department said four local vessel operators were convicted for black-smoke emissions last year, compared with none in 2007.

Casino Lisboa's lights are reflected on vehicles in Macau. The city appears to be entering a new era as Stanley Ho's influence wanes. Stanley Ho Hung-sun has run Macau as its unofficial king for years, apparently with a finger in almost every business pie in the special administrative region, at times accounting for half of its economy and, as befits a king, openly keeping concubines. Mr Ho's dominance, and often monopoly, have been long-standing facts in the former Portuguese enclave, where anyone who decided to avoid spending money at any of his businesses and properties would find life difficult. Under his name are 19 casinos, the two tallest Macau buildings, horse and dog-racing tracks, a large jetfoil fleet, a helicopter service, five hotels, department stores, and residential and commercial property, all in the 29-square-kilometre SAR. Then there are casinos in Portugal, Vietnam and North Korea, as well as 169 Hong Kong company boards on which he serves as director. One of the busiest boulevards in Macau is called Dr Stanley Avenue. He is a member of the Standing Committee of the Chinese People's Political Consultative Conference and of the election committee that chooses Macau's chief executive. Mr Ho has four beautiful "wives", including one who has passed away, and has 17 children. And as the 87-year-old lies in hospital after brain surgery to remove a blood clot, Chinese gossip magazines are busy running cover stories of another woman in her 20s rumoured to be his fifth "wife". But no king can stay in power forever. Mr Ho's four-decade Macau gambling monopoly was broken in 2001 when Beijing opened the market to foreign investors. In 2004, Sheldon Adelson's Macau Sands opened its doors, leading the charge of US casino giants and heralding a sea change in the SAR's economy and culture. Mr Ho fought back and regained some lost ground but now, with him apparently severely incapacitated, there is growing speculation that his reign is ending. A post-Stanley-Ho era is taking shape and Macau is emerging from the shadow of monopoly. Whether residents like it or not, life in the fast lane is becoming inevitable. "Gone is the era of Stanley Ho as his economic power gets diluted by US casino investors," said Larry So Man-yum, a political commentator at Macau Polytechnic Institute. Macau residents were kissing goodbye to a leisurely past, Professor So said, and learning to cope with greater competition. An influx of workers from the mainland, Hong Kong and Southeast Asia is threatening job security. Small local firms are struggling against large casinos and Hong Kong companies. Hong Kong's top real estate agencies have increased their presence there, eating up many smaller fish in the pond. On a grimmer front, loansharks from the mainland and elsewhere in Asia have been squeezing the profit margins of local competitors. And regardless of whether Mr Ho recovers from his illness or not, the tycoon will eventually have to divide his business empire between his three wives and 17 children. To date, no succession plan has been made known. Mr Ho has largely handed over day-to-day control and management of his two most prominent companies - Hong Kong-listed Shun Tak Holdings (SEHK: 0242) and SJM Holdings. Mr Ho remains chairman of both companies which have a combined market capitalization of HK$27.6 billion, based on August 21 closing share prices. Shipping, real estate and hotel developer Shun Tak has since 1999 effectively been run by three of Mr Ho's daughters, including Pansy Ho Chiu-king as managing director and Daisy Ho Chiu-fung as deputy managing director and chief financial officer. The management of flagship SJM Holdings is largely in the hands of veterans from the earlier days of Mr Ho's former monopoly in the industry. Between them, SJM chief executive Ambrose So Shu-fai and chief operating officer Louis Ng Chi-sing have clocked up 64 years of service in Mr Ho's casino business. Mr Ho's fourth "wife", Macau legislator Angela Leong On-kei, also serves as an SJM director. She has cultivated strong relationships among VIP junket agents and franchise casino operators. Affairs at Mr Ho's 32.2 per cent-owned conglomerate, Sociedade de Turismo e Diversoes de Macau (STDM), of which he is managing director, are less straightforward. STDM ultimately controls most of Mr Ho's casino, property and transport businesses and remains SJM's biggest shareholder with a 61 per cent stake. Its 44 disparate shareholders include the Henry Fok Ying-tung Foundation, with a 26.58 per cent stake. New World Development and Chow Tai Fook Enterprises chairman Cheng Yu-tung has a 9.6 per cent interest. Mr Ho's estranged sister, Winnie Ho Yuen-ki, holds a 7.35 per cent stake. Ms Leong and third wife Chan Un-chan hold equal 0.235 per cent stakes, while Pansy Ho holds direct and indirect interests in the firm. Mr Ho helped two of his children win two of Macau's six casino licences to start their own gambling businesses. Pansy Ho has entered the industry in competition with her father's SJM via a joint venture with MGM Mirage of Las Vegas. Likewise Mr Ho's eldest living son, Lawrence Ho Yau-lung, owns two rival casino resorts in Macau in a joint venture with Australian James Packer. Professor So said it was unlikely that anyone could repeat Mr Ho's dominance in a post-Stanley Ho Macau. "It's hard to imagine someone as strong as Stanley Ho will appear when the economic and political powers are increasingly fragmented in Macau," he said. Economist and gambling researcher Zeng Zhonglu, also of Macau Polytechnic Institute, agreed. It was not unusual for Macau businessmen to have highly diverse portfolios in the past, but competition was forcing them to change, Professor Zeng said. "As Macau opens up and competition hots up, one needs to stay focused on a limited number of fields to be competitive." Professor So said the Las Vegas Sands had brought to Macau a more efficient management style and local companies such as SJM had been forced to follow. The gambling business had become more regulated and transparent. When Mr Ho finally leaves SJM, Professor Zeng says, the company may lose some lobbying power with the mainland and Macau governments, but it could still do well because it had matured as a listed company and adapted. Mr Ho's casino monopoly, which he won in 1961, was frequently associated with organised crime, but he has always denied he has triad links. Some analysts believe the government's move to end the gaming monopoly is partly designed to limit the influence of organised crime related to the VIP gambling halls. There are worries that as Mr Ho's power diminishes, triad gangs living off gambling money may wage bloody street warfare like they did before the 1999 handover. But Professor Zeng said the Macau government was stronger than the Portuguese administration in the 1990s and mainland authorities would help ensure order in Macau. There may not be anyone to replace the legendary casino king, but there may not need to be. Macau looks set to do as well, or even better, in a new era of market competition.

The developer sold 709 units in the 2.5 billion yuan Evergrande Splendor in Chongqing on Sunday, raising 564 million yuan. Guangzhou-based property giant Evergrande Real Estate Group can offer projects at stunningly low prices because of the standardised approach it is using to ensure developments would be "built fast and sold fast". The 2.5 billion yuan (HK$2.84 billion) Evergrande Splendor project undergoing construction on an 800,000 square metre site on the outskirts of Chongqing is expected to deliver gross returns of as much as 30 per cent because of economies of scale. Evergrande is trying to raise as much as US$1 billion from a Hong Kong initial public offering. The developer sold 709 units - due to be completed next year - for 564 million yuan on Sunday. Located on a site next to a large green belt, the resort housing development will feature more than 1,500 apartments, villas and detached houses in its first two phases. Also planned for the site is a five-star hotel, a convention centre, and a sports and recreation centre. Overall margins on the development would be boosted by sales of bigger flats and villas that would be priced between 5,000 yuan and 9,000 yuan per square metre, much higher than the 3,000 yuan price for smaller units and amounted to no more than the cost price, taking into account a land cost of about 400 yuan per square metre and construction costs of 2,500 yuan per square metre, people familiar with the company said. But revenue generated by the sale of larger villas and townhouses would lift overall gross margins on the development to about 30 per cent, the market sources said. James Xia, the chief executive of Evergrande, said the flats at Evergrande Splendor would represent "value for money" because of tight control on development costs. "As a way to lower land costs, Evergrande's strategy is to target the construction of housing projects on large sites ranging in size from 500,000 sq metres to 1 million sq metres on the outskirts of cities but close to highways and surrounded by mountains or lakes," he said. Evergrande Splendor Chongqing is the latest mainland project to be tackled on this basis, the others being in Nanjing, Tianjin, Kunming, Ezhou in Hubei, Pengshan in Sichuan, Qingyang in Guangdong, and Suzhou. The group has projects in 22 cities and a land bank of about 50 million sq metres, and it aims to achieve contract sales of 30 billion yuan this year. For the first half, it has pulled in 12.7 billion yuan in sales. "Buyers will see that our fittings, including those for doors, kitchens and toilets, are more or less the same in all Evergrande Splendor developments. Through large volume purchase, we are able to secure bargain prices - even for famous expensive brands of toilet bowls," he said. Evergrande Splendor's target customers were working-class buyers aged 30 to 40 who were looking for a better living environment at affordable prices, he said. "We see a great market for this group of buyers." he said. Lou Ming-gang, a 35-year-old sales manager at an engineering firm, was among the buyers at the latest launch by Evergrande. He said he wanted to buy a 170 sq metre villa but when he discovered that all units had been sold out, he bought a 121 sq metre four-bedroom flat for 430,000 yuan.

Developers bringing some 1.42 million square feet of new retail space to the shopping district of Tsim Sha Tsui this year and next are facing strong competition in finding tenants as the retail market remains weak, say letting agents. "The new malls have positioned themselves differently in the market. But they are opening for business at almost the same time and developers could come under pressure to find tenants unless the economy recovers," said Helen Mak, senior manager of retail services group at Colliers International. While shoppers would benefit immediately from the wider choice on offer in the four new malls, competition for tenants would be fierce. The first of the four new malls in the area - the 80,000 sq ft Cheung Kong (Holdings) (SEHK: 0001)' 1881 Heritage in Canton Road - has already opened for business but is still looking for tenants. The occupancy rate of the retail space reached more than 90 per cent. Yet to open is Associated International's iSquare and New World Development's K11 - due for completion in the final quarter, and Chinese Estates (SEHK: 0127)' 29-storey 400,000 sq ft project The One, which will become Hong Kong's tallest retail complex on completion in mid-2010. Leasing agents are already searching for tenants for the three unfinished malls and say that 60 per cent of the 60,000 sq ft iSquare, developed by Associated International and its parent company Tian Teck Land, has already been leased. At the last official count in May, New World Development said the occupancy rate at K11 was just 40 per cent, but agents said this had since been increased to about 70 per cent. The last time that the retail market was presented with so much new space to digest was in 2004, when the pipeline of new supply reached more than 1.23 million sq ft. Then the influx of mainland travellers and strong economic growth encouraged retailers to open new shops. Among the new developments that came to the market then were Sun Hung Kai Properties (SEHK: 0016)' apm in Kwun Tong and Great Eagle Holdings (SEHK: 0041)' Langham Place in Mong Kok. At Langham Place, more than 90 per cent of the space was leased by September 2004 and it went on to open in January 2005, while apm had leased 98 per cent of its total retail space by early 2005 before opening in March of that year. Joe Lin, a director of retail services department at CB Richard Ellis, said leasing of the new shopping malls in Tsim Sha Tsui in the present market conditions would be unavoidably affected by the ongoing shock to confidence and economic growth arising from the outbreak of the global financial crisis. "The new malls are all located in the same area. Though they have their own edge and positioning, most of the branded outlets would only pick one of the malls to open a new shop," he said. Scheduled to open in November is iSquare, which cost some HK$1.3 billion to develop and is located at the junction of Nathan Road and Peking Road, a prime location in Tsim Sha Tsui. Kevin Lam, an associate director of retail services at DTZ, the sole leasing agency of the mall, said that to date about 36,000 sq ft or 60 per cent of the total floor area had been leased at rents that ranged between HK$45 and HK$200 per square foot. Rents for street-level shops in the mall ranged from HK$600 to HK$800 per square foot, he said, and tenants that had already signed up included food and beverage outlets, fashion, make-up and lifestyle shops as well as a cinema complex. The mall had also proved attractive to European fashion and accessory brands making their first entry into Hong Kong. The One at Nathan Road launched its leasing campaign last month but to date has made no announcements concerning any major leasing transactions. Agents said it was unlikely that rentals in the existing retail centre Harbour City would come under downward pressure as a result of the new space coming onto the market in the area. "Harbor City is well-established. Its leasing and rents will not be affected by the newcomers." Ms Mak said.

China: Australia on Wednesday approved a massive energy project that will supply natural gas worth tens of billions of dollars to China and India, giving new impetus to its resources boom. Environment Minister Peter Garrett imposed 28 conditions to protect wildlife but said he saw no reason to block the Gorgon liquefied natural gas (LNG) plant off Western Australia, allowing it to clear the final regulatory hurdle. The project is a joint venture by Chevron, Shell and ExxonMobil, which has signed a record US$41 billion contract with mainland’s PetroChina (SEHK: 0857) and another worth US$21 billion with India’s Petronet. “I’ve considered it very carefully, I don’t believe that there will be unacceptable [environmental] impacts and, as a consequence of that, I have made my decision today,” Mr Garrett told reporters. He said the conditions included measures to protect endangered turtles and other species on nearby Barrow Island and to minimize noise and light emissions. “It is acceptable for the expansion to go ahead subject to the conditions,” he said. “The public can have confidence that the environment of Barrow [Island] will be properly protected.” Mr Garrett said he expected Chevron and the venture’s other partners would be “more than willing” to meet the conditions. “We have had those discussions with the company and it is the case that there is agreement on the basis of the conditions that I’ve put forward, and I welcome that,” he said. The Gorgon field, thought to hold more than 40 trillion cubic feet of gas, is expected to create thousands of jobs and pump billions of dollars into Australia’s economy. Chevron, majority partner in the project, welcomed Mr Garrett’s approval and said a final investment decision would be made in the coming months. “The Gorgon project is Australia’s largest single resource project and is set to deliver significant economic benefits and create around 10,000 indirect and direct jobs during peak construction,” said Roy Krzywosinski, the company’s Australian managing director. He said the plant was “globally and nationally significant”, with an economic life of at least 40 years, adding it had been sited to minimize the environmental impact.

Listing candidate China All Access (Holdings) - which provides satellite and wireless data communication applications for city public safety and disaster emergency management in the mainland - said net profit grew 39.6 percent last year to 67 million yuan (HK$76 million) on increased turnover.

China Life (2628) - the mainland's largest insurer - said first-half earnings rose 15.4 percent thanks to higher investment returns on the back of a rosy stock market. The Beijing-based insurer posted an interim net profit of 18.22 billion yuan (HK$20.66 billion), compared with 15.8 billion yuan a year ago. The results missed the market consensus of 20 billion yuan. No interim dividend was declared. Chairman Yang Chao said China Life had actively responded to capital market changes and adjusted its investment portfolio on a timely basis so it could ride the market rally. It reduced the proportion of fixed-income investment and increased equity investment, further optimizing the investment asset allocation, Yang said in a statement to the Hong Kong stock exchange. At the end of June, China Life cut its debt securities to 51.49 percent from 61.43 percent a year ago, while equity investment at 13.43 percent improved significantly from 8.01 percent. Yang said the successful bidding for stakes in China Construction Bank (0939) and Bank of China (3988) led to satisfactory investment returns. The banks' shares and the insurer's portfolio adjustments boosted the gross investment yield by 96 basis points to 3.27 percent. Net investment income in the first six months was down 25.18 percent to 18.9 billion yuan, but total investment income rose 64.66 percent to 32.19 billion yuan if net realized gains on assets sold and fair value gains were counted. The firm made a profit of 11.88 billion yuan from equity sales - 15 times the 742 million yuan it made in the first half of 2008. At the same time, net fair value gains for holding assets were 1.375 billion yuan, compared with last year's loss of 6.49 billion yuan. Meanwhile, China Life's gross written premiums and policy fees were up 10.82 percent to 87.863 billion yuan, with embedded value reaching 267.3 billion yuan, 11.34 percent higher than at the end of 2008, maintaining its leading position with about 39.2 percent market share. Shares of China Life yesterday rose 0.6 percent to close at HK$33.25.

Beijing will require hospitals to disclose information on pricing, treatment plans and procedures for filing complaints in an attempt to reduce patient complaints and improve transparency. The Ministry of Health issued a draft document earlier this week listing information-disclosure requirements for medical institutes. The document mandates that hospitals tell patients about the quantity and charges for medicines, implants, disposable medical supplies and services for each treatment plan. Zhang Wei , assistant professor of management at the Shanghai-based China Europe International Business School, said the new regulation would give patients a better idea of the total cost of treatment. Hospitals supposedly have a price list on every service and medicine. But patients often have no idea how much they will end up paying. Extortionate medical bills and errors are often the causes of disputes - sometimes resulting in mass protests and even leading to a bizarre profession called "medical troublemakers", who stage protests, damage hospital property, or even harm doctors on behalf of disgruntled patients and their families. After almost four years of interdepartmental bickering and horse-trading, the government in April finally released its blueprint for medical reform, aiming to overhaul the ailing health system and slash costs. A key to this is transparency on how bills are calculated to avoid arbitrary charges, unnecessary surgery and excessive use of expensive drugs. The draft also requires hospitals to tell patients of the fees for expensive services such as a stay in the intensive care unit, dialysis, fitting of artificial joints, organ transplants and scans, as well as medicine not covered by insurance schemes. Such requirements may standardize the information, but most hospitals already had price lists and usually informed patients beforehand as deposits were required. More importantly, public awareness of service quality at each hospital is a key to reducing disputes. "There are internal assessments of the quality of medical services for each hospital, but they are not disclosed to the public," said Zeng Yixin , a professor at Sun Yat-sen University in Guangzhou. Professor Zhang said local governments should compile a valid database on the qualities of all hospitals. "For example, in the US, hospitals have to release information about the mortality rate of their heart bypass surgery," he said. But cancer patient Yan He , 28, of Hefei , Anhui , said hospitals informed him of the fees, but he could not afford the medicine. He is now more than 100,000 yuan (HK$113,600) in debt after being diagnosed last year.

A volunteer crossing guard looks to discourage jaywalkers in central Guangzhou. Government-backed neighborhood groups are going door to door in southern China's gritty business capital with a set of simple requests: please stop spitting in public, cutting in bus lines and talking loudly in the streets. It's all part of a campaign in Guangzhou, the mainland's third wealthiest metropolis, to win the coveted "Civilized City" award - an annual ritual that sparks months of frantic scrubbing and buffing in cities across the mainland. Women wearing red armbands patrol the streets and pick up cigarette butts. Volunteer crossing guards with yellow flags and whistles make sure people wait for green lights. Beggars are banished from their usual haunts on pedestrian bridges. While some citizens remain sceptical of the clean-up drive, it jibes with Chinese leaders' goal of shifting away from the pursuit of economic growth at any cost. They want to focus more on creating a spiffier, healthier, more cultured and harmonious society. Each year, the central government awards the prized designation to one or more cities, and it's a big deal for Guangzhou, as it tries to shed a reputation for being dirty and crime-ridden. Next year, this historic port city of 10 million people hosts the Asian Games, which will draw 25,000 athletes, coaches and journalists from 45 countries. "We have a saying: if you haven't been robbed, you're not a real Guangzhou person," says Wu Enwei, a 33-year-old businesswoman whose cellphone was snatched from her hand a few years ago. "The crime situation has improved, but I still think Beijing and Shanghai are much better." The civility campaign also highlights how the Communist Party still likes to indulge in often heavy-handed social engineering, reaching deep into people's lives to try to mould the masses. Beijing launched a similar campaign before last year's Olympics, trying to curb spitting, jumping ahead in line, littering and reckless driving. In Guangzhou, members of neighborhood committees, government-backed councils that monitor households, are knocking on doors in the evening and handing out a survey and brochures about improving civil behavior. Getting the public to support such campaigns is harder now on the mainland. The dramatic changes in society that began with the economic reforms 30 years ago have given people more freedom in their private lives. Most don't rely on the government for a job and apartment. Many have also grown cynical and suspicious of Beijing's edicts and campaigns. They can ignore the propaganda or be unenthusiastic without worrying too much about being branded an anti-revolutionary and sent to prison. One 20-year-old college student serving as a crosswalk guard in central Guangzhou says his parents, who work for the government, forced him to volunteer for the duty. He seems embarrassed as he stands on the curb wearing a yellow sash and carrying a matching flag that says, "Please wait for the green light". "I don't really understand this `Civilised City' campaign. It seems so silly," says the student, who only gave his surname, Chen, because he feared he would run afoul of the government and his parents. "Every year we do this stuff for a few weeks, and when the inspection is over, things go back to normal. People continue jaywalking and littering. It's just a show." City officials responsible for the campaign declined requests for an interview. Johnny Lau, a mainland analyst teaching at Hong Kong Baptist University, says cleaning up Guangzhou will be a challenge, but it's something all mainland cities need to do to remain competitive. "As a prosperous city, Guangzhou can no longer just focus on its industrial development. It has to enhance people's living standard to attract more foreign investors," Lau says. A recent winner of the "Civilised City" award is the prosperous southern port city of Xiamen, where the streets are famously clean, skyscrapers gleam on the waterfront, and well restored colonial buildings add charm. That is a far cry from Guangzhou, which ranked 12th on a list of the world's 20 "Hardest Hardship Posts" for expatriates by BusinessWeek magazine in March. The city is a "high-risk location" because of pollution and problems with disease and sanitation, according to the survey compiled by ORC Worldwide, a New York-based human resources firm. Many health experts believe that the 2003 deadly outbreak of Sars originated in the Guangzhou area. The region has long been regarded by scientists as one of the world's biggest breeding grounds for new flu viruses because the dense human population lives close to pigs and water fowl on farms and in markets. The city was once one of Asia's most important. China's last dynasty, the Qing, in 1757 decided that Guangzhou's port would be the only one open to the West. All the tea, porcelain, silk and other goods the West was hungry to buy had to pass through the city. Guangzhou also handled the opium imported by foreigners, and the first Opium War was fought in and around the city in 1839-42. With the eventual opening of other ports, Guangzhou's importance began fading. But as the mainland began to open up economically in the late 1970s, its entrepreneurial spirit brought prosperity (SEHK: 0803) again. Yet Guangzhou continues to be eclipsed by the glitzier Shanghai and Beijing. That does not appear to faze residents such as Ma Li, a 32-year-old property agent. He says those two cities get most of the attention because the Shanghainese are flashy show-offs and Beijingers love to talk and occupy the seat of national power. "We Cantonese are low-key, practical people who like to be left alone so we can just do our business," he says.

China Everbright Bank has received regulatory approval for an 11.5 billion yuan (HK$13.06 billion) private share placement, the bank said on Wednesday, moving it closer towards its initial public Offering.

China State Construction posts 2.35 billion yuan profit.

Country Garden Holdings, which specializes in large-scale residential developments in Guangdong province, posted a 78.43 per cent jump in first-half earnings.

Huawei Technologies had garnered a 10 per cent share of Europe's telecommunications equipment market and expected to gain more ground this year, an executive said. The Shenzhen-based firm was targeting a "huge improvement" in Europe this year, with a focus on wireless equipment, said Tim Watkins, Huawei's vice-president for western Europe. The company won US$3 billion in contracts out of the US$30 billion awarded in Europe last year, a 20 per cent gain from a year earlier, with sales to "all major operators", including Vodafone Group and Telefonica, Mr Watkins said. Huawei also made a "significant breakthrough" in the United States, he said. The company's gains defy the trend in the industry, which has been hurt by falling demand and intensifying price competition. Its net income rose 20 per cent to US$1.15 billion last year while its major rivals, Ericsson and Nokia Siemens Networks, suffered an almost 50 per cent drop in annual profit, and Alcatel-Lucent's full-year loss widened 48 per cent. Aided by its lower cost base, Huawei now ranks third in the industry, with a global market share of 14 per cent, behind Ericsson with a 35 per cent share and Nokia Siemens with 20 per cent, said Kulbinder Garcha, a Credit Suisse analyst. Huawei's US$2.2 billion joint bid with Bain Capital for 3Com Corp was withdrawn Washington's concern China would gain access to 3Com's anti-hacking technology. It was a "misconception" that Huawei was linked to the Chinese government, Mr Watkins said. He said Huawei had won more than five contracts in North America this year, including a three-year 4G wireless contract this month from US-based Clearwire Corp. "It doesn't mean all of a sudden the gate is flying open and everybody's happy with Huawei, but the important thing is we are moving in."

Aug 26, 2009

Hong Kong: The Environmental Protection Department would launch a nine-month trial of local ferries using ultra-low sulphur diesel (ULSD), a spokesman for the department said on Tuesday. The trial is to test the technical feasibility of switching to ULSD and to examine how it would affect ferry operations. It would also help the department promote the use of cleaner fuels, he explained. “Domestic ferries are a major source of local maritime air pollution emissions, accounting for 40-70 per cent of the air pollutants emitted from all local vessels”, the spokesman noted. “The sulphur content of ULSD is about one per cent of that of the marine light diesel currently used by ferries. “After switching to ULSD, a ferry can reduce its sulphur dioxide emissions by more than 90 per cent and particulate emissions by about 10 per cent,” he explained. New World First Ferry Services, Hong Kong & Kowloon Ferry and Hongkong & Yaumati Ferry have contributed five ferries to the trial. The government has set up a monitoring committee to oversee the trial. The committee comprises representatives of the EPD, the Marine Department, the Transport Department and the local ferry industry. The government has also set up a refilling station in Victoria Harbor for ULSD refilling by participating ferries. Prentice Koo, a campaigner with Greenpeace, said the organization welcomed the trial scheme. “The pollution emitted by ferries is comparable to roadside pollution and air pollution generated by coal fires. So I think this trial scheme is very useful,” he said. “With more ferries travelling across Victoria Harbor, the air pollutants emitted by them will affect the public’s health more,” he explained. Mr Koo urged the government to develop a timetable for domestic ferries to start using ultra-low sulphur diesel. “The government has only launched a trial scheme, but it did not have any concrete timetable for when it will follow up the scheme. “We hope the administration could map out a concrete plan to indicate when all ferries would use ultra-low sulphur diesel,” added Mr Koo.

Hongkong and Shanghai Banking Corp will become the first local lender to charge for printed statements as it promotes internet banking. The green initiative - to be launched in 2011 - sparked concern other banks will follow suit and that it penalizes customers who lack computer skills. Starting October 11, HSBC will invite 1.6 million personal internet banking service customers to go paperless. Customers will be notified of new statements via e-mail or short message alerts. Thirteen kinds of statements, covering integrated accounts and credit card services, will be available online. Other services will be converted gradually. In the long term, all 4.2 million customers using the bank's personal financial services will be covered. Customers who still want printed statements will have to pay HK$20 per account annually from January 1, 2011. Those aged 65 and above, and recipients of the government's comprehensive social security and disability allowances, are eligible for a fee waiver.

Hong Kong exports plunged 19.9 per cent year-on-year in July, as overseas demand for mainland goods remained subdued despite talk of a global economic recovery, the government said on Tuesday.

Celebrity chef Jamie Oliver is planning to launch 30 Italian family-style restaurants in Asia, with the first one set to open its doors to his gastronomic followers in Hong Kong early next year. The move marks the first step in taking his chain Jamie’s Italian – which now has five eateries in England – outside his hometown, to a region which takes pride in its rich diversity of international cuisine and where the economy is picking up faster than anywhere else in the world. “Why Asia? Of all the markets, it has by far the fastest-growing economy,” said Edward Pinshow, president of Tranic Franchising, which formed a venture with Jamie’s Italian International for the Asia expansion. “The Chinese have become extremely fond of Italian food. In Japan, Jamie’s become a household name,” he said on Tuesday. Mr Pinshow told reporter that the first stage of the expansion was to open six restaurants in Hong Kong and Singapore, for which he is now raising about 200 million US dollars.

Betty Yuen So Siu-mei, one of Hong Kong's highest-achieving women in the world of business, is in what looks like the fight of her life. The first woman and the first Chinese to win the top post at CLP Power Hong Kong has breast cancer. But Yuen is confident this is another battle she will win. The 51-year-old wife and mother - she has two teenage daughters - is now on leave from her job as the utility's managing director as she concentrates on treatment. She was diagnosed as having breast cancer in its early stages. Yuen wanted people to be absolutely clear about the reason for her absence and avoid speculation, so an official announcement about her illness was posted on the company's website. It spelled out Yuen's resolve, saying she is "confident that the illness can be overcome in its early stage and that her absence will not impact the operation of the company." With Yuen away, CLP's chief operating officer Richard Lancaster will be acting managing director for the Hong Kong business, while corporate development director Chan Siu-hung will handle its nuclear business. "Yuen has communicated with her staff on this arrangement and expressed her thanks for the kind thoughts and support given to her by the whole management team and staff," the announcement said. A chartered accountant, Yuen earned a bachelor of commerce degree from the University of Toronto in 1979. She joined CLP in 1999 as director of finance and planning and was promoted to managing director in 2002. Cancer of the breast is the most common of cancers among Hong Kong women and number three in cancer deaths. The latest complete data available show 2,584 new cases diagnosed in 2006. It killed 463 women that year. Gabriel Choi Kin, the immediate past president of the Hong Kong Medical Association, said women with a family history of breast cancer are more prone to developing the disease. "If one's mother or aunt has breast cancer, the chances that one gets cancer are higher," Choi explained. Besides genetic makeup playing a part in breast cancer striking, women who take hormones - such as birth control pills - for an extended period have a higher chance of developing the disease. Breast cancer can occur after menopause, though it usually afflicts women in their late 30s. Screening for breast cancer should be sought at least once in every three years, Choi said, and women in their 40s should be following this practice.

Hong Kong attracted about 551,000 fewer visitors to its trade fairs and conventions last year compared to 2007, a better-than-expected decline, the Hong Kong Exhibition and Convention Industry Association's annual survey has found. Visitors to trade shows in many other markets suffered drops of between 10 per cent and 25 per cent, it said. Hong Kong's 9.4 per cent drop in trade visitors means that the total number fell to about 5.31 million last year from some 5.86 million in 2007. The relatively strong showing last year was generally because of a mild 3 per cent drop in the number of mainland visitors. Regional visitors fell 13 per cent and other overseas visitors dropped 11 per cent. The association's chairman, Stanley Chu, described the findings as encouraging. "With government and industry support, I am confident that the industry will quickly come out of the current recession." The survey measures attendance based on the number of events visited, meaning one person who visits two shows during a trip will be counted twice. The findings are based on 96 questionnaires to which 55 trade show organizers responded. The companies staged 110 exhibitions in Hong Kong last year. Organizers are keen to establish Hong Kong as a major event hub despite competition from the Pearl River Delta as well as Macau. Trade visitors generally spend twice as much as tourists, according to the Tourism Board.

Organizers of this year's East Asian Games have given in to public pressure with the final destination of the torch relay at the 100-day countdown to be held at Golden Bauhinia Square in Wan Chai instead of TV City.

Parents of mentally handicapped youngsters were in a fighting mood last night just hours after a High Court judge said their kids do not have the right to stay at school once they reach the age of 18.

Taiwan's government on Tuesday confirmed that 376 people were killed while 254 were missing after Typhoon Morakot struck two weeks ago, bringing the worst flooding in the island’s history. Taiwan’s parliament came out of recess on Tuesday to discuss the cabinet's NT$100 billion (US$3 billion) budget for reconstruction in the wake of Typhoon Morakot.

China: LG Display on Tuesday said it had signed a non-binding agreement to build an LCD panel plant with Guangzhou, and would like to see a mainland television maker come on board for the project. Although LG Display did not disclose details, a local newspaper reported that the company was poised to invest 5 trillion won (HK$31.24 billion) in the facility. The plant would be an eighth-generation facility, LG Display said, capable of making large-size panels for television sets. “It would be good if a Chinese TV maker could become a shareholder” in a potential joint venture, LG Display CEO Kwon Young-soo told a press event, citing companies such as Hisense, Haier and Skyworth. Asked if Samsung Electronics’ had plans to build an LCD plant in the country, Samsung LCD unit president Chang Won-kie also expressed interest in the possibility of having a seventh or eighth generation facility there, but added that nothing had been decided. Separately, South Korea’s Ministry of Knowledge Economy said in a statement that Samsung Electronics, the world LCD leader, would supply LG Display with 17-inch computer monitor screens, while LG Electronics would deliver 22-inch monitor panels to Samsung. It said the total value of the deal would be 105.6 billion won. The Ministry said it expected the scope of the deal to be expanded to include other types of LCD screens, although an immediate deal involving television panels would be difficult as the two sides used different technologies. The ministry said the computer monitor cross-sourcing agreement would save about US$83 million in import costs as these products are usually bought from Taiwan. The deal is also aimed at opening the way for more cross-purchasing agreements between the rival groups. Shares in Samsung Electronics fell 1 per cent to close at 775,000 won, while LG Electronics was down 3.1 per cent. LG Display, a part of the LG Group, rose 2.6 per cent, while the wider market posted a 0.67 per cent drop. The outlook for South Korean and Taiwanese LCD makers has brightened recently as fears of second-half oversupply have faded because of a shortage in glass substrates, and on growing demand from mainland boosted by a government stimulus package.

Chinese President Hu Jintao (C) talks with residents of Uygur ethnic group at a village in Aksu, northwest China's Xinjiang Uygur Autonomous Region, on Aug. 22, 2009. Hu paid an inspection tour to the region from Aug. 22 to Aug. 25.

Top-seeded Svetlana Kuznetsova needed three sets Monday to overcome China's Zheng Jie 6-1, 6-7 (5), 6-4 in the first round of the Pilot Pen tennis tournament, the final warmup before the US Open.

PGA Championship winner Yang Yong-eun will renew his rivalry with Tiger Woods on Asian soil in November after confirming his participation at the US$7 million HSBC (SEHK: 0005) Champions on Monday. The 37-year-old South Korean, who became the first Asian man to win a major by out-duelling world number one Woods in Minnesota this month, will return to Shanghai for the Nov. 5-8 tournament, now a World Golf Championship (WGC) event. Yang is a former champion at the Sheshan International Golf Club, having stormed up the leader board in the final round of the tournament in 2006 to beat Woods by two strokes.

China will continue its stimulus policies to expand domestic demand and ensure a sustainable flow of credit in light of uncertainties and problems ahead of a recovery, Premier Wen Jiabao said. Wen warned against being "blindly optimistic" despite improvements in economic growth, according to a report on the Cabinet's website. In a downbeat statement after a trip to the eastern province of Zhejiang - a hotbed of private enterprise - Wen said Beijing will ensure a sustainable flow of credit and a "reasonably sufficient" provision of liquidity to support growth. "We must clearly see that the foundations of the recovery are not stable, not solidified and not balanced," Wen said. "We cannot be blindly optimistic. Economic operation still faces many new difficulties and problems. "Therefore, we must maintain continuity and consistency in macroeconomic policies, and maintaining stable and quite fast economic growth remains our top priority. This means we cannot afford the slightest relaxation or wavering." China still faces great pressure from the slowdown in demand for exports, Wen said, adding that it is difficult to boost domestic demand in the short term to fill in the gap - despite the boost from the government's 4 trillion yuan (HK$4.53 trillion) stimulus package. Wen cautioned that the effects of some government measures might fade while others would take time to show results, the statement said. Wen's comments echoed his repeated recent warnings against complacency and assurances that Beijing's stimulus spending and easy credit will continue. But they ran counter to increasing optimism among financial analysts who say China is emerging from its economic slump. The mainland's economic growth accelerated in the latest quarter on the back of Beijing's huge stimulus spending but authorities have called for continued vigilance. They say poor corporate profits and weakness in other areas show a recovery is not fully established.

Malaysian low-cost carrier AirAsia said on Tuesday it will launch its seventh route into China in October while Singapore-based budget carrier Jetstar Asia announced it would begin flights to mainland in December. AirAsia will be the first airline to fly direct from Kuala Lumpur to Chengdu, the capital of Sichuan province, with four weekly flights from October 20, it said in a statement. The carrier said the new route would be operated by its long-haul affiliate AirAsia X. AirAsia already flies to Shenzhen, Guangzhou, Guilin and Haikou in the south, Hangzhou in the east and Tianjin in the north. It also has flights to Hong Kong and Macao. Singapore-based Jetstar said it will be aiming to expand into mainland and from October increase flights to Manila from seven to 10 per week. It will also run three daily trips instead of the current two to Bangkok from next month.

China Resources Power Holdings (0836) reported a 125.5 percent jump in first-half net profit as its electricity generation segment grew considerably. et profit for the six months ended June 30 hit HK$2.27 billion, up from HK$1.01 billion last year. An interim dividend of 6 HK cents per share was declared. Benefiting from two mainland increases in tariffs last year and a 3.5 percent year-on-year decrease in per unit fuel cost in the first half, CRP recorded higher revenues from electricity sales, even though both gross and net power generation fell. Chief executive Wang Shuaiting said coal supply exceeds demand, but various factors, including the 60th anniversary of the founding of the People's Republic, and enhanced safety controls on coal extraction may drive prices up slightly. CRP will set aside 8 billion to 10 billion yuan (HK$9.07 to HK$11.34 billion) over four years for the acquisition and consolidation of 17 coal mines into nine. Its annual production will be three million tons this year, rising to 20 million tons by 2012. The company will use 40 to 50 percent of its own coal by then. The company expects the second half of the year to show strong electricity consumption growth. "Our daily electricity generation in July was 6 to 10 percent higher than that of June," Wang said. "The mainland economy, especially the industrial sector, has started recovering." Vice president Wang Yujun said month-on-month generation growth has been increasing. He added that the positive trend will be further entrenched as more power plants start operating.

Jia Qinglin (R, front), chairman of the National Committee of the Chinese People's Political Consultative Conference, also a member of the Standing Committee of the Political Bureau of the Communist Party of China Central Committee, meets with a delegation of the American Foreign Policy Council led by former U.S. House Speaker Newt Gingrich (L, front) in Beijing, capital of China, on Aug. 25, 2009.

Aug 25, 2009

Hong Kong: The East Asian Games Planning Committee (EAGPC) said on Monday the lighting ceremony of the torch relay on Saturday would now be held at Golden Bauhinia Square in Wan Chai.

Chairman of Sinopec Su Shulin celebrates the company's interim results at the Island Shangrila in Admiralty on Monday. China's Sinopec (SEHK: 0386) Corporation, the world's No 2 oil refiner, said on Monday that it plans total capital expenditure of 120 billion yuan (US$17.57 billion) over the next two years to boost refining and production. Vice-President Lei Dianwu made the remarks at a results news conference in Hong Kong. Sinopec, second to Exxon Mobil in terms of capacity, posted a record quarterly profit on Sunday that widely exceeded expectations on the back of higher fuel prices and falling crude oil prices, underscoring the turnaround in fortunes for China’s once-struggling refiners. Beijing’s fuel price reform grants refiners a guaranteed profit margin only if crude stays below US$80 per barrel. Shares of Sinopec rose nearly 5 per cent in the morning session, but gains were pared to close at HK$6.97, up 0.72 per cent.

Hong Kong tycoon Carson Yeung said on Monday he has offered 57.13 million pounds (HK$730 million) to buy English Premier League team Birmingham City, promising money to buy new players. Yeung, whose Hong Kong-listed company Grandtop International has a 29.9 percent stake in the club, said the firm would raise HK$785 million through an open offer of shares for the acquisition. The businessman’s latest attempt to seize control of the newly promoted side came after his first bid in 2007 failed to materialise. But he said he was only waiting for the right moment for the takeover. “The club was relegated [in the 2007/08] season. I bought it this year because it bounced back. It’s as simple as that,” he told a press conference in Hong Kong. Yeung said Grandtop had placed a deposit of three million pounds (HK$38 million) for the offer, which he said was already accepted by shareholders representing approximately 50 percent of the existing issued share capital of the club. The tycoon said he hoped to attract more talent and to encourage exchanges between mainland and overseas players. He added there was a possibility that he would personally offer five million pounds (HK$64 million) for team manager Alex McLeish to buy “better players”. He said the acquisition would open up numerous opportunities for his apparel and entertainment company to expand and diversify its business, especially in the mainland. If successful, the takeover would add to a growing list of foreign club-owners in the English Premier League, which include the Glazer family from the US at Manchester United and the Russian Roman Abramovich at Chelsea. Vico Hui, the Grandtop’s executive director, said he was confident Birmingham City would generate a profit next year.

Developer seeks new government office's backing for Lamma resort - A small private developer has just submitted an application to the new Development Opportunities Office for a huge spa resort and marina club with residential flats on Lamma Island.

Mingfa Group, a Fujian-based property developer, is planning to raise as much as HK$6 billion on the Hong Kong stock market in the fourth quarter of this year, market sources familiar with the offering said. The developer, set up in 1994 in Xiamen, is a privately owned firm that focuses on the development of large scale multifunction commercial and residential complexes. It has appointed Deutsche Bank and Merrill Lynch as sponsors for its listing plan on the main board and has already submitted an application to the stock exchange, the market sources said. Mingfa is the latest in a string of mainland real estate firms seeking to float their shares on the Hong Kong market to raise funds to develop properties for homebuyers and offices for the business sector in the world's fastest-growing economy. Guangzhou property giant Evergrande Real Estate is planning an initial public offering of at least US$1 billion by October 31, Shanghai-based Glorious Property aims to raise US$1 billion, and Shenzhen residential developer Fantasia aims to raise about US$500 million, sources familiar with their listing plans said earlier. Brokers said Mingfa's location in Fujian would appeal to investors as it stood to benefit from closer economic ties across the Taiwan Strait and Xiamen was regarded as a home away from home for many overseas Chinese or Chinese nationals in Taiwan. Weak market sentiment in the first half of the year discouraged new listings and there were 23 initial public offerings in the first seven months against 29 in the same period a year ago. Total capital raised dropped 52 per cent year on year to HK$27.49 billion in the first seven months, down from HK$57.55 billion a year ago. However, with investor sentiment now on the mend more listing candidates are coming to market. Taiwan-based funeral service provider Sino-Life Group aims to raise up to HK$150 million with the first listing on Hong Kong's Growth Enterprise Market this year, sources close to the deal said. The firm generated revenue of 41.8 million yuan (HK$47.43 million) last year, up from 36.95 million yuan in 2007. Net profit was 6.93 million yuan against 7.56 million yuan previously.

Listing candidate Evergrande Real Estates Group plans to tap the Hong Kong homes market by working with developers in the SAR, chief executive James Xia has revealed. We are interested in expanding to the Hong Kong market, and we are considering cooperating with developers there," Xia said after a project launch in Chongqing on Saturday. "But we will have to consider very carefully as we are not familiar with the market." He did not rule out forming a partnership with New World Development (0017), chaired by tycoon Cheng Yu- tung. New World invested US$150 million (HK$1.17 billion) for a 3.9 percent stake in Evergrande and poured another 780 million yuan (HK$885 million) into two property projects. Evergrande also wants to expand in Taiwan after Hong Kong, Xia said. But he declined to explain why UBS dropped out in a reshuffle of underwriters for Evergrande's listing plan. "I don't know where the information came from," he said, "but we always keep good relations with investors." Evergrande invited representatives of four investment banks to the Chongqing launch - Goldman Sachs, Merrill Lynch, BOCI and Credit Suisse. Evergrande aims to raise 3 billion yuan from five residential projects in Chongqing, having reaped about 400 million yuan in two projects launched in the first half, said Liao Jianing, general director of Evergrande Chongqing. The developer collected about 562 million yuan from selling 703 units at Evergrande Splendor Chongqing. In another project launched at the weekend, Evergrande Palace Baotou, it raised 333.6 million yuan from 245 flats. The mainland developer aims to raise as much as HK$11.7 billion through a Hong Kong initial public offering next month, market sources said.

Hopewell Holdings (SEHK: 0054) and its Hong Kong-listed subsidiary, Hopewell Highway Infrastructure (HHI), are expected to benefit from the green shoots of economic recovery in the Pearl River Delta. "We expect [Hopewell's] underlying profit to drop 76 per cent year on year to HK$1.31 billion due to the large exceptional profit booked in fiscal year 2008," Credit Suisse analyst Cusson Leung wrote in a report. "However, the stock is a good proxy to get exposure to the economic recovery in the Pearl River Delta." For the fiscal year to June 2008, Hopewell's net profit jumped 127 per cent to HK$5.97 billion, mainly because of HK$4.79 billion of exceptional gains from selling the Nova City property project in Macau and a joint venture managing the Guangzhou East-South-West Ring Road. Stripping out the one-off items, Hopewell's net profit last fiscal year would have been reduced to HK$1.18 billion. That means Credit Suisse's net profit forecast of HK$1.31 billion for fiscal year 2009 would be 11 per cent higher than last year's earnings. Six analysts surveyed by Bloomberg have a consensus forecast of HK$1.45 billion net profit for Hopewell on revenue of HK$1.05 billion for the fiscal year to June. Infrastructure, operated by Hopewell's toll-road subsidiary HHI, accounts for the lion's share of the group's profit, with property a distant second and hotels third. In property investments, Mr Leung expects that the profit contribution from Hopewell's rental income will rise 37.8 per cent to HK$351 million, driven by its two commercial buildings in Wan Chai - the QRE Plaza and Hopewell Centre - as well as improving occupancy of EMax shopping centre in Kowloon Bay. Mr Leung forecasts that infrastructure profit, contributed by HHI, will grow 10.8 per cent to HK$1.15 billion for the period, accounting for 70.9 per cent of Hopewell's earnings before interest and tax (ebit). "We expect the infrastructure contribution to increase 10 per cent for [this fiscal year], as we saw a turnaround in the average daily traffic growth of the GS Superhighway from February," wrote Mr Leung. HHI, 70.3 per cent owned by Hopewell, holds 48 per cent of the Guangzhou-Shenzhen (GS) Superhighway, its main asset. Citigroup analyst Jenny Zhen expects HHI's core earnings to rise 40 per cent for the fiscal year to June, mainly because of traffic recovery in the GS Superhighway with the completion of maintenance work on a section of the highway. Ms Zhen forecasts GS Superhighway's toll revenue will rise 10 per cent to HK$1.75 billion for the fiscal year to June, accounting for 96 per cent of HHI's total toll-road revenue. Excluding exceptionals, HHI's profit will rise 40 per cent to HK$1.17 billion. With the exceptional items, Ms Zhen predicts HHI's net profit would fall 42 per cent to HK$1.17 billion.

From high-definition televisions, to digital cameras and notebooks, if nothing takes your fancy at the 6th Hong Kong Computer and Communications Festival, you probably already have it all. Laser printers at HK$300, laptops at HK$2,000 and 40-inch HDTVs at HK$6,000 are just some of the bargains offered at the festival, which closes today at the Hong Kong Convention and Exhibition Centre. Crowds started queuing as early as 6am on the weekend. The festival attracted 120,000 visitors on Friday, 160,000 on Saturday and 170,000 yesterday. In comparison, the weeklong book fair from July 22 to 28 drew 70,000 by the afternoon of its first day. This year, about 250 participating companies occupied more than 900 booths at the computer festival. Many visitors arrived ready to splash out to their heart's desire, with many bringing their own suitcases or trolleys to carry around bulky items.

First Eastern Investment will become the first to tap China's private equity market as it launches three local currency funds of up to 6 billion yuan (HK$6.8 billion) in the next 12 months, chairman Victor Chu Lap-lik said.

Bank of China (3988) and its subsidiary Bank of China (Hong Kong) (2388) are expected to show big profit drops when they post their interim results on Thursday, analysts said.

Esprit Holdings (0330), which is set to release annual results on Wednesday, is expected to see net profit drop up to 20 percent due to the sluggish European economy, analysts say.

Sandy Lau (C) stands with first runner up Germaine Li (R) and second runner up Mizuni Hung during the Miss Hong Kong 2009 pageant in Hong Kong, south China, Aug. 22, 2009.

Sandy Lau is seen after winning the crown during Miss Hong Kong 2009 pageant, in Hong Kong, south China, Aug. 22, 2009.

Mizuni Hung, second runner-up of Miss Hong Kong 2009, displays a swimsuit in Hong Kong, south China, Aug. 22, 2009.

Candy Yuen (L) is titled with Miss Photogenic during the Miss Hong Kong 2009 pageant in Hong Kong, south China, Aug. 22, 2009.

Competitors display swimsuits during the final of Miss Hong Kong 2009, in Hong Kong, south China, Aug. 22, 2009. Sandy Lau (4th L) took the crown of the pageant.

China: Chinese Premier Wen Jiabao has warned that the country is still facing various uncertainties ahead despite signs of economic recovery, saying the government will maintain the macro economic policies.

A massive celebration in Tian'anmen Square on Oct. 1, at which President Hu Jintao will give a keynote speech, will commemorate the 60th anniversary of the founding of the new China. A military parade and mass pageant would follow, said a spokesperson for the 60th National Day celebration preparation committee of the Beijing municipal government Monday. Timetabling for the celebrations is not yet available The military parade would highlight the achievements China has made in its defense sector during the past six decades and showcase its resolution to safeguard world and regional peace and stability. The mass pageant would involve about 200,000 citizens and 60 floats, on the theme of the "Motherland and I Marching Together". On Sept. 30, the eve of National Day, a huge reception, hosted by the State Council, will be held in the Great Hall of the People. On the night of Oct. 1, a gala at the Tian'anmen Square is to feature "colorful performances and a splendid fireworks display", with senior party and government leaders present. From Oct. 1 to 3, major parks in Beijing are to host parties and functions to celebrate National Day. In addition, an exhibition highlighting China's progress during the past 60 years will be held in the Beijing Exhibition Center near the city zoo over the last two weeks in September. Also during that time, a grand musical, "Road to Revival", with a cast of about 3,200, will be staged at the Great Hall of the People. It will depict the past 169 years of Chinese history chronologically from the Opium War to the present. "We will try our best to create a festive environment at an economical cost," said the spokesperson. The military parade, mass pageant and evening gala will be rehearsed at Tian'anmen Square several times from Aug. 29 to Sept.26. "Preparation are going on smoothly," the spokesperson said. "We will make sure of a successful celebration."

China Petroleum and Chemical Corporation (Sinopec) said Sunday its net profit in the first half of 2009 rose 332.8 percent year on year because of adjusted refined oil prices in domestic market. Under international accountant rules, Sinopec's net profit totaled 33.25 billion yuan (4.87 billion U.S. dollars) in the first half with earnings per share up 0.294 yuan to 0.383 yuan, the company said in a statement to the Shanghai and Hong Kong stock markets. Of the same reasons, Sinopec predicted its net profit for the first three quarters will rise over 50 percent year on year.

China's General Administration of Quality Supervision, Inspection and Quarantine of China (AQSIQ) made an announcement on August 23, 2009 that Guangzhou Toyota Motor Co., Ltd. (GTMC) and Tianjin FAW Toyota Motor Co. Ltd (TFTM) have decided to start recalling some of the Camry, Yaris , VIOS and Corolla cars from August 25.

The U.S. attaches great importance to its economic and trade relations with China and is ready to work with China to fight against trade protectionist measures, said Jon Huntsman, the new U.S. ambassador to China in his first meeting with Chinese Minister of Commerce Chen Deming in Beijing on August 22, the first day of his tenure as ambassador. Chen identified resistance against protectionism as the "imminent priority" in the context of the global economic recession. He believes that the various meetings between leaders of the two countries within this year after the success of the first strategic and economic dialogue will lead to further reciprocal cooperation. Mr. Huntsman disclosed that President Obama would pay his first visit to China in November.

The National Audit Office says 753 million yuan (HK$854 million) in agricultural funds misused by 10 provincial-level governments has been returned to its proper use.

Henan, the top refined lead producing province in the mainland, has shut down up to 240,000 ton of annual lead smelting capacity in recent days after lead poisoning was reported to have affected hundreds of children in Shaanxi province, smelter officials said on Monday. “Three plants were shut on Sunday, with a monthly output 15,000-20,000 tons,” a senior executive at a large lead smelter in Henan told reporters. He added the closed capacity was in Jiyuan city. A sales manager at a medium-size lead smelter in Henan said the provincial government had asked lead smelters to shut down capacity that did not meet national environmental standards in China, the world’s top lead producer. “About a third of the province’s lead smelting capacity could be closed eventually,” he said. Henan has more than 1 million tons of lead smelting capacity and less than half have reached that standards, the manager estimated. “There are increasing voices asking for closure,” a trade manager at a major lead smelter in Henan said. He added the provincial government had not issued an official document to force smelter closing such capacity but given verbal requests. Henan produced a third of China’s refined lead at 600,996 tons in the first half, up 9.13 per cent, according to the China Nonferrous Metals Industry Association. China’s fourth-biggest zinc producer Dongling Group is maintaining full production at two zinc lines with combined annual capacity of 150,000 tons in Shaanxi province, after shutting a 100,000-tonne lead and zinc plant blamed by locals for being a source of lead poisoning.

A 43 billion yuan Yangtze River dredging plan will enable bigger vessels to operate from Wuhan's WIT Port and bypass Shanghai. Wuhan, the provincial capital of Hubei that straddles the Yangtze River, is raising its importance as an international port by shortening shipping time to Shanghai. The city also hopes to benefit from a 43 billion yuan (HK$48.79 billion) government plan to dredge the Yangtze to allow much bigger vessels on the river and enable direct shipping links between Wuhan and Asian destinations such as Singapore without having to stop in Shanghai. The government forecasts that cargo throughput along the Yangtze will rise from 1.2 billion tons last year to 1.8 billion tonnes in 2018. By 2013, the dredging plan will enable ships of 10,000 deadweight tonnes (dwt) to sail from Wuhan to Shanghai and beyond to the Pacific Ocean year round. It is now possible only eight months of the year, said Frederick Wong Wai-keung, the chief financial officer of CIG Yangtze Ports, a Hong Kong-listed firm that owns 85 per cent of WIT Port in Wuhan. "It will be economical for ships to sail direct from Wuhan to Asian countries like Japan, South Korea and Singapore without having to stop by Shanghai. When the ship is bigger, costs are cheaper," said David Xie Bing Mu, the general manager of WIT Port. At present, ships do not sail direct from Wuhan to Asia because it is more economical to transfer cargo to bigger ships at Shanghai, Mr Xie said. However, some analysts are sceptical that Wuhan can bypass Shanghai as a port for ocean-bound cargo. "Yes, it can be done, but it's much more economical for ships to transfer their cargo to much bigger ships at Yangshan port, which has spare capacity and offer much cheaper rates," said Charles de Trenck, an analyst at consultancy Transport Trackers. Another shipping analyst said: "One of the premises of Shanghai's Yangshan port's existence is it will have huge capacity with lots of transshipment. "With 50 berths, you need all the cargo you can generate, so the Chinese authorities won't put all that investment in Yangshan if other ports can bypass Yangshan to trade direct with Asia." Yangshan port will have 50 berths by next year capable of handling 15 million 20-foot equivalent units of container cargo annually. However, Mr Xie maintained it would be economical for 10,000-dwt ships, which can carry 650 teu, to travel between Wuhan and Asian ports because of the time saved on transshipment in Shanghai. "Hubei needs to import car parts from Japan for its car manufacturing industry, so there is a market for ships to come from Japan direct to Wuhan," he said. Wuhan has shortened the shipping time between itself and Shanghai's Yangshan port from seven to two days after the Wuhan government encouraged ships to sail direct from WIT Port by offering them subsidies. Since then, Wuhan's container throughput has increased significantly. WIT Port's container throughput rose 44 per cent to 138,888 teu in the first seven months this year, making it the second-fastest growing container port operator of China's 84 main container port operators, according to a central government report. In June alone, WIT Port's container trade grew 68.3 per cent to 26,000 teu. By comparison, from March to July, total container throughput at China's ports fell 11.2 per cent, according to the report. Previously, the shipping time between Wuhan and Yangshan took seven days, because ships had to stop at one of Shanghai's other ports to offload containers on to feeder vessels, which moved them to Yangshan for transshipment to international destinations, Mr Wong said. "There is a long waiting time from docking at Shanghai and getting the containers on to the feeder vessels. There is also cost savings because ships had to pay for docking in Shanghai and using the feeder vessels," he said.

Aug 22 - 24, 2009

Hong Kong: Hong Kong is unlikely to have swine flu vaccines available before the winter flu peak strikes, after the government cancelled its tender call for five million shots last night. Pharmacists and microbiologists said the setback would cause at least two or three months' delay in vaccine supply, which would be critical in preparing high-risk patients for the peak infection period of January and February. The Department of Health last night announced the tender call had been cancelled "because there was no offer that conformed to the essential requirements specified in the tender document". It said procurement would go ahead, but did not explain how, saying only that it might invite companies to join the bid. Before the start of the tender call on July 17, senior medical officials repeatedly noted the importance of vaccinating two million people in high-risk groups - young children, the elderly and chronic patients - by December to prepare for the peak. University of Hong Kong microbiologist Ho Pak-leung said effective protection of vulnerable groups meant inoculations must begin in October - the originally scheduled time - as it would take at least three months to vaccinate the two million people at highest risk. Society of Hospital Pharmacists vice-president William Chui Chun-ming said vaccines would not be available until January or February at the earliest as the tender process had to start all over again. A possible alternative was to rely on mainland drug makers, he said. "The mainland was the first country to complete clinical trials. The vaccines are ready for mass production," Mr Chui said, adding that Hong Kong would certainly be a priority for the mainland suppliers. A possible reason for the cancellation was that no drug makers could deliver the vaccines before the end of this year, one of the conditions, Mr Chui said. This was not surprising, he said, as the tender call had been made too late. "Hong Kong cannot get the first batch of production." Medical sector legislator Leung Ka-lau said the government had probably designed a "problematic tender call" by setting conditions that were too hard to meet. "We have already approved the money, but now the government has failed to make it happen - they need to explain," he said. In June, the Legislative Council allocated HK$700 million for the vaccine. The tender required the vaccine to be approved by the country of origin and any unused vaccines to be returned to the manufacturer. A person familiar with the situation said last night the government would continue its procurement of the new vaccines and had no plan to change the tender conditions. "What we can say now is that the swine flu vaccination program will go on as scheduled," the person said. A total of 304 swine flu cases were confirmed yesterday, taking the total to 8,210. A 58-year-old chronic patient became the latest critical case. Another seven patients were in critical condition, with two serious. Classes for 121 student nurses were suspended after four were confirmed with swine flu in the nursing schools of Tuen Mun and Kowloon Hospitals. Summer classes were also suspended in a kindergarten in Sheung Shui after nine boys and 12 girls came down with flu. Three were confirmed with swine flu.

