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Dec 30, 2009

Hong Kong*: The froth is coming off Hong Kong's property market, with bidding at the biggest government land auction in two years failing to reach the high prices forecast by analysts. Two residential sites on the Tai Po waterfront were sold yesterday at the low end of market expectations, a signal that developers believe property prices are close to their peak. Average residential property prices in Hong Kong have risen 28 per cent this year, according to property benchmark Centa-City Index, raising fears of a property bubble. Sino Land acquired both sites in the auction, one for HK$5.15 billion and the other for HK$5.25 billion. The second site was bought jointly with K Wah International, which owns a 15 per cent stake. The total land price of HK$10.4 billion has been called a perfect Christmas present for Sino Land, being 16 per cent less than the most bullish expectation of HK$12.4 billion. It was the second-biggest government land auction is terms of land size and lump sum. The Hang Seng Index fell 36.78 points, or 0.17 per cent, to 21,739.39 after the auction, following gains of as much as 222 points in the morning. Sino Land already has a strong presence in the Tai Po area. A consortium led by Sino Land snapped up three other sites in the area with K Wah International, Nan Fung Development and USI Holdings in 2007. The auction was the last in which sites will be exempt from new restrictions on developers' use of so-called "green features" to inflate floor areas. However, that was not enough to attract developers. Nicholas Brooke, chairman of Professional Property Services, said bidding was affected by the debate on green features as well as by the holding of the auction in the middle of the holiday season. The opening bid for the first site, Tai Po Town Lot 200, was HK$3.64 billion by New World Development. The auction got off to a slow start, with the auctioneer forced to wait at least one minute for each new bid. The plot eventually attracted seven bidders. Cheung Kong (Holdings) (SEHK: 0001) joined in at HK$4.55 billion but withdrew after the price exceeded HK$4.9 billion. Nan Fung Development also withdrew after a bid of HK$5 billion. Sino Land won the site with the 32nd bid. Bidding for the second site, Tai Po Town Lot 201, was slightly more aggressive. It attracted 10 bidders, with the consortium led by Sino Land acquiring the plot after the 34th bid. The average land price of the sites is HK$7,214 per square foot, 29 per cent higher than the average price of the three sites in the area acquired by Sino Land in 2007. After the auction, Sino Land chairman Robert Ng Chee Siong said the company planned to develop luxury apartments and houses on the sites. Brooke described the outcome of the land auction as a reality check for the property market. "We saw cautious bidding by the developers, which shows they have stepped back," he said. "[Developers] can't just keep bidding for sites and assume prices will continue to rise 20 to 30 per cent per annum. They believe prices will be pretty flat in 2010. "The land prices are realistic. Market expectations will be more conservative for 2010." Charles Chan Chui-kwok, managing director at Savills Valuation and Professional Services, was disappointed with the result. "Developers were cautious and this shows they believe that property prices are close to the peak," he said. The two sites, next to the Science Park in Tai Po, cover an area of 4.185 hectares, which could provide a total gross floor area of 1.44 million sq ft.

Sino Land wins tactical battle to consolidate its Tai Po sites - Developer's well-planned bidding secures 2 plots for HK$10.4b. To the uninitiated, it may look like a group of grown men and women waving table tennis paddles, but a government land auction is a sophisticated tactical battle. Yesterday, that battle was won by Sino Land chairman Robert Ng Chee Siong when his company bought two sites in Tai Po for HK$10.4 billion, the low end of the market's consensus forecast. The first residential site under the hammer was a 2.09-hectare plot that sold for HK$5.15 billion. Sino Land's 85 per cent joint venture also picked up an adjacent residential site of the same size for HK$5.25 billion. The remaining 15 per cent of that plot is owned by K Wah International Holdings. After the auction, Ng was obviously happy that other bidders had not driven prices too high, and thanked the other developers "for giving face". However, UOB Kay Hian property analyst Sylvia Wong has another explanation for the lack of aggressive bidding. Wong said Sino Land - along with its consortium comprising K Wah, Nan Fung Development and USI - bought three nearby sites in 2007, meaning it was more interested in consolidating properties in the area. While the government auctioneer emphasised the fierce bidding at yesterday's auction - the first site attracted seven bidders and the second 10 - a closer look reveals that some bidders were formed by the same group of developers.

One of Hong Kong's gold medal winners at the 2006 Doha Asian Games was yesterday charged with bribing his way into the event after being suspended from competition for failing a drugs test. Chan Yun-to, 43, is accused of conspiring to offer US$10,000 (HK$78,000) in bribes to the secretary-general of the Asian Bodybuilding and Fitness Federation, Paul Chua. In return, the official "was said to have shortened or lifted the period of suspension of participating in any bodybuilding competition imposed on Chan," enabling him to participate, the Independent Commission Against Corruption said. Chan won the men's 75-kilogram class at the Games. The ICAC yesterday also laid three additional charges against Hong Kong China Bodybuilding and Fitness Association chairman Simon Chan Siu-man, 39. In August, he was charged with one count of conspiracy for an agent to accept an advantage and one of fraud in connection with the Doha incident. Two of the additional charges involve conspiracy for an agent to accept an advantage and the third is conspiracy to defraud. One of the bribery charges alleges that between January and December 2006, Simon Chan and Chan Yun-to conspired together with Chua and an association coach for Chua to accept US$10,000 from Chan Yun-to. Another bribery charge alleges Simon Chan of having conspired together with Chua, the association coach, and an unnamed bodybuilder between January 2006 and May 2009 for Chua to accept between HK$100,000 and HK$200,000 from the athlete for the same reason. ICAC inquiries revealed that Chan Yun-to and the unnamed athlete were banned from any bodybuilding competition for two years and life respectively because they had failed doping tests in October 2005 after competing in an event held in South Korea. The remaining conspiracy charge alleges that between April 2007 and May 2009, Simon Chan conspired together with the unnamed athlete to defraud the Hong Kong Sports Institute by falsely representing that the athlete was a full-time athlete and that his occupation was a part- time personal trainer. Owing to the alleged false representation, the institute was led to approve an elite training grant of HK$600,000 for the athlete. The defendants have been released on bail by the graftbusting body, pending their appearance at Eastern Magistrates' Court on Thursday.

Exports surpassed HK$240.7 billion in November as shipments of Christmas goods fuelled a rebound from October's 13.1 per cent decline. Hong Kong's exports last month recorded their first year-on-year growth since the global financial crisis started to bite late last year, but businesses are cautious on the short-term outlook. The latest figures released by the Census and Statistics Department yesterday showed exports last month surpassed HK$240.7 billion, rising 1.3 per cent from November last year. This is a strong rebound from the 13.1 per cent year-on-year decline in October and the first year-on-year rise since October last year. "November is the peak period for exporting Christmas goods," Federation of Hong Kong Industries deputy chairman Stanley Lau Chin-ho said. "Even though exports only rose slightly, the figures at least show the situation began stabilising during the peak season." He said electronics, toys, apparel and other non-luxury goods continued to perform better. The value of re-exports increased 1.9 per cent from a year ago to more than HK$228.5 billion, the data shows, while domestic exports plummeted almost 20 per cent to HK$5.5 billion. Exports to Asia grew 8 per cent. Strong increases were posted for exports to Vietnam, which surged 37.2 per cent, and Taiwan, up 18.3 per cent. The data also shows the export of electrical machinery, equipment and appliances remained the strongest at HK$64.3 million, up 8.4 per cent over the year. Imports increased 6.5 per cent to HK$254.8 billion. Lau expects positive year-on-year growth this month and next because of a low base of comparison, but he warns the market will be quieter after the festive season. "It doesn't mean export figures will then rally," he said. "The export market has not yet fully recovered and it's still subject to worries about governments retreating from the market, for example." Compared with October, total exports dropped 2.8 per cent. For the first 11 months of this year, exports shrank 14.3 per cent from a year ago while imports dropped 13.3 per cent. A trade deficit of almost HK$190 billion was recorded for the period. A government spokesman said Asian markets continued to fare better than the United States and Europe, adding the slow recovery in the global economy should help trade in the coming months, lifting Hong Kong in the process. However, global economic prospects were still subject to "considerable uncertainties", he said, and the external trading environment "could remain challenging".

Hong Kong will move a step closer to becoming an offshore centre for yuan business under a proposal to be studied by Beijing to allow mainland people and firms to use the currency for foreign direct investments in the city. This was among suggestions raised by Premier Wen Jiabao during a meeting with Chief Executive Donald Tsang Yam-kuen in Beijing. If it goes ahead, it would help consolidate the city's status as an international financial centre and a testing ground for mainland financial reform. Quoting Wen, Tsang said the mainland would also explore the viability of using yuan for trade and project financing in Hong Kong, and would continue to strengthen the development of the yuan debentures business in the city. Co-operation between the securities markets in Hong Kong and Shanghai will also be promoted. A proposal would be put forward for the introduction of Hong Kong Exchange-traded funds (ETF) and China depositary receipts (CDRs) in Shanghai, the chief executive said. ETFs are an investment product backed by a portfolio of stocks in a particular market. Their units trade on the stock exchange like other stocks. CDRs, which are similar to American depository receipts, now list on the Shanghai or Shenzhen stock exchanges. The proposal would allow overseas firms and red chips - mainland companies registered in Hong Kong - to raise funds by allowing mainland investors to trade these shares. A senior government official said last night it would be a breakthrough if the central government allowed mainlanders to make foreign direct investments in Hong Kong. "This means mainland firms can buy things here with yuan without changing it to Hong Kong dollars or other currency. There will be more yuan available in Hong Kong and this will help Hong Kong to be a yuan offshore centre," the official said. Another senior official said: "The central government has indicated that whatever mainland financial reform can be tested in Hong Kong will be tested in Hong Kong." The city has been allowed to have cross-border business settled in yuan since July and the transactions amounted to about 490 million yuan (HK$556 million) by the end of last month. There are also 57 billion yuan of deposits in Hong Kong. The People's Bank of China said last week in a statement, issued jointly with the banking, insurance and securities regulators, that the mainland would extend the areas where a trial of cross-border yuan settlements is being conducted. It would also increase the number of companies allowed to settle cross-border trade in yuan. Peter Wong Tung-shun, an executive director at HSBC (SEHK: 0005, announcements, news) Asia Pacific, said Hong Kong would benefit if mainlanders were allowed to use yuan to make direct investment in the city. He said the move could also facilitate the development of other yuan products, such as yuan bonds, as investors would look for different kinds of investments. Billy Mak Sui-choi, an associate professor at Baptist University, said it would be important for Hong Kong if the mainland allowed more use of yuan in the city. "It will facilitate Hong Kong's development as a yuan offshore centre," Mak said, adding that there needed to be enough yuan in the city before it could become a yuan offshore center.

Workers at Two IFC prepare for the New Year's Eve fireworks show, which will see HK$3 million worth of fireworks let off from 10 buildings on Hong Kong Island, in a display designed to resemble a dancing dragon. Organized by the Tourism Board, the 4-1/2 minute show will feature 9,800 fireworks launched from 48 firing points.

Hong Kong is welcoming the New Year with a pyrotechnics display that offers more bang for the same bucks. The Hong Kong Tourism Board said yesterday 9,000 charges will be set off in a display that will last the first 4 minutes of 2010. That is 3,000 more than the show to welcome this year, but for the same HK$3 million cost. The highlight of the show will be a 2.2-kilometer dragon, whose head will sit atop the 88-story Two IFC and whose body will stretch across nine other skyscrapers and end at the Sun Hung Kai Centre in Wan Chai. Pyrotechnic firing points are being set up on top of landmarks such as Two IFC, HSBC headquarters and Central Plaza. Pyro Magic Production chief executive Wilson Mao Wai-shing said the northern facade of Two IFC will be used for the first time and firing points will be increased from 36 to 48. He said the display will give the audience a more vivid experience since the facade faces Victoria Harbor. Twenty sets of powerful searchlights on two sides of Two IFC will enhance the effect. "Installing the firing points at the northern facade was tricky as it is windy there and subject to weather conditions, but we accept the challenge," Mao said. Mao said the cost will remain the same because some of the LED lights used in the 2009 show will be reused while the organizers are using experience from the last show to cut costs. The display will begin promptly at the end of the countdown. LED lights on Two IFC will tick off the seconds to midnight for a crowd that is expected to be 400,000 strong. The Transport Department said special traffic and transport arrangements will be implemented in phases on New Year's Eve for the harbor countdown and others in Times Square, the Causeway Bay typhoon shelter and Lan Kwai Fong. For the Two IFC countdown, road closures may be implemented at the Rumsey Street flyover, Man Kwong Street, Man Po Street, Man Fai Street, Man Chiu Street, Man Cheung Street, Finance Street and a section of Man Yiu Street. Central Piers 7 and 8 will be closed from noon. In the Times Square area, sections of Russell Street and Matheson Street will be closed from 5pm. From 6pm, Percival Street, Lee Garden Road, Pak Sha Road, Kai Chiu Road, Yun Ping Road, Jardine's Bazaar and other roads in the vicinity of Times Square, such as Yiu Wah Street and Tang Lung Street, will also be closed. Depending on crowds in the Paterson Street shopping area, Sugar Street, Great George Street, and Kingston Street will be closed from 6pm.

China*: China Central Television, the mainland's state broadcaster, has launched an internet television network as the authorities wake up to the power of the internet in shaping public opinion. China Network Television (CNTV) was up and running yesterday, in an initiative described by CCTV president Jiao Li as a step forward in building a new media platform." The launch of CNTV was an important initiative to seize the high ground of the new media and to strengthen capability in international communications," added Jiao. CNTV offers internet users 24-hour live news, sports and entertainment programs as well as video-on-demand and file-sharing. CNTV will add another five channels in the second half of next month to provide films, drama and documentaries. The venture, said to have cost CCTV 200 million yuan (HK$227 million), came after Xinhua launched a CNN-style news network last month, and the launch of an internet-based television channel by Golden Eagle Broadcasting System, which owns Hunan Satellite TV, the mainland's most successful regional network. The aggressive expansion of official media outlets was seen by many to be a result of an ideological shift among senior state officials prompted by protests over the country's human rights records and its handling of Tibet during the international leg of the Olympic torch relay in 2008. The central government reportedly earmarked 45 billion yuan earlier this year for the expansion of major official media outlets including Xinhua, CCTV and People's Daily in a push for greater international reach. Professor Huang Yu of Hong Kong Baptist University said CNTV was part of an official campaign to harness the so-called soft power of the country to match its rising economic clout. Huang said that the aggressive internet-based campaign was also aimed at creating a favourable media atmosphere ahead of another sensitive year in which top officials are expected to jostle for position in the upcoming leadership reshuffle. The professor said there was no doubt that the central government had the resources to spend on media expansion, however he said that tighter censorship, particularly of news, could hamper official media outlets' ability to compete with firms such as CNN. CNTV said yesterday that it had set up mirror sites in five overseas cities, including Los Angles and Moscow, to allow faster access. Professor Yu Guomin , a media expert at Renmin University, said that the internet television network would allow a greater level of interaction than traditional media. But the professor said the station should do more than simply transfer existing content to a new platform. "The introduction of internet television should serve as a new media platform where new ways of content generation should be trialled under new rules, including a new set of censorship criteria," he said. The professor said the new service would provide CCTV with a chance to raise its international profile. "But [its success] will hinge upon whether CCTV can bring itself in line with the current trend of media development, including the application of much-relaxed online censorship." The station is at

Despite their often-strained ties, China and India are jointly creating a new kind of Silk Road - one built with high-speed, fibre-optic communications systems - through a narrow Himalayan mountain pass that connects the two countries. Tata Communications, India's biggest telecommunications company, and fixed-line network giant China Telecom Corp (SEHK: 0728) are poised to launch the second direct terrestrial communications link between the neighbouring economies. The first terrestrial fibre-optic connection over the same Himalayan route was opened in August by China Telecom and Reliance Communications, which operates India's most extensive fibre-optic infrastructure and the world's largest private undersea cable system. The land links are expected to help boost bilateral trade, which rose 34 per cent year on year to US$51.8 billion last year. More importantly, it could become a symbol of rapprochement between the two countries, whose armies fought a border war over the Himalayas in 1962. "The India-China terrestrial cable connection will go a long way in meeting the business needs of the world's two fastest-emerging economies," said Byron Clatterbuck, a senior vice-president for global transmission services at Tata Communications. Clatterbuck said planning and construction of the link began about two years ago after Beijing and New Delhi reopened the Nathu La pass in June 2006 through a series of trade agreements. The pass had been sealed since the 1962 conflict. Nathu La, at an altitude of 4,310 metres, links the Tibetan border town of Yadong to the city of Siliguri in the Darjeeling district in the Indian state of West Bengal. The Tata and Reliance fibre-optic cable systems with China Telecom are designed to deliver high-speed and high-capacity connection to both countries' key cities and rural areas. Previously, the only available option for high-bandwidth network connection between the mainland and India was through a submarine cable system through Hong Kong or Singapore. The disruption to communications services in the Asia-Pacific because of recent typhoons and earthquakes has clearly exposed the risk of depending solely on those undersea routes. "The new terrestrial India-China route expands the options we provide our customers, who require diverse connectivity between China and India and a way to bring more capacity from India to Asia and Asia to Europe," said Clatterbuck. The Tata-China Telecom terrestrial system is 500 kilometres long with 24 fibers inside the cable, according to Clatterbuck. He said one fibre-optic link would initially be available at 10 gigabits per second transmission capacity. "At a 10Gbps speed, a user can transfer a 1.5-gigabyte movie in less than two seconds between India and China," he said. The Reliance-China Telecom cable, which has an initial capacity of 20Gbps, stretched about 250 kilometers from the border pass to India. The length on the mainland carrier's side is not known. While their carriers are strengthening the digital bonds between the two countries, tensions on the trade front remain. In September, reports of India's plan to restrict the sale and use of Chinese-made telecommunications equipment in the country because of security concerns again tested the two countries' economic ties.

A little knowledge and thorough testing are all that is needed when buying a second-hand car to get the safest deal, says one buyer. In a country where what car you drive often reflects your social status, Zhong Yuebing, a twenty something used-car owner, is still a bit of an anomaly. Zhong, a Shanghainese who works at a car consulting firm as a support and training specialist, thinks his second-hand Volkswagen Bora functions well enough. Originally priced at 180,000 yuan (HK$204,350), the five-year-old Bora cost him 80,000 yuan. Zhong says a second-hand car is not a bad choice for him until he can save enough for a 400,000-yuan high-end new car like an Audi A6. New cars are still the vehicle of choice on the mainland with that sector growing 40 per cent this year. The country is expected to record sales of 13 million new cars this year, up from 9.38 million last year. It is the only vehicle market to show growth in the global economic crisis and has surpassed the United States as the biggest market. However, among recent university graduates, middle-income families and businessmen or officials who want to keep a low profile, the second-hand car market has become more attractive and is growing at about 10 per cent a year. Used-car sales figures nationwide are not available, but Guangzhou may serve as a proxy. Sun Mingxia is the general manager of Guangzhou's largest used-car market - Baolijie - on a 40,000 square meter lot in the southern part of the city and home to about 200 used-car dealers. Sun says about two million new cars were sold in the city last year, compared with about 100,000 used cars. A boom in used cars usually comes after the peak sales of new cars. "Especially now, there are some car owners who want to catch up with the latest models," she said. "They will dump their cars after owning them only for a short time." Analysts say the second-hand car market can take about five years to scale up and will begin improving in large part because China recorded robust new-car sales recently. "The new-car market was not yet big enough five years ago, so the second-hand market couldn't be developed" because of a lack of supply, said car analyst Chen Qiaoning at ABN Amro Teda Fund. "But the market is starting to emerge now as some people will change their cars after buying in 2002 or 2003." Scattered along the road outside Baolijie are dozens of individual second-hand car collectors. Called qiu che, which means begging for a car, these collectors buy used cars from owners and sell them to dealers. Before 2002, the second-hand market was fragmented and unregulated. All sales were individual transactions between buyers and sellers. But then Beijing started to regulate the market, saying second-hand car sellers should register with the State Administration for Industry and Commerce. Buyers and sellers were asked to follow a specific contract designed by the government when doing transactions. Dealers in Baolijie provide a one-year warranty to consumers under which car owners can get their vehicles repaired free if problems occur. "It's taking time for the market to mature," said Sun. "But honestly, the situation now is that good-quality second-hand car supply is much slower than demand." But despite the high turnover, she said it was not always easy to get a good second-hand car because the quality was often poor. In the north, sub-zero weather in Beijing has kept consumers away from the second-hand car market, but dealers say they expect sales to improve by the Lunar New Year in February. "We got four Audi A6s from Huaxia Bank at an auction," said dealer Li Qiang in Beijing. "These cars are welcomed by some businessmen who need to drive a good car but don't want to bother about always having the latest models." There are no qiu che in Beijing. Instead, larger auctioneers have set up shop near the Yayuncun second-hand market in the northern part of the city. They buy from individuals and turn around and auction the cars to nearby dealers. A second-hand Audi A6 can go for 198,000 yuan, about half the price of the new model. For most buyers, a car is pure pragmatism, a daily necessity and not for showing off. Zhong, who bought the used Bora, shares a similar perspective. "I think a car is mainly used for daily transport," he said. "It's not necessary to drive a new car. I used my 80,000 yuan budget to buy a Volkswagen Bora. All we need to do is to familiarise ourselves with the mechanics of the second-hand car. Testing it thoroughly before buying is the safest way to own one of these cars." But Zhong is not immune to the considerations of status. He said his Bora provided "more value for money than buying a new Hyundai brand car". In terms of brand reputation and functionality, Zhong believes Volkswagen is higher up the status ladder than Hyundai.

FamilyMart, Japan's third-largest convenience store chain, has unveiled an aggressive expansion campaign in China next year, which is expected to heat up the already white-hot competition between local and foreign retailers. FamilyMart president Junji Ueda said yesterday its net store increase on the mainland was likely to be much bigger in the next financial year than the 130 new stores expected to open by the end of this fiscal year in February. FamilyMart has about 7,600 stores in Japan and 7,900 overseas, including more than 4,000 in South Korea, about 300 on the mainland and others in Taiwan and Thailand. It opened its first store in Vietnam last week. Despite its robust growth and attractive prospects, securing a bigger slice of the mainland market may prove challenging. FamilyMart will not only compete against convenience chains such as 7-Eleven, Circle K and China Resource Enterprises' Vanguard, but will also have to contend with international retail giants seeking to cash in on the market. In August last year, British retailer Tesco introduced its convenience store brand Express in Shanghai, while American supermarket operator Wal-Mart Stores has set up six Smart Choice outlets in the residential communities of Shenzhen since April this year, saying this would be its first step to open 1,000 outlets in the country within five years. However, home-grown convenience store chains are also emerging one after another and taking a significant share of the market. Shanghai, for example, has about 4,300 convenience stores, 90 per cent of which are run by local operators. FamilyMart has launched its development plan to step up expansion overseas at a time when Japan's consumption market faces weak growth prospects because of its ageing population. Korea will be another target, with 400 to 500 new stores planned there in the next financial year. While its Asian expansion has been strong, the retailer's US business has been struggling as it has yet to find a viable business model. It has about 10 stores in the country. Ueda said the chain had started moving its stores to city-centre areas, where it expects more customer traffic, and would wait a year to see how this worked before making a decision on its future. "In the next year, we will decide the next step [for the US business] from the following options - to make further expansion, freeze at the current size or pull out," he said.

Profits at mainland industrial companies returned to growth in January through November, ending a year of declines and offering clear evidence of a stronger recovery for the country's businesses. Industrial profit nationwide rose 7.8 percent in the first 11 months from a year earlier, the National Bureau of Statistics said yesterday. That marked a dramatic turnaround from a fall of 10.6 percent in the first eight months of the year, the last time the NBS conducted a nationwide survey. The NBS releases nationwide year-to-date profit data for February, May, August and November. Economists attributed the rise largely to a low base of comparison in the final months of 2008, when the world's third-largest economy was hit hard by the global financial crisis. "But we cannot ignore that the sequential growth rate has also picked up since April," said Gao Shanwen, chief economist at Essence Securities in Beijing. The energy and natural resources sectors, including power, steel and nonferrous metals, saw strong improvement on recovering demand and prices, chiming with other indicators to suggest that the economy's recovery is gaining momentum. Premier Wen Jiabao gave a cautious outlook for the domestic economy in 2010, saying Sunday it was too early to wind down the government's stimulus policies but that officials needed to be attentive to surging property prices and incipient inflation. Private mainland companies, and foreign-invested companies, saw the biggest profit rebound. Profit at private companies rose 17.4 percent from a year earlier compared with a rise of 6.6 percent in January through August.

Dec 29, 2009

Hong Kong*: Premier Wen Jiabao on Monday urged the Chief Executive Donald Tsang Yam-kuen to solve Hong Kong's "deep-rooted conflicts" but praised efforts by the government to stabilise the territory's economy during the global financial crisis. Wen was speaking to the Chief Executive during Tsang's annual duty visit to Beijing. During the meeting, Tsang told Wen that Hong Kong’s economy and financial markets had been stabilised largely because of the government’s effective policies supporting companies and increasing employment opportunities. Wen praised Tsang’s leadership of the Hong Kong government, and the introduction of a series of measures aimed at tackling the financial crisis over the past year. However, Wen told Tsang should start to study matters “involving the overall and macro situation” in Hong Kong, and urged Tsang to plan for the future and be more effective in solving “deep-rooted conflicts”. He did not further elaborate. The premier also warned Tsang that the financial crisis was not yet over. He said Tsang should continue to lead Hong and enhance its competitiveness. “The new year will be here soon but some uncertain factors still exist. The Hong Kong government should keep up its efforts in tackling the financial crisis and in maintaining healthy economic growth. “No matter what difficulties Hong Kong may face, the central government would, as always, extend its full support – especially in helping to strengthen Hong Kong’s status as an international financial centre,” Wen said. On Monday afternoon, Tsang will brief President Hu Jintao on the latest economic, social and political developments. During Tsang’s absence, the Financial Secretary John C Tsang Chun-wah will be the Acting Chief Executive.

Chinese President Hu Jintao (R) meets with Donald Tsang Yam-Kuen, chief executive of the Hong Kong Special Administrative Region (SAR), in Beijing, capital of China, on Dec. 28, 2009. Tsang is in Beijing to report on his work to the central government. Chinese President Hu Jintao met with Donald Tsang Yam-Kuen, chief executive of the Hong Kong Special Administrative Region (SAR) in Beijing on Monday afternoon. Tsang is in Beijing to report on his work to the central government. He also met with Chinese Premier Wen Jiabao earlier on Monday.

Chairman of Sino Land Robert Ng Chee Siong leaves after bidding for a site in Tai Po, during a land auction at Queen Elizabeth Stadium in Wan Chai. The Hong Kong government on Monday auctioned off two plots of land in the New Territories well above the open bid prices - but below the market consensus of HK$5.45 billion. One plot of land went to Sino Land for HK$5.15 billion, more than 40 per cent above the open bid of HK$3.6 billion, but below the market consensus of HK$5.45 billion. A second piece of land - also in Tai Po - which also received an open bid of HK$3.6 billion, went for HK$5.25 billion to Mid-sized developer K Wah International. The first major government land auction in two years comes amid worries that final price tag will fan a property bubble. Hong Kong shares erased early gains and edged down 0.12 per cent after the results of the auction came in under market expectations. Property stocks turned lower after the auction, with Cheung Kong (SEHK: 0001) sliding 0.36 per cent, New World Development easing 0.38 per cent and Sun Hung Kai Properties (SEHK: 0016) shedding 0.79 per cent by late afternoon.

China and Hong Kong authorities are working on the possibility of setting up a mechanism to help Hong Kong individual investors win exemption from the 10 percent dividend tax requirement which took effect in January last year, sources said. Hong Kong Exchanges and Clearing (0388), the Hong Kong government and the State Administration of Taxation are among those discussing a new reporting system to waive the dividend tax for such investors who buy H shares and red chips, according to Sing Tao Daily, sister publication of The Standard. Individual investors in Hong Kong can be exempted from the tax if they prove and declare their shareholdings are solely personal investments, the sources said. The system under discussion was to set up a mechanism for individual investors to declare their holdings position and winning tax exemption once the declaration is confirmed by the mainland. According to mainland tax law, most Hong Kong investors are classified as non- individual investors and have to pay the dividend tax, as they hold their stocks in the form of nominee accounts through banks or brokerage firms. The State Administration of Taxation announced in 2008 that it would tax each enterprise and institutional investor 10 percent of their dividend income from Chinese stockholdings as part of Beijing's annual income. According to the statement, only individual investors can be exempted. The 10 percent dividend tax would be collected by the firm on behalf of their corporate and institutional shareholders. H-share companies started collecting the dividend tax in September 2008 while red chips began doing so in May.

Secretive Swiss commodities trading company Glencore International may list in Hong Kong if it goes ahead with an initial public offering. Glencore, the largest commodities trading company in the world, recently completed a US$2.2 billion sale of bonds to institutional investors which are convertible into equity in the event of an initial public offering. Analysts say this, together with the type of investors, clearly indicates the company is contemplating a listing, and there has been speculation in British and Australian press that London would be the most likely venue but that Hong Kong is also an option. That would be a huge boost for the Hong Kong stock market and would encourage other resources companies to consider listing here. Should it seek an offering, the bonds would convert into Glencore stock, valuing the company at US$35 billion. Glencore owns 9.7 per cent of Russian aluminium company Rusal, which has been given conditional approval to list on the Hong Kong exchange, although the Securities and Futures Commission considers it "too complex" for retail investors and too risky for their participation. Glencore executives have no doubt been watching Rusal's progress through Hong Kong's listing process particularly as it is bigger and more complex than Rusal. The Glencore bonds have been bought by private equity firms First Reserve, BlackRock and Government of Singapore Investment Corp. Hong Kong-listed Zijin Mining Group (SEHK: 2899), China's third-largest copper producer, will buy US$200 million of the bonds subject to Beijing's approval. Glencore trades a huge variety of raw materials and owns energy and mining assets around the world. One of its key assets is a 34.5 per cent stake in coal mining company Xstrata. In addition it owns zinc mines in Peru and Kazakhstan, coal mines in South Africa, and smelts copper in the Philippines. It was founded in 1974 by billionaire commodities trader Marc Rich and was known as Marc Rich & Co. When he sold the company to management in 1994, it was renamed Glencore. Rich acquired notoriety in 1983 when he was indicted in the United States for tax evasion as well as illegally trading with Iran. He was pardoned by president Bill Clinton when he left office in 2001. Glencore chief executive Ivan Glasenberg managed Glencore International's Hong Kong and Beijing offices in 1989-90. For many years the company was a notoriously secretive organisation but is gradually becoming more open. This year it published earnings details on its website showing that turnover for fiscal 2008 was US$152.2 billion. Revenue for the first half of this year was US$45.2 billion compared with US$86.2 billion for the comparable period last year. Net income was more than halved, falling to US$1.1 billion from US$2.6 billion. Net debt fell to US$10.4 billion in the first half of 2009 from US$11.5 billion last year. The company has not said what it intends to do with the funds from its bond sale but analysts say the new funding would cover the cost of repurchasing the Prodeco coal mine, which it transferred to Xstrata last year.

Passengers go through security checks at Detroit airport after the failed attempt to blow up a plane approaching the city. Air travellers to the United States have been hit with more onboard restrictions - and possible delays - as airlines tighten security following the failed attempt to blow up a plane over the US. During the final hour before landing, passengers are now not allowed to keep anything on their laps, not even blankets or pillows, and must remain seated. All hand luggage must be stored in overhead compartments. The use of the inflight satellite phones and the internet is banned throughout flights. Before boarding, passengers must now also undergo a second security screening at the gate, where they will be frisked and have their carry-on baggage and personal property inspected again. The extra measures, which apply to all flights to the US, came into force in response to a formal request from Washington after the attempted attack on Christmas Day.

CLP Holdings chief executive officer Andrew Brandler says the collapse of the talks in Copenhagen on climate change was a "real shame" and a big disappointment. The chief of Hong Kong's largest power supplier says the failed Copenhagen climate talks will lead to increased risks and uncertainties in clean-energy development in Asia. CLP Holdings (SEHK: 0002) chief executive officer Andrew Brandler said the collapse of the talks was a "real shame" and big disappointment. CLP had no immediate plans to change its business strategy, carbon targets or commitment to renewable energy, as it is carefully watching post-Copenhagen developments. The company's belief in nuclear power as an option to decarbonise power generation has also not been shaken, and its sights are set on new reactors in Guangdong to boost a carbon-free electricity supply to the region, including Hong Kong. Brandler said the outcome of Copenhagen was unexpected, given the good foundations that had been laid since the Bali round of talks in 2007. "I felt there was a good prospect that a clear way forward would have been established for between 2012 and 2020, and some ideas on global emission by 2050. "The fact that the whole thing collapsed, I think, is bewildering, and people are still trying to get their minds around what it means." While a war of words had broken out on who was to be blamed for the failure, CLP, as a major power supplier in Asia, is on the alert for the increased risks and uncertainties over national policy changes. These changes could mean a lot to power suppliers, whose investments could cost billions of dollars and last up to 30 years in a single project. It was particularly so for CLP, which not only has extensive power investments across Asia, it is the largest external renewable-energy investor in China and India. "Without a global framework, the degree of uncertainties of national plans is heightened," Brandler said. He said there had been big expansions of national plans in the past two years in China, which had tripled its wind-power capacity. India has similar plans, while Thailand, too, offers favourable policies on renewable energy. And the expansion contributed to CLP's fast-growing renewable-energy portfolio. Comprising 1 per cent of its total generation in 2004, it now stands at more than 10 per cent - 1,300 megawatts (excluding nuclear-generated power). Whether the positive momentum will continue, Brandler believes China and India will move ahead with their plans regardless of the Copenhagen outcome. He said a global climate accord was "too important not to happen", though there was a risk that it might end up like the World Trade Organization, with negotiations inching forward and countries looking at their own interests rather than a wider deal. He said future talk could be more efficient under the framework of the Group of 20. In the midst of this fluidity of any future climate regime, Brandler said CLP would continue to meet the targets of a 75 per cent cut in carbon intensity by 2050 and having one-fifth of its power generated from renewable and nuclear sources by 2020. The group would also continue to look for new opportunities in renewable-energy projects, including the marginally financially viable ones that qualified for the Clean Development Mechanism (CDM). Under the mechanism, industrialized nations can buy carbon credits from emission-reduction projects in developing countries to meet their binding targets. The group would also take advantage of a new rule to allow Hong Kong-registered companies to engage in fully owned mainland CDM projects. In the past, only mainland firms qualified. However, Brandler hoped the mechanism could be reformed to have more clarity and certainty on carbon prices, which were open to manipulations. The mechanism should also be expanded to include low- or zero-carbon sources such as nuclear power. Brandler said it was wrong to exclude nuclear power, the only technology that could deliver firm base load power without any carbon emission. Seeing nuclear power as a necessity to meet energy needs reliably while delivering environmental benefits such as clean air, he said the use of nuclear power was more a matter of public acceptance than anything else. "What is the bigger evil? Catastrophic global warming or proliferation of nuclear power stations?" he asked. "We have been operating very safely ... and a lot of debate around nuclear is very emotional, not entirely rational." In contrast to the 1980s, when a million people signed a petition to oppose the construction of China's first large-scale commercial nuclear power station 50 kilometers northeast of Hong Kong in Daya Bay, Shenzhen, he said the city had now become quite "relaxed and rational" about it. He attributed the underlying public acceptance to operational transparency and the safety record of the power station, which accounts for about a third of CLP's power supply in Hong Kong. CLP now owns 25 per cent stakes in two reactors in the Daya Bay nuclear power station - which has six reactors - under a joint venture with its mainland partner. With a total of 1,968MW in capacity, up to 70 per cent of the power generated by the two units has been sold to Hong Kong since 1994. It is estimated that about 7.5 million tons of carbon otherwise emitted by coal-burning could be avoided every year. This year, the mainland authority also agreed to extend the cross-border nuclear power supply by 20 more years beyond 2014 at no less than the current volume. Studies are also being undertaken by CLP's mainland partner, China Guangdong Nuclear Power Holding Company, on the technical feasibility of constructing a seventh and eighth reactor at Daya Bay. Brandler said nuclear power, though more expensive now, could also be favourably compared to gas-fired generation, since it was less subject to price volatility. CLP Power in Hong Kong has one-third of its power generated by gas-burning, and it will receive new gas supplies from the mainland via a pipeline originating in Central Asia and a new liquefied-gas terminal to be built in Shekou, Shenzhen. The new gas supply is needed to replace the depleting Hainan gas reserve and expand use of cleaner fuel to improve air quality. Brandler said talks on gas pricing had not yet started, but he expected that the price would not be purely driven by market forces, as it would also involve both the central and Hong Kong governments. As to the future of the existing 4,100MW coal-fired generation units operated by CLP Power, he said it would be cheaper in the long term to re-engineer them into gas-fired. But he said coal might still be needed for meeting peak load demands. Coal constitutes 40 per cent of CLP Power's total power generation. On whether Hong Kong should set a target on carbon reduction, Brandler said such a target would be a gimmick unless it had specific policy goals. "It is easier for the government to tell us, say, to phase out coal by 2020. If you say Hong Kong should reduce emissions by 10 per cent, who is going to do it?" he said.

China*: Beijing has published new draft rules for village elections, allowing villagers to fire officials who don’t perform as promised.

The financial crisis is not over yet - that is the stark warning from Premier Wen Jiabao. Beijing still has much work to do to sustain economic growth, Wen told Xinhua News Agency yesterday. He also cautioned about asset price bubbles - especially in the property sector - saying the problem will be one of the central government's main tasks next year. "The property sector made a fast recovery this year, but at the same time home prices have risen too quickly in certain areas and cities, making Beijing highly concerned." Measures will be taken to cool down the overheated property market. They include taxes and differentiated interest rates to combat speculation. The government will crack down on developers who hoard land in the hope of bigger profits, said Wen, adding it will expand the development of low-cost housing with preferential policies. He said the mainland economy has stabilized but sounded a cautionary note. "It's recovering but we are not sure if it's sustainable. Many companies are still suffering and economic growth is still unbalanced." Wen emphasized that Beijing's efforts in the past year have been effective and are in the right direction. But he admitted the government could have done better, "for example, if bank lending were more balanced, better structured and on a smaller scale." He added: "We adjusted the policy in the second half of the year to tackle the situation." Wen said it is too early to exit from stimulus plans because the economy still lacks momentum and needs support. "If we pull out too early all the previous efforts would have been in vain." Wen said there are no signs of inflation because the producer price index is still in negative territory and the consumer price index has just turned positive. But this year's exceptional money supply growth may stoke inflationary expectations. He reiterated that China will not bow to calls from trading partners for a faster yuan appreciation. "Demanding a stronger yuan while at the same time adopting trade protectionism is meant to arrest China's development."

China is likely to overtake Germany as the world’s largest exporter this year, despite a sharp fall in shipments as the global downturn took its toll, a high-ranking trade official has said. The country’s share of global trade is expected to exceed 9 per cent this year, up from 8.86 per cent last year, vice-commerce minister Zhong Shan said at a forum here on Sunday. “China will probably surpass Germany to become the largest exporting country,” he said, according to a statement posted on the ministry’s website. However, this year was a tough year for the Asian giant with full-year exports predicted to decline by 16 per cent on-year, Zhong added – the biggest decline in at least three decades, according to available ministry data. He blamed the drop on “severely weak international demand” and “rising trade protectionism”, adding the value of trade disputes brought against mainland in terms of potential losses doubled this year to US$12 billion. The country will face an “even more complicated foreign trade situation and more arduous tasks” next year given ongoing uncertainties in international demand and the stability of the yuan’s exchange rate, Zhong said. China’s trade is “big but not strong”, and the country must adjust its trade structure and beef up product quality and competitiveness to “realise … improvement in quality from an expansion in quantity”, he said. In the first 11 months of the year, the country’s exports were down by 18.8 per cent from the same period last year to 1.07 trillion dollars, official figures showed.

China developers will find it increasingly difficult to secure financing through initial public offerings, according to property experts. "Property developers have to get financing through IPOs for continual development, as they are not allowed to buy land with bank loans," said Cinda International property analyst Christina Ngai. But Adrian Ngan, a CCB International Securities department executive director, said developers should lower their expectations. "Listing candidates keen to raise funds may have to price their IPOs at a single-digit price-earnings multiple in order to attract investors," Ngan said, adding that listed developers trade at between 10 and 20 times their forecast 2009 earnings. "Some listing candidates may prefer to wait until the market can offer an attractive valuation, otherwise they have to compromise," said Ngai. Turning to the mainland property market, Ngai expects developers to cut selling prices to boost sales next year, provided that loan growth shrinks because of official mortgage controls. However, CLSA analyst Nicole Wong said the actual effect of any government measure is hard to predict because of the policy itself and market fluidity. Beijing will not successfully curb property prices unless it can sort out its relationship with local governments, according to both Wu Xiaoling, deputy director of the National People's Congress Finance and Economy Commission, and Ren Zhiqian, president of Beijing Huayuan Group. Wu said there has to be better symmetry in administrative and financial rights between the central and regional governments. Ren said the central government appears to lack effective policy and management restrictions on local governments. "The Ministry of Land and Resources has repeatedly issued restrictions to regional governments on the size of saleable land," Ren said. "But the Guangzhou government still resisted and sold the mammoth Guangzhou Asian Games Town site in its entirety for 25.5 billion yuan" (HK$28.96 billion).

Exercising a public flotation in the United States is the latest trend in China's budget hotel industry. Spurred up by the domestic consumption stimulus program launched by the Chinese government and a commitment to boost the tourism industry, China's budget hotel operators have never been hungrier than now for raising money to meet an aggressive expansion plan. And for them, the US stock market is a good choice. In late November of 2009, Guangzhou-based 7 Days Inn, the third largest budget hotel group nationwide by network, successfully made its debut on the New York Stock Exchange, raising $111 million. It was the second budget hotel group to list in the United States, following Shanghai-based Home Inn, which was listed in 2006 on the NASDAQ. The listing by 7 Days Inn is just a beginning, and it is expected to spur a wave of initial public offerings (IPOs) in the US by the industry. Hanting Inn, another leading budget hotel, is awaiting a listing at the NASDAQ, said industrial insiders. Early in 2008, high-level executives from Green Tree Inn said the company was mulling over an IPO, either on the New York Stock Exchange or the NASDAQ. Right time for listing "The time is ripe for Chinese budget hotels to go to the stock market. The earlier the better," said Alex Zheng, CEO of 7 Days Group. The 7 Days Inn initiated its IPO preparation in late 2007 but the move was delayed by the global financial crisis. However, observers say this was a good thing for the company. "We planned to list on the NASDAQ but now we are becoming strong enough to list on the main board after a year of expansion and improvement," said Zheng. The listing of 7 Days Inn is typical of moves within the sector. "Many IPOs were grounded because of the global economic disaster. As the economic recovery for China is under way, the companies are naturally re-launching their IPO plans," said David Sun, chief executive officer of Home Inn. Budget hotels set for big expansion - In addition, their aggressive expansion plans are also forcing the budget hotels to grab as much money as they can. Sun said Home Inn will have another 200 hotels under operation in 2010, from the current 600-odd properties. The chairman of Green Tree Inn said the portfolio of the brand will rise to 600 next year from 400 now. Zheng, from 7 Days Inn, told China Business Weekly that the company expected to surpass Home Inn and lead the local budget hotel market within five years. "We expect to have 1,800 hotels nationwide then," he said. The expansion means handsome investment. "A budget hotel on average requires the injection of 6 to 7 million yuan so an additional 100 hotels will cost us as much as 600 to 700 million yuan," said Sun. After the global economic doldrums struck, "overseas venture capital or equities, which were active during the past few years in the budget hotel sector, became quiet and are still waiting for better times", Li Xinjian, a professor from the School of Tourism Management at Beijing International Studies University. "An IPO is a quick way to get money for these leading brands." Apart from the Shanghai-based Jinjiang Inn, which listed domestically on the Shanghai Stock Exchange, many budget hotels are planning to go for listings in the US. "Listing overseas consumes more time, energy and effort but, if successful, it is a signal of how qualified you are and helps raise funds in a faster and more efficient way," said Sun. Zheng, from 7 Days Inn, agreed. "Listing in the US will benefit us more in the long term by improving corporate governance and management," he said. The listings of Chinese budget hotels are also invigorating the US stock market. "We were surprised to be warmly welcomed by the investors there," said Zheng. On the first trading day, shares of the 7 Days Inn grew by 13.64 percent to $12.5, and Home Inn, the first US-listed budget hotel operator, has witnessed a share rise of nearly 64 percent to $36.18 from the opening price in 2006 of $22. "We are not concerned about the price. When the network of the 7 Days Inn becomes larger, the price is bound to pick up," said Zheng. During the past few years, the local budget hotel sector has been a hot spot for overseas venture capital and investors. In 2003, Home Inn raised funds from IDG Capital Partners and Sycamore Ventures, which paved the way for its massive expansion. The 7 Days Inn has received three rounds of injections from a slew of big names including Warburg Pincus, Deutsche Bank and Merrill Lynch. Expansion, ripe time - The first budget hotel appeared in 1997, with Jinjiang Inn launching in Shanghai. But the industry did not take off until 2003 when a slew of brands were established amid a spree of expansionism. According to the China Budget Hotel Website, Chinese budget hotels have increased to 2,800 in 2009 from 23 back in 2000 and the room number has surged to 313,000, up from 3,236 nine years ago. "The industry is maturing, and another wave of expansion is coming," said Sun. While the high-end hotel sector was badly hurt by the economic recession and is expected to suffer for quite a time, budget hotels have hardly been affected. "To be frank, we have felt little negative impact," said Zheng. During the period from 2007 to 2009, the 7 Days Inn's occupancy rate remained at close to "90 percent". "The figure surprised the American investors, but it's true," said Zheng. As the corporate financial report showed, during the third quarter, Home Inn's revenues grew by 37.9 percent from a year earlier to 727 million yuan, and the performance was "much higher than expectation". The company also announced the occupancy rate on average reached 97 percent during the third quarter in 2009, 11 percentage higher compared with the previous year. "The last quarter of 2008 and the first quarter of 2009 were a bit of hard, but everything has turned good since then," said Sun. The growth momentum for budget hotels will be "sustained", given that business for the high-end hotels including the five- and four-star hotels is "expected to be sluggish for quite a period", said Li. "Many travelers will be flowing into the budget hotels from the high-end, thanks to the shrinking corporate budget," he added. During the central government's economic working conference held in early December, President Hu Jintao said the exports would continue to make grim reading because there were no signs that the developed nations and China's trading partners would recover quickly. He also emphasized that the government would make all efforts to stimulate domestic demand for stabilizing the economic growth. Further, the State Council in December released guidelines on promoting the tourism industry, outlining measures to improve the infrastructure and relevant products and services, and also boost tourism-related spending. According to estimates in the guidelines, by 2015, the number of domestic travelers will grow by 10 percent annually, and the number of inbound travelers will grow by 8 percent a year. Expenditure on tourism will account for 10 percent of Chinese people's outgoings. "Expansion and development will be the key words for the budget hotel industry," said Sun. Looking ahead, Sun said Home Inn will focus on the second- and third-tier cities around China. "We are confident about these areas. More and more Chinese in smaller cities will be able to afford to travel around, encouraged by the government's policy," he said. The guidelines on tourism also pointed out the government additionally encourages qualified companies in the industry to grow bigger and stronger through mergers and acquisitions. "There will be more deals in the coming years," predicted Li. "Chinese consumers will be more critical about the service and products as the industry improves. As the Chinese saying goes, 'The fittest will survive'."