Nearly 62,000 Hongkongers have made Shenzhen their home, with more than 70 per cent of them citing family reunions as the reason, a survey released yesterday showed. Of the 61,900, about 33,100 do not maintain a home in Hong Kong, and only about one-tenth said they intended to return to Hong Kong to live within the next five years, the government's "Survey of Hong Kong People Living in Shenzhen" found. While 70.1 per cent gave family reunions as the main reason for living in Shenzhen, other reasons included the lower cost of living, given by 25.1 per cent, working or studying in Shenzhen (25.1 per cent) and better living environment (20.4 per cent). The survey was jointly commissioned last year by the Hong Kong Planning Department and the Shenzhen Statistics Bureau. Findings were based on interviews with about 4,200 Shenzhen families, that included Hongkongers, in September last year. "Hong Kong people living in Shenzhen" are defined as Hongkongers who had resided there for at least three months during the six-month period before the interview. The survey showed the median monthly income of the families was 10,000 yuan (HK$11,300) and the median size of their flats in Shenzhen about 72 square metres. Despite living across the border, 55.1 per cent said they would return to Hong Kong at least once a week to visit friends, or for leisure and entertainment purposes. Anthony Yeh Gar-on, head of the University of Hong Kong's department of urban planning and design, said the trend of more Hong Kong people choosing to live on the mainland would be unstoppable. He said the cost of living in Hong Kong was too high, and with greater integration between the city and the Pearl River Delta region more Hongkongers would go to work across the border, and more would chose to live on the mainland. But he said these people were not eligible for public services in Shenzhen, and would return to Hong Kong for medical services or for their children's schooling. The survey findings showed that more than 37 per cent of those living in Shenzhen had returned to Hong Kong for health care services at least once in the six months before the interview. Society for Community Organisation director Ho Hei-wah shared Professor Yeh's views and called for a policy to cope with the trend. The policy could be to encourage them to stay in Shenzhen, to ease the burden on demand for services in Hong Kong, or it could be to encourage them to return to Hong Kong, because in a sense they were a good pool of human resources, he said. "But the present situation is that the government is not doing anything, perhaps because it does not know what to do without a guiding policy," Mr Ho said. Property consultancy firm Land Power International chairman Michael Choi Ngai-min, whose firm specialises in Shenzhen properties, said: "Hong Kong people like to invest in Shenzhen properties. But when it comes to taking up residence there, there could be some concerns - for example, law and order, and lifestyles." He said some Hong Kong people bought flats in Shenzhen as second homes for convenience sake because they worked there. "Usually, they would still consider Hong Kong their first home," he said. In a statement, the Planning Department said the survey was aimed at understanding the trend of Hongkongers taking up residence in Shenzhen. Data collected would provide useful reference for planning cross-border control points and infrastructure as well as strategic land-use planning.

Consumer prices fell 0.3 per cent last month as Hong Kong experienced deflation for the first time after about five years of rising prices, government data shows.

Filipino and Indonesian maids in Macau are campaigning against a bill that would ban them from the city for six months if their contracts are terminated.

PCCW (SEHK: 0008), the city's biggest telecommunications operator, yesterday decided against declaring an interim dividend because it paid out a special dividend of HK$1.30 per share two months ago. The company, controlled by Richard Li Tzar-kai, reported flat earnings for the six months to June. Net profit was HK$654 million, down from HK$656 million a year earlier, but revenue rose 12 per cent to HK$12.7 billion mainly because of a contribution from its property development at Cyberport. Earnings per share eased to 9.66 HK cents from 9.68 HK cents. Asked about the interim dividend, PCCW group managing director Alex Arena said the company had just spent HK$8.8 billion on the special dividend during the period. The special dividend came after the Court of Appeal rejected a HK$15.93 billion buyout deal launched by Mr Li's Pacific Century Regional Developments and China Unicom (SEHK: 0762) Group in April. The rejection followed accusations by the Securities and Futures Commission and minority shareholders of vote-rigging at the special general meeting to approve the deal. Mr Arena told analysts that PCCW would review its dividend policy at the end of the year. "Mr Arena's comments seem to suggest that PCCW may not sustain its dividend policy in the future," said Marvin Lo, an analyst at Daiwa Institute of Research. Mr Lo said he was also concerned about PCCW's debt portfolio because its average debt maturity was about 3.4 years. The company's net debt rose 32 per cent to HK$30.58 billion because of the special dividend. For the core telecommunications business, revenue fell 3 per cent to HK$10.46 billion from HK$11.25 billion a year earlier. Earnings before interest, tax, depreciation and amortisation (ebitda), which measures cash flow, was down 2 per cent to HK$3.28 billion. Ebitda margin remained stable at 31 per cent. Cost-cutting during the period sliced 5 per cent off expenses to HK$2.68 billion, paring the operating expense-revenue ratio to 25.6 per cent from 26.1 per cent. PCCW remains the city's dominant player in the fixed-line market with 2.59 million lines, down from 2.593 million a year earlier. But total fixed-line revenue fell 4 per cent to HK$8.24 billion. This included a 7 per cent fall in local telephone revenue to HK$2.13 billion. Now TV had 992,000 subscribers as of June 30, compared with 927,000 a year earlier. It posted an operating loss of HK$34 million, compared with a HK$40 million shortfall previously, but revenue rose 5 per cent to HK$1.09 billion. Average revenue per user was stable at HK$213 a month. PCCW Mobile's performance also improved, with an operating profit of HK$130 million, up from HK$108 million, but revenue fell 3 per cent to HK$828 million. Shares in PCCW closed 0.95 per cent higher at HK$2.13 yesterday.

Taiwan's leaders approved a NT$100 billion (HK$23.51 billion) Typhoon Morakot relief budget yesterday as public outrage intensified over their tardy response to floods and mudslides that have left about 500 dead or missing. The funding is for typhoon relief and reconstruction over the next three years and will go for parliamentary approval by the end of the week. The official death toll rose to 141, but President Ma Ying-jeou - whose popularity has sunk to an all-time low since the typhoon - noted that hundreds were still buried under mud and rock as the island prepared for three days of mourning starting tomorrow. "We must set a timetable for reconstruction so the victims can resume their normal lives soon," Hong Kong-born Ma told a gathering at an orphanage in Liukuei, a ravaged southern town. A day after a poll indicated Ma's approval rating had sunk to 16 percent and two Cabinet members offered their resignations, a new round of newspaper commentaries called on Ma to simply sack ministers for letting down Taiwan and its people. "The Cabinet lacks credibility in the typhoon victims' and the general public's eyes," rapped the China Times. "A Cabinet that cannot command the people's trust and respect should of course be replaced." The Taipei Times summed up the situation succinctly: "The government has lost the battle of Typhoon Morakot." Premier Liu Chao-shiuan had said on Wednesday that he would decide next month whether to accept resignations from the defense minister and the Cabinet secretary as well as the vice foreign minister. But he would not respond when asked whether it was true that he too has offered to step down. The Cabinet secretary drew wrath after trying to justify his dining out with his family at a five-star hotel on August 8, the day Taiwan felt the full force of Morakot. It was Father's Day in Taiwan, he argued, so he was "not out of line." The Defense Ministry came under fire for deploying too few troops during initial rescue operations, with only 2,100 in action on August 9. The number rose dramatically five days later, to 43,300. And the vice foreign minister took the blame for a decision - later overturned - to refuse offers of foreign aid. Ma has promised a probe and punishment for anyone found negligent. He also said Taiwan would create a disaster prevention agency and reorient its military toward a greater focus on search and rescue. Extreme weather now posed a greater threat than an invasion from the mainland, he added. The flooding and mudslides that came with Morakot tore apart houses and buildings, ripped up roads and smashed bridges. It was the worst typhoon ever to strike Taiwan, Ma has said.

China: The government has issued a list of more than 300 commonly used medicines that will be sold at controlled prices starting next month as part of reforms aimed at making health care more affordable. Beijing is pumping in 850 billion yuan (HK$964 billion) to reform its ailing health-care system in the next three years as part of an ambitious plan to provide basic medical coverage and insurance to all of the country's 1.3 billion people. Public hospitals and doctors often rely on profits from the sale of drugs and expensive treatments and tests to cover their operating expenses. The essential medicines list includes antibiotics such as amoxicillin and streptomycin, pain relievers such as aspirin and paracetamol as well as medicines for coughs, colds, anxiety, high blood pressure, and other common ailments.

Beijing is consolidating its steel industry, discouraging small firms in the hope that a few large heavyweights will have greater bargaining power in world markets. Against this background, Hong Kong-listed geo-thermal energy provider Kai Yuan Holdings Limited (1215) has agreed to purchase a large stake in three units of mainland steelmaker Rizhao Iron. Kai Yuan has bought 30 percent of Rizhao Sections and Rizhao Iron and Steel as well as 25 percent of Rizhao Steel Rolling Company for a total of HK$5.2 billion. Since December, Du Shuanghua, the owner of Shandong-based Rizhao Steel, has been accumulating shares in Kai Yuan - a supplier of geo-thermal energy to companies in Tianjin. Prior to the purchase by Kai Yuan of the Rizhao units, he had become the single largest shareholder of the Hong Kong-listed company. So market watchers see Kai Yuan's purchase of Rizhao units as nothing short of a backdoor listing of Rizhao Steel. Du currently owns a 100 percent stake in Rizhao Iron and Steel, which is one of the largest non-state owned firms in the sector. It produces eight million tonnes of steel annually and by output was ranked 20th among mainland steel mills in 2007. But with the government-led drive to consolidate the domestic steel industry, Du is being required to sell his company to state-owned local rival Shandong Iron and Steel. According to experts, Rizhao Steel cannot avoid being part of Shandong Steel Group. Prior to Kai Yuan's purchase of Rizhao units, Du, as the chairman of Rizhao transferred 30 percent shares of Rizhao Steel to Kai Yuan. Many market watchers see this back- door listing process as a tactical move by Du to consolidate his assets in order to garner a stronger negotiating position with Shandong Iron and Steel. After the assets are transferred to a listed company - controlled by Du - he can demand and is more likely to get a better deal with Shandong. Kai Yuan's stock has soared four times since January on expectation of more asset injection. But on June 11 when Kai Yuan Holding purchased the three Rizhao units, the Ministry of Environmental Protection ordered Rizhao Steel to stop its building projects, apparently because they did not have ministry approval. The scheme after completion would have boosted production capacity by some 7 million tonnes per year. Investors should be aware that if the negotiations are completed, that means the assets transferred will be required to shift back. By that time, you would probably expect the share price to fall sharply. For Beijing, steel is a strategic resource in which profitable private- owned enterprises must be guided by and follow state-owned enterprises' business direction. The steel industry has a costly entry barrier and Rizhao, as one of the most competitive and profitable enterprises, should be facing tremendous pressure from the province. Regrouping and restructuring is the only alternative to make a business feasible. According to statistics, private steel firms performed much better than Laiwu Steel and Jinan Steel, the two subsidiaries of Shandong Steel Group. Rizhao Steel made over 800 million yuan (HK$907 million) net profit in the first quarter with more than 7.8 billion yuan revenue, while Laiwu Steel lost 580 million yuan on revenue of 6 billion yuan. Jinan Steel lost 790 million yuan on 6.07 yuan billion revenue. It is not difficult to think that both central and provincial governments intend to restructure the business and transfer some of the profits to state-owned enterprises. Mainland business people are aware that playing against the government is absolutely unwise. Du is influential and heads a steel empire but he would not dare oppose state plans. An attempt to transfer assets to a listed company in Hong Kong is only mist: behind it is a power struggle. It has already been made clear by the chairman of Shandong Iron and Steel Cheng Qixiang that restructuring will be fully completed by the end of this year, Du's diplomatic game is highly risky and betting on Kai Yuan would be quite opportunistic. Investors assume that the profit of Rizhao Steel would contribute 995 million yuan to Kai Yuan this year. The assumption is correct only if Rizhao's assets can be legally and completely transferred to Kai Yuan without any hindrance. Personally, I would not bet against state policies and the same principle applies to Kai Yuan and Rizhao's strategic and diplomatic partnership.

The Potala Palace is illuminated during the fireworks display to celebrate the Shoton Festival in Lhasa, Tibet, Aug. 20, 2009. The Shoton (Sour Milk Drinking or Yogurt) Festival is held on the first day of the seventh month according to the Tibetan calendar. During the celebration, various kinds of religious and recreational activities will be held.

A police department head in the Xian Public Security Bureau is under investigation for corruption after his former subordinates signed a petition and reported him to local media.

Medical authorities in central China have discovered more than 1,300 cases of suspected lead poisoning in children, state media said, in the second such incident this month and bringing the total to 2,200. Authorities in the city of Wugang in Hunan province have shut down a smelting plant and detained two of the company's executives on suspicion of "causing severe environmental pollution," Xinhua News Agency said. Locals had complained of large amounts of thick smoke and dust coming out of the Wugang Manganese Smelting Plant since it began operations in May last year, it said. A total of 1,354 children - or about 70 percent of those under the age of 14 that lived in four villages near the smelter - were found to have levels of lead in their blood that exceeded safety standards, the report said. Seventeen of the most severely affected have been hospitalized. A primary school, a middle school and a kindergarten are located within a 500-meter radius of the plant, which was shut down last week, it added. Provincial medical teams were conducting secondary tests to confirm the initial results. So far, they have found 45 cases in which lead levels exceeded 200 milligrams per liter, the report said. Lead levels of between zero and 100 milligrams are considered normal. A reading of more than 200 milligrams is considered hazardous, with children more vulnerable to lead poisoning, which can harm the nervous system. The Wugang incident comes on the heels of another case in northern Shaanxi province, where more than 850 children have been affected by lead poisoning caused by pollution from a smelting plant, according to Xinhua. More than 170 children in Shaanxi's Changqing township were hospitalized, the agency said. On Monday, villagers stormed the Shaanxi smelter, smashing trucks in anger. The plant has also been shut down.

Li Shaode believes spot rates for coal and oil this quarter will be better than in the first half. China Shipping Development saw its net profit dive 80.7 per cent in the first six months of this year as freight rates for coal and oil slumped, but the company said it expected profit to improve this half. The company, the mainland's biggest coastal energy shipper, said it had invested in clean energy development in a nation thirsty for energy. China Shipping has created a joint-venture shipping company with PetroChina (SEHK: 0857) to transport liquefied natural gas (LNG) from Australia's Gorgon field to Guangzhou. The venture, in which China Shipping owns 90 per cent, will invest US$400 million to US$600 million to buy two to three LNG vessels, managing director Mao Shijia said yesterday. The terms of the shipping contract will be finalised as early as next quarter. In addition to the Australian LNG contract, the company was negotiating with Sinopec (SEHK: 0386), the mainland's second-largest oil company, an LNG shipping contract with Papua New Guinea, Mr Mao said. The LNG project would not generate profit in the first three years because of the high sunk cost, or irrecoverable expenses, said BOC (SEHK: 3988) International transport analyst Jimmy Lau. An LNG vessel costs twice the price of a crude oil vessel carrying the same energy content. LNG shipping is a capital-intensive investment, but returns are relatively stable with contract terms stretching 20 to 25 years and investment returns above 10 per cent, Mr Mao said. Hindered by the global economic downturn, the company's net profit fell to 613.64 million yuan (HK$696. 17 million) from 3.18 billion yuan a year earlier. Shipping volume dropped 10.6 per cent to 101.6 billion tonnes/nautical mile, while sales were down 54.8 per cent to 4.12 billion yuan. The operating margin was under pressure because freight rates and the proportion of international oil shipping fell. The contracted price for coal shipments signed this year was down 39 per cent year on year. Chairman Li Shaode said the spot rates for coal and oil in the third quarter would be better than in the first half. He believed freight rates for oil would climb as the recession eased. As the gap between domestic and international coal prices has narrowed, it would stimulate demand for domestic coal from power plants in southern China, benefiting the company, said Mr Lau. China Shipping will take delivery of 14 oil tankers in this half, of which five are very large crude carriers, boosting its tanker fleet to 2.2 million deadweight tonnes. Some smaller shipping companies were requesting a merger with China Shipping, said Mr Li, but he did not elaborate. The firm is also looking for merger and acquisition opportunities to secure its shipment volume. The company had committed to taking delivery of 64 vessels worth 19 billion yuan as of June 30. About 60 per cent of that amount will come from bank borrowing, of which 85 per cent has been secured with preferential interest rates - the London interbank offered rate plus 34 to 35 basis points. Mr Li said the company had no plans at the moment to tap the capital market for funds, as it has an ample supply of credit.

China Mobile (SEHK: 0941), the mainland's biggest mobile operator, has suffered its first earnings decline since becoming a publicly listed company in 1997 as an industrywide restructuring last year exposed it to tougher competition. The world's biggest phone company by market value said second-quarter profit dropped 2.62 per cent to 30.12 billion yuan (HK$34.17 billion) from 30.93 billion yuan last year. Revenue increased 7.6 per cent to 111.64 billion yuan. An industry revamp allowed fixed-line giant China Telecom Corp (SEHK: 0728) to enter the mobile-telephone market last year for the first time, encroaching on a sector all but dominated by China Mobile. It is the company's first earnings drop in a decade. China Mobile has also been hobbled with the mainland's untested 3G technology, TD-SCDMA, while its competitors are allowed to use the more commercially popular international standards. For the first half to June, China Mobile's net profit rose 1.4 per cent to 55.32 billion yuan, with revenue growing 8.9 per cent to 212.91 billion yuan. The margins on earnings before interest, tax, depreciation and amortisation (ebitda), which measures the profitability of a mobile operator, fell to 51.6 per cent from 53.2 per cent. China Mobile chairman Wang Jianzhou said the company had added several million new subscribers each month and maintained a stable dividend payout. "The quarterly profit drop was mainly due to the weak macroeconomic environment arising from the financial crisis," Mr Wang said. "But we are also facing intensifying market competition and high mobile-telephone penetration in large cities like Beijing and Shanghai." As mobile penetration along the nation's eastern coastal region reaches saturation levels, the company will shift its focus to central and western China where few people have mobile phones. "A lot of the customers they are signing up are in the rural areas who don't spend as much," Daniel Baker at Mirae Asset Securities in Hong Kong said. "In the metro areas, there have been a few price cuts, which are not helping things." China Mobile added 35.8 million users in the first half, down from 45.25 million a year earlier, as its share of new customers dropped to 66 per cent from 85 per cent. Total subscribers reached 493 million, up 18.9 per cent. Average revenue per user, a benchmark to measure users' spending pattern, however, dropped 10.7 per cent to 75 yuan per month. China Mobile's 3G mobile service, running on the mainland-developed TD-SCDMA technology, had 1.08 million subscribers by the end of July and targets to have three million by the end of the year. Separately, the company clarified that it has no exact timetable for its domestic listing. "It is clear that we are on the way to a domestic listing," said Mr Wang. "But what we consider is how to minimise the impact on our Hong Kong listing status." He said China Mobile is not likely to issue A shares directly on the mainland, given the regulatory difference between mainland and Hong Kong markets. "We suggest the regulator set up a new regulatory platform to handle the listings of all overseas-registered firms," Mr Wang said.

Australia has said it does not support autonomy in the restive Xinjiang region, in an attempt to arrest a slide in ties as China's media brand Australia "Sino-phobic". Relations soured after an Australian visa was granted to Rebiya Kadeer, the exiled leader of the Muslim Uygur minority in Xinjiang, and an Australian Rio Tinto mining executive was arrested on allegations of espionage. Australian Foreign Affairs Minister Stephen Smith told Parliament yesterday that allowing Ms Kadeer to visit did not mean support for her views on Uygur autonomy. "We have a long-standing position to respect the territorial integrity and sovereignty of the western provinces so far as China is concerned," Mr Smith said. China blames Ms Kadeer for instigating ethnic riots in Xinjiang this year, a charge she has repeatedly denied. It criticised Australia's decision to give her a visa and cancelled a high-level diplomatic visit. The China Daily, the Communist Party's official English-language paper, said in an editorial that Australia's "Sino-phobic politicians" were leading the world's "anti-China chorus" and siding with Ms Kadeer. "The cancellation of a visit to Australia by [the] Chinese vice-foreign minister is a restrained and reasonable response on the part of Beijing when that country has challenged China's core national interests," it said. "By providing Kadeer a platform for anti-Chinese separatist activities, Canberra chose to side with a terrorist and severely hurt China's national interests." Australia's ambassador to China returned home for consultations on Wednesday, but Canberra denied it signaled a protest. "He hasn't been rushed back to Canberra. He comes back on a regular basis," Mr Smith told national radio. China is Australia's biggest export market, with two-way trade worth US$53 billion last year. Major Australian exports last year included iron ore, wool and copper ore. Canberra, in stressing the strength of its ties with China, has pointed to this week's US$41.5 billion deal to sell liquefied natural gas to PetroChina (SEHK: 0857). "The China-Australia relationship is always full of challenges, and it always has been thus and it will be thus for a long time to come," Prime Minister Kevin Rudd said. "We approach this relationship mindful of our interests in China, mindful of Chinese interests in Australia." Mr Smith said Canberra was working through its differences with Beijing methodically, including the arrest of Rio Tinto executive Stern Hu. Officials of the mining giant expressed concern for their arrested colleagues, but said they respected China's legal process.

Beijing police are mobilising 800,000 residents for a two-month crime-watch campaign in a bid to boost public security ahead of the 60th anniversary of the founding of the People's Republic.

Rupert Hoogewerf, founder and publisher of the list of the mainland's richest tycoons, has defended himself against criticism that his list is a jinx, bringing misfortune to those who appear on it.

China's current account surplus dropped in the first half of this year, the first time in six years as the global downturn affected the nation's exports. The country posted a surplus of US$130 billion in the current account, the broadest measure of trade in goods and services, a decline of 32 per cent from a year ago, the State Administration of Foreign Exchange (SAFE) said yesterday. The mainland's capital and financial account surplus was valued at US$33.1 billion, down 54 per cent from the same period a year ago, the foreign exchange regulator said. "The drops didn't match China's rising economic profile in the world," said Zhang Youwen, the chief world economy researcher at the Shanghai Academy of Social Sciences. "The surplus growth will sooner or later return to positive territory when the global economy turns around." The surplus in the commodity trade hit US$118.2 billion, down 8.4 per cent. A deficit of US$18.6 billion was recorded for trade in services. The shrinking surplus under the capital account reflected Beijing's efforts to encourage outbound investment at a time when foreign direct investment declined amid the financial turmoil. China drew foreign investment worth US$43 billion between January and June, down 17.8 per cent from a year earlier. As of July, the country's foreign investment had dropped for 10 consecutive months, the Ministry of Commerce said. The SAFE did not provide detailed figures on the nation's outward investment, but Stephen Green, Standard Chartered Bank's chief China economist, estimated the country invested a total of US$18 billion abroad in the first half. "Overseas direct investment appears to be back on track with a flurry of deals announced in recent weeks," said Mr Green, who forecast that China's full-year outbound investment would probably exceed the foreign funds it received. Hu Xiaolian, the former head of the SAFE, said in April that the risk of an outright reversal of capital flows was small since the country still posted surpluses in both its current and capital accounts. The smaller surpluses in both current and capital accounts were a double-edged sword to the world's third-biggest economy, Mr Zhang said. "China does not necessarily need the mountainous foreign exchange reserve since it could only use it to buy US treasury bonds," he said. "However, the surplus will still grow in future amid China's increasing economic strength." The nation's foreign exchange reserve topped US$2.13 trillion at the end of June, an increase of 185.6 billion yuan from the end of last year, SAFE said.

Guangzhou R&F Properties (2777) posted a 90 percent drop in half-year net profit as it wrote off 241.2 million yuan (HK$273.66 million) in deposit from the termination of its Foshan land use rights contract.

A surge in lending has helped Industrial and Commercial Bank of China (1398) - the world's most profitable lender - increase first-half net profit by 2.9 percent to 66.42 billion yuan (HK$75.34 billion).

Chinese President Hu Jintao and Serbian President Boris Tadic on Thursday agreed to establish a strategic partnership between the two countries.

Aug 21, 2009

Hong Kong: The Law Society of Hong Kong said on Wednesday police should not be involved in the planned voluntary drug-testing scheme as this would make students less willing to participate. The controversial drug-testing programme is scheduled to be launched in Tai Po schools in December. But recently critics have questioned its effectiveness, legality and possible infringement of students’ privacy. On Wednesday, the Law Society voiced new concerns. Society president Wong Kwai-huen told a press conference students’ personal safety could be jeopardised if police knew the results of their drug tests. “Police involvement is the major problem with the scheme. Even if pupils are not charged with taking drugs, any investigation of pupils about the source of the drugs might harm them,” Mr Wong stressed. “This is because they are indirectly helping police solve crimes,” he explained. Many drug suppliers in Hong Kong are linked to triad societies and criminals, who could respond aggressively if students discuss the details of their drug purchases with police. Mr Wong said the Law Society generally supported the idea of a drug-testing scheme, but pupils should be completely informed about ite details. He said students should be told how their personal information would be used, who would be informed about drug-test results and how long their personal information would be kept. Mr Wong also said the scheme would not be effective if only a small group of pupils participated. “The drug-test results would not reflect the actual situation... among youngsters,” he said. Mr Wong said the society’s views would be addressed to the Privacy Commissioner and the Commissioner for Narcotics, local media reported. Earlier, Under Secretary for Education Kenneth Chen Wei-on told local radio the planned scheme would not create extra work for teachers. This was because the tests were being conducted by a team of two nurses, two social workers and a clerk.

The Heung Yee Kuk and a lawmaker have called for tighter monitoring of a controversial drug rehabilitation school even as its management sought to refute allegations it is involved in unseemly investments in the mainland.
Officials of Christian Zheng Sheng College called a press conference yesterday to answer allegations its mother group, Christian Zheng Sheng Association, had invested in a prostitution center, but ended up creating more questions than answers. For one thing the school appears to be the major revenue driver for the association. Total income for the school and association for the 11 years through 2008 was HK$128.91 million. Of this, HK$83.69 million was income from boarding and school fees from students. The school also got around HK$23 million in donations, HK$11 million from investments in Hong Kong, HK$18 million from the mainland and HK$2 million from Japan. Principal Alman Chan Siu-cheuk said its mainland investments mainly involve businesses that provide accommodation for visitors from Hong Kong, a center for children with AIDS and a center for orphans. He said the prostitution center claims are the result of negligence as the association had used a borrowed address when it was first registered. Chan said accumulated expenses for the college for the 11 years was around HK$84 million, incurring a loss that was made up by the association. Chan said his salary is HK$39,000 while association executive director Jacob Lam Hay-sing gets HK$41,000. Kuk vice-chairman Lam Wai-keung was not satisfied with the figures and said further explanations were necessary. "The government should monitor the association's spending as it uses CSSA funds," Lam said, referring to the Comprehensive Social Security Assistance, or dole, scheme. Education-sector lawmaker Cheung Man-kwong said the school should publish its audited statements and that all NGOs should be monitored. A government source declined to comment on whether the incident will affect the its support for the college. He added the administration will focus only on whether Zheng Sheng is doing a good job for those in its care. Accountancy-sector legislator Paul Chan Mo-po said it is difficult to tell whether there is any problem with the figures. He said such agencies can make profits provided they are spent on other charitable purposes. A spokesman for Education Bureau said it does not monitor the finances of non-profit-making schools that are not government-subsidized. But he suggested such schools should prepare "suitable accounting records." An Inland Revenue Department spokeswoman said the association is a tax-exempt charity. She said there is no territorial restriction on a charity's work if its objectives fall into one or multiple purposes of relief of poverty, advancement of education and advancement of religion.

The Food Expo has proved a huge success, with the traditional final-day rush pushing the attendance up 15 percent on last year to 350,000. Retailers reported a jump in sales as a crowd of mostly housewives on the hunt for bargains filled the Hong Kong Convention and Exhibition Centre on day five of the expo. Hong Kong Trade Development Council assistant executive director Raymond Yip Chak- ya expressed satisfaction after the five-day crowd easily eclipsed last year's 314,000. Expo debutant Sun Wah Japanese Food, which sold Japanese snow crabs at less than half the retail price, had to refill its shelves three times just to meet demand. A representative of the operator said Sun Wah would definitely return next year. Elsewhere, sorrow turned to joy for two customers who had broken down in tears after discovering an offer of 100 meatballs for HK$1 had been a sellout success before they arrived. "We gave each of them two packs of meatballs for free," said Pius Chan Ngok-sing, the marketing manager of Tai Po Chun Hing. In the final hours of the expo, five packs of fishballs normally priced at HK$80 by Tai Po Chun Hing were reduced to HK$60. Chan said turnover was up 20 percent on last year and volume was up 40 percent. Yuen Tai Trading, a distributor of Jumbo Brand canned food, cleared its stock by selling 10 cans of Jinhua Ham luncheon meat for HK$80. Managing director Lee Fuen said one housewife bought an entire carton of 48 cans. Champion Fair sales manager Horace Wu Hung-kwong said his company sold more than 200,000 cans of tinned food during the expo. And the managing director of On Kee Dry Seafood, Richard Poon Kuen-fai, said turnover reached HK$1.5 million - 50 percent higher than expected. "We could have made even better profits because many customers asked for high- end products," Poon said, "but we sold only middle-priced stocks here." One visitor, Wendy Yeung, took a day off work to visit the expo with her sister yesterday. They spent more than HK$2,000 filling three trolleys and several shopping bags with food.

Thirsty wine trade uncorks grape career opportunity - Hong Kong has developed a keen thirst for sommeliers as it emerges as a regional wine hub. Demand from the catering industry for wine experts has at least tripled in the past year despite tightening budgets due to the economic crisis. A measure of this came as the Hong Kong Sommelier Association published its first list of 134 recognized sommeliers yesterday - and revealed that at least 200 well-paid vacancies remain. "The market potential is much greater than that," said HKSA chairman Nelson Chow Kwok-ming. "Despite the fact that some Chinese restaurants have recognized the importance of matching Chinese cuisine with wine, many have still not caught up with the trend." After wine duty was abolished last year, the association was flooded with calls from hotels, clubhouses and restaurants looking for sommeliers able to market and recommend wine to diners. The number of calls may have dropped off, but despite the economic crisis, a healthy number keep coming. The association has introduced an examination system and has recognized more than 40 sommeliers and eight senior sommeliers in the past month. One of the eight certified seniors is the China Club's Henry Chang Kwok-wai who started as a waiter 18 years ago after finishing Secondary Five. He is set to represent Hong Kong in the World's Best Sommelier Competition in Chile next April. Chang will be up against representatives from 40 member countries of the Association of Sommeliers. But before then, he will take part in the Best Sommelier of Asia-Oceania competition in Osaka, Japan. Self-taught Chang, 44, had no formal wine education and learned about wine tasting from working in Western restaurants and extensive reading. He won the Best Sommelier Hong Kong competition in 2007 during which he was able - while blindfolded - to identify a red wine's country of origin, year of production, type of grapes used and price. "I do this with other wine-loving friends in our leisure time as well. I enjoy the anticipation I get from wine tasting," Chang said. "Sometimes I look at the bottle or sniff the wine and I cannot help imagining the taste of the contents." Chow said many of the listed sommeliers started at the bottom and are now high-ranking executives in the catering industry. "We are in need of new blood and hope this system can facilitate the grooming of new talent," he said.
There is no requirement for secondary education or language training - just a passion and willingness to learn. Monthly salaries range from HK$13,000 to HK$30,000.

The charity that runs Hong Kong's only private school for drug offenders yesterday dismissed allegations that it was using government money to finance its investments in Hong Kong, the mainland and Japan. The Christian Zheng Sheng Association said it had income of HK$128 million between 1998 and 2008, of which HK$83 million came from its school on Lantau Island where students' fees are paid by the Social Welfare Department. But it said the operating cost of the Christian Zheng Sheng College during the period was HK$84 million, and that it had to subsidise the school to the tune of HK$1 million from its other income - which includes donations and earnings from investments. The association - embroiled in a row over a plan to move its campus to Mui Wo - was speaking out for the first time about allegations it used government money to fund businesses, including a restaurant, tea house, hotel, farmland and a brothel, on the mainland and in Japan and Hong Kong. It said it used its investments to fund its operations, including subsidising the school when necessary, and it did not run the brothel, although the brothel was in a building registered in its name. School board chairman Ho Kwok-keung said the association was just like the YMCA or Caritas. "They have hotels and they also make investments and the profit is used to finance their services." The press conference was the latest development in a long-running row over the school's plans - backed by government officials including Chief Executive Donald Tsang Yam-kuen - to move from cramped quarters on the Chi Ma Wan Peninsula to a vacant school building in Mui Wo. The association also said the college would make its latest budget report, for 2007, public once it was approved by the school's board of directors. One of the allegations was that the charity was keeping its 130 students in quarters designed for 60 while it had a surplus of HK$20 million. But the association said the budget report would show it had a surplus of only HK$2 million. Most of the college's students are admitted under probation orders and can apply for Comprehensive Social Security Assistance of HK$10,465 a month to cover their fees. But principal Alman Chan Siu-cheuk said the fees were not enough and since it was registered as a private school in 1998 the college had suffered a HK$1 million loss, which was covered by the association. He said every penny received from the school's students was spent on them and on college facilities. "All our mainland projects, including orphanages in Fujian and Henan , are funded by donations to the association and designated for the mainland by the donors." A member of the college's board of directors, Chui Hong-sheung, who is also the president of Hang Seng School of Commerce, said many private schools had endowment funds for investment to support their expenditure. While many invested in stocks and bonds, Mr Tsui said: "The association has the vision to invest with `double benefits'. The investment not only can generate money, it can also serve as training grounds for students." The association is a tax-exempt charity under the law, which allows charity work in poverty, education and religion in any part of the world. The only two paid directors are Mr Chan, who receives HK$39,000 a month and association chief executive Jacob Lam Hay-sing who gets HK$41,000 a month. Mr Chan also noted the association's business investments were part of their education mission. "Our students can work at our restaurant and other businesses to learn vocational skills. They also visit our orphanages and do social service on the mainland," he said.

Chief Executive Donald Tsang gestures while talking about co-operation as Guangdong governor Huang Huahua looks on at the Hong Kong-Guangdong conference at the Convention and Exhibition Centre. Hong Kong and Guangdong yesterday signed eight pacts to strengthen co-operation, including a letter of intent on the development of service sectors and high-end industries in Qianhai , Shenzhen, and collaboration in other areas. The agreements covered proposals to increase exchanges in financial development, disease prevention and control, education, environmental protection and intellectual property protection. The deals were struck at the 12th plenary session of the Hong Kong-Guangdong Co-operation Joint Conference. About 50 Guangdong officials, led by governor Huang Huahua , travelled to Hong Kong for the two-hour meeting, with their counterparts led by Chief Executive Donald Tsang Yam-kuen. Under a document, signed by Chief Secretary Henry Tang Ying-yen and acting Shenzhen mayor Wang Rong , the two cities will jointly study ways to promote service industries in Qianhai, a 10 square kilometre zone in Shekou . The two sides will also encourage Hong Kong enterprises to run businesses there. After the meeting, Mr Tsang said: "We believe there is ample opportunity to develop Qianhai into a modern industrial area that will complement what is happening in Hong Kong - complement what we are trying to achieve in Hong Kong as an international financial and trading centre." He said the planning of the area was still at a very early stage and he did not think the development of financial services would pose a threat to Hong Kong. "Even the reclamation works of Qianhai haven't been completed yet ... These are only some preliminary ideas and we will conduct in-depth studies later." Both sides agreed to rename the Hong Kong-Shenzhen Airport Rail Link the Hong Kong-Shenzhen Western Express Link, to accurately reflect the area it would serve. A team of experts will be set up under an existing task force to advise the governments on construction of the railway and other transport connections in the western areas of the two cities. A new group of experts will be set up under the joint conference to strength Hong Kong-Guangdong co-operation in the financial sector. Members will include government officials, market regulators and financial professionals. To boost co-operation in the education sector, the governments will explore the feasibility of private schools in Shenzhen offering a Hong Kong curriculum for local children living on the mainland. On health care services, the two administrations will encourage cross-border research and production of drugs and vaccines, and strengthen exchanges between medical personnel from both sides. Health authorities from the two sides will hold a conference next month to review the accreditation system of Hong Kong medical practitioners who want to provide services in Guangdong. Mr Huang said he believed the co-operation measures would aid the economic recovery in both places. By promoting collaboration among Hong Kong, Macau and Guangdong, he said the region would hopefully become the most competitive place in the Asia-Pacific area. The governor said he had visited Hong Kong Exchanges and Clearing (SEHK: 0388), the Hong Kong Monetary Authority and the University of Science and Technology on Tuesday.

The ICAC yesterday charged the chairman of a Hong Kong body-building association for his alleged roles in a bribery scam that helped a suspended athlete compete at the 2006 Asian Games in Doha, and in a government subvention fraud. Simon Chan Siu-man, chairman of the Hong Kong China Bodybuilding and Fitness Association, faces one count of conspiracy for an agent to accept an advantage and one of fraud. Chan, 39, was released on bail and is scheduled to appear in Eastern Court tomorrow morning. A person familiar with the case said bodybuilder Andy Wong Kwong-sun, who won a gold medal at the Hong Kong championship in June, and Asian Bodybuilding and Fitness Federation general secretary Paul Chua had been under investigation in relation to the case. The conspiracy charge alleges that between May 2006 and February 2007, Chan conspired together with Mr Chua and Mr Wong for Mr Chua to accept US$10,000 from Mr Wong. In return, Mr Chua was said to have shortened or lifted the period of suspension from participation in any bodybuilding competition imposed on Mr Wong, and enabled him to participate in Doha in December 2006. The Independent Commission Against Corruption found that Mr Wong was banned from any bodybuilding competition for two years after failing a doping test in October 2005 at the Asian Championships in South Korea. Two other Hong Kong bodybuilders, Chan Yun-to and Marco Lam Man-shing, were also found guilty of doping violations at those championships, according to the International Bodybuilding Federation. The three bodybuilders should have served two-year bans, until October 2007, before being able to represent Hong Kong again in international competition. However they all competed in Doha. Mr Chan won a gold medal in the men's under-75kg category, while Mr Lam was a bronze medallist in the under-90 kg category. Mr Wong finished 10th in the under-65kg category. The fraud charge alleges that between the end of 2007 and May 15, 2008, Simon Chan falsely represented in the annual returns of his association for the financial year ended March 31, 2007, that the statement of programmes subvented by the Leisure and Cultural Services Department was correct and the spending listed in the accounts was genuine. Chan allegedly induced the department to accept the annual return submitted as genuine and not to demand the return of more than HK$250,000 in subvention. In July, the chairman of the Hong Kong East Asian Games Planning Committee, Timothy Fok Tsun-ting, confirmed that the bodybuilding competition at the Games in October had been cancelled.

The resumption of capital flows into Hong Kong, particularly from the mainland, is boosting the city's ailing commercial property market, which was badly hit by the global financial crisis. While average rentals for grade A office space continued to slide in the second quarter - down 5.8 per cent from the first three months - the rate of decline had slowed from 10.2 per cent in the first quarter, according to property consultant Savills. In the core Central market, rents fell 7.8 per cent in the second quarter, but this was only about half the 15 per cent decline in the first quarter, as more mainland businesses began looking for new set-ups and relocation opportunities in the central business district. Helping to lift sentiment in the sector was the expectation that since Beijing's foreign reserves remained at a record high US$2.13 trillion in June, the government might raise quotas issued under its qualified domestic institutional investor scheme, according to analysts. Under the scheme, qualifying local investors are given quotas to invest in offshore markets. Many of those investments are directed at Hong Kong or channelled through the city's financial intermediaries. Swiss investment bank UBS estimated in a recent report that about half of the US$62 billion in QDII quotas issued since the inception of the scheme in 2006 had found its way into the Hong Kong capital market - a pattern that encouraged fund managers to set up operations in the city. UBS believes the increase in quotas, if approved, will boost the Hong Kong stock market as well as raise demand for local financial services and hence office space. So far this year, mainland-backed investment funds including Harvest Fund Management, China AMC, China Southern Fund and E Fund Management have set up subsidiaries in the city, and several additional funds have applied to the Securities and Futures Commission for approval to establish branches in Hong Kong. The rejuvenated financial market has also benefited commercial property, and Ricky Lau, senior director for commercial at Savills, said mainland companies already listed or planning to list in Hong Kong had dominated the office leasing market recently. "They are not looking for large office spaces but can afford high rents," he said. Recent examples include Renhe Commercial (SEHK: 1387, announcements, news) Management, which rented a 4,500 square foot office in One IFC, and Zhong Rong Group, which set up its Hong Kong headquarters in Two IFC, taking 1,600 sqft. Kaisa Group Holdings leased 5,000 sqft in the same commercial premises, Mr Lau said. "Many international financial institutions laid off staff and now need to replace the headcount," said Eric Wong Chun-yu, the co-head of Asian property research at UBS, which now expects office rentals to rise 28 per cent from June to the end of next year against its previous forecast that rentals would drop 35 per cent this year and rise 5 per cent next year. Cusson Leung, an analyst at Credit Suisse, believed improved hiring intentions in the banking and financial services industry would benefit the office sector and revised his office rents projection from broadly unchanged next year to a rise of 20 per cent. Mr Leung said he believed the worst was over and the decline in demand in the sector had bottomed. CLSA head of Asian property research Aaron Fischer also believed Hong Kong office rents would bottom out in the second half, sooner than he had forecast. He expects demand to remain confined to smaller financial services companies. "Bigger banks are not yet expanding space, as they are still sitting on excess space from deals struck during 2007," he said. Mr Fischer said office rents would likely stay flat next year after a 38 per cent drop this year. Champion Real Estate Investment Trust, which owns the grade A Citibank Plaza in Central, was also cautious about the outlook for the commercial property market. "The financial sector has stopped shrinking, but it may not translate immediately into strong demand for office space," said the trust's manager.

China: Abandoned Mercedes and BMWs litter the streets, businessmen disappear one after another, and puffy-eyed police officers sit exhausted from all-night shifts - and the fear of disappearing themselves. Welcome to Chongqing as it surveys the damage from its biggest battle against organised crime. Since June more than 1,500 people have been arrested, including 67 gang bosses, three billionaires and 50 government officials. The biggest catch was Wen Qiang , director of the municipality's justice bureau and deputy chief of police. Two sedans and an anti-riot vehicle were waiting on the tarmac as his Air China (SEHK: 0753, announcements, news) flight touched down at 9.38am on August 7 at Chongqing Airport, according to China Newsweek. Mr Wen was arrested on his return from Beijing, where he had attended a meeting of justice officials. The magazine said the pilot was told he had a special guest on board. But he was given no further details - just a suspect and seven police keeping him under surveillance. A photographer was on hand to witness his detention: Mr Wen was placed in the vehicle under the escort of a handful of plain-clothes police, including current Chongqing police chief Wang Lijun. But Mr Wen still managed to strike his signature pose for the camera - a proud crossing of his arms across his chest. Things had come full circle for Mr Wen, who became a household name in 2000 when he arrested gangster Zhang Jun after a six-year pursuit. In that famous photo, Zhang was pinned to the ground - with Mr Wen's foot in his face. Having shot to fame for busting triads himself, his fall from grace at the hands of another triad-buster was as dramatic as events on the tarmac. According to people who spoke to China Newsweek, Mr Wen fitted the image of a policeman straddling the worlds of law and order: capable, showy, but also loyal. He is currently under internal party investigation for allegedly shielding the rampant triad forces in Chongqing. It is still uncertain what exactly triggered his downfall, but over the years he had gained a reputation for his close involvement with the rich and powerful, many of whom were also crime bosses. Since former Liaoning party chief and Minister of Commerce Bo Xilai took the reins in Chonqging in 2007, fighting crime has been a top priority. In June last year he parachuted in Wang Lijun from Liaoning to replace Mr Wen as police chief. Mr Wen was moved to head the Justice Bureau - a step now seen as foretelling his fall.

ExxonMobil Corp's Gorgon plant in Australia will supply PetroChina with 2.25 million tons of liquefied natural gas a year over 20 years. China and Australia have kissed and made up to the tune of more than US$40 billion, overlooking recent tensions to seal a gas supply agreement that is the latter's biggest deal on record. PetroChina (SEHK: 0857, announcements, news) , the nation's biggest oil and gas producer, late on Tuesday ordered 2.25 million tonnes of liquefied natural gas (LNG) a year over 20 years from ExxonMobil Corp's Gorgon plant in Australia in a deal totaling US$41.29 billion. The deal signals that even as an Australian citizen working for mining giant Rio Tinto languishes in a mainland jail for allegedly stealing commercial secrets from the Chinese, realpolitik is prevailing in both Beijing and Canberra. China, which received its first LNG cargo in May 2006, plans to build more than 10 terminals on the east coast to meet a government target to double the use of natural gas in five years by 2010. LNG is natural gas that is chilled to liquid form for transport by ship to destinations not connected by pipeline. Woodside Petroleum, the operator of the Browse LNG export project in Australia, had already agreed to sell fuel worth about A$45 billion (HK$286 billion) to PetroChina. "The long-term interests of the two countries will always trump the occasional crisis," said Michael McKinley, a professor of global politics at the Australian National University. "China's interest is in obtaining resources at the right volume and price and it's able to do so in Australia." Australian mineral and energy exports to the mainland have been credited with helping the nation of 22 million people avoid a recession, but the country's growing reliance on China has raised political tensions. The Gorgon deal brings the value of various mining and energy deals agreed between China and Australia over the past year to more than US$183 billion - more than the gross domestic product of New Zealand. China now consumes almost 80 per cent of Australia's iron ore exports by volume, up from less than 60 per cent a year ago and about 20 per cent at the start of the decade. Fortescue Metals Group, Australia's third-biggest iron ore exporter, remains in talks with Chinese groups to secure as much as US$6 billion in capital to expand. The relations between the two nations, which had improved after the election of the Putonghua-speaking Kevin Rudd as Australian prime minister in 2007, have been strained recently. The arrest of the Rio executives and Canberra's decision to approve the recent visit of exiled Uygur leader Rebiya Kadeer have raised hackles in both capitals, underscoring the vast political divide between the two countries. But when it comes to energy and minerals, the two sides are on the same wave length - the bigger the deals the better. "The [PetroChina] deal proves that Rio is just an individual case ... and the close trade ties between China and Australia will not be affected," said Han Xuegong, a professor at CNPC (SEHK: 0135) Managers Training Institute in Shanghai. Officials in both countries have sought to play down the frictions between them. Australian Resources and Energy Minister Martin Ferguson was quoted as saying the ExxonMobilPetroChina deal was "testimony to the strength of Australia's continuing trade and investment relationship with China".

A majority of the building sites in 12 mainland cities that were sold at exceptionally high prices during the feverish market peak in 2007 remain idle today because the cost of the land has made it difficult for developers to turn a profit, according to a survey. In a report issued yesterday, Centaline Group, which tracked land deals in 12 major cities, said four of 18 development sites that sold for exceptionally high prices at auction two years ago have been returned to local governments because sales transactions had not been completed. Typically, a buyer must pay a deposit of at least 10 per cent and the balance later. Work had not begun on seven of the remaining 14 sites, Centaline analyst Song Li said. Five of those sites were in Guangzhou. In Chengdu, Wharf (Holdings) (SEHK: 0004) paid a record 7.24 billion yuan (HK$8.21 billion) for a mixed-use site in September 2007, which remains undeveloped. Singapore-listed Yanlord Land Group paid 1.3 billion yuan in November 2007 for a residential site in Shanghai's suburbs on which work has yet to begin. "Developers hoarding these pricey sites is understandable, as transaction prices for new flats in nearby areas are just slightly higher than what they had paid for the land in 2007," said Ms Song. Beijing-based Sino-Ocean Land (SEHK: 3377) Holdings bought a site in Gongshu district, Hangzhou, for 2.26 billion yuan in October 2007. Ms Song said the land cost 15,675 yuan per square metre. New flats in the area now sell for 13,000 yuan per square metre. "The outrageous land prices will definitely jack up the development costs and make it more difficult to make money," she said. Although residential prices in some cities rose 20 per cent in the first half, she said the average land cost for sites bought in 2007 accounted for 38 per cent of the total investment. "That is the highest since 2003," she said, adding that the average land cost ranged from 23 to 26 per cent for sites sold during the past six years. She expected more sites to be confiscated by local governments if they remain undeveloped. The Guangzhou city government this month said Guangzhou R&F Properties, Poly Real Estate Group and Gemdale Group faced penalties for not completing four sites. But developers rejected suggestions their sites would remain undeveloped. A spokesman for Wharf said construction at its Chengdu site would begin in the fourth quarter. Michelle Sze, the head of investor relations at Yanlord, said it was awaiting approval to develop its site.

Kerry Properties (SEHK: 0683) is to release a block at phase two of its Central Residences luxury project in Shanghai's high-end residential district, at more than 80,000 yuan (HK$90,704) per square metre to Hong Kong buyers this week.
Chu Ip-pui, an executive director of Kerry Real Estate Agency, said 10 units in the completed block 2 at Hua Shan Road were sold to buyers at between 81,000 and 87,000 yuan per square metre when it was launched in Shanghai on Friday last week.
"We now plan to offer five units in Hong Kong later this week," Mr Chu said. The units at block two on offer in Hong Kong are between the 17th and 20th floors of the residential block, which is one of three blocks in the development and comprises 60 four-bedroom units ranging in size from 230 to 240 sq metres. The block also has two simplex apartments each measuring 500 sqmetres. Mr Chu expects the firm to generate revenues of about 1.5 billion yuan if all 60 units in the block were sold considering each unit may cost up to 20 million yuan. The developer has lined up banks in Hong Kong to provide mortgage loans in Hong Kong dollars and buyers may borrow up to 70 per cent of a flat's value at a fixed exchange rate to the yuan. Units in Blocks 1 and 3 which Kerry planned to hold for leasing are currently rented at between 170 and 200 yuan per square metre per month, providing an annual investment yield of 2.5 per cent. Mr Chu said he was upbeat about the outlook for the mainland property market and confident that the mainland government would not introduce tough measures to dampen the real estate industry. Early this month, the central government reaffirmed its decision to maintain its "appropriately loose" monetary policy stance and expansionary fiscal policy, and while some mainland banks had tightened their mortgage lending to buyers of second homes this had had little impact on the luxury housing sector, he said. Mr Chu cited as an example progress with sales of its 71 per cent owned luxury residential Gemini Grove project in Beijing where about 60 per cent of buyers had chosen cash payments. Kerry Properties had sold 200 of the 317 units in Gemini Grove at an average price of 40,000 yuan per square metre, he said. A number of units achieved prices as high as 60,000 yuan per square metre. The company has generated 700 million yuan from sales at Gemini Grove so far.

Downturn lifts demand for export insurance - The demand for export credit insurance is on the rise amid concerns about foreign buyers facing financial difficulties in the economic downturn.

Angang aims for profit after tackling `burdens' - Angang Steel (0347) said it is optimistic of making a profit in the second half now that two major burdens - falling steel prices and soaring iron ore prices - which led to its first-half loss, are easing.

Margin squeeze restrains BoCom in first half - Bank of Communications (3328) has announced first-half earnings of 15.55 billion yuan (HK$17.63 billion) - below market expectations - as a net interest margin squeeze offset record growth in new loans.

Wipe the blues away - Market sentiment remains cautious as Shanghai A shares continued their correction. They have fallen nearly 20 percent in the past two weeks.

Lower prices hit cement maker - Mainland cement maker Anhui Conch (0914) announced that its first-half net profit dropped 2 percent to 1.28 billion yuan (HK$1.45 billion) from a year ago on decreased prices and narrower gross margins.

Cross-border listings may include CBBCs - The cross-border listing agreement could later be extended to include derivative warrants and callable bull-bear contracts, according to Paul Chow Man-yiu, chief executive of Hong Kong Exchanges and Clearing (0388).

China becomes Japan's biggest trading partner in both exports and imports in the first six months this year, the Japan External Trade Organization (JETRO) said Wednesday.

General Secretary of the Communist Party of China (CPC) Central Committee Hu Jintao meets with a delegation of ethnic minorities from Taiwan, headed by actor-turned-politician Kao Chin Su-mei in Beijing, Aug. 19, 2009. As Taiwan was hit by the most devastating typhoon in half a century, the Communist Party of China (CPC) top leader Hu Jintao said Wednesday that the mainland shared "the same feeling" with Taiwan people. "We share the same feeling with Taiwan compatriots, especially the ethnic minorities, who suffered serious life and property loss in the recent disaster. We are very much concerned," said Hu, general secretary of the CPC Central Committee. Hu expressed deep sorrow and condolences for the typhoon victims to an actor-turned-politician Kao Chin Su-mei who leads her fellow ethnic minorities in Taiwan to visit the mainland. As of noon Wednesday, 136 people were confirmed dead in Taiwan,45 injured and 386 missing. The death toll did not include 523 people who were buried under mudslides in two villages. "The difficulties Taiwan compatriots are facing mean the same to us," Hu said. "We will continue helping them in rescue and relief as well as support them in rehabilitation." The State Council Taiwan Affairs Office spokeswoman Fan Liqing said Wednesday at a press briefing that the mainland was "keen to lend a hand." On Aug. 10 right after the typhoon swept the island, the Taiwan Work Office of the CPC Central Committee contacted the headquarters of Kuomintang, the island's ruling party, expressing the will of being ready to help. So far the mainland has donated about 176 million yuan (26 million U.S. dollars) and 25 million yuan worth of disaster relief materials to Taiwan. The first batch of prefab houses and 10,000 sleeping bags, 10,000 blankets and 1,000 sterilization appliances reached Kaohsiung Tuesday. Taiwan leader Ma Ying-jeou on Tuesday expressed gratitude to the Chinese mainland and the international community for typhoon disaster relief aid. The mainland also offered to send a civilian helicopter, rescue experts, medics and engineers to assist relief work even though Taiwan said these are not needed at the moment. Spokeswoman Fan said, "The two sides can develop a mutual mechanism of disaster warning, rescue, relief and rehabilitation." Based on existing cross-Strait seminars on weather forecast and disaster warning, the two sides can move forwards to share information and exchange experience, she said. Ordinary people are a major force in raising fund for help. At a fund-raising stand in Chengdu, capital of southwestern Sichuan Province, a middle-aged man emptied his wallet and went to a nearby bank to withdraw more money for donation. "We received help from Taiwan people. So when they need us, we should spare no efforts," the man said on condition of anonymity. Sichuan received about 1.32 billion yuan and relief material worth 200 million yuan (29.27 million dollars) from Taiwan after it was hit by the 8.0-magnitude earthquake on May 12, 2008. An online post, wooing donation to typhoon rescue and relief, has attracted more than 167,000 views since it was put on the popular mainland online community Tianya on Aug. 11. "I broke into tears," said netizen Yusufliu, who saw pictures of Xiaolin village in Kaoshiung where 491 people were buried under the mudslides. "I really feel sorry for them," the netizen said. "Hope people in Taiwan can pull through this disaster as early as possible." At the website of Phoenix TV, a netizen said in a post, "I am a migrant worker. I just learnt form the Internet that I could send short messages to donate money. I sent five messages, donating ten yuan. Don't laugh at me as I did not earn much." The mainland and Taiwan, with a long feud after the civil war 60 years ago, saw warmer ties in the past year, featuring direct transportation, financial cooperation and more frequent exchange of visits. CPC top leader Hu said, "People on both sides of the Taiwan Strait are of one family and Chinese people have a long tradition of lending a hand to those in danger and difficulties."

Aug 20, 2009

Hong Kong: Noodles or cucumber sandwiches? If Air China (SEHK: 0753)'s ambition to take control of Cathay Pacific Airways (SEHK: 0293) is ultimately successful, it will create Asia's largest carrier and help the state-owned mainland airline lift its game. But the blend of Eastern and Western corporate cultures could also make for complex board meetings. Air China this week paid HK$6.34 billion to lift its stake in Cathay to 29.99 per cent, moving closer to taking control of the city's only truly global brand. Air China is expected to appoint two more directors, lifting its numbers on the 18-member Cathay board to four. The largest shareholder, Swire Pacific (SEHK: 0019), a subsidiary of British family-run John Swire & Sons, has 10 directors. Cathay and Swire chairman Christopher Pratt was asked by a reporter earlier this week if he needed to learn Putonghua following the investment while Tony Tyler, chief executive of Cathay, reportedly felt the odd man out when he joined the Air China board. Air China chairman Kong Dong and vice-president Zhang Lan are the representatives on the Cathay board but have been outnumbered by Swire. The other Beijing-linked directors appointed by Citic Pacific (SEHK: 0267), which is selling most of its holding to Air China, have kept a low profile. Air China could reap the advantages of Cathay's international network, expertise in brand-building, service quality and cost controls - virtues the state-owned carrier is lacking at present. Moreover, the increased stake in Cathay could boost Air China's annual earnings by 10 per cent, said Corrine Png, a transport analyst for JP Morgan. Combining the two airlines could create the largest airline in Asia by market capital, fleet size, assets and passenger traffic. Significant synergies would be generated from the two companies, which have a combined fleet size of 379 aircraft and revenue amounting to US$18.73 billion, Ms Png said. Huang Bin, the company secretary at Air China, said: "It is a very precious and unique opportunity for us to increase our stake in Cathay. Our co-operation has been very solid and will become closer and broader from now on." The two carriers already co-operate on a range of operational matters from code-sharing and profit-sharing on some routes to staff training programs. While Air China's ambition to control Cathay is clear, the mainland carrier is coy about when that will happen. Its stake in Cathay currently falls just short of the 30 per cent threshold required for a mandatory takeover offer. When asked whether Air China will replace Swire as the biggest shareholder, Mr Huang said he would not make a forecast about the future. Meanwhile, Mr Pratt is committed to Swire remaining the single largest shareholder. That means if Air China wanted to take control of Cathay, the cost to persuade Swire to sell its stake would be high, said Jim Wong, a transport analyst at Nomura Securities. Air China agreed to buy Cathay's shares from Citic Pacific at HK$12.88 each, a premium of 11 per cent above Friday's closing price. "It is a big premium but it is justified as Air China can benefit from the deal in the long term," said Damien Horth, a transport analyst at UBS. However, the deal will further increase Air China's total debt of 62 billion yuan, assuming it will raise further funds. Robust domestic air traffic demand has lifted passenger numbers for mainland carriers. Last month, the Beijing-based carrier reported a 14 per cent year-on-year increase in passenger traffic, boosted by a 23 per cent increase in domestic passenger demand. However, analysts warn the significant increase in passenger demand was distorted by the travel restrictions during the Olympics period last year. Shares in Air China closed at HK$4.48 yesterday, 1.97 per cent lower than the closing price last Friday. Cathay closed up 1.38 per cent at HK$11.78, 8.5 per cent below the selling price set by Citic Pacific.