China Mobile (SEHK: 0941), the world’s biggest phone company by subscribers, said on Monday its deputy chairman is under investigation for unspecified offences, adding to a string of scandals at major state-owned companies in the mainland. Zhang Chunjiang is being investigated “due to suspected serious personal violations”, the company said in a statement issued through the Hong Kong stock exchange, where its shares are traded. It gave no details. A series of executives at major state-owned companies have been targeted for investigation of corruption and other offences that are fuelling public anger. Thousands of government and Communist Party figures are punished every year for corruption, and some are executed, but authorities have given no indication whether the problem is abating. In July, the former chairman of Sinopec (SEHK: 0386), mainland’s second-biggest oil company, was convicted of taking 196 million yuan (HK$221 million) in bribes. The following month, the former boss of the company that runs airports in Beijing and other mainland cities was put to death for taking bribes. Zhang is secretary of the party committee for China Mobile’s parent company, which gives him greater influence over the company than his corporate post. Such committees can dictate overall strategy for state-owned companies. Zhang joined China Mobile in May last year after serving as chairman of China Netcom (SEHK: 0906), a fixed-line carrier that was merged with another phone company in an industry overhaul last year. He also is a former director of the telecoms department of the ministry that oversees the industry. China Mobile reported a profit of 83.9 billion yuan for the first nine months of this year but said earnings growth was slowing due to competition. The company says it has 518 million mobile accounts.

China needed to maintain a "moderately loose" monetary policy to boost economic growth despite early signs of inflation, Premier Wen Jiabao told state media yesterday. "Maintaining stable and relatively quick economic growth remains the most important task in our economic policy," he said. "Ending our economic stimulus policies too early could spoil all that has been achieved and even worsen the situation." Wen also reiterated his stance against allowing the yuan to appreciate against foreign currencies, saying it was important to maintain a stable exchange rate. The premier made the comments in a vidcast interview with Xinhua, during which he responded to questions the official news agency said had been posted by internet users. In the one-hour, 45-minute interview, Wen talked of his concerns about the economic situation over the past year and warned that it was still too early to say whether China had escaped the impact of the global financial crisis. Low international demand continued to have an effect on exports, he said, citing the export of Christmas gifts from Zhejiang province , down 28 per cent from previous years. Wen called on mainlanders to "stay strong to the last" on the "uneven road ahead". The mainland should "anticipate that inflation could occur", but he pledged to maintain the Consumer Price Index at a "reasonable" level to avoid accentuating the problems created by the "unfairly large" income gap. Wen said managing inflationary trends "creates a positive external environment for the economy, while at the same time protecting the interests of the people". He said he would continue to reject foreign demands that the yuan be allowed to gain in value, saying its stability was "conducive to international society". "I have said this to foreign friends before, I say on the one hand you demand for the renminbi to gain in value, on the other hand you use trade protectionism of all descriptions, the essence of which is really intended to control China's development," he said. "This could be an important topic we will have to deal with in our external economic policy next year." He did not specify which countries he was referring to, but the US and the European Union have repeatedly called on Beijing to relax its currency restrictions to allow a revaluation of the yuan. Wen's comments also closely reflected statements he made in Nanjing last month at a summit with EU leaders. However, Wen stressed the importance of building a positive relationship with other countries, which he said relied on three principles: trust, responsibility and co-operation. Back on the domestic front, the premier also announced a series of steps the central government proposed to prevent the property market from overheating. "This year the property market has experienced a relatively swift recovery," Wen said. "In fact in order to ensure that the property market can enter a healthy track, we first of all need to be clear about what the government needs to do and what the market needs to do."

Archaeologists have unearthed a large third-century tomb which they say could be that of Cao Cao, the legendary politician and general famous throughout East Asia for his Machiavellian tactics. The tomb, in Xigaoxue village near the ancient city of Anyang, in Henan, has an epitaph and inscription that appear to refer to Cao Cao, China Central Television said. A Chinese proverb, "speak of Cao Cao and he appears," is the equivalent of "speak of the devil" in English. Cao Cao was the final chancellor of the Eastern Han dynasty, who went on to form his own state during the political turmoil of the Three Kingdoms period. He died in 220 AD in Luoyang, the capital of the Eastern Han dynasty, and was posthumously named Emperor of the Wei state that he founded. In Chinese lore, a number of anecdotes tell of Cao Cao's ruthlessness, cunning, and military and political acumen. The tomb contains the body of a man in his 60s, corresponding to Cao Cao's age at his death, and two women.

A factory in Fujian produces flooring made of bamboo. It is the poor man's timber, but it could help protect the earth from climate change. Bamboo, a building material used for thousands of years, is gaining attention for its potential to arrest the runaway destruction of forests due to its almost miraculous replenishment rate. Enthusiasts foresee vast forests of the world's largest grass replacing timber - saving trees and helping arrest the release of carbon dioxide through "reckless" deforestation. It has even piqued the interest of Hong Kong's industrialists. The Federation of Hong Kong Industries signed a memorandum of co-operation in October with the State Forestry Administration's International Network for Bamboo and Rattan, and its International Centre for Bamboo and Rattan. Under the pact, the federation pledged to help the mainland formulate national and international standards for bamboo processing and products ranging from furniture to food, building materials, paper and even clothing. It also vowed to take the lead in speeding up the modernisation of the bamboo industry, which is not yet technologically sophisticated enough for large-scale production. The federation has called on its members to look for investment opportunities on the mainland to turn the versatile and abundant plant into manufactured products for export. The federation's Martin Tam Tin-fong, who keenly supports the promotion of bamboo, used the term "movement" to describe efforts being made worldwide to realize the plant's potential. "It can become a revolution through which timber will gradually be replaced," said Tam, who is the federation's mainland affairs and building materials committee chairman, and has visited a number of mainland bamboo forests. "The increasing price of timber and the reckless deforestation will inevitably prompt others to look for alternative materials, and bamboo is clearly an answer to that," he said. Bamboo accounted for just 1 per cent of the world's forests and boosting its coverage would make a significant contribution to reducing the release of carbon dioxide caused by deforestation, Tam said. Bamboo could also grow extremely fast, with some species growing one meter a day. It could also reach full height in just four months, he said. Since bamboo declines after reaching maturity, harvesting is regarded as a necessary measure to allow new shoots to grow. William Yu Yuen-ping, head of WWF Hong Kong's climate program, said while bamboo was definitely a potential solution, its future would depend on the economics of replacing timber. However, bamboo might still face problems when competing with conventional materials. Not only are its size and texture different from timber, it is too often perceived as being fit only for handicraft-making, and sophisticated manufacturing on an industrial scale is uncommon. With more than 400 species and 4.2 million hectares of bamboo forest, Tam said China should be well positioned to lead the "movement". Last year, the average per hectare yield of bamboo on the mainland hit 25 tonnes, a third of the world's production. But the lack of co-operation among local bamboo growing regions has prevented the formulation of a unified and credible product standard that would give consumers confidence, Tam added. Another issue was cultural bias against the material. "It is often regarded as a poor man's timber and this perception is deep-rooted in Chinese culture. That is something that has to be reversed if bamboo is to gain more importance." Professor Lam Yanta, from Polytechnic University's School of Design, has written several research papers on the use of bamboo and agrees that image could be one problem facing the wider application of bamboo. But he said many designers steered clear of bamboo not because they were biased, but because they did not know enough about its uses. Lam said that the first step in modernising the bamboo industry should be ensuring the plants were properly grown and harvested to avoid soil erosion and environmental degradation. "It might grow fast, but it should not be abused. There should be good management practice in place for bamboo cultivation," he said. Lam said the design, manufacture and disposal of bamboo products should also be taken into account to prevent toxins or extra waste being generated in the production and consumption processes.

Some 25 Chinese sailors held aboard a mainland ship off Somalia could be freed as early as today after an airdrop of up to US$4 million to the pirates who hijacked the vessel more than two months ago. Amid cheers and celebrations, the pirates were last night seen counting bundles of cash on the deck of the De Xin Hai, which has been anchored off the pirate stronghold of Hobyo on Somalia's east coast since the middle of October.

A disgraced official stripped of his position over the Sanlu tainted-milk scandal has been picked to help head a national anti-pornography commission, mainland media reported yesterday. Li Changjiang's return to party politics comes just 15 months after he resigned as head of the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) over his role in the toxic baby-formula scandal. Six infants died and nearly 300,000 fell ill after consuming toxic milk products. News of Li's appointment as deputy chairman of the working group on combatting online pornography came after he made a two-day visit to Jiangsu. The province's official paper, the Xinhua Daily, reported that Li met local officials on Thursday and Friday to discuss their work in rooting out online pornography and clamping down on the distribution of indecent material by mobile phone. The date of his appointment was not reported. At 65, Li is at the normal retirement age for officials, making his selection for the semi-official post all the more unusual. Li, the highest-ranking cadre brought down by the tainted-milk saga, is not the first official punished to have been quietly brought back into the fold, a common practice in mainland politics. There was public outcry in May when the AQSIQ said that Bao Junkai , the former deputy director of food-production supervision who lost his job over the milk affair, had been appointed deputy head of its science and technology department. Bao had previously been given a key post in Anhui. The tainted-milk affair was the mainland's biggest food-safety scandal in recent memory. Two people were executed in Hebei last month for trading in the milk, while former Sanlu chairwoman Tian Wenhua was given a life sentence in January. Three other high-ranking executives are spending five to 15 years behind bars for their roles. At least 22 mainland dairy companies, including Sanlu, Yili and Mengniu, were confirmed to have been adding melamine to their products for many years. Melamine, which is usually used to manufacture plastics, was added to milk to boost its nitrogen content and make it appear to be richer in protein. It caused kidney stones in infants. However, parents seeking retribution from Sanlu over the loss of their children were dismayed last month when a Hebei court completed bankruptcy proceedings for the company - meaning it will not make compensation payments. Xinhua reported that an official statement released when Li resigned said: "Since products from numerous dairy companies are found to have contained melamine, [it is obvious] AQSIQ has negligence in supervision. As the leader of the administration, Li Changjiang should take the chief responsibility."

A Mary Kay sales director (left) helps a customer, one of the 28,000 women at the Hangzhou event. About 28,000 young women crowded into the Dragon Sports Arena here for a three-day gathering in September hosted by Mary Kay Cosmetics. The goal was to pump up the crowd, and the song-and-dance troupe, the video testimonials about transformed lives and the awarding of the signature pink Cadillac to a top earner had the desired effect. "I love the corporate culture of Mary Kay," said Zhang Xiaoying, 19, from Guizhou, one of the country's poorest regions, as she and several colleagues dabbed on make-up during a break in the event. "This company teaches you to aspire to a higher level." Zhang earns very little in her new job. But the promise of future rewards is what has persuaded her and about 200,000 other women to become "beauty consultants", or independent sales agents, for Mary Kay on the mainland. Avon and Amway, two other United States firms that use independent representatives, have even larger sales forces here. Avon says it recruits up to 50,000 women a month and now has one million agents. As China's economic boom unfolds, door-to-door sales and what is known as direct selling is sweeping the country, breathing new life into old US brands and creating hundreds of thousands of jobs, often for disadvantaged or poorly educated young women. However, that growth has not come without controversy. Many direct sellers in China have been accused of operating sophisticated pyramid schemes and other sales swindles. (In one widely publicised case a few years ago, people were conned into buying stakes in ant farms.) Even US companies operating in China have been accused of manipulating and misleading sales recruits. "They recruit people in a deceptive way, like you can become super-rich in a month," says Chen Defa, the chairman of the Chinese Academy of Direct Selling Management. Because of such concerns, China banned direct selling in 1998, saying that it was often used as a cover for "evil cults, secret societies and lawless and superstitious activities". Big direct-selling companies disputed those claims, saying regulators simply misunderstood their business model. In 2006, after heavy lobbying from US firms, China lifted its ban. And since then, direct selling, with some modifications, has flourished, growing into an US$8 billion industry that now markets products as diverse as health supplements, cosmetics, toothpaste and dishwashing liquid. "Direct sellers see unlimited opportunities here," says Kent Kedl, an analyst at Technomics, a market research firm. "They see the combination of entrepreneurial sellers and adventuresome consumers." Companies engaged in direct selling are succeeding in China by using many of the same techniques that worked elsewhere, analysts say. They often recruit young women and motivate them to sell aggressively, particularly to friends and family members. Companies also use multi-level marketing programmes that reward workers for recruiting other sales agents. Revenue in China for Mary Kay has doubled to US$600 million in the past three years. "We're going to grow another 20 per cent this year," says Paul Mak, the head of Mary Kay China. "People haven't stopped buying cosmetics." The company's message of female empowerment and femininity seems to resonate in China, a country where young women have few opportunities to start their own businesses. "The direct-selling industry has quite a low entrance threshold," says Wang Yi, who teaches at the Beijing Business Management College. Like other direct sellers, Mary Kay has expanded in China - one of the 35 countries where it operates, generating total revenue of US$2.6 billion last year - by working hard to recruit new representatives. It operates with a kind of missionary zeal, analysts say, pushing sales agent to invite friends and family members to make-up classes and seminars that quickly evolve into small communities of women who follow the sales gospel of Mary Kay. Many Mary Kay sales agents say that before joining the company they held low-paying jobs as secretaries, cashiers and rural school teachers. Many were also looking for a new focus in their lives. "Because my husband is a businessman, and he is busy, we talked less and less," says Lu Laidi, a Mary Kay sales director. "I felt my life was boring. I stayed home and barely dressed up." While many Mary Kay sales representatives say they earn very little, those who follow the company's sales and recruiting strategies can become wealthy. One sales director, Jin Yan, said that after 12 years at Mary Kay, she earned nearly US$400,000 last year. She now drives a pink Chevrolet, a reward from the company. "If you work hard and teach classes, you can do it," she says. But not everyone succeeds. Shang Qun, 29, a sales agent in eastern Jiangsu province, said she was pressured to meet unrealistic sales goals and to deliver dozens of names of potential clients to the company during her first months of selling. "Mary Kay has many direct-selling refugees," she says. "They claim Mary Kay can make you big money, but their pockets are empty." Crayton Webb, a Mary Kay spokesman, defended the firm. "Mary Kay is extremely careful in communicating to members of the independent sales force that their success is up to them," he said. "There are no guarantees, and that they should invest in their business carefully." Many other agents agreed, saying Mary Kay had helped them earn a good living, and also transformed their lives. Meanwhile, Zhang said that just one year ago she was a cashier in Shenzhen when a friend introduced her to Mary Kay. Today, she is paid just US$200 a month, not much more than she got as a cashier. But, she says, it is a start.

Dec 28, 2009

Hong Kong*: Construction of Kai Tak Cruise Terminal has begun, with officials confident they can stick to the HK$2.3 billion budget for site formation work, which includes berthing facilities. The whole project will cost HK$7.2 billion. Chief Executive Donald Tsang Yam-kuen said the groundbreaking ceremony yesterday marks a milestone in the territory's efforts to further develop cruise tourism. "The government is committed to enhancing tourism infrastructure and supporting software to further strengthen Hong Kong's position as a premier cruise hub in the region," Tsang said. Ultimately, the SAR will have four cruise berths catering to ships of various sizes. The new terminal will have two berths with no height limit on the vessels it services. The first is expected to be completed in 2013 and will have room for the world's largest cruise ships, such as the Costa Classica and the Oasis of the Seas that have a gross tonnage of more than 220,00 tons. The second berth, available in 2014, will be able to accommodate medium-sized vessels. The government is also assessing tenders for a second works contract, which involves the design and construction of the terminal building. Construction on that project is expected to begin next year and should be completed by 2015. Secretary for Commerce and Economic Development Rita Lau Ng Wai-lan said the terminal will become an iconic landmark. Lau hopes to get the terminal proposal to the Legislative Council for funding by the middle of next year. She said the government is committed to developing the cruise market in Hong Kong. As a result, it will continue to liaise with the industry and neighboring ports and concentrate on improving service quality to ensure it remains a leading competitor in the industry. The Advisory Committee on the Cruise Industry has been established to advise the government on policies to further develop the territory as a regional hub. In April, Beijing brought in regulations allowing mainland tour groups traveling to Taiwan to board cruise ships that are based in Hong Kong. About 20 sailings from Hong Kong to Taiwan with a total capacity of about 30,000 passengers will be launched next year. Costa Crociere marketing manager Eunice Lee Sau-yan and Royal Caribbean International international representative Joseph Lam are upbeat about the Hong Kong market. Lam said: "There should be more terminals that can berth larger vessels, as well as more training of talent to handle the cruise business."

One ticket won the first prize of HK$5 million in last night's draw. The winning numbers were 6, 17, 21, 27, 36 and 42. The extra number was 23. One ticket took the second prize of HK$1,051,600. Third prize paid HK$32,605.

Kay Collingwood takes in Ping Chau, the first stop in a re-enactment of the wartime escape from Hong Kong by her late husband and 67 other servicemen. Sitting on a pile of rocks on Ping Chau, Kay Collingwood looked out across the beach where her husband, Lieutenant John Collingwood, and 67 other servicemen landed at the start of their escape from Hong Kong following its fall to the Japanese army in 1941. It was a chilly and windy Boxing Day, and seven years to the day since her husband's death. Collingwood, 89, was not feeling too well after her long journey from London, but she was happy to be the oldest member of the party retracing the steps of the wartime great escape, 68 years to the day since the start of a journey that, for many, would end in Burma (now Myanmar). "It is wonderful to remember what these men did. It was a tremendous escape, and they were lucky not to be caught," Collingwood said of the servicemen who made their getaway under the leadership of Admiral Chan Chak. "It is very interesting that people from all over the world have come [for the re-enactment]." After months of preparation by the Hong Kong Escape Re-enactment Organization, nearly 70 descendants of the escapees began retracing the first leg of their flight, from Hong Kong to Waichow (present-day Huizhou ). Ping Chau was the initial stop in a four-day journey for the party, whose youngest member is just two years old. The escape 68 years ago began on the night Hong Kong fell. Under the noses and guns of the invaders, 72 servicemen set out from Ap Lei Chau for the mainland aboard five motor torpedo boats. The party was down to 68 by the time they stopped at the island on the way to Nanao , where they made landfall and began a four-day trek to Waichow. The re-enactment follows the escape route as closely as possible. They spent last night, and will spend tonight, in Nanao, and reach Huizhou tomorrow. They return to Hong Kong on Tuesday. The trip is not the only event the organization has staged to mark the servicemen's escape. On Christmas Eve an exhibition, Escape from Hong Kong: The Road to Waichow, was unveiled at the Hong Kong Museum of Coastal Defense in Shau Kei Wan; it will run for two years. On Christmas Day the re-enactment party dined aboard the Jumbo floating restaurant in Aberdeen, where Admiral Chan was shot during the escape. Collingwood said her husband never talked much about the escape. Still, she did recall a few things he told her about the dramatic break-out. "My husband said the Chinese were so kind to them," said Collingwood, who turns 90 in July. "Sometimes they had no food, but the Chinese people fed them even though they only had little food. He made some Chinese friends." The escape not only kept Lieutenant Collingwood alive, it also ignited his desire for love and starting his own family. He returned home on Christmas Day, 1942, and a week later, at a New Year's Eve party, met Kay, then a war nurse. "He was desperate to get married. After that escape, he wanted a home and a family," Collingwood recalled with a smile. Six months later they were married, and barely nine months after that had the first of four children. They went on to have 12 grandchildren and 14 great-grandchildren. To Collingwood, the re-enactment is a wonderful way to honour her husband and fellow escapees. To nine-year-old Nick Hawley, who travelled from Melbourne to Hong Kong for the event, it is a rare opportunity to learn more about his grandfather, Ted Ross, at the time chief assistant to the head of the British Ministry of Information in the city. "It's interesting ... feeling what it was like to be in the war ... I can learn more about grandfather and other men in the war. It is important for us," said Nick, who made the trip with 12 other family members. On Ping Chau the group looked for a plaque on which Chan's landing was recorded. However, it couldn't be found, said Alison McEwan, daughter of escapee Colin McEwan. Chan's grandchildren Andrew, 41, and Aaron, 39, flew from the United States for the re-enactment. Proud and moved, they vowed to keep the tradition going and pass it on to future generations. Chan's son Donald, president of the re-enactment organisation, said the event was important not only to commemorate their ancestors but also the Sino-British friendship that blossomed during the war. "We hope for a bigger event two years from now for the 70th anniversary," he said.

A former HSBC senior executive has been jailed for a year and eight months for accepting a bribe equivalent to HK$468,000 from a client to approve loans totaling US$10 million (HK$78 million).

The Hospital Authority should be more flexible with the special drugs on its drug list, a thalassaemia patients' group urged yesterday. Prescription guidelines allow patients to have special drugs only when they develop severe side effects from general drugs, Thalassaemia Association vice-chairwoman Sandy Wong Hang-yue said. Dr Ha Shau-yin, of the Children's Thalassaemia Foundation, said budget constraints had stopped doctors from prescribing a new drug that might work better. There are 378 patients with the blood disorder in Hong Kong. They need transfusions every month, but this can cause heart and liver failure. Most are given Desferal, a kind of iron-removing drug, through a pump for at least 10 hours, five or six times a week. Another drug - Ferriprox, taken orally - might lower immunity. Ha said more patients should be given Deferasirox, which claims fewer side effects. Up to September, only 12 had been prescribed the drug. Wong said most families could not afford Deferasirox, at HK$20,000 a month, five times more than Desferal and Ferriprox. It had been provided free as the first-choice drug in many countries, including Canada. Secretary for Food and Health York Chow Yat-ngok said this month that it was not listed as a general drug because its efficacy was not better than the other drugs, and that it might cause side effects in the liver.

A Vietnamese court sentenced two Hong Kong and three mainland men to death by firing squad for trafficking nearly 8 tons of hashish in one of the country’s biggest drug hauls ever, state media reported on Saturday. The hashish – with a street value of US$90 million (HK$698 million) – was seized from two containers full of jeans on a ship that arrived in the northern port city of Hai Phong in April last year, the Tuoi Tre [Youth] newspaper reported. A Hong Kong-based ring planned to transport the drugs from Vietnam to China, it said. A court in the northern province of Quang Ninh, which borders China, sentenced the five men on Friday after a four-day trial. Vietnam has some of the world’s toughest drug laws. About 100 people are executed by firing squad each year, many for committing drug-related offences. The court ordered the hashish to be destroyed. More than US$180,000 and 19,758 pairs of jeans were confiscated, the newspaper said. Sentenced to death were Lu Mingcheng, 52, and Wan Huilan, 42, both from Guangdong province; Chan Kwok Kwong, 52, and Ngan Chiu Kuen, 42, both from Hong Kong; and Ieong Chi Kai, 52, from Macau.

Promotion girls from Sony Computer Entertainment get into the holiday spirit ahead of today's opening of the Asia Game Show. Games enthusiasts began to line up outside the Convention and Exhibition Centre almost 60 hours before the Asia Game Show was due to open this morning. For the first time the show is being combined with the Hong Kong Online Game Show, where exhibitors release limited-edition items and visitors can try out new games. At the head of the queue were four 16-year-old schoolboys waiting to buy one of the 10 limited-edition Gundam boxed sets worldwide with a price tag of HK$988. Gabriel Chan said the group had arrived at midnight on Monday. "It is the first time I have come so early to wait," said Chan, adding that his parents did not mind him sleeping on the streets for three nights. Steven Chan, a shop owner who sells video games in Kwun Tong, was next in line, waiting to buy a boxed set containing several models of giant robots, props and collectible cards. He said one Gundam model had been auctioned in Diamond Hill in September for HK$7,500, and he hoped to place the boxed set in his shop to attract customers if he succeeded in buying it. Soccer fans also camped out overnight for a ball signed by Argentinian and Barcelona star Lionel Messi, which will be given to the first buyer of the Sony PlayStation game Winning Eleven 2010. The second purchaser will receive a soccer shirt signed by Spain and Liverpool striker Fernando Torres. Joseph Yeung, 17, had been standing in line with two friends since 1am yesterday. Asked whether he had ever slept on the streets, he said: "No. People who walk past judge us. It is not very comfortable without a bed in cold weather." Organizers are expecting much better sales than last year, partly because of the recovering economy. Sony Computer Entertainment Hong Kong, one of the main exhibitors, is also targeting mainland visitors who are likely to be big spenders because of the exchange rate. James Akio Hong, general manager of the company's marketing division, said there was an express queue for mainland visitors. The company has arranged bus services for 112 registered mainland visitors between Shenzhen and the convention centre. He expected mainland visitors who could not buy the games and consoles across the border to contribute to 30 per cent of total sales.

China*: Malaysia has lined up 10 initiatives to attract businessmen from China in a more active way to promote China-Malaysia's bilateral trade, a Malaysian official said here in an interview with Xinhua recently. Wong Lai Sum, Deputy Chief Executive Officer of Malaysia External Trade Development Corporation (MATRADE), said this is in tandem with the fully implementation of the China-ASEAN Free Trade Area (FTA). MATRADE has planned to carry out high-level visits to China next year with Malaysian International Trade and Industry Minister Mustapa Mohamed leading a delegation, she said. Wong told Xinhua that MATRADE will actively participate in trade fairs held in China, among which are the China-ASEAN Expo and the Shanghai World Expo. Wong said that China-ASEAN FTA construction has been making good progress since 2005, and in Malaysia, business communities have actively participated in tours to China organized by MATRADE. Following the full implementation of the FTA on Jan. 1 next year, Wong believed that more people will come to MATRADE's doorstep to seek advices for doing businesses in China. Meanwhile, she urged Malaysian businessmen to learn about the procedures of entering the huge market in China. Established in March 1993, MATRADE, a statutory agency under Malaysian International Trade and Industry Ministry (MITI), is the country's export promotion agency. It is responsible for assisting Malaysian companies to succeed in the international market while bridging overseas buyers with the local sellers. Wong pointed out that besides organizing specialized marketing missions to China, MATRADE also invited Chinese businessmen to take part in trade fairs held in Malaysia. MATRADE also liaised with the Chinese authorities and to help businessmen from China enter the Malaysian market and make them aware of the possible cost reduction through cooperating with Malaysians. Wong noted that the China-ASEAN FTA will also help further transform Malaysia into China's largest trading partner in the Association of Southeast Asian Nations (ASEAN). Wong stressed the strong complementary in the two countries' economy and trade. Citing an example, Wong said that China is good at manufacturing machinery while Malaysia excels at producing machinery parts. The China-ASEAN FTA has been implemented by stages as early as 2005 with the related countries consenting to eliminate or reduce tariffs to boost trade in the region. Upon its full establishment, the China-ASEAN FTA will become the largest free trade area in the world which embraces a total population of over 1.9 billion. Wong said that China and the ASEAN member countries enjoy close relations, especially with Malaysia and Singapore where reside many citizens of the Chinese origin. These citizens not only draw China closer to the two countries, but also promote trade and economic development among the countries. When asked about the impact of low-cost goods from China, Wong admitted that this may more or less affect the local producers, but she said China is always willing to engage other countries to hold consultations on such matters. Wong also said that market liberalization is an inevitable development trend as this is a way to raise a country's competitiveness. Among the ASEAN countries, Wong said Malaysia enjoys several advantages, including the well-diversified exports. On another note, Wong said that it is crucial to raise people's awareness about the FTA as many of them are reluctant to apply for the Certificate of Origin to enjoy the benefits stipulated in the FTA. Wong said a low utilization rate does not mean failure of the FTA since it is undeniable that the China-Malaysia's trade has been growing. She believed that people will come to see the benefits brought by the China-ASEAN FTA within two or three years.

The vice-chairman of China Mobile (SEHK: 0941) is being probed for corruption by the Communist Party's top anti- graft watchdog, Xinhua reported yesterday. Zhang Chunjiang was being investigated for a "serious disciplinary breach" by the party's Central Commission for Discipline Inspection but the news agency did not elaborate. Rainie Lei, a Hong Kong-based spokeswoman for China Mobile, said the probe was related to personal matters and would not affect the company's operations. She refused to give further details. The company planned to issue a statement "for further clarification", she said. The announcement came as a surprise to many because Zhang made his last public appearance as recently as December 17 in an event promoting "civilized" mobile phone text messages, an event that was part of Beijing's crackdown on material deemed indecent or vulgar. Zhang also made high-profile public remarks on curbing pornographic text messages earlier this month. China Mobile is the world's largest mobile phone carrier by market value. Zhang, 51, is a heavyweight in the mainland's telecoms industry. He was appointed party secretary and deputy general manager of China Mobile in May last year. Before that, he was chairman of China Netcom Group (SEHK: 0906). When appointed party boss and general manager of China Netcom in 2003, Zhang was the youngest senior executive in the country's telecoms sector. The industry has credited Zhang for contributing to the restructuring of China Tietong. He also worked on merging Netcom, China Jitong and 10 provincial operations of the original China Telecom (SEHK: 0728) Group to form the China Netcom Group in the north. He was deputy minister in the former Ministry of Information Industry from 2000 to 2003 and his interpersonal skills have contributed to the mergers, earlier reports said. Zhang started his career as deputy director of the telecoms bureau in Liaoning province in 1993. Some internet postings on mainland websites speculated that Zhang's downfall was linked to insider trading.

Exploration work in the eastern region of north China's Hebei Province shows potential iron ore reserves in this area is estimated to top 10 billion tons, the China Metallurgical Geology Bureau (CMGB) said Saturday. A total of 3.44 billion tons of iron ore has been verified in five mines in the province, said Yan Xueyi, director with the CMGB. The discovery of this deposit would largely ease the shortfall in China's domestic iron ore supplies and contribute to a sound and sustainable development of the country's steel industry, according to Yan. China imported 443.56 million tons of iron ore in 2008, bringing the country's reliance on imported iron ore to around 50 percent. The country's steel mills suffered an unfavorable position during the annual iron ore pricing talks as overseas miners allied to ask for a higher price.

China has earmarked 716.1 billion yuan (104.8 billion U.S. dollars) from the central budget this year for agriculture, rural areas and farmers, the Ministry of Finance said Friday in a statement.

The weight of private enterprises in the overall economy is on the rise and that of State-owned enterprises (SOEs) on the decline, Ma Jiantang, minister of the National Bureau of Statistics, said on Friday. The number of private firms rose by 81.4 percent from 2004 to 2008 to reach 3.6 million and SOEs dropped by 20 percent to 143,000, Ma said at a press conference where China's second economic census results were released. China has made great efforts over the past 30 years to restructure its economy. It has gradually raised the proportion of private enterprises after the market-oriented reform began in the early 1980s. As a result, the private sector has contributed an ever-growing value to the country's GDP and provided most of the jobs. But in recent years, some major acquisitions have seen SOEs buying into private companies, sparking concern that the State may be strengthening its control over the private sector. Ma said the census figures do not suggest SOEs are buying into private enterprises. In terms of asset value, SOEs saw their proportion in the nation's total drop by 8.1 percentage points from 2004 to 2008 to 23 percent. In contrast, private enterprises' assets rose by 3.3 percentage points to 12.3 percent.

Kids give Christmas gifts to their foreign teacher in a kindergarten in east China's Jiangsu Province on December 22nd.

China health authorities have started treating severely infected swine flu patients with blood plasma donated by survivors - a therapy not yet proven to work but one that has shown potential to save lives. In many parts of China, government-run blood collection stations have been harvesting plasma from people who have high levels of swine flu-fighting antibodies in their blood, because they recently recovered from or were vaccinated against the virus. The plasma is being stored in preparation for transfusions for severely or critically ill patients. The treatment is based on the principle that transferring antibodies, the immune system’s search-and-destroy force, can help a patient fight the virus and recover faster. Because the approach is still being evaluated for safety and effectiveness, the World Health Organization has not recommended it. Any therapy involving blood transfusions risks introducing new infections of blood-borne diseases such as HIV, hepatitis and syphilis. Some patients could also develop allergic reactions. Evidence from cases of bird flu and the 2002-03 severe acute respiratory syndrome outbreak have shown promising results using plasma from recovered patients. Plasma therapy is also used to treat hepatitis B, rabies, and other infectious diseases. Concerns about resistance to antiviral drugs like Tamiflu have also driven interest in additional therapies, particularly in pandemic situations where hospital intensive care units come under strain from severe cases. It is not clear how many Chinese have received the treatment. Media in recent weeks have reported at least 10 patients have been treated this way, including a baby and a pregnant woman. Some health experts support China’s approach. Microbiologist Guan Yi of the University of Hong Kong co-authored a paper in the New England Journal of Medicine in 2007 about a bird flu patient who recovered quickly after being treated this way. “I think it’s a good strategy,” Guan said. In severe cases, the virus penetrates deep into the lungs and replicates in great amounts, which Tamiflu is ineffective in limiting, he said. “The best way to treat the severe patients is with neutralized antibodies, which are only found in people who have accepted vaccination or in convalescent plasma,” said Guan. Dr Xu Zhenqiu, who has used the therapy, said plasma treatment offers some hope. “It provides us with an alternative treatment when saving patients, which gives us more hope of saving lives,” Xu said in a telephone interview. The health ministry was cautious in stating its position on the therapy, saying more research was required. Other experts are not fully convinced of the treatment’s effectiveness. “I think it needs careful study,” said Dr. Frederick Hayden, a virus expert at the University of Virginia and a World Health Organization flu consultant. “I think it’s a very potentially important intervention, but there is insufficient information... to make a routine recommendation for care in seriously ill patients.” Mainland health authorities have appealed for donations of plasma and hundreds, if not thousands, of people have already done so, according to news reports. Blood supply safety is a perennial concern in China, where worries still persist despite strengthened controls in recent years on blood collection centers. China also banned blood sales in 2003 after it was discovered unclean blood-buying businesses had passed the HIV/Aids virus to thousands of people in the 1990s. Guan said though he supports China’s treatment strategy, he has urged the government to strictly regulate plasma donations. “My concern is they have no standard protocol. Different regions and different hospitals may be screening the blood differently,” he said. “I urge them to standardize the whole procedure.”

Canada's Minister of Finance Jim Flaherty said China, with the world's largest currency reserves of US$2.3 trillion, might be poised to buy Canadian dollars as it sought to shield its reserves against the US dollar's decline. "It does not surprise me that China and Russia would take greater positions in the Canadian dollar than they have previously," Flaherty said. "I would expect countries looking around the world to invest in market currencies that are reliable." The US dollar has declined against all but one of the 16 most-active currencies this year, prompting major reserve-holding countries such as Russia and China to express concern about their US dollar-denominated investments. Russia last month said it would add Canadian dollars to its reserves to lower its dependence on the US currency. The Bank of Canada has warned "persistent strength" in the currency is a main risk for the economy, potentially acting as a significant drag on growth. Canada's currency has gained 15 per cent this year against the US dollar. Chinese purchases of Canadian dollars would also cement growing economic links between the two largest trading partners of the United States. Premier Wen Jiabao said in March that the nation was worried about the safety of its investment in US debt, as a weakening dollar eroded the value of its reserves. China's currency regulator said earlier this month it would improve its utilisation of foreign exchange reserves. PetroChina (SEHK: 0857), the country's largest oil company, this year bought its first stake in the Canadian oil sands, paying C$1.9 billion (HK$13.93 billion) for 60 per cent of a project run by Athabasca Oil Sands Corp. Teck Resources, Canada's biggest base metals producer, sold a 17 per cent stake to China's sovereign wealth fund for C$1.74 billion in July. Prime Minister Stephen Harper, seeking to cut dependence on the US, travelled to China earlier this month to secure Asia's second-biggest economy as a customer for oil, natural gas, uranium and other commodities. "We know that China has been interested in things in Canada, whether it's the bond market or the oil sands or oil companies," said David Watt, a senior currency strategist at RBC Capital Markets. "They've been sniffing around in the past. We know they've been interested." Watt said an amount equal to 2 per cent of Asian reserves would mean about C$100 billion of currency flows into Canada. "It would certainly be a positive backdrop for the currency," Watt said. One Canadian dollar purchases 94.58 US cents. Canada's currency will appreciate to parity with the US dollar by the middle of next year, Bank of Nova Scotia predicts. The median estimate of 38 analysts is for the currency to strengthen to C$1.04 in that period. The currency last traded on a one-for-one basis in July last year. The Canadian dollar has gained in part as investors bet an accelerating economic recovery will prompt the central bank to raise interest rates sooner than in the US. Canada also sits on the largest pool of oil reserves outside the Middle East and is a major exporter of other commodities such as gold. A Canadian commodity price index compiled by the Bank of Canada has advanced more than 20 per cent this year. Canada also had the lowest debt levels among the Group of Seven nations, making its currency a relatively safer investment, Flaherty said.

The high-speed Wuhan-Guangzhou railway opened on Saturday. The rail link will be one of the world's longest high-speed railways, and one of the world's fastest with an average speed of about 217 miles per hour (350km/h).

Competition between airlines and rail operators will further hot up on Saturday thanks to the launch of China's longest high-speed train link between Wuhan and Guangzhou. The line stretches more than 1,000 km and will slash the travel time from Wuhan, Hubei province, to Guangzhou in Guangdong from 10 hours to just three. Tickets for the service - which also stops at Changsha, capital of Hunan - went on sale at new stations in the three cities last weekend, with prices ranging from 780 yuan ($110) for first class to 490 yuan for second class, said a joint document released by the National Development and Reform Commission and the Ministry of Railways. The link, on which trains will reach a top speed of 350 km/h, is expected to pose a real threat to airlines running flights linking the cities. "High-speed rail has three advantages over air travel: it is more convenient, more punctual and has a better safety record. This could help erode the airlines' market shares," said Si Xianmin, chairman of China Southern Airlines, the largest domestic airline by fleet size. From today's launch, 38 out of China Southern Airlines' 160-plus domestic flights will compete with high-speed train links, he said. A similar service opened on April 1 between Wuhan and Hefei, Anhui province, had already grabbed half of the passengers traveling from Wuhan to Shanghai, said Si. The Shijiazhuang to Taiyuan link, also opened on April 1, caused sales for China Eastern Airlines' Beijing to Taiyuan flight to slump 36 percent the following day, while private Spring Airlines reduced its Shanghai to Zhengzhou flights due to competition from the Shanghai bullet trains, Beijing News reported. To deal with this threat, China Southern Airlines last week unveiled several counter measures, including cutting ticket prices from Wuhan to Guangzhou by almost half for advanced purchases. The company also signed a deal with airports in Wuhan and Changsha to give priority to flights to Guangzhou to ensure punctuality. If railway chiefs over-cut the number of low-cost tickets on slower trains, as they did when the country's first high-speed link opened between Beijing and Tianjin last year, the airlines could win more passengers with cheap offers, said Zhao Jian, professor with Beijing Jiaotong University. "But whichever side wins, passengers will be the ultimate winner," he said. Wu Wenhua, a researcher with the National Development and Reform Commission's comprehensive transport institute, said developing high-speed rail networks is in line with the demand for high-efficiency, low-emissions transport. China plans to have high-speed rail services running between 70 percent of key cities by 2020, which would cover more than 80 percent of the airline network. About 16,000 km of railway for 350-km/h trains will be built on the mainland in the next 10 years, according to a blueprint by the Ministry of Railways. By 2012, work will be completed on 42 high-speed links covering 13,000 km, the blueprint showed.

When A-Power Energy Generation Systems secured a deal to supply turbines for a United States wind farm project in October, the little-known Chinese firm had an ace up its sleeve to help it clinch the deal. A-Power was armed with US$1.5 billion in financing from state-run Chinese banks to fund the 600-megawatt project in Texas. While global peers have limited access to cheap state loans, Chinese renewable energy firms are getting a boost from Beijing as they win clean-technology projects around the world. Much of that is through low-interest loans from big state banks. This support is giving China's renewable energy firms an edge over Asian rivals such as India's Suzlon Energy, Japan Wind Development and Australia's Infigen Energy, as well as heavyweights such as German polysilicon firm Wacker Chemie and Danish firm Vestas Wind. "I don't think A-Power could have done this deal without access to cheap financing," said Jacob Kirkregaard, a research fellow at the Peterson Institute for International Economics. "China is clearly the big kid on the block ... that's not something many Asian countries can emulate." Shares of A-Power, which only entered the wind business last year, hit a 15-month high last Friday after it said it would supply wind turbines for the Texas project. Such deals are unfolding as the mainland aggressively develops its renewable energy sector and as its companies play catch-up with bigger, global peers including German solar cell producer Q-Cells and Spanish wind farm operator Iberdrola, which have built up solid track records, also with help from more than a decade of government subsidies. Most of China's alternative-energy makers, including solar firms Yingli Green Energy Holding and Suntech Power Holdings, and wind machinery maker China High Speed Transmission Equipment Group, already have access to low-interest financing from state-run banks to fund their growth and client purchases. Interest rates on loans for wind power generator China Longyuan Power Group Corp, for example, were 10 per cent below the prevailing benchmark rate set by the People's Bank of China, said Morgan Stanley in a report. "Chinese banks are motivated by the mandate from the government to develop renewable energy as a national priority," said Zhao Feng at BTM Consult, which specialises in renewable energy. "In Europe, the banks, when they offer loans, tend to assess the project and look at it more closely from a risk perspective." State-backed financing is a common policy tool for governments globally trying to support industries they want to develop. China also provides similar strong support for its energy firms for overseas acquisitions and its telecommunications equipment makers as they try to expand abroad. Beijing's support comes as Chinese players attempt to create new markets as the cost of developing renewable energy falls and competition intensifies for projects at home. The US$300 billion sovereign wealth fund, China Investment Corp, is also helping to bolster the industry. In past months, the fund has pumped about US$1.1 billion into the sector, buying stakes in solar firm GCL-Poly Energy Holdings, the world's No 3 polysilicon company by capacity, and Longyuan.

Chinese internet firms are eyeing more spin-off offerings after raising almost US$1.5 billion this year as they bank on strong foreign interest in high-growth mainland plays. Chinese spin-offs have prospered on the back of successful flotation such as Changyou's, but pricing issues and corporate governance remain key concerns for investors. Tencent Holdings (SEHK: 0700), China's largest internet firm,, the country's third-largest online games operator, and software developer Kingsoft (SEHK: 3888) Corp could be prime candidates to spin off business units, analysts said. "I see the trend continuing because, especially for gaming companies due to the intense competition on the ground, they need more resources to compete against one another," said Guo Chenggang, an analyst at JLM Pacific Epoch. Tencent and Kingsoft both denied any spin-off listing plans, while NetEase declined comment. The United States listing market has cooled since new issues began to pick up around mid-year, but market strategists expect demand to remain robust, although more selective, for China plays. "It's similar to the late 1990s when people felt like IPOs were almost uncashed lottery tickets. It turned out not to be true but for a while people would invest in anything," said Bill Buhr, a listing strategist at research house Morningstar. "Based on how well some of these early Chinese IPOs did, there might have been a little bit of that same thought process." Other firms to spin off units this year include CDC Corp, which listed CDC Software; Sina Corp's joint-venture listing of China Real Estate Information; and Shanda Interactive Entertainment's US$1 billion spin-off of online games unit Shanda Games.

European fashion retailers are accelerating business expansion in China thanks to the nation's increasing number of fashion-conscious consumers. Two companies that opened new outlets in China at a rapid pace this year included Sweden's H&M and Spain's Zara, both retailers of clothing and accessories for adults and youth. H&M is ending this year with a total of 13 new stores, raising the company portfolio in China to 27 outlets, while Zara, opened 33 new stores in China, winding down the year with 60 in total. "In China, new store openings have more than doubled due to strong domestic consumption, which has not been affected by the global financial downturn," said Wu Shuang, public relations manager of H&M China. Globally, H&M store openings are up between 10 percent and 15 percent in 2009, said Wu. "More H&M stores will be set up in China next year, especially in the second-tier cities," he said. H&M, Europe's second largest fast-fashion retailer, entered the Hong Kong and Shanghai markets in 2007 and later expanded its business to second-tier cities like Hangzhou and Ningbo of Zhejiang province. Back in August, H&M sales in Spain, the US and France were down 11 percent over July sales, the fourth consecutive monthly drop. In 2008, average sales revenue at H&M stores in the Chinese mainland and Hong Kong was up 23 percent to 59 million yuan, while globally average store sales was 48 million yuan. "We are expecting favorable sales volume in China this year," said Wu, while declining to elaborate further. Strong sales numbers were also recorded at Zara, the leading fast-fashion retailer in Europe. "The Chinese market is attractive with its soaring consumer spending power," a Zara promotion executive said on condition of anonymity. Chinese consumers can expect to see more Zara 'fast fashion' stores in the future," he said. Fast fashion is a term used to describe fashion trends that are manufactured quickly in smaller batches to keep inventories down and allow mainstream consumers to take advantage of current clothing styles at lower prices. This type of quick manufacturing methodology is preferred by large retailers like H&M, Forever 21 and Zara, according to online apparel industry directory, Apparel Search. This access to the latest clothing styles is popular with white-collar consumers in China. "I have been waiting for 30 minutes to try on several pieces of clothing, but the wait doesn't matter. I love to get everything here, and the prices are acceptable," said Liu Dan, a woman in her 20s shopping at one of Zara's Beijing stores. Liu, who works in the public relations department at an international company, said she is also a regular patron of H&M in Beijing. Both H&M and Zara stores are often crowded with local consumers, especially on the weekends.

Dec 26 - 27, 2009

Hong Kong*: Beijing's foreign affairs commission in Hong Kong reiterated yesterday that the Copenhagen climate summit was a success as it fended off criticisms of the non- binding pact. This came a day after Foreign Ministry spokeswoman Jiang Yu refuted a claim by British climate change secretary Ed Miliband that the mainland had hijacked the climate negotiations in the Danish capital. Jiang insisted on Tuesday that the conference had yielded fruit and reached a broad consensus. This was affirmed yesterday by Zhang Honghong, director general of the department of treaties and laws of the Office of the Commissioner of the Ministry of Foreign Affairs of the People's Republic of China in Hong Kong. "I don't consider it a failure, I think it was successful," Zhang said. She called the reports on the climate accord "biased" and "irresponsible." Spokesman Song Ronghua said the office decided to tell Hong Kong reporters the mainland's view of the summit. "Many reports of the local media on the pact seemed negative. They used stories of Western wire agencies. No Hong Kong media representative covered the summit in Copenhagen except for Phoenix Satellite Television, which has a foreign correspondent over there." The accord reached by the United States, China, India, Brazil and South Africa calls for cutting emissions to keep temperatures from rising more than two degrees Celsius above pre-industrial levels by 2050. It also mentions that richer nations will finance US$10 billion (HK$78 billion) a year from next year to 2012 to help developing countries fight climate change. A goal was also set to mobilize US$100 billion a year by 2020 for the same purposes, the deal says. "We also think that the targets are not ambitious enough, but it is still moving a step forward," Zhang said. "It will be great if the global temperature rise is limited to 1.5 degrees Celsius, but it will largely depend on the reduction level in greenhouse emissions," she added. The nations attending the United Nations conference just agreed to take note of the accord, instead of formally approving it. Zhang also called it unreasonable to peg the emissions reduction targets of developed countries with their developing counterparts. "It is like an obese guy saying he will only lose weight if a slim guy does the same. It doesn't make sense, does it?" she said. "[Developed countries] have already gone through industrialization and emitted heat-trapping gases for more than 250 years."

Top broadcaster TVB and four major record companies are singing from two different sheets in a battle over royalties. And television viewers could be big losers too in the fight over copyright fees, with some of Hong Kong's most popular singers missing from TVB;s holiday shows after talks broke down yesterday. In a bid to resolve the deadlock, TVB filed a writ with the Copyright Tribunal. Hong Kongs top free-to-air broadcaster also said it will not play the songs of about 50 singers including Kelly Chen Wai-lum and Jay Chou Chieh-lun until an agreement is reached. "There has been very little progress despite weeks of active negotiations. We will stop playing their songs to show respect for copyrights," TVB general manager Stephen Chan Chi-wan said. Should the dispute remain unsettled over the next couple of weeks, it is likely top draws such as Kay Tse On-kei, Eason Chan Yik-shun and Hins Cheung King-hin will miss the TVB Jade Solid Gold Top 10 Awards next month. A handful of singers from the EEG stable such as Joey Yung Cho-yee and Leo Ku Kui-kei could sweep the awards. A deadline on a fees deal set by the Hong Kong Record Industry Alliance a group formed by the four labels this year comes into play today. The alliance, which includes Universal Music Hong Kong, Sony Music, Warner Music Hong Kong and EMI Hong Kong, offered TVB a plan under which copyright fees would be pegged to the stations annual advertising revenue. The deal differs from a previous one under the International Federation of Phonographic Industry Hong Kong, which the record companies left. Under the plan, the fee percentage will grow from 0.12 percent for this year to 0.4 percent for 2012, or a rise from HK$2.9 million to HK$9.6 million per year. The alliance said the plan is close to international practice. However, Chan said the calculation should be reasonable and modified to cater to Hong Kongs market environment. TVB has repeatedly told the alliance it cannot accept its demand and that this was reaffirmed in a letter sent on Monday, Chan said. TVB filed a writ with the Copyright Tribunal on the same day considering it is better for the court to handle the dispute, he said. He hopes a deal can be reached before the award show on January 16. The alliance declined to comment on TVBs statement. Not to be outdone, the other industry group, the IFPI, announced yesterday it has renewed its contract with TVB. IFPI chairman Ng Yu said the federation represents more than 90 percent of local record labels and the terms of the new deal are very reasonable. Meanwhile, TVB production division controller (non-drama) Lo Lai- chuen said the station intends to telecast the award shows of the three local radio stations. He hopes those getting on stage will finish their songs though the four record labels have expressed reservations, citing possible copyright violations.

TVB general manager Stephen Chan (left) and IFPI HK chairman Ng Yu (right), backed by performers (from left) Raymond Lam, Leo Ku, Vincy Chan and Kate Tsui Tsz-Shan, applaud the copyright deal between the broadcaster and recording industry group.

It's a shop `til you drop Christmas as Hongkongers shrug off economic worries for the festive season and malls predict a double-digit rise in turnover. Stores are so busy that some are opening late while the tills keep jingling. Harbour City in Tsim Sha Tsui has extended its operating hours to 10pm and the arrangement will continue until December 31. It will host a street party on Canton Road tonight and on New Years Eve. Around 300,000 people are expected to stroll through the area each night, and Harbour City is predicting a 10 percent increase in business over the holiday period. Far from keeping people at home, the lower temperatures have proved to be a boon. The cold weather has helped to play a crucial role in promoting the Christmas atmosphere. People can put on their winter woollies and dress up for parties, said Hong Kong Bar and Club Association vice chairman Chin Chun-wing. Chin said the surprising success of the recent Halloween promotions has given the industry a boost in confidence. Many bars have been reserved for student or corporate gatherings and association members are expecting at least a 10 percent increase in turnover during the Christmas weekend. However, Chin said most bars will keep the price of drinks at a reasonable level so as not to kill off the recovering momentum. The Mira hotel in Tsim Sha Tsui is offering a Christmas buffet dinner with price tags of HK$738 and HK$838 per guest depending on the time of entry. Although the bill may reach more than HK$900 with the 10 percent service charge, it has been fully booked for more than a week. Even the Chinese restaurants in our group have received satisfactory bookings. Some corporations have already held Christmas dinners for employees or clients, spending on average 10 to 15 percent more than they did last year, said a spokeswoman for the Miramar Group. Karaoke chain California Red managing director Anthony Lock Kwok-on said key branches in Mong Kok, Causeway Bay and Tsim Sha Tsui have received strong bookings for overnight sessions. Our business has profited from the festive mood since last week. Guests are ordering more drinks and food, and we expect a 5 to 10 percent increase in turnover all the way through January 1, Lock said. The cash registers at travel agents are ringing in a Merry Christmas, too. Sunflower Travel assistant general manager Anthony Chan Hung-cheong said the headcount for Christmas travelers is up 5 percent on last year and he expects the trend to get even stronger for the Lunar New Year. Japan and Korea remain the most popular destinations. It is getting colder, and travelers want to go to places where they can enjoy winter activities such as skiing or soaking in hot springs, Chan said.

The Bank of China (3988) has become the first lender to undertake more than 1 billion yuan (HK$1.13 billion) in cross-border yuan trade settlements. Transactions carried out by the BOC's mainland branches hit 1.1 billion yuan by Monday. The rise in the value of cross- border yuan settlements was dramatic because at the end of October the figure stood at only 60 million yuan. The 120 transactions over the past six months involved more than 40 domestic and foreign enterprises. One trade between its Shanghai branch and a large-scale company for a yuan credit of 214 million yuan on December 3 was the biggest single recorded deal so far. China's central bank gave foreign lenders the go-ahead to offer trade finance to local firms settling cross-border deals in yuan in July. Cross-border yuan trade settlements now apply to a number of countries including Singapore, Thailand and Russia. Meanwhile, the system may be expanded to the whole country, according to a joint statement issued by the central bank and the banking, insurance and securities regulators, Bloomberg reported. However, no timetable has yet been given. Currently, only 365 firms in Shanghai and Guangdong province may use yuan in cross-border trade settlements with Hong Kong, Macau and some foreign countries.

Donald Tsang speaks at the groundbreaking ceremony for the Kai Tak cruise terminal. Construction work on the long-awaited Kai Tak cruise terminal finally began yesterday, after the site lay vacant for more than a decade. Speaking at the groundbreaking ceremony for the terminal's site formation work, Chief Executive Donald Tsang Yam-kuen said the government was building the terminal at "full pace" in view of the tremendous potential of the cruise industry in the Asia-Pacific region. "After the first berth commences operation in 2013, the new terminal will be able to berth the world's largest and most advanced cruise vessels," he said. "It will provide high-quality infrastructure for the long-term development of the cruise industry in Hong Kong and in the region." The second berth will be available in 2014 for medium-sized cruise vessels and will begin to accommodate mega-cruise ships after underwater gas mains are relocated. With Ocean Terminal in Tsim Sha Tsui, Hong Kong will have a total of four berths for different types and sizes of vessels. The HK$2.3 billion site formation work involves the construction of berthing facilities, including the building of a sloping sea wall of 1,100 metres and an apron area to berth cruise vessels of different sizes and capacities. It also involves the dredging of 1.38 million cubic metres of sediment. The government is assessing tenders for the design-and-build contract for the terminal building, for which construction is expected to begin next year and be completed in 2014/15. "We are hoping to get our proposal to the Legislative Council for funding support [of this contract] in the middle of next year," Secretary for Commerce and Economic Development Rita Lau Ng Wai-lan said. Late last year, the government abandoned tendering and decided to build the cruise terminal by itself, after its failure to find a suitable candidate in two rounds of tendering. The administration will fund, design and build the cruise terminal, and lease it to an operator while retaining ownership of the site and terminal. Situated at the tip of the old Kai Tak airport runway, the new terminal will form part of the 320- hectare Kai Tak project that was first drawn up 10 years ago. The current scheme, approved in 2007, will be developed in three phases and include public housing flats, schools, a government office building, a hospital and railway link. The whole project will be completed in 2021. The chief executive said the government would strengthen liaison with the cruise market and neighbouring ports, improve service standards and enhance the competitiveness of Hong Kong in the regional cruise market.

For angry investors, the nightmare triggered by the collapse of US investment giant Lehman Brothers last year may be finally over after two banks offered to pay 80 HK cents for every dollar of their investment. The deal, which applies to 529 customers who bought a total of HK$264 million of Lehman equity-linked notes from Dah Sing (SEHK: 0440) Bank and Mevas Bank, is seen as paving the way for all affected customers to receive the same payout. The deal also has important implications for investors of other affected investment products, like Constellation Notes sold by DBS Bank, and Octave Notes, sold by 17 banks and designed by Morgan Stanley. So far, only investors of Lehman-related minibonds have been partially compensated. In a joint statement, the two banks said eligible customers who bought certain equity index-linked fixed coupon principal protected notes issued by Lehman would be offered 80 per cent of their original investment to settle their claims. This amounts to compensation of HK$211.2 million. Customers who have already settled with the banks will also enjoy the same terms at an estimated "topping-up" cost of HK$72 million. The two banks have already settled with 462, or 87 per cent, of the 529 customers. In these cases, the payouts ranged between 40 per cent and 85 per cent of their investment, Philip Khan, vice-chairman of the Alliance of Lehman Products Victims, said. The banks first started selling these notes on August 5 last year, six weeks before Lehman went bankrupt. Under the agreement, the banks do not admit any liability. The settlement offer was reluctantly accepted by many investors. Alison Hui Cho-wai, a housewife who was sold HK$500,000 of the notes by Dah Sing, said the compensation was marginally acceptable. The bank was remiss in selling the note to her just three weeks before Lehman collapsed and refused to let her cancel her order as rumours swirled of Lehman's demise, she said. "Selling the note is basically asking people to lend money to Lehman, which I would not do if I knew this was the case. I assumed the note had an underlying asset but the bank never mentioned to me that this was not the case. They just highlighted the point that the note's principal was protected," Hui said. Such notes allow investors to recoup their original investment after holding it to maturity, with additional returns depending on the performance of certain stocks during the period of time the note is held. However, since Lehman, which issued the notes, filed for bankruptcy and was unable to repay the principal amount, the notes became worthless. Other banks that sold the notes stopped short of endorsing the compensation offer. Standard Chartered Bank and Citibank, which sold such notes to more than 3,200 customers, declined to comment on the offer from Dah Sing and Mevas. "We do not offer across-the-board compensation. We will continue to handle each case on its individual merits, which may include a settlement to affected clients if we find evidence that we fell short of our standards," a Citibank spokesman said. Citibank said it stopped selling these notes in the middle of June last year, while such products were not available at Standard Chartered by the time Dah Sing and Mevas offered them. Choi Yiu-kwan, the outgoing deputy chief executive of the Monetary Authority, said the terms agreed with Dah Sing and Mevas did not necessarily mean similar deals would be struck with other banks. "This deal was brokered with the two banks. You cannot say that all other customers who bought these notes on or after August 5 last year will be offered the same terms to settle their claims. The circumstances of every sale by each bank are different," Choi said. Hong Kong investors lost billions of dollars on minibonds guaranteed by Lehman when the bank went bankrupt in September last year. Minibonds are not corporate bonds, but are high-risk, credit-linked derivatives. They are marketed as a proxy investment in well-known companies. Since the unprecedented debacle, disciplinary action has only been taken in one non-minibond case. The Monetary Authority says it has received about 21,800 Lehman-related complaints. About 16,700 cases have been dealt with or settled. Investigations into the remaining 5,000 or so cases are expected to be completed by March, Choi said. A total of 765 Lehman-related non-minibond complaints are currently under disciplinary consideration. A total of 334 non-minibond cases have been referred to the Securities and Futures Commission for action. So far, 24,419 of the 24,688 investors have agreed to settle their claims. The offer by 16 banks to repurchase soured minibonds from about 25,000 investors meant those who accepted the terms would recoup between 60 per cent and 70 per cent of their initial investments.

Cheung Kong (Holdings) (SEHK: 0001), Sino Land and other major developers seeking to replenish their land bank may pay up to HK$13 billion in next week's auction of two luxury residential waterfront sites in the New Territories, analysts say. The two parcels of the same size in Tai Po will be auctioned on Monday. Each covers 2.09 hectares, the largest sites to be offered since September 2007, according to Lands Department records. Hong Kong is trying to ease a shortage in land supply and homes that has fuelled price increases of up to 30 per cent this year, sparking a public outcry over housing costs and prompting the Hong Kong Monetary Authority to warn the city might face "sharp corrections" in asset prices should fund flows reverse. "If you are running very low on inventories and aren't sure when the next site will be drawn, you'd want to seize on this auction and lock in the project," said Paul Louie, an analyst at Nomura Holdings. The two sites could fetch up to HK$6.5 billion each, said Alnwick Chan Chi-hing, an executive director at Knight Frank. Sino Land was the frontrunner to win the auction since the developer already owned three sites nearby, Louie said. Henderson Land Development (SEHK: 0012) was interested in bidding, spokesman Bonnie Ngan said, as are New World Development and KWah International Holdings. The auction was triggered in November when the Lands Department accepted a minimum bid of HK$7.208 billion or HK$4,995 per square foot for the plots, which were on the government's list of available sites. "These are choice waterfront sites, and given the low-density requirements, it should draw many builders to auction for it," said Alvin Lam Tsz-pun, an executive director at Midland Surveyors. The sites each have a gross floor area of 720,757 square feet. Lam forecasts the sites to be auctioned for a combined HK$11 billion, or HK$7,631 per square foot. Louie and James Cheung, a director at Centaline Surveyors, estimated the land could fetch HK$11.4 billion.

China*: A property record has been set in the mainland for the second straight day with China State Construction - a subsidiary of China State Construction International Holdings (3311) - buying a residential site in Shanghai for 32,500 yuan (HK$36,900) per square meter.

Manufacturers across the border are shipping the wildly popular Zhu Zhu Pets air freight to United States retailers desperate for the fluffy robotic hamsters, which have become this year's hottest Christmas gift for children. Workers at six toy factories in Shenzhen and Guangzhou are working overtime to fill orders. More than 11 million Zhu Zhu Pets have been sold in the US since the fuzzy electronic hamsters were introduced in May, and demand is high for the holidays. Just days ahead of Christmas, factories were still busy shipping orders valued at US$100 million from retailers in the US and Europe. Some buyers even asked that their orders be delivered by air, regardless of the cost, to ensure their store shelves were filled for Christmas shoppers. "Sales are just insane," said Russell Hornsby, chief executive officer of Missouri-based toy company Cepia and creator of Zhu Zhu Pets. Given the huge demand and relatively short supply, some retailers such as Wal-Mart and Target are rationing the toys, with sales limited to one per customer a day. Many shops have simply run out of stock. The palm-sized electronic rodents can squeak, chatter and move around on the ground and have their own accessories, such as houses, tunnels, cars and, of course, hamster wheels. "They appear real to kids," Hornsby said. "And at the same time, you don't have to feed or clean them." The retail price of a Zhu Zhu Pets hamster ranges from US$8 to US$10 (HK$62 to HK$77). But on online shopping sites like eBay, the price has soared to US$30 or more because of the short supply. Michael Chen, a Cepia manager in charge of toy production and shipping on the mainland, said major retailers placed Christmas orders two to three months ago. All the goods were delivered before November 20, following the industry's normal timetable for the holiday season. "However, the market feedback went far beyond everyone's expectations. They have had to place a second or third batch of orders," he said. "Some retailers know they are very likely to lose money delivering the goods by air. Yet they insisted on doing so because they believe shoppers would not visit their stores unless the hamsters are on the shelves." While Zhu Zhu Pets were launched at the Hong Kong Toys and Games Fair almost a year ago, children in the city will have to wait until early next year to get one. Spurred by the success of Zhu Zhu Pets, Hornsby said it planned to launch another kind of electronic rodent, called Kung Zhu, next year.

Chen Yunlin, chairman of the Association for Relations Across the Taiwan Strait, gets into a car for a tour of Taichung. Taiwan will further open up to investment from across the strait after complaints by mainland businesspeople about heavy restrictions set by the island. The decision was announced yesterday during an investment seminar attended by top mainland envoy Chen Yunlin and 17 mainland business leaders whose combined assets exceed one trillion yuan (HK$1.13 trillion).

Shanghai's top transport official yesterday struggled to explain a subway collision and a series of breakdowns in the system that brought hours of traffic chaos to the city on Tuesday. Sun Jianping, director of the Shanghai Municipal Transport and Port Authority, admitted that the response from emergency services and transport officials was insufficient despite regular drills to prepare for just such a situation. The local media have demanded to know why passengers had to wait for three hours to be freed from one of the damaged trains, why there was an apparent lack of co-operation between government departments and why other travellers were given only minimal information about the disruption. Several newspapers also said the incident had raised doubts over the city's preparedness to cope with emergencies ahead of the Shanghai World Expo, which is to open in May. The No 1 metro line - the oldest and one of the busiest in Shanghai - was shut down for nearly eight hours on Tuesday morning after two trains collided at about 7am. The incident happened when one train carrying passengers hit an empty one shortly after the system came back online after a power glitch an hour earlier. No one was injured in the collision, but service on the line was suspended until 12.15pm. Service was suspended for about an hour on two more occasions that day, caused by another power fault at 1pm and a minor fire at 8.40pm. It was the most severe disruption the network has experienced in its 16-year history. Sun said he was personally taking control of an investigation into the affair and promised full disclosure of its findings.

Ford Motor chief executive Alan Mulally says Geely Holding Group is the preferred buyer for Volvo. Ford Motor has agreed on most of the terms of a deal to sell its Volvo passenger car unit to China's Geely Holding Group. The United States car-making giant said in a statement yesterday a definitive agreement with Geely for the Swedish unit's takeover would be signed in the first quarter of next year. Both parties plan to complete the deal in the second quarter, subject to regulatory approval. The announcement did not disclose the amount of Geely's offer. People familiar with the agreement said Zhejiang-based Geely planned to spend about US$2 billion to buy the Volvo brand. The amount would be less than one-third of Ford's purchase price of US$6.5 billion in 1999. Mainland media reported earlier that Geely had the support of Bank of China, China Construction Bank (SEHK: 0939, announcements, news) Corp and Export-Import Bank of China for its acquisition plan. Geely declined to comment. Shares of its Hong Kong-listed subsidiary rose 7.3 per cent to HK$3.98 on news of the possible completion of the deal. Ford, under chief executive Alan Mulally, named Geely as its preferred bidder for Volvo on October 28 after putting the Swedish brand on the block a year ago. It is trying to shed its overseas luxury brands and focus on its namesake division. Geely chairman Li Shufu earlier had flown to Sweden to meet labour unions, which are a powerful force in the global vehicle industry. Li once described Volvo as a mysterious woman who always covered her face with a veil and was not easy to master. Analysts have questioned whether an economy carmaker such as Geely has the ability to manage Volvo in part because of its strong unions and its loss-making records. Geely took over Australian transmissions maker DSI Holding, Ford's parts supplier, for A$54.6 million (HK$370.39 million) in June. Li, who started by making cheap motorcycles for villagers, believes high-technology cars can strengthen Chinese vehicle brands in the international market. In an unusual move, the Ministry of Commerce said publicly days ago that it would support Geely's Volvo purchase. By contrast, privately owned Sichuan Tengzhong Heavy Industrial Machinery's acquisition of General Motors' Hummer has not yet received government approval, even though a definitive agreement was signed in October. Chinese carmakers, trying to gear up their technology, have seized the opportunity to acquire overseas assets as prices depreciated during the global economic crisis. Beijing Automotive Industry Holding, the fifth-largest carmaker on the mainland, disclosed yesterday that it paid US$200 million for Saab's power-train technology and tooling for its 9-3 small car and 9-5 medium-sized car. The carmaker, a joint-venture partner of Germany's Daimler, will spend 33 billion yuan (HK$37.47 billion) on research and development, especially on producing engines. General manager Wang Dazong said Beijing Auto would open a plant to build its own brand of engines in Beijing in 2011. It plans to sell 100,000 units of domestic-brand passenger vehicles annually in two years.

A consortium paid a record 25.5 billion yuan for a huge site in Guangzhou on Monday, but Lai Fung says it was within market expectations. Lai Fung Holdings, which focuses on mainland property development, is playing down the risk of an asset bubble in Guangzhou despite seeing a large site in the city fetch a record sum this week. Executive director Julius Lau Shu-yan said the accommodation value of 5,810 yuan (HK$6,598) per square metre paid by a consortium on Monday was within market expectations. "It was a huge lump sum because the site covers a huge area," he said after Lai Sun Group's annual general meeting yesterday. On Monday, a consortium comprising Guangzhou R&F Properties, Agile Property Holdings (SEHK: 3383) and Country Garden Holdings paid 25.5 billion yuan for the site in Panyu, a satellite city in Guangzhou. The site will provide a gross floor area of 4.38 million sqmetres. Prices in some mainland cities have surged in recent months and property consultant Knight Frank said recently that home prices in Shanghai were up 25 per cent from early this year. Lai Fung focuses on Guangzhou and Shanghai and Lau said he did not see any sign of a property bubble in either city. Over the next two years, he said the developer planned to release one million square feet of residential area for sale. Despite government attempts to cool an overheated real estate sector, he said the firm had no plans to lower asking prices for upcoming projects. Lai Fung's land cost was relatively low because it was acquired many years ago, said Lau. The company has a land bank of more than 15 million sqft, largely in Guangzhou, Zhongshan and Shanghai. "It will be sufficient for development over the next three years," he said. Lau said all the firm's projects had started construction, except Haizhu Plaza in Guangzhou, which was still resettling affected residents. He played down the impact of Beijing's announcement that land purchases now required a down payment of at least 50 per cent of the total price, saying all its land had been fully paid for. "Only sites in the rural area will allow the purchase of land by instalments. Otherwise, land sold in the major cities has to be fully paid for within 30 days," he said. Chief executive Lester Lam Hau-yin said the company would not engage in a bidding war with other land-hungry developers. "We will look for other alternatives such as teaming up with other developers as part of our expansion," said Lam. In Hong Kong, Lau said the group had no plan to scale down its investment in the city despite the soaring cost of land.

Dec 25, 2009

Hong Kong*: A former senior employee working for the commercial banking department of the Hongkong and Shanghai Banking (SEHK: 0005) Corporation on Wednesday received a 20-month jail sentence in the District Court – for recommending a loan approval after taking a bribe from a Taiwanese businessman. Chen Ching-hsiao, a 47-year-old Taiwanese man, who was formerly senior vice-president for the commercial banking department of HSBC, had earlier pleaded guilty in the District Court to accepting an advantage. Chen admitted receiving US$60,000 in June 2007 from a Taiwanese businessman Wang Ching-chung. In return, Wang’s applications in Hong Kong for credit facilities for his companies in Taiwan received approval by Chen, and by his supervisor because of Chen’s recommendation. The court heard that as of November 26, HSBC has approved loans of up to US$2 million to Wang’s two companies. In passing sentence, Judge Stanley Chan said Chen’s crime was serious but that he had shown leniency in deciding the jail term, taking account of the fact that Chen had pleaded guilty, showed remorse and that the case has left his reputation in ruins. The judge said that the maximum sentence for a similar offence was three years, local media reported.

Nearly 6,000 people got a human swine flu (H1N1) jab on day two of a mass vaccination program. The Department of Health said 5,976 people were given the jab at public clinics during the 24 hours ending at 1pm yesterday. It brings the total number of vaccinations to 7,504. People aged 65 and over have received a total of 3,322 jabs over the two days, followed by 1,248 people under 65 years with chronic illness; 943 children aged between six months and under six years; and 415 health care workers. There have been no reports of serious side- effects. Health authorities have been hoping for a big response to the vaccination plan to help stem a second wave of H1N1 during the winter months. So far, 49 people have died from swine flu out of 34,000 confirmed with the infection. The department also said it is investigating a private doctor in a case involving improper vaccination reimbursement claims. The doctor is enrolled in the department's vaccination subsidy scheme. The matter was referred to police and the private doctor removed from the list of participating doctors in the subsidy scheme. The department did not say whether the subsidy scheme involved the human swine flu vaccine. It is also running subsidy schemes for seasonal flu and pneumococcal vaccines for the elderly and children to get vaccinated at subsidized rates. From Monday, people of high- risk groups can get the human swine flu vaccine at private doctors' clinics under a HK$129 per shot subsidy. About 500 doctors have signed up for the scheme. Hong Kong hopes to inoculate about two million deemed at risk of catching swine flu over the next few months.

Chief Executive Donald Tsang Yam-kuen officiates at the ground-breaking ceremony for the construction of the new Kai Tak cruise terminal on Wednesday morning. The Kai Tak Cruise Terminal will further enhance Hong Kong's status as a premier regional cruise hub in Asia, Chief Executive Donald Tsang Yam-kuen said on Wednesday morning. Speaking after officiating at the ground-breaking ceremony for the construction of the development, Tsang said the terminal will be able to handle the world’s largest cruise liners. “After the completion of the new cruise terminal, together with Ocean Terminal in Tsim Sha Tsui, Hong Kong will have a total of four berths for cruise vessels. These terminal facilities can berth cruise vessels of different types and sizes and will provide high-quality infrastructure for the long-term development of the cruise industry in Hong Kong and in the region,” Tsang said. The chief executive said the government will continue to strengthen its liaison with the cruise market and neighboring ports, so as to enhance the competitiveness of Hong Kong in the regional market. Kai Tak cruise terminal will be constructed on the former site of Kai Tak airport, with the first berth scheduled to be ready by mid-2013. The second berth will be available in 2014 to hold medium-sized cruise vessels and will begin to accommodate very large cruise vessels after the relocation of submarine gas mains supply. The government plans to spend HK$7.2 billion to fund, design and build the cruise terminal, and plans to lease it to a cruise operator. The completion date has been delayed to 2013 due to re-tendering.

Hong Kong's environment minister has sprung to China's defense after British leaders, including Prime Minister Gordon Brown, blamed Beijing for the disappointing outcome of the Copenhagen climate summit. Edward Yau Tang-wah, secretary for the environment, who took part in the talks as a member of the Chinese delegation, said China had been positive, proactive and progressive throughout. "China has been more honorable than many others and it has acted responsibly," said Yau, who ended his one-week trip to the Danish capital yesterday. Yau was the most senior Hong Kong official to join Chinese negotiators in international climate talks since 2003 when the Kyoto Protocol was extended by Beijing to Hong Kong. His comments came after senior British officials accused China of vetoing a possible deal during the talks, which could have included a deep cut in global emissions, and emissions from developed countries. Yau said China had tried to engage in discussions with different groups at the conference and had even offered a voluntary carbon intensity reduction target before the talks. Carbon intensity is the amount of carbon by weight emitted per unit of energy consumed. He also defended the outcome of the talks, the 12-point Copenhagen Accord. "Even if it is not an accord that everyone is satisfied with, this is not something that makes perfect the enemy of the good," Yau said. Yau said the climate talks began with rifts between the different parties, and a sense of distrust in many of the lengthy and difficult debates, which were often marred by disputes over procedural matters. "Doubts were often raised over who chaired the conference, what texts were used and drafted by whom, resulting in many disputes ... it all boiled down to the question of mutual distrust," Yau said. "The chairman of the conference was changed three times ... and it seemed there were too many leaders but too few negotiators." As for the implications of the talks on Hong Kong, Yau said the city would not slow down its efforts to tackle climate change, but the government was reviewing how to co-ordinate with the mainland on target-setting. The mainland has voluntarily proposed to cut carbon intensity by 45 per cent below the 2005 level by 2020. "We should not take stock of what has been done, but focus on what more can be done," Yau said, adding that a Hong Kong climate change study would be completed next year.

Shares of China Pacific Insurance (Group) Co, the country’s third-largest life insurer, rose 1 per cent on their debut in Hong Kong after the Carlyle Group-backed company raised US$3.1 billion in the world’s seventh-largest IPO this year. The listing came just after Shanghai produced another huge IPO of its own, with China CNR Corp, one of the country’s two big train makers, raising 13.9 billion yuan (HK$15.76 billion) after pricing its A-share offering at the top of an indicated range. The IPO is China’s fourth-largest this year. The two offerings are likely to be the last of the major IPOs to hit the Hong Kong and Shanghai stock exchanges this year, after six months of heavy, globe-leading activity. A small Hong Kong listing, Huayu Expressway Group, closed at HK$1.29, just above its HK$1.28 IPO price. China Pacific Insurance is not only a big IPO for Hong Kong, but marks one of The Carlyle Group’s most successful investments. After putting around US$800 million into the mainland insurer for a roughly 17 per cent stake, the Washington D C-based private equity firm could see that stake rise to around US$4.8 billion on paper. “Its Shanghai A-shares have been trading poorly in the past month, so its Hong Kong H-shares should match that performance,” said Jackson Wong, investment manager at Tanrich Securities. China Pacific Insurance’s offer price was about a 6 per cent premium to its Shanghai-listed shares. The first day trading was in line with predictions after the stock had fallen 0.7 per cent in the pre-trading grey market on Tuesday. Shares of China Pacific ended at HK$28.3, compared with the IPO price of HK$28, which was slightly below the middle of its indicative range. The company is also listed in Shanghai. Mainland’s life insurers have traded at a premium to their developed market peers, because of high growth expectations. China Pacific Insurance’s offer price represents a multiple of about 1.8 times forecast next year embedded value, compared with China Life (SEHK: 2628, announcements, news) Insurance’s 2.9 times and Ping An Insurance (SEHK: 2318)’s 3.7 times, according to a UBS research report. This is at a premium to European peers’ average 1.2 times price to embedded value. Asia is home to just a handful of big listed insurers, led by China Life and Ping An – the world’s two most valuable life insurers – and Taiwan’s Cathay Financial Holdings. China International Capital Corp, Credit Suisse, Goldman Sachs and UBS were handling the deal.

China internet firms are eyeing more spin-off offerings after raising nearly US$1.5 billion this year as they bank on strong foreign interest in high growth mainland plays. Mainland spin-offs have prospered on the back of successful IPOs such as Changyou’s, but pricing issues and corporate governance remain key concerns for investors. Tencent Holdings (SEHK: 0700), mainland’s largest internet firm,, the third-largest online games operator in the country, and software developer Kingsoft (SEHK: 3888) could be prime candidates to spin-off some business units, analysts said. “I see the trend continuing because, especially for gaming companies due to the intense competition on the ground, they need more resources to compete against one another,” said Guo Chenggang, Shanghai-based analyst at research firm JLM Pacific Epoch. Tencent and Kingsoft both denied any spin-off listing plans were in the works, while NetEase declined comment.

China*: The U.S. government saw trade relation with China "produced concrete results" in 2009 and is optimistic of progress in 2010, according to a report released by the U.S. Trade Representative's office on Tuesday. "Bilateral engagement produced concrete results in a number of important areas in 2009," the U.S. Trade Representative's office (USTR) said in its eighth annual report to the Congress on how well China is complying with its World Trade Organization obligations. "The two sides were able to resolve significant trade irritants, while also achieving incremental but important progress in other areas." On the bilateral front, the United States and China pursued a robust set of formal and informal meetings and dialogues in 2009, including numerous working groups and high-level meetings. The two governments held their first Strategic and Economic Dialogue (S&ED) meeting in July 2009 and the 20th meeting of the U.S.-China Joint Commission on Commerce and Trade (JCCT) in October 2009. The report, the first issued by President Barack Obama's administration, said that "the United States is optimistic that significant progress is obtainable in 2010." "China has taken many impressive steps over the last eight years to reform its economy, while implementing a set of sweeping WTO accession commitments," the report said. "China's implementation of its WTO commitments has led to increases in U.S. exports to China, while deepening China's integration into the international trading system and facilitating and strengthening the rule of law and the economic reforms that China began 30 years ago." Since China's accession to the WTO in 2001, U.S. exports of goods to China have increased by nearly 270 percent, rising from a 2001 total of 19 billion dollars to 70 billion dollars in 2008, said USTR. While U.S.-China trade slowed in 2009 like trade in the rest of the world in the face of the global economic downturn, China remains the third largest goods export market of the United States. China is also a substantial market for U.S. services, as the cross-border supply of services totaled 16 billion dollars in 2008. "Despite the many remaining challenges, China's WTO membership has continued to provide substantial ongoing benefits to the United States." "U.S.-China trade has expanded dramatically, providing numerous and substantial opportunities for U.S. businesses, workers, farmers and service suppliers and a wealth of affordable goods for U.S. consumers," said the report. Although progress has been made, trade disputes remain between the world's two major trade partners. The U.S. government filed many dispute cases against China in 2009, which aroused critics about the Obama administration's protectionism. USTR said it preferred to resolve disputes with China through dialogue, but would not hesitate to take action at the WTO if necessary. The U.S. trade deficit with China is expected to fall this year, along with the overall slump in world trade.

US auto giant Ford and Zhejiang Geely Holding have struck a deal on Ford’s sale of Swedish brand Volvo to the mainland carmaker, Swedish television reported on Wednesday, quoting a union leader. An announcement about the deal will be made later on Wednesday, the television reported. The fine print of the deal can take some more time to finalise, the report said. Earlier a source had said Ford and Geely have addressed most of the big issues in the pending sale, paving the way for the biggest acquisition of a foreign automaker by a mainland company. “There could be something in as soon as the next few hours,” said the source, who asked not to be named due to the sensitivity of the situation. Both sides expect a sale of the Swedish auto brand to close early in the new year, sources told on Tuesday. The deal is estimated to cost US$1.8 billion. Shares of Zhejiang Geely’s Hong Kong-listed Geely Automobile (SEHK: 0175) rose 7.6 per cent, beating a 1.1 per cent gain on the broader Hang Seng index on Wednesday, on optimism that the Volvo acquisition would be wrapped up soon. An acquisition would have no immediate profit impact on the listed Geely, but investors hope the company could eventually leverage Volvo’s technology to upgrade its cars. Zhejiang Geely, named by Ford as preferred bidder for Volvo, said in November it had reached an agreement with Ford on intellectual property (IP) rights involving Volvo, addressing what had been a key stumbling block in the acquisition process. But the sources said one of the outstanding issues in recent discussions has been how to treat the intellectual property that Ford would transfer in a Volvo sale. A Ford spokesman declined to comment on the possible statement or give a timeline for the negotiations. “We have nothing further to add at present save that Geely is our preferred bidder and we are working towards an agreement with Geely that is in the best interests of all parties,” John Gardiner wrote in an email. At least three major mainland banks have agreed to extend loans to Zhejiang Geely, including Bank of China, China Construction Bank (SEHK: 0939) Corp and Export-Import Bank of China, sources have said.

BAIC Chairman Xu Heyi said on Wednesday that his company will immediately start integrating Saab technology into its vehicles with an aim to sell 100,000 self-developed passenger vehicles in 2011. Beijing Automotive Industry Holding Corp (BAIC), mainland’s fifth-largest automaker, will launch an aggressive campaign to develop its brand both at home and overseas, after buying car designs from General Motors’ Saab unit. BAIC said it will invest 33 billion yuan (HK$37 billion) in vehicle R&D over three years, after paying US$200 million for the Saab technology, including the rights to three overall vehicle platforms and two engine technologies. “Someone has commented that the purchase of Saab’s intellectual property can help cut short the development time for Beijing Auto’s own-brand passenger vehicles by 4-5 years,” BAIC chairman Xu Heyi told reporters on Wednesday. “We basically agree with the view.” The car maker plans to immediately start integrating Saab technology into its vehicles with an aim to sell 100,000 self-developed passenger vehicles in 2011, Xu said. Construction of a production facility with annual capacity of 150,000 passenger vehicles will be complete in 2011, he added. The sales target is a bit aggressive, said Tan Kunyuan, an analyst at Changjiang Securities. “It will take at least a year for the market to recognise the brand and BAIC probably would need to modify the appearance of Saab cars to fit with Chinese market demand.” Mainland overtook the United States this year as the world’s largest auto market, as sales soared after Beijing rolled out a series of incentives designed to stimulate consumer spending during the global downturn. However, there is still a significant technology gap between domestic mainland automakers and their global rivals, which has left mainland companies looking for acquisitions of overseas technology and designs as the global auto industry restructures. Homegrown car maker Zhejiang Geely Holding Group, parent of Geely Auto (SEHK: 0175), is in talks to buy Ford Motor’s Volvo unit, and Sichuan Tengzhong Heavy Industrial Machinery is buying GM’ Hummer brand. Xu said BAIC posted net profit of 6 billion yuan on revenue of 116 billion yuan for this year, selling 1.24 million vehicles. The Beijing-based automaker is in production partnership with Daimler and Hyundai Motor, with most of their joint output for sale in the domestic market. BAIC, which has a 20 billion yuan line of credit from Bank of China, is also making plans for an initial public offering, Xu said, though he declined to give details, including where the company would list. Morgan Stanley advised BAIC on the Saab deal, but it was unclear whether the investment bank is also involved in the IPO plan. BAIC – which hastily arranged the Saab purchase after a group led by Swedish sports car maker Koenigsegg pulled out from a deal to buy all of Saab – said it was buying technology such as manufacturing blueprints and the management systems that will let it continuously develop and produce high quality vehicles. Besides exporting its vehicles directly, BAIC also plans to set up joint ventures overseas to facilitate sales, Xu said. The company will roll out two new models of its own-brand vehicles next year and will develop new energy cars in tandem with the new models of its self-developed vehicles. The Saab acquisition includes the intellectual property for Saab’s 9-5 and 9-3 sedans and some equipment to make them, leaving the fate of the Swedish-based automaker up in the air. Luxury car maker Spyker was in talks to buy Saab from GM, but those negotiations broke down last week with GM saying it would close down the Swedish automaker. But Russia-backed Spyker came back this week and said it was still interested in a deal for Saab.

Copyright piracy in mainland remains at “unacceptably high levels”, causing “serious harm” to American businesses, the top US trade official said in an annual report to Congress on Tuesday. US Trade Representative Ron Kirk said in the mandatory report on mainland’s compliance with its World Trade Organization accession obligations that Beijing was not taking adequate steps to enforce intellectual property rights laws. He said enforcement of mainland’s copyright protection “remains a significant challenge”. The report cited other “priority” trade issues such as industrial policies, trading rights and distribution services, agriculture and services, but indicated piracy is a key issue where mainland has made little progress. “Despite repeated anti-piracy campaigns in China and an increasing number of civil IPR (intellectual property rights) cases in Chinese courts, counterfeiting and piracy remain at unacceptably high levels and continue to cause serious harm to US businesses across many sectors of the economy,” the 121-page report said. The US copyright industries estimate that losses last year due to piracy were about US$3.5 billion for the music recording and software industries alone, it said. “These figures indicate little or no overall improvement over the previous year.” Mainland is among nations in the annual intellectual property rights blacklist of the US Trade Representative’s office. Mainland acceded to the World Trade Organization eight years ago. The terms of its accession called for mainland to implement numerous specific commitments over time. All of mainland’s key commitments should have been phased in three years ago. Kirk’s report said that while mainland had put in place laws aimed at protecting intellectual property rights as required by the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights or the TRIPS Agreement, “some critical reforms are still needed in a few areas”. It cited further improvement of measures for copyright protection on the internet following the country’s accession to the World Intellectual Property Rights Organization (WIPO) Internet treaties, and correction of “continuing deficiencies” in mainland’s criminal IPR enforcement measures. The United States obtained a favorable ruling about a year ago from a WTO panel in a case challenging deficiencies in mainland’s legal regime for protecting and enforcing copyrights and trademarks. Specifically, in a case in which 12 other WTO members had joined in as third parties, a WTO panel found as inconsistent mainland’s denial of copyright protection to works that do not meet mainland’s content review standards as well as the country’s handling of border enforcement seizures of counterfeit goods. The panel also clarified important legal standards relating to mainland’s criminal enforcement of copyrights and trademarks. Neither side appealed the panel’s decision, and Beijing subsequently agreed to bring the measures at issue into compliance by March next year, Kirk’s report said.

Tourists take photos in a park during the Harbin Ice Lantern Festival in China's ice city Harbin, northeast China's Heilongjiang Province, on December 20, 2009. Authorized by Walt Disney Company, organizer of this year's festival is allowed to use Disney characters.

Beijing hits back after EU extends shoe taxes - Beijing said on Wednesday it would impose penalties on metal fasteners – such as bolts and nails – imported from the European Union (EU), in apparent retaliation to the EU’s extension of taxes on shoes manufactured on the mainland. The preliminary ruling will require importers of carbon steel fasteners from the 27 EU nations to pay a deposit from Monday, the commerce ministry said in a statement on its website. “[The ministry] finds that the European Union dumped carbon steel fasteners in China and China’s domestic carbon steel fastener industry suffered material damages,” the ministry said. Importers will have to pay a deposit based on the difference – up to 24.6 per cent – between the normal value of the fasteners and the cut price, the ministry said. Dumping occurs when a foreign company sells a product in another market at less than normal value. The anti-dumping measures were imposed after the EU decided on Tuesday to extend punitive taxes on imports of Chinese and Vietnamese leather shoes – first introduced more than three years ago – by a further 15 months. The measures, designed to protect European leather manufacturers from below-cost Asian competition, carry import duties of 16.5 per cent levied on shoes manufactured on the mainland with leather uppers and 10 per cent on shoes from Vietnam. Commerce ministry spokesman Yao Jian said Beijing was “strongly dissatisfied” with the decision and will launch a complaint at the World Trade Organization (WTO), in a statement posted on the ministry’s website on Tuesday. “The Chinese government... will appeal to the WTO dispute settlement mechanism and take measures accordingly to seriously protect the legitimate interests of the Chinese industry,” Yao said. European products “do not compete directly with Chinese products and it is meaningless to continue to impose anti-dumping measures against China,” Yao said. Bigger manufacturers that make their shoes in Asia such as Diesel, Adidas and Puma, fought against the renewal of the shoe tariffs. In a statement, the European Footwear Alliance, which speaks for brands including Diesel, ECCO, Levi’s, Timberland, Rockport and Hush Puppies, said the decision “lays to rest any lingering notion that the European Union still intends to fight protectionism.” It said the EU’s “opaque trade policy will result in payment of anti-dumping duties well in excess of one billion euros (HK$12 billion) for European footwear businesses, which will ultimately be paid for by EU consumers.” Figures from the European Commission show that Chinese and Vietnamese shoes make up 30 per cent of the EU footwear market.

An employee handles Nufarm chemical products at a warehouse in Melbourne. Shares of Nufarm were traded below the revised offer in Sydney yesterday. Sinochem Corp, China's largest chemical trader, lowered its offer by 7.7 percent to A$2.6 billion ($2.3 billion) for Nufarm Ltd, whose full-year profit declined to a five-year low. The State-owned company proposes to pay A$12 a share for Australia's largest farm-chemical supplier, Melbourne-based Nufarm said yesterday. It's seeking more information on the new offer from Sinochem, which bid A$13 in September. The proposal is China's second attempt in as many years to buy the Australian company for its global distribution network for pesticides and herbicides. Shares of Nufarm, which reported a 42 percent profit drop in September after cutting its forecast three times during the year, were traded below the revised offer, a signal that investors don't expect a rival bid. "After three downgrades, Sinochem is in the driving seat in terms of pricing," said Hugh Dive, who helps manage about $3 billion at Investors Mutual Ltd. "If they walk away, Nufarm should trade down to A$9 as management credibility would be viewed by the investment community as severely stretched." Nufarm shares closed yesterday at A$10.56. The stock, halted from trading in Sydney, is down 12 percent since the initial accord with Sinochem was announced on Sept 28. "Sinochem has not yet clarified the terms and conditions that pertain to the revised price," Nufarm said in the statement. "The Nufarm board will seek clarification from Sinochem in relation to conditions, which relate to the revised price before announcing whether it is prepared to recommend its support to Nufarm shareholders." Sinochem spokesman Hu Hongjun didn't return a call to his Beijing office. China National Chemical Corp, backed by buyout fund Blackstone Group LP, ended talks to buy Nufarm in December 2007 after a study of its accounts, without giving reasons. The official period in which Sinochem could study its finances had ended, Nufarm said on Nov 19. The Australian company is a "complicated company operating in a challenging environment," Sinochem said on Dec 1 after Nufarm said they wouldn't meet their Dec 3 deadline to complete an initial deal.

Sovereign wealth fund China Investment Corp (CIC) may get a $200 billion capital injection by the first quarter of next year, after approvals from the relevant authorities, according to sources familiar with the fund.

Dec 24, 2009

Hong Kong*: Setting a statutory minimum wage at HK$5,000 a month could drive about 100,000 people out of work and push unemployment to 8 per cent. At a rate of HK$6,000 a month, about 152,000 jobs could be lost and 9.5 per cent of the workforce left unemployed. Even a lower monthly minimum wage of HK$4,000 might put 33,650 people out of work and raise the unemployment rate to 6.3 per cent. These figures - the first time such calculations on the possible impact of a minimum wage have been done in Hong Kong - were presented by the Hong Kong General Chamber of Commerce in its submission to the Provisional Minimum Wage Commission last Friday, to illustrate how a minimum wage might affect employment, and highlight other issues that could emerge. The chamber sought feedback from about 15 of its smaller member companies, from the restaurant, fast-food and flower-shop sectors, from which it was suggested that between a quarter and a half of low-paid employees would be laid off if the minimum wage was set at between HK$4,000 and HK$6,000 a month. There are 197,200 people earning less than HK$4,000 per month, according to the government, although it has not said how many of those are working part time. A senior member of the chamber, who preferred not to be named, said implementing a minimum wage might even trigger a "cascading effect", pushing up the salaries of higher paid staff. Human resources departments in some of the chamber's member companies were already examining the implications, he said. The member emphasised that the calculations were not meant to be a prediction, but to demonstrate a reasonable framework and methodology for the government to assess, in a quantitative way, the precise impacts of the policy, and to prescribe measures to deal with them. The chamber was not advocating a specific minimum wage, he added.