CLP Holdings (0002) posted a 42.3 percent slump in interim net profit to HK$3.24 billion on the lower permitted return, weak electricity demand in China, a one-off provision of HK$346 million for an Australian solar system investment, and currency fluctuations. Operating earnings before the one- off item fell 32.5 percent to HK$3.6 billion. Revenue fell 14.6 percent to HK$23.5 billion for the first six months. "The HK$346 million provision surprised the market expectation of a 30 percent decline in net income," said Sun Hung Kai Financial analyst Michael Yuk. The Hong Kong power supplier booked a provision for its 20 percent stake in Melbourne-based Solar Systems as the firm faced fundraising troubles. CLP declared an interim dividend of HK$1.04 per share, unchanged from a year earlier. Earnings per share were HK$1.34. Earnings from the SAR tumbled 27.6 percent to HK$2.93 billion, accounting for 90.4 percent of the company's net income, as permitted rate of return was slashed to 9.99 percent this year from 13 percent to 15 percent, under the new Scheme of Control. Total electricity sales fell 0.9 percent to 15,494 gigawatts. Sales to China slid 12.1 percent as factories in Guangdong shut because of the economic downturn. "We have seen quite a dramatic shift in demand in China, when generation in Guangxi increased over 12 percent in July compared to July 2008," said chief executive Andrew Brandler. China business lost HK$97 million as income from coal-fired projects dived 71 percent, hit by the financial crisis. Income from India and Australia was hurt by volatile exchange rates. CLP shares slid 1.87 percent to HK$52.55.

Tourism Board events manager Mason Hung unveils details of Hong Kong's food and wine festival. For as little as HK$10 a glass, visitors to a food and wine festival in November will be able to sample products from regions as diverse as Bordeaux and California. It will be among attractions at the Hong Kong Food and Wine Year Spotlight Events to be held from October 30 to November 8. The 10-day series of events, organised by the Tourism Board, will start with the city's first large-scale outdoor wine-and-dine event at the West Kowloon Promenade. "Visitors will be able to enjoy the nice harbour view while enjoying fine wine and gourmet food" at the three-day event, the board's senior manager for events and promotion, Mason Hung Chung-hing, said. "There will be music, dancing and multimedia shows every night." Mr Hung said 80 per cent of 140 booths had been rented, with wine merchants from more than 10 countries - including France, Italy, the United States, Chile, South Africa and New Zealand. Award-winning restaurants will also offer fare. Admission will be free. Wine enthusiasts will be able to buy a wine pass for HK$150, which includes a souvenir wine glass and up to 12 glasses of wine from any booth. Alternatively, they can buy HK$10 coupons to redeem for a glass of wine. Another two food carnivals will be organised in Lan Kwai Fong and in SoHo in Central from November 6 to 8, with about 110 booths. The catering industry is also lending a hand, with wine appreciation and cooking classes. Visitors can also join a wine cellar tour and enjoy free corkage at designated restaurants. As it was the board's first such event, Mr Hung said it could not give an estimate of the number of tourists who would come, but Hong Kong's catering industry would get a boost. "Overseas tourists may be wine experts, but they may not know which kind of food goes well with a particular type of wine, while Hongkongers may know local food well but don't know which type of wine to match it with," he said. "We hope to help [with this event]." He said the 10-day event would involve HK$170 million, with HK$130 million coming from sponsorships and income from tickets.

Almost a third of Star TV's Hong Kong employees, or between 150 and 200 people, will lose their jobs in the coming 10 months under a corporate restructuring of News Corporation's Asian broadcast business. The widely expected move had "nothing to do with the economic downturn", a company spokesman said. Chief executive Paul Aiello will resign but stay until the end of the year to ensure a smooth transition. The business will split into three units - Star India, Star Greater China and Fox International Channels. Fox International will include Star World, Star Movies and the Fox and National Geographic Channel brands. A new News Corporation office will be established in Hong Kong, comprising a small group of Star executives. James Murdoch, chairman and chief executive for Europe and Asia at News Corporation, said: "We are now reshaping a big, regional organisation into three highly focused business units, each of which will be intensely competitive in its target marketplace. "While it was once natural to have a larger, regional headquarters, the company has now reached a scale in its key local markets where we are ready to empower the teams on the ground and move a number of functions to be closer to viewers."

Hong Kong will use its strength in financial services and logistics to promote development of service industries and hi-tech industry in a pilot zone in Shenzhen, under a co-operation agreement to be signed between the two city governments today. According to the letter of intent on co-operation in the development of Qianhai in Shekou , Hong Kong is being encouraged to take part in planning for development of the 10 square kilometre zone. A Hong Kong official said the agreement would state the intention of both cities to co-operate in developing Qianhai, and that they would continue to discuss the details in future. "The agreement will only outline the direction for co-operation in developing Qianhai, but it will not include any specific co-operation projects or any investment commitment," the official said. Both cities would capitalise on Hong Kong's strength in financial services, trade and logistics to pave the way for development of service industries and hi-tech industry, the letter of intent stated. Chief Secretary Henry Tang Ying-yen has said that Qianhai has the potential to become the "Central of Shenzhen". The proposed rail link to connect Hong Kong and Shenzhen airports would have a stop in Qianhai. Representatives of the two governments are scheduled to sign the agreement at a meeting of the Hong Kong-Guangdong Co-operation Joint Conference in Hong Kong today. At the meeting, the Hong Kong government and Guangdong authorities will also give an update on progress made in cross-border co-operation in areas such as environmental protection. Chief Executive Donald Tsang Yam-kuen, who is due to deliver a speech at the meeting, said last month that details on how Hong Kong and Guangdong would work together would be unveiled today.

Police said yesterday they had smashed a high-level drug selling organization and made the largest cocaine seizure in five years. Police seized 32 kilograms of cocaine - including two kilograms of crack cocaine - as well as various tools in the operation on Monday in Ma On Shan, where the syndicate's alleged mastermind lived. The seizure is worth HK$28 million. It was a follow-on action from earlier Monday when two kilograms of cocaine valued at HK$2 million were found in public lockers at Sha Tin's New Town Plaza shopping mall. The market value for cocaine is about HK$800,000 per kilogram while crack cocaine retails at HK$1 million to HK$1.1 million per kg.

Curtailing the Legislative Council's power to summon witnesses would effectively muzzle it as a public watchdog and threaten Hong Kong's "one country, two systems" policy, a landmark judicial review hearing was told yesterday. Anthony Lester QC - also known as Baron Lester of Herne Hill as a member of Britain's House of Lords - was arguing against a bid by New World China Land chairman Henry Cheng Kar-shun and executive director Stewart Leung Chi-kin not to give evidence at an inquiry into controversial former housing chief Leung Chin-man's post-service employment. Lord Lester, representing Legco, said their application for a judicial review threatened to "weaken the effectiveness of Legco as Hong Kong's public watchdog." Also, the very concept of the "one country, two systems" policy, in which continuity preserves historical legislation, will be challenged, Lester said. "What the applicants are seeking would amount to a judicial usurpation of the powers, privileges and responsibilities of Legco, an unnecessary and divisive struggle between legislative and judicial powers for the sake of a case without merit," Lester told the Court of First Instance. "It would muzzle Hong Kong's public watchdog and weaken its ability to obtain information, to call the government to account, and to provide information and opinions to the public." Lester said arguments put forward by New World's lawyers were inconsistent with the "one country, two systems" concept, which relies on the continuity of relationships established between the three branches of government prior to the handover. He said only the parliament of Ireland "fettered" its own powers by not allowing its committees to conduct inquiries that could result in ruining someone's reputation, the example New World barrister Dinah Rose used to argue that select committees' powers be curbed. "Everywhere else, the legislature has the power to operate through committees, and committees have the power to summon witnesses and call for papers when conducting investigations and inquiries into matters of public interest," Lester argued.

An aerial photograph shows a village in Chiayi county surrounded by a tide of mud and debris swept down mountains. Typhoon Morakot has blown itself out, but Taiwan's political storm has just begun. The island's vice-foreign minister, Andrew Hsia Li-yan, who had refused overseas aid, became the first casualty after tendering his resignation. A string of senior leaders now find their futures hanging in the balance, including Premier Liu Chao-shiuan, cabinet secretary-general Hsueh Hsiang-chuan, Defence Minister Chen Chao-min, and the director-general of the Water Resources Agency, Chen Shen-hsien. A cabinet reshuffle appears increasingly likely before county-level elections at the end of the year.

Ma Ying-jeou walks into yesterday's news conference. He and other leaders bowed in apology, and Mr Ma said officials would be punished. He was speaking at his first news conference since Typhoon Morakot struck the island 11 days ago, bringing record rainfall that triggered deadly mudslides and left at least 500 islanders dead. Mr Ma said the armed forces would undergo intensive disaster- response training. Their budget, manpower, equipment and strategy would be retooled to take into account disaster relief and prevention.

China: Premier Wen Jiabao urged governments at all levels yesterday to "squeeze out money" from their budgets to help fund the mainland's pilot rural pension system, even at the cost of cutting back other government-sponsored projects. The tone was in line with several of Mr Wen's previous talks that emphasised villagers' basic interests should be guaranteed, especially as the mainland's economy was facing great difficulties because of the recession. Addressing a work conference on voluntary rural pension funds, Mr Wen asked that promised funding from central and local governments be funnelled promptly to realise the goal of covering at least 10 per cent of the 800 million rural population by the end of the year. "Even at a time when our finances are stretched thin, we have to get this done by cutting or shrinking the size of other projects," he told China Central Television. He urged local governments to explain the pension system in detail to rural residents and win their approval so people could contribute to the collective pension fund. The State Council set up a voluntary pension system in rural areas in March to improve living standards for rural residents, reduce the income gap between urban and rural areas and maintain rural stability. The State Council also said it hoped a large social security network would encourage farmers to spend more to help offset the effects of the sudden drop in mainland exports. Under the pilot scheme, rural residents aged 16 and above can enrol in a pension system by paying a fee, while the central and local governments would match a person's contribution and all money would go into a personal pension account. The practice had not been a problem in rich rural areas in coastal provinces, but it was a huge headache for financially struggling governments in central and western provinces, said Zhang Xiaoshan , director of the Institute of Rural Development at the Chinese Academy of Social Sciences. "The success or failure of the plan hinges largely on how those underdeveloped regions handle the programme rather than how it does in developed areas," Professor Zhang said. "As far as I know, it could be a big challenge for poorer governments to arrange enough money to match the contributions."

China has invested in US$56 billion of projects globally to try to reduce dependence on ore suppliers Vale, Rio Tinto and BHP Billiton. China, planning to bankroll a US$6 billion iron ore expansion of Fortescue Metals Group in Australia, is poised to make further investments to help break the "stranglehold" of the world's three largest exporters. "The Chinese steel mills are trying to dilute the concentration of iron ore supply," said Mark Pervan, a senior commodity strategist at Australia & New Zealand Banking Group. "They will be looking for more deals like this." China, the world's biggest buyer of the ore, has invested in US$56 billion of projects globally to try to reduce dependence on Vale, Rio Tinto and BHP Billiton, which control two-thirds of seaborne supply. The nation on Monday scaled back contract price demands together with the Fortescue deal after seven months of stalled talks. "[The Chinese] are very keen to see supply away from BHP, Rio and Vale grow," said Tim Schroeders at Pengana Capital. "[They would want to] lessen the stranglehold, or perceived stranglehold, that the Big Three have." Fortescue, Australia's third-largest iron ore exporter, fell 3.9 per cent to A$4.40 in Sydney, giving it a market value of A$13.6 billion (HK$86.95 billion). The stock has more than doubled this year as a rebound in demand in China boosted ore cash prices by about 46 per cent. Chinese lenders will arrange US$5.5 billion to US$6 billion of financing for Fortescue, in which China's Hunan Valin Iron & Steel Group has a stake, as part of the accord, the Perth-based company said. Most of the money will be used to expand production, Fortescue chief executive Andrew Forrest said. "Fortescue and China are hoping the miner has the potential to break the duopoly of BHP and Rio" for Australian iron ore, said Zhou Xizeng, a Beijing-based analyst with Citic Securities. BHP and Rio are the two biggest producers in Australia, itself the biggest exporter of the ore. Fortescue, which had delayed expanding its iron mine amid a cash squeeze and a slump in demand, plans to increase capacity to 95 million tonnes by 2012, chief financial officer Michael Minosora said last week, from about 45 million tonnes now. It had cash of US$654 million and debt of US$2.8 billion at June 30, according to company filings.

Shanghai Electric Group (2727) will invest 2 billion yuan (HK$2.26 billion) in increasing its production capacity for nuclear- and wind-power equipment over three to five years.

More than 8,000 cargo boats have been stranded on a Yangtze Delta waterway after high water levels caused by Typhoon Morakot created navigational hazards. The bottleneck on the waterway connecting Changxing and Huzhou in Zhejiang to Shanghai extended 40 kilometers. The 145-km waterway carries 80 percent of coal for power stations in Zhejiang, Jiangsu and Shanghai. Morakot took water to a record high.

Aug 19, 2009

Hong Kong: Legislators considering the new cross-border express rail project spent a lot of time over the past nine years poring over funding figures and pondering matters of design, routing and environmental impact. But not one member asked the crucial question: where would the Guangzhou terminus for the HK$39.5 billion Guangzhou-Shenzhen-Hong Kong line be? As deliberations rolled on - and as the government began touting the speedy 48-minute trip the new line would offer its passengers - lawmakers remained ignorant, as some still are, of the fact that a trip of similar length on a commuter line would be needed to reach central Guangzhou. The question needed to be asked because, as a search of documents and minutes of the Legislative Council's railways subcommittee shows, the government was not telling them clearly either. While the Guangdong authorities decided in 2004 that the line would end at Shibi in Panyu , 23 kilometres and an estimated 45-minute metro ride from northern Tianhe in the central business district, where the present through train terminates, this information did not appear in a Legco paper until 2005. Even then the Hong Kong government did not say - and no one asked - how the passengers, having made the much-vaunted 48-minute ride from West Kowloon, would get to the city centre or how long it would take. The word Shibi was simply stated in Legco documents and the terminus shown on a map with no information about connections to the city centre. In fact, taking into account transfer time and the 18-stop metro ride, the journey will take at least as long as the present 100 minutes. No legislator even asked where Shibi was. One, Albert Chan Wai-yip, spotted its location on a map in 2006, but he did not question it. Meanwhile, it has emerged that, even before the site was officially chosen, the Guangdong government was weighing up the merits of four alternatives - three of them in Panyu and one in Haizhu district - giving a clear signal to anyone alert enough to spot it that the station was going to be a long way from the city centre. Some of the lawmakers sitting on the Legco subcommittee still do not know where the Guangzhou terminus is. "No, the Guangzhou-Shenzhen-Hong Kong express rail link does not head to Panyu. It goes to Guangzhou," unionist lawmaker Li Fung-ying said. When it was pointed out to her that Shibi is in Panyu, she said: "Then I need to follow this up in the next meeting." Democratic Party transport spokesman Andrew Cheng Kar-foo, a member of the subcommittee since 2000, said he did not know it would take about the same time to travel to Guangzhou city centre with the new link as on the existing railway. "I just heard this from you for the first time. We have not studied it in detail in the past," he told a South China Morning Post (SEHK: 0583, announcements, news) reporter. Engineering sector legislator Raymond Ho Chung-tai said it was not important where the Guangzhou terminus was located since the link would be part of the national express-rail system. "We should not just narrowly look at how long it takes to travel to Guangzhou," he said. Subcommittee chairwoman Miriam Lau Kin-yee, the transport sector legislator, said lawmakers had not questioned the location of the Guangzhou terminus because it was outside the legislature's scope. As it turns out, the convenience of Hong Kong passengers was far from the minds of Guangdong officials planning the new line. "The four [alternative sites] were chosen because the new station is not solely for Guangzhou. It is also built to serve Foshan ," a mainland engineer involved in the project since the early 2000s said. The terminus was shown on maps attached to some documents shown to legislators, but no mention was made of its distance from the city centre, although there were references to its being "at the heart of the Guangzhou and Foshan metropolitan zone". In fact, when the Hong Kong line was first mentioned in a government railway development strategy report in 2000, it was conceived as an express route to the border - an alternative to the then Kowloon-Canton Railway Corporation's multi-stop commuter line. A government spokesman said Hong Kong had agreed on the location in March 2005. But legislators were briefed on the route only in December 2005, when they were provided with a map showing Shibi's location. The map showed the terminus would be some distance from Guangzhou's centre, but not exactly how far away nor what the transit arrangements would be. And no one asked. An international tender to design and build the station was issued by mainland authorities in May 2004. It stated clearly that it would be in Shibi, Panyu, and would serve the Guangzhou-Shenzhen-Hong Kong express link. This was almost a year before Legco was informed of the terminus' location. Serving and former subcommittee members. The lawmakers and former lawmakers who have sat on the railways subcommittee since 2000: Abraham Razack, Albert Chan Wai-yip, Albert Ho Chun-yan, Andrew Cheng Kar-foo, Chan Kwok-keung, Cheung Hok-ming, David Chu Yu-lin, Ip Wai-ming, Jeffrey Lam Kin-fung, Kam Nai-wai, Lau Chin-shek, Lau Kong-wah, Lau Ping-cheung, Lee Wing-tat, Leung Fu-wah, Leung Kwok-hung, Li Fung-ying, Miriam Lau Kin-yee, Patrick Lau Sau-shing, Raymond Ho Chung-tai, Regina Ip Lau Suk-yee, Ronny Tong Ka-wah, Selina Chow Liang Shuk-yee, Mandy Tam Heung-man, Tam Yiu-chung, Tommy Cheung Yu-yan, Wong Kwok-hing and Wong Sing-chi.

The government has decided not to reassemble Queen's Pier at its former site, Secretary for Development Carrie Lam Cheng Yuet-ngor said. She told the Harbour-front Enhancement Committee yesterday that the majority of city residents would like to see the iconic colonial waterfront relic maintain its functional use as a pier. This was indicated by comment cards, face-to-face interviews, telephone polls and community engagement forums, she said. Lam added that the majority consensus is for the pier to be relocated between Central Piers numbers 9 and 10 along the waterfront instead of at its original site where it would be landlocked by the Central reclamation. In addition, the change of site would mean the work can be completed in 2013, one year earlier than planned. The decision to relocate the pier had nothing to do with technical difficulties, Lam said. "It is based on the majority of public responses." Lam said 49 percent of those filling in comment cards preferred the new location against 27 percent seeking a return to the original site. In face-to-face interviews it was 58 to 27 for the new site. Focus group workshops, however, were 39-16 for the original site. It has also been decided to reassemble the clock from the Star Ferry Clock Tower at its original location, Lam said. A gallery at the site will display various memorabilia salvaged from the old Star Ferry terminal. The government has further agreed to lower the development density in front of Two IFC after rising concerns that the density was too high for a site close to the waterfront. However, a Task Group on Urban Design Study for the New Central Harbourfront insists that the majority of Hongkongers prefer Queen's Pier to be reassembled at its original location with a large lagoon created in front of it. They believe this will maintain the pier's historic connections with Edinburgh Place and City Hall. The group also claims the support of architects and heritage concern groups. Engineers and surveyors on the other hand are in general supportive of the waterfront option. Green Sense yesterday expressed disappointment at the decision to relocate the pier, saying it will diminish its historic value. The removal of Queen's Pier in 2007 caused a public outcry and a wave of protests and litigation. Two members of conservation group Local Action who sought a judicial review against the decision to dismantle it lost their lawsuit and were recently ordered to pay HK$270,650 in legal costs.

The China arm of HSBC (0005) is issuing up to 2 billion yuan (HK$2.26 billion) worth of bonds in Hong Kong, but there are no guarantees that subscribers will get at least one board lot if market response is strong. HSBC Bank (China) announced it will issue at least 1 billion yuan of two- year retail bonds, with an interest rate of 2.6 percent payable twice a year. The bonds come in denominations of 10,000 yuan. If demand is overwhelming, another 1 billion yuan worth of bonds will be issued, with some going to institutional investors, said David Liao Yi-chien, treasurer and head of global markets of HSBC China. "We have not allocated the proportion of bonds to retail investors," Liao said. "We do not guarantee that each investor will get at least one board lot. They may get nothing if subscribers are too enthusiastic." The bonds will be available for public subscription from today until September 4. The distributors include HSBC, Hang Seng Bank (0011), BOC (Hong Kong) (2388) and Bank of East Asia (0023). In June, HSBC (China) sold 1 billion yuan worth of bonds to institutional investors. The bank is allowed to issue up to 3 billion yuan of bonds in total, market sources said. Vincent Cheng Hoi-chuen, chairman of HSBC Bank (China), said the lender has no plan to ask mainland regulators for a larger share. "We have no plan to issue more bonds after this ... and have no plan to apply for a larger quota," Cheng said. Liao estimated the next yuan bond issue will be in two years after applying to Beijing. Since mid-2007, nine banks have sold 29 billion yuan worth of bonds in Hong Kong, according to Chief Secretary for Administration Henry Tang Ying-yen. "The renminbi business is going to add to the breadth and depth of our financial market and underline our strengths as an international financial center," he said. China Development Bank said yesterday it concluded its 2 billion yuan bond issue. Subscriptions were almost double the issue, but each retail investor will get at least one board lot. The retail tranche will be allocated 1.5 billion yuan. Separately, Cheng said HSBC is in contact with investment banks about its listing plan in China, but there is no timetable yet.

Ping An Insurance (2318) is to keep its equity portfolio at 10 percent to avoid increasing volatility in the A share market, despite having a positive long-term outlook. Executives from the mainland's second-largest insurer adopted a cautious tone yesterday. "We will keep the current equity investment but will look for more investment opportunities in other areas such as highly liquid and even commercial property investment if policy allows," chairman Peter Ma Mingzhe said. President Louis Cheung Chi-yan said equity investment would stay at 10 percent of its portfolio to avoid too much reliance on the domestic stock market. In the first half, Ping An has already increased its cash level to 14 percent, from 10 percent by the end of 2008, through the sale of low-yield bonds. Ma also said the insurer is not eyeing other financial institutions. It will not increase its stake in Shenzhen Development Bank, but will use the relationship to boost profit and get clients. Last Friday, Ping An said its first-half profit fell 45 percent year-on- year to 5.22 billion yuan (HK$5.91 billion), or 0.71 yuan a share. Analysts believe its embedded value to be better than expectations. Citi and Credit Suisse yesterday revised their target price up to HK$80 and HK$82, respectively. Citi said Ping An could maintain 20 percent full year net profit growth in 2009. But Credit Suisse downgraded its full year earnings by 14 percent to 1.45 yuan per share, due to its higher than expected tax expenses.

Samsung Securities, South Korea's largest brokerage by market value, intends to hire 50 people in Hong Kong by the end of the year and is in talks with at least three potential partners for a venture in the mainland.

Air China (SEHK: 0753) yesterday raised its stake in Cathay Pacific Airways (SEHK: 0293) to almost 30 per cent, moving closer to the ultimate goal of taking control of Hong Kong's flag carrier. But Air China's ambition to take a controlling stake in one of the world's most respected airlines is raising disquiet because of their differing management styles and cultures. Cathay Pacific has been controlled by Swire Pacific (SEHK: 0019), a subsidiary of the British family-run John Swire & Sons, for over 60 years, while Air China is a state-controlled company. It would also be politically sensitive. Under Hong Kong law, the city's designated carrier should be controlled and owned by a company incorporated in Hong Kong or by a Hong Kong resident. "It has always been the goal of Air China to take control of Cathay, only Swire is reluctant to [let that happen]," said Kelvin Lau, a transport analyst at the Daiwa Institute of Research. Control of Cathay would let Air China benefit from Cathay's extensive international network, world-class brand and training. Under yesterday's deal, Beijing-controlled Citic Pacific (SEHK: 0267) agreed to sell HK$6.34 billion of Cathay shares to Air China. The latter lifted its stake to 29.99 per cent from 17.5 per cent. That is just under the 30 per cent threshold that would require it to make a mandatory offer for Cathay's shares. The agreement is a sequel to the 2006 deal that saw Air China and Citic Pacific offload their stakes in Dragonair to Cathay Pacific in exchange for cash and a combined stake of 35 per cent in Cathay. As part of the deal, Citic will also offload HK$1.01 billion of Cathay shares to Swire Pacific. Swire Pacific chairman Chris Pratt said his company was very keen to maintain its stake in Cathay Pacific. "We have a good relationship with Air China and there'll be no significant change from here," he said. But he understood why the market was speculating about Air China's intentions, given that the mainland carrier had increased its shareholding by such a large extent. After the deal, Swire Pacific will still have nearly 42 per cent of Cathay Pacific. Citic Pacific, which has considered Cathay a passive investment, has taken a neutral role on the board, favouring neither Cathay's management team nor Air China. This neutral approach has made it difficult for Air China to influence the decision-making at Cathay Pacific. By acquiring Citic Pacific's stake, Air China will gain more influence and leverage over Cathay's international network. But differences in management styles could prove difficult if Air China moves to take full control, said Corrine Png, a transport analyst at JP Morgan. Citic Pacific, which booked a HK$14.63 billion loss from a wrong-way currency bet last year, could get HK$7.34 billion cash from the deal and a disposal gain of HK$1 billion.

Food lovers crammed into the Food Expo as it ended yesterday. With products being sold at big discounts, business flourished and total attendance hit a record high. More than 350,000 people flocked to the Convention and Exhibition Centre for the five-day food fair, 15 per cent more than last year, organiser Trade Development Council said. Meanwhile, about 90,000 people attended the last day of the Hong Kong International Tea Fair, which was making its debut in the city and ended on Saturday at the same venue. The first two days were not open to the public. The council's assistant executive director, Raymond Yip Chak-yan, said he was satisfied with the fairs. He said food exhibitors from 24 countries came to Hong Kong this year, with 10 of the countries attending for the first time. Ninety-six per cent of buyers interviewed at the tea fair were satisfied with the event. Countries attending the Food Expo for the first time included Peru, Pakistan and Mexico. "We featured abalone from Mexico as big as a baby's head," Mr Yip said. The managing director of On Kee Dry Seafood, Richard Poon Kuen-fai, said its abalone and dried scallops had sold out, and he expected sales to be 50 per cent up on two years ago, the last time the company joined the fair. Four packs of its dried mushrooms, which cost HK$99 for the first four days, sold for HK$69 on the last day. The marketing manager of meatball manufacturer Tai Po Chun Hing, Pius Chan Ngok-shing, said sales had risen by 20 per cent from last year, thanks to a promotion in which 100 meatballs were sold for just HK$1 to the first 100 customers every day. Some exhibitors slashed prices in the hope of clearing their stocks so they did not have to put them back in storage. Communications officer Leung Suet-yee of the Wing Wah bakery company said business was up 20 per cent on last year, adding that the biggest spender had splashed out about HK$50,000 on mooncake vouchers. The firm's snowy mooncakes were on offer at six for HK$100 on the last day, compared with five for the same price for the first four days. However, strong sales convinced some companies not to lower prices. The marketing manager of Maxim's bakery, Wincy Cheung, said there was no need to cut prices. His new mooncakes had attracted many customers and were still selling well.

Actors Jacky Cheung, Alan Tam and Andy Lau (L to R, Front) perform during a charity fundraising soiree in Hong Kong, China, on Aug. 17, 2009. Actors from China's Taiwan, Hong Kong and mainland China hold a benefit performance here on Monday to raise money for Taiwan victims in the typhoon Morakot.

Actors Sylvia Chang and Eric Tsang host a charity fundraising soiree in Hong Kong, China, on Aug. 17, 2009.

Actors Andy Lau (L) and Sammi perform singing during a charity fundraising soiree in Hong Kong, China, on Aug. 17, 2009.

Actors Andy Lau (L) and Richie Ren Xian-Qi perform during a charity fundraising soiree in Hong Kong, China, on Aug. 17, 2009.

Hong Kong singers and actors perform along with other Asian entertainers during the "Artistes 88 Fund Raising Campaign " at the Hong Kong AsiaWorld-Expo yesterday. Showbiz celebrities from Hong Kong, Taiwan and the mainland converged on a Hong Kong stage last night for a marathon concert to raise money and show support for the victims of Typhoon Morakot in Taiwan. The star-studded show at AsiaWorld Expo on Lantau Island was televised live on major local TV and radio networks and broadcast live via the Web to a global audience of about 400 million people, organisers said. When the show ended at 11.30pm HK$50.9 million had been raised. During the four-hour show, big names from mainland and Taiwan showbusiness joined some of Hong Kong's top entertainers in taking turns performing and appealing for donations. They included actor Zhang Guoli , film director Feng Xiaogang and celebrity journalist Sally Wu Xiaoli , all from the mainland; and from Taiwan, veteran singer Tsai Chin. Some helped answer the 50 hotlines. Giving the show a boost, Hong Kong media tycoon Sir Run Run Shaw donated NT$100 million (HK$23.5 million). His wife, Shaw Brothers' deputy chairwoman Mona Fong Yat-wah, speaking on behalf of Sir Run Run in a cheque presentation ceremony, said: "When we in Hong Kong are enjoying the warmth at home, we should not forget those who have lost their homes and relatives in Taiwan. We hope we can do something to bring our sincere care and concern to Taiwan people." Taking to the stage, Secretary for Home Affairs Tsang Tak-sing thanked the stars for their efforts to help the typhoon victims. "I also appeal to the Hong Kong people to continue to donate to help the victims in Taiwan," he said. Hong Kong stars at the concert included singer-actors Alan Tam Wai-lun, Andy Lau Tak-wah and Jacky Cheung Hok-yau. Most spectators, who made minimum donations of HK$20 for admission, said they came to see their favourite stars and to show their concern for Taiwanese victims. A tourist from Jiangxi province, a Ms Zeng, donated HK$100. "It's shocking and it's sad," she said. "Last year I donated for the Sichuan [earthquake] victims. I want to also show concern and support for fellow countrymen in Taiwan." Meanwhile, donations from Hongkongers kept flowing in to relief organizations and agencies. By yesterday nearly HK$20 million had been raised. World Vision Hong Kong chief executive officer Kevin Chiu Wun-ming said: "The situation in Taiwan is more serious than we had thought. An estimated 30,000 people remain stranded." The Legislative Council finance committee approved a donation of HK$50 million yesterday for relief and rehabilitation work in Taiwan. Funds raised so far, Hong Kong Jockey Club, HK$10 million; Tung Wah Group of Hospitals, HK$3 million; Hong Kong Red Cross, HK$3 million; World Vision Hong Kong, HK$1.9 million; Salvation Army, HK$1.7 million; Hong Kong Baptist Oi Kwan Social Service, HK$500,000; Hong Kong General Chamber of Commerce, HK$200,000; Democratic Party, HK$145,000; Association for Democracy and People's Livelihood, HK$93,000.

China: China massively offloads US debt holdings first time in 2009 - According to the data published by the US Treasury Department on August 17, by the end of June, China's holdings of US Treasury Bonds (T-bonds) totaled 776.4 billion USD, down 25.1 billion, or 3.13 percent compared with the country's 801.5 billion USD T-bonds holdings in May, indicating China's first massive offload of US debt in 2009. Japan, the second biggest holder of US T-bonds has purchased 34.6 billion USD of US T-bonds in June, adding its total US T-bonds holdings to 711.8 billion USD. The UK, US debt's third biggest holder, holds 214 billion USD T-bonds by the end of June, up 50.2 billion, or 30.6 percent compared to its 163.8 billion USD of US debt holdings in May. China has offloaded 4.4 billion USD of US T-bonds in April and increased its holdings by 38 billion USD in May.

Yesterday at approximately 2:20 p.m., access to international websites such as Yahoo has been sluggish, with widespread outages in access to MSN. China Unicom has announced the FNAL/RNAL submarine cable was broken between Hong Kong to Taiwan on August 12 due to the Morakot typhoon. China Unicom is actively taking steps to restore normal service.

China Everbright (SEHK: 0165) Securities rose 32 per cent in its Shanghai market debut on Tuesday after raising 11 billion yuan (HK$12.50 billion) in its IPO, within expectations but more subdued than last month’s sizzling debuts after a market rally stalled. Analysts said the relatively uneventful start to trade for mainland’s 10th-largest brokerage, and only the second securities house in the country to list via an IPO, could encourage regulators to move cautiously in bringing large IPOs to market. Local-currency A shares in Everbright Securities began trading on the Shanghai Stock Exchange at 30 yuan, up 42 per cent from their IPO price of 21.08 yuan, and after a half hour of trade were up 32.35 per cent at 27.9 yuan. A survey of analysts by the official China Securities Journal had forecast the shares would rise to 25 to 30 yuan on their debut. “Its opening price was within our expectations,” said Wei Tao, an analyst with CITIC China Securities. “The regulators will continue to approve new listings, but will be cautious on heavyweights.” Two large IPOs that listed in Shanghai late last month by China State Construction Engineering Corp and Sichuan Expressway, the first listings in Shanghai since the lifting of a 10-month suspension of mainland IPOs, had surged on their trading debuts. China State Construction ended its first day of trade up more than 50 per cent from its IPO price and Sichuan Expressway more than tripled, spurring concerns about unbridled speculation, although both shares, while still above their IPO prices, have steadily retreated since then. Shanghai’s share market has cooled in recent weeks after a roaring rally of more than 90 per cent from the start of the year was finally derailed, with worries about stretched valuations compounded by signs of a slowdown in the economic recovery, a clampdown in bank lending and new supplies of equity. The benchmark Shanghai Composite Index has fallen 18 per cent from a 14-month intraday peak hit nearly two weeks ago. Monday’s 5.8 per cent slide was the index’s biggest one-day drop in nine months, although on Tuesday the market was showing signs of stabilising. Everbright Securities offered 520 million shares, or 15 per cent of its expanded capital, at a price of 21.08 yuan each, valuing it at 72 billion yuan, or nearly 60 times its last year earnings. That compares with a historical price-earnings ratio of 28 for Citic Securities, mainland’s largest listed brokerage and the only other securities house to list on the mainland via an IPO. Several others have listed through reverse takeovers of listed firms or other means. Mainland brokerages’ earnings have been bolstered by a 60 per cent rally in stocks in the first half of this year, which boosted their commission income and investment returns, with Citic Securities posting a rise of 3.6 per cent in second-quarter profit. Everbright Securities is controlled by the country’s second-biggest financial conglomerate, Everbright Group. Everbright hired Orient Securities to arrange its Shanghai IPO.

Foreign direct investment in the mainland declined a greater than expected 35.7 per cent year on year last month as multinationals remained cautious about prospects for the world's third-largest economy. The Ministry of Commerce said US$5.36 billion was directly invested last month, US$3.6 billion less than in June, as the mainland economy continued to feel the impact of the global liquidity crisis. Analysts said the decline also underscored concern about emerging asset price bubbles on the mainland. But they played down speculation it was due to a crackdown on the operations of some multinationals, such as Rio Tinto, some executives of which were arrested recently. "I think the drop reflects still strained liquidity on international credit markets for multinationals rather than the fundamentals within China," said Tao Dong, an economist with Credit Suisse. "In addition, volatility in monthly foreign investment figures is nothing unusual, particularly when the summer comes." Foreign direct investment has declined for 10 consecutive months as a result of the global financial crisis. Foreign investment in the first seven months of the year totalled US$48.3 billion, 20.35 per cent less than a year earlier. But the year-on-year drop has narrowed month by month since April. Each of the past 13 years saw a sequential decline in foreign investment between June and July in absolute numbers, according to statistics from Industrial Bank. "But this year saw the biggest retreat," said Lu Zhengwei, an economist with Industrial Bank. "It is a sign of growing caution in China-bound speculative investment." Mr Lu said some of the investment is "hot money" in disguise, and his research found that the fluctuation generally correlated with changes in the size of broader hot money inflows in the past. The mainland stock market soared 90 per cent in the first seven months, fuelling concern over inflated valuations that triggered sell-offs in the past two weeks. The once-blistering growth in the property market has also shown signs of a slowdown as the domestic banking regulator warned of tighter restrictions on home loans. But Mr Lu and Mr Tao agreed the downward lurch in foreign investment would not affect the pace of recovery in China. Nor did it have a lot to do with Beijing's recent clampdown on alleged wrongdoings by multinationals operating on the mainland. A US State Department spokesman said last Thursday the detention of four Rio staff since July 5 may have weighed on business investment in the country. The executives were formally charged with trade secret infringements and bribery last week. The detention this month of a top executive at a leading state-owned nuclear power operator was also reportedly linked to murky dealings with foreign suppliers. "Multinational executives closely follow the news, but it would take a long time for them to make decisions [based on that]," said Mr Tao.

China Investment Corp (CIC), the country's US$200 billion sovereign wealth fund, is set to pour up to US$2 billion into the US mortgage system by hiring mandates under the US Treasury-backed public-private investment plan, sources said. Under the investment plan launched earlier this year, the United States government plans to seed several public-private investment funds that would combine taxpayer money with private capital to buy as much as US$40 billion in toxic securities from banks. The CIC's move comes after the US and China ended their first annual "strategic and economic dialogue" late last month, where they agreed to lead the global economy out of recession and Beijing expressed hope for safer investments in the world's biggest economy. "The Chinese government is always trying to seek a more ideal way to invest in US assets rather than purely buying US government bonds all the time," said one of the sources. "Some might think US$2 billion for a US$200 billion sovereign fund is not big money, but it can be regarded as an innovative and positive option for Chinese investment." The companies in talks with CIC are designated managers of the investment plan and include Alliance Bernstein, with sub-advisers Greenfield Partners and Rialto Capital Management; Angelo Gordon with GE Capital Real Estate; BlackRock; Invesco; Marathon Asset Management; Oaktree Capital Management; RLJ Western Asset Management; Trust Co of the West; and Wellington Management, according to the sources. CIC has yet to select any firms as mandates but is expected to make a decision before the end of this month, said the sources with direct knowledge of the matter. Established by the central government in late 2007, CIC is keen to participate in the investment plan as it expects the US property market to start to recover gradually later this year, the sources said. CIC declined to comment.

The giant panda could be extinct in just two to three generations as rapid economic development is infringing on its way of life, state media said, citing an expert at conservation group WWF. The pandas' habitat is being split up into ever smaller patches, preventing the animals from roaming freely for mating partners and in turn endangering their gene pool, the Global Times reported. "If the panda cannot mate with those from other habitats, it may face extinction within two to three generations," said Fan Zhiyong, species program director for WWF. "We have to act now."

Aug 18, 2009

Hong Kong: Hong Kong should position itself as the centre for Chinese-language films and capitalize on the recent soaring popularity of local productions on the mainland, Hong Kong Film Development Council secretary general Wellington Fung Wing says. Of the top five highest grossing films on the mainland during the week of August 3 to 9, three were by local directors and featured local stars. Topping the chart was Wong Jing's comedy On His Majesty's Secret Service, which took more than 35 million yuan (HK$39.7 million) in that week, and which had taken 80 million yuan at the box office up to Friday last week since opening on the mainland on July 30. Hollywood blockbusters G.I. Joe: The Rise of Cobra and the 3D animation Up took second and third spots, taking more than 26 million yuan and 22 million yuan respectively. Mr Fung said the three Hong Kong movies had proved so popular because they had been filmed at the right time - when popular foreign films had already been screened and there was less competition. He said that investors showed great interest in Hong Kong directors because there were not enough filmmakers on the mainland focusing on making commercially viable films, as many mainland directors still believed in the cultural side of film, but overlooked the business side. "But from watching Hong Kong films, they know that Hong Kong directors are good at making commercial films," he said. Mr Fung envisaged Hong Kong filmmakers focusing on exploiting their creativity, instead of merely the technicality of filmmaking. "The ability to design is the most important," Mr Fung said. He added that Hong Kong, a city with freedom of speech, should also serve as a centre for Chinese-language films, an equivalent of the Cannes Film Festival. Fourth and fifth spots were taken by co-productions between Hong Kong and the mainland. The local crime thriller Overheard, directed by Felix Chong and Alan Mak, took 17.5 million yuan in the same week. In fifth place, the animated McDull Kung Fu Ding Ding Dong, directed by Tse Lap-man, took 11 million yuan at the box office, also between August 3 and 9.

The average selling price of homes in Hong Kong hit a 13-month high in July as the residential property market continued to recover with prices and transactions climbing. The average price breached the HK$4,000 per-square-foot level last month, according to Midland Realty. The real estate agency said prices rose for eight consecutive months to reach HK$4,135 psf in July, up 3.5 percent from the previous month. That was also a 21.7 percent increase from HK$3,397 psf at the end of last year. "Despite the significant price surge, I believe the low interest rate environment will continue to encourage people to buy and not rent," said Midland Realty chief analyst Buggle Lau Ka-fai. In the first 13 days of August, there were 769 sale registrations in the primary market, up 38 percent from the same period last month, Ricacorp Properties said. The value of the transactions soared 65 percent to HK$4.75 billion. Ricacorp, Midland and other real estate agents estimate transactions will reach more than 2,000 this month. Strong sentiment also boosted the secondary residential market where deals reached a 19-week high over the weekend. Sales in 10 of the largest housing estates increased 8 percent to 70 transactions from 65 over the previous weekend, according to Midland Realty. "The strong performance of the primary market shows a strong inflow of capital, which supports the market and purchasing power is returning to the secondary market," said Midland Realty director Andy Ho Ming-pui. Properties atop Kowloon Station were the focus of the primary residential market at the weekend as Hang Lung Properties (0101) continued to sell apartments at The Harbourside. An agent estimated the developer sold about 80 flats, at an average of HK$15,000 psf. The Harbourside is a joint development with MTR Corp (0066) but the two companies are now selling flats individually.

The first shipments of foreign aid arrived in the capital Taipei yesterday as Taiwan struggled to reach more than 1,000 people still stranded by landslides caused by Typhoon Morakot. Aid is expected from more than 59 donors, including the mainland, Hong Kong and the United States. Plastic sheeting for makeshift housing arrived from the United States and water purification tablets came from Australia. Taxi drivers in Taipei pitched in as well, driving rice and instant noodles to the hard-hit rural south. The official death toll stands at 124. President Ma Ying-jeou has warned that the number could rise to more than 500, with hundreds feared buried beneath the rubble in the village of Hsiaolin alone. He offered another apology for his government's slow response to the disaster after families said more people could have been saved. Sorry we were late," he told people in Pingtung county. "As the president, I will take full responsibility in getting the remaining work done well." After days of mounting criticism, the president convened his first national security meeting and replaced the head of emergency operations. Helicopters crisscrossed southern mountainous regions, airlifting survivors to safety as 41,000 troops fought raging rivers and crossed collapsed bridges to reach victims, many of whom have been without food for more than a week. A US military transport aircraft landed in the southern county of Tainan yesterday. The United States will also send two heavy-lift military helicopters to help relief efforts, said Transport Minister Mao Chih-kuo, who is also in charge of the emergency response. Mao said 3,000 villagers had been airlifted over the weekend, leaving about 1,000 still stranded in the ruins of flooded and mud-hit villages. Altogether, 35,000 villagers have been rescued from 44 hard-hit villages in the south, he said. Resettlement of an estimated 7,000 people whose homes were destroyed could speed up after a batch of prefabricated houses arrives from Britain, with more coming from the mainland.

Beachgoers pack Shek O Beach as the mercury soared yesterday afternoon. Kowloon City recorded a high of 34.5 degrees Celsius, followed by Wong Tai Sin and Shek Kong with 34.2. The Observatory predicts fine, hot weather for the next few days.

The tourism commissioner has defended the plan to turn the Tsim Sha Tsui Star Ferry bus terminus into a piazza, saying there would be a new bus stop nearby and the terminus had no heritage value anyway. "There will be a new covered bus stop outside the Cultural Centre, which is about one minute away from the Star Ferry pier," Tourism Commissioner Margaret Fong Shun-man said. "It will serve 11 of the 14 bus lines using the existing terminus. For passengers of the three other lines, they will be able to interchange for free at Tsim Sha Tsui East to the new bus stop." Ms Fong also said there would be covered access from the new bus stop to the Star Ferry pier and the piazza plan was supported by the Yau Tsim Mong District Council. The plan to demolish the public transport interchange and build the piazza to give the district extra appeal and boost tourism has met strong resistance. Some critics say that it will take 15 minutes to walk from the Star Ferry to the new bus terminus at the former Wing On Place Garden in Tsim Sha Tsui East, which would also affect ferry patronage. Activists also say the terminus, which has been there since the 1920s, is part of the city's collective memory and they have sought to make it a Unesco-listed site. Ms Fong said the taxi stop would be moved to Salisbury Road, which would allow 16 taxis - five more than now - to queue. She said the Antiquities and Monuments Office had said the bus terminus had no heritage value. "The piazza plan aims to offer a leisure space for performance, just like Covent Garden [in London]," Ms Fong said. She rejected suggestions a shopping mall would be erected on the piazza and promised the existing Star Ferry Pier, the clock tower, the five flagpoles and graffiti by the "King of Kowloon" Tsang Tsou-choi would be preserved. An old train carriage would be converted into a new visitor centre to reflect the fact that the piazza had been next to the railway station before it made way for the Cultural Centre. Asked if there would be any bus stop pole or sign at the piazza to commemorate the bus terminal, Ms Fong did not rule out the possibility and said it depended on the design - to be announced early next year. Leslie Chan Ka-long, chairman of concern group Our Bus Terminal, said the new transport arrangements would make traffic worse in the already busy Salisbury Road. "It's not feasible for the new bus stop to serve 11 routes in both directions. It will be very congested," Mr Chan said, adding that the group had studied traffic flows in the area. "The westbound lane of Salisbury Road, which is already very busy, will be a lot worse if the taxi rank is moved there, too." Although passengers on three of the bus lines could transfer for free to reach the pier, it would be inconvenient for them as they would need more time to complete their journeys, he said.

There has been a massive increase in the number of lawyers and law students learning the ropes of mediation as people become aware of its benefits as an alternative to costly and time-consuming legal action. Many attribute the surge of interest in this alternative form of dispute resolution to promotion by the judiciary and the Department of Justice. Mediation can save the parties money, time and stress, while maintaining confidentiality. According to Law Society figures, 41 lawyers attended its mediation courses between January last year and April 1 this year. Since then, more than 400 lawyers had attended such courses. And while only 11 solicitors became accredited mediators in the 15 months to April 1, more than 30 have been accredited since then. Leung Kong-yui, associate head of the College of Humanities and Law at the University of Hong Kong's school of professional and continuing education (SPACE), said it previously had offered only two mediation courses a year. But this year it had increased class sizes and was preparing to introduce a fourth class because of a growing waiting list. Mr Kong said the number of students had doubled this year. The Hong Kong Mediation Centre, which offers mediation services for a wide range of disputes, said it had received as many requests for services in the first half of this year as it had since it was established nine years ago and had had a significant increase in the number of students taking its courses. Hong Kong International Arbitration Centre said it now had 445 accredited mediators, and since 2008 there had been an increase of 15 per cent in newly accredited mediators. Bar Association chairman Russell Coleman SC said that since October 2007, when it began offering mediation training, until last month, 104 people had taken the courses, with a further 48 registered to join before the end of the year. The promotion of mediation has been a priority for the judiciary and the government in recent years, with the judiciary keen to ease the burden on the courts and the government keen to develop the city as an international legal services hub. Since November 2007, Secretary for Justice Wong Yan-lung has led a cross-sector working group to examine issues such as venues for community mediation, promotion of mediation in the commercial sector, strengthening training programmes in law schools, drawing up and implementing a code of practice for mediators, accreditation, and continued training of mediation professionals. The working group is expected to complete its report by December, in order to prepare for consultations early next year. The civil justice reforms that came into effect in April also included incentives for litigants to attempt mediation. The efforts to promote mediation were reflected by the turnout at the Mediation Centre's 10th anniversary celebrations last week, attended by Mr Wong, prominent members of the legal and judicial community and Sir Laurence Street, a former chief justice of New South Wales, Australia, also known as the "first knight of mediation". Sir Laurence said he felt humbled to be coming to the "home of mediation philosophy", since its principles stemmed from Confucian principles of peace and harmony. After stepping down from the judiciary in 1998, Sir Laurence became a vocal advocate of mediation over litigation. "In every community with an established legal profession, mediation has to be introduced gently," he said, adding that older practitioners were usually more resistant to change.

Until recently, the concept of mediation was almost unheard of, and people saw costly court action as the only way to decide on a dispute. But now law students are beginning to see mediation as a required part of their training and mid-career professionals see it as a new skill that could provide a career change. Regina Yeung Sum-yu is studying part-time for a law degree and has also enrolled in a mediation course at the HKU school of professional and continuing education (SPACE). Ms Yeung, who works in hotel investment, said she first heard about mediation through a friend who was already an accredited mediator. "Then I went to do my own research and I could see that while Hong Kong was still lagging behind, this would be a growing market," she said. Ms Yeung also has personal experience of the disadvantages of litigation as her company was embroiled in a dispute for six years. "After that, I can see all the benefits of mediation, in terms of time and money and for privacy reasons," she said, adding that she was already advising her company to seek mediation as a way of erasing misunderstandings and resolving disputes quicker. For Vincent Au-yeung, who has been taking a course at the Mediation Centre, mediation offers a career change or at least career development. Mr Au is a police officer and said he might become a full-time mediator because of the increasing demand for such professionals. "But even if I don't change careers, the skills are applicable for work in law enforcement," he said. "Often cases do not require direct action but just mediation between the parties." Associate head of the college of humanities and law at HKU SPACE, Leung Kong-yui, said people who took its courses came from a variety of backgrounds, including the legal profession, engineering and property management, as well as senior government officials.

A Hong Kong film festival is being planned for Guangzhou in November to ride on the growing popularity of local films on the mainland. Hong Kong Film Development Council secretary general Wellington Fung Wing said he hoped the festival would feature 10 to 15 local films - with original Cantonese soundtracks - that had never been shown on the mainland. Seminars and investment match-making events for financiers and filmmakers would also be held. Hong Kong movies have been packing them in on the mainland over the summer holiday, with three films taking a total of more than 226 million yuan (HK$256 million) at the box office. A review of the Film Development Fund, which has approved a total of HK$35.89 million in funding to 13 projects since October 2007, has been completed. Mr Fung said suggestions included raising the funding ceiling and criteria, currently one-third of a film project with a budget of no more than HK$12 million. He said the review report would be submitted to the Commerce and Economic Development Bureau next month. A delegation of nine emerging directors, including Pang Ho-cheung and Casey Chan, met mainland film officials and were introduced to financiers in Beijing at a business-matching forum last month. Mr Fung said many had begun negotiating deals with mainland investors.

The decline of Hong Kong's air traffic has been slowing, according to the Airport Authority's latest figures. This news comes after the government reported the city's first economic growth in more than a year, with second-quarter gross domestic product up 3.3 per cent on the first quarter. The authority said cargo traffic had bounced back from the double-digit plunges recorded since November. Last month Chek Lap Kok airport handled 291,000 tonnes of cargo, four million passengers and 23,315 flights - representing a year-on-year drop of 8.3 per cent, 9.5 per cent and 9.9 per cent, respectively. The number of Hong Kong residents flying had seen yearly growth of about 3 per cent, while visitor numbers dropped 17 per cent and transfer or transit passengers dipped 10 per cent. Airport Authority chief executive Stanley Hui Hon-chung said passenger traffic had been boosted with the summer holidays and receding anxiety about swine flu. He believed the overall figures would see milder drops in the coming months but it would take some time before performance returned to pre-crisis levels. "The latest figures indicate that the downward momentum may have slowed," Mr Hui said. "The business climate is still challenging as economic activities remain low."

Hungary is closing its consulate in Hong Kong to save money amid the global financial crisis. Its consul general, Adam Tertak, and consul, Janos Chalupa, returned home last month. Only vice-consul Bela Nemeth and some local staff remain at the Wan Chai office, which will close on August 31 after 10 years of operation. While Hongkongers are granted visa-free access to Hungary for up to 90 days, people who need a visa should now contact the consulate in Shanghai or the embassy in Beijing. The Hong Kong office is one of eight Hungarian consulates and four embassies around the world to close as a measure to cut government spending. The doomed embassies are in Malaysia, Luxembourg, Chile and Venezuela, while the other consulates are in Sydney, Toronto, Chicago, Dusseldorf, Lyon, Cracow and Sao Paolo. A spokeswoman for the Hong Kong government said it had been informed of the move. "We treasure trade relations with Hungary, which have been growing at an average of 11 per cent in the past five years," she said. "We believe the decision will not affect the growing bilateral trade ties." The former communist country was the first to set up a full consulate in Hong Kong after the handover. At that time, the first consul-in-charge, Laszlo Vizi, said it aimed to promote the republic as a hub of commercial activity in central Europe for Hong Kong businesses. Hungary is now the city's largest export market in Central and Eastern Europe, with total trade reaching US$1.33 billion last year, according to the Trade Development Council. It fell to US$421 million in the first half of this year. There are about 80 Hungarians in Hong Kong. The closure will bring the number of consulates in Hong Kong to 116, along with five officially recognized bodies.

Scrap king Jacky Chun Chi-wai was once ashamed about telling his daughters what he did for a living. "Not many people recognized the value of scrap and some of them in the past viewed metal recyclers as scavengers," said the co-founder and chairman of China Metal Recycling (Holdings). He used to tell his three daughters, aged between 11 and 14, that his company was a steel trader. Thankfully, those days are long past. While waste is the stuff most people take out every night in a black plastic bag, for Mr Chun it is the gold that helped him build a HK$9.68 billion business empire. China Metal is the country's biggest scrap metal recycler with annual revenue of HK$6.5 billion last year. It is also the first scrap metal recycler listed on the Hong Kong stock exchange after its HK$1.78 billion initial public offering in June. The 43-year-old chairman is proud that his business brings a handsome profit while at the same time helps protect the environment. With growing awareness of environmental protection and energy conservation, his daughters are now more likely to see him as a hero. "People now call us an environmental protection company. Mindsets are changing," he said. China Metal's net earnings rose 72 per cent to HK$307.9 million last year. Mr Chun's personal wealth, based on his 60.7 per cent holding in the company, is HK$5.88 billion.

The Kowloon Southern Link had a baptism of fire yesterday, with protesters calling the MTR Corporation "heartless" for its operating changes in line with the extended service while many New Territories residents complained of steep fares for a speedy ride to urban Kowloon. With the new interchange at Hung Hom for the West and East rail lines, passengers will take slightly more than 37 minutes to get to the station from Tuen Mun without having to change trains at Nam Cheong. For those in Yuen Long, the ride will take less than 27 minutes. The MTRC expects the West Rail daily average of 200,000 commuters to rise by 30,000 because of the extension. Yesterday's opening of the interchange attracted the usual early birds who queued up as early as 4.30am for the first train from Hung Hom to Tuen Mun through the new Austin station. But 20 to 30 representatives and supporters of the Democratic Alliance for the Betterment and Progress of Hong Kong wielded posters and banners that read "MTR is heartless." The protesters were angry over fares such as HK$12.90 to get from Tuen Mun to Nam Cheong and HK$10.90 from Sheung Shui to Austin. Operations head Choi Tak-tsan said services were "generally smooth" and that display board kinks were ironed out by 8.30am and had "no effect on the train services," Choi said. Many passengers complained of delays of up to nine minutes while changing over to West Rail trains from east-bound trains. Choi blamed the delays on it being a Sunday and promised waits will be minimized today, the first full working day. A DAB survey of 536 passengers at the Fanling Station on August 11 found that 31 percent of respondents were not aware that the new terminus was Hung Hom and not East Tsim Sha Tsui. About 46 percent thought that HK$10.90 to get from Sheung Shui to Austin Station was unreasonable, as opposed to 17 percent who did. Nineteen percent less respondents said they would take the MTR to Tsim Sha Tsui and 11 percent less would catch the train to the island.

China: More than 1,200 new cars hit Beijing's roads every day on average in the first seven months of the year. Of 261,000 new registrations, 97 percent were private cars. There are 5.5 million drivers among the city's 17 million people.

Sun Qin, deputy director of the National Energy Administration (NEA), has been appointed general manager of China National Nuclear Corporation (CNNC) to replace Kang Rixin, who was removed from his post for "grave violations of discipline", said a notice posted on the corporation's website on Friday. Sun, 56, was the deputy head of the Commission of Science, Technology and Industry for National Defense (COSTIND). He also served as the deputy general manager of CNNC for six years before he became the deputy director of the NEA in 2008.

China and Southeast Asian countries have successfully concluded talks on setting up a free-trade zone next year to boost economic integration and ease concerns about China's growing international clout. A pact promoting investment links was signed on Saturday in Bangkok between Commerce Minister Chen Deming and economic ministers from the 10-member Association of Southeast Asian Nations (Asean). China is the eighth-largest investor in Southeast Asia, with investment of US$2.2 billion last year. Accumulated Asean investment in China is US$52 billion. Mr Chen said free and fair mutual investment would be established after barriers to trade in goods and services had been removed. Up to 7,000 items would have no tariffs from next year in the joint market of nearly 2 billion people. Chinese people would be able to enjoy a variety of Southeast Asian fruits and Asean residents could purchase Chinese clothes and electrical appliances at cheaper prices, he said. Despite the recession, China's investment in Asean countries has surged, with Premier Wen Jiabao announcing in April a US$10 billion fund to support the region's infrastructural development. Mainland analysts said that Beijing had maintained its policy of offering economic incentives in exchange for political understanding and support from China's suspicious Asian neighbors. Chai Yu , a regional trade expert at the Chinese Academy of Social Sciences, said Beijing had been focusing on forging close ties with Asean countries in recent years. Mr Wen had said "winning the trust [of Asean] was of utmost importance". But Southeast Asian countries remained wary of China's ambition to build up its naval power, despite its burgeoning industrialization and market of 1.3 billion people. Dr Chai said that although the immediate economic benefits from the regional free-trade pact would not be as significant as were expected, China apparently eyed its potential for boosting long-term growth. "China has demonstrated willingness as a rising power to help its Asian neighbors economically by giving Asean countries its most-favoured-nation status," she said. "In return, China has made it clear it needs a relatively stable and amicable regional situation for development." But Pang Zhongying , an expert on international affairs at Renmin University, said the impact of closer economic links on geopolitical politics should not be exaggerated. He noted that despite a non-binding 2002 treaty between Beijing and other Asian nations aimed at easing tensions in the South China Sea, Sino-Asean ties were still plagued by glaring differences on political and security issues, notably the dispute over the Spratly Islands and the development of the Mekong River. "If the free-trade pact can be implemented, it will help forge better political ties. But it remains to be seen how much economic interdependence can alter the regional political landscape," Professor Pang said.

China can sustain three Disney theme parks, Shanghai's leading tourism official has said, implying that a Disneyland there would not pose a threat to the Hong Kong park. "China has a population of 1.4 billion or 1.5 billion. It will not be a problem even if there are three Disneylands here," Li Bincheng , director of the Shanghai Municipal Tourism Administration's international tourism promotion department, said when asked about the competition with Hong Kong Disneyland if Shanghai built a theme park. He said the cost and distance people needed to travel to reach the parks were the factors that determined which Disneyland tourists would visit, rather than which city they were in.

China Shenhua plans to increase its railway capacity by 50 per cent to 240 million tons by 2015 to meet its growing demand for logistics. China Shenhua Energy (SEHK: 1088, announcements, news) plans to spend more than 148 billion yuan (HK$168 billion) by 2015 to double its coal output, raise the handling capacity of its coal ports by 77 per cent, increase its railway capacity by 50 per cent, and lift its power generation capacity more than 33 per cent. At least 30 per cent of the investment will be funded by equity capital and the rest by loans. The business plan will see the listed unit of Shenhua Group, the nation's largest coal producer, grow its own operation organically and by merging smaller rivals to meet the mainland's rising energy demand, company secretary Huang Qing said. China Shenhua has budgeted 100 billion yuan to build two large-scale coal mines, each with annual capacity of 100 million tons. One is in Shaanxi province and the other in Inner Mongolia. Under government policy directions to consolidate the coal mining sector, the group will also shut and upgrade small, inefficient, and unsafe mines. China Shenhua aims to produce 197 million tonnes of coal this year, up 6.1 per cent from last year. About 60 per cent or 240 million tons of its planned coal output capacity of 400 million tonnes by 2015 would be shipped via its Tianjin and Huanghua ports in the north. The remainder will be used for power generation and chemical production in regions near the mines. To meet its growing demand for logistics, the company has budgeted 20 billion yuan to expand the Tianjin port's annual handling capacity to 80 million tonnes from 45 million tons, and that of the Huanghua port to 150 million tons from 85 million tons. At least 35 per cent of the expenditure will come from equity capital. The company will also buy additional rail cars that can handle heavier cargoes to double each train's capacity to 10,000 tons. Its total rail capacity will rise to 240 million tons by 2015 from 160 million tons now. Mr Huang also said China Shenhua had received government approval to spend 28 billion yuan to build power stations capable of generating a combined 6,700 megawatts (MW) of power in the next few years, enough to raise its capacity by 37 per cent from 18,000 MW. Mr Huang said given China Shenhua's cash pile of 72.3 billion yuan, it would not be necessary to raise fresh equity to fund the expansion, which would be financed from internal resources and bank loans. On overseas expansion, the company is conducting resource development in New South Wales, where it won a A$300 million (HK$1.96 billion) license a year ago to explore for coal. "Given our lack of overseas experience, if we start from scratch, we can learn the entire development process - from obtaining exploration rights, doing exploration, getting approvals, building and operating mines, labour management to environmental protection," he said. "This is not to say we will wait until we finish our first project before we will consider acquisitions. We'll keep our eyes open for opportunities." Shandong-based rival Yanzhou Coal Mining (SEHK: 1171) last week agreed to acquire all of Felix Resources for just under A$3 billion, making it China's largest investment in Australia's resources sector. While the deal promised to offer a quick fix to Yanzhou Coal's problem of stagnant production volumes, the miner's lack of experience in boosting operations overseas exposes it to significant risk in executing Felix's plan to expand output to 15.7 million tons by 2012 from 4.8 million tons now, analysts at Morgan Stanley said in a research report. Meanwhile, Mr Huang expects the price of high heat value power-station coal will range between 550 yuan and 650 yuan per ton over the remainder of the year, compared with 570 yuan now. He said prices would rise because of the global economic recovery and higher environmental protection costs. His view contrasted with that of Huadian Power International general manager Chen Jihua, who said last week the price of coal was likely to be flat this year and fall next year as growth in mining capacity would exceed demand.

What his new wife will think no one can say, but car salesman Wang Shiping regrets the timing of his spring wedding cost him an opportunity to earn more money from the booming car market. July, which is traditionally a low season for car sales, proved instead to be the fifth consecutive month that total vehicle sales exceeded one million units; and dealers and salesmen like Mr Wang believe the growing momentum will remain in August and for the rest of this year. "We don't worry about dwindling customers," said Chen Jianhui, the sales manager of a dealer that sells Shanghai Volkswagen's Passat and Lavinda in Guangzhou. "Some are buying a car because they have earned money from the stock market and some are just following the crowd to own a car." China now has the only car market that is growing and will become the world's biggest by the end of the year. Market watchers expect that sales in the present largest car market - the United States - will not begin to pick up again until next year at the earliest. By contrast it is expected that total sales on the mainland could reach 12 million vehicles by the end of the year, up from 9.38 million units last year. "I think the boom is the result of a mixed and fortunate coincidence," said Tang Liang, who sells Nissan cars in Shanghai. "Government taxation incentives and direct subsidies have also definitely helped." The four trillion yuan (HK$4.54 trillion) stimulus unveiled by Beijing last year earmarked the vehicle industry for early support. The government cut consumption tax for vehicles with engines of 1.6 litres or smaller to 5 per cent from 10 per cent from January 20 to December 31; and it allocated five billion yuan worth of subsidies to farmers buying three-wheelers and vehicles with engines of 1.3 litres or smaller between March 1 and the end of the year. "It's true that because of the tax benefits I decided to own a car as it is actually a necessity," said Wang Wei, 27, who works as a public relations officer for a developer. Car dealers said most of their customers set their sights on spending between 100,000 yuan and up to 200,000 yuan for large cars to show off their social status. While the big cities suffer from massive traffic congestion, countrywide there are only 24 car owners for every 1,000 citizens. That ratio indicates the huge upside potential for the industry when compared to the US, which has an average of 765 vehicles per 1,000 people, and Europe, which has a ratio of about 300 per 1,000. Zhu Hui, the deputy sales manager for Chery Automobile, said the sales results were an effect of the slashing of consumption tax. "A 70,000 yuan 1.6-litre car previously came with a consumption tax of 7,000 yuan. Now the government has cut the tax in half, it means a customer has to pay only 3,500 yuan in tax," Ms Zhu said. "What's more, some carmakers like Chery offered to pay the 3,500 yuan, which meant customers eventually paid nothing." Chery dealers in Guangzhou sold an average of 160 cars per month from January to July, up from last year's average of 100 units per month, she said. Mr Tang said that carmakers also underestimated this year's sales at the end of last year, "which led to a gap between demand and supply. And that further inflated the boom". Ma Huadong, a Nissan dealer in Guangzhou, said the dealership had already achieved its August sales target of 190 units. On average, 140 cars were sold per month this year, up from 100 units last year. On top of the lively demand stimulated by government policy, carmakers have helped themselves by launching promotions since the end of last year. "I spent some time looking around for a car. Finally, I chose to buy a 110,000 yuan Nissan because my credit card provided me with attractive benefits," said Water Tang, who works in the marketing department of a magazine in Guangzhou and earns 8,000 yuan a month. He said that after making a first payment of 30,000 yuan for the car, he could pay the balance in 12 installments using his credit card without having to pay surcharges and interest. Car dealers agreed that the sales boom this year was partly helped by easier credit. In previous years, one in every 10 cars was bought with the help of loans. But now about one in five deals was funded by credit, they said.

The recession has hit international tourist arrivals in Shanghai more severely than many other mainland cities. Overseas visitor numbers fell nearly 10 per cent in the first half of the year. Li Bincheng , director of the Shanghai Municipal Tourism Administration's international tourism promotion department, said the number of overseas visitors - including those from Hong Kong, Macau and Taiwan - had fallen to 3.9 million, compared with 4.3 million in the first half of last year. "This is because Shanghai is comparatively more international and therefore is more prone to feel the impact of the economic environment overseas," Mr Li said. The decline is about three times higher than the drop in total overseas tourist arrivals in 28 major mainland cities in the first half year on year, which slumped to about 20 million people, figures from the National Tourism Administration showed. Beijing recorded a drop of 2.3 per cent, while Tianjin saw an increase of 14 per cent. But Shanghai fared better than Sanya , Hainan , down 40 per cent; and Zhongshan , Guangdong, down 30 per cent. Shanghai still managed to attract Hongkongers and Taiwanese in the first half. It received 201,146 Hongkongers, up 17 per cent, and 230,500 Taiwanese, up about 8 per cent. Mr Li said Shanghai still expected to attract about 6.8 million overseas visitors this year, compared with 6.2 million last year. He was also optimistic about prospects for the World Expo next year. "We are confident that the target of 70 million people can be achieved," he said. The number of mainlanders coming to Shanghai was still increasing about 3 per cent annually, he said. adding that he thought many mainlanders would visit Expo. Estimates showed that only one in 20 visitors to the six-month event would come from outside the mainland. In a media tour of the Expo site this month, the main boulevard and frameworks of key structures were visible - including the China Pavilion, World Expo Centre, Theme Pavilions and Expo Performance Centre. The Hong Kong Pavilion could not be seen yet, but work on it started in April. "Our preparations have been going smoothly," said Hong Hao , director general of the Bureau of Shanghai World Expo Co-ordination. Wu Penghong , assistant supervisor at the bureau's communication and promotion department, said work had started on more than 60 of the nearly 100 pavilions. "On a busy day we expect to see 700,000 to 800,000 visitors and the number should fall to between 300,000 and 400,000 visitors on a quiet day," he said. The bureau added that despite the financial crisis, the Expo had attracted more official participants than expected and no sponsors or participants had withdrawn. With the theme "Better City, Better Life", the Expo has so far wooed 192 countries and 49 international organisations to participate. The site will be the largest ever for an expo, covering 5.28 sq km and involving about 18 billion yuan (HK$20.5 billion) in construction costs. Viewed as another opportunity for the country to shine on the international stage after the Beijing Olympics, the Expo will run from May 1 to October 31. Tickets are now on sale.

Aug 17, 2009

Hong Kong: Five luxury residential properties on Hong Kong Island and in Kowloon will be sold through public auction on August 28, with a unit in the 73-storey Highcliff likely to command the keenest bidding.

The government has promoted Arthur Yuen Kwok-hang, currently an executive director at the Hong Kong Monetary Authority, to head its local banking regulation division starting in January. Mr Yuen will become a deputy chief executive of the HKMA, replacing Choi Yiu-kwan, who will retire at the end of this year. In effect, Mr Yuen will be the new right-hand man to Norman Chan Tak-lam, who will replace HKMA chief executive Joseph Yam Chi-kwong when he retires on October 1. Bankers and analysts said Mr Yuen was chosen because of his strong regulatory background in the securities market, especially important as the HKMA begins to tighten regulations on banks' securities operations after the Lehman Brothers minibond fiasco. More than 20,000 investors complained they were misled by banks into buying the structured products issued or guaranteed by Lehman. These products became almost worthless when the United States investment bank collapsed in September last year. This prompted the HKMA to impose a range of measures to tighten regulation on how banks sell their securities business. Mr Yuen is a former administrative officer and was principal assistant secretary for the Financial Services Branch in the early 1990s handling securities market regulation. He was a senior manager at the Securities and Futures Commission for two years before he joined the HKMA as a division head in 1996. He was promoted to his current post in 2004. "Mr Yuen has experience in securities regulation that will be useful as the HKMA now needs to tighten the regulation of banks' securities business," said Chim Pui-chung, a legislator for brokers. However, Democrat Kam Nai-wai objected to the timing of the management changes. He said it was not appropriate for Mr Yam and Mr Choi to leave before the investigation into the minibond complaints was completed in March next year. "Mr Choi is handling banking regulation, so he is the one who knows best if there was any mis-selling by the banks," Mr Kam said. Mr Choi, 54, joined the HKMA in 1993 after working for the Office of the Commissioner of Banking since 1974. He handled a number of bank runs and government rescue plans in the 1980s. He rejected market speculation that his departure was related to the retirement of Mr Yam, saying he had always planned to retire at 55 by the end of this year. "Norman is a good friend of mine and a good colleague," Mr Choi said. "I struggled for a while before making the decision to retire." Mr Choi said he would not join the commercial world after retiring from the HKMA but would study history and spend time with his family. Tam Ping-shing, chief executive of Hong Leong Bank's Hong Kong branch, said he regretted that such an experienced banking regulator had to retire. "One of Mr Yuen's challenges is to make sure local banking regulation can cope with the challenges ahead and to allow local lenders to expand on the mainland in future," Mr Tam said.

Sam Ngai, the spokesman and manager of production company Star Overseas Ltd., will leave his current position on Friday. "I am going to enter a new phase of my career and start my own business," Ngai wrote in an e-mail which he distributed to various media organizations on Wednesday. Star Overseas, owned by Hong Kong comedian Stephen Chow, has been suffering from personnel losses in the past few years, as partners, managers and artists have left the studio one after another for different reasons. Ngai's announcement has prompted questions about how his resignation will affect the company and Chow's future acting career. But Ngai said the company's movie business is operating smoothly. The comedy movie "Jump," which stars the company's actress Zhang Yuqi, is scheduled to be released soon, while several other projects, including an animated version of "CJ7," are also under negotiation, the Chengdu Shangbao quoted Ngai as saying. Ngai also said Chow has already shifted his career focus. "Actually, Stephen Chow was not only engaged in the movie business," Ngai said. "In the past year, he focused mostly on other fields, which was not well-known by the public." Ngai said he did not know who would replace him. "It's Chow's business," he said. Founded in 1996, Star Overseas has produced or co-produced five movies, including the "Kung Fu Hustle" and "CJ7." It also helped turn several actresses such as Huang Shengyi, Zhang Yuqi, and Xu Jiao into film stars.

China: Chinese President Hu Jintao and his Brazilian counterpart Luiz Inacio Lula da Silva on Saturday exchanged congratulatory messages on the 35th anniversary of diplomatic ties.

Japan expressed remorse for its actions in the second world war yesterday, the anniversary of its 1945 defeat, but two former prime ministers visited a controversial war shrine seen as a symbol of its past militarism and occupation of China. Prime Minister Taro Aso and Emperor Akihito, whose father Hirohito surrendered exactly 64 years ago, attended a memorial service in Tokyo and expressed sorrow for the suffering the nation had caused. "Our nation inflicted significant damage and pain on many countries, especially on people in Asian countries," Mr Aso said during the nationally broadcast service attended by 5,000 people, mostly elderly veterans and bereaved families. "On behalf of our people, I express deep remorse and humble condolences for all of the people who fell victim." Emperor Akihito said: "I profoundly express my condolences ... with my sincere hope that such war sufferings will never be repeated." But amid Japan's efforts to own up to its wartime aggression, former prime ministers Junichiro Koizumi and Shinzo Abe visited Yasukuni Shrine, which honours some 2.5 million Japanese war dead, including 14 leading war criminals - and has long been a sensitive issue with Beijing. Resentment lingers in China over Japan's bloody occupation from 1931 to 1945, while many Koreans have bitter memories of its brutal colonial rule from 1910 to 1945. Sino-Japanese relations hit rock bottom during the five-year tenure of Mr Koizumi, whose annual visits to the shrine from 2001 to 2006 enraged Beijing. Relations have warmed since Mr Koizumi left office, but Beijing expressed "serious concern" in April when Mr Aso made an offering to the controversial Yasukuni war shrine, and warned that the move could harm bilateral ties. Mr Abe, Mr Koizumi's successor who avoided the shrine while he was prime minister, made his second consecutive annual visit yesterday. "Today, I made a visit here to share respect and veneration for spirits of the war dead," Mr Abe said. Mr Aso has indicated he will stay away from the shrine, although Consumer Affairs Minister Seiko Noda visited. Last year three ministers, including Mr Noda, visited the shrine. "I renewed my strong belief that we must not wage a war," Mr Noda said at the shrine. There was no response from Beijing yesterday. Ahead of the August 30 national election, some 40 conservative politicians also made a pilgrimage to the shrine. Opposition leader Yukio Hatoyama, widely tipped to become the next prime minister, expressed his condolences for those who lost their lives in the war, while staying away from the shrine. "It is our responsibility and duty to establish peace by facing history so that we will neither forget about the bitter and mindless war nor repeat the tragedy," he said. Mr Hatoyama's Democratic Party of Japan is studying a plan to create "an alternative non-religious national memorial", which prime ministers and cabinet members could officially visit without controversy. Hirohito, who was revered as divine and had never spoken to the public before, went on the radio on August 15, 1945, to announce Japan had to "bear the unbearable" and surrender as its cities lay in ruins, two of them struck by US nuclear bombs. Under bright sunshine yesterday, many Japanese veterans and their families worshipped at Yasukuni Shrine, where right-wing activists also congregated. "I came here for the first time as I feel younger generations should take over the respect for the war dead," said Masatoshi Kawano, 19, wearing a traditional kimono with a Japanese "Rising Sun" national flag in his hand. "Individuals - soldiers or ordinary people - should not be blamed," Mr Kawano said. "It was a tough time for everyone. All of them were the victims of the war." Kenji Hata, 66, said: "No matter what other countries say, it is our duty to respect those who devoted their lives to the country. We can't help but say any criticism against a visit to Yasukuni is an interference in domestic affairs."

About 100 Taiwanese and mainlanders have swum across a narrow strait dividing the Taiwanese island of Quemoy and the Fujian port of Xiamen in a historic event that is a further sign of warming cross-strait ties. The cross-strait swimming challenge, held yesterday, was made possible after Taiwan's Mainland Affairs Council, the island's top mainland-policy-planning body, agreed to the event and Taiwan's military removed anti-tank and anti-landing-craft barricades deployed along about 350 metres of the coast at Shuangkou on Lesser Quemoy - where the swim ended. Escorted by about 50 lifeguards and canoes, jet skis and boats, the 48 swimmers from Taiwan and 49 from the mainland set off from the beach and finished the 7.1-kilometre "Quemoy-Xiamen Crossing" in two hours and 10 minutes. Among the swimmers were students, teachers, athletes and businessmen. The mainland swimmers included policemen, according to the Quemoy county government, which co-organised the event with its Xiamen counterpart. "Swimming across the sea to Quemoy was not difficult at all," said Li Yenhan, 22, from Tianjin , who was the first mainlander ashore. "There were some sea currents near Binlang islet [held by Taiwan], but after that it was an easy swim." A member of the Tianjin Swimming Centre, Mr Li finished the course in 70 minutes, while 25-year-old tennis coach Chien Chun-che took 90 minutes. He was the first Taiwanese swimmer to finish. "It was challenging, but great," said Mr Chien, who coached Taiwanese players during the World Games in Taiwan last month. Before the swimmers took the plunge, there was an opening ceremony hosted by the heads of the Quemoy and Xiamen governments. A lion dance and welcoming ceremony greeted the swimmers when they arrived in Shuangkou. Organiser Lee Juh-feng, a Quemoy county magistrate, said: "This is a historic moment which indicates that the two sides of the Taiwan Strait are taking a further step towards peace. "After 60 years of hostility, the two sides have come to realise the importance of peaceful development, and we hope there will be many more exchanges between Quemoy and Xiamen." There would be many more swims in the future. "The next one will start in Xiamen next year, and possibly the event could be held twice a year, signifying closer relationships between the two areas and between the two sides of the Taiwan Strait." Asked if the government would put back the barriers in Quemoy, a former defence outpost, Mr Lee said he hoped not. But the defence ministry said the barriers would have to go back up. Mr Lee said with relations between Taiwan and the mainland warming since Ma Ying-jeou won a presidential election in Taiwan in March last year, it was time to end rivalry and military conflict so that Quemoy would no longer be an island battlefield. The mainland fired more than 470,000 shells at Quemoy over 44 days in 1958, killing 618 people, in an attempt to take over the small group of islets, the closest of which is just two kilometres from Xiamen.

Global investors are pumping money into China's opaque media sector as Beijing beckons foreign capital to help it boost the culture and entertainment sectors in the world's most populous nation. Investors are raising at least two multimillion-dollar media-focused funds, while global giants such as News Corp have also started to test the market with small deals. Late last month, the State Council surprisingly announced that it would welcome foreign and private capital to invest in its media-related areas including printing, culture and entertainment businesses amid industry consolidation. "I think China's media sector is becoming more open to private capital than ever before as the government needs big money to help it develop the whole media industry," Neil Shen, Sequoia Capital China's founding partner, said. Last month, Reuters reported BOC (SEHK: 3988) International Holdings, the flagship investment banking arm of Bank of China, is raising a media-focused fund. State-owned China Development Bank is also working with other investors to launch a media fund backed by the local government of Shanghai, industry sources said. However, dealmakers and analysts warned that foreign investors should bear in mind political risk when making investments in the country's media industry as the Communist Party is keen to retain tight control over content providers which may stray from their political agenda. "Running a media company has its risks and that's the fact in China," said Harry Man, a China partner of leading US venture capital firm Matrix Partners. "Take it or leave it. If you don't want to take this risk, don't invest in it." Last month, Sequoia and Matrix Partners, teaming up with a local firm, agreed to invest US$15 million in Poly Bona, a mainland movie maker and distributor often described as China's Miramax. More recently, AdChina, an online advertising agency, received US$30 million from investors including GSR Ventures and News Corp, in a deal backed by Wendi Deng, Rupert Murdoch's wife. Local social networking and mini-blog sites like and, clones of and, are likely to be hot destinations for venture capital. Compared with the price tag for a stake in firms like Facebook, small Chinese firms are much cheaper for investment and foreign funds believe some of them will be leaders.

Aug 16, 2009

Hong Kong: Hong Kong pulled out of its deepest recession since the Asian financial crisis in the second quarter as economic output jumped 3.3 per cent from the previous quarter, helped by improving trade flows and consumption. Official, seasonally-adjusted data, prompted the Hong Kong government to upgrade its full 2009 forecast to a 3.5-4.5 per cent contraction from a previous 5.5-6.5 per cent forecast. “The GDP data was much better than we expected, partly because exports were better and partly because of a pick-up in private consumption,” said Paul Tang, senior economist at Bank of East Asia (SEHK: 0023). “Private consumption is being driven up by stock market gains and by the property sector, which started doing well. “The second half will show positive growth. We will revise our forecast upwards.” However, the economy continues to perform well below last year’s levels and gross domestic product fell 3.8 per cent from a year earlier, although that was much better than forecasts for a 5 per cent decline. “The external environment is still uncertain,” government economist Helen Chan told a news briefing. The territory follows neighbour Singapore, which surged out of recession in the second quarter, while Germany and France surprised financial markets on Thursday by announcing they too had returned to growth. As a trading and financial hub, the territory has been hard hit by the global economic downturn. A year ago it slipped into its deepest recession since the Asian financial crisis in 1997/98 as trade was hit by weak global demand and rising unemployment made consumers cautious. Consumers have, however, become more upbeat as the Hong Kong stock market has rebounded 80 per cent since early March and property prices have recovered 20 per cent this year. Private consumption in the second quarter jumped 4 per cent from the first quarter. Exports improved in the second quarter as mainland’s economy picked up, although they were still down on last year. Economic recovery is likely to be very gradual and will depend on how soon the US economy can rebound, economists say. Recent data suggesting mainland’s economy is gaining speed will help Hong Kong, and the territory has attracted a flood of new funds in recent months as investors favour assets with exposure to mainland’s growth.

Frenchman Christophe Schwarz, better known as the artist Zevs, leaves Eastern Court on Friday. A French artist who sprayed a bleeding Chanel logo on one of Hong Kong's most expensive pieces of real estate was on Friday handed a suspended sentence by a city court. Christophe Schwarz, who goes by the name Zevs, was given a jail term of two weeks suspended for two years at Eastern Magistrates court after admitting a charge of criminal damage. The Parisian had daubed a Chanel logo on to Chater House in Central on July 13, although the piece of prime property is better known as the location of a major Armani store. His signature style, which he calls liquidation, is a logo covered in wet paint, which then drips down a wall creating the effect that the logo is bleeding. He has previously sprayed his designs on walls in Berlin, New York and Paris, where targets have included McDonald’s, Yves St Laurent and Chanel. His early morning painting was recorded in a YouTube video, but he was arrested by police a few hours later along with two residents, previous reports have said.

Taiwanese soldiers rescue a villager using a cable and sling strung across the Ba Si Lan river in Sinfa on Thursday. Rescuers in Taiwan on Friday battled to reach over 15,000 people still trapped in mountain villages nearly one week after a powerful typhoon triggered the island's worst floods in half a century. More than 50,000 troops were struggling to cross raging rivers and fallen bridges to reach victims across a large swathe of southern and central Taiwan, many of whom have been without food and water since Typhoon Morakot struck. President Ma Ying-jeou warned the island-wide death toll of 117 would likely rise substantially as fears mounted for those missing.

Casino operator Las Vegas Sands Corp said overnight on Thursday that its lenders agreed to amend its US$3.3 billion Macau credit facility, clearing the way for an initial public offering in Hong Kong. The agreement, first proposed to lenders last month, boosted the company’s stock more than 12 per cent to US$13.79 on the New York Stock Exchange. “It gives them, obviously, more flexibility over in Macau and makes an IPO probably more likely,” said Majestic Research analyst Matthew Jacob. Sands said the deal includes six quarters of relief from its loan covenants and allows it to sell a minority interest in its Macau operations. “The concessions … give investors more confidence in the company’s liquidity,” Mr Jacob said. The Macau amendment permits Sands to issue up to US$1 billion of senior secured notes. It must use the proceeds to pay down the credit facility. It also allows Sands to issue US$500 million of senior unsecured notes, once its leverage ratio gets lower. The amendment increases the interest rate for the loans under the credit facility to Libor plus 5.5 per cent per year. If the company sells the stake in its Macau operations and prepays US$500 million of outstanding loans, the interest rate would drop to Libor plus 4.5 per cent per year. Macau bank group’s willingness to amend the facility reflects its belief in Sands’ strategy and the resumption of growth in Macau, JP Morgan analyst Joseph Greff said in a research note. Las Vegas-based Sands operates the Palazzo and Venetian resorts on the Las Vegas Strip, two casinos in Macau and a casino in Pennsylvania. The company said it is on track to open its next gambling resort, in Singapore, in the first quarter of next year. Sands, which has come close to violating loan agreements and has suspended work on several projects, said the amendment increases the maximum leverage ratio covenant under the Macau credit facility by 1 for the four quarters beginning July 1, this year and by 0.5 for the two quarters beginning July 1, next year. Despite a rally over the past two weeks, shares of Sands are down about 77 per cent from the 52-week high of US$59 set last August.

China Merchants Bank (SEHK: 3968) said on Friday it would raise 15 billion yuan (HK$17.03 billion) to 18 billion yuan via a rights issue of Hong Kong-listed H shares and Shanghai-listed A shares to boost its capital adequacy ratio. Mainland’s sixth-largest lender said it would issue no more than two shares for each 10 shares held by existing A-share and H-share holders at price to be a discount to market trading prices. The A-shares closed at 17.68 yuan on Thursday and H-shares ended at HK$17.72 in Hong Kong. The A-share rights issue plan is subject to regulatory approval and the company will seek shareholders approval in a meeting to be held on October 9. Investment banking sources said last month that the bank planned a rights offering by the end of the year as corporate capital raising in the Hong Kong and mainland stock markets picks up steam with the rising equity markets.

The Centre for Health Protection (CHP) said on Friday a 40-year-old woman had contracted a strain of the human swine influenza (HSI) virus that is resistant to Tamiflu.

China: China appointed a new chief for its top nuclear firm, China National Nuclear Corporation(CNNC), after its former general manager was dismissed for "seriously violating discipline", Xinhua news agency said on Friday. Sun Qin, formerly CNNC’s deputy general manager before he became deputy head of the National Energy Administration (NEA), will replace Kang Rixin, former chief of the nuclear company, who is now under investigation. China has been aggressively expanding its nuclear capacity as part of efforts to increase cleaner energy supplies and reduce dependence on polluting coal. The world’s No 2 energy user, which started building five nuclear plants this year, plans to double its target for installed nuclear power generating capacity to 86 gigawatts (GW) by 2020 from the previous goal of 40 GW. CNNC, parent of the Hong Kong-listed CNNC International, is China’s largest nuclear power developer and operator. A slew of top Chinese officials and executives have been felled by “economic crimes” recently. Li Peiying, once head of the holding company that runs Beijing airport (SEHK: 0694), was executed early this month after being convicted of taking bribes and embezzlement. Chen Tonghai, ex-chairman of top Asian refiner Sinopec (SEHK: 0386), got a suspended death sentence last month, also for taking bribes.

China battery and carmaker BYD (1211) says it plans to issue as many as 100 million A shares on the Shenzhen Stock Exchange to raise capital for battery and auto development projects. The proceeds will be used to fund lithium-ion and solar battery production and expand auto products and accessories. BYD needs much investment to develop alternative-energy vehicles. Recall that in 2007 PetroChina (0857) listed its A shares when the market was rising. The state-owned oil and gas producer raised the most amount of money of any new listing globally. On its debut in Shanghai, PetroChina shares traded at a price-earning ratio of 55 while the PE ratio for its H shares was 21. US billionaire Warren Buffett sold Berkshire Hathaway's entire stake in this firm when its PE ration was below 20. By comparison Exxon Mobil was trading at 13 times its PE ratio in 2007. Bear in mind that mainland bourses are isolated from the world, hence a huge disparity in stock valuations. Mainland investors are more aware of the value-investment concept and know that A shares are overpriced compared to H shares in Hong Kong. BYD is trading at 73 times its PE ratio and as mainland investors are becoming mature on investment decisions, it is believed the firm's shares might be fueled by mainland capital before its Shenzhen listing. According to its annual report, BYD's revenue surged by 43.8 percent year-over-year to 12.394 billion yuan (HK$14.06 billion) on its handset and auto segments. But reported net profit decreased by 7.1 percent year-over-year to 596 million yuan because of surging raw material prices and research and development costs. Revenue from handset components and assembly services rose 67.9 percent year-over-year to 5.32 billion yuan, accounting for 42.9 percent of total revenue. However, segment operating profit was down 5.4 percent year-over-year to 365 million yuan. Revenue from automobile sales accounted for 32 percent of total revenue. BYD plans to boost the automobile revenue to 50 percent of its sales in 2009. I would not call BYD an auto company and prefer to regard it as a high- tech industrial stock. BYD Auto sold 170,000 vehicles in 2008 and aims to sell 400,000 units this year. In the first half it sold 176,795 vehicles, a 176 percent increase from a year earlier. Auto sales in China in the first half of this year have reached an historical high and that was in the low season. Vehicle sales usually start from June. BYD Auto, facing keen competition from rivals like Dongfeng (0489) and Geely (0175), plans to launch five new car models. The S8, G3, L3, S6 and M6 will go on sale in the coming six months. The S8 is China's first coupe-like sedan that uses hard-top convertible technology. BYD's innovative and contemporary design has been a reputed feature among domestic brands. Apart from the design, its environmentally friendly F3 model has benefited from China's stimulus policy for small vehicles which includes a tax reduction scheme for buyers. BYD's F3 sales rose to 20,000 units in June. But whether the tax reduction scheme will be extended remains to be seen. Last week, BYD Auto said it will spend 60 million yuan to acquire 100 percent of the equity of bus and coach manufacturer Hunan Midea Coach from Foshan Weishang. Under the terms of the deal, BYD will invest 3 billion yuan to establish its third new-energy auto production base, covering four square kilometers, in Hunan. BYD is adept in producing batteries and it aims to develop renewable- energy vehicles. Acquiring Hunan Midea Coach gives BYD the license granted by the National Development and Reform Commission to Midea to produce passenger cars. However, BYD's net cash inflow from operating activities for the six months ended June 30, 2008 was 1.42 billion yuan. Its total liability was 18.3 billion yuan, including short-term bank loans of 7 billion yuan and long-term loans of 1.83 billion yuan. BYD's debt level is very high and, according to its prospectus issued earlier this year, it needs 2.3 billion yuan for research on electric car devices, insulated-gate bipolar transistor and light-emitting diodes. BYD also needs a great deal of operating capital for the newly acquired Midea factory to begin production. It seems that BYD is short of cash. So while investors are optimistic about its electric cars, mass production has not begun. Only 19 units were sold in June and investors may not be able to see a big revenue growth contribution from electric cars either this year or next. Apart from the relatively expensive retail price, its recharging network and after-sales service are major concerns. I would not say investors cannot speculate on this stock, in which Buffett has invested. But the reality is whether you can apply Buffett's investment philosophy after you scrutinize the intrinsic value of the stock.

Sri Lanka and China’s Exim Bank signed deals worth more than US$350 million to build a highway and an oil bunkering facility near one of the world’s biggest shipping lanes, Sri Lanka’s Foreign Ministry said on Friday. The bunker terminals will be built at the Hambantota port on Sri Lanka’s southern coast, where the state-run Exim Bank has already pledged US$360 million to the initial construction phase being carried out by mainland firms. The other agreement will finance the building of highway from the Sri Lankan capital Colombo to the international airport 30km north in Katunayaka. Currently, the journey can take hours because of the narrow, traffic-clogged roads. “The signing of the two agreements will pave the way for much needed infrastructure requirements which will have an immense impact on the country’s future socio-economic development,” the ministry said. Mainland in July won the rights to Sri Lanka’s first exclusive economic zone, located in Mirigama with easy access to the Colombo port and airport. Hong Kong-based conglomerate Huichen Investment Holdings will pay US$28 million to build the turnkey business park, where mainland firms can set up shop. It follows a model mainland has used successfully in African nations, to house manufacturing and other businesses alongside their mainstay mineral and resource extraction firms. Mainland and India are competing to win lucrative and strategic investments in Sri Lanka since the military defeated the Tamil Tiger separatist rebels and ended a 25-year war in May. Both countries backed President Mahinda Rajapaksa’s government when it came under western-led criticism for refusing to slow its offensive while the Tigers held more than 100,000 civilians hostage in a tiny war zone. India is wary of the mainland’s beachhead in Hambantota, widely viewed as part of China’s “string of pearls” policy to give it coaling stations around the region. New Delhi views it as part of its giant neighbor’s plans to strategically encircle India. India in its budget this year has pledged a minimum US$104.6 million to Sri Lanka’s post-war development and has already staked a claim to do much of the construction in the former war zone in the north. Mainland meanwhile has offered an US$891 million, 20-year loan with a 2 per cent interest rate to build the second and third phases of the 900 megawatt coal-fired Norochcholai power plant. Sri Lanka’s US$40 billion economy this year is expected to see foreign direct investment surpass last year’s record US$889 million.

China is winning a global race to create "green collar" jobs, six months after countries worldwide launched US$500 billion (HK$3.9 trillion) spending plans to drive a low-carbon economy. Following the economic downturn, both the United States and Europe aim to spur jobs in a green push to fight climate change and boost energy security, but China may leapfrog both this year in new wind power. China passed the United States in numbers of new wind turbines built in the first half of 2009, data from Beijing- based specialists Azure International shows, and is also increasing its share of the main solar demand market, Europe. "I think China is definitely winning the race," said Wu Changhua, China director of the London-based environment body The Climate Group, citing support for low-carbon LED lighting and electric cars as well as wind and solar. "A low-carbon economy is mainstream thinking," she said, adding that Chinese development was helped by swifter centralized decision-making compared with its rivals. In wind power, local demand often means local jobs that's especially true in China where an unofficial rule says all installed turbines must include 70 percent local content. International companies' market share there is falling. "In the first half [of 2009] that decline continued," said Sebastian Meyer, head of research at Azure International. Tough financing markets plus falling oil prices have dented clean energy prospects worldwide and created a glut of turbines and solar panels, with recovery expected from next year, aided by new stimulus programs. In solar power, Germany will dominate demand this year, according to Barclays Capital, overtaking Spain following a cap on state support there. But mainland manufacturers will continue to grab an increasing share of production despite a fall in prices, their key differentiator, said New Energy Finance analyst Jenny Chase. China accounted for about a third of the market for global solar cell production in 2008 while Europe's share declined to about a quarter. Last year Europe collectively installed 4.3 GW of solar photovoltaic power and 8.5 GW of wind, tipping the United States into second place in both. But the wind ranking may change - China added about 4.5 GW in the first half of 2009, Azure's Meyer said, putting the country on track to pass the United States which installed 4 GW. HSBC forecast a drop in US and European demand this year. The Global Wind Energy Council expects China to take top spot in 2009, said secretary- general Steve Sawyer. Two weeks ago China fixed the price for wind power using a so-called feed-in tariff, and a state-backed economic stimulus and credit loosening have boosted projects. The United States is likely to be China's chief rival in new wind power, analysts say, overtaking Europe where some countries are hamstrung by planning delays. A protest last week at a British turbine factory against 625 job losses appeared doomed after owners Denmark's Vestas won a repossession order. Vestas is moving the facility to the United States, and has won plaudits from analysts for its second place in a more lucrative market, behind GE. US energy secretary Steven Chu said last week US$3 billion in new renewables grants would boost green jobs.

Diplomats watch a sand table of Xinjiang Tianye Co., Ltd in Shihezi, northwest China's Xinjiang Uygur Autonomous Region, Aug. 13, 2009. Diplomats from 26 countries and regions to China began a five-day visit to Xinjiang on Monday, a month after the deadly riot in the regional capital of Urumqi which left 197 people dead and more than 1,600 others injured.

Chinese food and drug regulators are required to report food accidents to their superiors and local health authorities within six hours, according to a government draft regulation Thursday. The draft, issued by the State Food and Drug Administration (SFDA), demands that once accidents occur involving 30 or more people, food and drug regulators at or above the county level should report them to their superiors and local health authorities within six hours. With regard to food safety accidents that occur on campuses, during important nationwide festivities, involve 100 people or more, or kill one or more people, food and drug regulators should not only abide by the "six hour regulation," but also report them to the SFDA "in a timely manner," according to the draft. Catering service runners, should they find food accidents, are asked to immediately stop using all suspicious food and cooking facilities and protect the site. They are also required to report to medical authorities and food regulators at or above the county level within two hours. The draft regulation also stipulates that heads at schools, companies or government organs will be held accountable if food accidents occur twice in one year in their cafeterias. The SFDA also asked food and drug regulators at all levels to formulate emergency plans to deal with food accidents based on local conditions.

China will continue its policy of subsidizing farmers' purchase of automobiles in a bid to spur vehicle sales, as part of the government's concerted efforts to stimulate domestic demand, a government official said on Thrusday. The policy, put in place earlier this year, has proven to be successful and will be extended, Li Yizhong, minister of industry and information technology, said at a news conference in Beijing on Thrusday. China's vehicle sales posted a 63-percent year-on-year growth in July, which is usually the worst period of the year for auto sales, according to figures released by China Association of Automobile Manufacturers. The country sold 1.09 million vehicles last month, the fifth consecutive month that the number has exceeded the 1-million-unit mark. "The fundamental reason behind the dynamic performance is the series of stimulus policies we doled out," Li said, pointing to other incentives. The government has cut in half the purchasing tax on passenger vehicles with engines smaller than 1.6 liters, a policy that it said will last until the end of this year. Li did not say whether the government would extend the policy. The government has also introduced policies under which customers can get subsidies if they trade in their old vehicles for new ones."The impressive double-digit auto sales growth against the backdrop of a worldwide industry slump is largely attributed to our policy stimulus and shows they are successful," Li said. The minister also said the government would push ahead aggressively with mergers and acquisitions among the enterprises to improve industrial consolidation. He said his ministry was working on guidance and restructuring details for 10 major industries, without going into specifics. Li said China's industrial growth slump has been reversed and corporate profitability has improved considerably. Industrial output rose 10.8 percent in July from a year earlier, after gaining 10.7 percent in June, the second time since September last year that output has seen double-digit growth, the National Bureau of Statistics said on Tuesday. "The overall industry performance is heading in a good direction," Li said. "The economy is turning better but it does not signal that the difficult period is behind us."

Aug 15, 2009

Hong Kong: Students at the University of Hong Kong will have to complete an internship in order to graduate as part of a planned course revamp under the "3+3+4" academic structure. Another key part of the revamp is the introduction of general studies, or "common core" courses, for all students. The university is the first institution to announce changes to be introduced under the new system. The internship programme, or "experiential learning" as the university calls it, will include - but go beyond - occupational training. "It aims to enable students to gain some outside-campus experience," a university spokeswoman said. At present students taking some courses, such as architecture or engineering, are required to take internships linked to those fields. Under the new course structure, the scope of internships will be much broader. "We will try to be flexible. For example, many arts faculty students may not find job internships that specifically correspond to their studies. Instead, they might do voluntary work, such as playing some role in the rebuilding of Sichuan , to fulfil the requirement," she said. Details still needed to be worked out by individual faculties, she said. HKU pro-vice-chancellor Amy Tsui Bik-may said the programme was being introduced in response to some employers' complaints about a lack of problem-solving and communication skills among Hong Kong university graduates. University of Science and Technology vice-president Wong Yuk-shan said it was too early to say if his university or other publicly funded tertiary institutions would follow suit. "Each university designs its curriculum independently," Professor Wong said. Professor Tsui also said her university wanted to introduce from the 2010 school year a "common core courses" system. As many as 65 courses would be offered and students would have to complete six courses to qualify for graduation, under the initial plan. Examples of common core courses include the understanding of biomedical science, cyber-societies and the rise of China. Ho Hon-kuen, a vice-chairman of the teachers' group Education Convergence, urged universities to consult the secondary school sector before carrying out changes. "Secondary schools may need to do something to prepare students for the course," Mr Ho said. Similar restructuring of undergraduate degree programmes are underway in other universities. Lingnan University also plans to require students to take core curriculum courses irrespective of their major, while Polytechnic University aims to provide "holistic education". In its 2008-09 to 2011-12 strategic guide, PolyU mentions plans to provide opportunities for students to enrich their experience outside Hong Kong. The changes are part of a revamp by the university in the wake of the government's secondary school education reform - commonly called the 3+3+4 system to represent three years of junior secondary education, three years of senior secondary education and four years of university education.

Hong Kong's richest person, Li Ka-shing, believes the worst of the global financial crisis is over but there is still a long way to go before an economic recovery. The worst may be behind us, but there would not immediately be a v-shaped rebound. That was impossible, the chairman of Cheung Kong (Holdings) (SEHK: 0001) and Hutchison Whampoa (SEHK: 0013) said at the companies' interim results announcement. "If you suggest that the overall economy will recover at the end of this year, I disagree. But if [you] say it'll not get worse, I agree," Mr Li said. The tycoon said Hong Kong could not escape the crisis, but its economy was already doing better than many places in the world. But despite the rising stock market, he said he tended not to buy shares at the moment and warned investors against borrowing money to play the stock market. "If keeping on buying shares can earn big money, the whole world wouldn't need to work hard and you, friends from the mass media, wouldn't need to sit here and work so hard. Passing a day relaxingly by buying shares and earning a lot of money in an hour or two - it can't be like that," he said. He defended Cheung Kong's Lohas Park development when asked by an Apple Daily reporter how it would sell remaining flats there in view of the strong odour from a former landfill. He said that newspaper always picked on the company. He had recently visited the site for a few hours and had seen the greenery of the landfill, which was beautiful and refreshing. His son, Victor Li Tzar-kuoi, said the 1,700 families who had bought flats must have visited the site first and been happy with the fresh air there. Mr Li fended off questions about whom he would support as the next chief executive, saying: "You shouldn't ask me who I support. I won't tell you." But he said those who ran for the post should possess two qualities: competence and public trust. Competency referred to one's working ability, and trustworthiness was related to one's personal qualities. The chief executive must not lack either of them, he said. Asked if Executive Council convenor Leung Chun-ying - who reportedly visited the tycoon, and who has been tipped as a candidate, had such qualities, Mr Li said a few of his friends he had had contact with were rumoured to be running for chief executive. "I won't say I have got a special relationship with someone because he comes meeting and chatting with me. The most important prerequisite is competence and trustworthiness ... which is related to the benefit of all Hong Kong people." Commenting on Chief Executive Donald Tsang Yam-kuen, Mr Li said: "It's not easy to be him, really, it's not easy ... compared with other countries, Hong Kong is not bad ... it's quite good." He was content that last week's strike by drivers and deliverymen at Watsons Water, a subsidiary of Hutchison Whampoa, had been resolved after "everyone changed their attitude a bit". He said a harmonious, realistic and practical environment was required in Hong Kong.

Public satisfaction with the Hong Kong government is at its lowest point in six years, a survey shows. People also consider themselves worse off than at any time since 2002.

Improving economic conditions have Ocean Park management in a cheerful mood as the park gears up for its scariest month of the year. Park chairman Allan Zeman, who dressed up as King of the Underworld yesterday to promote its Halloween attractions, said visitor numbers were expected to rise in October, with the brighter economic outlook more than offsetting any impact from a 20 per cent rise in admission prices, starting from October 5. "There were 500,000 visitors in October last year, and we are expecting a breakthrough this year," he said. "I understand some people would like to not have a price rise; I wish we could make it free but we cannot." The 9th Ocean Park Halloween Bash will be held from September 25 to November 1, with adult tickets priced from HK$235 up to HK$825 for special party tickets. The park is spending a seven-figure sum on this year's Halloween event, and plans to make it the scariest ever. "There will be eight new haunted houses, 13 new shows and 80 daily performances and 404 wandering ghosts," Mr Zeman said. New attractions include Hong Kong's first movie-themed haunted house, where visitors could encounter ghoulish characters from horror stories, such as "Ms Single Braid" and the "Vampire Catcher". The park will also feature a haunted house designed by members of the public for the first time. Winston Li Ho-yin and Michelle Chau Man-yin, from Polytechnic University, beat 70 other competitors in April and will bring their haunted train station "Purgatory Express" to the event. "We were often told ghost stories about railways when we were young, especially a story about the last train heading to hell," Mr Li said. "I would warn all the visitors not to hold the handrails as you never know what might happen," The park had planned to raise admission prices from HK$208 to HK$250 for adults and from HK$103 to HK$125 for children on August 1, but its board postponed the rise.

Detailed building plans for more rides and attractions at Hong Kong Disneyland will be submitted to the government for approval this month, paving the way for construction work on expanding the theme park to start by late December, people briefed on the matter say. After the plans receive official approval, the infrastructure work will be tendered out. Several recently sacked Disney "imagineers", or creative staff, have already been rehired and have started work. More than 30 imagineers were expected to be hired as part of the expansion, those who had been briefed said. If everything goes smoothly, construction work will start by the end of the year. The government, which holds 57 per cent of the equity in the theme park joint venture with The Walt Disney Company, is keen to demonstrate how the HK$3.63 billion expansion will benefit the community. During construction, the project will create more than 3,000 jobs and, on completion, 600 more permanent staff will be hired. Board members of Hong Kong Disneyland met yesterday and will meet again in about three months' time. The expansion will add three new themed areas, for a total of seven "lands", and see the area of the theme park increase by about 23 per cent. The new lands are Grizzly Trail, Mystic Point and Toy Story, which is based on the animated film. Up to the end of May, more than 17 million people had visited the theme park since it opened in September 2005, but summer attendance this year had suffered, those who had been briefed said. The expansion deal is seen as the best possible option for the government as there is no need for more taxpayer funds. Taxpayers shouldered about HK$23 billion of the HK$27 billion development cost, yet the government only acquired a 57 per cent stake. Disney invested just HK$2.45 billion for a 43 per cent share. To facilitate the expansion, Disney will inject new funds while the government will use previous loans to the theme park to buy more of its shares. According to details provided by the government to the Legislative Council last month, the changes to the shareholding structure will take place in phases starting from Disneyland's 2008-09 financial year, which ends on September 30. The government will convert more than HK$2.97 billion of its loans to shares, while Disney will convert its HK$2.76 billion loan to shares and inject HK$212 million in capital. The changes will lower the government's stake to 53.43 per cent and increase Disney's holding to 46.56 per cent. By 2011-12, annual incremental changes will leave the government with 52.19 per cent and Disney with 47.81 per cent.

Tens of thousands of food lovers flocked to the annual food fair yesterday in search of novel flavours, bargain prices and free samplings. The Food Expo at the Convention and Exhibition Centre in Wan Chai, which is in its 20th year, features a record 607 exhibitors from 24 countries and regions, organiser the Trade Development Council says. In the exhibition hall, shopping carts, large bags and boxes strapped to trolleys were the most common methods used by eager shoppers. Queues formed everywhere as retailers tried to woo the crowds with food samples ranging from bean paste, seafood soup to chicken and abalone. Despites various promotions and discounts on offer, many price-conscious buyers said the goods were not markedly cheaper than those in supermarkets. However, many still chose to do their weekly shopping at the expo. One housewife said she had nearly spent all her money and was still going round the hall. She said she had spent about HK$2,000 on instant noodles, snacks and mooncakes at the fair. "Things are not particularly cheap but I like the great assortment of products available here," she said. Some came to the fair in the hope of discovering new flavours. One of them, businessman Joseph Chu Hon-cheong, bought two bottles of black truffle sauce at an Italian food booth. "The flavour of truffles is very special. I'd like to recommend them to my friends running Chinese restaurants and hope they can create more dishes. "I think Hong Kong, as a cosmopolitan city, needs to be more creative in mixing the East with the West," he said. While everyday products such as canned and frozen food were widely available, many others made their debut at the fair. Yakult, the health drink, added a guava leaf tea to its range, Snowy mooncake maker Tai Pan launched four new flavours this year, featuring popular drinks such as papaya milk, lemon tea and grapefruit tea and catering group Maxim's appealed to shoppers with its new products: banana sundae and Kyoho grape mooncakes. Wing Wah communications officer Leung Suet-yee said business yesterday was very good, while Wilkin Li Wai-keung, sales executive of Kofco Enterprise, which sells Korean imports, said business on the first day had been moderate and was slightly weaker than last year. The food fair, which attracted about 310,000 people last year, will be open to the public from 10am to 10pm from today until Sunday, and from 10am to 6pm on Monday.

The MGM Grand Macau hotel. The number of package-tour visitors to Macau dropped by 46.1 per cent in June, year on year. Macau recorded a hotel occupancy rate of 60.7 per cent in June, the second lowest since the 2003 Sars outbreak, following a sharp drop in package tours from the mainland. The June figure, released on Wednesday by the Statistics and Census Service, shows a slight improvement from a month earlier, when occupancy fell to 59.4 per cent. But it still represents a year-on-year decline of 12.6 percentage points. Economist and gaming researcher Zeng Zhonglu, of Macau Polytechnic Institute, said June's low occupancy was largely due to the swine flu outbreak, 300 new rooms added to the market with the opening of the City of Dreams casino resort, and the lingering economic downturn. "June is a traditionally weak period, and the opening of the City of Dreams led to a bigger supply of hotel rooms," Professor Zeng said. At the end of June, the number of hotel rooms had risen 11.7 per cent year on year to 18,128, but the number of hotel guests had fallen 12.6 per cent to 445,756. Five-star hotels had an occupancy of 63.1 per cent in June, four stars 64.5, three stars 58.4, two stars 33.8 and guesthouses 40.8. Professor Zeng said the occupancy rate in July was likely to rebound. The central government began in May to crack down on low-fare tours involving compulsory shopping. A regulation passed by the State Council forbids travel agencies from operating tours below costs. It applies to all mainland-registered travel agencies and therefore affects Macau tours operated by the agencies. Package-tour visitors dropped in June by 46.1 per cent year on year to 183,140. Those from the mainland dropped 51.1 per cent to 108,662, while those from Hong Kong dropped 31.7 per cent to 15,422.

Export trading house Li & Fung, which reported a 12.84 per cent rise in interim profit to HK$1.4 billion, said it will cut more costs in the second half of this year to preserve profitability as overseas demand remains flat. Cost cutting on travel expenses and payroll helped lift core operating profit 10.77 per cent to HK$1.7 billion in the first six months of this year, offsetting a 2.32 per cent decline in turnover to HK$46.29 billion. Managing director William Fung Kwok-lun, who expected flat sales from existing customers in the second half, said the group was ahead of its target of trimming operating costs by 10 per cent this year. "Our customers expect their own business will shrink 10 to 15 per cent on average this year, so they will buy less from us," Mr Fung said yesterday. "However, we are fortunate in this unfortunate economic climate that they will cut their orders by a smaller percentage." Li & Fung, which sources consumer goods from shoes and clothes to electrical appliances in developing countries in the east for importers and retailers such as Wal-Mart Stores in the United States and KarstadtQuelle in Europe, pinned its hopes on the final week of this month - or the so-called "back-to-school" season. "If sales are good, we may get more quick orders for Christmas and even for the coming spring," Mr Fung said. "US unemployment is only slightly improved and the housing market is still weak, so it is uncertain if consumer spending is coming back." However, Mr Fung was optimistic the US would lead the world out of the economic doldrums early next year. Slumping markets in the US and Europe, which together generated 91 per cent of the group's turnover, were so poor that analysts said the insolvencies of retailers KB Toys and Arcandor collectively shaved off HK$1.9 billion from Li & Fung in the first half. Amassing US$1 billion in "fire power", Mr Fung said the group would step up acquisitions. Under a deal signed yesterday with Talbots, it will source apparel and handbags for about 600 Talbots outlets in the US for US$400 million in sales this year. To save costs, Li & Fung would continue localisation by moving staff to production sites such as the mainland, Vietnam and Bangladesh, executive director Bruce Rockowitz said. Mr Fung said natural attrition had seen its payroll shrink 3.7 per cent, or 533 people, to 13,905 as of June 30 from the end of last year. This comprised a 263 fall in Hong Kong staff numbers to 3,336 and a 270 decline in its overseas personnel to 10,569. Mr Fung said uncertain overseas markets presented a challenge to the group's goal of lifting turnover to US$20 billion and core operating profit to US$1 billion in 2010. The interim dividend was raised 8.3 per cent to 26 HK cents per share. Earnings per share rose 6.39 per cent to 38.3 HK cents. The stock jumped 85 HK cents or 3.45 per cent to HK$25.45 yesterday before the results announcement.

Acting chief executive Henry Tang Ying-yen yesterday proposed sending Taiwan a donation of HK$50 million for typhoon relief work.

Hutchison Whampoa (0013) said its first-half net profits fell 32.9 percent - confounding even more doom-laden forecasts due to losses in its European mobile unit shrinking faster than expected.

Cheung Kong (Holdings) (0001) said first- half net profit increased 5 percent - beating market estimates - due to higher-than- expected revaluation gains and contribution from Hutchison Whampoa (0013).

With central banks talking about a possible pullback from "loose" monetary policies, Hong Kong's top monetary official has warned investors to be wary of any potential impact a policy change may cause.

China: More than half of the people who donated after the Sichuan earthquake have no idea where their money went, according to a survey, a situation analysts say has the potential to undermine governmental credibility. The Non-Governmental Organisations Research Centre of Tsinghua University said in a report that 50.6 per cent of 1,684 donors interviewed did not know where their donations went. Only 4.7 per cent said they knew the recipients of their donation. Deng Guosheng , a professor with the research centre, said most donors were only told that their money would eventually go to earthquake-stricken areas, but they did not know which city or project their donations would benefit. Donors were not the only group confused by the use of the charity donations, as research from the centre showed that most organisations that helped collect donations were also unsure where the money went. Over 80 per cent of 76.7 billion yuan (HK$87 billion) in donations was under the control of local governments, which would have the final say on where to invest that money, the research said. The research did not give details on the source of the donations. Wang Zhenyao , an official with the Ministry of Civil Affairs, the mainland's chief disaster relief co-ordinator, said this reflected the reality of the country's charity distribution system. "Most Chinese NGOs do not have enough credibility...or implement their projects," Mr Wang was quoted by The Beijing News newspaper as saying yesterday. Another reason for the confusion was the fact that some provincial governments included public donations into the total donation pool in order to meet the assigned quota of donating 1 per cent of their budgets to the earthquake-hit areas. The central government ordered 19 rich provinces and municipalities to meet this quota. Yang Tuan , a professor of social studies with the Chinese Academy of Social Sciences who has been following the distribution of earthquake donations since last year, said the fact that governments controlled the charity money would discourage donor enthusiasm in future disasters. "They want their money to go to affected schools, villages and people, but at the end of the day they realised they in fact sent the money directly to the government," Professor Yang said. The National Audit Office sent over 1,600 auditors to check the use of relief funds and so far no major cases of graft have been reported. Professor Yang has called on the central government to set up a public fund to absorb all public charity donations and let the fund finance rebuilding projects in Sichuan. The government has not yet responded. She said a fund would offer the transparency that donors want, but the government has been reluctant to take this extra step. "The government's attitude is like, `Thanks for your money and that's it'," Professor Yang said. "This attitude would severely undermine enthusiasm to donate and raises serious credibility concerns."