People's Bank of China adviser Joseph Yam says the mainland will catch up with the United States and European economies in 20 years. Former Hong Kong Monetary Authority chief executive Joseph Yam Chi-kwong says it could take 20 years for the yuan to become an international currency. Yam, who retired from the HKMA in October as the world's highest-paid central banker, was speaking for the first time as a key adviser to the People's Bank of China after being appointed executive vice-president of the China Society for Finance and Banking, a research institute and think tank. Addressing a banking forum in Beijing yesterday, he said the ailing global monetary system was now supported by two injured legs, namely the US dollar and the euro. "A third leg is necessarily needed" to support the system, he said. "The yuan should have its own role to play." He said the size of China's economy would catch up with those of the United States and Europe in 20 years, making the yuan on par with their currencies in terms of international profile. In the meantime, the yuan would play a bigger role in the global monetary system, emerging as an alternative to the dollar and the euro. Yam's remarks echoed PBOC governor Zhou Xiaochuan's calls in May for creating an international reserve currency to replace the dollar as China seeks to wield its financial strength worldwide in the wake of the greenback's weakness. It is understood Beijing hopes Yam can help the mainland enhance the efficiency of its policymaking in the finance sector and at the same time point the right direction for the banking system. Yam headed the HKMA, the de facto central bank in Hong Kong, from its establishment in 1993. Pang Yingli, a professor of finance at Shanghai Jiao Tong University, said: "By saying 20 years, it may not necessarily take that long. Yet, Yam's remarks show that it will be a long road for the yuan to become an international reserve currency." China has the world's largest foreign exchange reserves of US$2.3 trillion. As of October, the country held almost US$800 billion of US Treasury bonds. Beijing is expected to make the yuan fully convertible before 2020 to reinforce its efforts to build Shanghai into an international financial center. Yam told reporters on the sidelines of the forum that his new role would help strengthen the financial relationship between Hong Kong and the mainland, promoting the globalization of the yuan. He added that he was not being paid for the advisory job. He earned HK$11.9 million in his last year as HKMA chief. Separately, Jiang Jianqing, the chairman of Industrial and Commercial Bank of China (SEHK: 1398), the mainland's largest lender, told the forum that Beijing should give more foreign exchange to commercial banks, allowing them to offer more foreign exchange loans to companies seeking expansion overseas. He said the move could help China make better use of the massive foreign exchange reserves while easing excessive liquidity on the domestic markets. "If we can take a step forward on this, Chinese companies will take a leap forward in overseas expansion," Jiang said. He said the globalisation of the yuan could be achieved through the internationalization of Chinese firms if they had more operations worldwide. TX Investment Consulting analyst Wang Yifeng said: "It will be a good way to boost Chinese banks' performance. More mainland firms will speed up overseas investments if the move is implemented."

Homeowners pin their hopes on the wishing tree in Lam Tsuen in Tai Po of gaining indirectly from high prices at the auction of two public sites in the district next Monday. Hong Kong home sales surged last week as end-users and investors raced to close deals ahead of an expected strong outcome at the auction next Monday of two prime waterfront sites in Tai Po. "Transaction volumes in the secondary market jumped 50 per cent from a week earlier," said Patrick Chow Moon-kit, a research head at Ricacorp Properties, who attributed the surge to optimistic market forecasts that the first major land sale in two years could set a new record land price in Tai Po and boost home prices. Surveyors and property consultants expect the two adjacent 2.1-hectare sites in Pak Shek Kok to fetch between HK$10.4 billion and HK$12.4 billion. That would translate into an accommodation value of between HK$7,000 and HK$9,000 per square foot, assuming the construction on each site of low-density residential blocks offering a total gross floor area of 720,757 square feet. Paul Louie, the regional head of property research at investment house Nomura, forecast that winning bidders would need to price their projects at about HK$8,000 per square foot just to break even on their development costs. "And if owners at Robinson Road in Mid-Levels see the prospect of prices in Tai Po rising to this level, they are likely to immediately raise their asking prices to HK$9,000 per square foot. So the outcome of the land auction will be used as a new benchmark for the Hong Kong residential market, since we have had no big land sale since 2007," said Louie. Against this background, property agents said sales volumes and prices in the New Territories, particularly in Sha Tin and Tai Po, recorded faster growth than all other areas last week. "Transactions in Hong Lok Yuen in Tai Po are becoming more active, with 10 deals concluded last week, compared with just two to three per week before the announcement of the land auction," said Chow. In Hong Lok Yuen, prices surged 10 per cent to HK$7,200 per square foot from HK$6,500 per square foot in October - a month before the two sites were triggered for auction. Some investors were using the sharp rise in prices to "flip" their luxury flats for a quick profit, said Raymond Chan, the sales director at Midland Realty's Sha Tin and Tai Po branch, while others were buying into the market in the hope of making a quick return. One investor bought three flats at Royal Ascot in Sha Tin for a combined HK$30 million last week, he said, while another pocketed a gain of HK$3 million from reselling a 3,240 square foot house in Constellation Cove in Tai Po for HK$31 million last week after he bought the house last month. "It shows buyers are willing to pay a bigger premium even though sellers are aggressive in raising prices," said Chan. Adrian Wong, a sales director at Centaline Property Agency's New Territories East branch, said transaction volumes in luxury residential units in Tai Po were up 30 per cent this month compared with last month. Homes in Deerhill Bay, a completed luxury residential development close to the two sites up for auction, were sold for HK$6,500 per square foot and HK$8,000 per square foot, while a house in the development recently changed hands for HK$13,000 per square foot. "Some owners have revised their asking prices upwards by 5 per cent or withdrawn them awaiting the outcome of the land auction," said Wong. Meanwhile, some end-users are taking a wait-and-see attitude, as they are unsure whether prices will continue to rise. Ernest Kong, who has been looking to buy a flat for the last three years, leases a 700 sq ft unit in Tseung Kwan O for HK$8,000. "I had intended to buy a unit by the year-end, but prices rose faster than my expectations," he said. Kong is searching for a unit in the same area at a budget of HK$2.5 million and hopes that even if the two sites in Tai Po fetch stronger than expected prices, this will have little impact on his target market, since he is not looking for a luxury flat. Alice Lam, who lives in a 700 sq ft unit in Tai Po that is more than 20 years old, said her flat's value had so far not been affected by expectations of a positive outcome at next week's auction.

Hong Kong banks have been improving each quarter since the beginning of the year but whether any of them will slip into the red like last year depends on fourth-quarter results, according to the Hong Kong Monetary Authority. While the pre-tax operating profit of retail banks dropped 9.7 percent in the first three quarters compared with last year, HKMA deputy chief executive Choi Yiu-kwan holds that some banks will turn in "pretty good" profit growth this year. "The fourth quarter in 2008 was extremely awful" for banks, Choi said. "Looking at the entire year, banks' performance has been improving quarter by quarter this year." But he added some banks will do less well than others. "Some banks have shown better results so far in the fourth quarter compared with last year," he said, adding that only when key fourth-quarter results are in can it be seen whether any lender ends the year in the red. In February Choi had warned that the operating environment for banks was difficult. He said yesterday that lenders will have to retain quality liquidity in case of market unrest, as the Basel Committee on Banking Supervision noted that the interbank market in the West almost came to a halt after the financial crisis. Choi said the capital adequacy ratio of 16.6 percent at the end of September was "very healthy," adding that the committee believes Tier 1 capital should include more common equities and reserves as an effective loss buffer. "Only after the economy has recovered will the rule be effective. Also, banks in need will be given considerable time to raise money," Choi said. Asked about the Hong Kong dollar's recent slide, leading to capital outflows, Choi said the magnitude is not large. He urged the public to pay attention to a potential reversion in capital flow. "If there is a change in flow direction, some assets would be sold and their prices would fall."

From left to right, Teddy Chan, Peter Chan, Huang Jianxin, Lau Wai-keung and Yu Dong with their new movie Bodyguards and Assassins' cast on the set. Hong Kong director Teddy Chan set out to make a film costing 68 million HK dollars(8.8 million U.S. dollars) in 1999 and insisted one third of the money be used to create a set replicating old Hong Kong. He had no idea the film would take him 10 years to complete. "Bodyguards and Assassins" centers on eight Hong Kong heroes, including a beggar, a gambler and a vendor. They protected Dr Sun Yat-sen from an assassination attempt in 1906, when he was leading the movement to overthrow the Qing Dynasty (1644-1911). What Chan has experienced over the past decade is a tale no less dramatic than the film's storyline. He was struck by depression, the death of a family member and frequent frustrations in building the set. Even so, with the help of many others, he eventually completed the movie. "The shooting of the film was what it was all about - many anonymous heroes working for the same goal," he says. Three Hong Kong directors co-directed the film with Chan. Each of them led a team to ensure the film was shown on Dec 18, which producer Peter Chan had named long before as the release date. One week before Christmas and two weeks before the New Year is believed to be the optimum time to screen a movie in China. But Shanghai's spring rains delayed filming for a month. Additionally, the movie gathers more than 10 A-list actors from the mainland and Hong Kong, all of whom had full schedules. A desperate Teddy Chan called his friends to help out. Lau Wai-keung, director of the smash hit "Infernal Affairs", arrived in Shanghai the day after being called and immediately started directing a team. Producer Peter Chan and action designer Tung Wei directed the two other teams. Yu Dong, head of Polybona Film Distribution Company and one of the film's investors, wanted to credit Lau and the other co-directors as co-producers, but they refused, saying they just wanted to help out. "It's like the film is more than just a film, but something about Hong Kong filmmakers' self-esteem," Yu says. "It has become an event in the Hong Kong film industry. Everybody knows how hard (Teddy) Chan has worked to pursue this dream. So when we discovered it was once again being held up it was almost like an obligation to help out." When he first raised the idea 10 years ago, many thought Teddy Chan was crazy. The sum of $8.8 million was twice the revenue of the highest-grossing film that year in Hong Kong.

Marine police seized a large quantity of computer and electronics equipment in an anti-smuggling operation in Sai Kung late on Monday. The goods, worth about HK$12 million, were to be smuggled from Hong Kong to the mainland. Police seized the suspected smuggled products during an operation in Sai Kung on Monday night, a police spokesman said. At about 11.55pm on Monday, officers of the Marine Police and customs officers spotted eight men loading the smuggled goods from a lorry onto two speedboats using a wooden boardwalk near Wong Chuk Wan Village in Sai Kung. Marine police gave chase to the men after they boarded a speedboat and made their escape by sea. No one was arrested during the operation. A total of 69 boxes containing mobile phones, digital cameras, DVD recorders and a large quantity of computer parts were found on the lorry. The total value of the cargo was estimated at HK$12.3 million, the spokesman said. The case is now being followed up by the Customs and Excise Department.

The shopping area district of Causeway Bay was the scene of the latest acid attack which left six people injured on December 12. Police are offering a reward of HK$300,000 for information about the acid attack that took place in Causeway Bay on December 12, a spokesman said on Tuesday. The police offered the reward 10 days after the acid attack in Causeway Bay, where a plastic bottle full of a corrosive liquid had been thrown from a building at 541-543 Lockhart Road into a pedestrian area behind Sogo department store at about 10.07pm. Six people, including one man and five women aged from 18 to 27, were burnt in the attack. They were all taken to hospital. After the attack, police officers stepped up patrols along rooftops of unguarded buildings in the immediate area and around Causeway Bay. Police are still investigating the case and no one has been arrested so far. Councillors of Wan Chai district met with police to discuss where and when surveillance cameras should be set up within the district. “Police have classified the case as throwing corrosive fluid with intent to do grievous bodily harm and the case is still under active investigation by the Regional Crime Unit of Hong Kong Island. “We appeal to anyone who has information on the case to contact any police station, or the investigating officers on 6643 7068,” the spokesman said. He said if the public have any information about the case, they can also send details to General Post Office Box No 999, by fax on 2200 4518 or by e-mail to  The reward is valid for six months and will be paid either in full or pro-rata to any person giving information helping to the arrest and prosecution of the offenders.

The People's Bank of China has recruited former Hong Kong Monetary Authority chief Joseph Yam Chi-kwong - once the world's highest paid central banker - to be an executive vice-president of an advisory body to the central bank. It is not known whether Yam, who retired from the authority in October, will be paid for the job. Yam, who will make a 20-minute speech at a banking forum in Beijing today, is listed on the schedule as executive vice-president of the China Society for Finance and Banking. The society is a research institute and think tank under the People's Bank of China. The bank's governor, Zhou Xiaochuan, who will also speak at the forum, is the society's president. Yam, who had been head of the monetary authority since 1993 when it was established, earned HK$11.9 million last year, compared with US Federal Reserve chairman Ben Bernanke's US$191,300 (HK$1.48 million). Yam was known as the highest-paid central banker in the world. "Pay won't be a problem, since it's not difficult for the central government to match the lavish perks Yam got in Hong Kong," said He Fuqiang, a director at Beijing ZHY Money & Bond Market Investment Consulting Center. "On the other hand, Yam wouldn't be looking for money if he decided to take the job." He said the job might not necessarily be full time. Other retired senior officials from the central bank are also with the banking society. Wu Xiaoling, a former deputy PBOC governor, is now a vice-president of the institute. Yam, 61, becomes the first Hong Kong resident to take a senior post at the central bank. There had been speculation that he would join it as a senior adviser. In November, Yam said he would not consider taking up full-time work until March or April. Anthony Neoh, former Hong Kong Securities and Futures Commission (SFC) chairman, became a senior adviser for the China Securities Regulatory Commission (CSRC) in 1998, taking a symbolic one yuan a year in salary. Laura Cha Shih May-lung, former deputy chairman of the SFC, was vice-chairman of the CSRC between 2001 and 2004.

Hollywood-based Chinese director John Woo will receive a lifetime achievement award at next year's Venice International Film Festival, organizers announced on Monday. Woo will pick up the Golden Lion for Lifetime Achievement during the 67th Venice festival, which is scheduled to run in Venice from September 1-11, 2010. "The acknowledgment recognizes a filmmaker who in recent decades, with his revolutionary conception of staging and editing, has renewed action movies to the core," the festival's Website says. Born in 1946 and raised in Hong Kong, Woo is the director of such Hollywood hits as "Mission: Impossible 2" and "Face/Off". Last year, Woo returned to China with the ancient war epic "Red Cliff", released in two segments. The first installment opened in Chinese theaters in July 2008 and took only one month to set a new box-office record for domestic films. Woo is currently working on a new Chinese-language action movie called "Jianyu Jianghu" or literally, "the rain of swords in the martial-arts world," starring Michelle Yeoh, Jung Woo-Sung and Wang Xueqi.

China*: Beijing's efforts to cool the red-hot property sector have failed to discourage three Hong Kong-listed developers who forked out 25.5 billion yuan (HK$28.96 billion) for what is now the mainland's most expensive site. A consortium comprising Guangzhou R&F Properties (2777), Agile Property (3383) and Country Garden (2007) won the Guangzhou Asian Games Town site after 44 bids, beating off another group consisting of Poly Real Estate, China Vanke and China Overseas (0688). The selling price exceeded market expectations. Local experts did not expect it to be more than 20 billion yuan because of concerns over tightening property policies. The amount paid was 54.5 percent higher than the offer price of 16.5 billion yuan, which itself was higher than the price of any mainland site sold this year. The land measures 2.64 million square meters and can be developed into a residential and commercial complex of 4.38 million square meters. The mammoth site went for 5,822 yuan per square meter, far lower than the 36,480 yuan psm paid for a smaller plot of land in Shanghai in September. David Ng, head of regional property research at Royal Bank of Scotland, said once the development is completed it may sell for the equivalent of around 9,000 yuan psm, similar to other projects in the region. He noted that mainland developers are increasing their land banks despite ongoing official restrictions. It was the first site put on the block after Beijing announced last Thursday that developers would have to either make land transfer payments within one year of signing a contract or pay a 50 percent downpayment in advance in return for a two-year window. As the central bank has declined to comment on reports whether the downpayment requirement for second or multiple home purchases would be increased, Vanke chairman Wang Shi said the mainland property bubble will eventually burst. Wang said it is natural for property bubbles to develop after banks loaned 10 trillion yuan this year. "There is as yet no property bubble in second- and third-tier cities, but I am very worried the bubble will spread to these cities," Wang was quoted by the Oriental Morning Post as saying. He said property prices in Beijing and Shanghai are following a trend similar to Japan's before that country's bubble burst.

China's GDP per capita is expected to climb to 4,000 U.S. dollars by the end of next year, according to the 2010 social blue book issued Monday. According to Li Peilin, director of the Sociology Institute of the Chinese Academy of Social Sciences, which compiled the book, GDP per capita has been growing rapidly in recent years. "From 1978 to 2000, GDP per capita in China increased from $400 to $800, which took 20 years. When we set the goal in 2000 to build up a well-off society by 2020, the forecast was to double the GDP per capita within 20 years, jumping to more than $3,000 in 2020," he said. The report, Society of China: Analysis and Forecast 2010, said rapid economic growth, decline in the new population and appreciation of the renminbi contributed to the acceleration of the growth rate. The GDP per capita refers to the average value of goods produced per person in a given country. GDP per capita exceeded $1,000 in 2003 and jumped to $3,000 in 2008, so it will approach $4,000 next year, achieving the target ahead of time. "A $4,000 GDP per capita means an increased strength of domestic capital, which will help the employment of migrant workers and college students," Chen Yan, chief writer at Economy magazine, told the Global Times Monday. The blue book also pointed out that the annual income of urban residents could increase by 10 percent this year but rural residents' income will only increase by 6 percent to 7 percent. "The income of people in rural areas reduced under the influence of financial crisis in 2009. The income gap between urban and rural residents will widen," Li said. During the first three quarters, the employment situation remained stable, with 8.15 million more people in urban areas getting jobs. The number is expected to reach 11 million this year. There are 9.15 million registered unemployed urban residents, with an unemployment rate of 4.3 percent. Thanks to government efforts, college graduates' employment rate reached 74 percent by September 1 but the average salary for graduates fell. However, nearly 83 percent of the population said they were optimistic about the employment situation in 2010 and the confidence index jumped by 1.3 percent compared with last year, according to a survey conducted recently by Beijing-based China Mainland Marketing Research Company.

Chinese traditional custom: Taste dumplings on Winter Solstice - The Winter Solstice Festival, a traditional day for eating dumplings in China, arrived on Tuesday. People around China will eat various flavored dumplings on this day.

Workers make dumplings at a supermarket in Yinchuan City, capital of northwest China's Ningxia Hui Autonomous Region, on December 21. Dumplings are traditional delicacy in north China for Winter Solstice Day, which means the season's coldest days are imminent. People traditionally also go tomb sweeping on Winter Solstice Day, which falls on December 22 this year.

Technicians repair a damaged subway train after a power system breakdown and a subsequent collision of two trains in Shanghai December 22, 2009. A pivotal subway line in Shanghai was shut down early Tuesday for system failure and a subsequent collision of two trains.

It was the most expensive matchmaking party ever held in Beijing. There were 21 single billionaires, 22 single women and an admission fee of 100,000 yuan. Love has a price. But this much? That is the central question of a heated debate taking place among Chinese netizens on whether these moneyed romantics have gone too far. The party took place on Sunday night in Beijing Jun Wang Fu, a luxury hotel near Chaoyang Park known for its Qing Dynasty-style decor. The 22 single women were selected in several ways. Some were registered members of a matchmaking website called Golden Bachelor, which organized the party. Others won a beauty pageant sponsored by Golden Bachelor. The remainder were scouted by Golden Bachelor employees, known as "love hunters," from Chinese cities. For the last two categories, tickets were free. "Every girl has the right to pursue happiness," said a 22-year-old surnamed Dai who is studying at an arts university in Nanjing. "I just want to avoid the problems I may be forced to face before falling in love." "I came to this party in Beijing for free," she said. "I do feel precious about this chance to meet many successful and mature men." A bachelor surnamed Zhang said the 100,000 yuan price tag is worth it, if it leads to true love. The 40-year-old graduate from a university in the United Kingdom owns a financial software firm in Shanghai. "When we are branded as billionaires or powerful men, we are forced to stay in very high societal positions, which makes it difficult to find true love," Zhang told the Beijing Morning Post. Golden Bachelor promised free membership for a year if the Chinese singletons failed to find love at the party. "It's not the first time we organized such a high-end matchmaking party, but it is the first time we have held such a party in Beijing," said Xiao Pu, market director of the Shanghai-based Golden Bachelor. Half of the 21 bachelors who attended the party were from Beijing while others came from different provinces, including Guangdong, said Xiao. She estimates 80 percent of those who attended the matchmaking party found a date. The youngest bachelor was 26 and the oldest 46, said Xiao. Most work in financial investment fields and drive luxury cars, like a Ferrari or a Porsche, she said. A number of the single women graduated from art school, according to Xiao. "Most young ladies are very concerned about the party," said Xiao. "Some of them arrived at the hotel one day in advance and hired cosmeticians to do makeup for them." Aside from trying to lure in men with their beauty, the bachelorettes also tried to capture lonely men's hearts in a Golden Bachelor talent showcase. Some sang. Others danced. A few cooked Chinese food. And then there was the so-called "wedding dress show". All 22 of the women decked themselves out in big white gowns and then paraded in front of the bachelors. Those who were not invited, say they are disgusted by the party. "The girls are materialistic," said Guan Mengyun, a 30-year-old bachelor living in Beijing. "Marriage should not be determined by money." More than a thousand comments have been posted on Chinese web portal The majority are critical. "Such marriage can't last for a lifetime," said a netizen identified as "ZG-BDSMSO". "If the man goes bankrupt one day, the woman will probably leave him."

SAVING ENERGY: Workers install LED lights on the horn-shaped Sunny Valleys building in Shanghai on December 4, 2009. Energy-saving equipment has been deployed during the construction of the Shanghai Expo buildings. After Shanghai's success in co-hosting an environmentally friendly Olympics last year with Beijing, China's eastern metropolis is setting another high bar of ecological responsibility for its 2010 World Expo. As the stage for next year's Expo, the city is preparing to impress with an improved environment and 5.28-square-km garden that features green pavilions. The Shanghai Municipal Government recently made a promise that air quality over the course of the six-month Expo will be rated as good 95 percent of the time.

A spat between London and Beijing over claims that China had “hijacked” the Copenhagen summit was given further fuel on Tuesday. Claims by Britain’s climate change minister Ed Miliband that Beijing had blocked a deal at the Copenhagen summit were aimed at “escaping obligations and fomenting discord” among developing countries, the foreign ministry said. Ministry spokeswoman Jiang Yu told state news agency Xinhua that Beijing refuted claims made by Miliband in an article published in Monday’s Guardian newspaper. Miliband wrote that the mainland vetoed attempts to give legal force to the accord reached at the UN climate summit in the Danish capital. It also blocked an agreement on reductions in global emissions, he said. “We did not get an agreement on 50 per cent reductions in global emissions by 2050 or on 80 per cent reductions by developed countries,” Miliband wrote. “Both were vetoed by China, despite the support of a coalition of developed [nations] and the vast majority of developing countries.” He added: “The last two weeks at times have presented a farcical picture to the public. We cannot again allow negotiations on real points of substance to be hijacked in this way.” But the foreign ministry in Beijing slammed the comments made “by an individual British politician.” “Such an attack was made in order to shirk the obligations of developed countries to their developing counterparts and [to] foment discord among developing countries,” Xinhua reported Jiang as saying. “But the attempt was doomed to fail.” “We urge them to correct mistakes, fulfill their obligations to developing countries in an earnest way, and stay away from activities that hinder the international community’s co-operation in coping with climate change,” she said. “China had made arduous efforts to push forward the progress of the talks, and contributed to safeguarding the rights of developing countries, which was obvious to all and undoubtable,” she said. The conference had “yielded fruit, reached broad consensus and won support from developing nations” she added The summit set a commitment to limit global warming to two degrees Celsius, but did not spell out the important global emissions targets for 2020 or 2050 that are the key to holding down temperatures. It also promised US$100 billion for poor nations that risk bearing the brunt of the global warming fallout, but has not given a fixed plan to make payments.

Cambodian King Norodom Sihamoni (R) meets with visiting Chinese Vice President Xi Jinping in Phnom Penh, capital of Cambodia, Dec. 22, 2009. Chinese Vice President Xi Jinping met Cambodian King Norodom Sihamoni here on Tuesday to discuss bilateral relations. Xi said China attached great importance to bilateral relations with Cambodia and was willing to enhance cooperation with the country, in a bid to push the Sino-Cambodia comprehensive cooperative partnership forward. Cambodia had always firmly supported China on issues relating to its core and major interests, and was a good neighbor, friend and partner to China, Xi said. It was the Chinese and Cambodian peoples' wish to further cement and develop the friendly cooperative relations, which served the fundamental interests of both countries, and was conducive to regional peace, stability and prosperity, Xi noted. Sihamoni said China and Cambodia currently enjoyed a good relationship and had close cooperation in many fields. He believed Xi's visit would further promote friendship and cooperation between the two nations.

Chairman of Taiwan's Straits Exchange Foundation Chiang Pin-kung, right, shakes hands with his counterpart Chen Yunlin, chairman of China's Association for Relations Across the Taiwan Strait, on the second day of cross strait negotiations in Taichung, Taiwan on Tuesday, Chen and his Taiwanese hosts are expected to sign three minor economic accords, and discuss a free-trade deal. Top envoys from Taiwan and China signed joint agreements on Tuesday as they met behind rings of barbed wire shielding them from anti-Beijing protesters who set ablaze a Chinese flag. The talks between Chen Yunlin, the mainland’s top Taiwan negotiator, and Taiwanese counterpart Chiang Pin-kung, have triggered demonstrations on the island by people angry about closer ties with their giant neighbor. The deals signed Tuesday – on food quarantine, industrial standards and employment of fishermen --bring to 12 the number of pacts inked by the two former arch-foes since China-friendly President Ma Ying-jeou assumed power in Taiwan in May last year. “The trend is irreversible,” Chen said during the talks in the central Taiwan city of Taichung. “Over the past year, we’ve accomplished a lot of work that we hadn’t been able to achieve in the previous 10, 20, or even 60 years.” A handful of anti-China protesters had gathered outside the hotel hosting the talks, voicing concern about a planned trade pact they argued would draw Taiwan closer to China, with no obvious benefits in return. One of them burned a Chinese flag, in full view of police deployed in large numbers to prevent a repeat of events during Chen’s last visit in late last year, when violent clashes erupted with demonstrators. “Taiwan has never been a part of China,” said protester Tsai Ting-kui. “We want the global community to understand the Taiwan people don’t support the course chosen by Ma Ying-jeou.” Taiwan, a society of 23 million, has developed into a vibrant democracy since it split from China at the end of a civil war in 1949. But it is now deeply divided over how to handle ties with the mainland, which looms as an ever larger presence across a narrow strait and has never given up its hope of reunification, even if it must go to war to achieve it. President Ma is pushing a sweeping trade pact with China which he says will help create jobs on the recession-hit island. However, the opposition warns that the pact, on the agenda in Taichung, will contribute to eroding the de facto independence the island has established over the last 60 years, and say it will not help employment. “Of course some people have voiced their concerns about the possible negative impacts the agreement may have on Taiwan’s economy,” Chen said. The two sides had planned to sign altogether four agreements Tuesday, but one of them, regarding double taxation, was dropped off the agenda at the last moment. “We feel we would need more time to iron out technical issues,” said Chiang, the Taiwanese negotiator. Since Chen’s arrival in Taichung Monday, he has been a lightning rod for various groups with a grievance against China, including Tibetan activists. About 500 members of the Falungong spiritual movement, which China has banned as an “evil cult” for the past decade, staged an overnight sit-in near the talks venue. “We want our voice to be heard by Chen and taken back to the mainland. Chen is the representative of the evil Chinese communist party,” said Theresa Chu, a spokeswoman for the Taiwanese Falungong. “The Taiwanese authorities have not raised China’s human rights issues. At this point, we feel very disappointed.” In an unusual gesture Monday, Chen said he respected Taiwan people’s right to protest his presence, following a day which saw several tens of thousands take to the streets, but his critics were not impressed. “They have cracked down on human rights lawyers. They don’t even bother about their own people, so how can they pretend they’ll give special favourable treatment to the people of Taiwan? I think that’s just a lie,” said Tsai.

A file picture showing a poster advertising the Hollywood blockbuster 2012 at a theatre in Beijing. Overnight on Monday, World Trade Organization rejected mainland’s appeal against a ruling that orders Beijing to free up distribution of US films, music and print. The central Ministry of Commerce on Tuesday said it regretted the loss of Beijing's appeal against a World Trade Organization ruling that its import monopolies violated trade commitments. Beijing had appealed the WTO ruling against import monopolies on books, film and audio entertainment, saying that it should have the right to control imports that might harm public morals. A WTO panel overnight on Monday upheld a ruling in a case brought by Washington that mainland was obstructing trade by forcing foreign suppliers to distribute movies, music and books through state-owned companies. The ruling allowed Beijing to continue reviewing products for objectionable content. Its decision cannot be appealed. The US complaint had argued that mainland should not impose monopolies on imports of products that are authorized for sale, or are widely available in pirated form. “After China entered the WTO, market entrance for published material has been in compliance with its WTO commitment,” read the online statement from commerce ministry spokesman Yao Jian. “Foreign published materials, films and audiovisual equipment have flowed smoothly into the Chinese market. “China regrets the appeal panel ruling. China believes that cultural goods combine commercial and cultural value, and should be managed in a different way than other products.” On Monday, US Trade Representative Ron Kirk called the panel’s ruling a “big win” for the United States and US filmmakers, recording companies and book publishers frustrated by widespread piracy in mainland and their difficulty selling legitimate products. “We expect China to respond promptly to these findings and bring its measures into compliance,” he said. Some industry executives regarded mainland’s appeal as a way to gain experience with the WTO appeal process, in line with its increased use of WTO complaints to keep foreign markets open to mainland goods. Beijing on Monday made an initial effort to bring a WTO case against US safeguard duties on tyre exports from mainland, but was blocked by the US. Currently, legal cultural or entertainment imports into mainland are limited to a few state-owned firms. If mainland opens import rights, that would benefit private domestic distributors and independent retailers, as well as foreign firms hoping to gain access to the mainland market. Beijing is expected to set up a more formal import approval system for cultural products, to replace its current practice of informally communicating bans to the monopoly importers, before allowing new entrants to import. The WTO ruling did not address mainland’s quota of 20 foreign films per year, one of Hollywood’s main gripes.

The local authorities in Beijing raised the price of water on Tuesday to help fight a worsening water shortage after nine years of drought. The authorities said the water price for residential use will go up eight per cent, an increase that follows a jump of almost 50 per cent in the price of water for non-residential use last month, according to the state-run Xinhua News Agency. “The gap between water supply and demand is quite obvious,” said a statement posted on Monday on the Beijing Municipal Commission of Development and Reform. It said Beijing has seen below average precipitation for nine out of the past 10 years. Work is already taking place on a massive project to divert billions of tons of water from its central, southern and western regions through pipes and canals to Beijing and other fast-growing northern cities. Experts, however, say even that will not be enough to meet water needs and will cause environmental damage. Authorities in mid-October started resettling 330,000 people to make way for the project, which will move water along three routes. The estimated US$62 billion water diversion scheme could be nearly three times as expensive as the country’s Three Gorges Dam, the world’s largest hydroelectric project. The central route, due for completion by 2014, is expected to supply about a quarter of Beijing’s water. Xinhua said the per capita water supply in Beijing is only 300 cubic meters, though the internationally recognised warning level is 1,000, according to government data. Xinhua said other cities that have already raised water prices or plan to do so include Shanghai, Tianjin, Shenyang, Guangzhou, Nanjing and Chongqing. Of those, Tianjin and Shenyang are in the north.

Mainland should give a chunk of its bulging foreign currency reserves to its commercial banks so that they have more financing power to support firms going abroad, the head of the country’s largest bank said on Tuesday. Jiang Jianqing, chairman of the Industrial and Commercial Bank of China (SEHK: 1398), said that borrowers of the foreign exchange could repay the loans in yuan, thereby mopping up some of the cash sloshing about the domestic economy. “If we could make a small step forward, Chinese companies would take a big step in going abroad,” he told a forum in Beijing organized by a research institution under the central bank. His comments suggested that a debate could be heating up about how to make best use of mainland's US$2.3 trillion in forex reserves, which have started to swell again in recent months on the back of the country’s trade surplus and capital inflows. Jiang did not say what the state-owned banks would give in return for being allocated a bigger portion of mainland’s forex reserves, the world’s largest such stockpile. The country’s sovereign wealth fund is already the biggest shareholder in the country’s major banks via its domestic investment unit, having amassed these stakes when it capitalized the banks earlier this decade. An unprecedented lending surge over the past year has left mainland banks looking for ways to replenish their capital cushions, with a regulator saying this week that they might collectively need to raise as much as 500 billion yuan (HK$567 billion). Jiang did not say whether his proposal was intended as a new round of forex-backed re-capitalization for the banks. But in calling for a bigger piece of the country’s foreign currency reserves, commercial banks might find themselves competing with other state-backed agencies. Local media have reported that China Investment Corp, the country’s sovereign wealth fund which was founded with US$200 billion of the forex holdings in 2007, has asked for an additional US$200 billion. And the State Administration of Foreign Exchange, which oversees the forex reserves, recently made a high-profile hire of a fund manager from US bond investor Pimco, a move seen as a sign that it planned to become more aggressive itself in investing the reserves.

Sinochem, mainland’s No 4 oil firm, cut its proposed bid for Australian agrochemicals maker Nufarm by 7.7 per cent to US$2.3 billion on Tuesday, risking losing its prey and putting its global expansion plans in doubt. The revised offer values Nufarm at A$12 a share, down from A$13, and comes after state-owned Sinochem failed to meet an initial deadline for a binding agreement. The two companies had extended talks to Wednesday. Sinochem, which is seeking a wider footprint and would gain from Nufarm’s global distribution network that includes Asia, South America and Europe, made its initial offer in September, but a series of profit downgrades at Nufarm has clouded the process. Trading in Nufarm shares, 11 per cent-owned by managing director Doug Rathbone, was halted to help the firm consider the lower offer and seek clarification on the terms. Some analysts said Nufarm would accept the lower offer given the length of time the company has been in play. “My feeling is he would probably take the A$12 offer. I think he [Rathbone] is more likely to accept because this is the second takeover offer,” said Tom Elliott, a fund manager with MM&E Capital, which does not own Nufarm shares. “He’s clearly a seller and has indicated as much. As a result, he probably would have no choice but to accept the offer on the table.” Nufarm chairman Kerry Hoggard said the company was disappointed Sinochem had not been able to proceed with an acquisition on the basis that was previously agreed, adding Nufarm’s board would not back a proposal that undervalues the business. “The business already had several profit downgrades over the past 12 months and I guess during the period of due diligence, things have gone slightly worse than better,” Elliott noted. Beijing-based Sinochem did not return calls seeking comment. Nufarm shares never traded above Sinochem’s initial offer price, reflecting the market’s concerns about the deal, which is also subject to regulatory approvals. “We’re disappointed they’ve reduced it, but we will wait and see what the company recommends,” said Ross Barker, managing director of Nufarm shareholder Australian Foundation Investment Co. “We like our investment in Nufarm and we are not very keen sellers.” Earlier this month, Nufarm said it would not accept anything less than A$13 a share. In the short term, Nufarm shares could slide to as low as A$8.50 each if the deal falls apart, analysts say. And the firm’s credit rating could also be under threat, pushing up its funding costs. But takeover speculation is unlikely to die down, with some analysts expecting farm chemicals makers MA Industries and United Phosphorous to cast an eye over Nufarm. Nufarm last traded at A$10.56. “Rathbone has been working pretty hard to get a buyer and the two Chinese companies are probably his best chances,” Elliott added. In 2007, Nufarm was approached by China National Chemical Corp (ChemChina), which led a A$3 billion approach with two US private equity firms, but they failed to come up with a formal offer. Nufarm is being advised by UBS, while Royal Bank of Scotland is advising Sinochem.

A child holds a placard saying "Do not burn garbage, we need to recycle" in a protest against the building of a garbage incineration plant in Guangzhou, capital of Guangdong province, on Dec 20. In an attempt to stop people from protesting garbage incinerators, officials here are maintaining that no death and cancer cases are directly related to burning trash in this way, officials said. "It is a rumor that the number of death or cancer cases rised after the garbage incinerator in Likeng was put into operation three years ago," said Su Zequn, vice-mayor of Guangzhou. Su was responding to opposition from the public to the building of two more planned incinerators in the city's Panyu and Huadu districts. "We have to let the public be aware that burning trash in advanced and environmentally friendly facilities is an ideal option for the city to deal with the rising amount of garbage," Su said. Local residents' resistance has succeeded in blocking the government's plan to build a major garbage incinerator in this southern city's densely populated Panyu district. In a public meeting with at least 56 resident representatives on Sunday, Tan Yinghua, the district's Party secretary, said the garbage project planned in Huijiang village had been suspended due to a wide range of protests from residents nearby in the process of environmental assessment. "Experts have stopped writing the environmental assessment report and all bidding processes have been halted," Tan said. "We need to draw up a new comprehensive plan for garbage treatment." Local authorities said earlier that the Panyu project would not be started until 2012 after a thorough debate among experts, government officials and residents and environmental assessments. "All decisions would be made after thorough discussion with residents," Tan said. More than 1,000 local residents protested at the Guangzhou government office buildings to oppose construction of the Panyu project, which was initiated early in 2002. Earlier reports said villagers near the Likeng plant, the country's largest garbage treatment project of its kind, confirmed more than 50 deaths from cancer after its operation.

Dec 23, 2009

Hong Kong*: Relatively healthy tax revenue is likely to help Hong Kong emerge from the downturn with a smaller budget deficit than feared, with one accounting firm even expecting a surplus. But Chief Executive Donald Tsang Yam-kuen was not so optimistic, saying the government's budget this year would be in the red. "There will definitely be a budget deficit this year," Tsang said in a television interview. "I'm not as optimistic as some people are about next year's outlook." Hong Kong relies on demand from US consumers and businesses for its products and services, and they suffered when the economy succumbed to the financial meltdown sparked by the credit crunch. About 10 per cent of the working population in America is jobless and there are concerns about how sustainable a recovery will be once the US government stops spending billions of dollars to stimulate economic activity. The government expects the full-year economic contraction to be 3.3 per cent in Hong Kong after third-quarter data showed a tapering of the year-on-year decline in gross domestic product to 2.4 per cent. The official projection is a deficit of HK$39.9 billion for the current fiscal year, mainly due to shrinking profits tax. But Tim Lui Tim-leung, a tax partner with accounting firm PriceWaterhouseCoopers, said there was a potential upside in the revenue from profits and salaries tax as well as the stamp duty on stock and property transactions. The firm expects a budget surplus of HK$5.6 billion. Tax revenue is now from income earned in 2008, which was not that poor a year, Lui said. Stamp duties on stock and property transactions should reach HK$40 billion, up from the official estimate of HK$25 billion, thanks to the recent market rally. Land sales and premiums could top HK$25 billion, up from the government's projected HK$16.6 billion. Lui said there could be some fluctuation because it was unknown when the government recorded some revenue, such as the more than HK$9 billion in land premiums payable by Henderson Land Development (SEHK: 0012). The fiscal year is from April 1 to March 31. KPMG tax partner Jennifer Wong How-yee estimated similar numbers on stamp duty and land revenue but did not expect the government to record any increase in profits and salaries taxes. Wong said a reduced budget deficit of about HK$10 billion was more likely this year.

Choi Yiu-kwan, the outgoing deputy chief executive of the HKMA, urges lenders to be vigilant on risk management. The banking environment will remain difficult next year even though financial markets are stabilising, says Choi Yiu-kwan, the outgoing deputy chief executive of the Hong Kong Monetary Authority. Choi, who will retire at the end of this month, expects retail banks to post pre-tax profit growth this year, saying quarterly profits were improving, compared with a sharp decline in the fourth quarter of last year. Banking confidence was hit late last year after the collapse of Lehman Brothers Holdings in September. Banks' loan-loss provisions were not as severe as expected and while asset quality had deteriorated slightly, it was still better than the levels seen in previous crises, Choi said yesterday. "Some banks will notch up profit growth and others will find their profits under pressure," he said. But Choi was still cautious on the banking outlook for next year, saying it was difficult to tell when central banks would withdraw "quantitative easing strategies", which have increased liquidity to help banks. He also warned that the withdrawal of quantitative easing in the future would push interest rates higher. More than HK$640 billion flowed into Hong Kong between October last year and last month, and some has found its way into the stock and property markets. However, Choi warned that those inflows could reverse, triggering volatility. A weakening Hong Kong dollar has raised fears that a massive capital outflow will cause asset markets to slump. Choi said the reason the local currency had weakened was that initial public offering proceeds had been swapped into other currencies and some corporates also had year-end demand for US dollars, putting pressure on the local unit. However, he urged banks to be vigilant in risk management, monitor the possible impact of a sudden fund outflow or interest rate volatility and maintain adequate levels of capital and liquidity. He also warned investors to be aware of the uncertain market environment when making investment decisions and said homebuyers should consider the impact on their loan repayments if interest rates rose to normal levels. Choi said some lenders might need to raise capital to comply with new international rules. The Basel Committee, an international standard-setting body, is expected to ask banks to raise the quality of their tier-1 capital base, which measures a bank's ability to absorb sudden losses. "I do not think it will present a major problem to banks in Hong Kong," he said, adding that the banks maintained high capital adequacy ratios. Choi joined the HKMA in 1993 after working for the Office of the Commissioner of Banking since 1974. He will be succeeded by Arthur Yuen on January 1.

Luxury retailer Emperor Watch & Jewellery pays monthly rental of HK$1.4 million for the 1,212 sqft shop at 6-8 Canton Road. A high-street shop in Tsim Sha Tsui has been sold for HK$695,544 (US$90,333) per square foot, setting a new record in the city. Emperor International Holdings paid HK$843 (US$109.5 million) million for the 1,212 square foot shop at 6-8 Canton Road. "The acquisition was prompted by the investment value of the location and a basic need for the shop," said a source close to the company. The unit is leased to luxury retailer Emperor Watch & Jewellery, a sister company of Emperor International, at a monthly rental of HK$1.4 million. Both companies are controlled by Albert Yeung Sau-shing's privately run Emperor Group. The deal broke the record made by Ricky Yeung, a brother of Albert Yeung, who bought a shop at Star House, also in Tsim Sha Tsui, for HK$60 million or HK$450,000 per square foot in May. "Canton Road is a prime location for local shoppers, mainland and overseas tourists," the source said. "The west of the street is either controlled by Wharf (Holdings) (SEHK: 0004) or Sino Land. "The developer feels it is a good opportunity to establish a foothold there." Emperor International also owns the 800 sqft shop at 4 Canton Road, which is also leased to Emperor Watch. According to Lawrence Wong at property agent Sheraton Valuers, the original owner - a local enterprise - bought 6 Canton Road in 1986 for HK$5.3 million. No 8 was bought for HK$32.3 million in 1994. "It is unknown if this is now the most expensive shop in the world, but obviously it's a record in the city," said Wong. With such a price tag, the rental yield was as low as about 2 per cent, he said. "It is seen as expensive at this moment, but there is rental growth potential in the area," the source close to the buyer said. Agents said retail tenants were paying high rents for shops because of the high turnover of business on the street. For example, an operator of a money-changing business from a 95 sqft store in Cannon Street pays a Hong Kong record rent of HK$1,789 per square foot a month. That amounts to a monthly rental of HK$169,955. Capital values of retail shops on Canton Road have risen about 20 per cent this year. This is above the average growth of 14.8 per cent, according to international property consultant Jones Lang LaSalle. In a survey released this month, property consultancy CB Richard Ellis said Hong Kong ranked as the world's second-most expensive retail location, with average rents at the end of the third quarter this year at US$976 per square foot a year. New York remained the most expensive with average rents of US$1,640 per square foot a year. According to Jones Lang LaSalle, the second half saw a restoration of consumer confidence, triggered by a gradual economic recovery and the wealth effect brought by rallies in the stock and property markets. The tourism market has also been improving with the year-on-year growth of arrivals on the rise for three consecutive months. The property consultant was confident about the retail property market outlook. The gradual economic recovery will continue to help improve labor market conditions and further strengthen consumer confidence. Arrivals of long-haul visitors might remain low, but the refined policies of the mainland's individual visitation scheme would ensure sustained growth in tourist arrivals for Hong Kong, it said.

The fake 100 yuan note (bottom) and a genuine note. A counterfeit banknote smaller than a normal note was withdrawn from a Bank of China cash machine at University station last week. Yesterday a businessman surnamed Yu said one of the 100 yuan (HK$114) banknotes, among 15 he withdrew from the automated teller machine (ATM), was a suspected fake, smaller, thinner and smoother compared with a real one. "Previously I thought it was very safe to withdraw money from cash machines, but now I have lost confidence in the yuan withdrawn from ATMs, and found citizens' rights are not protected in such a case," Yu said. Frequently travelling to the mainland, Yu has withdrawn yuan from cash machines in Hong Kong before his departure in the past three years. This is the first time he has found counterfeit yuan in one. He withdrew the banknotes at a machine at the station on his way to Lo Wu at 9am last Thursday, Yu said. Three hours afterwards, Yu arrived in Dongguan, Guangzhou, and gave one of the notes to a driver. "The driver told me that the 100 yuan note was a fake one, and I realised that it was physically smaller," Yu said. Yu decided to keep the 100 yuan notes he had remaining and the ATM receipt, and reported to Hong Kong police at Lo Wu station when he returned to Hong Kong last Friday. An officer told him that the suspected counterfeit note would be confiscated, so instead Yu took it to BOC (SEHK: 3988). However, bank staff in Kwai Tsing Road branch suggested only that Yu report the case to police and could not guarantee that the bank would compensate him. A BOC spokesman sqaid yesterday he had no comment on the individual case, but said the bank reported to the Commercial Crime Bureau in suspected counterfeit-note cases, according to standard procedures. BOC has 470 cash machines in the city, and 420 provide yuan. BOC machines do not provide cash-deposit-taking services in the city. BOC stressed that all banknotes put in cash machines went through strict examination procedures. Police figures revealed that 3,071 counterfeit 100 yuan notes were seized in the first half of this year, and 8,569 counterfeit 100 yuan notes were seized last year.