China's industrial head admitted yesterday that the launch of the pornography-filtering Green Dam software was, to some extent, a mistake. Li Yizhong , minister of industry and information technology, openly regretted the order, which required all personal computers sold on the mainland after July 1 to have the program either pre-installed or with a disk included. The order, which the ministry issued to all PC makers in June, had been made without thorough consideration and had been plagued by ambiguous language, leaving the public with the impression that the ministry was bullying citizens to install the program, Mr Li said. Forcing everyone to install Green Dam was not the government's intention, and it "absolutely" would not happen, he said, adding that the central government welcomed criticism on Green Dam-Youth Escort software. "Chen Deming [the minister of commerce] and I received some letters from business communities in the United States and western Europe. I think most of them came with good intentions. They pointed out the shortcomings of our work," Mr Li said. He added that the original purpose was for voluntary installation. When people bought a computer, they would be given a floppy disk or CD and could chose whether to install the program. But he said the administrative document did not make this clear, prompting some people to worry about the safety of individual privacy, censorship and violation of World Trade Organisation treaties. Mr Li also conveyed an equally clear, if not stronger, message: do not confuse the Green Dam error with general policy. Some people had used the issue as a political weapon to denounce the mainland's policing of cyberspace, he said, calling those words and actions neither honest nor responsible. The central government received many petitions from social groups, parents and others, urging it to do something to shield the younger generation from internet pornography, which they said was spreading globally. But although the government had bowed to pressure and stopped the installation of Green Dam on new computers, Mr Li said it would continue to finance and support the development and installation of porn-filtering programs. Schools and internet cafes would still be required to install Green Dam on all computers. Green Dam's developers were improving the software's performance and closing its security loopholes, Mr Li said. His remarks were considered sincere by some internet users on the mainland, but others were blase. Li Zhiyuan of Beijing, who opposed the filter, said the admission had come too late and that the fiasco had almost died out. "I went to Zhongguancun [Beijing's computer retail and research centre] the other day and tried to find an official copy of Green Dam as a souvenir. I couldn't find one," he said. "So keep the copy if you have one. It's already history."

Shanghai's first sex-education camp for children aged eight to 13 began this week, but only six boys enrolled and the girls' section was cancelled. The 2,800 yuan (HK$3,276) privately run three-day camp coincides with the start of school summer holidays and emulates a program popular in eastern Nanjing, the Shanghai Daily reported. "We are going to have a really private talk which cannot be shared with girls or strangers," teacher Gao Weiwei told the boys. Health and education experts have warned China has to shift its sex education strategy from focusing on teaching married couples birth control, saying unmarried young should be targeted.

China's largest airline in terms of fleet size, China Southern Airlines, opened a subsidiary on the Taiwan island Thursday. China Southern Airlines was among the first batch of enterprises from the Chinese mainland to obtain business licenses and set up branches in Taiwan. The airlines would provide transportation for passengers across the Taiwan Strait, said board Chairman Si Xianmin. The company had decided to allocate 10 million new Taiwan dollars (about 303,030 U.S. dollars) to help relieve disasters caused by Typhoon Morakot, the worst to hit Taiwan in nearly half a century. The Chinese mainland and Taiwan started direct air and sea transport and postal services on Dec. 15 last year, ending a 59-year ban on such links. Previously, air and sea services, including mail, had to be rerouted through a third location.

A 34-floor building, unoccupied since 1997, waits for its demolition blasting in Zhongshan city, south China's Guangdong province, Thursday August 13, 2009. The 104-meter high-rise is the tallest building ever blast-demolished in Asia.

Aug 14, 2009

Hong Kong: A campaign that started online has forced the school exams authority to rethink charging students "excessive" fees for appeals against HKCEE results. Four Secondary Five students from a Facebook group yesterday marched to the Hong Kong Examinations and Assessment Authority offices in Wan Chai to submit a petition for free appeals, or at least a reduced rate. The Facebook campaign has so far gained the support of 12,021 users. Based on authority rules, Hong Kong Certificate of Education Examination students have to pay HK$715 for appeals against results on language subjects and HK$580 for other subjects. A full refund is granted if the appeals are successful. The protest group's founder, Jackie Lee Yin-lam, 24, a current HKCEE student studying at night school, called for fairer treatment and claimed exam grades are unacceptably varied when compared with previous academic performance. He blamed the decline on "hasty examination markers." "I expected a full certificate but it turned out I failed in two subjects," Lee said, adding the protest is also fighting for students with financial difficulties. "Why can't the HKEAA be more lenient with us? Why should we pay for our own exam papers?" he said. He added that at least HK$300 has to be paid by students who demand a look at their own exam papers. Authority director (development and educational assessment) Thomas Cheung Kwok-yuen and general manager (school examinations) Margaret Hui Yuen-ching met the protest group. A spokeswoman later vouched for the authority's cautious marking process and quality assessors. "They have all undergone training on assessment criteria," she said. She said the authority as a self- financing institution has to bear all operating costs. But she said a reassessment of the fees will be carried out. A total of 5,044 HKCEE appeal applications were received last year. Figures for this year will be available next month.

Hutchison Telecommunications International (2332) said yesterday it will sell control of Israeli mobile operator Partner Communications to local entrepreneur Ilan Ben-Dov for US$1.38 billion (HK$10.76 billion).

Promoters practice their demonstration of tea-making yesterday ahead of the opening of Hong Kong's first annual tea fair today. Hong Kong's first tea fair opens today, with 260 exhibitors from 17 countries. Co-organised by the Trade Development Council and the Chinese Tea Culture International Exchange Association, the Hong Kong International Tea Fair runs until Saturday. Tea companies from Sri Lanka, India, Vietnam and Africa have arrived to sell their wares, many with an eye to business with the mainland, the world's biggest tea exporter. Tea was formerly part of the annual Food Expo, but it has now been given its own exhibition for the first time. The council's assistant director, Raymond Yip Chak-yan, said Hong Kong's proximity to the mainland and commitment to free trade and an open market would attract many people in the tea industry to come and do business. Mr Yip said the inaugural fair would promote a stronger tea culture in Hong Kong, citing the city's record HK$380 million tea and related imports last year, up 10 per cent from 2007. A Kenyan exhibitor said his main purpose was to sell tea to buyers from the mainland, because it was a bigger market than Hong Kong. As well as trade, the fair offers forums on topics such as tea history, investment and tea varieties. Admission is limited to trade visitors for the first two days. It will be open to the public from 10am to 10pm on Saturday, with an entrance fee of HK$25. The Food Expo and the International Conference and Exhibition of the Modernization of Chinese Medicine and Health Products also open at the Convention and Exhibition Centre today and will run until Monday. Many new food products, in particular mooncakes, will make their debut at the food fair. Some food exhibitors expect a 50 per cent growth in business from last year. The Food Expo will be open to the public from 10am to 10pm from today until Sunday, and from 10am to 6pm on Monday.

One of the newspaper stands that developer Luk Hoi Tong says might pose a hazard to emergency vehicles when the site is completed. The developer of the demolished Queen's Theatre says it will not allow shoeshiners to operate within the new premises as it is private property. It also warned against them being allowed outside its perimeter as they might block fire engines and ambulances in the event of an emergency.

The fate of Central Market will return to the agenda of government heritage advisers after submissions in a public consultation that it should be upgraded and protected. The grade-three historic building in Des Voeux Road Central, on the government's list of sites for sale, has no legal protection and is subject to commercial redevelopment. The Antiquities and Monuments Office said yesterday there were public submissions calling for an upgrading of its status, based on its social, historical and architectural merits, plus its rarity and authenticity. When the site was put on the land sale list in 2006, conditions were laid down to require the purchaser to display items of historical and architectural interest for public viewing. A spokesman for the Development Bureau said the government had no intention of removing it from the land sale list. The community has in recent years become more outspoken in campaigning for the preservation of the building. The Institute of Architects conducted a study in 2005, which said the four-storey structure would be the last piece of 1930s Bauhaus architecture in the city after Wan Chai Market was partially demolished for a high-rise. It also said it was the most advanced market in the city when opened in 1939. Katty Law Ngar-ning, convenor of the Central and Western Concern Group, said it was a magnificent building and should eventually be declared a statutory monument. "The current grading was made almost 20 years ago and public sentiments have changed drastically in recent years, reflected by strong public call for preservation of the Star Ferry Clock Tower and Queen's Pier. There is an urgent need to reassess the heritage significance of this important public building," she said. The chairman of the Institute of Architects' heritage and conservation committee, Eric Lee Chung-ming, said the market should be preserved. "It should be given temporary uses to prevent further deterioration," he said. Kam Nai-wai, Democratic Party district councillor in Central and Western District, said the council had always hoped the market would stay "not only because it is historic, but also it is an important low-rise space in the very dense Central". The Antiquities Advisory Board will start to review in the next few months all the proposed gradings of the 1,444 historic sites with the 360 public submissions gathered during the consultation. Some of the submissions came from building owners who requested their properties be downgraded or taken from the heritage list. Other sites where there have been calls for an upgrade are Tin Hau temples in Shek O and Lei Yue Mun, and shophouses in Shanghai Street which the Urban Renewal Authority is planning to revitalise. Objections were raised against the removal from the heritage list of a stone house in Diamond Hill that stands on the site of a future railway depot.

Derek Wong says it is unlikely that Dah Sing will have to make a substantial provision for the Lehman minibonds in the second half. Loan impairment charges and higher costs related to the Lehman Brothers minibonds slashed Dah Sing Banking Group interim net earnings by 40.61 per cent. The bank posted net first-half profit of HK$306.85 million, down from HK$516.7 million a year earlier. Loan impairment charges rose 116.15 per cent to HK$272.49 million, mainly due to higher commercial banking and equipment finance loan losses. Managing director Derek Wong Hong-hing said the bank also set aside money for potential resettlement of the minibonds but added that it was unsure how many customers would accept the offer. "It is unlikely that we will have to make a substantial provision [for the minibonds] in the second half [of this year] and next year," Mr Wong said. Sixteen banks sealed a deal with regulators last month to settle claims with investors over the Lehman minibond saga. Dah Sing estimated the cost of its minibond buy-back at HK$444 million. The bank posted a HK$17.68 million operating loss, but that was offset by a one-off gain of HK$243.98 million after buying back subordinated debt at a discount. Mr Wong said the bank also made a further write-down of HK$142 million on its exposure to structured investment vehicles, which had fallen to HK$5 million by June 30. Operating expenses rose 41.36 per cent to HK$963.88 million, partly reflecting provisions for the potential settlement of the minibonds. Mr Wong said asset quality was stabilising and he hoped this would continue in the second half. Ivan Li, an analyst at Kim Eng Securities, said he was disappointed by the bank's core business performance, with net interest margin narrowing to 1.98 per cent from 2.24 per cent a year earlier. Dah Sing and its parent company, Dah Sing Financial Holdings (SEHK: 0440), did not declare an interim dividend. Mr Wong said the bank would resume dividend payments when the economy recovered and business returned to normal. Earnings at Dah Sing Financial fell 20.38 per cent to HK$300.9 million due to the banking arm's weak performance. The group's insurance business returned to profit from a loss previously.

Chairman Peter Lee says there are signs the Hong Kong economy is stabilising, but uncertainties remain on the path to sustained recovery. Hysan Development (SEHK: 0014), the biggest landlord in Causeway Bay, said earnings at its core business dropped 4.1 per cent in the first half because of lower gains from financial investments, but its overall rental business remained resilient. Recurring underlying profit was HK$580 million for the six months to June, compared with HK$605 million a year earlier. The decline was due to lower gains from financial investments and other gains, which totalled HK$23 million, down from HK$117 million. Including one-off items and a HK$397 million fair-value gain on investment properties, net profit slumped 68.9 per cent to HK$1.07 billion from HK$3.44 billion a year earlier, when it booked a HK$3 billion revaluation gain. Revenue climbed 7.59 per cent to HK$851 million. Hysan declared an interim dividend of 14 HK cents per share, unchanged from last year. Owing to the deteriorating economy, spot rents for office spaces fell 16 per cent on average during the first half, said executive director Wendy Yung Wan-yee. However, rentals for new contracts signed in the first half were 37 per cent higher than contracts signed three years ago, which helped boost overall rental income. "I am confident that positive rental reversion could [continue to] be achieved in the second half, even though the degree will be narrowed," said Ms Yung. During the period, rental income from the office sector climbed 11.95 per cent to HK$384 million. The occupancy rate was 91.4 per cent on June 30, falling 6.1 percentage points from the end of last year because the majority of the contracts due this year expired in the first half. Insurance company Manulife Financial Corp decided to relocate part of its office space from Hysan's Lee Garden to Kowloon East. Although the 100,000 square feet of office space to be vacated would only be available in the second and third quarters of next year, Ms Yung said it would not put heavy pressure on the office leasing portfolio. Meanwhile, the retail segment posted moderate growth, with rental income increasing 4.55 per cent year on year to HK$322 million, while residential income totalled HK$145 million, up 3.57 per cent. "There are some recent signs of the Hong Kong real economy stabilising," said chairman Peter Lee Ting-chang. "There may, however, be uncertainties on the path to a sustained recovery." Analysts believe office rents in Causeway Bay will decline at a lower pace or even start stabilising in the second half, which will help relieve pressure on rental income. But the redevelopment of Hennessy Centre is not expected to be completed until the end of 2011, which means Hysan will lack a catalyst to stimulate earnings in the next two years. Hysan shares closed 2.35 per cent down at HK$20.80 after the results were announced.

China: China has formally arrested four employees of Anglo-Australian mining giant Rio Tinto on charges of bribery and stealing commercial secrets from the nation's steel industry, further fuelling diplomatic friction between Canberra and Beijing. Australian citizen Stern Hu, head of Rio's iron ore business in China, and three Chinese colleagues, had obtained commercial secrets about the steel industry through "improper means" violating criminal law, Xinhua reported, citing a statement from the Supreme People's Procuratorate. No formal charges have been laid yet, but the arrest warrants mean the authorities can continue detaining the four men while they make further investigations. Mainland lawyers said the latest accusations were less serious than earlier allegations of stealing state secrets but the men still faced up to seven years in jail if convicted. Mr Hu and his colleagues - Liu Caikui, Ge Minqiang and Wang Yong - were detained on July 5 by the Shanghai State Security Bureau for suspected spying and stealing state secrets. Their detention came amid protracted iron ore contract negotiations between Chinese steel mills and mining companies including Rio, raising suspicion in some quarters that the men were being used as bargaining chips to force prices down. Relations between Australia and the mainland have since hit a new low, undermining a renewed investment push by Chinese companies into Australia's resources sector. Attempts by Beijing to block a speech in Canberra by exiled Uygur leader Rebiya Kadeer raised tensions further. Rio yesterday questioned again the strength of the case against its employees, while the Australian government urged Beijing to let the four consult lawyers. Sam Walsh, Rio's chief executive for iron ore, said: "Rio Tinto will strongly support its employees in defending these allegations. From all the information available to us, we continue to believe that our employees have acted properly and ethically in their business dealings in China." Australia's foreign affairs department said the Chinese Ministry of Public Security informed it about the arrests and charges late on Tuesday. The four are suspected of "using improper means to obtain commercial secrets about China's steel enterprises" and commercial bribery. Changing the charge from stealing state secrets to stealing commercial secrets could reduce some of the international pressure on China. "Stealing state secrets comes with a punishment much too harsh for China to take a step back should it want to compromise with Australia," said Li Mingjiang, assistant professor at the S. Rajaratnam School of International Studies in Singapore. Zhao Yunheng, senior partner at Beijing-based Dacheng Law Offices, said the men could face between three years and seven years in prison on the latest charges.

A traditional wine vessel exhibited in front of a painting showing the drinking history of the Chinese people.

China's restrictions on the sale of books, films and music from the United States violate global commerce rules, the World Trade Organisation ruled, handing US President Barack Obama's administration its first trade victory over the mainland. WTO judges largely sided with a US complaint that accused China of making US companies sell copyright-protected products such as magazines, CDs and video games through state-approved or state-run businesses. The ruling, handed down in June but made public only yesterday, also went against mainland curbs on foreign producers of audiovisual goods that exempt domestic rivals. The ruling "is an important step towards ensuring market access for legitimate US products in the Chinese market", US Trade Representative Ron Kirk said. The issue is one of the biggest irritants in the Sino-US commercial relationship. Improvements in China's protection of patents for products such as pharmaceuticals, car parts and copyrights for movies and software may help American companies even more than changes in its currency policies, analysts say. "We recommend that the Dispute Settlement Body request China to bring the relevant measures into conformity with its obligations," the judges said in their 469-page report. The ruling stops short of a clear-cut US victory. Judges agreed with the Chinese argument that its criminal law was strong enough to deter piracy. The US failed to convince the panel that thresholds for criminal prosecution of people pirating copyrighted goods are so high they effectively allow sales of illegal items on a commercial scale. The case was one of two the US lodged against China at the WTO in April 2007 aimed at stopping what it said is rampant piracy of copyrighted audiovisual products. The other complaint argued that Chinese law is not harsh enough on counterfeiting and sets too high a value on pirated movie and music discs before prosecuting violators. WTO judges also issued a mixed ruling on that case, saying China must protect copyrighted content banned by state censors and Chinese regulators can't release confiscated products back into the market.

China Construction Bank (SEHK: 0939) Corp is buying a unit of financial conglomerate American International Group for US$70 million, its first acquisition outside the mainland in about three years. The deal, being conducted by China Construction Bank (Asia) Corp, a wholly owned subsidiary of the world's third-largest bank by market value, also involves repayment of loans and deposits totaling US$557 million to take over AIG Finance (Hong Kong). The transaction is expected to be completed in October, subject to approval from the regulatory authorities, the two parties said. AIG is offloading assets to repay the US$182 billion bailout loan it received from the United States government in September last year. It is also in the process of spinning off its Asian insurance subsidiary, American International Assurance. AIG Finance operates as a restricted license bank offering financial services including time deposits, mortgages, private car loans, premium financing, personal loans, credit cards and other credit facilities. As of the end of June, it had more than 500,000 customers, with total net loan receivables of HK$4.8 billion and a retail deposits balance of HK$1 billion, according to a statement from AIG. The combined loans of AIG Finance and CCB (Asia) are expected to total about HK$50 billion. Charles Ma, president and chief executive at CCB (Asia), said the acquisition would help its growth, bring diversification to its consumer loan portfolio and serve as a platform for building its credit card business. China Construction Bank's last acquisition was in August 2006 when it bought Bank of America Corp's Hong Kong and Macau unit for US$1.25 billion. Over the years, CCB (Asia) had increased its branches from 17 to the current 40, including premier select centres. As of June, its total assets had grown 65 per cent from December 2006 as advances to customers jumped 67 per cent and deposits from customers surged 57 per cent. China Construction Bank shares fell 4.17 per cent to 5.75 yuan (HK$6.52) in Shanghai yesterday, while they were down 1.49 per cent at HK$5.95 in Hong Kong.

China's top economic planner, the National Development and Reform Commission, unveiled Wednesday a draft regulation on monopoly prices. The regulation applies to cases of monopoly prices both inside and outside the country, when monopoly prices outside the country impact the domestic market, according to the regulation posted on the commission's Web site. Other than deals reached among more than two parties for the purpose of monopolizing prices, power abuse of government agencies to eliminate or limit competition is also regarded as violation of the regulation. Those who violate the regulation would be punished according to stipulations in the country's anti-monopoly law, according to the commission. Individual retailers or producers may face confiscation of illegal earnings and a fine of up to 10 percent of last year's sales, while industry associations are subject to a fine of no more than 500,000 yuan (73,529.4 U.S. dollars) or could be dismissed as an association. Government agencies that violate the regulation would be ordered by their superiors to correct their actions, and officials held responsible would be disciplined according to relevant laws. The commission said the regulation was aimed to prevent monopoly prices and to endorse fair competition so as to safeguard the interests of consumers and the public. The commission is soliciting public opinion for the regulation until Sept. 6.

Aug 13, 2009

Hong Kong: The government stressed on Tuesday its controversial drug-testing scheme was designed to help young people – not to prosecute pupils who abused drugs. The government defended the scheme after Privacy Commissioner Roderick Woo Bun expressed concerns over the legality of the plan in an open letter to Secretary of Education Michael Suen Ming-yeung on Monday. Permanent Secretary for Education Raymond Wong Hung-chiu said he had been seeking legal advice from the Department of Justice about the trial scheme. He made the comments after meeting Tai Po school representatives on Tuesday. “We will explain to students how their personal data would be used later,” he told reporters. The privacy commissioner also cited section 54AA of the Dangerous Drugs Ordinance. This requires both a minor and his or her parent’s consent to collect a urine specimen by law enforcement officers. This means approval of students’ parents or guardians is not enough to allow testing to go ahead. Students also have to agree. “Students may still refuse to provide a specimen for drug testing even if they have joined the scheme and been selected for drug testing under the scheme,” a government spokesman explained. “Section 54 AA of the Dangerous Drugs Ordinance is applicable to law enforcement procedures,” he added. The privacy commissioner said the results of drug tests were sensitive personal information. Mr Woo urged the government to handle the data in accordance with the Personal Data Ordinance. “I am not opposing the government. As a privacy commissioner, I have to make sure all plans by the government are lawful,” he told local media on Tuesday. Meanwhile, vicar general of the Catholic Diocese of Hong Kong, Father Michael Yeung Ming-cheung, has again expressed doubts about the scheme. He said told local radio on Tuesday the scheme was launched too quickly and was putting pressure on teachers. “Drug-testing will only be successful after teachers have adequate time to prepare and when students are well informed about the adverse effects of drugs,” Father Yeung said. He said the scheme might increase tension between parents and their children when parents were required to sign consent forms for the scheme. Fred Li Wah-ming, a lawmaker and a member of the Action Committee Against Narcotics told the government would not be able to foresee potential opposition to the scheme from different groups. “The proposed scheme was planned in a short time but the government fails to seek advice from pupils, social workers, the privacy commissioner and the Catholic Church,” Mr Li said. “It indicates a lack of communication between government and other groups,” he added.

Listing candidate Sundart International said it is working on HK$1 billion worth of interior decoration projects and the revenue will be booked in this financial year. New World Development (0017) chairman Cheng Yu-tong spent a nine- digit sum to subscribe to Sundart's shares and the institutional tranche of the HK$602 million listing deal is already oversubscribed, a source close to the deal said. Sundart was the subcontractor for the interior fitting work of NWD's residential project Parc Palais. "Contracts in China are worth about HK$100 million, while those in Hong Kong and Macau are worth over HK$600 million and over HK$200 million, respectively," said Sundart chief executive Ng Tak-kwan. The company plans to offer 144 million shares at HK$3.33 to HK$4.18 each, aiming to reap as much as HK$602 million in Hong Kong. Minimum spending for a board lot of 1,000 shares would be HK$4,222.18. The retail book opens from today till Friday. Sundart plans to invest 55 percent of the proceeds to fund future projects, 17 percent to set up a procurement and prefabrication facility and 15 percent on potential acquisitions. The contractor plans to tap Middle Eastern markets in Qatar and Abu Dhabi, aiming to boost revenue from the region to account for 25 percent of total income in three years, Ng said. Revenue from business in Hong Kong accounted for 59.2 percent of total income last year, while that of Macau and the mainland were 37.4 percent and 3.4 percent, respectively. Sundart's net income soared 78.5 percent year-on-year to HK$143.7 million for the year ended March 31. Iron ore miner China Vanadium Titano-Magnetite Mining also plans to list in Hong Kong in October to raise up to HK$1.6 billion, according to market sources. The firm is the largest non-state- owned operator of iron ore in Sichuan by output volume.

The Association for the Rights of Industrial Accident Victims mounts a protest over compensation for McDonald's delivery workers outside the McDonald's outlet in Tsim Sha Tsui. Fifteen McDonald's delivery workers injured in traffic accidents at work have sought help from workers' rights groups to fight for compensation from the fast-food chain. The Confederation of Trade Unions and the Association for the Rights of Industrial Accident Victims said the 15 cases had been reported to them since last month. One involved 32-year-old delivery worker Kwok Chi-lung, who died after his motorcycle crashed into a taxi in Austin Road, Tsim Sha Tsui, in February. Association chief executive Chan Kam-hong said Kwok's family had not received a penny from McDonald's or Rixon Logistics, the firm to which McDonald's outsourced deliveries. "The wife is devastated and is now taking care of her baby who is only a few months old." He said he had gone to Tseung Kwan O Hospital on Sunday to see another delivery worker, aged 25, who suffered severe abdominal injuries when he crashed his motorcycle in Tseung Kwan O on Saturday. "The young man was very emotional when I visited him," he said. "He still cannot talk much. We will help all these workers to fight for the compensation they deserve." Juo So-in, a spokeswoman for the Catering and Hotel Industries Employees General Union, a CTU affiliate, said another delivery worker injured in a traffic accident three months ago could not walk properly and had received no compensation. "The company just told the workers that since they were all self-employed, they would not receive any compensation," she said. Last week the union said the 500 people who deliver McDonald's takeaway meals had been forced to sign contracts saying they were self-employed. Yet they worked fixed shifts, were paid a fixed hourly rate of HK$28 and did not provide their own motorcycles. The contracts made them liable for their own Mandatory Provident Fund contributions and gave them no paid leave, medical insurance, sick pay or compensation for work injuries. The self-employment relationship between the workers and Rixon Logistics was fake, the union said. McDonald's said it was "deeply concerned" about Saturday's accident. "We are following up with the outsourced logistics company on compensation for the injured delivering rider and will ensure he receives reasonable protection." Rixon Logistics said it had held discussions with its insurer over compensation for the worker injured on Saturday and he would receive the compensation he deserved.

Hong Kong received about 827,000 fewer visitors between January and July than in the same period last year, and July alone accounted for more than 40 per cent of the drop, preliminary data shows. "There were steep declines in the number of long-haul visitors, especially from January to April, but short-haul and mainland arrivals only started to suffer from May," said James Tien Pei-chun, chairman of the Tourism Board. "My worry is that the numbers are still falling ... and it seems August will also suffer." Tourism has been hit hard this year, both by the financial meltdown that decimated household wealth and worsened unemployment and by the swine flu pandemic, which has put some people off travelling. In the first seven months, visitor numbers were down 4.9 per cent year on year; the drop in July was 12.5 per cent. The board is looking for visitor numbers to pick up between October and December - traditionally the peak season for arrivals. It is promoting what it calls the Hong Kong Wine and Food Year, and hopes autumn food and wine festivals will draw more visitors. Last month, it began promoting the food and wine year to mobile phone users. More than 2,000 iPhone users have downloaded the application - which offers a Chinese cuisine and wine pairing guide - since July 3. The board launched another mobile phone promotion, Hong Kong 720, on May 31, offering iPhone users a virtual tour of attractions, information about them and locator maps, and some Cantonese phrases. It says the application has been downloaded more than 50,000 times. Mr Tien said that the cost was relatively low at "several tens of thousands of dollars" compared with placing print advertisements and distributing brochures. The applications will also be developed for other mobile platforms.

The gloomy economy seems to have made little difference to Hongkongers' daily spending habits. Almost 80 per cent still spend the same amount on daily necessities as they did before the economic slowdown hit, and more than half continue to buy luxury items, according to a survey. For food staples, 86 per cent of the 1,006 respondents said they had not cut their budget, and almost 70 per cent said they still visited coffee shops or tea houses just as often as before. Brendan Shair, managing director of Synovate Hong Kong, a market research company that conducted the study, said most Hongkongers stuck to their usual spending and saving habits, despite the difficult economic times. "On a regular day when you go to the markets and some of the shops, they are still buzzing with people," Mr Shair said. The survey included 26 markets in Europe, Asia, and South and North America. In Hong Kong, about 60 per cent of respondents - the highest figure after Denmark's 75 per cent - said they were saving as much and as regularly as they had done before the financial slowdown. That compared with 22 per cent who said they were putting less money aside. At the same time, figures on people's earnings showed that Hong Kong was being less affected by the economic situation than its neighbours were. Nearly seven out of 10 Hongkongers said they were earning the same now as they were six months ago, in contrast to 24 per cent who said they had less income. By comparison, 30 per cent of South Koreans, 44 per cent of Japanese, and 43 per cent of Taiwanese said they had earned less over the past half-year. Hongkongers' better-than-expected economic position was also reflected in another study unveiled yesterday by ESDLife, an online wedding information provider. It found that couples were showing few intentions of cutting down on their wedding expenses in the face of continuing uncertain times. According to the study of 1,781 respondents who are planning to marry in the coming year, the average budget for a wedding was HK$226,352, which is 3.3 per cent less than in a similar survey last year. The couples tended to spend less on the rings, other jewellery, gowns and suits but more for wedding photographs or videos, the survey said. However, their concerns about the economy came to light when asked how many children they would like to have. Half planned to have two or more, which represents a drop of 11 percentage points from last year. And 35 per cent preferred only one child, up nine points on last year.

After doling out four rounds of sweeteners worth HK$87.6 billion since February last year, the government has decided it is time to stop the giveaways and get on with developing industries it hopes will help the battered economy grow. In his policy address in October, Donald Tsang Yam-kuen is unlikely to offer any more handouts, according to several people familiar with the government's position. Instead, the chief executive will unveil measures to support the six service industries selected as "pillars" to diversify the economy in future. One of the people said: "We don't see any need for providing extra giveaways in the next policy address. The relief measures announced in October's policy address and the budget in February have helped revitalise the retail market and improve public sentiment." However, the government will come under pressure to provide more help for the disadvantaged, with welfare groups saying it has wasted money on across-the-board handouts that helped people who did not need it. A government official said Mr Tsang would use the policy address to announce two urban sites for private university campuses as part of efforts to develop education, one of the six economic pillars identified by a government-appointed task force on responses to the global downturn. Mr Tsang is also expected to widen tax deductions for company spending on research and development in an effort to spur innovation and technology, another of the so-called pillars. (The others are medical services, environmental industries, cultural and creative industries and food safety and product testing.) The chief executive starts consultations on the policy address on Monday. Government Economist Helen Chan said in June that Hong Kong's economy could see growth in the second quarter after a year of contraction. Despite its view that the handouts have improved sentiment, the government acknowledges they may not have made it any more popular. The latest relief was announced in May, when Financial Secretary John Tsang Chun-wah rolled out measures worth HK$16.8 billion which he characterised as economic stimulus. The package largely expanded upon existing tax concessions and help for businesses. The handouts were the fourth in 15 months. At the time, the finance chief did not rule out further relief if the economy worsened. Ho Hei-wah, director of the Society for Community Organisation, which helps the city's needy assert their rights, said the government should devote more resources to helping the working poor instead of spending money indiscriminately. Chua Hoi-wai, business director of the Hong Kong Council of Social Service, agreed, saying most of the handouts had been designed to please the public. He cannot see the rationale for subsidising everyone's electricity bills to the tune of HK$300 a month. Li Kui-wai, associate professor of economics at City University, said the chief executive should make a long-term investment for the community, such as by beautifying the urban environment and creating jobs for people on low incomes.

Agnes Chan runs through the dan tian method with Frederick Tsang, who suffers from autism. East beats West for promoting relaxation - Study finds Chinese breathing system best - Research by Chinese University suggests that a way of breathing called dan tian can help practitioners improve their mood and generally perform better. In the study conducted by the Integrative Neuropsychological Rehabilitation Centre at Chinese University, 50 adults were randomly divided into two groups. One practised dan tian breathing and the other practised Western relaxation techniques. The results showed that after one month, the group that practised dan tian had increased their left-right brain alpha asymmetry, which indicated they were more relaxed and happier. They also had enhanced theta coherence, which meant they could stay focused longer. "We often can't relax when we concentrate on doing something," Agnes Chan Sui-yin, the professor who led the research, said. "We can't concentrate when we are relaxed. So if we can do both at the same time, it's the best condition to work." In contrast to Western approaches to treating anxiety and depression, which can be time-consuming and expensive, the dan tian way is effective, inexpensive and easy to learn. The results were consistent with observations of clinical cases in which, after a few weeks of intervention, most adults and children had a more stable mood and had become more attentive, she said. Michelle Tsang Suen-lam, a mother of an autistic child and another with cerebral palsy, was one of the centre's patients. She found she was sleeping better after she had started practising dan tian. "I was always nervous because of my children's health conditions. I had sought Western and Chinese medicine and aromatherapy but nothing gave me peace as well as this breathing method," she said. Her elder son, Frederick Tsang Sze-ming, nine, was diagnosed with autism when he was two. He had problems focusing and falling asleep at night. She said she tried music, linguistic and muscle therapy for him, but none had worked as well as dan tian, which he has been using for nine months. There are two types of dan tian methods; passive and active. The passive required less training, and was more suitable for beginners, Professor Chan said. To do passive dan tian, you put your hands on your dan tian, an area roughly five centimetres below your navel, while standing or sitting. Gently close your eyes. Visualise your navel when you breathe in and visualise your nose when you exhale. To do active dan tian, put your hands on the same place, and pull in your stomach when breathing in, while keeping mouth and eyes closed. When exhaling, open your eyes slowly. When inhaling, relax the body and transfer the air that just entered to your dan tian. Professor Chan said many things in Chinese medicine were scientifically inexplicable, but her centre was committed to its research.

Macau's gambling-reliant economy will come under further strain from the financial crisis, Chinese Premier Wen Jiabao said on Tuesday during a meeting in Beijing to formally appoint Macau’s next leader. “The financial crisis is continuing to deepen and spread. The difficulties you face are still great,” Mr Wen told Macau’s incoming chief executive, Fernando Chui, who will take up his five-year term on December 20. Citing a Chinese proverb, Mr Wen said it was important for Mr Chui to start well so that future difficulties could be overcome, with the world’s largest gaming hub hard hit by the downturn and Beijing-imposed visa curbs on Chinese visitors. “This way, during your term you can overcome all sorts of difficulties,” Mr Wen said, while calling on Chui to unite all sectors in Macau to achieve new results. Mr Chui, who has pledged to lessen Macau’s overwhelming reliance on gambling sector revenues through “appropriate diversification” of the city’s economy and to clean up Macau’s corruption-tainted image, said he would do his best with the worst not yet over. “Macau’s economy has been relatively stable, but it has also been impacted to a certain extent. We expect that in the coming period we haven’t yet seen the bottom, so we have to make sure that our work to fight the financial crisis is well done.” Mr Chui’s comments on Macau’s economic and gaming prospects contrast with the recent bullishness of gaming analysts who expect Macau to recover more swiftly than Las Vegas given its proximity to China and its vast pool of gambling-mad punters. Macau’s gross gaming revenues, which exceeded those of Las Vegas in late 2006, are expected to rise 11 per cent year-on-year in the fourth quarter, according to BNP Paribas. The former Portuguese colony is unlikely, however, to see a return to the explosive growth rates seen since 2002 when it liberalised its gaming sector and opened up to gaming goliaths like the Las Vegas Sands and Wynn Resorts. Three new casinos are expected to open in the next two years while Macau will also face regional competition from upcoming mega casinos in Singapore. The low-key Mr Chui, a former culture official from a wealthy Macau family was elected unopposed by a pro-Beijing 300-person electoral college last month. This will be the first leadership change for Macau since it reverted to Chinese rule in 1999, with incumbent chief executive Edmund Ho having served since then.

An HSBC Holdings (SEHK: 0005) listing in Shanghai appears to be a near-certainty, said a source briefed by the China Securities Regulatory Commission. But there are likely to be delays as Beijing works through a host of issues, and there is no guarantee that the bank will become the first foreign entity to list on the mainland. There are laws to change, biases against foreign banks and many other companies, including a United States and European exchange joint venture, and red-chip companies, which also stand anxiously in the queue to list. The source said the regulator has already given tacit approval to HSBC and NYSE Euronext - a joint venture between the New York Stock Exchange, the London International Financial Futures & Options Exchange and markets in Paris, Brussels and Amsterdam. As yet there is no timetable for either. The banking source said NYSE Euronext probably would pre-empt HSBC and be the first to land on the Shanghai bourse because the CSRC believes the exchange operator could generate stable income. But first, there are legal issues. According to existing mainland law, companies with 25 per cent or more foreign ownership are barred from listing on the mainland stock market. Beijing has to revise corporate and securities laws, as well as related regulations such as the Shanghai exchange's listing rules, to pave the way for A-share listings by foreign firms. But even if that is accomplished, there is the issue of priority. The CSRC first would like to embrace the return of Hong Kong-traded red chips China Mobile (SEHK: 0941, announcements, news) , CNOOC (SEHK: 0883) or Lenovo Group (SEHK: 0992, announcements, news) before purely foreign-owned companies list, the source said. Red chips are mainland companies incorporated overseas. Thus their status on the mainland is the same as foreign firms. "HSBC should have no problem getting listed on the A-share market since the banking and securities regulators are really showing a positive attitude towards its plan," the source said. "For the time being, it must be patient and wait since the CSRC is focusing on red chips." HSBC is well aware of the intricacies of the process. "We can't predetermine the issue," said HSBC Asia-Pacific chief executive Sandy Flockhart. "It's for authorities to decide." However, HSBC does have some history going for it. "Shanghai is home to HSBC," said Richard Yorke, chief executive of HSBC China. "We now look forward to listing in the Shanghai Stock Exchange when regulations permit, and contributing to Shanghai as an international financial centre." Even with a listing, expansion on the mainland will not be rapid. The China Banking Regulatory Commission is likely to take a go-slow approach to approving foreign bank expansion. It wants to protect domestic banks, while the global credit crisis has somewhat tainted the image of their overseas peers. The CBRC was under fire last year, when Zuo Dapei, a researcher at the Chinese Academy of Social Sciences, accused regulators of sacrificing domestic banks to cosy up to their foreign counterparts. Mr Zuo is an influential adviser to the central government on financial policies. His remarks were echoed by a host of domestic economists and bankers, who called on the government to carefully assess the negative impact of the entry of foreign banks. A CBRC official said the regulator was concerned about the criticism.

MTR commuters have been assured that fares will remain unchanged even if the HK$15.4 billion cost to build the West Island Line surges. "Fares are independent of the final capital cost of the project," chief executive Chow Chung-kwong said yesterday after a ground-breaking ceremony for the line, which will be completed in 2014. The project is a three-kilometer extension of the Island Line from Sheung Wan to Kennedy Town. There will be three new intermediate stations at Hong Kong University, Sai Ying Pun and Kennedy Town. According to Chief Secretary for Administration Henry Tang Ying-yen, it will take only eight minutes to get from Kennedy Town to Sheung Wan and 14 minutes to Tsim Sha Tsui. Chow described the new line as a "community railway" as new pedestrian walkways, escalators and lifts will make traveling within Kennedy Town more convenient. The railway will also make traveling to new public facilities such as the Kennedy Town swimming pool easier. The project will generate more than 3,000 jobs and about HK$62 billion in economic benefits. But the cost and the siting of the ventilation shafts have fueled debate. Since the line was first approved in 2006, the estimated cost has risen by 73 percent from the original HK$8.9 billion. Taxpayers will foot HK$12.7 billion, or 82 percent, of the cost. "There is a clawback mechanism to ensure any government contribution left over will be fully returned," Chow said. A group of six people protested outside the Kennedy Town station site over the siting of the proposed ventilation shafts at the Hong Kong University station. The MTRC is planning two shafts in the pedestrian area on Hill Road, Kennedy Town, causing concern they will only trap and circulate bad air from a waste-collection center and from cars running on either side. Chow said the air from the shafts will be "as good as, if not better" than the air in the area. Ma Lo Yee-mei, who has lived in the area for 10 years, said the shafts will only recirculate fumes from car exhausts and spew out bad air from the center.

The Hong Kong Monetary Authority (HKMA) Tuesday announced the launch of the Central Money markets Unit (CMU) Fund Order Routing and Settlement Service, which has become operational. The CMU Fund Order Routing and Settlement Service is a new service provided by the CMU of the HKMA. It is designed to make fund order routing and settlement safer and more efficient by streamlining the processing of investment fund transactions among market participants. The new service provides a standardized platform for processing subscription and redemption orders and settlement and custody of investment funds among CMU members including investment houses, distributors, or custodians initiating the orders, and transfer agents receiving them. Eddie Yue, deputy chief executive of the HKMA, said that investment funds have become an increasingly important international financial intermediation channel in addition to banking, equity and debt securities. However, he said, there is no standardized processing platform for investment funds in Hong Kong at present. The launch of the CMU Fund Order Routing and Settlement Service will address the fund industry's need for an automated and standardized platform to make the process more efficient and reduce operational risks and back-office costs. Leveraging on the existing infrastructure, the new Service will further expand the service coverage of the CMU and contribute to the safety and efficiency of Hong Kong's multi-dimensional financial infrastructure, thereby reinforcing Hong Kong's role as the regional settlement hub and an international financial center, he said.

China: Australia’s Fortescue Metals Group and China Investment Corp (CIC), mainland’s US$200 billion sovereign wealth fund, are in advanced talks on a US$1 billion-plus convertible bond deal to help the iron ore miner fund expansion, two sources said on Tuesday. The talks follow news on Monday that Yanzhou Coal (SEHK: 1171) agreed to buy Australian coal miner Felix Resources in a deal worth up to US$3.3 billion. Mainland is increasingly looking to less politically sensitive joint ventures and financing deals, rather than full takeovers, to invest in global natural resources to support domestic economic growth. “Investment is investment,” said a source with knowledge of CIC’s overseas strategy. “Australia is still very important to China in terms of the bilateral trade relationship.” “Plus, a convertible bond is safe as an investment tool in this case,” the source added. Spokesmen for CIC and Fortescue both declined to comment. The potential financing deal comes at a sensitive time for Australia-China relations, following mainland’s detention a month ago of four Rio Tinto employees in Shanghai on suspicion of stealing state secrets. The men, including Australian Stern Hu, remain in detention and have yet to be charged. Earlier in the year, Rio walked away from a US$19.5 billion deal with state-owned firm Chinalco in favour of a tie up with its rival BHP Billiton. Still, analysts and bankers expect mainland companies to further pursue Australian resource firms. So far this year, mainland firms have invested about US$2.2 billion in Australian energy and resources companies. CIC’s top officials paid a low-profile, secret visit to Australia in July and had closed door meetings with Fortescue, one of the sources said. In recent months, mainland’s sovereign wealth fund has shifted its strategy toward investments in natural resources. In July, CIC bought a 17.2 per cent equity stake in Canada’s Teck Resources. That deal did not require government approval under Canada’s foreign investment rules, which only review transactions when a foreign company takes control of a domestic firm. Fortescue, Australia’s third-largest iron ore miner, is also talking to different parties about funding options, an investment banker with direct knowledge of Fortescue’s strategy said. Both sources declined to be named because they were unauthorised to speak publicly about the matter. Earlier this year, mainland’s Valin Iron & Steel Co was cleared by foreign investment regulators in Australia to take up a 17.55 per cent direct interest in Fortescue for around US$770 million. CIC was created in 2007 to manage part of mainland’s foreign exchange reserves for higher returns. The US$200 billion fund became wary of overseas expansion after losing money from its investments in Morgan Stanley and Blackstone, but is now pursuing new overseas investments as the global financial crisis eases.

Chinese Premier Wen Jiabao (R) awards the instrument of appointment as the new chief executive of the Macao Special Administrative Region (SAR) to Chui Sai On, in Beijing, capital of China, on Aug. 11, 2009.

Containers waiting for shipment at the Waigaoqiao Container Port in Shanghai. Figures released on Tuesday showed exports grew on a month-to-month basis but it still was a steep drop compared to July last year. Mainland’s export-dependent economy remained hampered by a “grave” global situation in July, an official warned on Tuesday, as new data showed continued reliance on government spending to boost growth. Shipments abroad saw a steep drop in July from a year earlier – although they grew month-on-month – but investment on fixed assets in the cities rose massively, the government said. “The grave international environment affected our exports,” said Li Xiaochao, a spokesman for the National Bureau of Statistics. “The growth of some sectors’ industrial output remained rather slow,” he told a briefing in Beijing. Mainland’s economy, the world’s third-largest, has taken a heavy hit from the global crisis, growing just 7.1 per cent in the first half. That compares with double-digit annual expansion between 2003 and 2007 as well as for the first two quarters of last year. The government has set a target of 8.0 per cent growth for the year, a level it says is needed to create enough jobs and avoid social unrest. Customs authorities said on Tuesday that July exports stood at US$105.4 billion, a decline of 23 per cent from a year earlier. Yet the figure pointed to some recovery as it marked an increase of 10.4 per cent from June, the customs bureau said in a statement. “We believe that exports will start to recover in the fourth quarter, while the real estate sector remains strong,” said Li Huiyong, chief economist with Shenyin and Wanguo Securities in Shanghai. The impact of mainland’s 4 trillion yuan stimulus package, announced in November, was reflected in investments in urban fixed assets – a measure of government spending on plants and infrastructure. “China’s July data release points to continued economic recovery in the second half, led by strong government-backed investment,” said Jing Ulrich, an economist with JP Morgan in Hong Kong. “The softness in external demand has resulted in a greater reliance on investments as a driver of China’s economic growth,” she said. However, the trade surplus stood at US$6 billion in July, an increase from US$8.2 billion in June, according to earlier data. The widening gap highlights a lack of domestic demand as imports fall quicker than exports. Overall, analysts were confident that mainland would reach its goal of eight per cent growth this year. “We are optimistic about the economy in the second half because consumption growth will remain stable while investment growth will accelerate,” said Hao Daming, an economist with Galaxy Securities, who predicted 8.3 per cent growth.

A major theme park in Guangzhou has quietly closed after nearly 15 years in business, amid reports that more than 70 per cent of mainland theme parks lose money. Shijie Daguan - Grand World Scenic Park- opened in October 1995 to great fanfare. Its kitsch collection of replica historic buildings and world architecture was a hit with residents eager to experience more of the world. The park attracted an estimated 100,000 visitors a month despite tickets costing 100 yuan (HK$113). But in recent years the park, owned by Shijie Daguan Holding Company, had been embroiled in a series of disputes and been hit by declining visitor numbers. It was taken to auction twice in 2005 after accumulating debts of 200 million yuan, but failed to attract a buyer. Early this year a group of 40 people went to the park armed with guns and knives in what police said was a dispute over money. They smashed up attractions until police arrived. One person was shot and at least a dozen were arrested. A notice at the park's main entrance yesterday said it was undergoing renovation and business was suspended. Repeated calls to the park's office went unanswered. There are 2,500 theme parks on the mainland, but 70 per cent of them are losing money and only 10 per cent are making a profit, the Guangzhou Daily reported yesterday, citing unnamed research. Grand World Scenic Park is the seventh theme park in Guangzhou to close in recent years, though other new parks have also been opened. Theme parks that opened in the mid-1990s have been the worst hit, as they have struggled to keep up with the changing tastes of an increasingly well-travelled population. Zeng Yi , manager of Nanhu International Travel Service, said in the past, when people had less money, they went to theme parks for fun. "But now they travel everywhere and don't need to see replicas - they just go and see the real things." Zhang Hui , dean of the tourism management school at Beijing International Studies University, said mainland theme parks were too slow to add new attractions and expand. "China has not worked out a sustainable business model for theme parks," he said. "Nowadays, they must be large-scale, hi-tech, interactive, and a blend of culture and entertainment."

China plans to invest at least 700 billion (US$100 billion) yuan a year over the next three years to improve the country's railway network, a report in the mainland media said on Tuesday. Mainland plans to invest at least 2 trillion yuan (HK$2.27 trillion) in railway construction over the next three years, Xinhua news agency reported on Tuesday, quoting the vice-minister of railways. Wang Zhiguo said the country would invest at least 700 billion yuan a year over the next three years, with 247 billion invested so far this year. He said about 20,000km of new railways would be approved for construction by the end of next year, requiring investment of at least two trillion yuan, Xinhua reported. Late last year, the ministry said the investment would span construction over a period of two years. It was not immediately clear why the timeframe had changed. By the end of this year, mainland would have a total of 86,000km of railway lines, second only to the United States, Mr Wang said. Russia has 85,500km of track, according to Russian Railways, while the United States rail network extends more than 200,000km. The country is making a massive investment in railway infrastructure in a bid to spur growth in the face of the global economic crisis. Longer term, mainland aims to have 120,000km of track laid down by 2020, deputy railway minister Lu Dongfu said in November. Mainland made a similar move at the end of the 1990s amid the Asian financial crisis by investing heavily in the road network across the country. The huge cash injection in the rail system is expected to boost employment and demand for raw materials, and promote real estate as land and towns near the new railways are also developed. The railway network in the country is already one of the most extensive in the world, but it has come under pressure as the nation’s economy has boomed, giving many of the country’s 1.3 billion people more opportunity to travel.

Net profit at China Eastern Airlines (0670), rocketed 900 percent in the first half from the same period last year, with the nation's third biggest carrier mainly benefiting from mark-to-market gains on hedging its jet fuel requirement.

Beijing will announce a plan to choose the country's first female astronaut at the end of the year. "Preparations for the selection of female astronauts are underway but we do not have the detailed schedule yet," said Chen Shanguang, director of the Scientific Research Training Center for Chinese Astronauts, which is responsible for the selection. "We will publicize the selection plan at the end of this year," Chen said, the Beijing News reported yesterday. Yang Liwei, the nation's first spaceman and now the vice chief of the training center, said the standards for female astronauts have already been determined. These are based on scientific data from experiments conducted on volunteers, Yang added.

China's consumer price index (CPI), a main gauge of inflation, dipped 1.8 percent in July from a year earlier, the National Bureau of Statistics said Tuesday.

Aug 12, 2009

Hong Kong: Air cargo throughput via Hong Kong fell 8.4 per cent in July - the smallest monthly decline since September last year, data from Hong Kong Air Cargo Terminals (Hactl) showed on Monday.

Chief Secretary Henry Tang Ying-yen watches the lion dancing as he officiates at the MTR West Island Line ground-breaking ceremony on Monday. Chief Secretary Henry Tang Ying-yen said on Monday the controversial new West Island Line railway project would improve public transport in Hong Kong and create thousands of new jobs. Speaking at a construction commencement ceremony in Kennedy Town, Mr Tang said the project would create 6,000 job opportunities. “It is forecasted to bring HK$62 billion in economic benefits to the community over 50 years of operation,” Mr Tang told reporters. Most areas of Hong Kong are serviced by the MTR Corporation (SEHK: 0066) rail links – first launched in 1979. But Western District, which includes the busy residential area of Kennedy Town, has never been connected. The West Island Line project aims to redress this. However, it is unpopular with many locals. On Monday morning, television footage showed a group of residents protesting against the construction of the railway. They told reporters the new rail line would cause noise and air pollution near their homes. They said this was because the ventilation shafts of the West Hong Kong Island Line were going to be built near residential areas. MTR Corporation chief executive officer Chow Chung-kong told a press conference after the ceremony the ventilation shafts were an integral part of an underground railway system. “The air exhausted [from ventilation shafts] will not cause any adverse impact on the air quality of the surrounding areas. “The corporation will try to serve the needs of residents by designing smaller ventilation shafts,” Mr Chow said. He also stressed that fares for the West Island Line would not be raised. “The fare was set according to an adjustment mechanism and would not be altered despite the rise construction costs,” Mr Chow said. The three-kilometre West Island Line is an extension of the existing MTR Island Line from Sheung Wan to Kennedy Town with two intermediate stations at Sai Ying Pun and the University of Hong Kong. The project also includes community facilities, such as high-speed lifts at Pok Fu Lam Road, Bonham Road, David Trench Rehabilitation Centre and Kennedy Town swimming pool. The project drew public criticism in May as the MTR Corporation adjusted the estimated cost of the project to HK$15.4 billion – up 73 per cent from its original HK$8.9 billion budget in 2006. The government then had to grant HK$12.7 billion in capital to bridge the funding gap of the project.

Chinese Premier Wen Jiabao shows a State Council order appointing Chui Sai On as the new chief executive of the Macao Special Administrative Region, Aug. 10, 2009.

Fernando Chui Sai-on speaks to electors after winning chief executive election at Macau East Asian Games Dome on July 26. Beijing on Monday formally appointed Fernando Chui as the new chief executive of Macau following his unopposed election last month by the gambling hub’s mainly pro-Beijing electoral committee, state media said. The State Council, or cabinet, made the appointment at a meeting presided over by Premier Wen Jiabao, Xinhua news agency reported. A former culture minister of Macau, Mr Chui pledged to diversify the region’s economy and rid it of corruption after being named the new chief executive on July 26. Mr ChuiChui, 52, succeeds Edmund Ho, who led the Macau government since the former Portuguese colony returned to Chinese rule in 1999 and oversaw the liberalization of the territory’s gaming sector in 2002. Macau, which has a population of 550,000 people, has a separate legal system from the mainland and is the only place on Chinese soil where casino gambling is allowed. Mr ChuiChui’s election was a formality, as he was the only candidate. He won the support of 282, or 94 per cent, of the southern Chinese city’s 300-member chief executive electoral committee, formed mostly by people with ties to Beijing. His five-year term runs from December 20, this year. Since Macau’s gaming market was liberalized in 2002, it has overtaken Las Vegas and Atlantic City combined in terms of gaming revenue as gleaming foreign and locally owned resorts have sprung up. But the staggering growth has suffered in the past 12 months as mainland authorities, concerned about the problems of gambling and corruption, have limited the number of visitors to the gaming haven from the mainland.

Mai Po manager Bena Smith feeds the nature reserve's new buffalo, which joins the resident buffalo of three years, Siu Mai. A second buffalo has been introduced to Mai Po Nature Reserve to help keep the grass under control and attract birds. Since the first one was introduced three years ago, the wetland park has saved HK$40,000 a year in site management costs. The conservation body WWF said the second phase of the Buffalo Wetland Management Research Project would show the animals could help create an attractive habitat for waterbirds as well as reduce costs. Bena Smith, WWF Hong Kong Mai Po reserve manager, said: "It costs about HK$40,000 a year in managing each freshwater pond in the reserve area, while grazing saves the cost of hiring workers and purchasing equipment to cut the grass." In co-operation with the Lantau Bovine Association, the new, six-year-old buffalo has been kept with the original buffalo, named Siu Mai, which is also six years old, within a 1.8 hectare freshwater habitat since July 29. "Buffaloes can be beneficial in attracting more locally declining waterbird species such as the greater painted snipe, grey-headed lapwing and cattle egret," Mr Smith said. Insects the buffaloes attracted were a major food source for waterbirds and the marsh created by the bovines' trampling provided a habitat for the birds, he said. The organisation started the research project in 2006 by introducing Siu Mai, a female Asian water buffalo, into the reserve to investigate how the animals influenced wildlife and to test the efficiency of buffalo wetland management. "According to the results of initial studies, the mean bird diversity per hectare in grazed areas is 16.9, compared with 19.3 and 9.5 in managed and unmanaged areas, respectively," Mr Smith said. "We also discovered about four cattle egrets within the site after the arrival of Siu Mai." Though Siu Mai had kept the grass down to a height of about 20cm, results in the winter had not been as good as the organisation expected. "By adding a new buffalo, we are hoping to keep the grass height at 10cm, especially in the winter, to benefit ducks," he said. The project will be completed by the end of next year. "We will cease grazing if the result is negative, otherwise we will expand the grazing into other freshwater ponds and start phase three of the research project." The public is invited to take part in a naming competition for the new member of the Mai Po team and can make online submissions until August 24. The winner will be given a chance to visit the buffaloes.