Seal copyright deal or lose stars, labels warn TVB - Broadcaster risks losing monopoly on Canto-pop scene. Television Broadcasts (SEHK: 0511)' long-time monopoly on the local pop scene is at risk of collapse as four major record labels representing some 40 pop singers - including Jacky Cheung Hok-yau and Eason Chan Yik-shun - threaten to bar the stars from appearing on TVB shows unless the broadcaster settles a copyright fees dispute with them before Christmas. The labels - Universal Music Hong Kong (which includes Cinepoly, Go East and What's Music), Sony Music, Warner Music Hong Kong and EMI Hong Kong - revealed their plan yesterday, detailing the dispute between TVB and the Hong Kong Recording Industry Alliance. The HKRIA was formed last year by the labels after they quit the International Federation of Phonographic Industry Hong Kong (IFPI). The dispute arose after the HKRIA decided to calculate copyright fees in a way different from that used in the IFPI days. An industry veteran said TVB used to pay less than HK$5 million a year in copyright fees, but the HKRIA is asking for more than double that under the new calculation. HKRIA chief executive officer Ronnay Botejue said the association began negotiating with TVB on the fees a year ago but TVB could not agree on how to calculate them. Botejue said the HKRIA proposed charging copyright fees based on TVB's advertising revenue. According to international standards, he said, the charge could be between 0.13 per cent and 1.2 per cent of advertising revenue, and 0.6 per cent was a medium percentage adopted in Southeast Asia. Botejue refused to comment on whether the HKRIA was asking for too much compared with the IFPI days, but he said the value of music had been underestimated according to many foreign court cases. With the implementation of digital broadcasting, TVB was using more music on its new high-definition channels, he said. The proposed annual licence would cover unlimited use of a range of music formats. Initially, the HKRIA planned to charge 0.45 per cent of TVB's advertising revenue in 2008 - meaning HK$10.8 million from HK$2.4 billion in advertising. But the negotiation did not move forward. On November 30, the HKRIA proposed lowering the percentage to 0.12 per cent for 2009 (HK$2.9 million), with the percentage to increase each year - to 0.2 per cent for 2010 (HK$4.8 million), 0.3 per cent for 2011 (HK$7.2 million) and 0.4 per cent for 2012 (HK$9.6 million). "We hope to at least settle the music licence for 2009 and 2010 first," said Botejue, adding that the association had also been in talks with other broadcasters, from terrestrial to pay TV and radio, and the negotiations had been positive. Botejue said a letter was sent to TVB last week but the association had not received a reply. "We hope to get an answer by December 24," he said. "But TVB can refer the case to the copyright tribunal if they think our proposed fees are not acceptable." Top management of the four labels said their singers would not appear on TVB until a deal was finalised, and that they were exploring opportunities for stars to appear on other stations, including TVB arch rival ATV, as well as Cable TV and Now TV. Many pop singers have contracts with TVB restricting their appearances on other TV stations. Singers tied to the four labels were missing from Saturday's third season of Jade Solid Gold's Best Selection. "Our artists simply can't show up on TVB before an agreement is finalised," Universal Music senior vice-president Duncan Wong Kim-to said. His label's singers would probably not appear on the Jade Solid Gold Top 10 Music Awards in January even if winners. "If they are going only to receive an award and cannot perform, it's not fair to TVB either." TVB's production division controller (non-drama production), Ho Lai-chuen, said the HKRIA letter had been passed to lawyers and that as long as singers did not breach their contracts with TVB, they could appear on other TV stations. ATV said it welcomed any collaboration with singers from the four labels.

A training course that helps Hong Kong tour guides prepare for a qualifying exam on the mainland will be launched here, after only a handful of candidates passed the first two tests. The qualification exam, which began this year under the fifth supplement of the Closer Economic Partnership Arrangement signed last year, is held twice a year, and allows Hongkongers who pass to operate as tour guides in Guangdong. Only one in 11 Hong Kong candidates who sat for the exam in March passed. In September, only three - including two who retook the exam - out of 28 Hongkongers passed. This works out to a pass rate of about 10 per cent for Hong Kong candidates, compared to the overall average pass rate of 30 per cent. "It's a difficult test, and Hong Kong people failed it because they were not prepared for it," James Zheng Yongyi, deputy director of the Guangdong Provincial Tourism Service Centre, said. "They don't understand the examination, which asks a lot of questions about the history of some places ... and they have to answer the questions in Putonghua." He said those who passed the Guangdong exam could seek to qualify for work in other regions by taking local tests. Those who planned to lead groups of foreign visitors - which paid better than catering to Putonghua-speaking tourists - could also take a language test. The preparatory course will run over 12 lessons, starting next month. It is jointly organized by the centre, the Travel Industry Council and the Vocational Training Centre. Enrolment for the HK$4,000 course starts today. Dr Leung Hip-hung, the senior assistant executive director of the Vocational Training Centre, said instructors from the mainland would teach the course. Michael Wu Siu-ieng, chairman of the Hong Kong Association of Travel Agents, said Hong Kong tour guides would boost their career by getting the qualification and would also provide better services for tourists.

Shanghai aims to launch an international board next year for foreign companies, which could boost the number of listings the bourse attracts. Ernst & Young says Shanghai will edge ahead of Hong Kong in initial public offerings next year. The consulting firm says HK$370 billion in funds will be raised by listings on the Hong Kong stock exchange next year but the Shanghai exchange is expected to draw in at least HK$380 billion. Hong Kong investors will see more mainland listings, especially from the retail, consumer products and industrial sectors, and larger deals will come from the property and financial sectors. Shanghai would also attract financial and industrial listing candidates, the Ernst & Young report said. Agricultural Bank of China is to raise up to 200 billion yuan (HK$227.1 billion) in an initial share sale next year, according to Li Fuan, the head of the banking innovation department at the China Banking Regulatory Commission, who was quoted in a mainland newspaper. The Shanghai exchange could outperform the Hong Kong market because the mainland has had ample liquidity since the China Securities Regulatory Commission lifted a ban on listings in March. Ernst & Young also said corporate earnings on the mainland had been less affected by the global financial crisis, allowing companies to raise more capital. Mainland newspapers have already suggested that Shanghai, which aims to launch an international board next year for foreign companies, will overtake Hong Kong next year as a listing market. Beijing said earlier this year it would permit foreign firms to list in Shanghai and use the yuan for trade settlement on a trial basis. Paul Go, a managing partner at Ernst & Young, said investors could expect more mainland companies to raise funds in Hong Kong and on the mainland simultaneously. He also expected more mainland developers to seek listings in Hong Kong. But he said the Cayman Islands might still be the top choice for incorporation, given that the Hong Kong exchange had just added British Virgin Islands, where many mainland companies are registered, as an acceptable overseas jurisdiction. The Hong Kong exchange is the winner globally this year, with HK$246 billion raised through 64 flotations after fund-raising activities picked up in the past quarter. The nine new listings this year on the Shanghai exchange raised 118 billion yuan, and globally the bourse was third after the New York Stock Exchange. The largest offering this year was Banco Santander's Brazilian unit, listed both on the New York exchange and the Sao Paulo bourse, which raised US$7.52 billion. Mainland companies continue to do well when it comes to raising capital through flotations. The second-largest offering globally this year was China State Construction Engineering Corp, raising US$7.35 billion from a listing in Shanghai.

Finance Committee chairwoman Emily Lau Wai-hing has denied she conspired with pan-democrats to delay the approval of the HK$66.9 billion funding for the Guangzhou-Hong Kong- Shenzhen Express Link at a key meeting last week. Responding to media questions yesterday, Lau said she had no idea that pan-democrats would suddenly table several motions causing the meeting to be adjourned, leaving no time to discuss the funding. "I have not conspired with them. I wasn't notified before the meeting and I didn't attend the pan-democrats meeting," Lau said. So far, the government has not called for a special Finance Committee session before the next scheduled meeting on January 8. Civic Party lawmaker Ronny Tong Ka-wah and League of Social Democrats' "Long Hair" Leung Kwok-hung were among those who moved the motions. "No one from the government has lodged any complaint so far," Lau said. "After the meeting, a lawmaker from the pro- establishment camp even came to me and said I have done my job properly. I believe it means I did it in a fair manner." Although she admitted the funding delay has become a cause for public concern, Lau said the move by the pan-democrats was allowed under the chamber's rules of procedure. Pan-democrats had challenged the position of pro-establishment lawmakers Raymond Ho Chung- tai and Abraham Shek Lai-him, both accused of having a conflict of interest over the multi-billion dollar project. Asked if lawmakers need to declare their interest before voting, Lau said they should decide after seeking legal advice. Lawmakers are allowed to vote if they only have indirect monetary gain from a project and have declared their interest. Lau warned that legislators have to bear the consequences if they failed to declare and their vote is later challenged by legal means.

Hong Kong’s central bank said on Monday it was not worried about an outflow of capital, attributing outflows this month to repatriation of money raised in stock market listings and year-end demand for the US dollar. Fund outflows have pushed the Hong Kong dollar to its lowest level since March. “The capital raised from recent IPOs was channelled out of Hong Kong,” Y K Choi, deputy chief executive of the Hong Kong Monetary Authority, told a media briefing. Year-end demand by companies for US dollars was also putting downward pressure on the Hong Kong dollar, Choi said. The currency has weakened this month after trading at the top of its pegged trading band to the US dollar in recent months. On Friday, it hit 7.7585 to the US dollar in New York trade, its lowest level since March 5 although it is still in the upper half of its trading band which is fixed at 7.75 to 7.85 to the US dollar. The currency hit the topside of its band repeatedly this year, forcing massive intervention by the HKMA to keep the trading band intact, as the city attracted a record HK$640 billion in fund inflows between October last year and November this year. Much of that money was headed to the stock and property markets on the view that Hong Kong interest rates, tied to US rates because of the city’s currency peg with the US dollar, would stay very low for some time and because the city was expected to benefit from mainland’s economic rebound.

Las Vegas Sands, the world’s No 2 casino operator by market capitalisation, said it could complete all its planned five projects on Macau’s Cotai strip within five years, hugely expanding its presence in the world’s biggest gambling market. The bullish forecast, characteristic of chief executive officer Sheldon Adelson, took some analysts by surprise, as shares in Sands China, the company’s Macau unit, fell 4.1 per cent. The firm – which raised US$2.5 billion from the listing of its Macau unit, Sands China, in late November – plans to build five properties on the Cotai strip, a swathe of reclaimed land some Macau developers have touted as the next Las Vegas strip. Those properties, including two that are halfway through construction, would complement two existing casinos in Macau, one of which is the Venetian Macau, the world’s largest casino. “We could finish all the properties easily within five years,” Adelson said in an interview on CNBC. “We could have a total of 14 brands.” But Aaron Fischer, CLSA’s head of Asian consumer and gaming, said he was surprised by Adelson’s bullish forecast. “It’s quite aggressive,” he said. “Five years is a bit earlier than I thought, but it’s a good thing.” Sands has said it expects to open phase one of the two halfway-completed projects, sites five and six, on the Cotai strip in June 2011. The firm was forced to suspend construction of the projects, which are estimated to cost about US$2.6 billion, due to the global financial crisis. The firm also plans to develop three more parcels of land on the Cotai strip. Sands has said it expects its Cotai strip developments to contain over 20,000 hotel rooms, over 1.6 million square feet of meetings and convention space, and over 2 million square feet of retail malls, upon completion. Sands competes in Macau with Wynn Macau, Galaxy Entertainment Group (SEHK: 0027), SJM Holdings, Melco Crown Entertainment and MGM Mirage. Separately, Adelson said the firm’s US$5.5 billion Singapore casino resort, which was originally set to open by the end of this year but later got pushed to end-March next year, could open around the new timeframe. “We are on track till the end of March,” he said. “However, we have some rain delays … If we are a little late, it’ll be weeks, not months.” The Singapore project, the Marina Bay Sands, which was originally expected to cost around US$3.2 billion, has also suffered massive cost overruns.

CHP Controller Dr Thomas Tsang watches a young child receive a free swine flu vaccination at Western Student Health Service Centre on Monday. Five high-risk groups of citizens were eligible to receive free swine flu vaccination starting from Monday – but there was only a moderate response to the program, the Centre for Health Protection (CHP) said on Monday. After visiting Chai Wan Health Centre to observe the turn-out from high-risk groups to the human swine flu vaccination programme, controller of the Centre for Health Protection Thomas Tsang Ho-fai appealed to parents to bring their children in to be vaccinated. “The number is still below what we can handle. The maximum capacity at our student health centres is about 6,000 per day." He said the centre had received only about 400 bookings from parents by Monday morning. “But we see signs that the number of bookings are increasing, so we hope that this trend will continue,” Tsang said. About two million people belonging to five high-risk groups – healthcare workers, chronic patients and pregnant women, children aged six months to six years, the elderly, pig farmers and slaughterhouse workers – have been urged to receive free swine flu shots from government clinics. Yuen Kwok-yung, Head of Microbiology at the University of Hong Kong, on Monday called on the high-risk people to be vaccinated. “Seasonal influenza virus causes upper-respiratory viral infections, but human swine flu sufferers can have both upper- and lower-respiratory viral infections – and the effects can be very serious. “In some cases, patients' lung tissue can be seriously damaged, while others can suffer acute myocarditis and blood vessel blockages,” he told local media. Yuen said the best way to prevent human swine flu infections was to receive the vaccination, and not to rely on antivirus drugs that might not be effective. People in lower risk groups who have joined the human swine influenza vaccination subsidy scheme can receive vaccinations starting next Monday. The government will subsidize each dose by HK$129.

China*: Chinese President Hu Jintao has called on the country's enterprises to recruit more talents and strengthen research and innovation in order to facilitate the transition from "made in China" to "created in China." Hu made the remarks during a two-day inspection to Zhuhai, a coastal city in China's southern economic hub of Guangdong Province, from Sunday to Monday. During his visits to the Kingsoft Corporation Limited, a leading software company in China, and a research institute of the Gree Electric Appliances Inc., Hu said the two companies' business success was indispensable from the country's support and their own research and innovation. Chinese enterprises should recruit more talents and hone their research and development capabilities in order to facilitate the transition from "made in China" to "created in China," Hu said. He also urged members of the Communist Party of China (CPC) to play a leading role in the enterprises' technical innovation.

The fraught climate change talks in Copenhagen have shown that the concept of a "G2" that would see China and the United States ruling global affairs in co-operation is far from reality, analysts say. The accord reached last week in Denmark after marathon negotiations has been widely criticized as a failure, and much of that ire has been directed at China and the US, the world's two largest carbon polluters. The global powers sparred often at the talks, failing to agree on several key issues, including how to verify that emerging economies such as China fulfil their pledges to crack down on greenhouse gas emissions. "If there is proof times four that there is no G2, it's the Copenhagen conference," Jean-Pierre Cabestan, professor of political science at Hong Kong Baptist University, said. "Nothing can be done without the others." Shi Yinhong, a political expert at Renmin University, agreed. "I think that on the one hand, China's position and importance have increased much more, and consultation between the US and China was quite important," he said. "But on the other hand, if you talk about G2 in Copenhagen, you can see G2 confrontation on some very important issues, so I don't think that the G2 is a correct concept." The idea of a special US-China relationship has been floated in American academic circles since 2006. But analysts said the Copenhagen talks had highlighted the fact that the two sides remain far apart on a number of issues. Russell Leigh Moses, a Beijing-based analyst, said the verification of emissions cuts was a key sticking point in Sino-US relations. "There's still anxiety that the United States is out to contain China," he said. "It also has to do with domestic consequences - how do you tell local governments that not only are you going to be overseen by Beijing in terms of economic growth ... but you're also going to be overseen by other countries?" Beyond that, the Copenhagen summit also illustrated that China was still trying to work out what role it wanted to play in the world, Moses said. "Do you want to be a G2, a G8, do you want to be the only superpower in the world?" For Shi, the conflicts signalled the beginning of a difficult period for relations between the two nations. "If we consider the Sino-American conflicts in Copenhagen, the potential new arms sales to Taiwan and [US President Barack] Obama's potential meeting with the Dalai Lama, relations will have more difficulties in the next few months." Commercial ties have been frayed in recent months, with the capitals trading accusations of unfair practices. Another potential irritant could be the trial this week of dissident Liu Xiaobo on subversion charges - Washington has already urged Beijing to free him and end harassment of political prisoners. "Relations will remain difficult," Cabestan said. "Obama's visit to China was a bit of a waste of time - it ... masked important differences."

Top mainland envoy Chen Yunlin (second right) is greeted by Chiang Pin-kung, Straits Exchange Foundation chairman, at the start of a visit to Taiwan in Taichung yesterday during which the two sides will discuss a free-trade pact. Their wives embrace alongside.

China will treat talks on a binding global climate change pact next year as a struggle over the “right to develop”, an official in Beijing said, signaling more contentious deal-making will follow the Copenhagen summit. The rancorous meeting ended on Saturday with a bare-boned agreement that “noted” a broad accord struck at the last moment between the US and the big developing countries – China, India, Brazil and South Africa. China, the world’s biggest emitter of greenhouse gases from human activities and its biggest developing economy, was at the heart of the talks, and bared some its growing global assertiveness in the grinding late-night sessions. Talks on a binding treaty are to extend throughout next year. A Chinese Foreign Ministry official, Yi Xianliang, indicated in comments published on Monday that his government anticipated more strife over how to mesh its economic and emissions growth with a binding pact to cut greenhouse gas levels. “The diplomatic and political wrangling over climate change that is opening up will be focused on the right to develop and space to develop,” Yi said, in comments cited by the official People’s Daily. Yi said the negotiations that culminated in Copenhagen showed “conflicts were increasingly sharp and the crux of disputes was steadily involving each country’s core interests”. Since the summit, some Chinese officials have offered an upbeat view of the results, with its chief negotiator, Xie Zhenhua, saying he was “happy” with the deal. But China faces disputes on how its domestic vows to curb greenhouse-gas growth may be brought under international oversight, and how much financial and technological help it and other big developing countries will get from wealthy economies. “The agreement reached was better than total collapse,” said Wang Ke, a climate change policy expert at Renmin University who was in Copenhagen to observe the talks. “But China and other developing counties will feel the negotiations to come will be equally tough as we get into the details... The funding commitments from the developed countries are still vague, and technology transfer issues were barely mentioned [in the Copenhagen accord].” The accord held out the prospect of US$100 billion in annual aid from 2020 for developing nations but did not specify where this money would come from. China has said it should have the formal right to such aid, even if the most vulnerable countries are first in line to receive it. British Environment Minister Ed Miliband, in an article published on Monday, accused China and other developing nations of blocking agreement on a potential pact, including a goal to cut global greenhouse gas emissions in half by 2050. Rich nations also say China’s efforts to slow greenhouse gas growth, such as closing dirty power plants, should be subject to international verification to assure wary voters and lawmakers that Beijing is keeping its word. China has said such checks would violate its sovereignty and UN-treaty rules saying developing countries do not shoulder the internationally binding emissions targets that developed countries must accept. Yi said wealthy nations had failed to spell out their commitments to help poor countries cope with global warming. “With the international financial crisis and other factors getting mixed in, the developed countries retreated from their stances and positions, and then sought to shift the blame to developing countries, especially the big emerging powers,” the People’s Daily quoted him as saying.

Chairman of Taiwan's Straits Exchange Foundation, Chiang Pin-kung, left, shakes hands with his counterpart Chen Yunlin, chairman of China's Association for Relations Across the Taiwan Strait, as he arrives for five days of negotiations in Taichung, central Taiwan, on Monday. China's senior envoy to Taiwan told his hosts on Monday that Beijing wants to "move down the road of peace," a day after tens of thousands of Taiwanese demonstrators blasted the government for its pro-Beijing policies. Chen Yunlin’s statement in the central city of Taichung came amid heavy security, with police preventing several hundred protesters from besieging his hotel. The protesters view Chen as the spearhead for the Beijing’s proclaimed policy of uniting Taiwan with the mainland. Chen arrived in Taichung on Monday to discuss a wide-ranging free-trade agreement with Taiwanese officials, part of Taiwanese President Ma Ying-jeou’s push to link the island’s economy ever closer to the mainland. Four minor economic accords are also on the agenda. Since assuming office in May last year, Ma has eased tensions across the 160-kilometre-wide Taiwan Strait to their lowest level in 60 years, turning his back on predecessor Chen Shui-Bian’s pro-independence policies amid a welter of business-boosting initiatives. They include launching regular air and sea links between the sides and ending across-the-board restrictions on Chinese investment in Taiwan. Shortly after his arrival, Chen acknowledged the progress the sides had already made, and said he hopes that further gains can be made. “History has proved and will prove that the two sides of the strait are marching ahead on the right path,” he said. “We want to move down the road of peace.” Chen spoke a day after tens of thousands of opposition demonstrators marched through the streets of Taichung to protest Ma’s policies. The main opposition Democratic Progressive Party (DPP) believes the president’s approach sets the stage for an eventual Chinese takeover of the island – a charge Ma vehemently denies. The DPP says Ma’s intended trade deal – formally known as the Economic Cooperation Framework Agreement, or ECFA – will flood the island with cheap Chinese products, prompting massive job losses. “Our president has turned blind to the possibility that jobs will be lost” after signing the ECFA with China, DPP Chairwoman Tsai Ing-wen told protesters on Sunday. As recently as five months ago, most of the Taiwanese public accepted Ma’s argument that closer economic ties would aid Taiwanese prosperity (SEHK: 0803) – even allowing for the global economic downturn. But Ma’s mishandling of the response to a devastating typhoon in August began to dent his popularity, as did more recent errors of judgment involving secret negotiations on the removal of a ban on some US beef imports. Earlier this month, Ma’s Nationalists lead the DPP by only two percentage points in local elections – a far cry from the 17-point margin that Ma enjoyed over his DPP rival in the presidential poll last year.

Chinese Vice Premier Li Keqiang (R) and visiting French Prime Minister Francois Fillon attend the launch of Taishan nuclear power plant in Beijing, capital of China, Dec. 21, 2009. Li Keqiang and Fillon commenced the construction of Taishan nuclear power plant here Monday, a Sino-French joint project in south China's Guangdong Province.

Lawson, Japan’s second-largest convenience store chain, said on Monday it aims to boost its store numbers in mainland by 10 times in five to 10 years as it seeks growth outside its saturated home market. “We assume there will be about 30,000 convenience stores in China in five to 10 years. We want to be a player with a 10 per cent share,” Takeshi Niinami, the company’s president said at a media reception. The company, which currently has about 300 outlets in Shanghai, said it plans to expand into other areas of mainland, such as the country’s inland and northeastern regions. Lawson and its rivals are planning to speed their expansion in mainland and other Asian markets as they face weak growth prospects at home, where more than 40,000 convenience stores are vying for survival as the population ages. Lawson has about 9,600 stores in Japan. Seven & I Holdings, which runs the industry leading Seven-Eleven chain, has said it plans to increase the number of its convenience stores in mainland by more than five times to 500 locations over the next three years. Lawson’s Niinami said the company is also considering opening stores in Vietnam and India, where it has already been approached by local businesses for possible partnerships.

Japan’s exports rose by the most in seven years in November as mainland led growth in demand from Asia, reducing worries that the Japanese economy will fall into another recession next year. Strong growth in mainland and the rest of Asia is set to continue to support exports next year, economists say, and that will likely be enough to compensate for weak domestic demand. “I’d say the recovery in exports so far this year has been close to the best scenario we had thought of at the beginning of the year,” said Junko Nishioka, chief economist at RBS Securities in Tokyo. “Given that exports are growing solidly despite the yen’s rise last month, we don’t need to be overly pessimistic about growth. The economy will perhaps slow down early next year but a recession is unlikely.” Exports rose 4.9 per cent in November from the previous month, seasonally adjusted figures showed, increasing for the fourth straight month to the best level since November 2002. The pace of decline for exports compared to the same month a year earlier also slowed substantially from October. Compared with a year ago, Japan’s exports fell 6.2 per cent in November, less than the median market forecast for a 6.5 per cent decline and slower than a 23.2 per cent annual decline the previous month, the data showed. Exports to mainland rose 7.8 per cent from a year earlier, up for the first time in 14 months, with such products as chemical compounds, auto parts and resins contributing to growth. As a result, exports to Asia, which account for more than half of Japan’s total exports, rose 4.7 per cent from a year earlier, also posting the first annual rise since September last year.

Jane Sieberts, visiting from Los Angeles on business, examines a Fendi handbag at Bloomingdale's in New York. The luxury Italian fashion house wants to turn all 15 stores in China into upscale versions of its high-end flagship in Shanghai's Henglong Square. Luxury Italian fashion house Fendi recently opened a newly refurbished flagship store in Shanghai rendered in black and honey travertine marble juxtaposed with hand-carved fiberglass panels in white. Now the fashion house wants to turn all 15 of its stores in China into luxurious copies of its flagship store. LVMH purchased Fendi in 2001 and, after a few rough years, the Roman fashion house has a new design concept and a renewed contract for head designer Karl Lagerfeld. Since taking the top job at Fendi in 2003, CEO Michael Burke has brought clarity and confidence to the formerly family-run business. Designer Karl Lagerfeld, who had threatened to leave the house when his contract expired, said that Burke "got ready in six months what the others couldn't do in four years". Burke said he wants to transform Fendi's 15 stores in China into bigger ones versus the idea of opening more stores. "We will invest more in turning old stores into flagship-style stores in the next five years rather than opening up new stores, because you need to keep Fendi really in the high end. The Fendi model will be more luxurious, limited and exclusive," he said. "China is extremely complicated, but everything is possible," Burke said. Burke said he is proud that Fendi was the first internationally known luxury house to stage a fashion show on the Great Wall in the autumn of 2007. "You didn't know how difficult it would be, and if you had known how difficult it was, you would never have done that," he said. "Karl said we wouldn't be able to do it, but we made it. China is a place where you can dream," he said.

China National Petroleum Corp (CNPC), the country's biggest oil and gas producer, announced on Monday it has signed an agreement with Myanmar's Energy Ministry to receive exclusive rights to build and operate the China-Myanmar crude oil pipeline. The deal has granted operating concession of the pipeline to the CNPC controlled South-East Asia Crude Oil Pipeline Ltd., said CNPC. The pipeline company will also enjoy tax concessions and customs clearance rights, said a report on the CNPC website. CNPC to build, run China-Myanmar oil pipeline CNPC begins work on oil port in Myanmar. The agreement stipulates the Myanmar government should guarantee the company's ownership and exclusive operating rights, as well as the safety of the pipeline. In June, CNPC and the Myanmar government signed a memorandum of understanding, agreeing that CNPC would be responsible for the design, construction, and operation of the pipeline, the statement said. The 771-kilometer pipeline, extending from Maday island, in western Myanmar, to Ruili, in the southwestern Chinese province of Yunnan, is expected to carry 12 million tonnes of oil a year initially. CNPC in late October started construction of a port in western Myanmar as part of the China-Myanmar Crude Pipeline project, said the company.

Chinese Premier Wen Jiabao (5th L) holds talks with visiting French Prime Minister Francois Fillon (4th R) at the Great Hall of the People in Beijing, capital of China, Dec. 21, 2009. China and France signed Monday two agreements on aviation cooperation during French Prime Minister Francois Fillon's China visit. According to the deals, the aerospace giant CFM International is to build an assembly line in China to supply engines to the Commercial Aircraft Corporation of China for the country's home-grown jetliner C919. The two countries altogether signed 12 deals on bilateral cooperation after talks between Chinese Premier Wen Jiabao and Fillon. The other deals covered cooperation in such areas as nuclear energy utilization, culture and water resource utilization.

Photo taken on Dec. 13, 2009 shows the White House Theater in Branson, Missouri, the United States. China Heaven Creation officially took over the White House Theater on Monday.

Dec 22, 2009

Hong Kong*: HK baby boom takes off as the economy slides - A clearer picture is emerging of what some people were up to late last year, at the height of the global financial turmoil. And it wasn't job hunting. The delivery of several hundred more babies in July, August and September from a year ago indicates that more couples were busy in the bedroom as stock markets crashed, banks failed and companies folded at the end of last year. Data compiled by the Immigration Department points to evidence of a baby boom this year despite the recession. The number of babies born has grown in recent years, from 65,626 in 2006 to 70,875 in 2007 and 78,822 last year. This is the largest number since 1983, when about 83,300 babies were born. Although the recent rise is skewed by increasing numbers of mainland women giving birth in Hong Kong, excluding these births still makes last year the busiest year for maternity wards since 2000. Figures show Hong Kong's population rose from 6,900,700 in 2006 to 7,018,636 as of July last year. The Census and Statistics Department says the crude birth rate - the number of births per 1,000 people - rose from seven in 2003 to 11.3 last year. Birth registration data for the first nine months of this year reached 59,459, about 6 per cent more than the 56,079 births recorded in the same period last year, and expectations are for this trend to continue. Year on year, 94 more births were registered in July's total of 6,650, August saw an increase of 346 to 6,607 and 7,259 births were registered in September, up 104. There is usually a slight discrepancy between the number of babies born in a period and the corresponding number of registered births because mothers are allowed to register their babies up to 42 days after they are born. The baby boom this year was accompanied by an increase in the number of marriages, with 33,445 couples tying the knot in the first nine months, compared with 31,882 a year ago, according to immigration data.

Universal suffrage was not included in the declaration China signed with Britain 25 years ago because there was no pressure from the Hong Kong people at the time to do so, the British consul general says. But the provisions laid down in the Basic Law for universal suffrage "very strongly respond" to the people's aspirations, Andrew Seaton said. The Joint Declaration reached its 25th year last Saturday, with key diplomats hailing Hong Kong's current prosperity (SEHK: 0803, announcements, news) as a testament to what can be achieved through diplomacy. But the declaration has also come under scrutiny in recent months in the debate over political reform. Politicians are looking for a definitive answer as to the legal instrument that mandates the election of the Legislative Council through universal suffrage. Seaton said the declaration did not contain any provisions for universal suffrage but states that the chief executive shall be "selected by election or through consultations" while the legislature "shall be constituted by elections". Seaton said that, nevertheless, the Basic Law now properly reflected the people's aspirations: "Without doubt, one of the ways in which Hong Kong has evolved is in much greater popular pressure for an adherence to a much greater democratic process. It seems to me that the prospect of democracy has come much more strongly onto the map in Hong Kong in the last 25 years," he said. "The provisions laid down in the Basic Law for universal suffrage very strongly respond to aspirations of people in Hong Kong and the sense in the community that it is ready to move on to a universal suffrage system. "But 25 years ago, I'm not sure that there was quite that same public pressure for that. I don't think there was the same pressure in society at that point," he said. Seaton said the anniversary was a good opportunity to reflect on how much Hong Kong and the mainland had developed. "If those involved in the negotiating and the signing of the Joint Declaration could have looked forward to their handiwork, and seen Hong Kong as it is now, they would rightly feel that that was a very, very positive outcome." Sir Richard Evans, the British ambassador in Beijing between 1984 and 1988, had no doubts that the Joint Declaration would be judged favourably. "It has worked operationally in almost all respects. It has removed a shadow from Sino-British relations. And it continues to show the world what diplomacy can do," he said. David Wilson, then the head of the British side of the working group engaged in drafting the 1984 Sino-British Joint Declaration, who went on to become a Hong Kong governor, hailed it as a "far-sighted resolution of a unique historical problem", that had "stood the test of time remarkably well".

Cargo throughput at Hong Kong International Airport climbed to 344,000 tons last month - up 16.4 percent year-on-year - as both exports and imports continued to improve. Exports posted year-on-year growth of 23 percent last month, while imports rose 21 percent. But transshipments dropped 6 percent, with traffic to and from Europe, Taiwan, and Australasia showing double-digit declines. Passenger volume and aircraft movements fell by 0.4 percent and 5.2 percent to 3.8 million and 23,515, respectively, last month. Transfer/transit traffic registered a decrease of 12 percent, a reflection of the growing number of Taiwanese passengers taking scheduled direct flights when traveling across the Taiwan Strait. Despite these declines, Stanley Hui Hon-chung, chief executive of the Airport Authority Hong Kong, said the numbers still indicated progress has been made. "Stronger demand for air travel and better market sentiment are driving airlines to reinstate their previously suspended capacity and routes," Hui said. "We have also seen new airlines launching new services and routes to Hong Kong, such as Air Pacific in early December, following the signing of the air services agreement between Hong Kong and Fiji." For the first 11 months, the airport handled 42 million passengers and three million tonnes of cargo, down 5.8 percent and 10.8 percent from the same period a year ago.

HSBC Holdings (0005) is eyeing floating a 5 billion (HK$62.68 billion) share offer in Shanghai as early as in March, according to a British newspaper. An unidentified bank official confirmed the London-based lender is planning to list in Shanghai, but gave no details, The Observer reported. HSBC is said to have appointed two mainland investment banks - China CITIC Securities, and China International Capital Corp - to advise it on the listing, and is set to add Goldman Sachs. It is widely believed the Shanghai international board will become operational in the first half of next year, when overseas corporations may start listing in the A-share market. The London newspaper reported the China Securities Regulatory Commission will change its laws in January to allow foreign and non-mainland companies to list in Shanghai. Peter Wong Tung-shun, HSBC general manager and Asia Pacific chief executive-to-be, told Sing Tao Daily, sister publication of The Standard that preparation work for the Shanghai listing has been ongoing, but the final timetable will depend on the regulator's decision. Wong said the flotation will help boost the bank's image and investor base. HSBC sees Greater China as a key market, and Wong said it will put extra effort into catching up with mainland rivals in various forms of internet banking. It aims to open 20 branches and sub- branches in the mainland next year, raising the number of outlets to at least 115. Its rural bank network will reach Chongqing and Dalian this year, and three to four more branches are expected nationwide in 2010. On the global front, the British bank will sell HSBC Insurance Brokers Ltd, a risk intermediary and risk advisory services provider, for 135 million to New York-based Marsh & McLennan Companies, Reuters reported. The acquisition is expected to close in the first quarter of next year. Marsh & McLennan, the second largest global insurance broker by assets, said it has also formed a partnership with HSBC that will give HIBL preferred access to provide insurance broking and risk management services to the bank's corporate and private clients.

Tycoon Li Ka-shing's grandson arrived in Hong Kong with his mother, the first time seven-month-old Ethan Li Cheung-chi has been in the city. Actress-singer Isabella Leong Lok-sze and her San Francisco-born son travelled to Hong Kong on Richard Li Tzar-kai's private plane three weeks ago, the Chinese- language press has reported. Leong's publicist, Michelle Loo, confirmed they were in the city. Richard Li said: "Thank you all for the regards. We would like to wish everyone peace and happiness in this festive season. I'm hoping you would let us have our peace and privacy as well." A photo of Leong and Ethan, said to have been taken after they arrived, was also received. It was reported that the mother and son had wanted to travel to Hong Kong in July to celebrate Li Ka-shing's 81st birthday, but cancelled because of concerns over swine flu. Leong is from a single-parent family and grew up in Macau. She reportedly met Richard Li during the filming of The Mummy: Tomb of the Dragon Emperor, while Li was visiting a friend, Leong's co-star Michelle Yeoh Choo Kheng, on set. Last year, Leong began a legal battle with her former management company, Emperor Entertainment Group, to whom she became contracted when she was 12.

The Chinachem Group is quitting its Tsim Sha Tsui headquarters on Wednesday, leaving behind the place where a romance between late billionaire Nina Wang Kung Yu-sum and fung shui master Tony Chan Chun-chuen allegedly began. And Wang's younger brother, Dr Kung Yan-sum, who has been leading a fight against Chan's claims to the Chinachem fortune, is closing his clinic near Tsuen Wan on Christmas Eve, according to a notice posted there recently. It is uncertain whether Kung, who could not be reached yesterday, is doing this to devote more time to the company's business. Chinachem, a privately held property group, is moving to its complex, the Nina Tower in Tsuen Wan, which former group chairwoman Wang built as a landmark for the city. The Chinachem camp has said that the giant Nina Tower is "the proof of love" between Wang and her husband, Teddy Wang Teh-huei, the company founder, who was kidnapped in 1990 and later declared legally dead. The two moves on the side of the Chinachem camp come before the judgment in the probate case is expected to be handed down, probably after Christmas. The Chinachem Golden Plaza, at Mody Road, Tsim Sha Tsui, the group's headquarters since 1988, is where Chan said he started a relationship with Wang, whose will is the centre of the dispute. Chan based his claim on a supposed 15-year affair with Wang and a purported 2006 will leaving him the Chinachem empire, but the Chinachem Charitable Foundation, led by Kung, said that will was a forgery or an invalid "fung shui will". According to Chan's evidence, the Tsim Sha Tsui office was where he had secret rendezvous with Wang, gave her massages, took millions of HK dollars as presents, and where he collected the 2006 will. Chan declined to comment yesterday. A notice in lifts inside the Tsim Sha Tsui building reads: "The group will temporarily suspend service on Dec 23 and resume it at Nina Tower 2 on Dec 28, occupying the 35th to 38th floors." The new complex has double the space of the Tsim Sha Tsui block. It holds offices, a mall and a hotel. The taller, 88-storey tower, originally called the Teddy Tower, is linked to a shorter one by a footbridge. They are now simply called Nina Tower 1 and Nina Tower 2. Reports have said that the two top floors of the Tsim Sha Tsui building, where Wang used to live and her husband used to work, would be left as is and would not be leased out.

Casino tycoon Stanley Ho Hung-sun Sunday made his first outing since his admission to hospital four months ago, attending a ceremony for the 10th anniversary of Macau's handover, where he had a five-minute chat with President Hu Jintao. Dressed in a suit and wearing a mask over his mouth, the white-haired 88-year-old, in a wheelchair, was escorted by his family and medical staff as he left the Hong Kong Sanatorium and Hospital in Happy Valley to take a ferry ride to Macau at around 6am. Accompanied by son Lawrence Ho Yau-lung and his third and fourth wives - Chan Un Chan (also known as Chan Yuen-chun) and Angela Leong On-kei, Ho arrived at the Macau Dome before the 10am ceremony. Ho and his family left at noon to return to the Hong Kong hospital. During the ceremony, Leong and medical staff constantly talked to Ho and he listened attentively when Hu made his speech. His wife, Leong, carefully removed a scarf covering his hands as he applauded Hu's speech. After the ceremony, Hu had a chat with Ho, who is undergoing speech therapy, a person close to the family said. Hu praised the casino magnate as patriotic. Ho replied that Macau's future development relied on support from the motherland. Speaking to reporters in Hong Kong after the Macau trip, Ho's other wife Chan said Hu also wished her husband a speedy recovery. "His health is quite good and he was very happy and excited to meet President Hu today. They shook hands and chatted for about five minutes. The president wished him to get well soon," Chan said. "We have to push him [in a wheelchair], as he cannot walk for too long. The trip might be a bit tiring for him. We are still not sure when he can go home and it all depends on the doctors' decisions. Meeting the president might give him some encouragement to recover soon." In August, the casino tycoon was admitted to the intensive care unit after surgery to remove a blood clot on the brain. Ho was first admitted to Hong Kong Adventist Hospital in Happy Valley where he had operations. Ho's presence at yesterday's ceremony was vital, as he has a finger in almost every business pie in Macau and has, at times, accounted for half of its economy. His empire includes 19 casinos, the two tallest Macau buildings, horse and dog-racing tracks, a jetfoil fleet, a helicopter service, five hotels and department stores, all in the 29 sq km former Portuguese enclave.

The highway connecting Tsing Yi and Sha Tin is now fully open to traffic, after Stonecutters Bridge entered service yesterday.The HK$3.7 billion bridge, an alternative route cutting journey times between the airport and the northeastern New Territories, was opened together with Nam Wan Tunnel at Tsing Yi. Both are toll-free. The opening of the bridge and tunnel, forming the section that spans the Rambler Channel separating Tsing Yi and western Kowloon, completes the Tsing Sha Highway. Another section of the highway, linking Sha Tin to Cheung Sha Wan in western Kowloon, was opened in March. That section comprises three tunnels and altogether charges drivers HK$8 for all types of vehicles. The Tsing Sha Highway was built to provide more options for travelling around Sha Tin, western Kowloon and Lantau. With the bridge in service, the journey time between Sha Tin and the airport is expected to be reduced to 35 minutes. Four Citybus airport routes, which start from Island South, Island East and Kowloon East, are expected to save five to 10 minutes by taking the bridge instead of another highway via Kwai Chung. The world's second-longest cable-stayed bridge, it ran HK$1 billion over budget. Yiu Ka-chun, vice-chairman of Sha Tin District Council's traffic and transport committee, said there were only two bus routes now using the toll-charging tunnels of the highway. "Few Sha Tin residents benefit from the new highway," Yiu said. "It seems private car and truck drivers are the main users. Bus companies should be encouraged to use the tunnels." The new highway will also provide a more direct route between the airport and container terminals Nos 8 and 9 at Stonecutters Island and Tsing Yi. Philip Pearce, managing director for Greater China of industrial- property group Goodman Asia, said demand and rental rates for warehouse and distribution centres in Tsing Yi would rise significantly. He said a new warehouse built there by his company had attracted two logistics operators to pre-lease half of the space.

The joint venture aims to expand the Monitise Mobile Money service to the mainland by 2011 in partnership with banks and China Mobile. Privately held First Eastern Investment Group is setting up a joint venture with British firm Monitise, whose backers include Standard Chartered Bank and Visa, to offer secure mobile banking and payment services across the Asia-Pacific. Hong Kong-based First Eastern, which has invested in more than 100 projects on the mainland and in various markets in Asia, is negotiating with most of the city's commercial banks to roll out the Monitise Mobile Money network by the first half of next year, according to chairman Victor Chu. "This will be a fantastic growth opportunity," said Chu, describing Monitise as "a proven mobile banking and payments platform" with more than 1.3 million registered customers in Britain and the United States. After opening in Hong Kong, the plan is to expand the service to the mainland by 2011. Chu said the country's biggest banks and China Mobile (SEHK: 0941, announcements, news) , the world's largest mobile-telephone network operator, with more than 500 million subscribers, would be targeted as key partners. London-listed Monitise, which allows customers of multiple banks and cellular network operators to conduct banking and payment transactions directly from their mobile phones, is supported by partners such as Visa, Standard Chartered, HSBC (SEHK: 0005s), Royal Bank of Scotland, Lloyds TSB, Vodafone, Orange, T-Mobile and 3UK. "After years of hard work building the platform for Mobile Money, it is good to see it come of age and begin to reach out to the mass market globally," said Alastair Lukies, the chief executive of Monitise. First Eastern has agreed to subscribe for £5 million (HK$62.87 million) in new ordinary shares in Monitise. It will subscribe for a further £2.5 million once their 50-50 joint-venture deal is completed in April. Chu said Monitise Mobile Money had the potential of becoming a dominant standard for mobile banking and payments services in Asia, where desktop-computing-based online banking services are more developed. Total mobile users in the region are forecast to exceed two billion by the end of this year. Banks and telecommunications service providers in the Asia-Pacific are struggling to find the most appropriate business model to balance the revenue requirements of the multiple parties involved against the needs and expectations of consumers, according to Abhishek Kumar, a senior analyst at Financial Insights, part of market research firm International Data Corp. "With the city's mobile broadband infrastructure and greater availability of internet-ready smartphones, we welcome the development of full-function mobile banking, because consumers will become more engaged with our services," said Stephen Chau Kam-kun, the chief technology officer at mobile network operator SmarTone-Vodafone. Chau said mobile banking adoption and applications remained underdeveloped in Hong Kong, despite the efforts by some banks to extend their desktop online banking systems through handsets. A spokesman for Bank of East Asia (SEHK: 0023) confirmed yesterday that current mobile banking functions remained limited, with applications being set up first through desktop-based internet banking systems. Juniper Research has predicted the number of mobile banking users worldwide will reach more than 150 million by 2011.

Macau has done very well out of the gambling industry but its time for the city to diversify its economy. That was the message from President Hu Jintao yesterday in a ceremony marking the 10th anniversary of Macau's handover. Hu, who swore in new Chief Executive Fernando Chui Sai-on, said Beijing wants Macau the world's top gaming spot to lessen its dependence on the casino business. The city's leaders "should utilize fully the series of measures that the central government has already adopted to support Macau," Hu said. Macau should be "strengthening and improving the management of the gambling sector," diversifying the economy, lifting living standards and improving the educational system, he added. Chui, in a speech after being sworn in, said: Over the next five years, we shall actively develop the appropriate diversification of the economy. The 52-year-old chief executive, who takes over from Edmund Ho Hau- wah, said his administration will step up oversight of the gaming sector. While we strengthen the regulation of the gambling industry, we will also support the advancement and transformation of the convention, logistics, cultural and traditional industries. Since 1999, Macau, which has 31 casinos, has overtaken Las Vegas and Atlantic City combined in terms of casino revenues. The president called on the new administration to uphold four pillars work for the people, unity, and an efficient and clean government. On Macaus passing of Article 23 state security legislation a controversial issue in Hong Kong Hu said this fully reflects the strong sense of responsibility of the government, Legislative Assembly and people of all circles of the Macau SAR to safeguard national security and interests. Hu also praised the previous administration for overcoming the Asian financial crisis, SARS and the recent global economic downturn. Chui, the sole candidate who won the chief executive post with 282 votes from the 300-strong election committee in July, vowed to put the peoples interests first as well as to learn from past experience and to honor innovation. We will firmly adhere to the people- oriented concept of governance, and will inherit and innovate. We will fully take into consideration the public opinions collected during the election campaign and achieve joint advancements with the public, he said. Chui, a former culture minister, also pledged to keep the government clean and accountable. Hu, who arrived in Macau on Saturday, also inspected the Macau garrison of the Peoples Liberation Army on Taipa and laid the cornerstone of the University of Macaus new campus on Hengqin Island before returning to the mainland.

China*: Hyundai Motor, South Korea's largest carmaker, plans to form a US$400 million venture with Baotou Bei Ben Heavy-Duty Truck in China next year. The deal is Hyundai's third attempt to penetrate China's commercial vehicle market after a 2004 agreement with Jianghuai Automobile and a US$1.2 billion deal with Guangzhou Automobile Group in 2005 fell apart. The companies signed an initial agreement at the weekend to form the 50-50 partnership, Hyundai said. The venture would take over Baotou Bei Ben's existing heavy-truck operation with an annual production capacity of 40,000 vehicles, targeting sales of 100,000 heavy trucks in China in 2014, the company said. Hyundai has been seeking to enter China's commercial vehicle market as the country spurs demand for construction equipment. Sales of medium and heavy trucks in China accounted for 29 per cent of the global market in 2008 and development projects of the nation's interior would further speed growth of the market, Hyundai said. "It's a good move," said Lee Sang-hyun, an analyst at Hana Daetoo Securities in Seoul. "Global auto companies aren't aggressively targeting the commercial vehicle market in China yet, and I believe there lie opportunities for Hyundai." Choi Han-young, a vice-chairman at Hyundai's commercial vehicle division, said entering China's commercial vehicle market was essential for Hyundai to grow into a comprehensive vehicle manufacturer in the world's largest auto market. Choi also said the Chinese venture would be "pivotal" in helping Hyundai meet its goal of selling 200,000 commercial vehicles worldwide by 2013. The venture will initially produce revamped models of the Chinese partner's designs before introducing a model in 2012 based on Hyundai's technology and equipment. The companies would co-operate in production and sales of vehicles and engines, research and development, after-sales service and distribution, Hyundai said. Baotou Bei Ben, a unit of China North Industries Group, was the sixth-largest maker of heavy trucks in China, operating three production plants, Hyundai said. Hyundai, which has a joint venture making passenger cars with Beijing Automotive Industry Holdings, plans to start construction of its third factory in China next year.