Cliff Sun believes Hong Kong is losing its shine as China's window to the West while Shanghai is intensifying its bid for a more prominent national and global financial role. Hong Kong industrialist Cliff Sun Kai-lit's first factory on the mainland was a far cry from the modern production line he oversees today. In fact, it was in a deserted rural temple infested with mosquitoes. He was among the first group of Hong Kong businessmen who set up factories in Guangdong in 1979, the year the mainland opened its doors to foreign investment. Mr Sun, the new chairman of the Federation of Hong Kong Industries (FHKI), recalls the difficulty of setting up production lines for his family company in the temple at Nanhai - and the countless nights spent sleeping under a mosquito net. He has since witnessed the rise of China from a backward society to an economic and financial powerhouse - an industrial revolution he says Hong Kong has to keep pace with if it is to remain a regional financial centre. While labour and land were cheap back in 1979, recruiting factory workers from among the peasants of the Nanhai area was a big challenge. "At that time, Nanhai was presented as an affluent rural county in the Pearl River Delta with plenty of hydropower, many hard workers and tens of thousands of pigs and roosters," said Mr Sun. "After we set up production lines, we had many workers taking days off to work in the rice fields and had insufficient hydro-electricity at night as priority was given to irrigation of the paddy fields." The hardships failed to weaken the resolve of Mr Sun, who at the time was a fresh graduate from a Canadian university with a diploma in mechanical engineering. Sensing opportunities in the rapidly liberalising economy, Mr Sun soon diversified the family's moulding firm, Kin Hip Metal & Plastic Factory, into manufacturing pots and pans. He set up a factory in Pinghu, Shenzhen, and soon the company's now-famous Kinox cookware products were selling well in the United States and European markets. "We have made this steel-based plastic coffee pot for 28 years - it's a product that doesn't go out of vogue and you can find it in any restaurant," he said, proudly displaying a tea-stained pot on his desk. "The type of high-strength plastics we used in this pot is called polysulfone, which costs three or four times more than the polycarbonates other manufacturers commonly use. The cheap stuff cracks at a high temperature and has to be written off." Kinox coffee pots, which have been the favourite at hotels and bestsellers in department stores for years, have become so popular that mainland copycats now offer their own version. "It is not surprising to find that only one in four coffee pots in Guangzhou is a genuine Kinox," he said. "When the municipal government clamps down on fakes, there is a good chance you will find two in four." Rampant infringement of copyrights in China is a stumbling block not just for Mr Sun but also for tens of thousands of Hong Kong exporters across the border trying to break into the gigantic domestic market. Touted as a much-needed alternative to battered consumer markets in recessionary US, Europe and Japan, the domestic market could potentially generate huge sales that might be a turning point for manufacturers in "the factory of the world" - the Pearl River Delta. "It is time to act," Mr Sun said. "The delta's low-cost business model is from bygone days. The options are to expand into the mainland market or upgrade the value of products. If the 58,000 Hong Kong factories in the delta drag their feet, I don't even want to think about how many will survive in the next decade." Mr Sun's warning echoes wake-up calls from the Guangdong provincial government, which tried last year to push manufacturers on the delta to upgrade or move their energy-consuming and polluting factories to the province's mountainous parts or the country's western regions. However, the push to reform the industrial base of the delta has been complicated by the global financial crisis, which has reportedly left at least one in seven Hong Kong-owned factories there out of business in the past 18 months. To speed up the sale of consumer goods on the mainland, the municipal governments of Shenzhen, Dongguan and Guangzhou have selected designated distribution centres in those cities to cater for Hong Kong exporters. Mr Sun himself is turning to the retail sector by selling his products at department stores. "We are fighting for a platform for Hong Kong exporters to showcase their products, market their brands and access the group of customers they want," Mr Sun said. "Retailing is a piece of blank paper for many exporters even though they produce the products in China." Branching from manufacturing into retailing was a courageous, if not risky, process, Mr Sun said. Spending the past two years selling toasters, woks, pans, electric kettles and coffee pots at about 20 counters at department stores in Shanghai, Shenzhen and Beijing was a slow and challenging task. Although breaking even in the fledgling retailing venture might take time, Mr Sun said it had succeeded in making the Kinox brand well known among mainland housewives. He describes transforming his business as a "revolution" that may have to be passed on "to the next generation of fighters", and hopes his three sons will carry on running the company his father started in 1949. "I give maximum autonomy to my eldest son, Eric, who is in charge of the retailing venture in China," said the 56-year-old industrialist, who declined to say when he will pass the torch on to his offspring. "I stand by him and will play a role in preventing any frivolous spending." If ups and downs are part of daily life, Mr Sun believes a person's attitude towards challenges is a guide to how successful he will be. In his opinion, the future prospects of Hong Kong beg this question. "We need vision and timely execution of government policies," he said, pointing out to the former Kai Tak airport from the window of his 20th-floor office in Kwun Tong. "Look at this runway, which is still [lying idle] 12 years after the airport was moved to Lantau." He criticised the government for failing to speed up redevelopment of the site. The latest plans include turning the old district around Kai Tak into a modern residential, commercial and entertainment precinct, a project that would take 12 years and HK$100 billion to complete. Mr Sun said the government approved the construction of the cruise terminal at the former airport only recently even though the idea was floated 20 years ago. "Hong Kong must not let us down," Mr Sun said. "Some legislators are fighting for the welfare of workers, but on the other hand they delay major infrastructure projects. How many workers will starve to death before we see the start of construction of these projects?" Although he is an optimist, Mr Sun fears that Hong Kong is getting increasingly marginalised and losing its shine as the country's window to the West. He notes that Shanghai is intensifying its bid for a more prominent role on the national and global financial stage. Hong Kong needed to rejuvenate itself to stay competitive, Mr Sun said. "The only solution is integrating with the Pearl River Delta. The government should have visions on how to bring the city forward or it will lose its niche and be overtaken by Shanghai." Although plans for closer co-operation in financial and professional services were sealed between Shenzhen and Hong Kong recently, Hong Kong needed to come up with a long-term blueprint to position itself in the delta region, he said. The government may be well advised to listen to a man who helped lead the Hong Kong charge into the mainland 30 years ago.

China: China's Yanzhou Coal has reached an agreement with Australian coal miner Felix Resources on a potential takeover transaction, a source familiar with the matter said on Monday.

A technician works on a natural gas production rig of China National Petroleum Corp in Liaoning province. On the eastern coast of China, the country's oil companies are building or already operating a series of liquefied natural gas (LNG) projects. With an investment totaling billions of yuan, they are improving the energy mix of the country, which now relies on coal for 70 percent of its energy. The latest among these projects is the Zhejiang LNG receiving terminal developed by China National Offshore Oil Corp (CNOOC). The country's third-largest oil company announced on July 8 that the project has been approved by the central government. LNG projects are changing China's energy mix. The project is CNOOC's fourth LNG terminal in the country. The first phase of the project, costing about 7 billion yuan and able to receive 3 million tons of LNG per year, is scheduled to be operational in 2012. Currently, CNOOC is operating two LNG projects in Fujian and Guangdong. It is building its third LNG project in Shanghai. The company aims to have 50 million tons per year of LNG receiving capacity by 2020, Zhou Shouwei, deputy general manager of CNOOC, said in July. The target would be nearly eight times the total capacity of the first phase of two LNG terminals that CNOOC has brought on line since 2006. CNOOC's ongoing expansion of its LNG facilities is in line with China's efforts to increase the use of natural gas to reduce its dependence on coal, which causes heavy pollution, analysts said. Other domestic oil companies have also paid more attention to developing LNG projects. China National Petroleum Corp (CNPC), the country's largest oil and gas producer, is now building LNG terminals in Liaoning and Jiangsu provinces. In addition to building LNG terminals along the coast, domestic oil companies are also speeding up construction of inland natural gas pipelines. CNPC last year started building the country's second west-east gas pipeline, the largest of its kind in the world. The project included one trunk line and eight sub-lines with a total length of 9,102 km. The project, which is to cost 142.2 billion yuan, will cross 14 provinces, autonomous regions and municipalities. It will carry 30 million cu m of natural gas every year from Central Asia and Xinjiang to eastern and southern areas including Shanghai and Guangdong. The pipeline will greatly boost natural gas consumption in China. Once it comes into operation in 2011, China will raise the ratio of natural gas in its total primary energy consumption by 1 to 2 percentage points, said Wu Hong, an executive with CNPC. Using natural gas from the project, as opposed to coal, could reduce carbon dioxide emissions by 130 million tons a year and sulfur dioxide emissions by 1.44 million tons a year, Wu said. CNPC completed China's first west-east gas transmission pipeline in 2004. The 4,000-km project crosses 10 provinces, autonomous regions and municipalities, linking Xinjiang's gas-rich Tarim Basin to Shanghai. The line has a designed capacity of 12 billion cu m a year and provides natural gas to more than 200 million people in China. Oil and gas pipelines are safer, more economical and more convenient than other transportation methods, said Han Xiaoping, a veteran analyst in Beijing. "China will see booming development in the sector in the next few years," Han said.

China's young sovereign wealth fund, China Investment Corporation (CIC), said on Friday that it reaped the benefits of investing cautiously during the global financial crisis, after posting a negative 2.1-percent return from its global portfolio for 2008. Return on total capital, based on the accounting income of CIC's global portfolio, and the cash income and cash dividend declared from its domestic investment, is 6.8 percent for last year, CIC said in its annual report. Total investment income and net profit in 2008 stood at $23.955 billion and $23.13 billion. CIC's performance, however, is remarkable when compared with other sovereign funds, university endowments and pension funds. Morgan Stanley strategist Stephen Jen had recently said that global sovereign funds could incur heavy losses of 18 to 25 percent on their investment returns in 2008. "It was right on the part of CIC to rejig its investment strategy. Had it not done so, the return on global portfolio could be lower than the negative 2.1 percent," Jin Liqun, CIC's chairman of board of supervisors said at a media conference on Friday. "CIC's return is comparatively good," said a CIC official. The fund said it acted prudently in 2008 and invested only an additional $4.8 billion into the market last year with 87.4 percent of its assets in cash and cash products. Equities and fixed income accounted for 3.2 percent and 9 percent of the global investment portfolio. Cautious stance reaps rich dividends for CIC China sovereign fund posts 5% investment return - "We may step up the investment pace this year, as downside risks in the global economy have eased considerably," said an official with the sovereign fund. The sovereign fund, however, has been stepping up the ante recently. The fund recently bought A$500 million worth of convertible debt in Australian property firm Goodman Group. CIC also has plans to enhance its partnerships with Morgan Stanley's asset management unit and Blackstone Group LP, the Wall Street Journal said earlier. It said CIC had finalized an allocation of $500 million to Blackstone Group and also plans to have Morgan Stanley oversee additional money. CIC's move indicates that it is focusing on non-financial sectors such as prime consumption plays that can reap rewards when the economy recovers. Earlier in July, CIC made a $1.5-billion investment in Canadian miner Teck Resources. This move indicates it is focusing on non-financial sectors that can reap rewards when the economy recovers. The fund also has agreed to invest HK$2 billion for a 40-percent stake in private equity fund manager CITIC Capital, Reuters and Caijing magazine reported earlier, citing unnamed sources. CIC started operations on September 29, 2007, with an initial corpus of $200 billion. Nearly 50 percent of the funds have been allocated for global investments, while Central Huijin, a wholly owned subsidiary of CIC, uses the balance for investment in domestic financial institutions. The top five portfolio holdings of Central Huijin are China Development Bank, Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank. Some of CIC's early international investments included minority stakes (under 10 percent) in US firm Morgan Stanley and the Blackstone Group.

A hotel lies collapsed after Typhoon Morakot hit Chihpen in Taiwan. Troops were mobilized after the island's worst flooding in 50 years, which left three people dead and 31 missing. Morakot later made landfall in Fujian province, killing four adults and a baby.

A state-run shareholder of Lenovo’s parent company aims to sell a 29 per cent stake in the parent firm for 2.76 billion yuan (HK$3.13 billion), the company said on Monday.

A solar panel is seen on top a subway station information pillar stand against the hazy skyline in Beijing. Mainland will unveil a plan to foster the development of 'new energy' sourcesby the end of this year, state media on Monday. Coal-dependent mainland will unveil a plan to foster the development of “new energy” sources, including wind, solar and nuclear, by the end of this year, state media on Monday quoted a senior energy policy official as saying. Sun Qin, vice-head of the National Energy Administration (NEA), told a forum in southern Guangzhou city that a guide for developing energy technologies would also be released, but gave no further details. The development and utilisation of clean coal technologies would be an important part in the “new energy” plan, Mr Sun was quoted as saying. Mainland has long been seeking to diversify away from coal, which currently provides over 70 per cent of its power, but produces large amounts of greenhouse gas carbon dioxide and pollutants like acid-rain causing sulphur dioxide. Boosting the role of other hydrocarbons such as gas and oil means increasing imports, which causes energy security worries in Beijing. It also does little to improve the emissions profile of a country which recently became the world’s biggest annual producer of greenhouse gases. The government has been pushing for greener growth for several years, and has recently stepped up backing for renewable power with new tariffs for wind power and an ambitious plan to increase installed capacity to 100 GW by 2020, and subsidies for solar energy. It has long poured resources into hydropower. Beijing has committed to making renewable energy 10 per cent of mainland’s primary energy mix by next year, and 15 per cent by 2020, though much of it will be from giant dams like the Three Gorges. It is also keen to build more nuclear power plants, to the frustration of some environmentalists. The government is also considering raising power prices before the end of the year under a pricing formula that has not been followed for several years, a weekly newspaper said last week, citing a source and an energy official. Higher prices could help increase efficiency and make more-expensive renewable power more efficient. Mainland has long promised to adjust government-controlled resource prices to better reflect their cost, but been slow to act.

Guangdong province plans a sixfold increase in its nuclear power generating capacity to 24 Gigawatts (GW) by 2020, the official Xinhua News Agency quoted a local government official as saying. Li Miaojuan, director of the Guangdong Development and Reform Commission, told a forum over the weekend that the development of nuclear power in the energy-intensive province would improve its power-consuming structures. The target, around 2.6 times mainland’s total nuclear generating capacity of 9.1 GW, is in line with the country’s ambition to develop alternative energy resources, including solar, wind and nuclear, and reduce its dependence on coal and lower pollution. Mainland is considering lifting its target for installed nuclear power generating capacity to 86 GW by 2020, double its previous goal of 40 GW. The second phase of the Ling Ao nuclear station, the second nuclear plant in Guangdong, with a capacity of around 2.16 GW, was expected to start operation next year, the report added, citing He Yu, General Manager of Guangdong Nuclear Power Co (CGNPC). CGNPC, one of mainland’s two key nuclear developers, is also preparing for an initial public offering, Caijing magazine reported on its website ( ), citing Mr He. It did not provide details about the planned share sale.

Amid the lingering global economic slump, chairman Jack Ma Yun is not shy about using an analogy to help soothe the fears of the firm's investors and many small member-companies.

Shimao Property Holdings (SEHK: 0813) plans to invest an additional eight billion yuan (HK$9.08 billion) to develop a large property complex in Xiamen, betting the closer economic ties across the Taiwan Strait will fuel housing demand. The developer won the site for 3.02 billion yuan in a government auction in June, raising the total investment of the project to about 10 billion yuan. "Xiamen is renowned as the home city of many overseas Chinese and Chinese nationals living in Taiwan," said a source close to the company. The large residential project would be developed in phases over the next seven years, said another source close to the company. The apartments, in the Lakeside Reservoir Area, would be pitched at higher prices considering the view, the source said. Shimao has a strong cash position. As of June 20, the company has generated contract sales of 13 billion yuan, about 76 per cent of its 17 billion yuan target for the year. The land cost is 6,666 yuan per square metre. The source said building expenses would be 3,000 yuan to 4,000 yuan per square metre, bringing the total cost to between 10,000 yuan and 11,000 yuan per square metre. Upmarket units in Xiamen cost from 18,000 yuan to 20,000 yuan per square metre, the source said. "Prices in Xiamen still have greater potential for further growth," the source said. In a report, Royal Bank of Scotland Group property analyst David Ng expected Shimao's project to sell for 15,000 yuan per square metre at the launch next year. The developer's confidence in the market was boosted by good sales at its Fuzhou project and the prospects of growing economic activity in the province because of its closer ties with Taiwan, Mr Ng said. In May, Shimao Property's 64 per cent owned Shanghai Shimao Commercial Group also said it would spend 1.8 billion yuan co-developing a retail-office-hotel project on a newly acquired site in Qingdao, Shandong. However, owing to the consolidation of the stock market, Shimao Property will temporarily freeze the proposed spin-off of its mainland hotel arm. "The valuation for hotels is declining and now is not a good time to seek a listing on the stock market," the source said.

Local people enjoy their time at Victory plaza in downtown Anshan, where Anshan Iron and Steel Group Corporation (Angang) is located, northeast China's Liaoning Province, Aug. 1, 2009. As one of the most important iron and steel producing base in China, Angang has been growing up with the nation since it was set up in 1949. The major logistics supplier provided steel for the country's early domestic development. Along with the development of the giant corporation, Anshan city formed a developing system, which was predominanted by iron and steel production and assisted by various kinds of industries. In the meantime, the city made great effort in revegetation, to balance between the ecological construction and the economy development.

Workers work at a workshop of Anshan Iron and Steel Group Corporation (Angang) in Anshan, northeast China's Liaoning Province, Aug. 2, 2009. As one of the most important iron and steel producing base in China, Angang has been growing up with the nation since it was set up in 1949. The major logistics supplier provided steel for the country's early domestic development. Along with the development of the giant corporation, Anshan city formed a developing system, which was predominanted by iron and steel production and assisted by various kinds of industries. In the meantime, the city made great effort in revegetation, to balance between the ecological construction and the economy development.

The photo taken on Aug. 2, 2009 shows city traffic of Anshan, northeast China's Liaoning Province. As one of the most important iron and steel producing base in China, Angang has been growing up with the nation since it was set up in 1949. The major logistics supplier provided steel for the country's early domestic development. Along with the development of the giant corporation, Anshan city formed a developing system, which was predominanted by iron and steel production and assisted by various kinds of industries. In the meantime, the city made great effort in revegetation, to balance between the ecological construction and the economy development.

Chinese home prices rise 1.0% in July - Home prices in 70 large and medium-sized Chinese cities nationwide grew 1.0 percent in July from a year earlier, the government said on Monday. The prices also climbed 0.9 percent from June according to a joint statement issued by the NDRC and the NBS.

Romantic spots wooed for Chinese Valentine's Day - Guilin

Romantic spots wooed for Chinese Valentine's Day - Lugu Lake Yunnan

Romantic spots wooed for Chinese Valentine's Day - Sanya Hainan

US-China relations on path to cooperation - The confirmation of Jon Huntsman as United States ambassador to China will hopefully lead to better understanding between the two countries, said former US labor secretary Elaine Lan Chao.

China's ChangAn Auto Co Ltd, a leading domestic auto maker, announced Saturday that its sales volume rose more than 82 percent year-on-year last month.

Iron ore is piled up at Rizhao port in East China's Shandong province. Rizhao is one of the country's major port cities for imports of iron ore from other countries. One of the more controversial organizations in the recent wrangling over the price of iron ore that led to the arrest of four Rio Tinto executives in China remains open, but there is now no nameplate on the door. The Rizhao International Iron Ore Trading Center, located on the fourth floor of China Construction Bank in a development zone in the Shandong port city, was seen as an attempt by small Chinese steel makers without their own import licenses to cut their own deals on the international markets. Smaller steel mill owners in limbo The small steel mill owners are often the forgotten victims of the failure in recent months of the China Iron and Steel Association (CISA) to reach an agreement with the big iron ore producers: the Australian mining company Rio Tinto, the British-Australian BHP Billiton and Brazilian company Vale. They have been left trying to get iron ore at any price, often at inflated levels, from the traders and big steel producers, which could make up for having to pay a higher price themselves by selling their iron ore at a premium to the little guys with nowhere to go. While China's dispute with the international mining companies raged in boardrooms around the world, they still had steel mills to fire up. The iron ore trading center was opened in May by three local iron ore traders, Huaxin Gongmao, Wanbao and Zhongrui, as well as two e-commerce companies. The deal was seen as an attempt to get price information for the smaller steel companies that were without their own import licenses. The CISA attempted to close it at birth, however, warning in June that the center should stop engaging in speculative activity outside its operating rules. In a statement on its website, the CISA alleged the center had exceeded its legal scope and had issued misleading information about its operations. The trading center has maintained that it was only set up to provide electronic commerce services for iron ore suppliers, steel makers, domestic steel plants and foreign mining firms. Liu Xiangwei, a local businessman who has been friends with the founders of the three iron ore trading companies for more than 10 years, said it was not viable for the center to trade iron ore. "It is impossible for the center to conduct iron ore trading business with only 20 million yuan in registered capital," he said. Smaller steel mill owners in limbo Steel lobby official takes tough stand on iron ore pricing talks. I know each of them has floating assets of over 1 billion yuan. If they want to do iron ore trading business, why don't they operate the business by themselves. " Su Qian, founder of Longqian E-commerce Company, one of the companies behind the center, insists there was no hidden agenda. "We started the Rizhao trading center as an electronic commerce service provider and planned to charge fees for information, rather than run a trading business. I don't know why the center is paid so much attention, " Su said. Price dispute The dispute over the international iron ore price that has so disrupted the smaller steel makers, as well as the industry, escalated in May when the CISA insisted on a bigger price cut than the 33 per cent agreed by the Japanese and South Koreans. It became even more heated last month when four Rio Tinto executives were arrested in China on alleged spying charges. They were accused of gaining information about China steel production targets to boost their negotiating strength. While holding out for a 40 percent cut, the iron ore spot price soared, making a better deal unlikely for China. In the meantime, the smaller Chinese steel makers without their own import licenses were finding themselves forced to buy their ore from the bigger companies that had them. Peter Markey, a mining analyst at Ernst & Young in Shanghai, said most of the pressure fell on China's smaller steel companies during the crisis. "The guys who have steel mills and no licenses have been basically stuck. Those who have licenses don't really mind what they pay. They pay the Australians 'x' and then charge the local companies 'x' plus a percentage. It doesn't really matter to them what 'x' is," he said. Bernhard Hartmann, president and energy practice leader of A.T. Kearney Greater China, said the last thing the CISA wants is a fragmented market. "They want to put on as much of a unified front as possible. It would not be an ideal situation from a Chinese perspective to have a lot of small inexperienced steel mills going up against a unified front of three major iron ore producers," Hartmann said. The CISA wants a wholesale reform of the current iron import licensing system, which has led to more than 100 licenses being issued. It wants the number of licenses to be drastically reduced, if not the current licensing system to be abolished altogether. The smaller steel producers do not like their role as the powerless underdog and see a number of market developments working against them. Shandong Iron & Steel Group's proposed acquisition of Rizhao Steel Group is seen as one of those developments. The larger State-owned Shandong is reported to have suffered a loss of 1.28 billion yuan in the first half of this year, while analysts forecast that the private Rizhao Steel will return a profit of up to 3 billion yuan. "This is a government-oriented acquisition. We would have been reluctant to be acquired by a State-owned steel mill that is not as profitable as us," said a sales director of a private steel company in Hebei province, who declined to be named. 'Forced love' "Forced love doesn't last. I know some private steel companies moved their cash before being merged into State-owned ones. Although China is encouraging the consolidation of the steel industry, what we are seeing is less competitive companies acquiring more competitive ones. We should let the market decide the rule," the source said. Meanwhile, back at the iron ore trading center, Xin Weihua, the general manger of Wanbao, one of the founders who was never out of the media glare in May, is keeping a low profile. Gao Lei, operation director of the center, however, told China Business Weekly the center is the still waiting for approvals from CISA, and is currently carrying out operational work such as employee training and website construction. Whatever the role of the center, the issue of iron ore pricing still burns. Whether the CISA accepts a 33 per cent reduction, where this leaves the smaller steel mills without licenses in the future is far from clear. "There is a lot of pressure on them. Someone who has got a steel mill could be sitting there unless they get iron ore," said Markey of Ernst & Young.

Aug 11, 2009

Hong Kong: Hong Kong's Secretary for Financial Services and the Treasury K C Chan will attend the World Capital Markets Symposium, the Hong Kong Special Administrative Region (HKSAR) government said in a bulletin. The symposium, organized by the Securities Commission Malaysia, will be held on Monday, the Information Services Department said. Chan will meet with Malaysian financial officials and business executives. He will brief them on the development of Islamic finance in Hong Kong. Hong Kong, an international financial center, has been fostering Islamic finance in recent years.

The Mandatory Provident Fund Authority is considering offering tax breaks to individuals for voluntary pension contributions to encourage them to save more for retirement. The move would help address the financial needs of Hong Kong's ballooning ageing population. Other changes being considered as part of a review of the nine-year-old Mandatory Provident Fund system include an increase in the current HK$12,000-a-year cap on mandatory contributions, and allowing members to receive their retirement payout in regular payments rather than in a lump sum. Last year, just under 13 per cent of Hong Kong's population, or about 890,000 people, were aged 65 or over. By 2033, that proportion will more than double. While Hong Kong residents tend to be strong savers, the Mandatory Provident Fund Schemes Authority recognizes a need for people to contribute more to their post-retirement nest eggs. An independent economist, Ho Lok-sang, of Lingnan University, said: "The move can certainly encourage people to save more for their retirement. It can also help the government ease its potential burden of looking after the aged population in the future. But the high management fee should not be overlooked. This could discourage people from contributing more to the fund." Currently, employers and employees have to contribute 5 per cent of an employee's pay to the MPF scheme. But contributions are capped at HK$12,000 a year - a level economists say is insufficient to support retirees, given longer life spans. By comparison, Singapore's Central Provident Fund requires most employees aged 50 or under to set aside one-fifth of their income, while employers contribute 14.5 per cent. An official close to the MPF said the cap on contributions would be reviewed, and there was a high possibility of it being increased. Employees can contribute more to their account, but such voluntary payments are not tax free, giving them little incentive to do so. The authority has started talks with the government over details of the review, and a consultation document will be released next year. Data compiled by the authority shows voluntary MPF contributions reached just over HK$1.2 billion in the second quarter of this year - about 13 per cent of all contributions to the system during the period. Overall, the average balance in a member's account was HK$105,358 as of the end of June. There are 2.46 million workers covered by the MPF, with another 462,000 employees covered by the Occupational Retirement Schemes Ordinance, the old voluntary pension scheme. The proposed tax changes and increased caps are backed by many MPF providers, which stand to benefit from greater fees as more savings are ploughed into retirement funds. "The reality now is that someone retiring at 60 or 65 realistically will probably have to use that money for the next 20 years," Jason Sadler, HSBC (SEHK: 0005) Insurance (Asia)'s managing director for insurance business in Hong Kong, said. The official close to the MPF said that to help people prepare for their post-retirement years, MPF providers could be required to pay out retirement benefits through regular monthly payments instead of a lump sum. Recent reforms to Hong Kong's Mandatory Provident Fund legislation have given employees more say in how their retirement savings are managed by letting them transfer their MPF contributions to a provider of their choice once a year. Previously, the MPF provider was determined by the employer. Allowing employees to also transfer their employers' contributions would also be considered, the official said.

The director of broadcasting says "radical action" by RTHK staff would not lead to better pay or a more secure future for their organization - and they should instead negotiate from a moderate position to win over the government. In an interview marking his first year in office, Franklin Wong Wah-kay also said he did not think RTHK had been put under political pressure, despite a recent row where a program was accused of being anti-communist. "In the past 20 years, people in RTHK have used all sorts of ways to fight for its rights. However radical they have been, what have they achieved? Nothing. That's why we have to be moderate," Mr Wong said. "Even Bill Clinton used negotiation when dealing North Korea. Did he go there with missiles and aircraft carriers?" he said, referring to the ex-US president's successful mission to Pyongyang last week to bring back two detained American journalists. "If I backed RTHK by demonstrating on the streets right after I came [into this post], I wouldn't be here talking to you." Staff at RTHK recently demonstrated against the government's failure to offer any clear promises on the future of the public broadcaster, which is a government department but has come under review as part of the broadcasting policy. Staff pay and promotions have been frozen since a government-commissioned report on public-broadcasting policy was issued three years ago. Officials have failed to come up with a promised consultation on whether RTHK can become an independent public broadcaster. The Beijing-friendly camp has long bristled at RTHK's critical stance against the Hong Kong government, but pan-democrats want it to become an independent body and maintain editorial freedom. Mr Wong said officials were "very sincere" in discussions with him, and maintaining a dialogue would be more fruitful for staff than protesting. Unlike his predecessor Chu Pui-hing previously, Mr Wong did not join the staff protest last month. But he stressed that his views and demands were "100 per cent the same" as the staff's. Quality programming was the best way for a broadcaster to ensure its future. On the question of staff morale, Mr Wong said he had created a task force and found ways to increase staff benefits, including securing longer contracts for some non-civil-service staff. They account for almost half of RTHK's 700-strong workforce. On concerns over whether RTHK would be able to maintain editorial independence, Mr Wong said he did not think the broadcaster had been subject to any political pressure, citing its extensive coverage on the 20th anniversary of the 1989 Tiananmen Square crackdown. But when asked why he did not publicly counter accusations by Cheung Chi-kong, executive director of the One Country Two Systems Research Institute, who labeled RTHK "anti-communist" for airing one of the June 4 programs, Mr Wong said the accusation did not amount to interference.

Greens Power Equipment (China) and China Longyuan Electric Power Corp plan to raise up to a combined HK$6 billion in Hong Kong initial public offerings as they take advantage of rising mainland demand for alternative energy projects. Both offerings are planned to be completed before the end of the year and investment bank Morgan Stanley of the United States is the sole adviser for the two companies. Market sources indicated Greens Power, the smaller of the two firms, could start its offering before China Longyuan. Greens Power, founded in 2002 and based in Shanghai, was solely owned by Greens Power of Britain and was hoping to sell a stake of up to HK$1 billion for a listing on the main board in late September or early October, sources said. Two other sources said China Longyuan aimed to raise at least HK$5 billion by the end of the year. Greens Power offers a variety of environmentally friendly boilers and heat-transfer products for the power generation and petrochemical industries. Green energy, or alternative energy, is considered to be non-polluting and includes electricity production by geothermal, wind, solar or hydropower methods, instead of the traditional use of coal. The alternative energy sector on the mainland has attracted strong interest from institutional investors given its huge growth potential and is backed by policy support from the central government. China Longyuan, the nation's largest producer of wind power, is believed to have lodged its listing application with the Hong Kong stock exchange. The company is the renewable energy unit of China Guodian Corp, one of the five state-owned producers of electrical power. Last year, it accounted for more than 20 per cent of mainland wind-power producing capacity with power generation capacity of 2,630 megawatts. China Longyuan boosted its generation capacity to 3,000 MW in the first half of the year and hopes to raise that to 6,000 MW next year. Given the recent strong market sentiment and ample capital inflows, at least 10 companies are believed to be planning offerings in Hong Kong aiming to raise a combined HK$20 billion. The H-share offering of China Metallurgical Group is the biggest issue among those planning a September offering. The company is thought to be aiming to raise HK$10 billion in Hong Kong as well as to tap the domestic market by selling US$1.4 billion worth of A shares on the Shanghai stock market.

Le Le and Ying Ying, one of two panda couples at Ocean Park, turn four this month, which means they will soon be sexually mature, and wildlife experts hope the pair will start a family. The amusement park threw a birthday party for the two mainland-born pandas yesterday, replete with an "ice cake" topped with fruit and bamboo shoots. They ate about half, then wandered away. "The fourth birthday is very special for pandas because that's when they say goodbye to their childhood and become sexually mature," said Zhang Xiwu, director general of the Department of Wildlife Conservation and Nature Reserve Management under the mainland's State Forestry Administration. Mr Zhang had brought the pandas two potted plants as gifts, which symbolised an extending family tree. "We are eagerly anticipating the arrival of the baby of Ying Ying and Le Le," he said. Female pandas normally become sexual mature at 4-1/2, with the male following about one year later. The pair were given to Hong Kong two years ago to mark the 10th anniversary of the handover. So what's the chemistry between Le Le, the male, and Ying Ying? According to Timothy Ng Sau-kin, deputy director of Ocean Park Conservation Foundation Hong Kong, Le Le had yet to show affection for her. Artificial insemination was an option, but the park preferred they mate naturally because this gave the cubs a better chance of surviving. The rising hopes for cubs come as the mainland continues to get its conservation effort back to normal after one of its main panda areas was badly damaged in the Sichuan earthquake last year. The Wolong Giant Panda Breeding Centre was almost destroyed in the May 12 disaster, and the nearby nature reserve, home to wild pandas, suffered landslides. At least one panda was killed and a second is still missing. Secretary for Development Carrie Lam Cheng Yuet-ngor, who attended the Ocean Park ceremony, said rebuilding of the main road leading to the reserve began in April. Another 23 reconstruction projects for the reserve, for which the Legislative Council set aside HK$1.56 billion of an allocated HK$10 billion, had been approved and design work would begin soon. Last week, Ocean Park announced half-price admission for people with birthdays in August. It follows a 20 per cent price rise slated to start on August 1 but which was postponed until October 5 after lawmakers questioned increasing the ticket price during the downturn. Meanwhile, the park announced the launch of a new tunnel train system, dubbed Ocean Express, which will start service next month. Visitor trials will start next week. Park chairman Allen Zeman said the park would get Chinese sturgeons in the last quarter of the year.

China: China's ChangAn Auto Co., Ltd., a leading domestic auto maker, announced Saturday that its sales volume rose more than 82 percent year on year last month. The Chongqing-based company sold 107,863 units of vehicles in July, up 82.4 percent year on year, it said in a statement to the Shenzhen Stock Exchange. The company produced 118,037 units of vehicles in July, up 64.9 percent year on year. The Shenzhen-listed firm's shares had fallen 5.24 percent to 10.31 yuan a share Friday before the release of the report.

A schoolgirl is selling her stuff. The little advertising board shows such words as "bargaining within humanitarian scope is allowed." People buy articles on a flea market held in Panjiayuan, the market for folk art, in Beijing, China, Aug. 6, 2009. Panjiayuan Market will supply 400 free booths for citizens to trade their unused articles on every Thursday.

The Committee on Foreign Investment in the United States has formally approved the acquisition of Delphi's global production of braking systems and suspension parts by a Chinese company. The acquisition by Beijingwest Industries Co. is to get approval from the Chinese government. Beijingwest will maintain and develop the R&D and production of the two businesses and optimize domestic and overseas auto parts resources.

Chinese State Councilor Dai Bingguo (L, front) meets with Indian Prime Minister Manmohan Singh in New Delhi, India, Aug. 8, 2009. Dai is Chinese special representative here attending the 13th meeting of special representatives of China and Indian on the boundary issue.

China is the world's largest buyer of iron ore and Australia's second-biggest trading partner, with two-way trade valued at A$68 billion. Rio Tinto's six years of spying on China's steel industry cost the nation 700 billion yuan (HK$794.15 billion) in excessive charges for iron ore, said a report published on a website controlled by the central government. Government agencies should enhance surveillance of the secret-protection work at key companies they supervised, said the article on the website. China has detained four members of Rio's Shanghai team, including Australian Stern Hu, on charges they stole state secrets. The detentions have strained relations between China and Australia and followed Rio's abandoning of a US$19.5 billion deal with Aluminum Corp of China (SEHK: 2600) four months after agreeing to what would have been China's biggest overseas investment. "That means China gave the employer of those economic spies more than US$100 billion for free, which is about 10 per cent of Australia's [gross domestic product]," the article said. "It also caused the serious losses in China's pillar industry of steelmaking." Mr Hu and three other Rio executives were detained by the authorities on July 5 for allegedly stealing state secrets and actions that harmed the nation's economic interests and security. Australia, which has said the detentions may be connected to annual price talks for iron ore, is seeking more information and has urged China to deal with the case expeditiously. "This is another step forward and we are moving towards the Rio employees being charged," said Michael McKinley, a professor of global politics at Australian National University. "History tells us that if someone is charged, there is a strong prime facie case and they will most likely be found guilty." Australian Prime Minister Kevin Rudd told reporters that the world was "watching closely" how China handled the Hu case. China is the world's largest buyer of iron ore and Australia's second-biggest trading partner, with two-way trade valued at A$68 billion (HK$434.8 billion) last year, and is also its largest source of foreign investment. Rio Tinto declined to comment on the report. The website is operated by the Gold Wall Press, which is administered by the Secrets Office of the Communist Party of China's Central Committee, according to an introduction on the website. "The case will still take some time and China has a different definition of national security," Mr McKinley said.

Former commerce vice-minister Wei Jianguo has been chosen to head the Boao Forum, a prestigious regional conference on international affairs, replacing Long Yongtu , China's former trade negotiator, according to a diplomat familiar with the process. The appointment of Mr Wei as secretary general of the Boao Forum for Asia is part of Beijing's move to restructure two of its important diplomatic platforms to improve China's influence and its voice on the international stage. "The restructuring is aimed at strengthening the unified leadership of the mainland's two most important platforms in international affairs," said a Chinese diplomat, adding that the other was the newly established China Centre for International Economic Exchanges (CCIEE) - a non-governmental super think tank that sponsors the Global Think Tank Summit. Mr Wei is the secretary general of the CCIEE. The Boao Forum for Asia, a non-government and non-profit international organisation, was initiated in 1998 by former Australian prime minister Bob Hawke, former Japanese prime minister Morihiro Hosokawa and former Philippine president Fidel Ramos, in the belief that Asia should have an economic forum for its leaders to share views on issues such as the economy, development and the environment. The forum was formally inaugurated in 2001 and has been held annually in Boao , Hainan , since 2002. The Boao Forum for Asia is often called the Asian version of the World Economic Forum, since the main purpose is to give Asia a stronger voice in the world economy. Theoretically, the Boao Forum is headed by a board of directors comprising former Asian political and business leaders. The mainland-based organising institute is managed by Chinese officials headed by former vice-premier Zeng Peiyan , who is also chairman of the CCIEE. The Chinese diplomat, who spoke on condition of anonymity, said the personnel reshuffle was aimed at strengthening the co-ordination and division of labour between the two most influential institutes. "After the reshuffles, the two institutes will be directly under the stewardship of Mr Zeng and will report to Vice-Premier Li Keqiang , a member of the innermost Standing Committee of the Politburo and heir apparent to Premier Wen Jiabao in 2013," the diplomat said. A veteran trading official who became vice-minister in 2001, Mr Wei, 62, had been in charge of China's trade affairs with the developing world and international aid. Mr Long, 66, is the former chief trade negotiator who brokered China's accession to the World Trade Organisation in 2001 after 13 years of talks with numerous WTO members. Mr Long's exit is largely because of his age, as the compulsory retirement age is 65 for his position. For his role in the WTO talks, Mr Long was named Man of Year in 2003 by China Central Television. Last month, the CCIEE kicked off its first three-day Global Think Tank Summit to showcase China's growing influence in international affairs, attracting a star-studded list of speakers including former European Commission president Romano Prodi, former US secretary of state Henry Kissinger and Supachai Panitchpakdi, secretary general for the United Nations Conference on Trade and Development. The CCIEE's announcement of its goal when it was established in March - to become a world-class think tank with clout similar to the Brookings Institution in the United States - created a buzz worldwide. The centre boasts a panel of vice-directors and advisers that includes some of the country's top financial policymakers and industry moguls. Several Hong Kong names are on the list, including former chief executive Tung Chee-hwa, Chinese University of Hong Kong vice-chancellor Lawrence Lau Juen-yee and Li & Fung Group chairman Victor Fung Kwok-king.

Sino Resources chairman Geng Ying says she wants to instil culture in everyone in the company as well as in its business operations, believing that the two should be integrated.

Actresses of comedy "Sophie's Revenge" Zhang Ziyi (R4) and Fan Bingbing (R3) attend the film's premiere in Beijing, capital of China, Aug. 9, 2009.

Plans to build a Disneyland in this eastern city are yet to be approved by the central government, despite Disney and local authorities reaching a broad consensus on the theme park. The municipal government has kept close watch on the theme park project, said Liu Zhengyi, the newly elected vice-head of Shanghai's Pudong New Area. However, the "very important tourism project" has yet to get the nod from top authorities, and the local government does not have the authority to approve it. The investment in the theme park could reach tens of billions of yuan, the Pudong's head Jiang Liang said on Saturday. The official's comments were similar to what Robert A. Iger, president and CEO of the Walt Disney Company, said in May during a quarterly earnings report announcement that the company was waiting for a response from the Chinese government. The Walt Disney company could not be reached for comment Sunday. In this January, a Wall Street Journal report said the United States-based entertainment giant was working with the Shanghai government to construct a $3.5-billion ($512 million) theme park, in which Disney planned to hold a 43 percent stake. The report said the project is estimated to be built by 2014 and will be situated on the east bank of Shanghai's Huangpu River, bordering Chuansha town of the 1,210-sq-km Pudong New Area. Speculation of a Disneyland in Shanghai has been circulating for years and previous media reports said 10 sq km of land has been reserved for the resort.

Aug 10, 2009

Hong Kong: Hong Kong's development as a financial services centre has been underlined by data that shows the sector's contribution to the economy has doubled in barely a decade. The financial services industry now accounts for about a fifth of gross domestic product, and economists say this could rise to 40 per cent. But its rise has had little impact on jobs growth, with its share of the workforce hovering at little more than 5 per cent since the handover. Financial services is the only one of the four so-called "pillar" industries to have increased its share of GDP significantly, with the other three remaining flat, an analysis of economic data since 1996 shows. Tourism remains the smallest contributor, at 3.4 per cent, and has grown by just 0.3 percentage points over the years even though the government has spent an estimated HK$40 billion on overseas promotions and attractions such as Hong Kong Disneyland. The trade and logistics industry was the biggest contributor, at 25.8 per cent, followed by professional services, including legal and accounting services, at 11 per cent. Financial services, which accounted for 10.3 per cent of the economy in 1996, accounted for almost 20 per cent in 2007, the most recent year for which complete figures are available. The sector will continue to grow," Francis Lui Ting-ming, professor of economics at the Hong Kong University of Science and Technology, said. "It's because China has a strong demand for financial services and yet this is one of its least developed areas." He is not worried Hong Kong will be over-reliant on the financial industry if it continues to expand, as long as there is room for it to develop further. "I don't think we need to worry if the industry's share of GDP rises to 30 per cent to 40 per cent," he said. However, Hang Seng Bank (SEHK: 0011, announcements, news) senior economist Irina Fan Yuen-yee said developing the industry further would not create many more jobs as it employed only 5.2 per cent to 5.5 per cent of the workforce from 1997 to 2007. She also said the sector needed to diversify. "Hong Kong has been the fund-raising centre for mainland companies which seek initial public offerings here. But as their equity markets develop, companies may choose to get listed in the mainland instead." She said Hong Kong could also face competition from Southeast Asia and from Shanghai - as it develops renminbi-denominated financial business - and should move into areas such as fund management. A government spokesman said the fast-growing mainland economy was "no doubt a big plus point" for Hong Kong as an international financial centre. But Professor Lui said it was "a long path" to expanding yuan deposits to an adequate level - about 6 trillion yuan (HK$6.81 trillion) was required but the sector now involved only about 53.4 billion yuan. "So the government should speed up its lobbying with the mainland to liberalise capital controls," he said. "Relatively, Shanghai doesn't have much of a problem." According to the Global Financial Centres Index released by the City of London in March, Hong Kong is the fourth most competitive financial centre in the world, after London, New York and Singapore.

Growing organic vegetables has given Tong Yiu Fa-yeung a new lease on life since her husband died, and now she says the government should regulate the industry. Tong Yiu Fa-yeung is proof that you can teach an old farmer new tricks. Not only is the 70-year-old Mrs Tong unusual in the farming districts around Tai Po because she is a woman, she also stands out because she has chosen to farm organically. Other farmers were initially mean to Mrs Tong as she set about turning her 30,000 sq ft field of weeds into a vibrant farm. She produces watermelons and sweet corn in the summer, and tomatoes and strawberries in the winter, without using pesticides and chemicals. "They weren't friendly when they spoke to me and said I couldn't farm," she said. "But I told them that just because I was a woman, it didn't mean I couldn't farm. Farming is something women can do just as well as men." Mrs Tong left Hong Kong for New Zealand in the early 1990s. It was there, as a 60-year-old, she took a diploma course in agriculture and learned about organic farming. Her first attempts were the tomatoes and other vegetables in her garden in New Zealand. Her husband loved the flavours, and she found herself a new passion. In 2003, when the couple came back to Hong Kong to visit relatives, her husband caught Sars and died. Mrs Tong was alone and thought if she started farming, it would ease her loneliness. She started her farm in April the following year, and she has never looked back. Mrs Tong got her organic certification from the Hong Kong Organic Resource Centre in 2005, which states that her farm meets international guidelines. There are 61 certified farms in Hong Kong. But she wants the government to enact proper legislation to govern organic farming. "Organic farming is good for our health and proper legislation could protect me," she said. Organic produce is appearing more often in Hong Kong's supermarkets and restaurants, but there is still confusion about which products are truly organic and which are not. There are no across-the-board government standards. A government spokesman said there was no pressing need for laws specifically for organic food. "From the perspective of food safety, there is no significant difference between the risk [presented by] ... organic food and conventional food," the spokesman said. Professor Jonathan Wong Woon-chung, director of the Hong Kong Organic Resource Centre, said that while it received funding from the government, it would be better if Hong Kong had a governmentstandard, compulsory organic certification system. Certification from the centre costs farmers HK$3,000 a year. They also have to undergo an inspection of their farm and must have their application vetted by the centre's board. But Mr Wong said some farmers might think it was not worth going through all the hoops. He estimates there are still at least 60 "organic" farmers who are not certified. Many own small farms and see no point in going through the hassle, and some follow their own certification standards. "With certification, they need to be under our surveillance, they need to abide by some rules," Mr Wong said. Because of a lack of compulsory certification, it was up to retailers and consumers to decide if they could trust an uncertified organic product. Gideon Chang, manager of the Tai Po Farmers' Market, said farmers could easily attach a label claiming their food was organic to exploit the growing popularity of the goods and increase profits. The market was established in 2005, so that local farmers could sell their produce direct to customers and interact with them. Participating farmers in the market are required to have ORC certification if they want to declare their products to be organic. Two-thirds of the annual fee is subsidised by organisers. Genuine organic produce was normally sold for double or even triple conventional prices due to production costs, he said, although prices may fall as demand rises.

Voluntary drug tests in schools must be implemented as soon as possible and would be useful even if students ditched school to avoid the screening, Chief Executive Donald Tsang Yam-kuen said as he defended the controversial pilot scheme. For the first time the chief executive openly addressed religious groups' reservations over the measure, including the Catholic Church's proposal to defer the trial for a year. "Evasions and delays will only deepen the problems, but will not solve the problems," Mr Tsang said yesterday after attending an RTHK forum to discuss youth drug problems with parents. Noting doubts recently voiced about the feasibility and effectiveness of the scheme, he stressed that the aim of the drug tests was to help young people, not to punish them. "Even if students refuse to take the drug tests, or evade school, it will give a clear message to schools, social workers and parents, telling them to intervene and to counsel these students," Mr Tsang said. Vicar general of the Catholic Diocese of Hong Kong Father Michael Yeung Ming-cheung said last week that students with drug problems might find ways around getting tested, such as skipping classes. The Hong Kong Buddhist Association and teachers' group Education Convergence have also cautioned against rushing the scheme. But Mr Tsang said the Education Bureau would proceed with the scheme, which is scheduled to begin in Tai Po district early next month. At the RTHK forum, the chief executive gave religious encouragement to a rehabilitated drug user. A student who gave his name as Ka-kei shared his experience of quitting drugs and Mr Tsang responded by presenting him with a Christian cross as a gift for his 16th birthday. "Jesus was reborn and carried out his big mission. I hope you can do that too," Mr Tsang, who is a Catholic, told Ka-kei. On another radio programme, Father Yeung reiterated that the church was not opposing all drug tests, but said schools did not have sufficient manpower for the programme. "At least the number of social workers and teachers should be increased," he said. Social Welfare Director Stephen Fisher has said he expected demand for drug counselling would increase. "If there is suddenly a surge in the number [of people requiring counselling], it may impose pressure on existing services," he said. While the government would try to meet the increased need, Mr Fisher said additional services would be created in the long run. "We will need more services and we have already applied for resources in a bid to support the pilot scheme," he said. Executive Council convenor Leung Chun-ying said the drug-testing program should not be postponed, but the government should keep an open mind and listen to suggestions for improvement.

The self-employed contracts deny the McDonald's delivery riders medical insurance, sick pay and compensation for work injuries. The 500 people who deliver McDonald's takeaway meals around the clock have been forced to sign contracts saying they are self-employed, a trade union says. Yet they work fixed shifts, are paid a fixed hourly rate of HK$28 and do not provide their own motorcycles. The contracts make them liable for their own Mandatory Provident Fund contributions and give them no paid leave, medical insurance, sick pay or compensation for work injuries; in the past month, 10 of the McDonald's delivery workers have told the union they have been injured in road accidents. The self-employment relationship between the workers and Rixon Express, a transport firm to which McDonald's outsourced deliveries, was fake, Juo So-in, spokeswoman for the Catering and Hotel Industries Employees General Union, said.

Retailers report a drastic decrease in the use of plastic bags since the 50 cent levy began a month ago, but manufacturers say their business has dropped only about 10 per cent. The Retail Management Association says about 80 per cent of shoppers now use their own bags. But the Hong Kong Plastic Bags Manufacturers' Association says that while sales of the familiar supermarket-style bag with handles, which now attract the levy, have fallen 30 per cent or more, sales of other types of bags are rising. The association, whose 100-odd members account for about 70 per cent of all plastic bags sold in the city, says orders for reusable bags jumped about 40 per cent in July. Manufacturers have also seen a one-third climb in business for plastic carriers used in prepackaging and say handle-less bags, including garbage bags, also gained by a third. One said that while his factory was producing fewer conventional shopping bags, the environment would not necessarily get better. "Orders from shops turn to non-woven reusable bags, to show they are caring for the environment," the manufacturer, who has been working in the industry for more than 30 years, said. "Their real motive is to use them to advertise, or even to earn money from selling the bags." He said reusable bags might cause more harm to the environment than conventional plastic bags. "The raw plastic materials for producing one reusable bag could make up to 10 [supermarket] bags," he said. Wholesaler-retailer Scenery Restaurant Supply said it was selling about 20 per cent more plastic bags with handles to individual shoppers. "After the levy came into practice, customers are carrying their own conventional plastic bags [to go shopping] but not reusable bags," owner Chui Chi-wa said. Scenery sells plastic bags of different sizes, charging about HK$8 for 100 bags like those offered by supermarkets. A customer leaving the company's shop in Tsuen Wan said she would buy packs of plastic bags to carry her groceries. "Reusable bags are actually inconvenient for shoppers as they are not good for fresh food like fish and vegetables. Conventional bags have another advantage because they can be used for garbage," she said. Shoppers who forget to bring enough bags to carry their purchases buy reusable bags at the retail outlets. According to the Retail Management Association, demand for such bags has jumped by 5 to 1,100 per cent, varying among different shops. Demand for tear-off produce bags, available free in the grocery sections of supermarkets, has also risen - by 10 to 60 per cent. Association president Caroline Mak Sui-king said it was possible shoppers were taking more of them to carry their other purchases. According to a survey of 33 companies covered by the levy, two-thirds said more people were using their own bags than on the first day of the levy, while slightly more than half said business had dropped on weekends. Three-quarters said customers bought fewer frozen foods and cold drinks, and nearly half said people bought less cooked food. Wellcome said 86 per cent of customers brought their own bag, 8 per cent paid the bag levy and the rest made purchases without using a bag. ParknShop said it distributed 85 per cent fewer plastic bags in July. In response to criticism that more pre-packaged products - including drinks - were being sold, Ms Mak said it was unfair to compare the number of such products in July to May or June. "The summer season is the peak period for promotion of drinks." Environmental Protection Department deputy director Albert Lam Kai-chung said implementation of the levy had been smooth. "To a certain extent, a switching effect exists," he said. Nevertheless, the drop in demand for plastic bags was bigger than the increase for other bags, he said.

The crew behind Devashard, Benjamin Hall (left), Johnny Tam, Simon Squibb and Helen Griffiths, at Fluid Comics' Sheung Wan office decorated with images from the comic. A Hong Kong comic is making a break into Hollywood for the first time, with a California-based movie studio planning an adaptation into a fantasy that would be on the scale of The Lord of the Rings. DevaShard, a locally published graphic novel series that draws inspiration from sanskrit epics from ancient India such as The Mahabharata, has been optioned by CastleBright Studios, a subsidiary of NBC Universal. Vanquish Motion Pictures, which is under CastleBright Studios, is raising funds to develop the comic into an US$80 million blockbuster. Directors who have expressed interest in the project include John Woo and Alfonso Cuaron, who directed Harry Potter and the Prison of Azkaban, but a decision has yet to be confirmed. Other names attached to the project's development include Kevin Grevioux, the co-creator and co-writer of the action-packed vampire series Underworld, who has started overseeing the script's development, and David Venghaus, the assistant director on Tropic Thunder and two of the Pirates of the Caribbean instalments, Dead Man's Chest and At World's End. The publisher of DevaShard, Fluid Comics, exhibited at the Comic-Con in San Diego last year and the graphic novel was picked up by the Hollywood studio. "We picked up the property because the groundwork done was exceptional and we felt that the storyline based on Asian mythology is going to be the next big thing," the o-founder of CastleBright Studios, Jay Douglas, said. Fluid's business development director, Spencer Douglass, said that although the creative team - comprising international members, including scriptwriter Benjamin Hall from Britain and local artist Johnny Tam - hoped to turn the title into a movie, having DevaShard being picked up by a Hollywood studio was never expected. Up to now, two issues of DevaShard have been published, with a print-run of 50,000 copies sold in Hong Kong, Southeast Asia and the West. Fluid Comics is negotiating a deal for a console game for DevaShard but details are yet to be finalised. Hong Kong Comics and Animation Federation secretary Alan Wan Siu-lun said DevaShard's experience was rare for a local comic and it showed Hong Kong had global creative talent. He said Hollywood studios had approached local titles for movie adaptations, such as Weapons of the Gods and Storm Rider, but none had borne fruit. Mr Wan hoped that the news would send a wake-up call to the government on the importance of promoting local artists overseas and in developing the city's creative industries.

The government's "dull" website will get a new look next year that is aimed at making it more user-friendly and that could eventually transform it into a social networking site. Chief information officer Jeremy Godfrey, who is overseeing the HK$900,000 project, said the new design, now being tested, was meant to be "a lot warmer and more friendly" than the present one, which he admitted was dull. "Websites from the commercial sector, such as airlines and banks, have set the benchmark of public expectations," Mr Godfrey said. "We need a much more human feel to the government website. Our objective is to provide services, rather than just information, that are convenient, efficient and pleasurable to use." He said most users came to the site with a specific goal, so an "I want to" box would be put on the front page to make sure the most popular services were the easiest to reach. Personalized services, with which users could sign up for an account, bookmark items and create their own pages, would also be introduced from the third quarter of next year. These could be as simple as a tax reminder or e-billing services, which showed bills from different departments in one portal, he said. These took longer because of security and privacy concerns, he said, but were only the beginning. "In the long run, we want to develop the portal into a social networking site, in which you may send e-invitations to your friends to join a tennis match after you book a tennis court." The revamp would also include a version for access by mobile and netbook users, he said. Mr Godfrey would not predict traffic volume for the portal after the revamp, but said he would like to see "millions of people register to the website in a few years". There were 249 million visits to the government website and 4.06 billion page views in 2007-08, 12 per cent and 15 per cent up, respectively, on the 222 million visits and 3.53 billion page views the previous year. A government survey cited in the Audit Report in March showed only 44 per cent of people said they would visit the portal regularly. The Audit Commissioner has also recommended an improvement of GovHK to increase user awareness. "The purpose of the government portal is not getting eyeballs," Mr Godfrey said. "The use of the website is driven by events. The visits have shot up by more than three times since the swine flu outbreak, with people very keen to get information from the government."

The Hong Kong Monetary Authority (HKMA) announced Friday it has received 21,602 complaints up to Thursday concerning Lehman-Brothers-related products.

The Hong Kong Monetary Authority announced Friday that the official foreign currency reserve assets of Hong Kong amounted to 218.1 billion U.S. dollars at the end of July 2009. According to the authority, the amount of foreign currency reserve stood at 207 billion U.S. dollars at the end of June. Including unsettled forward contracts, the foreign currency reserve assets of Hong Kong at the end of July 2009 stood at 219.8 billion U.S. dollars. A total of 208.2 billion U.S. dollars was recorded at the end of June. Hong Kong is the world's seventh largest holder of foreign currency reserves based on the latest published figures, after the Chinese mainland, Japan, Russia, China's Taiwan, India and South Korea. The total foreign currency reserve assets of 218.1 billion U.S. dollars represent about nine times the currency in circulation or 48 percent of Hong Kong dollar M3.

China: China's passenger car sales last month jumped 70.54 per cent from a year earlier, as rising consumer confidence, tax cuts and government subsidies continued to boost demand. A total of 832,600 cars were sold last month, up from 488,200 a year earlier, but shy of 872,900 units sold in June, the China Association of Automobile Manufacturers said. Overall vehicle sales, from trucks to buses, surged 63.57 per cent in the month to 1.09 million units from a year earlier, the association said, after gaining 36.48 per cent in June. Industry analysts attributed the impressive figures largely to Beijing's stimulus measures which had effectively bolstered vehicle demand in the country. However, weak vehicle demand in the second half of last year in the wake of a devastating earthquake also played a role in inflating the year-on-year growth rates of last month, analysts said. "July was a very solid month as consumer confidence remains strong, but a weak second half in 2008 was also a factor," said Qin Xuwen, an industry analyst with Orient Securities. "Still, there is little question that double-digit or much higher year-on-year growth rates can be extended in the remaining months." Car sales had eased sharply since July last year because of the earthquake in Sichuan and as a slowing economy dented consumer confidence. Demand started to recover in February this year thanks to a series of government policy support measures, from a halving in the sales tax on small cars to subsidies for buyers in rural areas, effectively lifting carmakers sales to record levels. General Motors has been among the biggest beneficiaries. Its mainland vehicle sales jumped 77.7 per cent to 144,593 units last month. Rural subsidies spurred demand for minivans, which account for about 60 per cent of GM's sales. The carmaker expects to exceed its forecast of selling 1.4 million vehicles in the country this year, up from 1.1 million last year, said Johan Willems, the vice-president of GM International Operations. "We have run pretty quickly in China to take advantage of the market, and we have a good footprint there. We had the best July ever in China," Mr Willems said. Many Chinese and foreign players, from Daimler's Mercedes-Benz unit to China's biggest SUV maker Great Wall Motor, have expressed optimism for the second half. Nissan and partner Dongfeng Motor (SEHK: 0489) announced plans last month to build a plant in Guangzhou. The factory will raise their venture's capacity to 700,000 vehicles a year. In the first seven months, passenger car sales rose 30.91 per cent to 5.37 million units. Overall vehicle sales grew 23.38 per cent to 7.18 million units, data showed.

Tens of thousands of people perform tai chi yesterday in front of Beijing's National Stadium, also known as the Bird's Nest, to mark the first anniversary of the opening of the Beijing Olympics. Perhaps the city's most prominent reminder of the highly successful Games, the US$423 million stadium is the world's largest steel structure, seating 80,000 spectators.

Chinese submarines and other warships take part in an international fleet review off Qingdao and the magnificent closing ceremony for the Beijing Olympic Games - a fittingly grandiose finale to China's "coming-out party". From successfully hosting the 2008 Olympic Games to recognition as a so-called G2 partner with the US, China's clout on the global stage has had a boost. And significantly, this has been achieved in a year, not decades. Last year's Games were perhaps the most visible symbol of China's rapid rise as an international power. Not only did the event serve as China's "coming-out party", but it also helped mark the country's economic achievements, especially those since the beginning of this millennium, said Jin Canrong , deputy dean of the School of International Studies at Renmin University. In this short time, China moved from being the world's sixth-largest economy to being No3. Joseph Cheng Yu-shek, a China watcher at City University of Hong Kong, said the success of the Olympics had given China's leadership a major psychological boost. With it came more confidence on the international stage and more assertiveness in foreign policy. Steven Tsang, a China watcher at Britain's Oxford University, said that while the central government gained a lot of good coverage through the Games, he was not sure "if this really enhanced the country's soft power that much". "This does not mean the leadership does not believe in trying to raise China's standing and improve its image. The Olympics has certainly reinforced this," Professor Tsang said. "But the outside world has largely forgotten about the Games by now." For years, China's foreign policy was guided by Deng Xiaoping's cautious injunction tao guang yang hui, a term used by ancient strategists and often translated as "hiding one's capacities and biding one's time". But it seems that China's time has arrived. From its naval confrontation with the US in the South China Sea in March to its challenge to the US dollar's international position, Beijing appears ever more confident as it extends its reach around the globe - and its rivals appear more watchful. Vice-President Xi Jinping , who appears to be the heir apparent to President Hu Jintao , struck a different note to Deng's philosophy on an overseas trip this spring. Blogs quoted him saying: "There are some well-fed foreigners who have nothing better to do than point fingers at our affairs. China does not, first, export revolution; second, export poverty and hunger; third, cause troubles for you. What else is there to say?" Recent headlines are further evidence of the arrival of a new power: "Chinese peacekeepers patrol Darfur and Kosovo"; and "Chinese navy battle Somalian pirates". Premier Wen Jiabao publicly fretted about the safety of China's vast US treasury holdings, and People's Bank of China governor Zhou Xiaochuan caused a stir at the London G20 summit in April by calling for the creation of a non-sovereign currency to replace the greenback as the mainstream international reserve currency. They also lobbied for allowing developing countries to have a greater voice in global affairs and the global oversight of the Western-led financial system. China's state-owned companies are becoming the world's big spenders, looking to acquire assets, from minerals to top brands, from bankrupt Western companies. Mr Hu took centre stage at the G20 summit. But also making a splash was the "G2" concept - or the Group of Two nations, meaning the United States and China - suggesting China is itching to challenge America's global economic and political dominance. At the G20, China pledged US$40 billion in extra funding to the International Monetary Fund, a move Xinhua described as having given Beijing "a chance to showcase its growing importance to the world economy". A National Intelligence Council report indicates the coming of a new world order: by 2025, the world will say farewell to US supremacy, and China is expected to be biggest beneficiary of that change, it says. The council is a US government body. Investment bank Goldman Sachs predicted China would overtake the US as the world's largest economy by 2040, but that date has been brought forward to 2027 in its latest report. Professor Niall Ferguson of Harvard University has even predicted the end of "Chimerica", a term coined to describe the symbiosis of the Chinese and US economies in the past decade. He now sees the Chinese economy becoming independent of the US as a result of the current recession. Professor Tsang said the main sources of Chinese soft power come from a "China fever" in recent years. It also comes out of the expectation, and therefore the perception, that China will bail the world economy out of this recession. The relative decline of the capitalist model also helps boost China's soft power, as some developing nations are looking at the Chinese model to reinvent their growth, he said. While the world is watching China's rise with worry, there is growing debate in Beijing over how its foreign policy should respond to fast-changing global economics and politics. Some say Beijing should seize opportunities to win international standing by playing a bigger role in international economic negotiations and traditional security. Others agree with Wu Jianmin , president of China Foreign Affairs University, who advises China's leaders to "remain level-headed and continue tao guang yang hui". Zuo Xiaolei , chief economist with Galaxy Securities, warned that the G2 concept was a total exaggeration of China's rising clout, saying Western countries want to use it to pressure China to contribute more to help bail out the global economy. "It is total nonsense to suggest China as No2 in the world's economy, just in view of its about 6 per cent share of gross global product, while Japan is about 8 per cent, Europe is 24 per cent and the US is 25 per cent," Ms Zuo said. Analysts also point out that despite its increasing soft power, China cannot change the world's perception of it as long as it continues to be ruled by one party. "The international perception of China's rising profile on the world stage and its increasing assertiveness in diplomacy in the year since the Olympics is still mixed, as human rights, Tibet and mostly Xinjiang issues continue to remind the world that China is still a one-party-ruled communist nation," Professor Cheng said, adding that the unresolved legacy of the Tiananmen crackdown and its treatment of the Falun Gong also damaged the country's image. Professor Tsang added that Beijing's handling of last month's unrest in Xinjiang, and Mr Hu's abbreviated participation in the G8 meeting, also damaged China's international image. Dai Qing , a long-time dissident based in Beijing, said China's success in hosting the Olympic Games and its rising international clout had only encouraged the government to continue to tighten its grip on the media, suppress free speech and heighten its repression in Tibet and Xinjiang in the past year. Clearly, as the rest of the world watches those repressive policies at home as well as what China does in flexing its economic and political muscles abroad, the country still has far to go to make the world perceive it as it would like.

Zheng Jie of China returns the ball to Dinara Safina of Russia during a match at Los Angeles Women's Tennis Championships in Carson, Calif., Thursday, Aug. 6, 2009. Zheng won 7-5, 4-6, 6-4.

Huge turbines of wind power plants are pictured in Hinggan League (or prefecture) of north China's Inner Mongolia Autonomous Region on Aug. 7, 2009. Inner Mongolia, covering 1.18 million square kilometers of land, has boasted more than 3 million kilowatts of wind power, the largest of its kind in China.

An oil field with about 140 million tonnes of high-quality reserve has been discovered in north China's Inner Mongolia Autonomous Region. The oil field, in Chaogewenduer Township of Urad Rear Banner, was discovered by the Geophysical Exploration Company of Zhongyuan Petroleum Exploration Bureau, a unit of China's state-run oil refiner Sinopec. Shang Ruibin, an official of the exploration company, said the exploration was expected to finish at the end of this month and exploitation would start in about a year. About 130 million yuan (19.11 million U.S. dollars) has been invested in the exploration, up to 800 workers were involved.

Aug 8 - 9, 2009

Hong Kong: Britain's Harrow School, which counts Winston Churchill among its long line of famous alumni, has been chosen to open an international school in Hong Kong. Harrow International School will operate primary and secondary sections on a 3.7-hectare site at So Kwun Wat, Tuen Mun, in the New Territories, with an initial intake of about 1,200 pupils. Its secondary section would offer space for 290 boarders, according to the school's plan. A Harrow International (HK) spokeswoman said: "Hong Kong has many international schools and the city has strong ties with Britain. We believe a British curriculum will have a good market here." The government is pushing to turn the city into a regional education hub, and Secretary for Education Michael Suen Ming-yeung said: "I believe it is a step forward for Hong Kong in developing a vibrant international school community attracting students from different parts of the increasingly connected world." British Chamber of Commerce executive director Christopher Hammerbeck said the move had the potential to expand local international school education into the Pearl River Delta. Gerald Postiglione, professor of education at the University of Hong Kong, said the Harrow school would help bring in education revenue from the growing ranks of wealthy parents in the Pearl River Delta region. "It's a big market out there on the mainland and even in Southeast Asia," he said. However, the Harrow spokeswoman said it was too early to say if it would try to tap students from Guangdong because it was not allowed to do so under present government policy. An Education Bureau spokeswoman said international schools mainly served the children of expatriates in Hong Kong, but could recruit overseas students, although not from the mainland, Taiwan or Macau. Harrow International already operates schools in Bangkok and Beijing. Education is one of the six so-called knowledge-based industries Hong Kong should aim to develop, according to a task force chaired by Chief Executive Donald Tsang Yam-kuen tasked with identifying new development directions for Hong Kong. The Bauhinia Foundation Research Centre - a think tank widely believed to be close to Mr Tsang - earlier released a report proposing Hong Kong develop as an education centre and attract students from the Pearl River Delta region. Harrow School is one of four operators chosen to run new international schools in Hong Kong. The other three are existing operators. They are the Kellett School Association, the Trustees of the Kowloon Tong Church of the Chinese Christian and Missionary Alliance, and the Hong Kong Academy. Their sites are in Kowloon Bay, Lai Chi Kok and Sai Kung respectively. The school operators have been granted the sites for nominal rents and must run as non-profit organisations.

Wong Kwong-yu - once the mainland's richest man - and his wife have had HK$1.66 billion in assets frozen by a Hong Kong court following an application by the Securities and Futures Commission. Mainland authorities are investigating Mr Wong, formerly chairman and the biggest shareholder of Hong Kong-listed Gome Electrical Appliances Holding (SEHK: 0493), for economic crimes. He was detained in November. His whereabouts remain unknown. Two weeks ago a company called Shinning Crown Holdings - through which Mr Wong holds Gome shares - was used to raise funds to enlarge his stake in the retail giant. The company is among those subject to the court order. The freezing of the couple's assets signals that regulators on both sides of the border are ramping up efforts against Mr Wong, who built Gome into the mainland's largest electrical retail chain. The High Court ordered Mr Wong, his wife Du Juan, Shinning Crown Holdings and Shine Group - the two companies through which Mr Wong holds his Gome stake - not to remove from Hong Kong assets worth up to HK$1.66 billion. The Court of Appeal recently upheld the SFC's powers to freeze assets as part of investigations. Despite his detention, Mr Wong raised HK$400 million two weeks ago selling Gome shares to buy new ones as part of a share offer, and reportedly made a tidy profit. Mr Wong's case is being watched closely in Beijing because of its implications for the mainland's ambitions to improve corporate governance. The case has uncovered a maze of suspected economic crimes and other offences. Mr Wong has not been charged with any crime. "The impact goes beyond rational financial analysis," said Randy Zhou, an analyst with UBS Securities. The SFC is also seeking a declaration that the defendants contravened a section of the Securities and Futures Ordinance dealing with fraud and deception. In addition, it is seeking a court order to make the couple pay compensation to Gome. Mr Wong resigned as Gome chairman in January after his detention in Beijing. He has been linked to a widening corruption inquiry that has seen the arrest of senior officials including Zheng Shaodong, a former assistant minister of public security, and Hong Kong businessman Lin Chiu. The Hurun Report ranked Mr Wong the mainland's richest man last year. His major asset is his 4.87 billion shares in Gome, worth HK$12.51 billion based on the stock's closing price yesterday of HK$2.57. His wife holds 205 million shares, worth HK$526 million. The SFC filing said Mr Wong held HK$57.96 million in Bank of China accounts on dates between July 24 and July 29 and HK$50,950 in an HSBC (SEHK: 0005, announcements, news) account on July 15. He and his wife had HK$1.57 million and US$17, 957 in joint BOC (SEHK: 3988) accounts on dates from July 24 to July 27. The court said the order would remain in force until September, when a further hearing will be held unless the defendants have secured the assets in question or paid HK$1.66 billion into court. The appeal court last month confirmed the SFC's powers to seize assets when the regulator won a legal battle involving two cases of alleged insider dealing in which the defendants had sought to block attempts to freeze their assets or to force them to compensate victims.

A Hongkonger who said he was detained and blackmailed in Guangzhou has urged the Hong Kong government to offer more protection for its residents involved in trouble across the border.

Hongkong Land Holdings, the largest landlord in Central, reported an interim net loss of US$402 million yesterday due to the revaluation of its investment properties. The developer recorded a property revaluation loss of US$885.2 million in the first half. The valuation of its commercial investment properties dropped 8 per cent at the end of June, mainly because of a 28 per cent fall in the value of its properties in Singapore. In the first half of last year, Hongkong Land posted a net profit of US$1.63 billion. Excluding the revaluation loss, underlying profit was US$281 million, up 16 per cent from a year earlier. Credit Suisse analyst Cusson Leung said this was almost 25 per cent higher than his expectation. Revenue rose 63.38 per cent to US$521.5 million from US$319.2 million. Finance director Geoffrey Brown said spot rents of the company's office portfolio in Central had dropped 25 to 30 per cent in the first half due to the financial crisis. However, the landlord still enjoys a positive rental revision due to leases coming up for renewal, with rental income from its commercial properties in Hong Kong rising 26 per cent to US$316 million. The average rent of its office portfolio in Central rose 25 per cent to HK$83 per square foot from HK$66 due to renewals, while that of retail properties stood at HK$131 per square foot, according to Mr Brown. The vacancy rate of Hongkong Land's office portfolio rose to 5.5 per cent at the end of June, compared with 2.6 per cent at the end of last year. However, Mr Brown said about 25 per cent of that space had been leased and the vacancy rate would drop to 4 per cent when the new tenants moved into the buildings in the next few months. He did not expect a significant change in the vacancy rate in the second half. The company's retail space in Central remains fully occupied. Mr Brown said the company was cautiously optimistic on the office market outlook. "We see the pace of falling rents has started to slow down in the second quarter. The office market has stabilised and turned active in recent months," he said, adding that there was limited supply in Central and the company had the best office buildings in the city. "It is difficult to predict when rents will bottom out," he said. But Mr Brown expects the company could still enjoy a positive rental revision in the second half. "We should also benefit from the completion of new projects in the second half," he said. The company will continue to look for opportunity to expand the business, including the development project on the mainland. The company declared an interim dividend of 6 US cents per share, unchanged from the year-ago period. Hongkong Land shares dropped 0.75 per cent to close at US$3.96 in Singapore yesterday.

Swire Pacific (SEHK: 0019) yesterday cut its interim dividend by a third as profits from Cathay Pacific Airways (SEHK: 0293) failed to offset a sharp fall in property earnings, sending net earnings for the company plunging 73.82 per cent. The conglomerate, which is engaged in the property, aviation and beverage businesses, reported net income of HK$3.23 billion for the six months to June, compared with HK$12.34 billion a year earlier. Earnings from its aviation division, largely because of its 39.9 per cent stake in Cathay, were HK$520 million, up from a loss of HK$29 million a year earlier. On Thursday, Cathay returned to the black with an interim profit of HK$812 million, compared with a loss of HK$760 million a year earlier. The earnings were boosted by a HK$2 billion write-back of last year's disastrous fuel-hedging losses. However, the improvement in the aviation business was wiped out by an 88.39 per cent fall in property earnings. Operating profit in property dropped to HK$1.27 billion because of a HK$1.18 billion revaluation deficit on investment properties, compared with a revaluation gain of HK$9.92 billion a year earlier. "Demand in the office market weakened somewhat, reflecting global economic conditions," said Martin Cubbon, an executive director of Swire. Swire's earnings were better than the market forecast of HK$2.6 billion to HK$3.1 billion. The company cut its interim dividend to 60 HK cents per A share, down 33 per cent from 90 HK cents a year earlier. It set its B-share dividend at 12 HK cents, down 33 per cent from 18 HK cents previously. Swire owns more than 14 million square feet of investment property, including the Pacific Place office-retail-hotel development in Admiralty and 1.54 million sqft on the mainland. "The revaluation deficit is largely affected by the depressed office leasing market," said Eric Yuen Chi-fung, the head of research at Guoco Capital. In Admiralty, office rents declined about 20 per cent in the first half, he said. "Office rental has not yet bottomed out and will continue to be under downward adjustment pressure for the next six months." However, Mr Yuen said the revaluation deficit of HK$1.18 billion on investment properties accounted for less than 1 per cent of Swire's HK$138.77 billion property portfolio. Excluding the revaluation deficit on investment properties, Swire's underlying interim profit, which reflects its core earnings, rose 17.7 per cent to HK$3.79 billion. Gross rental income increased 10 per cent to HK$3.59 billion. Swire's rental income was boosted by the development at One Island East in Quarry Bay and the Village South retail complex at Sanlitun in Beijing, which opened last year. Earnings from the beverages division rose 89.28 per cent to HK$371 million because of growth in sales volume. Profit at marine services grew 5.8 per cent to HK$929 million, but net income at the trading and industrial division dropped 44.87 per cent to HK$129 million. Turnover rose 1.3 per cent to HK$11.94 billion. After the interim results announcement, shares in Swire rose 1.23 per cent to HK$86.20.

Education minister Michael Suen briefs representatives of Tai Po schools on details of the trial scheme to test pupils for drug use. Police will be told if students test positive for drugs under a voluntary trial to be launched in Tai Po next month, although the students will not be expelled or prosecuted. Secretary for Education Michael Suen Ming-yeung said the scheme aimed to help students with drug problems, not to punish them. "Social workers will give these students counselling and help them. The school police liaison officer will also be informed," Mr Suen said after attending a meeting with principals and teachers in Tai Po. Kwok Wing-keung, chairman of the Association of Secondary School Heads, Tai Po district, also pledged students found to have drug problems would not be expelled.

New international schools not enough, business leaders say - The four new international schools granted land by the government yesterday would do little to ease the waiting list for places at such schools, operators and business leaders said.

The recent strong inflows of capital into Hong Kong, if they persist, could fuel inflation and pose a threat to the city's economic and financial stability, warned Joseph Yam Chi-kwong, the chief executive of the Hong Kong Monetary Authority, yesterday. The flip side, said Mr Yam in his weekly HKMA website column, was that any sudden reversal of the flows could then push up interest rates. However, the head of the de facto central bank said there were ways to deal with the inflows. He did not rule out measures to restrict bank lending to avoid an asset bubble. Mr Yam said there were no signs of excessive credit creation, which might fuel speculation in asset markets. "We are mindful of the potential negative impact that asset price bubbles, if they were to occur, could have on financial stability," he said. The HKMA could use measures to ensure that banks did not expand their lending to asset markets imprudently, Mr Yam said. "This would help restrain credit expansion arising from strong capital inflows and banks' credit risk exposure, which might increase sharply if an asset price bubble were to burst," he said. If capital flows reversed, the HKMA could operate directly within the convertibility zone, if necessary, to avoid destabilising movements in exchange and interest rates. The HKMA has pumped more than HK$268 billion into the banking system so far this year amid strong demand for the local currency. This brings the aggregate balance to HK$232.99 billion because the HKMA has issued more than HK$220 billion worth of bills that have reduced the balance correspondingly. Hong Kong's monetary base - formed by notes in circulation, the aggregate balance of the banking system, and Exchange Fund paper - more than doubled to HK$771 billion at the end of last month from HK$324 billion a year earlier. Under the linked exchange rate system, the HKMA is committed to buying or selling the Hong Kong dollar to keep it within the HK$7.75 to HK$7.85 range - the convertibility zone. "These inflows were largely 'real money', that is, not related to any speculative activity in the currency," said Mr Yam in his column. Alan Luk Ting-lung, the head of investment advisory at Hang Seng Bank (SEHK: 0011) , said the capital inflows mainly came from investors bullish on the outlook of the mainland and Hong Kong economies. But he did not rule out the possibility that there was speculation on a change in the currency peg. "I don't think the government would make any change at this stage as there are insufficient reasons economically or politically," Mr Luk said. He said the city could see an asset bubble if liquidity inflows continue, but slight inflation could be good for the city at this stage when the economy had not yet fully recovered.

PCCW (SEHK: 0008), the city's biggest telecommunications operator, will boost its exposure to the English-speaking call-centre business by paying HK$170 million for Philippine investment firm IPBPO Holdings. The deal will give PCCW controlling 70 per cent stakes in two call-centre firms.

China: China still has a long way to go in upgrading industrial processes, although it had managed to secure economic stabilization and was moving upwards, Zhuang Jian, a senior economist with the Asian Development Bank, said Thursday. "China has achieved great success in bolstering the economy's growth through a series of plans to stimulate it, but it should also continue making efforts to upgrade its industries, as well as its energy-saving and pollution reduction measures, to sustain development," Zhuang said. China's economic growth had slowed during the global downturn, but expanded 7.9 percent in the second quarter of 2009 year on year after sinking to 6.1 percent in the first quarter. Zhuang said the improvement of China's industrial structure and increasing energy conservation were of critical importance to the world. Government figures show the amount of energy consumed in China to produce a unit of gross domestic product (GDP) dropped 3.35 percent year on year in the first half. The decrease compares with 2.88 percent for the first half of last year. China should also promote domestic consumption to boost economic growth, he said.

China has plans to lower tariffs on the import of luxury goods, including cosmetics and luxury watches, as part of its efforts to spur domestic consumption on high-end products, Jiang Zengwei, vice Minister of Commerce, said in an article published in today's People's Daily.

China is winning a global race to create "green collar" jobs, six months after countries worldwide launched US$500 billion in spending plans to drive a low-carbon economy. Following the economic downturn, both the United States and Europe aim to spur jobs in a green push to fight climate change and boost energy security, but China may leapfrog both goals this year in new wind power - a key measure. China passed the US in the number of new wind turbines built in the first half of this year, data from Beijing-based specialists Azure International showed, and it was also increasing its share of the main market for solar power, Europe. "I think China is definitely winning the race," Wu Changhua, China director of the London-based environment body The Climate Group, said. She cited support for low-carbon LED lighting and electric cars, as well as wind and solar power. "A low-carbon economy is mainstream thinking," she said, adding that mainland development was helped by swift centralised decision-making. In wind power, local demand often means local jobs - that is especially true on the mainland, where an unofficial rule says all installed turbines must include 70 per cent local content. Foreign companies' market share is falling. "In the first half [of 2009] that decline continued," Sebastian Meyer, head of research at Azure, said. In solar power, Germany will dominate demand this year, according to Barclays Capital. But Chinese manufacturers will continue to grab an increasing share of production despite a fall in prices, their key differentiator, New Energy Finance analyst Jenny Chase said. China accounted for about a third of the market for global solar-cell production last year, while Europe's share declined to about a quarter, according to a survey by German industry publication Photon. The wind ranking may change - China added about 4.5 gigawatts in the first half of the year, Mr Meyer said. That would put the country on track to pass the US, which installed 4GW, according to the American Wind Energy Association. The Global Wind Energy Council expected China to take top spot this year, secretary general Steve Sawyer said. Two weeks ago, Beijing fixed the price for wind power using a so-called feed-in tariff, and an economic stimulus and credit loosening have boosted projects. "This year, plans to develop have been accelerated under the stimulus environment, it has to do with infrastructure across the board. Banks have more imperative to lend," Mr Meyer said. The US is likely to be China's chief rival in new wind power, analysts say, overtaking Europe, where some countries suffer planning delays. "The permitting process has been easier in the United States than in certain countries in Europe," said HSBC (SEHK: 0005, announcements, news) 's Robert Clover.

Chinese Premier Wen Jiabao(R) talks with Qian Xuesen, a renowned scientist and founder of China's space technology, during his visit to Qian in Beijing, capital of China, on Aug. 6, 2009.

After a highly publicised global search for foreign managers to help it modernise, the mainland's main military jet maker has hired six executives, all Chinese, a company spokesman said yesterday. The Aviation Industry Corporation of China (Avic) announced in February it wanted new blood from overseas to help it compete in commercial aviation. The move was unprecedented for a Chinese military contractor. The company received nearly 1,000 applications from 20 countries, and 10 foreign nationals were among 67 people in the final round of interviews, company spokesman Ding Zhiyong said. Mr Ding did not know why only Chinese nationals were hired. "Maybe there was a mismatch between the recruits and the posts," he said. "We are still in contact with some candidates for experts' posts. Some might not fit into management posts, but they are very skilful." Government-owned Avic is trying to develop aircraft, including a 150-seat jetliner, to compete with Boeing and Airbus. The new managers, who include a former deputy mayor, would be vice-presidents of Avic's defence, aircraft, helicopter, investment and international divisions, Mr Ding said. He said several had doctorates or master's degrees from overseas universities. The Beijing-based company said in February that it wanted to hire 13 vice-presidents to help improve production, marketing and management in divisions including defence, a job it said might be open to non-Chinese. It would have been the first time a Chinese military enterprise had employed foreign executives. A growing number of Chinese companies, including personal computer manufacturer Lenovo (SEHK: 0992, announcements, news) and carmaker SAIC Motor, have hired foreign executives as they try to expand into global markets. The central government created Avic last November by merging its two biggest military aircraft companies. It hopes to nurture a commercial aerospace industry on the mainland. Beijing has spent heavily on weapons development and has bought Russian technology, including the right to manufacture a version of the supersonic Su-27 fighter. But analysts say China still lags Western countries in many areas. An AVIC subsidiary received a 176 billion yuan (HK$200 billion) credit line from state banks in January to finance development of a jet airliner.

Qiang women dance before a Diaolou, traditional Qiang stone watchtower. Through folk songs, drama and dance, The Soul of Qiang captures the essence of the ethnic group that lost over 30,000 people to last year’s quake, 10 percent of the minority’s total population.

China and India will resume high-level negotiations today after a year's break to resolve a nagging border dispute over which they fought a war in 1962.

An American participant dressed as Cao Cao, a warlord in the Three Kingdoms period (AD 220-280),performs during the final of 8th Chinese Bridge-Chinese Proficiency Competition for Foreign College Students in Changsha, in central China's Hunan province, August 6, 2009.

The Taiwan Stock Exchange says it is interested in having stocks listed on both sides of the Taiwan Strait, but industry players and analysts warn that it may be easier said than done.

Aug 7, 2009

Hong Kong: First-half net profit for Hongkong Electric (0006) fell 15.9 percent to HK$2.67 billion after the new Scheme of Control came into effect.

Michael Suen Ming-yeung, Secretary for Education, speaks on Thursday at a briefing for representatives from 23 Tai Po secondary schools participating in a trial drug testing scheme. Secretary for Education Michael Suen Ming-yeung said on Thursday pupils could refuse to be examined under the voluntary drug-testing scheme - expected to be launched in December.
Mr Suen made the comments at a press conference after meeting with 23 Tai Po secondary school principals, whose institutions will be testing the new scheme. The government is launching the voluntary scheme after growing community concern about drugs abuse. A team comprising two social workers, two nurses and a data commissioner will visit participating schools in Tai Po every month on an irregular basis. Twenty students randomly chosen will be asked to supply urine samples so that they can be tested for drugs. “Pupils chosen have the right to decline the test and we will respect their choice, even if there is parental approval,” Mr Suen said. “But social workers will offer counselling to pupils who refuse to take the test,” he added. The education secretary also said the results of the drug tests would be kept confidential. They will only be known to pupils, teachers, parents, social workers and school principals. He said pupils would not be expelled as a result of the tests. Cheng Chi-man, a member of the Action Committee Against Narcotics, told he supported voluntary drug-testing. Whether parents and students participate in the scheme was optional, but for those students that were part of the scheme, particular attention should be given to those who, after being randomly selected, had refused to give a sample, Dr Cheng said. “This means they might have taken drugs,” he said. “[And] counselling is always more important than detention in helping students get rid of a [drug] habit.” Vicar-General Father of the Catholic Church Michael Yeung Ming-cheung said Catholic schools would co-operate with the scheme to combat drug use, but he doubted the effectiveness of it. Pupils might still take drugs once the school week had finished or during a vacation, but the test results would not reflect this even if they were tested upon their return to classes, he told local media.

Hong Kong's mandatory pension plans surged in value last month, advancing for a fifth month as signs of a turnaround in the global economy sparked a resurgence in financial markets.

A land premium settlement concluded between Cheung Kong (Holdings) (SEHK: 0001) and the government that paves the way for the development of its 258,000 square foot site could signal a turn in the tide for housing supply, say analysts. Cheung Kong reportedly agreed to pay about HK$530 million, or HK$2,050 per square foot, to obtain the right to develop the site adjacent to its completed Banyan Garden project in Lai Chi Kok. "That represents a good price for Cheung Kong," said CCB (SEHK: 0939, announcements, news) International Securities executive director of research Adrian Ngan Wai-hung. "It's obvious the government is softening its stand to quicken land premium transactions to encourage more development." Eric Wong, a property analyst for Swiss investment bank UBS, said he now expected to see more land premium transactions being settled. "Considering the recent property rally and the risk of an asset bubble forming if private land supply remains artificially suppressed, we expect the Lands Department to soften its stance on minimum land premiums," he said. Driven partly by shortages and revived sentiment, residential prices have risen by about 20 per cent so far this year, according to the Centaline City Leading Index. But against this background of strong demand, only a small site in Sheung Shui has been sold this year through government auction, for HK$305 million. Reflecting the growing imbalance between supply and demand, official data from the Transport and Housing Bureau shows the number of units available for sale fell 9.26 per cent to 49,000 at the end of March. This is the lowest level since records began to be kept in the third quarter of 2004. Increased sales, meanwhile, were helping developers to build up cash reserves with which they could replenish their land banks, said analysts. News of Cheung Kong's land premium settlement comes at a time when it has sold HK$10 billion worth of apartments. In April, it generated HK$2 billion from the sale of Central Park Towers II in Tin Shui Wai and last month it fetched another HK$8 billion from the sale of Le Prestige in Tseung Kwan O. Other developers such as Sun Hung Kai Properties (SEHK: 0016), Henderson Land Development (SEHK: 0012) and New World Development have also released their units for sale. Last month, new flat sales were at a four-year high of 8,863, up 26 per cent, compared with the same period last year. But Alnwick Chan Chi-hing, an executive director of Knight Frank, said developers could stall on the settlement of land premiums as long as the market remained clouded by economic uncertainties. Developers might prefer to bid for sites offered for tender by the Urban Renewal Authority as these were clean sites in prime locations, he said. Echoing this, Savills managing director Charles Chan Chiu-kwok said more developers might prefer to replenish their land banks on the mainland considering the complexities involved in the conversion of land use for redevelopment in Hong Kong. He said the government should review the land application system as the continuation of low land supply would help to fuel property prices.

Sun Hung Kai Properties (SEHK: 0016)' (SHKP) joint-venture foray into Singapore's prime retail strip has bucked a falling trend in rentals in the city state, says Jimmy Wong Chin-wah, an executive director of Sun Hung Kai Real Estate Agency. Ion Orchard, a new luxury mall with an integrated residential building that opens on Orchard Road, had already found tenants for 96 per cent of its retail space, said Mr Wong, and rent per square foot had exceeded the project's targeted amount and now stood at S$20 (HK$108). Total rent revenue for the mall, which is a joint venture between SHKP and Singapore developer CapitaLand, is projected at HK$1.1 billion per year. About 70 per cent of the 96 per cent leased shops have opened for business since July 21. The positive comments from Mr Wong contrasted with a negative report just released on Singapore's retail rental market by consultant CB Richard Ellis. The CBRE report finds that across the whole sector average monthly rentals for Orchard Road retail units fell 7.8 per cent in the second quarter to S$33.90 from S$36.80 per square foot in the third quarter of last year. But Sulian Tan-Wijaya, a senior director of retail and lifestyle in the Singapore office of consultants Savills, said not all landlords on the retail strip suffered the same fate. "Prime retail property rentals were not as badly affected as everyone had expected," Ms Tan-Wijaya said. "They have definitely dropped but done quite well considering the economic crisis and with the new suppliers coming into the top end of the market." She said the relative stability of prime retail property rentals was helped by local demand and demand from top luxury brands like Louis Vuitton. SHKP's Mr Wong said that even though the sharp slowdown in economic growth had a widespread impact on business, it had not severely affected the confidence that Ion Orchard tenants had in the likely performance of the mall and thus there had been no problem renting out the shops. The mall offers 640,000 square feet of net lettable space on eight floors with 335 shops. Out of the 96 per cent leased shops, 70 per cent are made up of new to market shops, flagship stores and new concept shops A feature of the mall is a total of 10 retail duplexes which have been taken up by a variety of mass appeal and premium luxury brands. Six of the luxury brand duplex stores fronting Orchard Road will account for a combined space of more than 50,000 square feet. But while luxury malls such as Ion Orchard seemed to show few signs of being negatively affected by the economy, Letty Lee, a director of retail services at CBRE Singapore, expects a further decrease of rental prices for prime space along Orchard Road. "We expect Orchard Road rents to fall 10 to 12 per cent in 2009 and remain flat in 2010."

China: A Chinese delegation of tire producers warned Wednesday that the proposed U.S. tariffs on Chinese tire export will hurt the American consumers and cause job loss as well. "We have filed much evidence demonstrating that Chinese tire imports do not injure the U.S. tire industry," the delegation said in a letter to U.S. President Barack Obama before a government hearing on this issue on Friday. "The restriction of the Chinese tires cannot solve any problem faced by the U.S. tire industry, and it would hurt U.S. tire distributors and consumers," it said. The U.S. Steelworkers Union, which represents workers at major U.S. tire manufacturers, filed a petition against China earlier this year for import relief and won a favorable ruling from the U.S. International Trade Commission (ITC). The panel recommended Obama to impose a 55-percent tariff on the Chinese tire imports that would be reduced to 45 percent in the second year and 35 percent in the third before being removed. The steelworkers asked for protection under Section 421 of U.S. trade law, which only requires petitioners to show that imports from China have disrupted the U.S. market. "Chinese tire has not disrupted the U.S. market at all since our products are relatively lower ended and mainly for the replacement of tires," Xu Youming, a representative of Chinese tire producers told Xinhua, "The U.S. tire makers do not produce these types of tires." "I think limiting trade in fairly traded goods is protectionism. It would contradict recent pledges by the United States to avoid protectionism and to work in cooperation with China to promote trade," said Mary Xu, deputy secretary general of the China Rubber Industry Association, who led the delegation to Washington. The ITC said it submitted an investigation report to President Obama and the U.S. Trade Representative (USTR) Ron Kirk last month. The USTR hearing would be the final event in the investigation before Obama rules on the ITC recommendation. The USTR will submit its remedy recommendation to Obama by September 2, and the president is supposed to make a decision within 15 days after receiving it. The U.S. trade authorities said Wednesday that this case is seen as a test for Obama's trade policy. The president's decision will tell the world if he believes his own rhetoric about the dangers of protectionism in a weak global economy, The Wall Street Journal said in a report on Tuesday.

Models walk on a three dimensional visual effect painting at Meilongzhen plaza in Shanghai, east China, Aug. 5, 2009. The 3D painting with the theme of the Shanghai World Expo is made by Edgar Müller.

Central bank reiterates credit policy stance - The central bank has reiterated its commitment to stick to the "moderately loose" monetary policy that, according to it, has helped spur economic growth and revive the stock and property markets.

Billions from stimulus tagged to cut emissions - More than 15 percent of the country's 4-trillion-yuan ($586 billion) stimulus package will be spent on cutting carbon emissions by the end of 2010, China's chief climate change negotiator said yesterday.

China's increased spending on new weapons, some of which will be showcased during the 60th anniversary parade, has boosted stocks in the military industry. The AVIC index that tracks 18 defense contractors controlled by Aviation Industry Corporation of China (AVIC), rose a total of 23.3 percent between July 8 and July 31, compared to a 10.5-percent gain in the benchmark indicator. Shares of Shenzhen-listed Xi'an Aircraft International Corporation, the largest military aircraft maker under AVIC, surged an aggregate 34.85 percent within a month. Its shares rose 4.06 percent to close at 15.38 yuan yesterday, the highest in a year. "Military companies have seen a sharp rise in their order books largely due to purchases of latest military equipment for display at the National Day Parade," said Shuai Zaixian, analyst, South China Securities. Before the latest flood of orders, most stocks in the defense sector, which is non-cyclical, had underperformed the major index, Shuai said. Between April 1 and July 7, the AVIC Index rose 12.6 percent, compared with the 28.3 percent increase of the main index. Defense sector stocks often enjoy a bull run three months before the National Anniversary, said Huang Qingyang, analyst, Aijian Securities. This year, the bullish trend has also been aided by the enlarged defense budget. China plans to increase its defense budget by 14.9 percent this year to 480.7 billion yuan, accounting for 6.3 percent of the total fiscal spending, parliament spokesman Li Zhaoxing said early this year, adding that part of the budget would be used for military equipment purchase and construction of facilities for military. In addition, the central government's decision to reform the shareholding system in military enterprises last November also fuelled the sector's restructuring and securitization processes. Shanghai-listed Jiangxi Hongdu Aviation Industry Co, an attack and fighter supplier to the Chinese military for instance, announced last Thursday that it planned to raise up to 2.5 billion yuan through a private placement to its parent company AVIC and several intuitional investors.

China to float $4b T-bonds this week - China's Ministry of Finance announced Wednesday that it would issue a batch of book-entry treasury bonds worth 27.58 billion yuan ($4 billion) this week, the 18th such issue this year.

The head of China's nuclear power program, Kang Rixin, is under investigation for "grave violations of discipline", the top disciplinary body of the Communist Party of China (CPC) said yesterday. International Ltd, a leading travel service provider for hotel accommodations, airline tickets and packaged tours in China, yesterday said its second quarter net profit rose 33 percent year on year.

The world’s No 4 PC brand, Lenovo, reported a smaller-than-expected first-quarter loss on Thursday, thanks to Beijing’s massive stimulus package and further boosting hopes of a rebound.

Peng Shuai returns to Vera Zvonareva at the LA Championships in California on Tuesday. Chinese standouts Zheng Jie and Li Na advanced on Tuesday at the WTA Los Angeles Championship but it was Peng Shuai who provided China's most exciting performance even in defeat. Russian second seed Vera Zvonareva rallied to deny a determined upset bid by Peng before advancing to the third round with a 3-6, 6-3, 7-6 (8/6) triumph in the US Open hard court tune-up. Also struggling to reach the third round was Serbian sixth seed Ana Ivanovic, who outlasted American Vania King 6-4, 4-6, 6-1. Zheng, the first Chinese player in a Grand Slam semi-final after reaching the last four last year at Wimbledon, defeated Ukraine qualifier Olga Savchuk 7-5, 1-6, 6-2. Li advanced when Japan’s Ayumi Morita retired after losing the first eight games of their first-round match. Japan’s veteran 38-year-old Kimiko Date Krumm was also eliminated, falling to Germany’s Sabine Lisicki 7-6 (7/5), 2-6, 7-5. Daniela Hantuchova rallied to oust American Melanie Oudin 6-7 (3/7), 6-2, 6-2. The Slovakian booked a second-round date against world number one and defending champion Dinara Safina of Russia. Safina, this year’s Australian Open and French Open runner-up, defeated Italy’s Flavia Pennetta last year’s Los Angeles final.

Aug 6, 2009

Hong Kong: The five-day comics and games fair ended last night reporting a record attendance, but the big companies fared better than the small ones. As the fair closed at 8pm, turnout hit 649,000, up 5 per cent from last year, the organisers of the 11th Ani-Com and Games fair said. "The bad economy hasn't affected businesses a lot. The bigger companies managed to make profits," fair executive director Leung Chung-poon said. Oscar Chu Chung-ho, general manager of the U1 Technology Company, estimated business to be 10 per cent better than last year. "It's quite good." he said. "Our expanded range ... played a big part in this growth." He introduced several game booths to his exhibits this year so visitors could have some fun with their families apart from shopping. Each dart game cost HK$20. Ronnie Ma Shuk-chu, director of local comic giant Jonesky Publishing, was happy with the long queues at her booth. Each customer had spent about HK$400 and she expected a 5 per cent rise in takings. But Lego's product manager, Yvonne Lam Wing-kei, said business was down 10 per cent. The company had rented just 10 booths this year, compared with 20 last year. And Ricky Chan, an independent exhibitor who sold key chains and toys, said business had dropped by 30 per cent. The sale of counterfeit toys was widely reported in the media. Mr Leung said they had signed contracts with all exhibitors, telling them what they could not sell, but some had flouted the regulations. He said most of the culprits were from the mainland and he thought there was a cultural difference between them and local retailers. "We won't renew contracts with those who continued selling fake products after we advised them not to," he said. Stanley Wong, project manager at Kidult Team, said business had been badly affected by the counterfeit products sold in the first two days. His business had dropped 25 per cent and he said he would only come back if the organisers promised to weed out the fake goods. The booth that sold cushions with prints of racy models said it was sold out, forcing them to take orders only. Cosplay and "image girl" contests attracted many onlookers and photographers. Asked about plans to expand the fair next year, Mr Leung said it had been expanded and the exhibition hall was larger than last year.

The New World First Bus Company staff union said on Wednesday it would strike next Friday - after talks again broke down with management over pay.

Eric Fong Ho-man from St Stephen's College in Stanley celebrates with schoolmates and members of his study group after getting 10 As in the HKCEE on Wednesday. In an emotional day for many Hong Kong teenagers - over 119,000 candidates received their Hong Kong Certificate of Education Examination (HKCEE) results on Wednesday morning. Thirteen pupils this year received a perfect score of 10As. On Wednesday morning, television footage showed emotional scenes of Hong Kong school children receiving their results. Many had been very nervous as they went to receive their grades at schools around the territory. Some children were jubilant; others wept in disappointment. A few did better than they had anticipated. This year, nine boys and four girls achieved a perfect score of 10 distinctions. Of the male pupils who received 10 A grades in the HKCEE, two were from Diocesan Boys’ School. The others were from Queen’s College, Saint Joseph’s College, Carmel Pak U Secondary School, Tsuen Wan Government Secondary School, La Salle College, STFA Leung Kau Kui College and St. Stephen’s College. Four girls received 10 A grades in the HKCEE. Three were from Diocesan Girls’ School, and one from Maryknoll Convent School. Chu Long-lam of Queen’s College said he was astonished to receive 10As. He told local radio he never attended a tutorial school, popular with many other students, and that his parents never pressured him. Another student with 10As, Lee Lok-hang of STFA Leung Kau Kui College, was also surprised he had performed so well. He said the reason for his success was “concentration in class and regular revision”. Another star pupil, Noble Mak Hong-sze of Diocesan Girls’ School said she had begun preparing for the exams early and had sharpened her skills by reading overseas journals. ““I want to become a journalist. I like reading current affairs magazines, such as Times and Newsweek, said the 17-year-old. "Their articles are well written [and] I always try to write like their writers.” Another pupil at the same school, Chan Wing-yan, attributed her performance to her parents’ support and said she never attended a tutorial school, local media reported. Some special-needs pupils also did very well. Wong Yee-kiu, who is hearing impaired, scored nine As. She encouraged other disabled pupils to be confident. Wong Yee-kiu, who attends St Paul’s Convent School, explained that she lost 50 per cent of the hearing in her left ear as a result of a childhood fever. “I don’t think one should feel self-pity because of an impairment,” she told local radio. Wong Yee-kiu plans to enrol in medical school through an early admissions scheme. This year Christian Zheng Sheng College had 11 candidates sitting the exams this year. The college is a drug rehabilitation school for teenagers. It is currently planning a controversial move to Mui Wo on Lantau island. Some parents on Wednesday were anxious to ensure their children would be admitted promptly to Form 6 classes in new schools. Television footage showed over 200 parents queueing outside the Hang Seng School of Commerce. The prestigious school traditionally offers the best pupils the chance to do two years of secondary education in preparation for university. There is fierce competition to gain a place at the school. A spokeswoman for the school told only 360 secondary six places were available. All places filled by Wednesday morning. “The average score of newly admitted pupils was 26 marks out of 30,” she said. But exam stress has also taken its toll on some pupils. Hok Yau Club, which offers counselling services to HKCEE candidates, said it had received more than 900 inquiries between 8am to 12.30pm. A Hok Yau Club spokesman told most of the pupils who called were worried about gaining secondary six places. “Their inquiries were mainly about secondary six admission procedures and information related other education programmes, such as pre-associate degrees,” he explained. In other developments, the first two stages of secondary six admission procedures started on Wednesday morning. HKCEE candidates with 14 points or more from their best six subjects in one sitting of HKCEE can apply to their own or linked schools in Stage I (Wednesday morning), or apply to other schools in Stage II (Wednesday afternoon and Thursday morning). Secondary six vacancy information will be available on the Education Bureau website and through the Vacancy Information Hotline: 3499 1111 (Cantonese); 3499 1112 (Putonghua); 3499 1113 (English). On Wednesday morning, the Education Bureau released the results as scheduled after the typhoon signal No 8 had been cancelled. On Tuesday, it was thought severe tropical storm Goni might postpone announcement of the results.

Cathay pacific on Wednesday reported a net profit of HK$812 million for January-June, compared with a loss of HK$760 million a year earlier. Cathay Pacific (SEHK: 0293) Airlines said on Wednesday it returned to profitability in the first half, rebounding from its biggest-loss ever last year – thanks to gains on its jet fuel contracts. Hong Kong’s flagship carrier earned HK$812 million for the six months ended June 30, compared to a loss of HK$663 million in same period last year. The better-than-expected results reveal the first, faint signs of recovery after Cathay, like many airlines around the world, took a beating as the economic crisis sent demand for passenger and cargo traffic into a tailspin over the last year. The recent swine flu threat only made matters worse. Last year, the company lost a whopping HK$8.6 billion – its first annual red ink since the height of the Asian financial crisis in 1998. But for this year, the company is expected to post a profit a little over HK$600 million, according to analysts polled by Thomson Reuters. “There are cautious signs that the fall in demand has bottomed but there is, as yet, no indication when a sustained pick-up will begin,” Cathay’s chairman Christopher Pratt said in a statement. Demand for premium business travel and cargo traffic remained low in the first six months, with the number of passengers travelling with Cathay and its subsidiary Dragonair falling 4.2 per cent to 11.9 million, according to Cathay’s interim results. Cargo and mail shipments for the two airlines combined also recorded a decline of 15.3 per cent to 700,693 tonnes for the same period, the company said. Beyond actual demand, Cathay benefited from the recent advance in oil prices, saving money on contracts it entered into as a way to hedge against spiking jet fuel prices during the first half of last year. The company booked a market gain of HK$2.1 billion in the first half, compared to the massive loss of HK$7.6 billion in wrongway bets last year. During the depths of the downturn, Cathay undertook companywide measures to scale back costs, including offering unpaid leave to employees and suspending construction on a cargo terminal to cut costs. The company had said previously said it would aim to keep passenger growth flat this year and avoid cutting destinations. Cathay shares traded 2 per cent higher at HK$12.9.

China South City Holdings, which manages logistics operations and a wholesale shopping centre in Shenzhen, intends to take advantage of the market momentum and revive its planned listing in Hong Kong next month to raise an estimated US$500 million, sources familiar with the plans for the offering said. The deal will be one of the biggest share sales next month, when a number of big mainland property developers and retailers are said to be queuing up to raise fresh capital in Hong Kong. China South City will seek a hearing with the stock exchange's listing committee before the end of this month and, if it receives approval, will launch the pre-marketing the following week to allow fund managers to get to know more about the company, according to two sources close to the offering. Trading is expected to start late next month. Bank of America Merrill Lynch is the sponsor of the proposed offering. China South City cancelled its original US$300 million to US$500 million initial public offering last year because of souring investment sentiment after the collapse of Lehman Brothers Holdings in September. The company operates the 2.6 million square metre China South International Industrial Materials City, an integrated logistics and property development project in Pinghu, Shenzhen. The project comprises a wholesale and sourcing centre selling products from textiles and leather to electronic raw materials. "The firm not only runs a wholesale mall but also provides an integrated logistics platform for companies at home and overseas to tap into the mainland consumer market," said a source familiar with the deal. The centre comprises a convention hall for exporters to hold exhibitions and trade fairs and warehouses for storage. It also offers logistics services to distribute their products. The funds raised will be used to expand beyond Shenzhen by adding more than 13 million sqmetres of gross floor space in Nanning in Guangxi province, Nanchang in Jiangxi and Xian in Shaanxi over the next five years. The centre in Pinghu was built in two phases, with a total investment of 6 billion yuan (HK$6.81 billion). About 30 per cent of the space has been sold, with the remainder being held for leasing. More than 4,000 manufacturers from 20 countries have opened shops in the centre. In June, the company was reportedly involved in talks with Hong Kong exporters to set up a dedicated Hong Kong direct selling centre in Pinghu to help them enter the mainland consumer market. According to a study by the Federation of Hong Kong Industries, Hong Kong manufacturers operate 57,500 factories in the Pearl River Delta, of which 90 per cent produce goods for export.

China: Guangdong police have confirmed that 90 per cent of fake bank notes in circulation on the mainland - including two high-quality strains of 100-yuan notes originate in the province. Mainland media reported early this year that counterfeit notes with serial numbers beginning HD90 and HB90 had originated in Taiwan, something denied by the island's authorities after an investigation. Qian Bo , deputy director of the Guangdong Public Security Bureau's economic crimes department, confirmed the notes "were certainly not from Taiwan, but printed in eastern Guangdong", The Southern Metropolis News reported yesterday. Mr Qian described eastern parts of the province as an epicentre of the counterfeiting industry. "The Ministry of Public Security said Guangdong is the main battlefield in stamping out currency counterfeiting and obviously most fake banknotes are originally from Guangdong," he was quoted as saying. According to provincial police, the counterfeiting industry was centred around Shantou , Lufeng and Jieyang . Some notes were also printed in neighbouring Jiangxi province. Sales networks were mainly controlled by a small group of people from Lufeng and Jieyang, while Shantou's Chaonan district was where many of the notes were printed. Chaonan, home to paper and printing industries, was also named as the source of many fake receipts. Guangdong police said Taiwan had been the main source of fake notes before the 1990s, but after a crackdown on smuggling, production shifted to Guangdong. More than 50 people have been sentenced to death for counterfeiting in the past two decades after a series of campaigns. Police said two peasants from Jieyang and Shantou had been executed last month for making notes with a face value of 100 million yuan. Provincial police announced early last month that they had launched a six-month crackdown, mainly targeting the three eastern cities as well as Guangzhou's Baiyun district. Police said that Guangzhou and Shenzhen had become the distribution hubs for fake notes because of ease of transport and mature logistics systems. Mr Qian told the newspaper the new campaign would focus on producers of the fake notes and people who frequently used them. He said people would be detained for intentionally introducing the notes into circulation and sent to labour camps or charged with fraud if they were caught more than three times. The Ministry of Public Security launched a national campaign to stamp out currency counterfeiting in January. By early May, it said that police had seized fake notes with a face value of more than 310 million yuan and smashed 16 counterfeiting workshops nationwide.

When China promised in 2001 to deliver an earthly miracle and present a new Beijing to the world with the 2008 Olympic Games, many regarded it as merely a slogan by the rising Asian power, eager to impress. Instead, visitors from across the world arrived last year to find that one of the world's ancient capitals had transformed itself into a bustling city of metro lines, highways and modern skyscrapers. Structures such as the world's largest airport terminal, the surreal "Bird's Nest" stadium and the China Central Television headquarters have become the city's new landmarks and icons of a modernising nation in pursuit of its new identity. And Chinese people - especially Beijing natives - were mostly proud to be part of the transformation and basked in international praise. They said Beijing's changes were best summed up by a popular Olympic theme song: "Welcome to Beijing. We usher in a new world for you, and miracles are for those daring to try." Because of the Olympics, the government's spending on infrastructure increased by an average of 16 per cent a year from 2002 - surpassing that of previous Olympic host cities. "Of course we're glad to see the changes", said Yu Kongjian , dean of the graduate school of landscape architecture at Peking University. "Most of the projects built in the name of the Olympics should have been done anyway, but the event apparently accelerated the process in Beijing, with financial support from all over the country." The capital, with already gridlocked streets and slow and crowded buses, found no help from a generally richer population, which has put more than 300,000 new cars on the roads each year. Even so, many people found that the city seemed to be getting smaller and their commuting trips easier in recent years, with a decade-long spending spree to improve public transport, mainly the metro system. A total of 327 billion yuan (HK$370 billion) was spent on infrastructure between 2006 and 2008, with 198 billion yuan, or 60 per cent, spent on the transport sector, Xinhua reported. When Beijing was awarded the Olympics it had only two metro lines covering 54 kilometres. It has since opened three new metro lines and the Airport Express line to Dongzhimen station at a cost of 22.3 billion yuan, in an attempt to ease gridlock and cut pollution. The 15.5 billion yuan Line 10 cut the journey from the northwest of the city, where universities and Beijing's "Silicon Valley" are located, to the city's busiest business quarter in the east to 45 minutes. With the Olympic party over, city officials wasted no time renewing their promise that public money would continue to be spent in upgrading the transport sector, with more metro lines and intercity rail lines planned. Authorities have unveiled an ambitious plan to increase the number of metro lines from six (not counting the Airport Express) to 20 by 2015 and the total distance from 200 kilometres to 561 kilometres, making it one of the world's largest metro systems. The cost per kilometre is about 500 million yuan. Liu Xiaoming , deputy director of the Beijing Municipal Committee of Communications, said the new mass transit network would be able to handle eight million passengers a day. It would also raise the number of metro stations to 420 and put everyone living within the Fourth Ring Road no more than one kilometre from a station. Apart from the Olympic venues and facilities, Beijing built 52 new roads and several links to railway stations, and opened three "rapid transit" bus lanes cutting through the city's most populated areas. New buildings sprang up throughout the city, and analysts said that while authorities were largely obsessed with the scale of the new structures, the Games also turned Beijing into an experimental site for all sorts of avant-garde designs. For example, the US$2.7 billion Terminal 3 at Beijing Capital International Airport (SEHK: 0694), the size of 170 soccer pitches, has impressed millions of passengers already and increased the airport's total capacity to 76 million passengers a year. Designed by British architect Lord Foster in the form of a Chinese dragon, the project was planned and built in four years by an army of 50,000 workers. The rail sector also benefited from the Olympic boom. The new South Station, Asia's largest in terms of passenger capacity, opened days ahead of the Games. It is from there that the world's fastest trains connect the capital with Tianjin , 115 kilometres away. At a top speed of 350km/h, the trains cut journey times from about 90 minutes to 30. Construction on another high-speed line between Beijing and Shanghai started last year. Costing US$30 billion, the 1,318-kilometre link is the most expensive project in mainland railway history. Targeted for completion in 2012, it will halve the travel time to five hours. Advance work has also begun on a high-speed line from Beijing to Guangzhou. Chinese rail industry analysts note that the mainland has built as many kilometres of high-speed passenger lines in the past four years as Europe did in two decades. The rest of the mainland benefited indirectly from the building boom in Beijing because of the soaring investment it fuelled. For example, the mainland plans to add 97 airports by 2020 to the 142 it had at the end of 2006. Aviation officials say the number of airports able to handle more than 30 million passengers a year will grow from three to 13 by then. But not everyone is happy about the city's transformation. Some have complained that history and culture have suffered. Heritage expert Xu Pingfang said he had done everything he could to protect cultural relics from developers' bulldozers. "For the past 60 years we have seen endless disputes and confrontations between conservation and development, and history has seldom, if ever, gone our way," said Mr Xu, a 79-year-old Beijing native. Tang Yuyang, of the Beijing University of Civil Engineering and Architecture, said that although authorities had, until recently, paid attention to conservation of historical treasures, old quarters had disappeared due to urban expansion. "We don't think conservation outweighs development, but when one heritage site after another is demolished, we will never be able to recover or rebuild the cultural and historical values gone with them." Foreigners also are upset. Jeffrey Soule, policy director of the American Planning Association in Washington, lamented: "They've torn down Beijing and put up Houston." Professor Yu agreed, saying the eye-catching buildings and lavish Olympic spending revealed that, to some extent, China still lacked confidence as an emerging power. "It is a big lesson for Beijing as well as other cities. We need some positive legacy we can cherish in the future," he said. Almost all of the experts agree that despite the upgrade, Beijing has a long way to go to catch up with other metropolises. They cite as examples poor air conditioning and ventilation on older subway lines, an absence of maps and road directions, and confusing and sometimes misleading street signs that still puzzle visitors.

Guangdong party secretary Wang Yang has taken a swipe at regional governments by accusing them of playing tricks to boost GDP growth artificially. In a speech published in People's Daily, Mr Wang was critical, saying some regional governments' pursuit of growth in gross domestic product was driven by backwards, labour-intensive industries and unnecessary infrastructure construction. He again defended the industrial upgrade and transformation he had advocated since becoming Guangdong party boss. "Economic development should be accompanied by substantial growth," Mr Wang said. "The most worrying thing for me is [some regional governments'] rush to drive up their GDP figures with backwards production forces. If we can focus on industrial restructuring and transformation, even with temporarily unsightly numbers, we'll be repaid." Guangdong's economy grew 7.1 per cent in the first half of this year - the same growth rate as national GDP. However, a string of provinces and municipalities turned in above-average growth - Inner Mongolia and Tianjin both recorded 16.2 per cent growth - and the sum of provincial GDP was more than a trillion yuan above the national figure. The publication of comments by Mr Wang, one of only two provincial party secretaries to sit on the 25-member Politburo, by the government mouthpiece reflects doubts in the central government over some provincial GDP data. Mr Wang said economic development was not just about numbers. "Of course, regional bosses are concerned about economic performance and expect nice-looking GDP growth ... But some governments are actually squandering social resources to polish their numbers." For example, they built a bridge, and this contributed to GDP growth. They then demolished the bridge and this also drove up the figure. They probably rebuilt and demolished the bridge several times, but it did not bring extra wealth to society, he said. Mr Wang said some regional governments drove economic development through polluting industries - then registered further growth by cleaning up the pollution. He said the downturn provided an opportunity to revolutionise Guangdong's traditionally labour-intensive manufacturing sector and this should not be slowed down just because of scant GDP growth. "It's normal for growth to slow down during a recession. Guangdong recorded relatively modest growth of 7.1 per cent in the first half, and this is the great combination of industrial restructuring while maintaining growth," he said, pledging that the manufacturing powerhouse would be repaid for abandoning its old pattern of development. In an earlier interview, he said he was thankful for the global financial crisis because it provided the opportunity to make the economy more innovative and dynamic, which would not happen in boom times. Guangdong forecast a grim year because of the decline in exports. Meanwhile, Mr Wang vowed to continue the crackdown on corruption after a series of scandals this year. He reiterated concerns that party disciplinary officials who were supposed to combat graft were facing huge temptations. The former head of Guangdong's anti-corruption body, Wang Huayuan , was put under shuanggui, a form of party discipline, this year.

Shanghai will take steps to cool the city's property market as housing prices are "too high", mayor Han Zheng said. The city government would increase the supply of land for property development and speed up construction of affordable housing for low-income families in the second half, Mr Han said. Record bank lending in the country drove average prices for new homes 6.3 per cent higher in June in 36 large and medium-sized cities, government data showed. That gain came even as urban unemployment rose and wage growth slowed. "The government should do something to effectively control the speed of growth of the real estate market," Mr Han said. "The housing price in Shanghai is already too high. We must prevent excessive inflation of home prices in this market." Mainland banks made 7.37 trillion yuan (HK$8.36 trillion) of new loans in the first six months as the government sought to bolster economic growth that slowed to the weakest in almost a decade in the first quarter. Some of the money entered the property and stock markets, Cheng Siwei, a former vice-chairman of the Standing Committee of the National People's Congress, said in June. Home prices on the mainland would rise 20 per cent by the end of next year, UBS analyst Eric Wong said last month. Shanghai's property market will probably be the strongest in the country, and residential prices may climb as much as 20 per cent over the next year compared with the final quarter of last year, according to Stanley & Partners Investment Management, citing recent land option contracts and commodities data. Investors have been quick to capitalise on the rebound in the property market. Property stocks gained the most among the five industry groups on the Shanghai Composite Index this year. Shanghai's government was also continuing to work on policies to emulate the world's financial centers, Mr Han said. The government said in March it planned to make Shanghai an international financial hub that was commensurate with the country's economic strength by 2020. Fang Xinghai, the director-general of Shanghai's financial services office, had urged changes in foreign exchange rules and other steps to encourage foreign private equity firms to set up in the city, the Wall Street Journal reported yesterday, citing an interview with Mr Fang. Mr Han also said he was still awaiting final approval from the central government for a US$3.59 billion Walt Disney theme park in the city. "We've been in love with each other for many years, and we have a very strong commitment to each other, but we don't know when the wedding will become a reality," he said.