Lloyd's of London chairman Peter Levene says with the amount of infrastructure planned in China, the opportunities in tunnel, rail, bridge and aviation insurance will be huge. Lloyd's of London plans to expand into the big-ticket general insurance market on the mainland to tap business opportunities in the world's fastest-growing economy. Chairman Peter Levene said the 300-year-old insurer would apply for a general insurance license on the mainland, where it has conducted a reinsurance business for some years, to expand its business scope. "We do not plan to offer auto or household insurance products," Levene said during a visit to Hong Kong last week. "Lloyd's is a leader in the special insurance market. We want to cover the big-ticket items, such as insurance cover for tunnels, bridges, high-speed railway projects and the aviation sector." Lloyd's began running its business from a coffee shop, opened by Edward Lloyd in 1688, frequented by merchants, ship owners and captains. The company's structure differs from other insurance firms. It works like a market in which member syndicates insure everything from satellites, infrastructure projects and buildings to aircraft against damage caused by natural catastrophes or terrorist attacks. Lloyd's is based in London but has developed a large business in the United States. "It took 150 years for us to build our business in the US," Levene said. "We hope that the China market will be as big as the US one day, although I do not know how long it will take." At present, Lloyd's operates in Hong Kong with a general insurance license, offering property, marine and liability cover. Last year, it underwrote US$150.9 million in insurance from Hong Kong, up 18.8 per cent on 2007. In China, however, the company has only a reinsurance license in Shanghai, which means it can sign deals with mainland insurance companies to offer them a reinsurance service to buy into their policy risk portfolio and share the compensation payouts when policyholders make claims. Although not allowed to offer direct insurance products to mainland customers, Levene said Lloyd's was in talks with the authorities to apply for a general insurance license. "Since China is developing many infrastructure projects, the opportunities are huge," he said. While many bank and insurance companies have been hit hard by the financial crisis, Levene said Lloyd's had coped well, as it had learned from mistakes made in the 1980s, when an over-aggressive strategy and a lack of risk management control led to a wave of claims, which took the firm to the brink of collapse in the early 1990s. Levene said Lloyd's had since brought in stiffer rules to control risk and adopted a very conservative investment strategy that aimed to hold a lot of cash in reserves while not investing in exotic products. "Holding cash may be a boring investment, but it helps Lloyd's through financial crises when markets drop dramatically," he said. "We are very conservative, and this has proved to be a wise decision." The lack of a big hurricane or natural disaster this year also resulted in a smaller number of claims, which buoyed Lloyd's performance. "We cannot tell what may happen next year. But we have adopted a very conservative pricing strategy to prepare for any hurricanes to come," Levene said. Natural catastrophes are a leading source of claims for general insurers and have prompted Lloyd's and other insurers to become more active in lobbying on environmental protection matters. "We do not know exactly how to prevent climate change or hurricanes to come. But if everybody does something to protect our environment, it will make a big difference," Levene said.

Alan Tsoi, principal, Deloitte Touche Tohmatsu - Partnership rules hailed as a lure for foreign funds. Tax breaks now available to China investment funds that are structured as partnerships offer a "breakthrough" that could unlock a flood of new capital into the mainland, financial consultancy Deloitte Touche Tohmatsu forecasts. On December 2, the State Council formally issued long-awaited measures for foreign enterprises and individuals to establish partnerships in China. The country is allowing for the first time foreign firms and individuals to form partnerships - structures that could substantially reduce income tax rates. "In the past, foreign firms couldn't form partnerships in China. Now foreign partnerships will be allowed to invest in China," said Deloitte principal Alan Tsoi Shu-yan. "This is a major breakthrough. It offers foreign investors a new investment opportunity that will increase China's foreign direct investment. We have many foreign clients who have great interest in forming partnerships in China." The new rules will apply from March 1 next year. At present, foreign firms operating in China, whether as joint ventures or wholly owned foreign enterprises, are not allowed to form partnerships but must be registered as companies. Corporate income is taxed at a rate of 25 per cent, and a further withholding tax of 10 per cent is applied to distributed profits - reduced to 5 per cent for Hong Kong shareholders if their ownership in the company is greater than 25 per cent. A partnership is a business operation in which partners share in profits and losses and is often a favoured structure because partnerships in many countries such as the United States and Britain generally do not incur taxes on profits before they are distributed to the partners. The new measures allow partnerships to be established by two or more foreign enterprises or individuals, or by foreign enterprises or individuals and Chinese enterprises or individuals. There will be no minimum capital requirement. Many of Deloitte's foreign clients that had expressed interest in forming partnerships were financial companies and investment funds wanting to set up local-currency funds in China, said Tsoi. "This will open the door for them to enter China with [yuan] funds." If foreign funds set up joint ventures and wholly foreign-owned enterprises in China, they would have to pay corporate income tax of 25 per cent, which represents a deterrent since taxes are too high and returns too low. "But this new law will attract more foreign funds to China," said Tsoi. Under the new measures, partners would still have to pay income tax, but at a reduced rate not yet determined, said Tsoi, who estimates the tax rate at 10 to 20 per cent. Under a law enacted in 2006, Chinese firms are allowed to form partnerships, but until now foreign firms could not do so. "The measures are the most significant development in this area since the Partnership Law [which allows domestic partnerships in China] was introduced in 2006," said a Deloitte paper by Tsoi and his colleagues. Such partnerships are not allowed by law in Hong Kong, said Tsoi, and in this sense China is now more advanced than Hong Kong. Partnerships are allowed in Britain and the US, where they attract zero income tax. Hong Kong-registered companies have to pay a corporate income tax rate of 16.5 per cent, while the maximum US corporate income tax rate is 35 per cent. "The new law is not 100 per cent perfect. There are a lot of areas with room for improvement," Tsoi said, noting that it is not clear on the repatriation of profits to foreign partners.

French Prime Minister Francois Fillon arrived in Beijing yesterday for a visit aimed at pushing forward relations with China following a year-long rift over Tibet. In an indication that relations are now back on track, Fillon will meet Premier Wen Jiabao during his three-day stay, and also hold talks with President Hu Jintao. Fillon is accompanied by Finance Minister Christine Lagarde and around 20 chief executives. Nuclear cooperation will be high on the agenda. Energy firm EDF and nuclear group Areva will sign two joint ventures with state-owned China Guangdong Nuclear Power Co to launch "the operational phase" of the construction in southern China of two nuclear reactors. Safran, the French aerospace and defense industries group, along with US firm General Electric, is expected to win a contract to equip the C919 - the future Chinese competitor to the Airbus A320 and the Boeing 737 - with engines. The contract is thought to be worth billions of euros.

A planned central government regulation would give governments - not developers - the central role of initiating housing demolition projects, apparently heeding increasing public discontent over the rising number of forced evictions. The Legal Affairs Office under the State Council, the nation's cabinet, is spearheading efforts to draw up a new regulation on the acquisition of homes and redevelopment compensation to replace the controversial housing demolition regulation introduced in 2001. The office did not specify a time frame for the new regulation to go public for wider consultation, but it would seek to restrict the role of developers in demolition, according to Peking University law professor Jiang Mingan. Jiang, invited to a State Council symposium on Wednesday regarding the drafting of the new regulation, said that to specifically hold governments to account over housing demolitions would mean that developers could not begin demolition work without agreeing compensation. He noted that the new regulation would also try to clarify what constitutes "the public interest" - the excuse regional governments often use to forge ahead with home demolitions in collusion with developers while offering little or no compensation due to loopholes in the housing demolition regulation. Photos of a Chengdu woman setting herself on fire after she failed to stop forced demolition work on November 13 once again put the regulation under the spotlight. Mainland media reports said the woman, Tang Fuzhen , had spent more than 7 million yuan (HK$7.94 million) on a three-storey garment factory warehouse, but the district government agreed to pay only 2.17 million yuan because it claimed the building was illegal. In another incident that captured national attention, Huang Jianying went shopping at a supermarket in Guangzhou on Wednesday morning and returned to find her home demolished. Huang said the developers announced their intention to redevelop the land for the upgrade of a nearby waterway only three months ago. No agreement on compensation had been reached. Violent confrontations over forced evictions in the past few months have prompted five Peking University professors, including Jiang, to write an open letter to Beijing calling for the housing demolition regulation to be scrapped. The professors added that developers must not be allowed to use violence and the disruption of electricity, water and cooking gas services to force evictions. But many academics fear the planned regulation could face resistance from local governments, which have relied heavily on the property market in their pursuit of economic growth. Peking University professor Wang Xixin, another signatory of the open letter who was at the State Council symposium, said that he would expect the draft regulation to go public very soon because of the heightened discontent over existing housing demolition rules. However, he said local governments were likely to hold out over key points.

Dec 21, 2009

Hong Kong*: Governments, companies and public organisations should appoint integrity officers to police business ethics, a former anti-graft chief says. Tony Kwok Man-wai, retired deputy commissioner of the Independent Commission Against Corruption, said people had lost confidence in businesses' ethics. Kwok announced that University of Hong Kong's school of professional and continuing education (Space) would run a nine-day pilot course in business integrity in March. "Why does a company need an integrity manager? Because the financial turmoil has called into question a lot of business ethics." Kwok said he hoped bodies would appoint certified institutional integrity officers (CIIOs). "In combating corruption, one cannot simply rely on governments and anti-corruption agencies. Every citizen and organisation ... should have to participate and have to play a role. In the aftermath of the financial tsunami, the drumbeat of regulation and control has been getting louder in all societies. It will be an executive certificate course," Kwok said. "The current anti-corruption course is macro, about how a country can fight corruption. The one in March will be about how an organisation can maintain integrity in business ethics." Kwok, architect of both Space's anti-corruption course and the new program, said he hoped all bodies would send auditors or other staff members and to be groomed as potential integrity officers. The course would be about setting standards and would focus on a range of issues, including conflict of interest. "If you understand that, you understand a lot about integrity," he said. Where there was a culture of nepotism, there could be no integrity. "People may say, `Well, it's my job to help my relatives, there's nothing wrong with that'. But there's everything wrong with it." The same went for the practice of accepting gifts. The old days of people accepting lai see in return for favours or services were gone, he said.

Offering state-of-the-art simulators, City Links Golf Lounge allows customers to play golf regardless of the weather outside. It is Hong Kong's first and only indoor golf lounge. The constant transient nature of Hong Kong has seen many recognised establishments close over the years only for new hi-tech concepts to appear in their place as the move for more new and innovative businesses continues. No trade here is immune to it, and it is the local golf industry that has recently been feeling the negative and positive effects of change. One of Hong Kong's most popular golfing venues, City Golf Club, will close its doors for the last time at the end of the month unless a last-ditch stay of execution until Lunar New Year proves successful. Located along Hong Kong's waterfront and with a stunning view of Victoria Harbour, for the past 10 years City Golf Club in Wui Cheung Road, Kowloon, has enjoyed huge patronage from Hong Kong's golfers. The club has a driving range with more than 200 bays on four tee-off levels, plus an 80-seat Thai restaurant. Its days have been numbered, however, since it was confirmed that the club received notice from the Lands Department stating that its premises must be vacated and repossessed to make way for construction of the Guangzhou-Shenzhen-Hong Kong express rail link, one of the 10 major infrastructure projects championed by the government. It was thought that work on the railway would not begin in earnest until next year and that members would therefore continue to enjoy the benefits of the club - until an announcement was made last week that it would close at the end of the month. Club owner Stanley Pong is in negotiations with the government for a short extension of the closure date. Pong said his loyalty was to his staff of 80 to 100 and it was his hope that the club would remain open until Lunar New Year. "It's a delicate situation, but I would hope that the club will stay open and my staff remain employed up until Chinese New Year. No one wants to see them lose their jobs before this if possible," he said. "It's the sentiment that matters. On the second day of Chinese New Year, City Golf Club hosts its annual charity day, and it would be a fitting way for the place to close after that." Members of the Happy Golf Society - one of the many local clubs that use City Golf Club - have initiated a petition and signature campaign to urge the government to delay the land repossession for as long as possible so that members and the public can continue to make the most of the facilities. Within a week, more than 3,000 people had signed. Meanwhile, the City Links Golf Lounge is a new business looking to break into the lucrative local golf market. Its business model is to take all the hard work out of the game by creating an environment where you can play a round and the only distance you'll really have to travel is to get another drink from the bar. On the 10th floor of The Centrium, in Wyndham Street, Central, City Links is Hong Kong's first and only indoor golf lounge, with four state-of-the-art Full Swing Golf simulators and a lounge bar and cafe. Never mind the hassle of travel, dress code and clubs, in Hong Kong convenience is the name of the game, and here you can play a round of golf no matter what the weather. Packages start at HK$750 a month. "Golf is a very popular sport in Hong Kong. However, it's difficult, expensive and inconvenient to play - when you add in the transportation time, it can take an entire day to get a round in," said one of the owners, Anoop Chaudhry. "So we're trying to offer a venue in the heart of Central where people can come and play extremely realistic golf in air-conditioned comfort, regardless of the weather outside." The simulators are the same that US golfer Mark Wilson - winner of the 2007 Honda Classic - practices on when not playing on the US PGA Tour. Other simulator owners include American tycoon Donald Trump and basketball legend Michael Jordan.

An artist's impression of the Xuma Beach Resort. Its futuristic design made it look more like a scene from a Star Trek film than a world-class resort and spa in the heart of Sai Kung. But it was a legal dispute between the developer and the designer that destroyed the project, not an attack by the Klingons. The Xuma Beach Resort and Spa would have been valued at more than US$420 million when complete, according to a report by international valuation experts Cushman and Wakefield issued to the developer, Hinton Enterprises, which includes former government chief architect Paul Yiu Yuen-on among its partners. But Hinton pulled out of the deal. A legal dispute between the developer and its design consultant, Storm Associates Hong Kong, part of the Storm Signature Developments Group (Storm), has been under way since Storm's lawyers filed a writ against Hinton in the High Court on May 5. It is a case of what might have been, as Storm's original plan was certainly out of this world. The visitor's adventure would have begun with the journey to the resort, accessible only by helicopter, seaplane or boat. What greeted the visitor from there on was like something from another dimension. "Prior to arriving at the resort's drop-off point, guests will be in no doubt that they are completely elsewhere, as the view of the site, with its curvilinear, sculpted forms nestled warmly into the landscape, is both a strange and almost alien one," Storm's original proposal says. "Each [guest] cannot fail to notice that the design ... completes and enhances the resort's integrated alien `culture' appeal, hence ... the message now received by all of the resort's guests is a clear one - you have now left normality behind." The reality was more sobering, however, as Hinton withdrew because of "many unforeseen circumstances with land titles and related ownership acquisition processes". This was rejected by Storm, which claims in the writ that not only had an oral agreement been breached, but that "despite numerous requests and demands, Hinton had refused and/or failed to execute a formal written agreement in respect of the project". Storm is also seeking legal redress for more than 4,200 hours of design work on the 180,000 square metre resort - and damages for misrepresentation. Hinton, run by Yiu and his partner Terry Hung Shing-yin, had been acquiring land in the Tan Ka Wan area of Sai Kung. Confident of assembling a complete plot, it brought Storm on board in October 2007 to come up with a concept design and commercial model for a comprehensive, seven-star beach resort and spa similar to those in Phuket. Malcolm Copson, Storm's group chief executive, was adamant that the massive futuristic development would have been a success. "The inspiration for my designs comes from anything and everything around me. I am not an architect but I am a qualified engineer with a seriously good imagination, which is why I describe myself as an `imagineer'. The designs may look completely alien to some, but I assure you they can be built," Copson said. Hung refused to be drawn on the matter, saying: "I can't make any comment on this as it is still going through the courts. It may be some time before we get a verdict and, until that time, I have nothing to say."

Chinese President Hu Jintao(R) shakes hands with Donald Tsang Yam-kuen, chief executive of the Hong Kong Special Administrative Region (SAR) in Macao SAR in south China on Dec. 19, 2009. Chinese President Hu Jintao stressed Sunday that "the great motherland is always a strong back-up force for the prosperity and stability in Hong Kong and Macao."

Chinese President Hu Jintao (R) administers as Fernando Chui Sai On (L) is sworn in as the Macao Special Administrative Region (SAR) Chief Executive in Macao SAR of south China on Dec. 20, 2009.

A futuristic new Macau landmark partially designed by architect I.M. Pei will open early next year. President Hu Jintao yesterday officiated at a ceremony purported to be the opening of the Science Centre. But the complex, which took nine years and more than 300 million patacas to design and build, has not opened to the public. A tilted cone, a dome and a low three-dimensional rhomboid distinguish the complex from a jungle of glittering casino buildings. I.M. Pei was involved in the project's early conceptual stage, said his son, Sandi Pei Li-chung, a partner in New York-based Pei Partnership Architects. The firm was responsible for designing most of the complex. "He was involved in affirming the basic geometries of the project, mostly on the external form and materials," Sandi Pei said of his father. The centre is on a 44,500 square metre parcel of reclaimed land off the southeastern shore of the Macau Peninsula, across from the Cultural Centre. Much of the complex is covered in shimmering metal, giving it a distinctive presence. It features 6,500 square metres of exhibition galleries around a skylit central atrium within an asymmetrical conical form. There is a 150-seat planetarium, a 500-seat hall in the low 3-D rhomboid and a ground-floor children's zone with natural light. An external viewing platform accessible by escalators takes full advantage of the complex's prime waterfront location. Visitors can enjoy a view of the water and the city from the 26-metre-high platform. The complex has 23,000 square metres of gross floor area. Sandi Pei said the conical form would offer an exciting spatial experience to visitors, and the museum would promote scientific knowledge among the public. Galleries are organised as trays reached by a spiral ramp that ascends within the cone. "It can prevent people from having `museum fatigue'," he said. The designing began in February 2001 when little of what is now Macau's skyline existed. "Macau today is a riot of new buildings," Sandi Pei said. "That all happened since we began work on the Science Centre." Groundbreaking started in October 2006, shortly before the Ao Man-long corruption scandal broke. Ao, the former public works minister, took bribes from Tong Lei Engineering and Construction over the tendering of the right to build the center. Graft investigations forced work on the centre to be suspended in 2007 and last year.

Despite being "sandwiched" between Beijing and the people of Hong Kong, the chief executive says he is sleeping well because he has done his bit for democracy. In an interview with Cable TV, Donald Tsang Yam-kuen denied he had breached his election promise of "going all out" to resolve the universal suffrage question in his second term in office. "I have been sleeping very well because I feel that I have already done my part and have fulfilled my duty," he said. Although he has been attacked for failing to explain how the chief executive and all members of the Legislative Council will ultimately be elected, Tsang claimed credit for Beijing's "timetable" allowing universal suffrage to be introduced for the 2017 chief executive election. The chief executive, he lamented, would always be "sandwiched" between being loyal to Beijing and being accountable to the Hong Kong people. He said his low popularity rating, up slightly but still below 50 points according to a University of Hong Kong survey, was satisfactory. "I am already lucky with this sort of support rating after four years in office, right?" Referring to the incident in which Wong Yuk-man, chairman of the League of Social Democrats, threw a bunch of bananas at him in Legco last year, Tsang joked that next time he would use the picture of Mother Teresa he always kept in his pocket to ward them off. "I can promise you this: I won't throw them back, and I won't eat the bananas either."

Zhongwang Holdings, the mainland aluminium producer battling accusations it misstated sales data when it listed on the Hong Kong stock market, has delayed publishing an independent inquiry into the matter. The firm's shares fell 5.5 per cent yesterday, to HK$5.81. They have dropped 20 per cent since Monday. The company hired Ernst & Young to review its sales figures early last month and told investors in a November 10 conference call that the study would take five weeks. The five weeks were up on Tuesday. In September, mainland newspaper the China Economic Observer claimed in a report, which it later retracted, that none of the top 10 customers named in Zhongwang's prospectus for its initial public offering bought from the company last year. After missing the self-imposed deadline to make Ernst & Young's findings public, Zhongwang executives have now briefed analysts that Ernst & Young will not be able to complete the audit for another two to three weeks, an analyst and one of the firm's investors confirmed. "The length of time still needed to complete the audit is a huge concern. I am out of the stock now," a foreign fund manager who bought into the IPO said. Zhongwang declined to comment, as did Ernst & Young and UBS, the lead investment bank on the company's IPO. In May, the aluminium extrusion firm raised HK$9.8 billion in its HK$7-a-share Hong Kong initial public offering. Chairman Liu Zhongtian's 71 per cent stake in the company was worth HK$26.52 billion at the time of the IPO. The fall in the stock's price this week has wiped HK$5.41 billion off the value of Liu's shareholding. Liu, a low-profile company boss who is little-known within the aluminium industry, could not be reached for comment.

The wrecked car at the Causeway Bay entrance to the Cross-Harbour Tunnel yesterday. It will stay in place until March as part of a campaign to deter drink-drivers. A wrecked car is the latest shock tactic used by the police to warn people not to drink and drive at Christmas. The mangled vehicle was put on display yesterday at the entrance to the Cross-Harbour Tunnel in Causeway Bay, providing a stark reminder to drivers of the dangers of getting behind the wheel after taking a tipple. A huge bottle embedded in the car reads: "If you drink, don't drive!" The vehicle, wrecked in an accident, will be displayed until March 15. "This serves as a reminder to the public, especially drivers, that the possible result of drink-driving will be a fatal accident and unforgettable remorse," said Yu Kam-kee, of the Road Safety Campaign Committee. Superintendent Shirley Chu Ming-po of traffic branch headquarters said the wreck would attract attention. Although the display was shocking, it would not block the view of drivers or distract them, and traffic in the tunnel was usually slow. Police figures certainly suggest that people need reminding. Eighty people were arrested for drink-driving from December 18 to January 4 in 2006-07. This soared to 136 in 2008-09. The number of accidents caused by people driving under the influence of alcohol increased from three to seven over this period. Officers will step up enforcement action, including random breath testing, over Christmas and New Year. Messages warning against drink-driving will be shown on video walls at shopping hot spots such as Times Square, Harbour City and various others over the period. There has been some good news in the battle against drink-driving. The introduction of random breath tests has proved to be successful in keeping drivers sober. Up to yesterday, 36,226 drivers had been tested since the introduction of random breath tests in February. Some 249 drivers had been arrested, making up about a quarter of the total arrests for drink-driving. The number of accidents related to drink-driving has dropped 61.2 per cent since the introduction of the random tests. From February to November, there were 221 such accidents, compared with 570 for the same period last year. The chairwoman of the General Insurance Council, Agnes Choi, said some drivers had misunderstood clauses in their insurance policies and thought they would still get payouts for crashing their cars even if they were drunk. "Motor insurance policies exclude the insurers' responsibility to provide indemnity when the liability arises from the vehicle being used by the driver who is under the influence of alcohol," she said. David Leung Siu-cheong, chairman of the Taxi Operators Association, said he was already used to seeing displays of wrecked cars. They were first put into use after the opening of Tuen Mun Road in the 1970s and over the years they had been placed at traffic black spots and beside the road at various spots. But the practice had not been used for several years. "It's not creative but it may be effective on new drivers," he said. The chairman of the Motor Transport Workers General Union, Pang Kong-cheung, remembered there used to be a similar display at the Tai Lam Tunnel. "It was effective as a reminder for drivers," he said. Leung and Pang said the wrecked cars had not distracted drivers in the past and they did not expect any problems with the new display.

The yuan can become the third pillar of the global monetary system, competing with and even surpassing the US dollar and the euro, according to Joseph Yam Chi-kwong, the former chief executive of the Hong Kong Monetary Authority. "Large budget deficits and public debt, and structural problems in the financial system, mean that the two pillars are not resting on sound foundations," Yam told a financial conference in Beijing yesterday. "There is a need for a third currency to serve as a third pillar, which would also give an opportunity for the two weak pillars to heal." To create that third pillar, he said, there was a need "quickly to internationalise the yuan", adding that there was also a need to manage carefully the intricacies between internationaliation and the move towards full convertibility. Yam, who retired in October, said Hong Kong was the ideal testing ground and suggested the mainland government scrap restrictions on yuan business in the city so that it could further develop in accordance with market principles, thus allowing the market to provide important signals on which to determine policy. This would involve giving Hong Kong the freedom to use the yuan for pricing, transactions, clearing settlement and payment in due course. It could start with the introduction of mainland financial products that were not now traded in the city, or their exchangeable derivatives, as test cases. Yam said the yuan could qualify as the third pillar of the global currency system if it resumed its appreciating trend and the mainland authorities managed the economy prudently, providing the necessary foundation for the maintenance of currency stability and international confidence.

Workers at Television Broadcasts (SEHK: 0511) (TVB) have threatened "radical action" if management continues to ignore demands for a 5 per cent pay rise and an extra increase for about 200 people working in the props unit. The TVB Staff Association accused the company of delaying tactics and warned that employees' patience was running out. Citing TVB's annual reports, the association said the broadcaster had made more than HK$5 billion since 2005 but staff had seen only nominal pay rises in that time. "While the company is making a profit every year, we are only given a rise of HK$200 to HK$300 a month. It is flatly unfair," said Lau Shun-on, chairman of the 900-member association. "We are not trying to be greedy. But we employees have contributed to the company's success and we want our fair share of rewards." To cut costs, TVB has sacked more than 270 workers in three rounds of mass layoffs in the past year.

Michael Wu expects mainland property prices to moderate next year, saying Beijing will not allow an unlimited acceleration.. After making waves with some major investments in Hong Kong's luxury property sector, mainlanders are moving down market, buying more than 200 units in a new residential project in Tseung Kwan O.

Chinese President Hu Jintao delivers an important speech at the evening dinner held by the Macao Special Administrative Region (SAR) government in Macao SAR in south China on Dec. 19, 2009. President Hu: central gov't firmly committed to "one country, two systems". President Hu reiterated that the central government will remain firmly committed to the principles of "one country, two systems" and "Macao people governing Macao" with a high degree of autonomy.

Chinese President Hu Jintao (R front) shakes hands with principal officials from Macao Special Administrative Region (SAR)'s executive, legislative and judicial arms in Macao SAR, south China, on Dec. 19, 2009.

China*: China's proactive employment policies and measures in the wake of the financial crisis have generated positive results, Yin Weimin, Minister of Human Resources and Social Security, said on Saturday. China is expected to create over 11 million jobs in 2009, well above the target set in March this year, Yin said. In a most important measure taken since the beginning of this year, millions of enterprises nationwide had been allowed to delay the payment of enterprise-contributed social security funds for up to six months, said Yin. China's social security system is made up of five parts -- pension insurance, medical insurance, work injury insurance, unemployment insurance and maternity insurance. The measure also temporarily lowered the insurance rates for medical, work injury, unemployment and maternity. In the meantime, the government offered subsidies over the payment of social security funds for enterprises which were in financial difficulties. Yin told Xinhua that this measure alone had eased corporate burden by nearly 33.9 billion yuan (5 billion U.S. dollars) in the first 10 months this year and more than 1.6 million enterprises had benefited from this measure. According to Yin, China had generated 10.13 million new jobs in urban areas in the first eleven months, exceeding the government's target of 9 million new jobs for the entire year. The urban unemployment rate would likely stand at 4.3 percent by the end of this year, which also met the target of below 4.6 percent set in March, he said. In 2008, China's urban unemployment rate was 4.2 percent.

Jay Chou (L) and Chiling Lin participate in a press conference in Shenzhen, south China's Guangdong Province, Dec. 19, 2009, to promote the new film "The Treasure Hunter", which started showing on Dec. 9.

Barack Obama makes a point during a meeting with leaders, that included Wen Jiabao, in haggling over a climate accord in Copenhagen. Chaos and farce reigned at the birth of the climate accord agreed by a clique of leaders, with statesmen going missing, critics crying foul and hacks stampeding on vain hunts for US President Barack Obama. Fatigue fermented a feverish cocktail of human emotion as Obama claimed to have staved off a default in the dying hours of global-warming talks in Copenhagen. It was a stunning turnaround, as earlier, when the summit went into extra time, the whole project was on the verge of collapse, US officials said. Australian Prime Minister Kevin Rudd added: "There was a grave risk that these negotiations would collapse altogether." While Obama's team clearly had an interest in spinning the climax of the talks to the young US president's advantage, they revealed a succession of events more apt to a French farce than a major world summit. Frustrated at deadlock in the talks, largely over China's refusal to accept a transparency regime to monitor developing states' emissions, Obama apparently vowed to have "one more run at getting this done". Desperate for a foreign-policy win, Obama drew the line when a comparatively minor Chinese official, Yu Qingtai, an expert on climate change, showed up at a meeting instead of Premier Wen Jiabao. "I don't want to mess around with this any more. I want to just talk with Premier Wen," a senior aide quoted Obama as saying. Obama also decided he wanted to speak to leaders of major developing powers seen in China's camp. So he sent his team to find Indian Prime Minister Dr Manmohan Singh, Brazilian President Luiz Inacio "Lula" da Silva and South African President Jacob Zuma. One problem: US aides were told that Singh was already at the airport, probably believing the talks were finished. "The South Africans [hear] that at this point the Brazilians are unclear about meeting without the Indians, the Indians are at the airport, and Zuma at that point says: `Well, if they're not coming, I can't do this,'" the US official said. Soon, Wen's team said they were ready to meet Obama. Obama's team headed off to scope out the room in the cavernous Bella Centre where the talks were taking place, but could not get in, and the reason soon became clear. "We've now figured out why we can't get into that room: because that room has Wen, Lula, Singh and Zuma," the official said. "They're all having a meeting." Obama, headed straight in. "Mr Premier, are you ready to see me? Are you ready? Mr Premier, are you ready to see me? Are you ready?" Obama cried. US officials insisted the president did not barge in uninvited on the surprise meeting, but was merely showing up on time for his talks with Wen. "We weren't crashing a meeting - we were going for our bilateral meeting ... we found the other people there." At this point a near-scuffle broke out after Chinese cameramen made a rush for a shot of all the leaders together. "My people" have to get into the room "or we're leaving", White House spokesman Robert Gibbs said in an unusual role as defender of the US press. Shell-shocked delegates were left to digest implications of the non-binding deal in an all-night session. Danish Prime Minister Lars Rasmussen was in the chair, but at times the talks descended into total incoherence. "The United States abstained, then I passed the floor to Nicaragua," Rasmussen said, confused by a breakdown of the session. "Nicaragua abstained ... who wants to speak?"

One is a city-state in the Arabian desert where they build islands in the sea; the other is a boom city on the shores of a picturesque lake on mainland China's east coast, famous for producing tea. On the face of it, Hangzhou and Dubai don't have much in common. But that didn't deter officials in Zhejiang's capital from attempting to mirror the growth machine in the desert. Local party secretary Wang Guoping saw "shocking similarities" between the two cities and set out to use Dubai's breakneck pace of growth as a blueprint for his own city's real estate explosion. Since Dubai's dramatic fall from grace - in the full glare of the global business media - Wang and other local officials mu st be regretting the sycophantic praise they heaped upon it during the boom years. Dubai has had to be bailed out by its richer neighbour, Abu Dhabi, to the tune of US$10 billion, after its leading conglomerate Dubai World defaulted on a US$3.5 billion debt payment late last month. The roller coaster of property speculation in the tiny state appears to have ground to a halt, with a judder that reverberated in markets around the world. It's fair to say the furniture in Hangzhou city hall wobbled as well. Mainland media have reported unnamed municipal officials as saying the talk of comparisons is now officially toast. Since 2007, the city had been boasting of its close links to Dubai - they are even connected by direct flights - and its desire to build itself into a Chinese replica. In May last year, the Hangzhou government sent a 100-strong team to the desert kingdom, keen to learn the secrets of the Dubai miracle and hoping to bring home a genie of their own. Returning from that trip, Wang was fired up about the potential for growth. Dubai was Hangzhou's model and a "yardstick" to measure development against. "We must study Dubai closely, wholeheartedly learn Dubai's open-mindedness, its rejection of pride and refusal to be satisfied," he said. Perhaps giddy from the desert sun, Wang said Hangzhou would raise its targets to push its per capita gross domestic product to beyond US$10,000 this year and more than double that figure by 2015. His timing for such predictions wasn't exactly the best, given the global financial storm brewing on the horizon. The official figures for 2008 show the city's GDP was 478 billion yuan (HK$542 billion), up 11 per cent on the previous year. That works out as 59,763 yuan for each of the city's 8 million residents - still a long way short of the magic number. Elsewhere in the world, 11 per cent would be an incredible rate of growth; in Hangzhou it was the smallest increase in several years and the first time the measurement has threatened to drop into single digits in 18 years. More worryingly for the city government, the year-on-year increase for the first quarter of this year - the most recently published - was 3.4 per cent. It's easy to see why the city is no longer so keen to stress its likeness.Even Xinhua has been reporting that the bursting of the Dubai property bubble - prices there halved in the blink of an estate agent's eye - has "sounded the alarm bell" for mainland real estate speculators. An opinion piece in China Daily yesterday also dealt with the "lessons" the Dubai tumble offered for the mainland. Hangzhou may not have been building man-made islands in its famous West Lake attraction, but the city has been throwing up property developments like there was no tomorrow. After a slow start to the year, house sales in Hangzhou went through the roof in September and October - registering year-on-year increases of more than 400 per cent for both new and second-hand apartments. Property commentators are already starting to ask whether the "West Lake bubble" might be about to pop, too. Of course, Hangzhou was not alone in being dazzled by the Dubai dream. Governments around the world were fascinated by the oil-rich emirate's vision of rapidly restructuring its economy for a post-hydrocarbon era, and its ability to draw external investment by the truckload in the process. What makes Hangzhou unusual is the slavish enthusiasm the municipal government showed for transporting a development model lock, stock and crude oil barrel direct from the sand dunes - and the apparent lack of objective scrutiny the plan was subjected to. The tale is typical of the top-down, slogan-driven mindset of Chinese officialdom. Once senior officials buy into an idea, the whole party machine grabs the ball and runs with it. No one pauses to question why or whether the idea is a good one or not; if they do they do not dare speak up about it. In describing the "shocking" similarities between Dubai and Hangzhou, party secretary Wang stated that both cities "reside on water and live on resources". Perhaps it might have been prudent for his advisers to point out those are not exactly unique similarities. Ah, the luxury of hindsight.

The expressions say it all as Barack Obama and Wen Jiabao address the summit. climate talks letdown looms - Nations bicker as clock ticks on warming pact. The US was seething that Wen had earlier snubbed Obama. The chances of reaching a binding global agreement to cool the planet were fading rapidly in the final hours of the two-week Copenhagen climate-change summit despite the presence of more than 120 world leaders. Developed and developing countries blamed each other for the continuing deadlock over financial help for poorer nations to combat climate change and international monitoring of countries' actions to cut emissions. Neither camp offered any new concessions yesterday, and a new draft agreement dropped mention of achieving by next year a legally binding treaty to supplement the Kyoto Protocol, which runs out in 2012.

Puer, better known for its tea, exported 7,927 tons of coffee beans in 2007, accounting for more than 40 per cent of China's coffee exports. Tea or coffee? A question asked millions of times each day but in Yunnan's Puer prefecture, the ancient heartland of tea production in China, the answer has more to do with business than personal taste. For farmers such as 24-year-old Li Chunxue, the choice was clear. Li and his parents decided last year to convert nearly all their 7.28 hectares of land to coffee, leaving a small proportion for rice, vegetables and just enough tea for the family's own consumption. "I have no preference on what to plant or what not to plant. I plant whatever makes money," said Li, who only drinks tea. "Our tea leaves are of high quality but we get only seven yuan (HK$7.95) a kilogram. Coffee we can sell for about 18 or 19 yuan. So we chopped down all our orange trees and plenty of tea bushes last year. We need more land for coffee." Most of the other 2,000 farmers in Manxieba, 18 kilometers south of Puer where Li lives, are also planting coffee in a region where tea cultivation began during the Han dynasty (206BC to 220AD). Farmers in the neighboring Nandaohe area and around the nearby city of Xishuang Banna are also diversifying. This is a sharp departure from tradition for growers from a region that has seen the name Puer become an internationally renowned brand for premium tea. It has long been popular in Guangdong and Hong Kong where it is known in Cantonese as "polay" tea and prized as an aid to digestion. Devotees also believe it can help with weight loss or even prevent or cure cancer. For centuries, chains of pack horses hauled the leaves in densely packed bricks over dizzying, slippery trails to the outside world. Before the opening of modern trade routes, the first destination was Tibet, then on to India and beyond. The Chinese authorities recently acknowledged the importance of this historic trade route, Chama Gudao, or Ancient Tea-Horse Road. While tea is still Puer's dominant export, in Manxieba and Nandaohe, the two areas with most coffee plantations, it is now common to see the two crops grown side by side. There is also plenty of newly cleared farmland that farmers say will be planted with coffee. For a region steeped in outward trade, it was the winds of globalization that brought a new flavour to this tea-drinking kingdom. "It all began with Nestle," said Deng Jianhuo, a director of Beigui Coffee, one of the first companies to start planting coffee in Puer. "Nestle came. It said this place is suitable for growing coffee, high quality coffee. It signed a co-operation agreement with the government. So our company was set up to work with Nestle." Deng said the company bought abandoned mountain tracts and rented land from farmers to plant coffee. He added the majority of the mainland's coffee plantation were in Puer and the rest in neighboring Xishaung Banna and Hainan Island. In 1991, the Swiss food giant opened a joint-venture factory in Dongguan to produce its signature Nescafe instant coffee and began steps to source coffee locally. Initially, the development of coffee plantations in the country was slow and the multinational had to rely on imports. However, output has accelerated in recent years with some 80,000 farmers now growing coffee in Yunnan. From only 1,000 tons in 1988, the annual yield of green beans has now reached 30,000 tons. Nestle is still a major buyer. It accounts for 4,000 tons of production and since 1997 it has been able to source all Arabica coffee it needs locally.

Business links of sacked Shandong chief exposed - CPPCC role under scrutiny amid string of graft scandals. The sacked head of the Shandong branch of the Chinese People's Political Consultative Conference was involved in some of the biggest scandals in the province, and his departure prompted calls for a review of the role the advisory body plays. The vultures had been circling around Sun Shuyi for several years due to allegations of dodgy business dealings and the dramatic downfall of his deputy. Sun, 64, was the third provincial CPPCC chairman to be sacked this year, following Chen Shaoji of Guangdong and Guizhou's Huang Yao. A CPPCC official told the 21st Century Business Herald that Sun had been "acting strangely" for more than a year. His daily routine used to be consistent, but his schedule suddenly changed. This prompted speculation he was under investigation by graft authorities. Sun disappeared from public view in mid-October. His name no longer appeared in the media and he did not attend any meetings. The announcement of his sacking by the Shandong CPPCC this week did not provide any details. Sun's subordinate, Duan Yihe , was executed in September 2007 after he killed his mistress with a car bomb. The mistress had threatened to reveal his corruption unless he divorced his wife. Sun and Duan were extremely close. They were both from Shanghe, a rural county east of Dezhou city. When Sun was party secretary of Jinan , the provincial capital, Duan was deputy. Together they built up a powerful political and business network, which was severely damaged by Duan's arrest. Sun's fall is also believed to be linked to the arrest of Gao Yuankun, the president of the province's biggest private business, Linuo Group, and the exile of Gong Yinwen, an official turned businessman who organised a 4 billion yuan (HK$4.5 billion) pyramid scheme. Gao was deputy chairman of Jinan's CPPCC. His arrest was linked to a land-buying scandal in 2002 that saw Linuo Group buy a huge chunk of land in Jinan's hi-tech zone at a price well below market value. Gong used to be Sun's subordinate. He resigned in 1992 and started selling health care products. He was frequently praised in the official newspapers controlled by Sun. Hong Kong-based commentator Johnny Lau Yui-siu said the CPPCC chairmanship was traditionally reserved for veteran party leaders who still had substantial political influence in a region. The CPPCC was supposed to be an advisory body and watchdog. However, an influx of businessmen meant it had become a place for the rich to do deals, Lau said. Apart from the three CPPCC provincial chairmen, two deputy chairmen of CPPCC provincial committees, Sun Shanwu of Henan and Pang Jiayu of Shaanxi were also sacked this year. "The central government usually turns a blind eye. But once a scandal causes strong social repercussions and hurts the core interests of the party, the leadership will knock down the related CPPCC head without mercy," Lau said. "CPPCC membership is not elected, the government appoints the delegates. Many businessmen buy seats to gain an official background and connections."

The former editor of Caijing magazine, Hu Shuli , took her first steps into the world of education yesterday, but talk of her new media venture still dominated. Hu, 56, formally started her appointment as dean of the School of Communication and Design at Guangzhou's Sun Yat-sen University yesterday morning. In the afternoon she met faculty staff, before giving a speech to hundreds of students. Hu would not comment on plans for a new magazine, saying she was not ready to answer. She also would not go into specifics about what sort of classes she would be teaching. A former Caijing reporter who came to support her old boss in Guangzhou said the new magazine, Caixin, would probably be launched early next year. Another person familiar with the situation said it would be ready to go to press next month. Hu will be a founder of the magazine but might not be the editor-in-chief. Hu's departure from China's most successful business magazine has been a talking point for months. About 200 Caijing staff left the magazine early last month after Hu's resignation, and since then Hu's next steps and the identity of potential investors have been closely followed in mainland media circles. Addressing the students yesterday, Hu said new media and its integration with the traditional print industry would be a major focus for her. "I would like to work closely with all of you to create a first-class centre of new media training," she said, adding that the internet had dramatically changed the media landscape. A former Caijing department head revealed her new venture would include a multimedia platform in addition to a printed magazine. Last week, she started a group blog for the university in conjunction with former Caijing colleagues. Hu said her first year in education would be spent learning the ropes. Her priorities would be recruiting more talented staff for the school and helping students find jobs. She said the main factor that attracted her to the school was a common belief in the importance of seeking the truth. "Seeking the truth is the bottom line but also the highest goal. It is easy to say but hard to implement and even harder to insist upon in the long term," she said. Hu's departure from Caijing was widely attributed to disagreements over the future of the magazine and control of advertising revenues. But there has also been speculation that its owner, the Stock Exchange Executive Council, was under pressure from propaganda authorities, and room for Hu's outspoken coverage was narrowing. Students greeted Hu warmly and applauded several times during her speech. But some also worried about how much time their high-profile dean could devote to them. A postgraduate student surnamed Lou said: "We know she is a little idealistic, but as a dean she must help us find jobs, help teachers increase income, help the school improve its reputation. How can she handle all this?"

China Telecom is playing catch-up in the mobile-telephone market, as rival China Mobile signed up with Research In Motion in 2006. China Telecom Corp (SEHK: 0728) will start offering the BlackBerry smartphone to its 50 million mobile subscribers next year, according to Jim Balsillie, a co-chief executive of handset maker Research In Motion. The deal makes China Telecom the second carrier-partner to offer the BlackBerry on the mainland after China Mobile (SEHK: 0941, announcements, news) , which has more than 500 million subscribers, signed up with Research in Motion in 2006. "We have a lot of work to do," said Balsillie. "To further support our efforts in China, the company is also exploring opportunities to manufacture and conduct research and development activities in the country. "We will provide more details on the relationship [with China Telecom] and the launch plans in the coming months." A spokesman for China Telecom, the country's biggest fixed-line operator, said the companies were now "working on practical arrangements". The BlackBerry deal means China Telecom will have a competitive smartphone brand for its fledgling 3G mobile broadband service. The 3G services of larger domestic mobile network rivals China Unicom (SEHK: 0762) and China Mobile have as their flagship handsets, respectively, Apple's iPhone and the OPhone. China Mobile's portfolio of low-cost OPhone 3G handsets, made by companies such as Lenovo (SEHK: 0992) Mobile Communications Technology and Dell, is based on the operator's modified version of the Google-developed Android operating system. China Telecom, which posted a 33.9 per cent fall in net profit to 11.4 billion yuan (HK$12.95 billion) for the first three quarters of the year, is the latecomer to the mainland's mobile-telephone network sector. The operator started offering cellular network services in October last year after acquiring the smaller of China Unicom's two mobile-telephone units, in line with the government-led revamp of the country's telecommunications industry. That industry restructuring has repositioned China Mobile, China Telecom and China Unicom as integrated fixed and wireless network operators. Research in Motion, which has sold more than 75 million BlackBerry units worldwide as of last month, secured a distribution agreement last week with Digital China Holdings, the mainland's largest information technology services provider. "Business partnerships are an important aspect of Research in Motion's strategy, and Digital China's extensive knowledge and market presence will further expand the opportunity for us in China," Balsillie said. "We're moving forward with our plans to more aggressively target this region."

Dec 20, 2009

Hong Kong*: Hong Kong bankruptcy petitions in November fell 18 per cent from a year earlier, the first such annual decline since August last year, government data showed on Friday in a further indication that the economy is recovering. Bankruptcy petitions rose 1.3 per cent last month from October but monthly figures are not seasonally adjusted. Petitions totaled 1,005 in November, down from 1,223 a year earlier. Bankruptcies reached a six-year high of 1,872 in March, as the economy was hard hit by the global financial crisis and economic downturn. It pulled out of recession in the second quarter, and data on Thursday showed the unemployment rate fell to 5.1 per cent in September-November from 5.2 per cent in the previous quarter.

Shoeshiners (From left to right) Lau Wing-ming, Audrey Eu Yuet-mee, Tanya Chan and Yeung Siu-ying drink fruit juice Theatre Lane to celebrate receiving their hawker licenses. Eight elderly shoe shiners – who have been working in Central’s Theatre Lane for over a decade – have officially obtained operating licenses to continue their trade under a declaration due to become law on Friday, a government spokesman announced. Officers from the Food and Environmental Hygiene Department (FEHD) have spray-painted areas where the shoe shiners are permitted to work. The new licences were issued after a controversial incident earlier this year. Four shoe shiners working in Theatre Lane were arrested and fined by the FEHD during a crackdown on illegal hawking in May. The officers also claimed the shoe shiners were obstructing the road. In recent years, shoe shiners have been fined or had their brushes and polish confiscated because of unlicensed work. But these actions aroused concern among the public and legislators – who regard the work as legitimate. Two of the shoe shiners on Friday said they were happy to receive licences and continue working in Theatre Lane. “I am just worried the government won’t issue any new licenses after I retire,” Yeung Siu-ying told local media. Another also expressed concern about the future of the trade in Hong Kong and said he hoped the government could change the specifications of the licenses and allow them to transfer their hawker licenses to new shoe shiners in future, local media reported. The Hawker (Permitted Places) Declaration specifies areas where shoe shiners can operate, including the Theatre Lane area in Central. The declaration allows shoe shiners to work on part of the footbridge in front of the east entrance of the Murray Road multi-storey car park building; the southern side of an unnamed lane connecting Pedder Street and Theatre Lane; and at the space in front of 1-7 Theatre Lane. The government stopped issuing new hawker licences in the 1970s. Most of the original licensed shoe shiners have died or retired.