Aug 5, 2009

Hong Kong: Hong Kong Aircraft Engineering Co (Haeco (SEHK: 0044)), which is 27 per cent owned by Cathay Pacific Airways (SEHK: 0293), posted a 27 per cent drop in net profit for the first six months as airlines cut services and grounded aircraft. The business in the second half would be significantly weaker than in the first half as airlines continue to tighten their budgets on services, said chairman Christopher Pratt in an announcement filed with the Hong Kong stock exchange yesterday. Net profit fell to HK$430 million from HK$591 million in the same period last year. The board recommended a dividend of 50 HK cents, compared with 93 HK cents last year. Sales dropped 13.26 per cent to HK$2.16 billion since fewer service contracts were completed in the period. The heavy airframe maintenance man-hours sold in its hangars at the Hong Kong International Airport reduced 8 per cent to 1.2 million hours in the first half from a year earlier while line maintenance movements declined 10 per cent. Its operation in Xiamen was also heavily hit by falling demand for aircraft maintenance. Heavy airframe maintenance man-hours in Xiamen decreased 18 per cent year on year to 1.83 million hours while its line maintenance movement shrank 12 per cent. Airlines have reduced capacity in light of the downturn in air traffic by grounding aircraft or cutting flight frequency. Cathay has grounded five to six passenger aircraft and five freighters in a bid to cut its passenger capacity by 8 per cent and freighter service by 11 per cent. British Airways plans to have grounded 22 aircraft by next winter in response to the drop in traffic demand. Global passenger traffic decreased 7.6 per cent in the first half from a year earlier while the capacity of passenger aircraft dropped 4 per cent year on year, according to figures by the International Air Traffic Association. Haeco shares closed at HK$111 yesterday, up 3 per cent before the results were announced.

Casino tycoon Stanley Ho Hung-sun is being treated in intensive care after brain surgery to remove a blood clot. A medical professional familiar with his treatment said two leading neurosurgeons had operated on the 87-year-old to remove the clot. A business associate close to the tycoon said Mr Ho had an accident at home and injured his head, but neither Mr Ho's family nor his publicists would confirm this. While the office of the chairman of Shun Tak Holdings (SEHK: 0242) and SJM said yesterday that Mr Ho was recovering well, worries about his health were enough to bring a stream of family members - including his wives - rushing to his bedside. The news also sent shares in his two flagship companies tumbling. Shun Tak Holdings fell 2.81 per cent to HK$5.88 and SJM Holdings dropped 4.54 per cent to HK$3.15. Mr Ho was first admitted to the Hong Kong Sanatorium and Hospital in Happy Valley on Wednesday before being transferred to Adventist Hospital in Stubbs Road. While most family members remained tightlipped on their patriarch's condition, Florinda Ho, Mr Ho's eldest daughter with third wife Chan Un Chan (also known as Chan Yuen-chun), spoke out. "Daddy is actually okay," Ms Ho said when she left at 7.25pm after spending nearly three hours at the hospital. "He is recovering. He will be fine after taking some rest." At least eight members of the tycoon's family were seen going in and out of the hospital. At 9.15am, Pansy Ho Chiu-king, managing director of the family holding company Shun Tak Holdings, visited and she left about an hour later. She returned to the hospital at about 3.10pm and was joined by Mr Ho's fourth wife, Angela Leong On-kei, at 4.40pm and Florinda Ho at 4.45pm. At 4.50pm, third wife Ms Chan arrived at the hospital. Mr Ho's son, Lawrence Ho Yau-lung and his wife, and another daughter, Daisy Ho Chiu-fung, were seen entering the hospital later. Pansy and Daisy left at 6.55pm. They declined to comment on Mr Ho's health. Florinda Ho returned to the hospital at 8.30pm. The scene outside the hospital frequently descended into chaos, as more than 30 journalists and photographers jostled to get comments and photographs of Ho family members. Finance analysts said news of Mr Ho's ill health would affect the share performance rather than the daily operations of his group of companies as succession plans were in place. "Trading of the group's shares will be volatile as Mr Ho's health condition adds uncertainties," Sun Hung Kai Financial strategist Castor Pang Wai-sun said. "[But] Mr Ho has arranged a succession plan among his children so abrupt changes in the group's operations are unlikely." Although Mr Ho is chairman of property to shipping conglomerate Shun Tak Holdings, it is run by Pansy Ho. His son, Lawrence Ho Yau-lung, controls gaming company Melco International Development (SEHK: 0200). Mr Ho's last public appearance was last Tuesday when he was named founding president of Macau's casino chamber. But he missed Sunday's opening of Hotel Lan Kwai Fong, part owned by his company Sociedade de Jogos de Macau.

The principal dancer with the 87-year-old Latvian National Opera Ballet has been named to the corresponding position with the Hong Kong Ballet, replacing dismissed local dancer Faye Leung, in a decision that was criticised yesterday as lacking transparency. Margarita Demjanoka, 30, who was born in Russia, has been given the job six months after the controversial dismissal of Leung, who had been with the company for 13 years. Hong Kong Ballet artistic director Madeleine Onne said Demjanoka had a "lean and agile physique that complements those of our company's beautiful Asian dancers". Onne, who started in the job in March, said Demjanoka had deep experience in interpreting both classical and modern ballet and would be an inspiration for everyone at the Hong Kong Ballet. But Civic Party legislator Tanya Chan said the statement did not explain the decision clearly enough. "I still wonder what criteria Hong Kong Ballet employed to select their top ballerina," she said, also asking whether the company had exhausted all the available options among local dancers. "The company is funded by public money, and it should pay more attention to fostering local talent," she said. But she said nationality should not be a prime consideration. Mathias Woo Yan-wai, executive director of experimental theatre company Zuni Icosahedron, said the lack of transparency in the company's management had been highlighted by the decision to fire Leung. "I don't know why Faye Leung had to be replaced in the first place. What did Faye do wrong?" he asked. The Hong Kong Ballet said at the time that the company and the dancer were "going different ways". Mr Woo said the company had not given the public a clear vision of its long-term development and there were no clues in the new appointment. Leung declined to comment. A spokeswoman for Hong Kong Ballet said Onne had started an international search for a new principal dancer when she assumed her post in March. Demjanoka started dancing ballet in Latvia when she was seven. She joined the Latvian National Opera Ballet in 1996 after graduating from high school, and rose to soloist within two months, being promoted to principal dancer in 2000. She was named Best Dancer of the Year in the Latvian Theatre Award in 2003 and received a similar award last year.

More than 600,000 visitors are expected to scramble for discounted electronic gadgets at the Hong Kong Computer and Communications Festival this year.

Sundart International Holdings, which won big contracts fitting out the marble and crystal gambling palaces of Macau, is hoping Hong Kong investors will take a bet on its own prospects.

Casinos in Macau unexpectedly snapped a seven-month losing streak last month, returning to positive year-on-year growth for the first time since November last year. Casino revenue in Macau hit 9.57 billion patacas in July, up 3.05 per cent from a year earlier and the city's biggest monthly haul since August last year, according to preliminary data leaked to Portuguese news agency Lusa. Revenue last month was up 16 per cent from June and was 13.2 per cent above average monthly casino revenue over the preceding 12 months. "This was better than our expectations," Deutsche Bank gaming analyst Karen Tang wrote yesterday in a research note. Noting the 12 per cent decrease in casino revenue during the first half of the year, Ms Tang said: "We were not expecting a year-on-year increase until the fourth quarter." But the resulting surge in casino stocks was dampened by news that 87-year-old gaming magnate Stanley Ho Hung-sun was hospitalised after suffering a head injury from a fall. Shares in his SJM Holdings dropped 4.55 per cent to close at HK$3.15. Figures for July were boosted in part by the improved performance of Melco Crown Entertainment's US$2.1 billion City of Dreams casino resort, which opened its doors on June 1 and had a run of bad luck on the high-stakes baccarat tables during its first month of business. City of Dreams, jointly developed by Mr Ho's son, Lawrence Ho Yau-lung, and Australian billionaire James Packer, saw VIP wagers rise to US$2.65 billion last month from US$1.94 billion in June, Melco Crown said in a voluntary Nasdaq announcement. More importantly, the casino won a slightly better than expected 2.97 per cent of those bets last month, up from an abnormally low 0.8 per cent. City of Dreams' mass-market table games revenue rose to US$132 million last month from US$100 million in June, and slot machine betting volumes climbed to US$92 million from US$81 million. Shares in Melco International Development (SEHK: 0200, announcements, news) , which owns 34 per cent of Melco Crown, gained 4.17 per cent to HK$5.24. Galaxy Entertainment (SEHK: 0027) fell 0.84 per cent to HK$2.36. Separately, MGM Grand Macau, the joint venture between Pansy Ho Chiu-king and MGM Mirage, reported a less than stellar US$15 million in earnings before interest, tax, depreciation and amortisation during the second quarter, MGM executives said on an investors' conference call. Analysts expect Macau to see further improvement in casino revenue growth in the coming months. "The comparisons for gaming revenue should improve in the back half of this year, as in 2008 gaming trends were strong in the first half of the year before visa restrictions and the global economy affected results in the second half," Susquehanna International Group's Robert LaFleur wrote in a research note.

Macquarie Global Property Advisors is said to have tapped Savills to sell the lower zone of its Grand Millennium Plaza in Sheung Wan. Foreign investment funds are cashing in on the recovery in property prices on the mainland and in Hong Kong to rebalance portfolios badly hit by the global financial crisis, say fund managers and analysts. "Many international funds are selling assets to rebalance their global portfolios. China and Hong Kong are probably the only bright spots for them to take some profit and redistribute the earnings back to their investors," said Goodwin Gaw, the chairman of Hong Kong-based private equity real estate fund Gaw Capital. "We have done the same with the recent sale of our building in Mong Kok," he said. Global fund managers Macquarie, Merrill Lynch and Morgan Stanley are also among the sellers, and Goldman Sachs is reported to be in talks to sell its office building in Beijing. The sell orders should not be interpreted as a loss of faith in the outlook for property in these markets, Mr Gaw said. "Fund managers in general earn incentive fees when they sell, and the internal rates of return on their funds are better if the hold periods are shorter. So if the window is there to take profit, they will try to do that - especially for global funds where opportunities to exit in other markets do not exist." Sydney-based Macquarie Global Property Advisors (MGPA), a private equity real estate fund management company of the Macquarie financial services group, has appointed property agency Savills to handle the sale of the retail and office space at Grand Millennium Plaza in Sheung Wan, according to the sources close to the deal. MGPA is unavailable for comment. Merrill Lynch's real estate fund has also sold its three properties in Hong Kong to a local investor for a total of more than HK$1.6 billion on Monday. The properties are Silver Fortune Plaza in Central and Golden Plaza and Pakpolee Commercial Centre in Mong Kok. They were bought in 2007 for about HK$1.37 billion. On the mainland, Morgan Stanley signed a memorandum of understanding to sell the Exchange, an office building in Shanghai, to Soho China (SEHK: 0410) for between 2.25 billion yuan (HK$2.56 billion) and 2.5 billion yuan at the end of last month. Goldman Sachs is also believed to be in talks to sell its office building, also known as the Exchange, in Beijing to one of the big four state-owned banks for more than 900 million yuan. Goldman Sachs is unavailable for comment. A property unit of the Macquarie Group also sold a luxury residential project in Shanghai to a local investor last month. But the price tag was reported to be below 300 million yuan - more than 25 per cent below its acquisition price of 400 million yuan paid four years ago. Ren Rong, the chief executive of Harvest Capital Partners, which is 90 per cent owned by state conglomerate China Resources (SEHK: 0291) (Holdings), said some international funds had taken a short-term approach of three years or so to the mainland real estate market and their loan-value ratios on the deals were very high. Since it was not easy to raise refinancing on these deals, they would have been under pressure to sell. "The sales do not mean the funds think that property prices have peaked and are now going to drop, nor that managers have become cautious about the market outlook," said a source with a private equity group. "It has become more difficult to raise private equity for property investment after the outbreak of the financial crisis and property is not as profitable as before. So funds put more resources into other investments." Most of the funds managed by the investment banks were selling their properties without making new property investment, a source working in a real estate fund said. On the mainland, many funds preferred to offload their properties rather than make acquisitions, according to Jim Yip Kin-shing, the head of investment for north China at DTZ. "Mainland property prices have rebounded significantly in the past few months," Mr Yip said. However, funds now looking for buyers were confronted with a challenge, he added. The collapse of confidence and tighter loan conditions that followed the global financial crisis meant that it was now difficult for overseas buyers to raise loans by share mortgage to fund the purchase of assets held through an offshore owner. "Some of the funds have tried to get around this problem by selling their mainland properties under strata title since this can cover a wider range of potential buyers and achieve higher selling prices," Mr Yip said. Morgan Stanley Real Estate adopted this strategy with the sale of units at its Chateau Pinnacle, a luxury residential building in Shanghai, to individual buyers. "Property prices of the units reached about 60,000 yuan, which would have been difficult to achieve by selling the project en bloc to a single buyer," Mr Yip said. But tighter loan conditions meant that growing interest in the property investment market in Hong Kong was not translating directly into higher numbers of deals, said Antonio Wu, an executive director of the Hong Kong investment department at Colliers International. "It is difficult for investors to get financing from banks to buy a property worth more than HK$1 billion," Mr Wu said.

Standard Chartered (2888) yesterday announced a surprise 1 billion (HK$13.1 billion) share placement - the bank's second capital-raising since the outbreak of the financial crisis - as it reported first-half net profit jumped 5.5 percent to a record US$1.88 billion (HK$14.66 billion). "When you raise capital at the right time, in the right amount, it's bonanza," Standard Chartered's Asia chief executive, Jaspal Bindra, told reporters. Bindra noted the bank's share price has more than doubled since its rights issue in December, which raised 1.78 billion from existing shareholders. Standard Chartered has closed the book on the share placement and priced the shares at 13.60, raising 1.02 billion. The bank's shares were down 8.2 percent at 13.18, or the equivalent of HK$173.02, by early afternoon in London trading. They closed at HK$182.20, down 2.3 percent, in Hong Kong. Standard Chartered said first-half operating income rose 13.9 percent year- on-year to a record US$7.96 billion, beating forecasts. Pre-tax profits from wholesale banking surged 36.5 percent to US$2.25 billion. Consumer-banking profits plunged 56.6 percent year-on-year to US$348 million, but were up 10.8 percent half-on-half. Loan impairment charges more than doubled year-on-year to US$1.09 billion, from US$465 million. Pre-tax profits from Standard Chartered's Hong Kong operations fell 12.2 percent year-on-year to US$576 million, but were up 60.9 percent compared to the second half of last year. The London-based bank declared an interim dividend of 21.23 US cents per share, up 10 percent. Bindra said the bank's latest capital- raising exercise was not to generate a war chest for acquisitions. The money will be used to provide Standard Chartered with more of a capital buffer, and to increase lending by grabbing market share, and lending more to existing customers, he said. Singapore's Temasek Holdings, the bank's largest single shareholder, will not be able to buy shares in the placement because it is considered a connected party. ABN Amro analysts wrote in a trading note that the surprise equity issuance would bring Standard Chartered's capital ratios more in line with peers. They said the capital-raising plan indicates confidence in cyclical recovery, as well as Standard Chartered's ambitions to grow and grab market share. "We would buy into any weakness," the analysts wrote. "The stock ... is the best placed bank in Europe to capitalize on Asian growth and re-leverage."

The 11th Ani-Com and Games Hong Kong fair in Wan Chai ended yesterday with a record turnout of 649,000 people during the five-day event, up 5 percent from last year. Business was satisfactory for major exhibitors, with most making more profit this year while some smaller exhibitors barely broke even. "Major exhibitors were able to see a rise in sales. We cannot guarantee that every exhibitor can make a profit," executive director of the fair Leung Chung-poon said. The sales figures of U1 Technology Company rose more than 10 percent compared with last year. "Toys produced in limited quantity were all sold out in the first day," general manager Chu Chung-ho said. Ma Shuk-chu, director and vice president of Jonesky, one of the biggest comics and toy figures publishers in Hong Kong, said business was up about 5 percent.

China: Guangdong, an export-led province that has been hit hard by the global financial crisis, has recommended a smaller pay rise to millions of workers this year.

Residents struggle to find their way along a flooded street outside a grocery store in Ciqikou township in Chongqing after drains in the area failed to handle the impact of a torrential deluge on Monday. More downpours have been forecast for the region.

If you were asked to guess Chen Lei's profession, engineering might not be the first career that springs to mind after a glance at the slim, soft-spoken 38-year-old woman. But she is more: she was the chief engineer for the construction of the National Aquatics Centre, better known as the "Water Cube". And one year after the translucent blue venue hosted the swimming competitions at the Beijing Olympics, it is still winning as many admirers as the "Bird's Nest" stadium nearby, with its striking steel-mesh exterior. Sitting in the venue, which still attracts tens of thousands of visitors from throughout the mainland every day, Ms Chen said she was still proud of what she and her teams had done "to leave a masterpiece in this city that will endure the test of time". "It's become a scenic spot in Beijing and an Olympic icon, you see," she said, pointing to people taking pictures in the centre. "Compared with other venues, I still think it's a wonderful venue, with that compelling bubble-like look and many advanced technical elements." After a long rest, she came back to the "Water Cube" to oversee its transformation into a multipurpose leisure centre, featuring a water park and a recreation centre with spas, and a shopping area. It was another milestone in her trailblazing career. She was appointed chief engineer by the China Construction First Building Group in 2004 when she was only 33 and, either because of her young age or her gender, sceptics raised doubts over her abilities in the male-dominated construction industry. The only way to win them over, Ms Chen said, was to rely on her belief in perfectionism, her "firm will" and to "work quietly and persistently". From 2004, she spent every day at the aquatics centre's construction site, signing every blueprint and technical proposal, overcoming technical difficulties and witnessing the venue being built. "For the first three years we worked hard and quietly, but later on, as people began to realise the challenge the `Water Cube' was becoming for the builders, pressure began to build," she recalled. The "Water Cube" was designed without a main pillar to support the ceiling, and its massive use of pneumatic cushions baffled many engineers. Although conceding that the construction was a huge challenge, Ms Chen said she tried to view it as a team project rather than put too much pressure on herself. "We had various technical teams specialized in every aspect of the construction, so it was definitely a group job," she said. "My duty was to render a decision on each idea and everything related to the technology. I needed to be very clear-minded and decisive. "I've never tolerated imperfection. The only way was to try my best to make everything flawless on this construction site, and I am satisfied that I did it." Born into what she calls a "technically minded family" in Huangshi , Hubei - her father worked in design at the Huangshi Institute of Technology - Ms Chen entered the construction industry in 1993 after graduating from Wuhan University of Technology. She was in charge of several important projects in Beijing, such as the second phase of the International Trade Centre, before she was appointed to the "Water Cube" project. She hopes the "Water Cube" will not be the last pinnacle of her career. "Just because it was an Olympics project I was pushed to the front line," she said. "I took this opportunity as an honor, but it will not change my attitude towards other projects in the future."

Gery Messer hopes a cloud computing centre being built in Foshan will serve as a model for other cities on the mainland. A local government-backed initiative to build a cloud computing centre for small businesses in Guangdong may spur similar developments across the country, according to Gery Messer of Linux software provider Red Hat. Mr Messer, Red Hat's president of Asia-Pacific operations, said the Technology Agency of Nanhai District in Foshan was leading the cloud computing project inside the Guangdong Finance and Hi-tech Service Park. "This may well be the first major government-initiated cloud computing centre in Asia," Mr Messer said. "If successful, similar ones will be established across the mainland." Cloud computing allows customers to access software, data and services from large-scale data centres through the internet for a fee. These facilities are usually represented as clouds in network diagrams, hence the name. The model, which only requires customers to have a computer with internet access, has been proven to offer a much cheaper and viable way for small businesses to acquire and use information technology that larger enterprises have. According to market research firm International Data Corp, worldwide information technology spending on cloud services will reach US$42 billion by 2012. Major IT suppliers, such as International Business Machines Corp and Hewlett-Packard, and smaller players, such as and NetSuite, have set up their own cloud computing centres in strategic locations around the world to serve business customers of all sizes. The government-sponsored cloud computing infrastructure being established in Foshan is expected to help the thousands of small and medium-sized enterprises (SMEs) in Guangdong save money, because they will not have to build their own hardware and software computing platforms to run their businesses. The government agency plans to get local independent software vendors involved in supplying their services via online subscription through the cloud computing centre, which will be highly secure and reliable, Mr Messer said. He said the centre, which is expected to be completed by the end of this year, will deliver manufacturing software applications, including those for product model design and computer-aided manufacturing, to online SME subscribers. For companies in the financial services sector, the centre would also be used to provide many of the back-end processing systems. United States-based Red Hat, a leading supplier of free open-source software to businesses, is helping further cut costs by supplying some of its key technologies to the project. "We're providing a cloud computing platform [that] can be built on any industry-standard server," said Mr Messer. "This government-initiated, open-source cloud computing centre will, hopefully, serve as a model for other local governments across the country."

HSBC (0005) has chosen the bookrunners for a planned Shanghai listing that could raise up to US$5 billion (HK$39 billion) next year, and preparatory work began yesterday. And analysts were spurred by HSBC's better- than-expected results, with JPMorgan and Goldman Sachs both tipping the bank's share price to soar back to HK$100. The stock jumped 6.9 percent to HK$83.10. HSBC mandated China International Capital Corp (CICC) and CITIC Securities as bookrunners for its planned Shanghai listing, Dow Jones Newswires reported. The offering is expected to raise between US$3 billion and US$5 billion next year, according to the report. Vincent Cheng Hoi-chuen, chairman of HSBC's Asian arm, told Reuters the group is in talks to set up a securities joint venture in China. Cheng also said the bank will focus on organic growth in Asia, as assets are now too expensive. JPMorgan analyst Sunil Garg said the aftermath of HSBC's ill-timed acquisition of consumer lender Household International is "nearly history." Investors should expect a return to "the old HSBC," Garg said, a "steady, boring, no- surprises bank" offering a 17 to 18 percent return on equity. Garg raised his 2009-2012 earnings estimates by 6 to 21 percent. Profits from HSBC's Asian business will rival those from its European operations by 2012 as earnings growth at HSBC China accelerates, Garg forecast. The bank's China investments will contribute nearly a third of pre-tax profits in Asia going forward, he said. Merrill Lynch analyst Alistair Scarff said HSBC is well-positioned to capitalize on emerging opportunities and added there is limited downside risk to the bank's share price. Goldman Sachs analyst Roy Ramos said the problems at HSBC Finance, the bank's US consumer-lending arm, are becoming self- contained and he no longer expects further capital injections.

The U.S. Senate Foreign Relations Committee on Tuesday approved Utah Governor Jon Huntsman's nomination as ambassador to China. The Committee also endorsed President Barack Obama's pick of campaign fund-raiser and lawyer John Roos as U.S. ambassador to Japan. The endorsement by the Committee paved the way for a vote by the full Senate, the date of which remains unclear. Huntsman, 49, was appointed by President Obama as new U.S. ambassador to China in May. He is a Republican who was elected governor of Utah in 2004 and reelected in 2008. He served as U.S. ambassador to Singapore during the administration of President George Bush and as deputy U.S. trade representative during the administration of President George W. Bush. Huntsman attended the University of Utah and received a bachelor's degree in business from the Wharton School of the University of Pennsylvania after transferring to that school. He can speak fluent Mandarin Chinese.

Chinese steel mills would prefer to import more iron ore from Brazil rather than Australia after the detention of four Shanghai-based employees of multinational miner Rio Tinto on charges of commercial espionage, according to data specialist ASXMarine. Spot iron ore vessel bookings from Brazil to China surged to a record 39 in July, from 24 in the previous month, Reuters quoted the data from ASXMarine.

Aug 4, 2009

Hong Kong: HSBC Holdings (SEHK: 0005) yesterday unveiled depressing first-half results, with profits down 57 per cent from a year earlier and bad-debt charges soaring, but said an end to its woes lay just around the corner. Investors seized on the reassurance and the bank's share price rose 4.98 per cent, to close at 635.9 pence (HK$82.42) in London. Analysts cheered because the bank's performance had not been worse. Profit for the first half fell to US$3.35 billion from US$7.72 billion a year earlier, but was 60 per cent above the US$2.1 billion forecast by a Bloomberg survey of eight analysts. HSBC releases financial results after the stock market close in Hong Kong, so the shares may also rise in local trade this morning. "We may be at or around the end of the downturn," chairman Stephen Green said in Hong Kong as he presented the bank's results for the first half-year. However, he said: "The timing of economic recovery remains uncertain." Daniel Tabbush, banking analyst at CLSA, said: "The tone of the bank's statement was very positive." The surprise earnings performance was mainly the work of HSBC's investment banking unit, which cashed in after its traders rode the recovery in global equity markets. Pre-tax profits at HSBC's so-called global banking and markets division surged 157 per cent to US$6.3 billion, from US$2.7 billion in the same period last year. "The earnings, partly due to dealing income being so strong, were ahead of estimates," said Mr Tabbush. But HSBC's old problem of rising bad debts is far from over. The failure of struggling borrowers to repay loans to HSBC's North American subprime lender, Household, continues to clobber the bank's balance sheet. And one dark cloud that has hovered over HSBC for the past two years - British borrowers defaulting on their credit cards and mortgages - has finally broken into a storm.

Sales of big-ticket items including jewellery and watches, like these at Central's IFC mall, were down 8.2 per cent year on year in June, better than the 11.1 per cent lag in May. Diners spent more from April to June than in the first quarter, and last month motorists bought more cars and shoppers spent more at supermarkets, bolstering the shop and restaurant trades. But the retail industry, and an economist, said recovery was still a long way off. Restaurant receipts rose 0.7 per cent compared to the first quarter, to HK$19.2 billion, following two quarters of decline amid the global financial crisis, the government said. "The first quarter was the worst period so a rebound in the second quarter is not surprising. But I don't see a sharp increase going forward because there's still not much to spur spending," Hang Seng Bank (SEHK: 0011, announcements, news) senior economist Irina Fan Yuen-yee said. Restaurant takings were still lower than a year earlier, a reflection of falling household spending. Compared with April to June last year, they fell 0.7 per cent. Fast food was less affected than other restaurants, with takings down 0.3 per cent year on year in the second quarter and 1.6 per cent in the first quarter. Takings at western restaurants were down 1.8 per cent year on year between April and June, and 2.2 per cent in the first quarter. The year-on-year decline in retail sales narrowed in June. By value, they were 4.8 per cent lower than a year earlier, compared with May, when the drop was 6.2 per cent. Economists had forecast a drop last month of 4.3 per cent. The volume of retail sales from April to June was 0.4 per cent higher than in the first three months of the year. "This shows consumer confidence held up firmly in recent months," a government official said. Supermarket sales rose 1.2 per cent year on year in June, double the 0.6 per cent rise in May. Car sales, which had suffered heavy double-digit declines, recorded a dramatic turnaround in June, with the year-on-year drop in volume narrowing to 15.2 per cent. Sales of other big-ticket items such as jewellery and watches were down 8.2 per cent year on year in June, an improvement on the 11.1 per cent drop recorded in May. Caroline Mak Sui-king, chairwoman of the Hong Kong Retail Management Association, said: "Department store sales, especially of clothes and footwear, were dragged down by the falling numbers of mainland and overseas tourists even though the overall retail figure was helped by car and fuel sales. Retailers at the airport say their business was down almost 20 per cent in June." June passenger volume at the airport fell 18.9 per cent year on year to 3.3 million, while the number of mainland visitors fell by 11.6 per cent last month, to just over 1 million. Many association members expected business this month to be worse than in June, Ms Mak said. She said that, in contrast to the Sars outbreak of 2003 when shops were deserted, people were still shopping. But the implementation last month of a 50 HK cent levy on plastic bags had discouraged some shoppers from making impulse purchases, while retailers at the airport were being hurt by the swine flu outbreak, which had put people off visiting the city.

Pansy Ho (front) attends Adventist Hospital, which is believed to be treating her father, Stanley Ho. She had no comment. Doctors and family threw a veil of secrecy yesterday over the health and the whereabouts of Stanley Ho Hung-sun. But the scrum of journalists and cameramen outside the Hong Kong Adventist Hospital and the stream of relatives who filed into the Happy Valley facility left little doubt the 87-year-old had been admitted for treatment. For what the gambling and property tycoon was being treated, no one was saying. He was reportedly admitted to the nearby Hong Kong Sanatorium and Hospital last week before being transferred to Adventist. At 8pm, Pansy Ho Chiu-king, managing director of the family holding company Shun Tak Holdings (SEHK: 0242, announcements, news) , was seen entering the hospital in Stubbs Road via the back door. Five minutes after that Mr Ho's son Lawrence Ho Yau-lung and his wife walked through the front entrance. Ms Ho and the couple left at 10.35pm without answering reporters' questions. Another of Mr Ho's daughters, Shun Tak deputy managing director Daisy Ho Chiu-fung, visited the hospital separately. Stanley Ho was last seen in public last Tuesday, when he was named founding president of Macau's casino chamber. He missed Sunday's official opening of the Hotel Lan Kwai Fong in Macau. The casino in the hotel is owned by his casino company, Sociedade de Jogos de Macau. Neither Shun Tak Holdings nor Hong Kong Adventist Hospital would comment on earlier reports that the hospital had admitted Mr Ho. In 2007, Hong Kong Sanatorium doctors treated Mr Ho for a rectal injury he sustained while being treated in Bangkok for constipation. He emerged denying he had cancer or had to cut back on his public duties.

Cathay chief executive Tony Tyler says the latest revenue figures show the airline is still some way from leaving the downturn behind. Falling ticket prices and a drop in demand for business and first-class travel have put Cathay Pacific Airways (SEHK: 0293) a long way from a sustainable recovery. "Our latest revenue figures highlight the fact that we are still some way from climbing out of our deep hole," chief executive Tony Tyler said in an internal newsletter. Weekly revenue showed signs of bottoming out but there were still no signs of any sustained recovery, Mr Tyler said. Singapore Airlines, one of the strongest regional rivals to the Hong Kong flag carrier, reported a worse than expected quarterly loss last Thursday. Cathay is scheduled to release its interim results tomorrow. July is a traditional peak season for regional airlines as holiday makers travel to popular tourist spots in Japan, South Korea and Southeast Asia. However, Cathay's revenue last week fell short of target by more than 15 per cent, with a big drop from the same week last year. Cargo revenue was down more than 20 per cent behind budget, according to the data released by Cathay. The drop in revenue follows a downturn in passenger numbers and sales per seat per mile, or the passenger yield. The airline's passenger traffic declined 4 per cent in the first half while its passenger yield was expected to fall 18 per cent year on year, said Kelvin Lau, a transport analyst at Daiwa Institute of Research. Shares in Cathay rose 1.82 per cent to HK$12.28 yesterday on expectations interim earnings would be helped by a write-back in fuel hedging losses from last year. If oil prices stay at US$75 a barrel over the next three years to 2011, the company could make mark-to-market gains and write back some of the paper losses from fuel hedging provisions. Mr Lau said the carrier would book a hedging gain of HK$2.1 billion because of the oil price returning to US$70 a barrel. SIA, the world's second-largest airline by market value, last week unveiled its first quarterly loss in six years and warned that it could post an annual loss if adverse conditions continued. "Operationally, [Cathay] is still facing a difficult environment in the second half, but the gains from hedging will help the results to turn around," said Cho Fook-tat, an aviation analyst at Taifook Securities. Mr Tyler said advance bookings for the economy and business class were "not that bad" but added that the overall situation remained grim. For next month to November, Cathay's front-end bookings were still heavily down, he said, adding that the company would only know early next month whether business travel would show any signs of a turnaround.

The number of homeowners whose mortgages are in negative equity is estimated to have fallen by 60 per cent in June from the previous quarter. The Hong Kong Monetary Authority said yesterday its survey of loans in which the outstanding amount exceeded the value of the property indicated the number dropped to 3,767 at the end of June, from 9,553 three months earlier. It was the second successive quarterly decline. In December, 10,949 mortgage loans were in negative equity, compared to 105,697 in June 2003 at the height of the Sars epidemic. The most recent survey also indicated that just 0.8 per cent of mortgaged homes were worth less than borrowers paid for them. This was a decline of 1.2 percentage points from the previous quarter, and the lowest level since last September. The total value of residential mortgages in negative equity fell by three-quarters, to HK$8.1 billion, over this period. The Monetary Authority estimated that the unsecured portion of such loans declined to HK$600 million in June, from HK$2.1 billion in March and HK$2.7 billion in December. The loan-to-value ratio edged down to 108 per cent from 111 per cent in the same period. The three-month delinquency ratio for negative-equity loans - loans unpaid for more than three months against the total outstanding - rose to 0.17 per cent from 0.12 per cent at the end of March. The authority explained that the amount overdue had declined but not as quickly as the total in negative equity, pushing the ratio up.

A total of HK$8 billion worth of SAR government bonds will go on sale starting next month. Institutional investors are invited to tender their bids for the sovereign bonds in three tranches, with the first lot of two-year HK$3.5 billion debt set for tender on September 2. The five-year debt, worth HK$2 billion, will open for bids on November 3, followed by 10-year debt worth HK$2.5 billion on January 12, the Hong Kong Monetary Authority said. No date has been set for a retail offering, but the HKMA yesterday appointed Bank of China (Hong Kong) (2388) and the Hongkong and Shanghai Banking Corp as arrangers for two years, and they will advise on the appropriate timetable. Market participants said that despite the current low yield environment not being suitable for the retail market, demand for Hong Kong dollar- denominated bonds does exist, as fund managers still need to park their funds somewhere in the short to medium term. "Some local funds or treasury departments of banks need to park their money for stable yield returns," said a local fixed income trader, who believes lenders could provide enough demand for those two- to five-year bonds. Clement Ho, director and chief investment officer at Hang Seng Investment Management, said "the US interest rate is not likely to rise till the second half of next year. As such, funds that opt for a credit and duration balance would see the government bond as a viable investment tool for the temporary parking of funds."

The discovery of a new subtype of the AIDS virus that jumped to humans from gorillas has local concern groups reiterating the need to practice safer sex. The new strain, found in a woman from the West African nation of Cameroon, is part of the HIV-1 family of microbes that accounts for the vast majority of cases of human immunodeficiency virus, French virologists said in a letter published in the latest issue of the US journal Nature Medicine. Until now, all three established subtypes of HIV had been linked to the chimpanzee, the primate closest to man. The new subtype has been named P, adding to three established HIV-1 subtypes - M, by far the most prevalent, and O and N, which are rare. Hong Kong's Department of Health has been performing genetic subtyping for newly diagnosed HIV-1 cases. "So far, we have not seen the new subtype," a spokesman said. "We will closely monitor the situation." AIDS Concern chief executive Loretta Wong Wai-kwan said the discovery of the new subtype "may help scientists gain a better understanding of the transmission of the virus from animals to humans." This may lead to important findings on how to prevent animal-to-human transmission of the virus in the future. "The main route of HIV transmission in Hong Kong is through sexual contact," Wong said. "Therefore, to prevent HIV infection, people should practice safer sex. Condom use is the key message! "Condoms can also prevent the spread of many sexually transmitted infections." The new virus was sequenced from a blood sample taken from an unnamed 62-year-old woman who moved to Paris from Cameroon. She was tested for HIV in 2004, shortly after she moved to France. She responded to diagnostic tests for HIV-1 but further tests failed to pinpoint the viral subtype. The virus was genetically decoded and then put through a computer model to compare its evolutionary past against known viruses, both HIV and its equivalent in apes, called simian immunodeficiency virus. The strain was a "significant" match with SIVgor - an immune deficiency virus found in gorillas. "The most likely explanation for its emergence is gorilla-to-human transmission of SIVgor," the French virologists' letter in the journal says. The research was headed by Jean- Christophe Plantier at a national referencing laboratory for HIV at the Rouen Hospital Centre in northwestern France. The woman probably got the virus from another person because she reported no contact with gorillas or bush meat and the virus showed signs of being adapted to human cells, the researchers said. Hong Kong has reported a total of 4,151 HIV infections since 1984 and has 1,047 AIDS patients.

Hang Seng Bank (0011) reported yesterday a drop of 28.8 percent in first-half net profit due to narrower interest margins and a fall in fee income. The lender said net income for the six months ended June this year was HK$6.45 billion, down from HK$9.06 billion for the same period last year. Analysts had expected earnings to fall by 10 to 28 percent. The bank's net interest margin dropped 0.37 percentage points at 2.06 percent in the first half. Net interest income declined 11.8 percent to HK$7.28 billion in the period. Net fee income plunged 36.4 percent to HK$1.93 billion. Hang Seng Bank - a unit of HSBC (0005) - expects its net interest margins to continue being pressured in the second half. It will focus more on non-interest business. "Hong Kong's interest rates will remain low in the next 12 to 18 months following the US rate trend," said chief executive Margaret Leung Ko May-yee. Loan impairment charges surged 230.3 percent to HK$621 million from the first half of last year. But that was a 76 percent decline from the second half of last year. Leung estimates the nonperforming loan ratio for Hang Seng Bank will not rise as factory orders increased and the bankruptcy rate in the SAR is not serious. The bank's mainland business made up 11.7 percent to total pre-tax profit, up from 9.4 percent in the first half of 2008. New loans in the mainland fell 12.9 percent from the end of 2008, but Leung expects lending to increase over the next six to 12 months, especially to Hong Kong clients with mainland businesses. The bank is also seeking investment opportunities in China's securities, insurance and asset management sectors. A second interim dividend of HK$1.10 per share was declared, bringing the total distribution for the first half to HK$2.20, unchanged year-on-year.

China: The total value of gross domestic product announced by the mainland's 31 provinces and municipalities is significantly higher than the national figure announced by the central government, putting the statistics' credibility in doubt. According to the figures provided by local governments in the past few days, the world's third-largest economy had an output of 15.38 trillion yuan (HK$17.45 trillion) in the first half of this year, significantly more than the figure of 13.99 trillion yuan released by the National Bureau of Statistics. All but seven governments reported a higher percentage increase in GDP than the national one. The inconsistencies once more raised concerns about the accuracy of mainland statistics; economists recently questioned mismatches in figures for power generation and economic growth and for personal income and fiscal revenue. Economists say flaws in data collection and calculation might exist but the greatest cause of inconsistency is the inflation of GDP figures at a time when the central government puts great emphasis on them in cadres' performance appraisals. "We gave up trying to figure out the GDP difference five or six years ago, after we decided local GDP figures are not important," said Tao Dong, an economist with Credit Suisse. To get a better picture of local economies, economists look at local exports and imports, power generation and other departmental figures, and visit the provinces, he said. Sun Mingchun, an economist with brokerage Nomura International, said: "The GDP figure is processed. First-hand figures are more convincing." Mr Sun said the latest local GDP figures seemed more reliable than in the past. "In 2004, all 31 provinces and municipalities reported faster GDP growth than the national rate," he said. Liu Fuyuan, an economist with the National Development and Reform Commission, said local officials had been left with no choice but to fake figures to please higher-level authorities. A legal amendment passed in June punishes officials for forging or falsifying statistics. Ma Jiantang , director of the National Bureau of Statistics, last week told his staff they faced enormous challenges. The figures they produced still did not meet the needs of the Communist Party, the government and the public, and lacked credibility. "Our mission is very important, and the challenge is huge," Mr Ma said. He also pointed to the wide availability of data on the internet and the fact people were now more willing to challenge data. "How to respond to the challenges brought about by the internet and globalisation will be a test for all of us," he said.

Nearly 200 Chinese traders detained for a month following a clampdown on a vast wholesale market in Moscow have been released, the Foreign Ministry said yesterday.

China Railway hopes to expand in other Latin American countries if the Venezuelan contract is a success. Just days after announcing the mainland's biggest overseas railway construction project - a US$7.5 billion deal in Venezuela - the ministries of rail and commerce said the aggressive global expansion would continue, especially in Latin America. China Railway Engineering Corp and a subsidiary of the Venezuela Railway Authority signed the multibillion-dollar deal last Friday to design and build a 471.5-kilometre railway in the Latin American nation. Mainland railway companies, aided by the Ministry of Railways and the Ministry of Commerce, will continue to aggressively expand globally. "To date, this is Venezuela's largest non-oil contract, and the largest rail construction contract in the international market undertaken by a Chinese company," said the website of China Railway Group (SEHK: 0390), the Hong Kong and Shanghai-listed subsidiary of China Railway Engineering. It said the deal represented "a breakthrough ... in the overseas market". China Railway Engineering said it intended to hand the contract to China Railway. A shareholders' meeting was likely to be held in about one or two months to decide the matter, China Railway chief financial officer Li Jiansheng said. "We will do the entire US$7.5 billion contract or not at all." If China Railway assumed the contract, it would add about 15 billion yuan (HK$17.02 billion) in revenue - 7.4 per cent of China Railway's total - to the company every year for three or four years from next year, Ms Li said. "If we do well in this Venezuelan project, we hope to expand our influence in other Latin American countries like Brazil," she said. The railway is part of Venezuela's plan to build 13,000 kilometres of railways by 2030, and China Railway Engineering will try to win more agreements in Venezuela, according to China Railway's website. Meanwhile, the Ministry of Railways and Ministry of Commerce agreed at a meeting in Beijing on July 29 to co-operate in overseas ventures and uphold China's "going-out strategy" of global business expansion, the railways ministry's website said. Minister of Commerce Chen Deming said many countries had approached the ministry for assistance in building high-speed rail. He said he hoped both ministries would sign a strategic partnership in the near future to further their co-operation in accelerating the globalisation of the mainland's rail industry. If China Railway assumed the Venezuelan contract, it would benefit the company's top and bottom lines since the gross margins of overseas rail contracts were typically 1 to 2 percentage points higher than domestic contracts, said Jack Xu, a Sinopac Securities analyst. "There are political risks in international deals, but Venezuela is friendly towards China," he said.

Everbright Securities, the first brokerage to launch an initial public offering on the mainland in almost seven years, is expected to draw a flood of orders during its online subscription today as analysts and investors expect the shares to surge more than 50 per cent on their debut. The anticipated listing bonanza also could set a bullish mood for several medium-sized mainland securities firms poised to follow in Everbright's wake, hoping to raise billions of yuan in new funds soon. But analysts warned that the optimism might have been overdone and the stock market's outlook was uncertain. Beijing-based Everbright set its flotation price range at 19 yuan (HK$21.55) to 21.08 yuan a share at the weekend, expecting to net up to 10.96 billion yuan by selling 520 million shares, 15.21 per cent of its enlarged capital. "The market is agog over the first brokerage IPO in seven years, as investors believe the buoyant market has created a boon for brokerages," said TX Investment Consulting analyst Yao Yinan. "Obviously, the optimism is not well grounded, since the current rally is not on a solid footing." The top end of the price range translates into almost 59 times 2008 earnings. On the mainland, final flotation prices are normally set at the high end of the indicative price range. By contrast, Citic Securities, the mainland's largest brokerage, trades at nearly 35 times its 2008 earnings. Everbright will offer 364 million shares, or 70 per cent of its total flotation volume, to the general public today, with the rest slated for institutional investors. "The market is swamped with cash, and it is most likely that Everbright's shares will hit at least 30 yuan when they start trading," said China Jianyin Investment Securities analyst Chen Jiantao. "Actually, it might be a little conservative to predict a debut price of 30 yuan." Everbright was expected to post earnings per share of 80 fen for 2009, Mr Chen said. "Investors refer to the brokerage's 2009 performance as they assess the value of Everbright," he said. "But the growth potential of the stock is again hyped up." If the shares were to trade at 30 yuan, the price-earnings multiple based on estimated earnings this year would stand at 37.5. Everbright planned to raise 10 billion yuan from the stock market last year after it received approval from the China Securities Regulatory Commission. But the CSRC suspended new share offerings in September to boost the then weak market. It lifted the unofficial listing ban in June. The first batch of share offers after the suspension all made rosy debuts amid frenzied buying, with Sichuan Expressway surging 202.8 per cent on July 27 in Shanghai. The Shanghai Composite Index has climbed 90.2 per cent this year, buoyed by an influx of fresh capital, as investors became convinced that the mainland economy had bottomed out, thanks largely to the government's stimulus package. Everbright ranked No10 in terms of brokerage business on the mainland, and its investment banking operations were relatively weak, said Mr Yao. China Merchants Securities is tipped to launch a 30 billion yuan listing soon. It was also given the approval by the CSRC last year.

Aug 1 - 3, 2009

Hong Kong: Hong Kong stocks rose on Friday, the fifth successive winning month, fuelled by positive earnings momentum and analyst upgrades. In the absence of a major disappointment in US economic data due next week, or in corporate earnings that will continue to trickle in through August, analysts expect the stock markets to continue their upward trajectory. “A lot of people, including some long funds out there, are still underweight on the market because they didn’t buy the recovery story. But there is only so long you can wait, you have put that money to work,” said Andrew Sullivan, sales trader with MainFirst Securities. Power companies, which have lagged the market rally this year, jumped on Friday, after Datang International Power Generation (SEHK: 0991) forecast a surge in first-half profit. Datang jumped 5.4 per cent to HK$5.09. China Resources Power (SEHK: 0836) climbed 5.5 per cent after the country’s fourth largest power producer on Thursday revealed plans to take a 25 per cent stake in a 25 billion yuan nuclear project in Hunan. The benchmark Hang Seng Index finished up 339.25 points at 20,573.33 after scaling an 11-month high of 20,712.66 earlier amid strong corporate earnings forecasts and analyst upgrades. HSBC (SEHK: 0005) lead the charge with a 4.6 per cent jump even as some analysts predicted a loss for the global banker when it reports its first-half earnings next week on the back of write-offs at its US unit. The gauge gained 11.9 per cent in July and 3 per cent in its third consecutive weekly rally. The China Enterprises Index, which represents top locally listed mainland stocks, was up 1.1 per cent at 12,123.59. Local property developers surged after Morgan Stanley forecast a further 20 per cent increase in home prices and a 15 per cent rise for office real estate. “The liquidity rush will continue to drive up Hong Kong asset prices and the performance of property stocks,” said analysts with Morgan Stanley led by Derek Kwong. Henderson Land (SEHK: 0012) jumped 5.8 per cent, while Hysan Development (SEHK: 0014) vaulted 10.1 per cent, after both stocks were raised to an overweight rating by the investment house. Hang Lung Properties (SEHK: 0101) rose 6 per cent after the company reported a forecast-matching 53 per cent drop in underlying profit for the year ended June as it held back home sales amid weak market conditions.

Comics fair goddesses (from left) Wylie Chiu, Renee Dai and Melody Chan, plus Guangzhou Vice Mayor Xu Zhibiao, attend the opening of the 11th Ani-Com and Games Hong Kong Fair at the Convention and Exhibition Centre in Wanchai on Friday. The Ani-com and Games Fair opened on Friday morning at the Convention and Exhibition Centre in Wanchai - attracting more than 1,000 enthusiastic youngsters. The annual fair is a popular event with people wanting to buy comics, computer games and figurines. The fair will also include a beauty contest dubbed ACG Image Girl Pageant, a comic writing competition, called the “Hong Kong Supernova Original Comics Contest” and the Super Art Idol Show 2009. Pseudo-models will also attend the fair to promote racy photo albums. This led to controversy when the albums were exhibited at the recent book fair. Some parents said they thought this was inappropriate. Television footage showed dozens of fans rushing to booths at the fair when it opened at 10am. Comics, computer games, animations and figurines are particularly sought after by teenagers in Hong Kong. Figurines are small models of characters featured in comics and animations. Some youngsters said they had queued outside the venue for five days. One secondary school pupil, surnamed Chan, said he made sure he was at the front of the queue. This enabled him to obtain a limited-edition golden figurine - given away free at the fair. “I think it is worth queuing for five days for this,” he told local media. Some teens said they each planned to spend about HK$1,000 on comics and figurines. Police officers and about 10 pupils from Christian Zheng Sheng College, a rehabilitation school for young drug users, distributed leaflets outside the venue. The leaflets reminded young people to stay off drugs. “We would like to take this opportunity to promote an anti-drug message as the fair will attract thousands of teenagers,” a police spokesman told reporters. Local university students have also developed an anti-drug game that will be showed at the fair on Friday. The fair will be open from 11am to 8pm until next Tuesday. This year, there are more than 100 exhibitors. About 600,000 people are expected to attend, organizers say.

Las Vegas Sands is reporting it lost US$175.9 million in the second quarter, compared with a loss of US$8.8 million a year earlier.

The Marina Bay Sands construction site stands along a major highway in Singapore. Overnight on Thursday, Sands CEO Sheldon Adelson said the Marina Bay casino was on time and scheduled to open in the first quarter of next year. Las Vegas Sands is reporting it lost US$175.9 million in the second quarter, compared with a loss of US$8.8 million a year earlier. The company, controlled by billionaire CEO Sheldon Adelson, said the loss included the costs of settling a legal matter and charges related to lower-than-expected proceeds from the sale of a mall at one of its Las Vegas resorts. Net quarterly revenue was US$1.06 billion, a decrease of 4.8 per cent from US$1.11 billion a year earlier and just below what analysts expected. They predicted on average that Sands would take in US$1.08 billion in revenue. Sands lost 34 cents per share in the quarter compared with 2 cents per share one year ago. The company said its net loss attributable to stockholders was US$222.2 million after accounting for more than US$46 million in dividends paid to holders of preferred stock and for the redemption value of certain preferred stock.

An international audit of aviation safety ranked Hong Kong's airport fifth in the world and second in Asia. Chek Lap Kok got top marks for its resolution of safety concerns and the city's aviation laws. The results were announced yesterday by the director general of civil aviation, Norman Lo Shung-man. He said the city had scored very highly in another of the eight categories, and had an overall mark of 94.47 per cent compared with the global average of 59.34 per cent. He would not say where other airports ranked since the six-yearly audit, by the International Civil Aviation Organisation, was not finished. The airport off Lantau Island is about to become even safer. It is preparing to switch to a state-of-the-art traffic control centre in 2013. The complex, at the southeastern corner of the airport, is under construction and will include public areas such as a library. The development would cost about HK$1.5 billion, Mr Lo said. "The existing systems we are using are based on technologies from the early 1990s," he said. "Secondly, there is limited capacity in terms of the workstations available in the existing centre. The maximum we can have is 32 workstations." Of these workstations, 26 are in use. The new facility would be able to accommodate at least 56 workstations, which would allow the airport to manage the expected growth in air traffic up to 2025, the director general said. The airport's two runways can handle up to 57 aircraft landings or take-offs every hour. Mr Lo said capacity was expected to rise to 58 per hour this year, to 62 per hour by 2012 and to 68 per hour by 2015. By making further adjustments, more flights could be accommodated. It was estimated each flight contributes economic benefits of more than HK$100,000 to Hong Kong, he said. In the past 12 months the number of flights the airport has handled has fallen 5 per cent year on year. Some international airlines have reduced the frequency of flights on some routes, merged their operations or gone out of business amid the financial meltdown. Mr Lo believes the downturn has bottomed out.

Buyers beware: some herbal jellies might have no medicinal benefit and expensive Cordyceps may be rigged with metal wire and bamboo picks. Two studies released yesterday showed that people should be careful in buying Chinese herbal medicine. In one study by City University, three of 18 samples of herbal jelly - which helps to detoxify the body or relieve internal heat - did not contain necessary substances. The samples were missing plastrum testudinis (turtle shell) and a wood-decay fungus called Wolfiporia. CityU department of biochemistry deputy director Cheung Hon- yeung said: "Without these major components of herbal jellies, it is like eating just jelly." He urged for greater vigilance by the Food and Environmental Hygiene Department. The findings, however, were rejected by the herbal shops. A spokeswoman for Kung Wo Tong's Mong Kok branch claimed its products included all ingredients listed on its label. "We spend five hours a day to prepare these precious ingredients. We sell a few hundred bowls of turtle jelly every day and we have gained our reputation over decades. So why do we have to lie to our customers?" she said. Another supplier, Guang Jiang Tang, whose products are sold in supermarket chains, said it would be unfair to simply base charges on a single laboratory test and claim its product did not contain Wolfiporia. "We do not know how the testing was conducted," an employee said. "We will discuss the findings with our mainland supplier." In another study by the Chinese University, 40 percent of Cordyceps sinensis, which is also commonly known as caterpillar fungus, sold in markets was either not the real thing or contained substances harmful to people. Some samples had metal or chemicals added to increase the weight of the fungus. CUHK department of biology professor Paul But Pui-hay explained the potential risks. "Five out of 15 types of Cordyceps sinensis contain a medical substance called C. hawkesii Gray, which may lead to dizziness and vomiting when taken," he said. He said the public should be alerted to the packaging of Cordyceps. "Cordyceps packed [in a plastic-wrapped test sample] contained harmful substances," he said, adding people should buy "distinctive strips of Cordyceps instead of those being packed if they are not sure about their authenticity." He suggested people should visit more reliable shops. Cordyceps are usually sold for HK$3,000 to HK$4,000 per 50 grams and he said people should not buy products sold cheaply. He added that the price of real Cordyceps powder- made capsules could be up to four times the price of fake ones.

Polytechnic University trainers yesterday basked in the glory of China's first male swimming champion Zhang Lin who the mainland media have now equated to icons Yao Ming and Liu Xiang.

Hong Kong's Exchange Fund reaped a HK$58.5 billion bonanza in the second quarter as it rode the equity-market recovery to start posting investment gains again for the first time in more than a year.

A senior official made a rare admission yesterday that the mainland has to change its policies toward ethnic minorities in light of the deadly riots in Xinjiang this month. Wang Yang, Guangdong's Communist Party boss who has close ties to President Hu Jintao, said it is time for a rethink on ethnic policies, though he did not say specifically what is wrong or offer solutions. Mainly Muslim Uygurs attacked majority Han Chinese in Urumqi after taking to the streets to protest against attacks on Uygur workers at a factory in Guangdong in June which left two Uygurs dead. Han Chinese sought revenge days later. Xinjiang has long been a tightly controlled hotbed of ethnic tension, fostered by an economic gap between many Uygurs and Han, government controls on religion and culture and an influx of Han migrants who now are the majority in most big cities. "The policies themselves will definitely need adjustments," Wang told foreign reporters in Guangzhou. "We have to adjust to the actual situation. China is a multi-ethnic society. If adjustments are not made promptly, there will be some problems." Officials have to date either deflected questions about whether policies need changing, or denied there are any problems, blaming exiled groups for stirring up the violence. Wang played down the ethnic dimension of the clash between Uygurs and Han in Guangdong. "This case is a conflict between workers and should be regarded as a criminal act. Overall, this will be handled in accordance with judicial procedures," he said. Wang said 15 people had been arrested over the factory brawl. Among the arrested were those believed to have killed the two Uygur workers. Meanwhile, the Urumqi Public Security Bureau has made public a list of names and photographs of 15 Uygurs wanted for their roles in the unrest. The bureau issued a notice urging fugitives "not to hope that they would be lucky enough to get away with it," offering leniency for those who turn themselves in within 10 days. The government also offered rewards to people who report on rioters. In recent days, 253 more people have been detained after being turned in by local residents, the China Daily said.

China: China is issuing new accreditations to mainland journalists ahead of the sensitive 60th anniversary of the People's Republic of China, in an attempt to curb the common practice of non-journalists masquerading as reporters. Some journalists also suspect the order for new accreditation could be used by censors to tighten control over combative reporters. Journalists have long been hailed as "kings without crowns" on the mainland and enjoy many benefits such as getting reserved train tickets - along with army officers and officials - and red packets distributed at press conferences. In some cases, journalists who threaten to expose any impropriety of cadres are given treats by local governments. Because of these privileges, journalist accreditations are sought after by many, and media outlets sometimes issue journalist badges to non-editorial staff, such as staff in advertising and distribution, and freelancers. In some cases, journalists have made up stories to impress their supervisors and boost their earnings, as their income depended on their work performance. The authorities renew journalist accreditation from time to time to crack down on bogus reports and journalists. In the latest round, the General Administration of Press and Publication has ordered news outlets to carefully vet the credentials of their journalists. In February, Li Dongdong, a deputy chief of the press administration, told officials that stronger rules proposed for the mainland's journalists would include a "full database of people who engage in unhealthy professional conduct", China News Service reported. "People entered into the transgressor list will be excluded from engaging in news reporting and editing work," the report said, citing Ms Li. Xinhua said local media outlets were asked to exercise self-discipline when applying for accreditation for their staff, and those guilty of a serious violation of the code of conducts should not get accreditation. Media outlets were also told to disclose the identities of the applicants for public scrutiny.

Zhao Jing celebrates after winning the final of the Women's 50m backstroke at the Fina Swimming World Championships in Rome on Thursday.

Mainland insurers can decide for themselves how much to invest in stock markets, as long as they stay under a fixed ceiling, the country’s insurance regulator said on Friday.

Bank of America, the largest US bank, plans to build up its corporate and investment banking business, and offer wealth management services to tap rich mainland consumers, according to the sources.

Photo taken on July 31, 2009 shows the repaired Chediguan Bridge, part of No. 213 state highway, in Wenchuan, southwest China's Sichuan Province. The bridge was reopened to traffic on July 31, seven days after it was damaged by a fallen rock. No. 213 state highway is a key traffic line linking Wenchuan County to other areas of Sichuan.

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

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