Packets and vials of the new herbal remedy on display. China researchers have developed a new type of herbal remedy that can slay the H1N1 virus, Beijing municipal authorities say. Dr Wang Chen, president of Chaoyang Hospital, said yesterday that the formula could reduce the average length of swine-flu-related fever from 26 to 16 hours and cut the use of antibiotics by more than 70 per cent. The formula is taken as a tea. The remedy showed positive effects on more than 95 per cent of patients, based on more than 200 clinical trials in nearly 30 hospitals in the capital. Yang Jibin, vice-president of global research and development for BD Medical, a US medical-supplies company, said evidence of its effectiveness was robust. "Modern science may not be able to fully explain the mechanisms of herbal medicine yet, but it cannot ignore the formula's almost instant effect on H1N1-induced symptoms such as fever and respiratory inflammation," he said. "It is impressive. "It is good news for patients in China and, say, Africa, where medical costs are a big burden. Herbal treatment will be more economical than Tamiflu" - the existing remedy. Researchers in a government-funded project developed a special formula of herbal tea and gave it to H1N1-infected mice. Plasma scanning showed that the alkaloid of the herbs entered the virus protein. Dr Huang Luqi, deputy director of the Academy of Chinese Medical Science and a lead scientist in the study, said the formula, Jinhua Qinggan (Golden Flower that Cures Flu), took a different approach to the virus than Tamiflu. "Unlike Tamiflu, which attacks the H strains, the formula bombards the N strains," Huang said. "Clinical trials show that it works." The H strain is the part of the virus that binds to the receptor cell, while the N strain initiates the infection. Dr Cris Tunon, senior programme management officer at WHO China, was happy to see the country taking steps to counter swine flu and said the formula could be a very important development. But the World Health Organisation was not ready to endorse it. "The WHO has a very rigid evaluation standard based on evidence. I have been given a summary of clinical trial results today, but we need to see more, especially peer reviews," Tunon said. Zhao Jing, director of the Beijing Traditional Chinese Medicine Bureau, said the city government spent 10 million yuan (HK$11.3 million) on the project. The government mobilised the best doctors of traditional Chinese medicine to work with modern medical-science researchers in Beijing. They came up with the herbal formula that draws from thousands years of medical wisdom and tested it with the most stringent modern clinical trials. Fang Laiying, director of Beijing Municipal Health Bureau, said a drug based on the formula was expected to be released next month. Patients could get it in hospitals in Beijing with a doctor's prescription.

A Hong Kong arm of China Travel Service is holding talks with a city government in Henan to form a joint venture aimed at turning Shaolin Monastery into a money-spinning mega brand. However, a statement issued by the Dengfeng city government yesterday said, "no formal contract has been inked yet", and that the monastery itself would not be part of the joint venture's assets. The monastery's controversial leader, Abbot Shi Yongxin, was reportedly kept in the dark about the negotiations. On December 9, Dengfeng Mayor Zheng Fulin chaired a meeting discussing the establishment of a joint venture between tour operator China National Travel Service (HK) Group Corp and Mount Song Shaolin Cultural Tourism.According to a report in The Beijing News quoting minutes of the meeting, the rights to collect entrance revenues for Shaolin Monastery and scenic spots on Mount Song were valued at 49 million yuan (HK$56 million), and the Dengfeng government would get 49 per cent of the joint venture. The local government appears to be selling it cheap - last year the monastery took 100 million yuan in revenue from ticket sales alone. Dengfeng's attempts to cash in on the site have prompted widespread criticism on the mainland. Shaolin Monastery is considered a bit of national heritage that should not enrich a particular group - let alone be traded like a commodity. Shaolin Monastery is the 1,500-year-old birthplace of Chinese kung fu and Zen Buddhism. It has developed into both a popular tourist destination and a brand for businesses ranging from film production to medicinal products. Its monks are often sent on world tours. A key player in its rise is the abbot. Shi has earned notoriety for charging businessmen 200,000 yuan in exchange for blessings and accepting a luxury SUV worth 1 million yuan from the local government as a reward for his contributions to the local economy. But the abbot, in an interview with Hunan Satellite TV last April, denied rumours he would list the monastery, saying it housed invaluable cultural heritage. Dengfeng city government yesterday denied they would include in the listing 16 spots listed as national- and provincial-level cultural relics for preservation. "Sixteen cultural relics of national and provincial levels in the area, including the Shaolin Temple, will not be managed by the new joint venture," it said. However, the government did not say whether other parts of the area round about, or other Shaolin-related scenic spots, would be listed. The city also denied suggestions it was selling national assets cheap. The government said no formal agreement had been reached. A spokesman for the Hong Kong company said the co-operation plan would be announced today. A spokesman at Shaolin Monastery refused to comment on the matter yesterday. "I don't want to comment on this," he said. "[I fear] it might affect our relationship with the local government." However, a senior manager at Shaolin Monastery Culture Promotion Ltd, the monastery's branch in Beijing, revealed that the municipal government had not sought Shi's opinion before informing them about the listing plan a few days ago. "Shaolin has been a spiritual home for the people for over a thousand years," he said. "How can you trade it on the stock market? That is no different than selling your soul for money." He added that the local government's move had breached national law in protecting religious sites. "But our voice is weak compared with the government's strong ambition," he said. Both the State Administration for Religious Affairs and the Buddhist Association of China said they were not aware of the matter.

China*: Tele2 said on Friday that it and Norway’s Telenor had picked China Huawei to supply their joint 4G network in Sweden, shutting out Ericsson in its home market. Telecom operators are expected to spend billions of euros on the fourth generation LTE (Long Term Evolution) networks as data traffic in their current networks has risen sharply due to the surge in take-up of mobile data cards. Due to the costs, many are opting to share networks, where possible. “Huawei is contributing high technical competence and cost effectiveness, both are key in our extensive investment in the build out of a nationwide 4G network,” Tele2 and Telenor’s jointly owned company, Net4Mobility, said in a statement. Tele2 and Telenor plan to launch commercially next year and cover 99 per cent of Sweden’s population with high-speed 4G services by 2013. They gave no financial details of the deal. “The build-out also includes an increase of 30-50 per cent in the number of base-stations for voice traffic over 2G/GSM, leading to better … coverage over the whole country,” the companies said. The Huawei deal is a blow to Ericsson, the world’s biggest telecoms equipment firm. “We were disappointed that we did not succeed in reaching an agreement with Net4Mobility,” Ericsson said in a statement. “We went as low in price as we could in the negotiations, but it wasn’t enough.” Ericsson has previously won LTE contracts with Verizon and Metro PCS, Japan’s NTT DoCoMo and TeliaSonera.

Premier Wen Jiabao arrives at the plenary session of the UN Climate Summit in Copenhagen on Friday.

Soho China CEO Zhang Xin, seen here with chairman Pan Shiyi (left) in this file photo, on Friday warned that mainland is facing a serious property bubble, especially in second-tier cities. china is already facing a serious property bubble, especially in second-tier cities, and the government must tighten bank lending to prevent it from swelling to dangerous proportions, a top developer said on Friday. The warning by Zhang Xin, chief executive officer of SOHO China (SEHK: 0410), chimes with the views of many analysts who believe that soaring mainland property prices are unsustainable. But it puts her at odds with other real estate bosses, who say that the hot market is justified by fundamental demand. The government has vowed that it will crack down on speculative investment in housing, but Zhang said it will need to act more decisively than it has done so far to head off the burgeoning risks. “The government needs to realise how serious the asset bubble is,” Zhang said. “It cannot control the asset bubble by just saying a few words. The most fundamental solution is to tighten credit.” Beijing earlier this month pledged to use a range of tools including land-use policies and taxation to curb excessive property price rises in some cities. However, a host of property stimulus measures, such as discounts on mortgage rates, that were adopted during the global financial crisis are still in place, and bank lending is set to remain relatively loose next year after surging to record heights this year. “There is a bubble in every city. It’s better in Beijing and Shanghai because at least there is real demand,” she said, while adding that both of these leading mainland cities had higher vacancy rates than London or New York in office and retail space. The picture is much worse in second-tier cities, where supply far outstrips owner-occupier demand and many buildings remain empty, she said. When property transactions dried up last year in the midst of the financial crisis, Beijing stepped in to spur buying activity and instructed banks to open their credit taps. Housing prices dipped only briefly and have rebounded strongly in recent months, climbing beyond their pre-crisis levels. Mainland’s main nationwide property price index rose 5.7 per cent in November from a year earlier. “When one gets fat, you need to cut weight. But this is like you haven’t started losing weight yet and food is coming again,” Zhang said. More than 1.6 trillion yuan, or about one-sixth of mainland’s new loans, went to the property sector in the first 11 months, including mortgage loans to home buyers and lending to developers. Zhang said that if mainland’s monetary stance remained accommodative throughout next year, property prices would continue to trend upward. Under such conditions, SOHO would step up efforts to sell more next year than this year’s contracted sales income of 13 billion yuan (HK$14.74 billion), she said. Currently, SOHO has space worth more than 50 billion yuan available for sale. Zhang said that SOHO feels little urgency to acquire more land or property next year, having paid a combined 8.8 billion yuan in the second half to buy a land lot and an office building in Beijing and another office complex in Shanghai.

China has stiffened rules for purchases of government land by individuals and property developers, including demanding down payment of at least half the transaction price, as it seeks to cool real estate speculation. Full payment for the land must also be completed within a year after the transaction, although this can be extended to two years under certain circumstances, the finance ministry said on its website. An industry official quoted by the official Shanghai Securities News on Friday said rules on down payments and subsequent instalments varied across regions in the country, although down payments generally ranged from 20 to 30 per cent. Rising property prices, fuelled by an unprecedented boom in bank lending in the first half of this year, have aroused fears about broader inflation in mainland. Mainland’s main property price index rose 5.7 per cent in November from a year earlier, while increases have been far steeper in some cities. To dissuade house flipping for quick profits, the State Council said earlier this month that individuals would have to own their homes for five years, up from the previous minimum of two years, to receive a tax exemption on their sale. The government also vowed to use tools, including land-use policies and taxation, to control property price hikes.

China CNR Corp, one of the country’s two big train makers, plans to raise as much as 13.9 billion yuan (HK$15.76 billion) in an initial public offering in Shanghai, after it set a higher-than expected IPO price range. CNR, which competes with China South Locomotive & Rolling Stock Corp, will sell 2.5 billion yuan-denominated A shares at 5.00 yuan to 5.56 yuan each, to raise 12.5 billion to 13.9 billion yuan, the company said in a statement to the Shanghai Stock Exchange on Friday. Shenyin & Wanguo Securities Co had forecast a price range of 4.25 to 5.1 yuan per share, representing 25 to 30 times estimated next year earnings, while Guotai Junan Securities Co had predicted a range of 4.4 to 4.6 yuan. CNR joins other mainland firms in a rush to tap buoyant stock markets this year in the mainland and Hong Kong while the country’s regulators are speeding up IPO approvals to boost equity supply as part of an effort to prevent asset price bubbles. China Shipbuilding Industry Co started trading in Shanghai on Wednesday after raising US$2.2 billion in mainland’s third-largest IPO this year, while China Pacific Insurance raised US$3.1 billion in a new stock offer in Hong Kong on the same day. Mainland and Hong Kong account for seven of the 10 largest global IPOs so far this year. Concerns over swelling supplies of new shares have curbed gains in recent weeks in the mainland’s benchmark Shanghai Composite Index, which is up 75 per cent this year but has faltered whenever it rises near its November highs despite optimism about the economic recovery and corporate earnings. CNR, which also competes with foreign manufacturers such as France’s Alstom and Canada’s Bombardier to supply trains for the world’s fastest-growing major railway market, has said it needed 6.44 billion yuan to upgrade its technology. The company said 40 per cent of the new shares would be offered to institutional investors while the remaining 60 per cent would be allotted to the retail portion. CNR has hired China International Capital Corp (CICC), Huatai Securities and Huarong Securities to help arrange the IPO.

Vice Minister of Foreign Affairs He Yafei talks at a briefing at the climate summit in Copenhagen on Thursday. China said on Thursday a US pledge to mobilise US$100 billion a year in climate funds was a "good step", and signalled Beijing was seeking compromise with Washington on its demand for checks on Chinese emissions curbs. But Vice Foreign Minister He Yafei, bearing a message from Premier Wen Jiabao, warned that the UN-led negotiations in Copenhagen were at a critical stage and could be wrecked if the 193 countries taking part didn’t pull together. The December 7-18 summit is officially due to wrap up a new deal to tackle global warming on Friday, but rifts between rich and poor nations over everything from funding to which draft deal should be on the table, have made for agonisingly slow progress. US Secretary of State Hillary Clinton tried to break the deadlock on Thursday with a pledge to help mobilise the US$100 billion a year by 2020 to assist poor nations shift to greener growth and adapt to a warmer world. He, who had previously said finance was China’s top concern at the talks, said the move was positive. “I think the financial issue is very important. Whatever initiative these countries will announce is a good step,” He told reporters when asked about the US announcement. He also suggested that China was working towards a deal on controls of its emissions curbing efforts that would satisfy US concerns. Another official earlier said the two countries were having regular and productive bilateral meetings. “In terms of mitigation actions [emissions curbs], we can also consider, international exchange, dialogue and cooperation that is not intrusive and does not infringe upon our sovereignty,” He said.

Guangzhou is emerging as a battle ground between developers and residents, with a building rush for the 2010 Asian Games stirring protests that echo nationwide tensions over land.

Taiwan and China will discuss a free trade pact at formal talks next week amid protests planned by the island’s opposition parties wary of deeper engagement with Beijing.

Guangdong will spend 72.6 billion yuan (HK$82.3 billion) to transform sleepy Hengqin Island off Macau from a bleak outpost with a gross domestic product of just 128 million yuan last year into a key base for cross-delta co-operation. A new town will be built on the 86 square kilometre island, with a theme park, multi-functional power station and business district. Guangdong party boss Wang Yang and governor Huang Huahua officiated at a ceremony on Wednesday to launch Hengqin's Communist Party office. Hengqin now has sub-provincial administrative status, joining the ranks of Pudong New Area in Shanghai and Binhai New Area in Tianjin. More details of key projects in Hengqin were unveiled by officials as they launched the party office. A 12 billion yuan power station will be built by China Power (SEHK: 2380) Investment on a 360,000 square metre site on the island's northwest. To be ready in 2012, it will provide electricity, heating, gas and drinking water. A 10 billion yuan theme park will be built by Guangzhou-based Chimelong Group, which runs a safari park in Panyu district. The first phase of the 400,000 square metre park could be ready by early 2012. The park may feature pandas, as Guangdong authorities listed "experience in raising and exhibiting giant pandas and koalas" among prerequisites for bidding when they tendered the right to build the park last year. Part of a 38 billion yuan business district, known as Shizimen (Cross Gate), will be built on a 3.5 square kilometre site in the north of Hengqin. This will feature convention and exhibition centres, office towers and five-star hotels. In another project, the University of Macau will be moved to Hengqin and a cross-harbour tunnel will link the university's future campus with Macau's Cotai Strip. The island, part of the Zhuhai Special Economic Zone, will also pilot co-operation projects with Macau in customs, financial and revenue systems, and land management. Macau's policymakers and developers have long been eyeing Hengqin to ease the pressure of population growth. The former Portuguese enclave has arguably the world's highest population density, with 541,200 residents sharing just 29 square kilometers of land. Just a few hundred metres from Cotai, Hengqin is three times the size of Macau, but has fewer than 7,000 residents.

Dec 19, 2009

Hong Kong*: Tourists visiting Hong Kong were most impressed with the city’s transport system, a new study released on Thursday found. The study was conducted by the Hong Kong Polytechnic University’s School of Hotel and Tourism Management. Known as the PolyU tourist satisfaction index (PolyU TSI), it measured the “satisfaction level” of tourists in Hong Kong. PolyU associate director Song Haiyan said 2,841 tourists were interviewed from different countries. They were asked about six tourism-related sectors: transport, immigration, attractions, hotels, retail shops, and restaurants. The study found that among the six sectors, transport received the highest tourist satisfaction index score of 77.79 out of 100, followed by immigration, and then hotels. Tourists’ satisfaction in the retail shops and restaurants were only ranked fifth and sixth, the study found, with an index score of 69.44 and 68.85 respectively.

Hong Kong's transportation system, immigration staff and tourist attractions are rated as top class by visitors. Hotels are fourth on the tourist satisfaction index, followed by restaurants and retail stores. This was revealed by a Hong Kong Polytechnic University survey of 3,000 visitors, who gave the city an average rating of 72.65 out of 100. Chair professor and director of the university's School of Hotel and Tourism Management, Kaye Chon Kye-sung, described the figure as "satisfactory." Transportation facilities got 77.79 points while immigration officers scored a handsome 74.27, a touch more than the tourist attractions, which received 74.26. Hotels came in at 71.67, while restaurants and retail shops brought up the rear with 69.44 and 68.85 respectively. Tourists from North America were the most impressed by Hong Kong, giving it the highest points of 78.43. Those from Australia, New Zealand and the Pacific region rated the city at 76.22 while visitors from Europe, Africa and the Middle East awarded it 75.04. Mainlanders rated us at 74.32. However, the SAR was less of a hit with tourists from Taiwan, Macau, Japan and South Korea, with scores ranging from 66.27 to 66.33, though the Japanese and Koreans did give the hotels higher marks than the Europeans. School of Hotel and Tourism Management associate director Song Haiyan said the high ratings from Europeans and Americans may have come because they were charmed by the local transportation system, which is nothing unusual for most Asians. However, Song said language training in the service industries must be improved, and warned that the high turnover rate of frontline staff in some service-sensitive industries could lead to inconsistent standards. The scoring method for the retail sector drew some criticism, with Hong Kong Retail Management Association chairwoman Caroline Mak Sui-king saying the sector provides a wide range of high- and low-end shopping choices and it was unfair to grade them together. Hong Kong Federation of Restaurants and Related Trades chairman Lock Kwok-on said the low rating for his sector was a warning to improve employees' language training.

Hong Kong's latest jobless rate edged down for the third consecutive month to 5.1 percent on measures to stimulate economic recovery, bucking the market consensus that it would remain unchanged. Figures released by the Census and Statistics Department show the seasonally adjusted unemployment rate fell from 5.2 percent in August- October to 5.1 percent in September-November. Bank of East Asia (0023) chief economist Paul Tang Sai-on and Hang Seng Bank (0011) senior economist Irina Fan Yuen-yee noted that the improvement in the August-October rate was actually the result of a shrinking labor force, but that total employment actually rose by about 9,300 this time. "We can see from the November figures that companies are confident enough to create new posts," Fan said. "Only because of this do we think the labor market is well positioned to improve." Tang believes the increase in the underemployment rate from 2.4 to 2.5 percent is of little concern as employers on the whole are willing to recruit. Secretary for Labour and Welfare Matthew Cheung Kin-chung said the improvements are largely due to the construction sector, where unemployment shrank seven months in a row to 7.6 percent. "With construction commencing on the Hong Kong-Zhuhai-Macau Bridge and Disneyland expanding, the employment situation in the construction sector can be expected to show steady growth," Cheung said. Tang said statistics show the mainland manufacturing sector is picking up, which in turn will benefit local exports. The trading and logistics industries employ 25 percent of the local workforce and they have improved significantly, Fan said, adding that industries related to stocks, properties and tourism are also expanding. Tang expects the SAR to see bright job prospects in the first half, but the second half will depend on the sustainability of the US recovery. Hang Seng Bank revised its average unemployment estimate for next year down from 5.3 to 4.8 percent. Goldman Sachs economists predict the unemployment rate will eventually fall to 4.5 percent next year. They forecast GDP growth to recover from minus 3 percent this year to 5.8 percent in 2010. Hang Seng's growth estimate for next year is 3.5 percent - still below the trend of 5 percent in the past.

Chief Executive Donald Tsang Yam-kuen receives an injection against swine flu at a local clinic on Thursday. Tsang was trying to encourage people susceptible to the disease to get themselves immunized.

Hit by a weak wholesale market in Europe and lacklustre retail growth, Esprit group is looking to mainland as its most important growth engine in the coming months. Fashion retailer Esprit Holdings (SEHK: 0330) will buy the 51 per cent stake it does not already own in a retail joint venture with China Resources Enterprise (SEHK: 0291) for HK$3.88 billion, the companies said on Thursday. The deal will see Esprit take full control of the 10-year-old venture as it embarks on an expansion drive in mainland. For China Resources, selling the stake will allow it to focus on its core businesses, which includes supermarkets, beer production, food processing and food distribution. The mainland conglomerate said in a joint statement that it would record a HK$3.2 billion gain from sale of the stake. Trading in shares of Esprit and China Resources Enterprise were suspended earlier on Thursday. Shares of China Resources Enterprise have more than doubled so far this year prior while Esprit shares have gained 16.6 per cent, compared with a 50 per cent rise in the Hang Seng Index as of Wednesday’s close. Esprit, whose competitors include Hennes & Mauritz and GAP, has been hit by a weak wholesaling environment in Europe and lacklustre retail growth. The fashion group said mainland presented great strategic value and would be one of its most important growth engines. The world’s No 7 fashion group by market value said earlier this month that it would cut the number of new stores planned for the current fiscal year to 50, from an earlier target of 60-80, as consumers were still very conservative. Esprit said it aimed to open more stores in mainland. The joint venture, Tactical Solutions Incorporated, has 1,112 outlets in 171 mainland cities, comprising 345 self-operated stores and 767 franchise stores as of June 30, this year. It distributes “Esprit” and “Red Earth” trademarks products. “The transaction will further facilitate Esprit to continue its expansion in the PRC,” Esprit said in the statement. In November, China Resources Enterprise said it may consider spinning off of its beer and supermarket businesses but that no timetable had been set. Beijing-backed China Resources operates supermarkets, processes meat, and produces its Snow-brand beer with SABMiller in the world’s fastest growing major economy. It posted a 55 per cent rise in profit to HK$1.04 billion for the July-September quarter as sales grew. UBS is the financial adviser for Esprit and Goldman Sachs is the adviser for China Resources Enterprise.

The row between Taiwanese snack tycoon Tsai Eng-meng and Payson Cha Mou-sing, two of ATV's largest shareholders, has deepened with the tycoon saying he feels there has been a breach of trust. The dispute emerged after the two accused each other of "bad faith" over the investments, following the acquisition by Tsai of a stake in ATV earlier this year. "I fully trusted him when I first signed the agreement with him," said Tsai, speaking for the first time to the media in Taipei yesterday about the row. "And it seems to me now that there could be traps in the deal," he added. Tsai, chairman of Want Wang China Holdings, was referring to the issuing of 50 million convertible bonds approved by the ATV board on October 17, for which the selling price was just 28 HK cents each, instead of HK$1.37 in the agreement. Tsai said he had been asked three times to provide a total of HK$150 million in funding through the issuing of convertible bonds, for which he had to pay HK$1.38 each in line with the agreement. The October 17 approval came just a day after Tsai told the ATV board he had nominated a Hong Kong person to represent him on the board. Tsai said that Cha always took along a lawyer when meeting him and said behind his back he did not like something Tsai had done. "Maybe I should bring a lawyer along every time I meet Cha in future," he said. Tsai said he had high respect but felt he did not get the same respect in return, which he found disappointing. He said he had not encountered similar problems while buying the Taipei-based China Times media group. Tsai said he had agreed to invest because he had confidence in ATV's future despite its deficit. While he had no plan to take over the management of the broadcaster, he could provide some proposals to help ATV, including getting more clients from Guangdong for TV commercials, which he believed was one way to help increase the station's income. On allegations that he had offered to provide HK$1 billion in funding for ATV, Tsai said he had never said that verbally or in print. An ATV spokesman declined to comment last night and stressed the station's operation has not been affected. The Cha family also declined to comment. But a senior ATV staff member said: "This is the most serious in-fighting among the shareholders I have ever seen here." The latest development comes after the South China Morning Post (SEHK: 0583) reported on two letters from Tsai to Cha, in which the Taiwanese tycoon accused his fellow shareholder of "bad faith" and being "ridiculous" over unspecified allegations about proposals that he pour additional money into ATV. He wrote that as a minority investor without control and no ability to gain control it was "simply not realistic" for him to provide a "disproportionate level of additional funding" for ATV, when no other shareholders intended to provide extra money.

A special group of children broke from their routine this week to take part in an engaging art project at Citywalk mall in Tsuen Wan. The project, called "Take a Break with ART", is an extension of the Sino Group's award-winning effort "Art in Hong Kong", a programme that brings art to Hongkongers inside various Sino properties. The latest project is housed in a Citywalk shop on the upper ground floor, numbered UG 45a and b. Artists from the Hong Kong Society of Illustrators have painted the shop's walls, and created objects, around the theme "Take a break". There are depictions of take a break to shop, take a break for coffee time, take a break to be a sloth, take a break to feel the world. There's even take a break to fly over the city. The exhibit - which lasts until early February - is not just focused on individual work or the illustrators' impressive joint mural. From time to time, the Sino Group invites the public to join the artists for art jam sessions, interactive art demonstrations for the curious and the creative. An art jam session "is a community art activity", said Nikki Ng, group general manager of the Sino Group. "It is an art process that involves professional artists and community members in a collaborative creative process resulting in collective experience and public expression." On Sunday, the Sino Group invited children of Stand by U, and some parents, to attend two sessions. Stand by U is a mentoring and counselling programme for children who live with a parent or parents suffering from mental illness. The programme was created by the Baptist Oi Kwan Social Service group, which is an Operation Santa Claus 2009 beneficiary. "Sino Group has been a long-standing supporter of this annual charity campaign," Ng said. "All Operation Santa Claus campaigns are heavily community-focused and are making a direct and noticeable impact with specific projects. We are delighted to be a supporter for another year." On Sunday, the Stand by U participants learned how to make window stickers under the guidance of illustrators. The guests drew pictures on plain paper with pencils and markers, placed a clear adhesive sheet over their works and traced their expressive efforts on to them. Afterwards, the group cut around their images on the adhesive sheet, peeled away the backing and stuck their work on the shop's front glass window. Their drawings joined the illustrations of some of the city's most talented artists. The art jam was "a good opportunity for them [parents and children] to have an opportunity to draw together," said Cosette Chan Lee-ting, a Stand by U case worker. Some "parents who suffer mental illness ... like to stay at home, and they seldom have any activities with their children". "This kind of activity provides chances for the parents to ... improve their relationships," Chan said. And for children, "they also have the chance to spend time with other children. It may help their social skills and it's also a good opportunity to have some fun." Chan said Stand by U was still looking for bilingual volunteers to help mentor children or chaperone group outings.

Over the 10 years since Macao's return to the People's Republic of China in 1999, the former Portuguese colony has witnessed nothing less than an economic miracle. Macao's gross domestic product (GDP) tripled during that period and reached MOP171.87 billion ($21.48 billion) in 2008, growing at an average rate of nearly 15 percent per year. The 2008 per-capita GDP of Macao, which lies west of the Pearl River and is China's second special administrative region on the southeast coast of the country, stood at $39,036, a figure that ranks it second in Asia behind only Japan. With government coffers expanding from growing tax revenues collected from the gaming industry, the social welfare system in the region, which is home to 549,200 residents, has also improved dramatically in recent years. Beginning in the fall of 2007, the Macao Special Administrative Region (SAR) Government began offering 15 years of free education from kindergarten to senior high school. The Macao SAR Government initiated a "wealth share" handout program in 2008 to allow the public to benefit from its strong budget surplus. Under the program, residents were given MOP5,000 ($625) per person in 2008 and MOP6,000 ($750) per person in 2009. In both years, non-permanent residents received half of that sum. In October, Macao announced a plan to open individual retirement accounts in the central savings regime for the residents of Macao. The government immediately injected MOP3.3 billion ($412.5 million) into the new system, which amounted to MOP10,000 ($1,250) per account. The money was allocated from the MOP25.1 billion ($3.14 billion) budget surplus recorded in 2008. Money in the accounts for all residents 22 years old and higher can be withdrawn once the beneficiary reaches the age of 65. The government calls this measure a new form of retirement social security for Macao's residents. Speaking at the Legislative Assembly in his final official meeting with the local parliament on November 19, Macao's Chief Executive of 10 years, Edmund Ho Hau Wah, said he estimated that 2009 would see a surplus of more than MOP10 billion ($1.25 billion), according to the Macao News Agency. "Next year, the government will continue to implement measures for exemption and reduction of taxes that it has adopted over the last few years, with the aim of helping companies and citizens to face the pressures and difficulties resulting from the international financial crisis," he said. Celebrations of the 10th anniversary of Macao's return to its motherland included a December 4 seminar in Beijing on the 10th anniversary of the implementation of the Basic Law of the Macao Special Administrative Region, where China's top legislator, Wu Bangguo, delivered a speech reviewing progress made in Macao over the past decade. On December 11, a photo exhibition on Macao's achievements in the last 10 years opened at Beijing's Capital Museum.

China*: China US$80 billion national pension fund plans to boost its investments abroad, mainland media reported on Thursday, as Beijing faces renewed pressure to let its managed currency appreciate after global markets stabilise. China’s National Social Security Fund (NSSF) will raise its overseas investment limit to 20 per cent of total assets from the current 7 per cent, the China Securities Journal reported, citing chairman Dai Xianglong. He did not specify when the investment cap would be lifted. Mainland, which literally re-pegged the yuan to the US dollar since last July to aid local exporters is now under increasing pressure to let its currency appreciate as the global financial crisis calms. Allowing more mainland money to be invested overseas will help ease that pressure, said Zhao Qingming, analyst at China Construction Bank (SEHK: 0939). “NSSF needs to convert yuan into foreign currencies to invest overseas, which would surely ease pressure on accumulation of foreign exchange reserves,” Zhao said. On the other hand, “the global economy is recovering, so there will be some nice investment opportunities”. China Investment Corp (CIC), the country’s US$300 billion sovereign wealth fund, has also stepped up activities in global financial markets this year, and the government in October resumed issuing quotas for overseas investment under the Qualified Domestic Institutional Investor (QDII) scheme. NSSF, the fund of last resort for mainland’s patchwork of underfunded provincial pension schemes, has made an annual investment return of 8.98 per cent on average since it was established in 2000. Assets under management are expected to grow to 1 trillion yuan (HK$1.13 trillion) in a year, up from US$80 billion at the end of last year, chairman Dai said on October 28. A NSSF spokesperson declined to comment on Thursday’s report. The pension fund is likely to invest globally either through outside money managers, or through partnerships with mainland companies going abroad, analyst Zhao said. NSSF had appointed a new set of foreign asset managers, including BNY Mellon Asset Management and Schroders, to help it with a new round of overseas investment, sources with direct knowledge of the situation said in June. In late 2006, the pension fund selected 10 foreign fund houses to help invest US$1 billion in global stock and bond markets. “NSSF’s investment now is concentrated in the domestic market,” said Zhang Haochuan, analyst at fund consultancy Z-Ben Advisors. “But China’s capital market is only about 10 per cent of the global market, so investing up to 20 per cent of assets in places like the US and Europe is not too much.” But in the short term, NSSF may face risks, as the global equity markets have rebounded sharply from their bottoms seen in the worst of the financial crisis last year, while economic prospects remain murky. Hong Kong’s Hang Seng Index has rallied almost 50 per cent this year, while the Dow Jones Industrial Average has rebounded 61 per cent from its March low. “The timing now for overseas investment must be worse than a year ago, and would exert pressure on short-term returns,” Zhang said. “But if you take a 20-year horizon, the benefit of venturing out outweighs the risks.”

New World Development (0017) plans to invest US$1 billion (HK$7.8 billion) to open seven art malls - shopping centers that feature art pieces - in the mainland over the next five to seven years, said executive director Adrian Cheng Chi-kong. The developer plans to expand the concept of art malls, after opening the first one, K11, yesterday in Hong Kong. The next K11 will open in Wuhan around June and another one will open in Shanghai in 2011, said Cheng. Cheng expects measures by the mainland to cool the property market to have only a slight impact on NWD's mainland property unit, New World China Land (0917). NWD executive director Stewart Leung Chi-kin believes Beijing may rein in mortgage loans. On Hong Kong property prices, Leung said a rise of 10 percent more is still acceptable. NWD invested HK$3 billion in K11 in Hong Kong, Cheng said. The occupancy rate is 80 percent. The general retail area in the mall has been leased at more than HK$250 a square foot, while food and beverage rents are between HK$50 and HK$80 psf. Average spending per customer is forecast at HK$1,700 to HK$1,800, Cheng said, adding that 65 percent of the shops are brands coming to Hong Kong for the first time. The art mall displays 32 sets of art - 13 sets were bought by NWD for HK$20 million and the rest are for sale. The 340,000-square-foot six-story mall features a 36-meter wide giant curved wall that doubles as a projection screen, a 11.8-meter high waterfall and maple trees. The mall is connected to the Hyatt Regency Hong Kong, Tsim Sha Tsui and residential project The Masterpiece.

Chinese Premier Wen Jiabao (3rd, R) poses for a group photo with President of the Maldvies Mohammed Nasheed (3rd, L), Bangladeshi Prime Minister Sheikh Hasina (2nd, L), Ethiopian Prime Minister Meles Zenawi (2nd, R), Grenadian Prime Minister Tillman Thomas (1st, R) and Sudanese Presidential Assistant Nafie Ali Nafie (1st, L) ahead of their meeting in Copenhagen, capital of Denmark, on Dec. 17, 2009.

Representatives watch as Shao Ning(2nd R), vice minister in charge of the State-owned Assets Supervision and Administration Commission (SASAC), and Li Changyin(R), board chairman of China Shipbuilding Industry Corp, ring a gong during the ceremony of China Shipbuilding Industry (601989.SH) at Shanghai Stock Exchange in Shanghai, east China, Dec. 16, 2009.

South Korean President Lee Myung-bak and Vice President Xi Jinping shake hands before trade talks at the presidential Blue House in Seoul on Thursday. The man seen as the next leader of China on Thursday called for talks with South Korea on a free trade deal, saying a pact between the Asian economic powers and rivals would benefit both countries. If a pact goes forward, it could leave the region’s biggest economy, Japan, out in the cold, but the increasingly overlapping interests of the South Korean and Chinese economies make reaching a deal difficult. The three countries account for about one-sixth of the global economy. “Reaching a free trade deal between China and South Korea meets the interests of both countries,” Vice President Xi Jinping was quoted as saying in a meeting with South Korean President Lee Myung-bak by Lee’s office. South Korea and China have been jointly studying a trade deal for years but policymakers in Seoul are wary of a backlash coming from the politically powerful farm lobby who would face stiff competition from cheap Chinese products. China is South Korea’s biggest export market led by steel and electronic products. Two-way trade of US$168 billion (HK$1.3 trillion) last year is expected to double by 2013 if they implement a free trade deal, according to a joint study. South Korea’s exports to China in November rose 54.7 per cent from a year ago, the South’s finance ministry said this month. South Korea has seen its leading position in sectors such as shipbuilding and steel eroded by Chinese manufacturers who have relied on cheap labour and steadily improved technology to grab greater global market share. But in a setback for a major Chinese business, a South Korean court approved a tough restructuring plan to help revive struggling Ssangyong that had been opposed by Shanghai-based SAIC Motors, its majority owner. The plan involves a sharp write-down of SAIC’s investment in Ssangyong, which lags other domestic brands by a wide margin and is seen needing a massive amount of funding for a still slim chance of a turnaround, in a stark reminder of how overseas forays can go wrong. South Korea, which has depended heavily on exports to fuel growth, has struck major free trade pacts in recent years, ratifying a deal with India last month and signing another with the European Union in October. A deal with the United States reached in 2007 has yet to be ratified by the assemblies of both countries, with some US lawmakers calling for a revision of its provisions on autos. Xi, 56, is tipped to succeed Hu Jintao as Communist Party chief and president in 2012 and 2013 respectively. His Asian tour, which also included Japan, follows a trip across Western Europe in October and appears to be another step in burnishing his diplomatic credentials.

China has told participants at UN climate change negotiations it sees no possibility of achieving an operational accord to tackle global warming this week, an official involved in the talks said on Thursday. Dozens of heads of state are descending on the Danish capital to address the conference, hoping to sign a new pact to curb greenhouse gas emissions on Friday. The official, who asked not to be identified, told reporters the Chinese had instead suggested issuing “a short political declaration of some sort,” but it was not clear what that declaration would say. The official said negotiations were continuing in an attempt to reach a breakthrough that would allow a more meaningful agreement to be signed. US President Barack Obama has called for an “operational accord” – essentially a political agreement with teeth that can get countries working to cut or curb their greenhouse gas emissions while a more formal and binding treaty is hammered out next year. Some ministers warned that slow, often stalled talks during the December 7-18 summit meant it was staring at failure. “We may not get there on the substance. It is quite possible we’ll fail on the substance. But at least let’s give it a try,” said Britain’s energy and climate minister Ed Miliband. “At the moment the problem is we’re not giving it a try.” Developed and developing nations are at odds over who should cut emissions, how deep the cuts should be and how much funding should be provided to poor countries to help them shift to greener growth and adapt to a warmer world. Roughly 120 heads of state and government are expected to show up in Copenhagen in the next two days, with Obama planning to arrive on Friday morning. Speakers are lined up to address the summit until the small hours of the morning, including political heavyweights such as Iranian President Mahmoud Ahmadinejad, Germany’s Chancellor Angela Merkel, Brazilian President Luiz Inacio Lula de Silva and French President Nicolas Sarkozy. But rather than an ironed-out final document, leaders will find draft texts littered with incomplete choices, exposing long-running rifts between rich and poor countries on how to split the cost of fighting climate change. Denmark said it was trying to simplify several complex draft negotiating texts to help the leaders agree upon a deal. But developing nations rejected Denmark’s effort to select small negotiating groups to storm through the laboured draft texts, saying the process had to be fully inclusive. China told Denmark on Wednesday night it was siding with developing nations and argued it was not empowered to change the process by delegating to the small negotiating groups. While the overall picture appears bleak, there has been some progress in areas critical to reaching a deal. Africa dramatically scaled back its expectations for climate aid from rich nations, and Japan pledged about US$11 billion in public funds to 2012 to help poor countries adapt to a warmer world and cut their emissions. Talks on a UN-backed system to pay poorer nations to curb deforestation have advanced, and the US pledged US$1 billion in short-term funds to conserve tropical forests. A major sticking point between the world’s top emitters, the US and China, has been the question of how they will prove they are sticking to emission-curbing plans. Earlier, China had signaled it might find a way to end the stand-off, dropping previous hardline language and suggesting “national communications” on emissions that the Kyoto Protocol already requires of developing nations could hold a solution. “The convention has a very clear stipulation as to the operation of a national communication system,” Chinese delegate Su Wei said. “It will not be difficult for us to find a solution to this problem [verification], as long as we adhere to the principles of the convention, it is not a crucial problem,” he said.

China plans to invest more than three trillion yuan (HK$3.4 trillion) in environmental protection over five years from 2011, state media said on Thursday, as the country battles widespread pollution. Wu Xiaoqing, deputy head of the environmental protection ministry, said a third of the overall investment would go towards the operating costs of pollution control facilities, the official People’s Daily newspaper said. The investment period refers to the nation’s next five-year economic development plan, which begins in 2011. The comments came as negotiators at crunch talks in Copenhagen were racing against time to broker a deal to combat climate change beyond 2012. China, the world’s biggest carbon polluter, has pledged to reduce carbon emissions per unit of gross domestic product by 40 to 45 per cent by 2020 based on 2005 levels. However, experts say its emissions could still double given economic growth projections. Heavy pollution is widespread in the mainland, which relies on coal for 70 per cent of its fast-growing energy needs and is home to countless coal-burning power plants. Rapid industrialization in recent decades, prioritization of economic growth over environmental protection and soaring sales of cars and other pollution sources have all contributed to the problem.

Chairman of Brilliance China Automative Holdings Limited Wu Xiaoan, seen here in a file photo, said on Thursday that sales and profit growth for their joint venture with BMW to exceed 20 per cent next year. Brilliance China (SEHK: 1114) Automotive said on Thursday it was in talks with Toyota Motor, the world’s top car maker, on technology co-operation and the possibility of forming a joint venture for minivan production. Brilliance, the country’s eighth-largest car maker and a joint venture partner of BMW, has a long term relationship with Toyota that has been transferring technology know-how on minivan production to the mainland company. “We are exploring the possibility of making new minivan products together, which could involve equity cooperation, such as setting up a joint venture,” Chairman Wu Xiaoan told reporters after a shareholder meeting. Shareholders gave a green light for Brilliance to sell its loss-making Zhonghua sedan manufacturing business to its parent, Huachen Automotive Group Holdings, for up to 550 million yuan (HK$624 million). “Brilliance will focus its resources on the BMW joint venture and minivan production to make the firm more profitable,” Wu said. Brilliance posted a net loss of 386 million yuan in the first half of this year due to hefty losses from Zhonghua versus a profit of 283 million yuan the previous year. BMW Brilliance contributed a net profit of 116 million yuan during the period, up 6 per cent. Huachen is also in talks with Daimler AG’s Mercedes-Benz unit on possible co-operation, such as using Benz’s production facilities in mainland to develop new models of special purpose vehicles for the company, Huachen chairman Qi Yumin said. Brilliance is confident about domestic car market and expects sales and profit growth for its joint venture with BMW to exceed 20 per cent next year, Wu said. Mainland continues to support the auto market by extending its stimulus policies, including tax incentives, and residents’ savings remain high, so auto sales should rise next year although the growth will be lower than about 41 per cent this year, said Qi, who is also Brilliance’s CEO. “We expect China’s auto sales growth about 15-20 per cent next year,” he said. Sales of its joint venture with BMW reached 41,372 cars in the year to November and it is expected to sell more than 43,000 this year. It posted a 25 per cent sales growth in the first half and the growth in the second half will be higher than that. “The profit in the second half will be significantly higher,” Wu said. The company manufactures BMW 3 Series and 5 Series sedans at a plant in Shenyang. Brilliance also planned to boost production of minivans to 100,000 next year, up 25 per cent from this year, and would export 16,000 of them versus just 5,000 this year, Qi said. Production of Zhonghua sedans will rise about 66 per cent to 200,000 next year, he added. Shares of Brilliance eased 0.9 per cent at noon, in line with a 0.7 per cent loss in the broader market.

Regulatory departments are strengthening their supervision over financial institutions to prevent an incomprehensible financial scenario from unfolding: the failure of the Chinese banking system, an event which would overshadow the collapse of Lehman Brothers Inc. in the United States in 2008. Because the robust Chinese economic development has been a major foundation for renewed confidence worldwide, if Chinese banks—which experienced the least turmoil during the financial crisis—were to encounter serious problems, the world could once again be thrown into an economic abyss. Recently, the China Banking Regulatory Commission (CBRC) and the central bank publicized a number of policies guiding the capital adequacy ratio of commercial banks to ensure the banking sector run safely and smoothly. Inadequate capital is considered the biggest threat to the banking industry, supervisory authorities said. In order to cushion the blow from the financial crisis and secure sufficient liquidity, banks began shoveling money liberally into the market. In the first 10 months of this year, newly added renminbi-denominated loans stood at 8.92 trillion yuan ($1.31 trillion), the equivalent of roughly one third of the China's gross domestic product in 2008. The generosity of the banks' monetary measures resulted in a drop of 1 to 3 percentage points in their capital adequacy ratio, leaving small and medium-sized commercial banks under even greater pressure than the larger financial institutions. In the December 1 issue of China Finance magazine, Vice Minister of the CBRC Wang Zhaoxing outlined the CBRC's increase in the minimum capital adequacy ratio from 8 percent to 10 percent for small and medium-sized banks and 11 percent for larger banks. The CBRC also expanded the non-performing loans provisioning coverage ratio from 100 percent to a more encompassing 150 percent. Wang said increases in the two ratios were meant to encourage the banks to turn profits into concrete assets and provisioning coverage to cope with unexpected losses, allowing the banking industry in its entirety to operate soundly. Despite the CBRC guidelines, many banks are on the verge of falling below the threshold. According to third quarter reports from the three major listed banks, capital adequacy ratios had amounted to 11.63 percent by September 30 for the Bank of China, 12.6 percent for the Industrial and Commercial Bank of China and 12.11 percent for China Construction Bank.

Dec 18, 2009

Hong Kong*: Health Secretary York Chow Yat-ngok on Wednesday said he was confident the doses of swine flu vaccine supplied by manufacturer Sanofi Pasteur were safe and effective – despite a recall in the US. Chow was responding to the company’s recall on Tuesday of 800,000 doses of swine flu intended for children in the US. The action was taken because tests had indicated some vaccine doses were inadequate. The recall is for 800,000 pre-filled syringes intended for young children, aged from six months to nearly three years. The shots, made by Sanofi Pasteur – the vaccine division of French pharmaceuticals giant Sanofi Aventis, were distributed across the US last month and most have already been used. Tests done before the shots were shipped showed the vaccines were powerful enough. But tests done weeks later indicated their strength had fallen slightly below required levels. “The recalled lots in the US consists of pre-filled syringes for paediatric use,” Chow told reporters. “Hong Kong has ordered swine flu vaccines from the same manufacturing company, Sanofi Pasteur. But the vaccines recalled are different from the Hong Kong batch – which consist of multi-dose vials,” he explained. He said the Department of Health had scrutinized the batch certificates and quality-control reports of human swine flu vaccine lots received in Hong Kong. “We confirm that our vaccines meet all the potency specifications,” Chow said. He said the human swine flu vaccination program in Hong Kong would proceed as planned.“ I appeal to those belonging to the five key high-risk groups – including healthcare workers, chronic patients and pregnant women, children aged six months to six years, the elderly, and pig farmers and slaughterhouse workers. “They should go to public clinics or designated private clinics to receive swine flu vaccines, which start next Monday.” Chow said he would continue to promote the vaccination program. The health secretary, Chief Executive Donald Tsang Yam-kuen and other senior officials will receive vaccinations at Sai Wan Ho General Out-patient Clinic on Thursday. Meanwhile, a spokeswoman for Sanofi-Aventis in Hong Kong said the vaccines for children that have been recalled in the US were individually packed and produced there. : She said they were different from Hong Kong’s vaccines, which were imported from France. She stressed the company had recalled the vaccines not because of safety concerns, but because tests showed their strength had fallen slightly below required levels.

China Pacific Insurance (Group) Co, the country’s third-largest life insurer, raised US$3.1 billion in the world’s seventh-largest IPO this year, when it priced its Hong Kong initial public offering near the middle of an indicated range, a source familiar with the deal said on Wednesday. Shanghai-listed China Pacific, part-owned by US private equity firm Carlyle Group, sold 861.3 million shares, or 10.2 per cent of its enlarged share capital, at HK$28.0 each, compared with a range of HK$26.8 to HK$30.1, the source said. At the offering price, China Pacific Insurance is valued at about 1.8 times next year basis embedded value estimated by bookrunners. By comparison, China Life (SEHK: 2628), mainland’s No 1 life insurer traded at 2.87 times forecast next year embedded value, while No 2 life insurer Ping An traded at 3.71 times forecast next year embedded value, according to a UBS research report. China Pacific Insurance’s Hong Kong share offering price has about 5 per cent discount to its Shanghai-based shares, which ended on Tuesday at 26.03 yuan (HK$29.50). Its Shanghai-based shares have gained 134 per cent this year, outperforming the Shanghai Composite Index’s 80 per cent rise. The insurer has also signed up five cornerstone investors, including Allianz, Mitsui Sumitomo, for a combined US$395 million worth of shares, with a commitment not to sell their investments for six months. Carlyle is committed to holding its shares for at least one year. China Pacific Insurance’s trading debut set for December 23, under the symbol “2601”. China International Capital Corp (CICC), Credit Suisse, Goldman Sachs and UBS are handling the deal. Mainland’s life insurance market has seen an increase in recent years, thanks in part to Beijing’s focus on health care and the rapid economic growth in the world’s third-biggest economy.

Hong Kong’s quasi-government trade body on Wednesday forecast the territory’s exports will rise five per cent next year, recovering from a decline this year but below trend growth as global demand is expected to pick up slowly. The Hong Kong Trade Development Council forecast that exports this year - down 15.8 per cent by value in the first 10 months from a year earlier - would drop 12 per cent. A year ago, it forecast only a six per cent decline in shipments this year. More than 50 per cent of the territory’s merchandise exports are electronic goods. As a regional trading hub and re-export centre for goods passing to and from the mainland, Hong Kong has been hard hit by the global recession in the past year, although the trade council said it expected exports to return to growth by year-end. Recovery next year will be below average annual export growth of 7.9 per cent in the decade through last year. The trade council forecast that imports next year would rise 6 per cent, picking up after an expected 10 per cent decline this year.

Text messages are so quick and easy to send and read that most people do not think twice about using them - but they can carry a sting in their tail. Ask the man who was hit with a HK$10,000 bill after signing up for a "free" friend-seeking service. Or the one who registered his phone number for a "free" lucky draw but who ended up with a HK$70 bill for text messages sent to him. These examples were cited by the Consumer Council yesterday as it warned about the traps of services that can produce rude shocks when subscribers receive their phone bills. "People may have authorised the receiving of paid messages without realising it," the head of the council's publicity and community relations committee, Ambrose Ho, said. Short messaging services fall under the Unsolicited Electronic Messages Ordinance, introduced in 2007 to crack down on junk calls and messages, but the regulator, the Office of the Telecommunications Authority, said the complaints mentioned by the Consumer Council would have to be considered case by case. One of the traps is an offer of services such as personality tests, IQ tests, friend matching and ringtones advertised as free on websites. But many who sign up do not notice conditions that state they will be sent costly text messages after they leave their mobile-phone numbers online. Whether the recipients reply to or ignore the messages, they can be charged for them, the council says. In the first 11 months of this year, the watchdog received 470 complaints about disputes over such charges. One came from a man who signed up for a friend-finding service after receiving a message that he could send texts to potential friends free of charge. He used the service frequently, running up a HK$10,000 bill before realising he was being charged HK$5 per message. After complaining to the council, he still had to pay HK$8,000 to the content provider. Another complainant registered his mobile-phone number online for a free lucky draw. He received several IQ questions every few days through text messages, which he deleted without responding to them - until he saw the HK$70 charge on his bill. He then checked the lucky-draw webpage and noticed there was a clause at the bottom that said he was charged HK$5 for every SMS sent to him. Another complainant said his son had received messages advertising Java game downloads and was charged HK$75 for five messages in a month even though he did not download any games. The council said many information providers advertised their services as free to tempt users into leaving their personal details. But they might only provide, say, the first three messages free and charge for later ones. One provider sent 80 text messages to a user in an hour and charged HK$5 for each of them. Another sent 700 messages in two days and charged HK$2,128. Mobile-service provider PCCW (SEHK: 0008) said it provided a platform for communication between content providers and users. When any discrepancies arose regarding pay-text messages, users should deal with content providers directly, a spokeswoman said. Ofta said mobile-phone users should think twice before responding to marketing messages. They should read the service terms before confirming a subscription and check mobile-phone bills for irregular charges. If in doubt, they should contact phone service providers or content providers immediately.

Limited new supply and a recovery in shipping volumes have helped boost leasing interest in a warehouse and distribution centre in Hong Kong planned by Australian property developer and fund manager Goodman Group. "We have seen strong demand from customers who want to move to new facilities," said Philip Pearce, Goodman's managing director for Greater China. The Sydney-based group says two multinational logistics operators have already pre-leased and committed to lease about half the total space on offer in the development. Rents are also starting to climb again after an 8 per cent decline over the past year. The centre, called Interlink, is being built in Tsing Yi and will offer a total leasable area of 2.4 million square feet. Investment cost is estimated at A$430 million (HK$3.04 billion) and the centre is expected to be completed by January 2012. The project is owned by Goodman Interlink, a joint venture between the Goodman Group and Goodman Hong Kong Logistics Fund, which is one of the largest industrial landlords in the city. "Hong Kong's supply characteristics are unique. There's been very little new supply in the logistics sector in the last decade," said Pearce. "There's a real need for warehouse space, especially now that the Hong Kong government is planning to redevelop a lot of the existing space," he said, referring to plans outlined in this year's policy address from Chief Executive Donald Tsang Yam-kuen to "revitalise" about 1,000 industrial buildings to promote a knowledge-based economy. UPS, the world's largest package delivery firm, said earlier that its shipping volumes had recovered to beyond 2007 levels and that some shipping lines were starting to raise rates. "There are still some seasonal effects, but this recovery is sustainable," said Kris Inglis, the director of developments and planning in Asia for UPS. "There are good, strong fundamentals for these developments." The group said it would build a portfolio of logistics assets on the mainland worth up to US$700 million over the next five years. China Investment Corp, the mainland's sovereign wealth fund, has an 8 per cent stake in the group. The company does not see the logistics and distribution industry on the mainland as a threat to Hong Kong, as the city remains a transshipment hub, while Chinese ports focus on exports. Hong Kong's status as a free port with no import taxes will also continue to give it a strong edge over mainland rivals, the firm says. "The 'hard costs' in Hong Kong are higher. But other costs, like those involving regulatory issues, make Hong Kong more efficient. There is also a substantial population base here that needs servicing. Hong Kong and China actually complement each other nicely in the distribution of goods," said Pearce.

China*: China direct investment in mainland rose for a fourth straight month in November as the country’s rapid recovery from the global economic downturn attracted more overseas money. Investment rose 32 per cent in November from a year earlier to US$7.02 billion, Commerce Ministry spokesman Yao Jian said in a news conference on Wednesday. The figure excludes stocks and other financial assets. “This shows the economy is improving and reflects foreign investors’ confidence in China,” Yao said. The government has reported rises from year-earlier figures in foreign investment since August. However, total investment in January-November was down 10 per cent from a year earlier at US$77.9 billion. Some foreign companies cut investments in mainland as the global slowdown squeezed credit and spending, but economic growth is rebounding and consumer purchases are rising. Mainland’s economy grew 8.9 per cent in the third quarter and is forecast to easily exceed 8 per cent growth for the full year. Foreign companies also cut back on payrolls during a slump in exports that hit late last year and has yet to fully reverse, but surveys show that many have since shifted their focus away from exports and toward selling to the fast-growing domestic market. The number of newly approved foreign-invested enterprises rose 10 per cent from a year earlier in November to 2,437, though the cumulative figure for the year, 20,900, was down 17 per cent from the same period of last year. Ministry of Commerce: 

China's climate change ambassador Yu Qingtai speaks at a press conference at the UN Climate Summit in Copenhagen on Tuesday. China on Wednesday reiterated its opposition to the idea of "carbon tariffs" being imposed on goods made in the developing world, calling it an unfair trade restriction that hurts poor countries. The idea for such tariffs has been floated in the United States and Europe as a way of penalizing imports from countries that do not have statutory curbs on greenhouse gas emissions, such as China. “China firmly opposes carbon tariffs,” commerce ministry spokesman Yao Jian told reporters. He said such tariffs “restrict trade and economic development.” He added they “ignore the fact that developed and developing nations are in different stages of development and should take on different historical responsibilities and liabilities.” China is among the leading developing-country voices insisting that rich nations bear “historical responsibility” for emissions of greenhouse gases that cause climate change and should shoulder the burden of reducing such emissions. The issue has led to a contentious atmosphere at global talks in the Danish capital Copenhagen on how to address climate change. Some richer nations argue their industries are being punished by tough domestic environmental laws, which encourage the shift of polluting industries to countries with less stringent controls.

A worker moves tyres at a factory in Hangzhou, in Zhejiang province in this file picture. On Wednesday, Beijing slashed import duty on natural rubber to boost tyre production as car market in the country zoomed ahead. China will cut import tariffs on rubber next year, helping domestic tyre makers who enjoyed increasing demand from rocketing car production in the country but got embroiled in a US trade dispute this year. The import tax on natural rubber will fall 23 per cent to 2,000 yuan (HK$2,267) per tonne, while the tax on higher-value rubber smoked sheet will fall 38 per cent to 1,600 yuan per tonne, the Ministry of Finance said on Wednesday. Both were previously taxed at 2,600 yuan, or a much less commonly used flat 20 per cent, which remains unchanged. The tax cut will help reduce costs for mainland buyers and traders said it could spur imports by mainland, the world’s largest consumer of rubber. “We might import more in the coming months, but we will first calculate our cost, considering the demand and natural rubber prices in the global market,” Sheng Liang, a trader with Qingdao International Rubber Exchange Market, said. “But we still see stable market demand, and as the import tax for rubber smoked sheet was revised down so much, we might consider buying more smoked sheet,” Sheng added. Traders in Thailand said the move should support physical rubber prices and prevent them from falling significantly over the year end period when supply is expected to rise due to favourable weather in what is the world’s biggest rubber producer. “That would help support physical prices and futures prices as well,” said a trader at Thailand Hat Yai rubber center. A Singapore-based trader said the tax cut would help support tyremakers to produce and export more, and is expected to keep demand for natural rubber buoyant next year. “I think the Chinese government wants to support the tyre industry. They are sending a message to the market that they will import more rubber next year,” he said. The benchmark rubber contract in Shanghai Commodity Exchange rose by 3.3 per cent on Wedneday. The most active rubber contract on Tokyo Commodity Exchange, currently May 2010, rose to a one-week high, up 4 per cent. One southeast Asian dealer said the tariff change meant natural rubber imports would enjoy relatively lower costs than synthetic rubber. Imports of synthetic rubber, which is cheaper than natural rubber, jumped 17 per cent in the first 11 months of this year compared to the same months of last year, while shipments of natural rubber slowed 2.8 per cent, according to data from mainland’s customs office. Mainland imported 1.53 million tonnes of natural rubber and 1.34 million tonnes of synthetic rubber between January and November. The same dealer said mainland’s own rubber producers would see the policy change as a weakening of the protection of their industry. But two local rubber traders said they had hoped for a bigger cut in the tariff. The import duty for natural emulsion remained at 720 yuan per ton, or a flat rate of 10 per cent.

Vice President Xi Jinping was wrapping up a three-day Japan visit on Wednesday with a trip to a former heavy industry centre that has cut down on pollution and developed a robotics sector. Xi, who is expected to succeed Hu Jintao as president in 2012, was due to visit the southwestern city of Kitakyushu before travelling to South Korea on a regional tour that will also take him to Cambodia and Myanmar. His trip to Japan came as the two Asian neighbours seek to strengthen a relationship that has often been troubled. Xi met Foreign Minister Katsuya Okada in Tokyo on Wednesday before leaving for his final stop in Japan, Kitakyushu city in Fukuoka prefecture. Okada told him that “Kitakyushu was once called ‘the city of iron’ but it has overcome the problem of pollution and is a good model case.” Officials there were scheduled to brief Xi on the city’s environmental policies and to show him Yaskawa Electric Corporation, a leading developer and manufacturer of industrial robots. China, expected soon to overtake Japan as the world’s number two economy, struggles with large-scale pollution from its heavy industry, coal plants and cars and is now the world’s biggest greenhouse gas emitter. During his meeting with Okada, Xi thanked him for “the thorough preparation for my visit” and said that “in the audience with His Imperial Majesty yesterday, I was able to have a friendly talk with him.” The meeting with the emperor sparked a bitter domestic row in Japan after the prime minister’s office asked the Imperial Household Agency to skip a usual rule that requires such meetings to be requested a month in advance. Conservative opposition politicians accused the centre-left government of bending the rules to kowtow to rising giant China. Ichiro Ozawa, a heavyweight in the ruling Democratic Party who reportedly pushed for the meeting with the emperor, has openly feuded with a palace official who complained about the heavy government pressure. Tokyo police have since boosted security for Ozawa and Prime Minister Yukio Hatoyama to prevent possible attacks by right-wing nationalists who have accused them of disloyalty and disrespect for the emperor, Jiji Press reported.

China’s Standardization Administration body said on Wednesday it has suspended some requirements that could have restricted the use and production of electric bicycles in the country.

Consumers using mainland credit cards, including those from Hong Kong, could be jailed if they default on credit card debts to mainland banks three months after receiving the second warning notice, the nation's top judiciary body has ruled. The exact liabilities of Hong Kong card holders depend on the contract they sign with the mainland issuer. All credit cards issued on the mainland are subject to local laws. Cards issued by mainland banks in Hong Kong are subject to Hong Kong law unless it is otherwise stated in the contract, legal experts say. "If mainland law applies, a Hong Kong card holder who defaults on payment could also be subject to this criminal charge," Chinese University of Political Science and Law commercial law professor Li Shuguang said. While mainland law states malicious overdraft could be a criminal offence, yesterday was the first time the judiciary authorities had clarified the regulation. The Supreme People's Court and the Supreme People's Procuratorate have jointly issued a judicial explanation, saying that card holders would face charges if they fail to pay the settlement three months after receiving the second notice letter from banks.

The Taiwan-listed shares of Tingyi (SEHK: 0322) Holdings, the company behind instant noodle brand Master Kong, were limit up on their first trading day, on optimism the company would benefit from mainland’s solid economic growth. Tingyi’s Taiwan depositary receipts had climbed 7 per cent, beating the main index’s 0.5 per cent slide in early trade. “China will still post 8-10 per cent economic growth in the medium- to long-term,” said Robert Hsieh, an executive of Shin Kong Asset Management. He said Tingyi’s TDRs would likely rise 14 per cent over the next two days. Tingyi, the top-selling noodle brand in mainland, said on Tuesday it was aiming to allocate nearly 90 per cent more in capital spending for next year to cash in on growing demand. The company said it would spend around US$100 million next year to expand its noodle business on the mainland, where it expects 10-12 per cent growth in overall noodle sales next year. Tingyi, which competes with Taiwan’s Uni-President Enterprises, Coca-Cola and mainland’s Wahaha, a partner of France’s Danone, controls more than 50 per cent of mainland’s instant noodle market in value terms, and about 49 per cent of its ready-to-drink tea market, a survey by AC Nielsen showed.

The location of Beijing Four Seasons helped the apartments sell at prices ranging from 60,000 yuan to 94,000 yuan per square metre. Apartments in a luxury Beijing project that had lain semi-finished and abandoned for almost a decade before construction resumed under new ownership two years ago have been sold to Hong Kong buyers at near-record prices. Despite its clouded history, the project's relaunch at a sales function in Hong Kong's Four Seasons Hotel in Central lured savvy Hong Kong property investors such as Sun Hung Kai Properties (SEHK: 0016) vice-chairmen Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen, Sino Land chairman Robert Ng Chee Siong and Great Eagle Holdings (SEHK: 0041) chairman Lo Ka-shui. While it is not known if any of these property magnates are buyers, sole marketing agent Centaline (China) Property Consultants says about 30 Hong Kong investors have reserved apartments in Beijing Four Seasons Private Apartments on Xiaoliangmaqiao Avenue in the city's upmarket "Lufthansa district" for as much as 94,000 yuan (HK$106,708) per square metre. The prices are almost four times higher than the last transaction values in the development recorded by the Beijing Housing Authority. But official data does not include transaction dates and the developer Evergreen says these deals were made in early 2000 with the first developer. Now, the project is almost complete and set for occupation in November next year.

Construction starts for the foundation of the No. 2 unit of the first phase of the Sanmen Nuclear Power Plant in Zhejiang Province on December 15. The Sanmen plant is the world's first nuclear plant using the AP1000 technologies, a type of third generation nuclear power reactor introduced by United States-based Westinghouse company. The Sanmen plant will be built in three phases, which will include two units each with a generating capacity of 1.25 million kilowatts. The first unit will be put into operation in 2013, and the second is scheduled to come into operation in 2014. The facility will eventually have six such units. The first phase attracted an investment of more than 40 billion yuan ($5.86 billion)

Dec 17, 2009

Hong Kong*: Chief Executive Donald Tsang Yam-kuen said on Tuesday the government would try to keep toll rates for the Hong Kong-Zhuhai-Macau Bridge as low as economically feasible. Mr Tsang was speaking at a commencement ceremony of the bridge project in Zhuhai, officiated by State Council vice-premier Li Keqiang. Tsang said the three governments would continue to work together to ensure the bridge was properly managed. “We will also increase the economic benefits and increase the usability of the bridge by trying to keep toll rates low,” said Tsang. China’s National Development and Reform Commission vice-chairman Zhang Xiaoqiang told reporters the bridge would also promote economic development and competitiveness. The ceremony was attended by Secretary for Transport and Housing Eva Cheng Yu-wah and Hong Kong director of highways Wai Chi-sing. The project will start in mid-2011 and be completed by 2016. A 12-kilometre, six-lane road – most of it elevated, but also including a 1km tunnel – will connect the bridge starting from Lantau with customs and immigration checkpoints in Macau and Zhuhai.

Asset bubbles are the leading risk to financial stability in Asia ahead of inflation, Hong Kong Monetary Authority chief executive Norman Chan Tak-lam said, as Beijing warned it is ready to use all tools at its disposal to control property prices. "I am not saying inflation is not a concern for Asia, but I believe it is more important to address the risk of asset bubble formation and the associated harm," Chan said at the "Economic Summit 2010" organized by radio station Metro Finance FM 104. He said more than HK$640 billion had flowed in since October last year, helping drive up home prices for 10 consecutive months. With the mainland property market also having picked up significantly, Premier Wen Jiabao vowed yesterday to clamp down on "excessively fast housing price surges in some cities." The State Council said it will step up market monitoring and thwart speculation, as well as increase the supply of mass residential homes and support the purchase of homes by owner-occupiers. It is the second time in two weeks that Beijing has imposed property curbs. Echoing Beijing, Chan said he believes it is necessary to take effective measures at an early stage. Even though it is difficult to identify an asset bubble before it materializes, he holds that authorities should not fear misjudgment - because once formed, asset bubbles would be difficult to contain. "It is obvious that if there is a bottleneck or an imbalance in the supply of land, we have to deal with it," Chan said. But he believes that luxury rentals have not surged along with selling prices because investors, including those in the mainland, are optimistic about the outlook. He advised banks to have good risk management and warned individuals and companies against over-borrowing at low rates. Centaline Mortgage Broker managing director Ivy Wong Mei-fung expects total loans for next year to hit a post-1997 record high, growing 10 percent to reach HK$220 billion. Financial Secretary John Tsang Chun- wah said he is hopeful unemployment will also go down like in the last quarter.

This design sketch shows the man-made island of east tunnel of Hong Kong-Zhuhai-Macao bridge. China began construction of the world's longest cross-sea bridge linking its southern economic hub Guangdong Province to Hong Kong and Macao on Dec. 15, 2009. The Y-shaped Hong Kong-Zhuhai-Macao bridge will have a total length of almost 50 km, of which about 35 km will be built over the sea.

Chinese Vice Premier Li Keqiang (3rd R, front) is seen on his way to a construction site after attending the inauguration ceremony of Hong Kong-Zhuhai-Macao bridge, the world's longest cross-sea bridge, in Zhuhai, south China's Guangdong Province, on Dec. 15, 2009.

Police officers post notices in the residential blocks to remind the public to strengthen security in buildings and rooftops in Wan Chai on Tuesday. Police officers were investigating "high-risk buildings" in Causeway Bay and Wan Chai as part of their investigation into last Saturday's acid attack, Deputy District Commander (Wan Chai) Au Yueng Chiu-kong said on Tuesday. “There are many buildings in the area. We have to identify high-risk buildings so police officers can focus on them,” he said. These include old buildings, and buildings without security guards and gates. Police believe such buildings could be more easily accessed by an acid attacker. Au Yueng said more officers had now been sent to both districts. They have been checking rooftops of buildings, as well as patrolling at ground level. “We have also assessed the risk posed by different buildings in Wan Chai and Causeway Bay,” he said. Au Yueng said officers had been distributing leaflets to remind residents and shop owners to be more vigilant about security. In other developments, the Hong Kong Island and West Kowloon regional crime units were investigating whether the attack in Causeway Bay was linked to earlier ones in Mong Kok. These have occurred since December last year. A police spokesman urged anyone with information to contact the Regional Crime Unit, Hong Kong Island, on tel: 6643-7068. Hong Kong’s latest acid attack occurred about 10.10pm last Saturday in Causeway Bay. A plastic bottle containing corrosive acid was thrown from a building at No 541-543 Lockhart Road into a pedestrian area behind Sogo department store. Six people, including one man and five women aged from 18 to 27, received burns in the attack. They were taken to hospital. Four of them have since been discharged. Two were seriously injured and remain in hospital in a stable condition. On Saturday, police found a paper bag containing another bottle of corrosive acid on a staircase. They believe the attacker left this behind. The case has been classified as throwing a corrosive fluid with intent to cause grievous bodily harm.

The number of secondary schools teaching in English in Hong Kong will almost double in September when the changes to language instruction policy take effect, according to school profiles released by the government yesterday. Taking advantage of the latest changes in language policy, 16 schools which are now teaching in Chinese will switch to teaching entirely in English. Another 80 schools will adopt a mixed approach - using Chinese for humanities subjects but using English for science subjects. Seven schools will do the opposite by switching at least some classes from English to Chinese. This means 199 schools, or nearly half of the 402 secondary schools in Hong Kong, will be teaching fully or mainly in English. This is the second turnaround of the medium of instruction adopted in local schools. The government adopted the mother-tongue policy in 1998 when all but selected secondary schools were ordered to switch their medium of instruction to Chinese. At present, 110 schools teach entirely in English.

The relationship between two of ATV's largest shareholders, Payson Cha Mou-sing and Taiwanese snack food tycoon Tsai Eng-meng, was severely strained months before Linus Cheung Wing-lam's resignation as the troubled broadcaster's chairman last week. As far back as October, Tsai was accusing Cha of "bad faith" and being "ridiculous" over allegations by Cha surrounding proposals for Tsai to pump up to HK$1 billion of extra money into ATV. This has come to light in two letters from Tsai to Cha dated mid-October, seen by the South China Morning Post (SEHK: 0583). Both appear to be responses to earlier letters by Cha. Tsai wrote that he reserved his legal rights against Cha over allegations in a letter, which he did not spell out but said were "groundless", "offensive" and "defamatory". In the first letter, dated October 17 and copied to all board members, Tsai wrote that he never promised additional funding of HK$1 billion for ATV as suggested by Cha, saying that providing extra money was an option, not an obligation. Tsai said in the letter that he had an indirect economic interest of only 47.58 per cent of ATV, through B shares he owned through Antenna Investment, the broadcaster's major shareholder co-owned by Tsai's camp and Cha's family; and he had only two representatives on the 10-member board. As a minority investor without control and no ability to gain control it was "simply not realistic" for him to provide a "disproportionate level of additional funding" for ATV, when no other shareholders intended to provide extra money and he had already committed "a substantial amount of capital" to the company. This included his unspecified initial investment as well as some HK$200 million through multiple purchases of convertible bonds, a person familiar with the dispute said. Cha's family owns 51 per cent of the A shares of Antenna, which have voting rights, while Tsai owns the rest. Cha's family also owns 10.75 per cent of ATV's shares through Panfair. The rest of the shares are owned by Chan Wing-kee, with Phoenix TV chairman Liu Changle and mainland conglomerate Citic Group. In another letter sent only to Cha dated October 22, the Taiwanese tycoon said he had come up with options to raise funds for ATV other than issuing convertible bonds. He wrote that he had discussed these ideas with Cha in person in Taiwan on September 14 and on September 18. Tsai proposed to the board a loan of HK$15 million for a two-year term, with 30 per cent of the interest set off by advertising airtime. "ATV has no money and 30 per cent of its advertising airtime has been unsold," a person familiar with the dispute said. "Offering a loan was a much quicker way to raise cash for ATV, compared to issuing convertible bonds." The loan proposal was shelved. In the letter, Tsai said Cha claimed that he was not given the chance to comment on Tsai's proposal. But Tsai said that as he had discussed the proposal with Cha in person before putting it to the board, it was "in very bad faith that you now claimed not to have been given an opportunity to comment [on it]". Tsai also told Cha he was being "ridiculous" for claiming that Tsai should be solely responsible for "very substantial amounts of additional funding" to ATV while Cha was not prepared to commit any further capital. Saying that he reserved his legal rights, Tsai said the investment he had made in ATV was based on "mutual trust and respect" - which had been shattered by Cha. In November, after ATV chief executive officer Nancy Hu Gin-ing said the broadcaster was in desperate need of cash, Tsai offered loans. On November 12, he proposed to lend HK$10 million to ATV for a year at 30 per cent interest set off against the cost of advertising time provided to him. On November 16, on the eve of last month's board meeting, Tsai offered to lend ATV HK$20 million for a year at 8 per cent interest payable in cash, or 30 per cent interest to be settled in kind by advertising airtime. But the next day the board approved another round convertible bonds at one-fifth of the price that Tsai had paid for those previously issued. "These convertible bonds were set to dilute Tsai's shares," said the person familiar with the dispute. Last week, the Post reported that Cha ignored Tsai's request to transfer 2.75 per cent of shares from Panfair to Antenna, and 2 per cent of voting shares to Tsai within Antenna, as stated in a contract between the two. No comments could be obtained from Cha's camp. ATV said it had no comment on arguments between shareholders. Cheung's resignation on December 7, after a year as chairman, and the row between shareholders have drawn concern from lawmakers and the government. At a meeting of Legco's information technology and broadcasting panel yesterday, Democrat Lee Wing-tat asked whether ATV could continue to fulfil its licence requirements, and proposed a special meeting to discuss the issue. Permanent Secretary for Commerce and Economic Development Duncan Pescod said the government was looking at the situation closely.

Cabin crew serve passengers on the high-speed train that runs between Beijing and Tianjin. A high-speed railway between Beijing and Tianjin boosted Tianjin's economic growth at the fastest rate of any mainland city this year, according to a national railway official - who adds that Hong Kong could reap similar rewards if it has the "attitude and determination" to build its own high-speed link to Shenzhen and Guangzhou. The line, the official says, was responsible for a third of Tianjin's 16.8 per cent growth in gross domestic product. Hong Kong officials have also predicted an economic boost from the link to the mainland high-speed network, of which the Tianjin line is part, after the Guangzhou line opens in 2015. But as Hong Kong is much more developed than Tianjin, expecting similar rates of growth is not realistic. The Ministry of Railways said the Tianjin link, which cut the 120 kilometre journey to Beijing from two hours to 25 minutes, had increased traffic, tourism and investment for both cities, especially Tianjin. Beijing's GDP growth is projected to reach 10 per cent this year, a breakthrough from the single-digit growth of recent years. Ministry of Railways spokesman Wang Yongping said 20 million passengers rode on the Beijing-Tianjin link - currently the fastest train on the mainland with a top speed of 350km/h - in its first year of operation. Tianjin saw visitor numbers grow 20 per cent this year, with a 15 per cent increase in service-sector revenues over the first three quarters. "We have entered the era of high-speed rail," Wang said. "Whether the same would happen to Hong Kong depends on its people's attitude and determination." Hong Kong's HK$65.2 billion project has been opposed by academics and politicians, as well as villagers who would have to move to make way for the city's first high-speed link. But the plan's funding is expected to pass the Legislative Council's final scrutiny on Friday. Hung Wing-tat, a transport researcher at Polytechnic University, said it would be difficult to quantify the link's economic benefit - and even more difficult to predict which cities would reap the greater benefit from better access. The Transport and Housing Bureau expects a daily average of 99,000 passengers - 70 per cent of them local - to take the Guangzhou-Shenzhen-Hong Kong link in 2016. Minister Eva Cheng said the actual patronage should be higher than 99,000, as that projection took into account only the natural growth of existing cross-border patronage, not newly generated clients - people who would not have travelled without the high-speed rail. After linking to the mainland's high-speed network in 2015, it will take 14 minutes from West Kowloon to Futian in Shenzhen, 48 minutes to Shibi in Guangzhou, five hours to Wuhan and 10 hours to Beijing. The mainland's high-speed network will be completed by 2013. A South China Morning Post (SEHK: 0583) reporter who took a ride on the Beijing-Tianjin link on Thursday found the train steady, quiet and the seats spacious. A one-way trip cost 59 yuan (HK$67) and the train was full. The model to be used on Hong Kong's high-speed line will be even faster and more modern.

The Tourism Board is promising a larger fireworks celebration and skyscraper light show for the New Year countdown this year. Spectators will see fireworks firing out from three sides of the 88-storey Two IFC, the city's tallest building, pyrotechnics being arranged to fire from the northern facade of the building - facing Victoria Harbour - for the first time. "This will create a three-dimensional visual effect, along with some other new effects," Anthony Lau Chun-hon, the board's executive director, said yesterday. With nine other buildings on Hong Kong Island being used in the 4-1/2 minute synchronised programme, Lau said that the number of pyrotechnic firing points would be increased by 30 per cent, and the number of charges would increase from 6,000 to 9,000. Twenty sets of powerful searchlights would be placed next to Two IFC to enhance the effect, he said. The celebration will start with music and dance outside the Hong Kong Cultural Centre at about 11.15pm on December 31. The countdown will start one minute before midnight, with a huge LED display on Two IFC. The fireworks and light show will follow, together with a theme song created by composer Peter Kam Pui-tat. People will be urged to give each other high fives when the New Year arrives. Lau believes the show, like last year, will attract about 400,000 people on both sides of the harbor. Henderson Land Development (SEHK: 0012) and Sun Hung Kai Properties (SEHK: 0016) have each put in sponsorship of HK$1.5 million for the HK$6 million event. Lau said visitor arrivals to the city dropped slightly, by 0.7 per cent, in the first 11 months compared with the corresponding period last year. The board will organise a ceremony today to welcome the first batch of non-Guangdong residents coming to Hong Kong that have been issued with individual visit scheme endorsements in Shenzhen, as the scheme comes into effect today.

Conglomerate Swire Pacific (SEHK: 0019) plans to spin off its property arm in the second quarter of next year, a senior executive said on Tuesday. Martin Cubbon, chief executive of Swire Properties, said the Swire Pacific planned to spin off its property arm to better capture market growth, and confirmed that the company had appointed three investment banks to handle the deal. Cubbon’s comments came after the Hong Kong market closed. Swire Pacific shares ended 1.69 per cent lower, compared with the main Hang Seng index’s 1.23 per cent fall. Last week, sources close to the deal said Swire had formally appointed at least three investment banks, including Goldman Sachs, HSBC (SEHK: 0005, announcements, news) and Morgan Stanley, to handle the proposed spinoff of its US$3 billion property arm. The aviation-to-property conglomerate had said previously that it was considering a separate mainboard listing for the division that holds hotel and property interests in Hong Kong, the UK and the United States. Conglomerate Swire Pacific holds a stake in Cathay Pacific (SEHK: 0293), Asia’s No 3 air carrier which is also Hong Kong’s leading air carrier.

Mainland property firm Sunac China Holdings Co has decided not to proceed with its global share offering under the original time schedule because of “market conditions”, the company said in a statement issued through the stock exchange without elaborating. Sunac said it would review the situation and make a further statement when a decision regarding a relaunch was reached. The mainland property developer had planned to raise up to HK$2.22 billion in a flotation of shares in Hong Kong, selling 600 million new shares at HK$2.90-HK$3.70 each. Trading was planned to begin on December 18 with UBS handling the deal. A flood of real estate IPOs has put pressure on offerings and underwriters have had to lower deal valuations to fuel market interest. Mainland’s measures to curb a rise in property prices also weighed on the sector. Beijing said on Monday that it would use tools including land-use policies and taxation to control property prices in the latest indication of its concern that housing prices could rise excessively if left unchecked.

Former Miss Hong Kong runner-up Winnie Chin Wai-yee was having none of it when she was accused of firing 45 maids in five years. Not so, declared the wife of socialite banker Philip Ma Ching-yeung: in fact the number of her helpers who left was more like 30 - and not all of them were fired. Suggestions that she habitually hurled obscenities at her Filipino helpers, calling them [expletive] idiots with no brains, were also false, she told Eastern Court. Chin was replying to barrister Ody Lai, representing three of her ex-maids. The former maids are accused of stealing 149 items of designer-label children's clothes and shoes worth HK$23,000 from Chin's home in Kam Yuen Mansion on Old Peak Road in October and November. Marites Alberto Saddaran, 34, Aubrey Leal Garcia, 25, and Ginavilla Velasco Gongob, 41, deny they stole anything and say Chin gave the items to Saddaran to dispose of as she chose. Chin, the Miss Hong Kong runner-up in 1981, said the "30-odd" maids who had left included some hired for another, 20,000-square-foot family property as well as her home. She fired some for not meeting her standards, but some left by mutual consent or resigned and many completed their contracts, she said.

China*: China accused developed countries on Tuesday of backtracking on what it said were their obligations to fight climate change and warned that the UN climate talks in Copenhagen had entered a critical stage. In sharp comments made as the atmosphere at the UN climate conference in Copenhagen grows more divisive, Foreign Ministry spokeswoman Jiang Yu said there had been “some regression” on the part of developed countries on their position regarding financial support. The change in their position “will hamper the Copenhagen conference,” Jiang told a regular news conference in Beijing. China and the United States – the world’s top two carbon polluters – have been at odds in Copenhagen. In Beijing’s view, the US and other rich nations have a heavy historical responsibility to cut emissions, and any climate deal should take into account a country’s development level. China, the world’s largest polluter, is grouped with the developing nations at the talks. But the US doesn’t consider China one of the neediest countries when it comes to giving those nations financial aid. “We still maintain that developed countries have the obligation to provide financial support,” Jiang said, adding that it was “the key condition for the success of the Copenhagen conference.” The talks were suspended for most of Monday’s session – a sign of the developing nations’ deep distrust of the promises by industrial countries to cut greenhouse gas emissions. There are only days left before the conference closes on Friday, and the wrangle over emission reductions froze a timetable for government ministers to negotiate a host of complex issues. Though procedural in nature, the Africa-led suspension went to the core of suspicions by poor countries that wealthier ones were trying to soften their commitments and evade penalties for missing their targets. Talks were halted most of the day, resuming only after conference president Connie Hedegaard of Denmark assured developing countries she was not trying to kill the Kyoto Protocol, the 1997 document that requires industrial nations to cut emissions and imposes penalties if they fail to do so. Kyoto makes no demands on developing countries. President Barack Obama, Prime Minister Wen Jiabao and more than 110 other world leaders are scheduled to arrive in Copenhagen in the next several days to cap two years of negotiations on an agreement to succeed Kyoto.

China will end temporary low import duties on most oil products next year but will lower tariffs on coal, naphtha and phosphate ore among more than 600 products, the Finance Ministry said on Tuesday. After the adjustment, the country will have fulfilled a commitment to lower tariffs, which it agreed to do when it joined the World Trade Organisation in 2001, the ministry said in a release on its website ( The ministry did not give details. Mainland last cut import tariffs on petrol, diesel and kerosene to 1 per cent effective from January last year from previous rates of 5-6 per cent, to help amass stockpiles ahead of the Beijing Olympics in August last year. A resumption of the previous higher levies might stem imports but traders said the impact would be negligible because mainland is mainly a net exporter of petrol and diesel after the world’s number 2 oil consumer started up new refineries. The import duty for fuel oil, used to generate electricity and power ships, will be raised, the ministry said. Mainland, Asia’s top fuel oil buyer, cut the import duty to 1 per cent from the beginning of this year from an earlier 3 per cent. “Rumours have been there for a while that the duty will return to 3 per cent, which will be another blow for buyers after the heavy consumption tax,” said a trader based in Singapore. The ministry said duty for naphtha, used mainly to produce petrochemicals, would be lowered, without giving details. Beijing last set naphtha import duty at 1 per cent effective from last year. It said it would also implement the temporary low duty on coal, of which the country is the largest consumer and producer. It was not clear which type of coal it was referring to, but mainland had scrapped the 1-per cent import tax on thermal coal from June 2007 and the 3-per cent charge on coking coal and anthracite since Jan last year. On average, the ministry said the country’s overall import tariffs next year would remain at 9.8 per cent level of this year, when duties on agricultural products were 15.2 per cent and duties on industrial products were 8.9 per cent. Mainland would also end existing lower import tariffs on wind power equipment, which is in increasing surplus amid the renewable energy boom, the ministry said. A temporary duty on the export of resource and energy-intensive products including crude oil, pulp, ferroalloy, billet and some steel products would continue, it added. The temporary duty on crude oil exports was 5 per cent.

Vice President Xi Jinping talks with Japanese Emperor Akihito at an audience in Imperial Palace in Tokyo on Tuesday. Vice President Xi Jinping in Japan on Tuesday stressed the importance of good ties between the Asian giants as his hastily arranged royal audience sparked a political row in the host nation. Xi, who is expected to succeed Hu Jintao as China’s president in 2012, said Tokyo and Beijing “must enhance the mutual political trust, expand mutual interests and improve the public sentiment of the two nations.” He also emphasised China’s commitment to “peaceful development.” Japan and China long had tense relations, sparked by former conservative premiers’ visits to a controversial Tokyo war shrine, but Japan’s centre-left government has stressed that it wants to strengthen ties. Prime Minister Yukio Hatoyama said during Xi’s visit that Japan seeks close relations with both its traditional security ally the United States and China, saying that international diplomacy is not a zero-sum game. But the mood was darkened by domestic political squabbling over Xi’s 20-minute audience on Tuesday morning with the 75-year-old Emperor Akihito. China’s request for the meeting was initially rejected because it came only 19 days in advance, not a month as customarily required by Japan’s Imperial Household Agency, which cites the emperor’s poor health. The fact that the Hatoyama government asked the emperor to meet Xi at shorter notice sparked angry charges from Japan’s conservative opposition that the government is kowtowing to rising giant China. The head of the palace agency complained to reporters Friday about strong pressure from the prime minister’s office, saying he feared the royal family could be used as a political tool. Since the second world war, when Japan fought in the name of the emperor, the world’s oldest monarchy has had a largely ceremonial role and its members have been barred from engaging in political activities. Ichiro Ozawa, secretary general of Hatoyama’s Democratic Party of Japan, fumed at Shingo Haketa, the top palace bureaucrat, and said he should resign before complaining about the government he serves. Hatoyama has denied using the emperor for political purposes and said: “It is very regrettable to see this situation at the time when Vice President Xi Jinping has come over for activities in Japan. “We should welcome him with more delight as he is highly likely to be the leader in future,” said Hatoyama, who took power in September. Xi is on his first visit to Japan since assuming his present role in March last year. He is the first high-ranking Chinese politician to meet the Japanese emperor since President Hu visited Japan in May last year as a state guest. At their meeting, Akihito said he hoped Xi’s visit would contribute to the promotion of friendship between the neighbours, and Xi told Akihito he was “deeply grateful” to be able to meet him, said a palace spokesman. Visits to Japan by senior Beijing officials usually prompt vocal protests from right-wing nationalist groups who drive through the streets in convoys of black trucks shouting angry slogans through loudspeakers. Activists staged a loud protest on Tuesday near the Tokyo hotel where the reception for Xi took place, calling Hatoyama and Ozawa “traitors” who are selling out Japan to Chinese interests and disgracing the royal family.

Beijing plans to speed up the pace of construction of mass housing and use taxation to check excessive growth in property prices in some cities. In a meeting of the State Council yesterday, Premier Wen Jiabao said the central government would strengthen the supervision of the industry to maintain healthy development of the real estate market. "With the rebounding of property prices, housing values in some cities have seen excessively fast growth. We have to pay high attention to it," he said, according to a statement issued by the State Council. But the statement failed to elaborate. Lee Wee Liat, a senior property analyst at Nomura International (Hong Kong), said the central government aimed to increase supply to control property prices instead of imposing tough lending measures to put a halt to property investment. "It is a positive move," he said. Lee believed the State Council was trying to contain price increases by urging developers to accelerate the construction of their property projects. He said the supply of new flats in the second half of next year would jump 50 per cent from this year as a result of the acceleration in construction. "Property prices may be under pressure by that time," he said. Lee said prices would level off or suffer a slight downward adjustment next year. He said mainland property had not developed a full bubble, despite home prices in big cities such as Shenzhen and Shanghai jumping nearly 50 per cent over the past 12 months. To tackle rampant speculation, the mainland government announced last week it would withdraw a tax incentive introduced late last year to revive the market. From next year, the resale lock-up period for a property will go back to the original five years, from two years under the incentive introduced last year. The change means owners can resell a property after five years without paying a 5.5 per cent tax. David Ng, the head of regional property research at the Royal Bank of Scotland, wrote in a research note that "leaders are still not comfortable with the economy and will tolerate a heated property market for a bit longer to encourage land sales and construction starts prior to reviewing the situation in again in the middle of 2010." Prices of new projects and second-hand homes rose an average 1.2 per cent month on month in 70 major cities, compared with a 0.7 per cent gain in October, and were 5.7 per cent higher than November last year, National Bureau of Statistics data shows. Shares in China Overseas Investment and Land rose 1.77 per cent yesterday to HK$18.34, while Shimao Property Holdings (SEHK: 0813) climbed 0.12 per cent to close at HK$16.60.

Power plant operator GCL-Poly Energy said on Tuesday that it aims to set up a joint venture with sovereign wealth fund China Investment Corp, early next year.

Workers take a break in front of the cooling towers of a coal-fired power plant in Dadong, Shanxi. Central government on Tuesday said it will streamline price linkage between coal and power, a move that could potentially profit margins of power plants. China will revise the percentage that coal-fired power plants are required to absorb in the change in coal costs while setting a cap on thermal power price rises, the government said on Tuesday.

Dec 16, 2009

Hong Kong*: The Food and Health Bureau on Monday invited companies to submit proposals for the development of four new private hospitals in Hong Kong.

Hong Kong's Exchange Fund reported an increase of 116.1 billion HK dollars in the foreign assets in November, the Hong Kong Monetary Authority released hereon Monday. According to the key analytical accounts of the Exchange Fund, the foreign assets, representing the external assets of the Exchange Fund, amounted to 1,852.4 billion HK dollars at the end of November. The Monetary Base, comprising Certificates of Indebtedness, Government issued currency notes and coins in circulation, the Aggregate Balance and Exchange Fund Bills and Notes issued, amounted to 996.1 billion HK dollars. Claims on the private sector in Hong Kong amounted to 137.6 billion HK dollars. Foreign liabilities, representing mainly obligations under repurchase agreements, amounted to 0.4 billion HK dollars.

Performers from Tianjin, where the next East Asian Games will be held in 2013, help bring down the curtain on this year's Games at the Coliseum last night. Hosts Hong Kong finished with a record of 26 gold, 31 silver and 53 bronze medals. The mayor of Tianjin, Huang Xingguo, received the Games flag from Secretary for Home Affairs Tsang Tak-sing at the ceremony.

Hong Kong's athletes won glowing praise Sunday for exceeding the wildest expectations as the hosts celebrated the successful staging of their first ever major games. A record haul of 26 gold medals, 31 silver and 53 bronze gave Chief Executive Donald Tsang Yam-kuen and other officials plenty to smile about at last night's closing ceremony at the Hong Kong Coliseum. Featuring a Games record 22 sports, the fifth East Asian Games cost tax payers HK$1.6 billion. Officials admitted it would be difficult to judge whether every cent was worthwhile, but said the 12-day extravaganza had increased the awareness of sports in society. "We have witnessed the combined efforts of the sports community and the government to put on a great games in Hong Kong and for those who spent money to buy tickets they have been rewarded with competition and top-class performances," Hong Kong Olympic Committee honorary secretary Pang Chung said. "I also congratulate Hong Kong's athletes for their outstanding achievements. Their marvellous results have come as a big surprise." The hosts finished fourth in the medals table, behind China who captured 113 golds, Japan (62) and South Korea (39). At the last Games, in Macau four years ago, Hong Kong could manage only two golds, two silver and nine bronze medals when they finished third last out of the nine competing countries/regions. Hong Kong had won only seven gold medals in all four previous Games. "The result shows our sports have made great improvements over the past four years, but it is also because we had home-ground advantage," Pang said. "Most of all, we have enjoyed many technical advantages which have bolstered our medal count." The support of home fans was graphically illustrated when thousands of fans emerged to fill Hong Kong Stadium and will the home team to a penalty shoot-out victory over Japan in the soccer final. "Every time a Japan player came to take his penalty, he was jeered by the 32,000-strong crowd and this obviously shook their confidence," Football Association chairman Brian Leung Hung-tak said. Of the "technical advantages", the most obvious was the introduction of six sports to boost Hong Kong's medal hopes. And it worked out as planned with 18 gold medals won in these new sports - seven in squash, three in windsurfing, with cycling claiming three, table tennis (two), cue sports (two) and badminton (one). The design of the cycling road-race route to suit Hong Kong riders, the home waters in Stanley for windsurfers and the familiar environment for the athletes all contributed to the success. However, Hong Kong will lose many of these advantages when they take part in the next Games in Tianjin in four years. There will be 20 sports on that roster, but missing will be squash and windsurfing. Fortunately, cycling, table tennis, cue sports and badminton will remain on the program. "Medals are important and without the two major medal-winning sports, it will affect our results," Pang said. "But, at the same time, it will also lessen the pressure to try to achieve a similar result." There were many great moments over the 12 days of competition. The victory of the women's table tennis team over "Big Sister" China, the breakthrough in team sport with significant results in football (gold), men's rugby sevens (silver) and men's hockey (bronze) are important milestones in Hong Kong sport. "But we must keep up the good work or we will waste the efforts we have made on making the Hong Kong East Asian Games a great success," Pang said.

Tiffany has a complex dietary regime, which she follows every day. The main ingredients in her tailor-made food formula are chicken, horse meat, dried mushrooms, vegetables and a pinch of shark fin, which is good for the joints. Custom-designed by a nutritionist and regularly flown from Japan, each 800-gram package costs up to HK$1,500. Not bad for a three-year-old toy poodle. But then Nicola Ng considers Tiffany, who she bought in Japan and has had for three years, to be her "daughter". The Japanese food service is part of a business boom stemming from the city's growing demand for high-end pet services and products. One of the regular customers at the Dog One Life shop in Causeway Bay is Yvonne Lee. The housewife spends about HK$4,000 a month on food and grooming for her two female toy poodles. "As long as I can afford to do so, I love to give them the best things. Just like any mummy, I just hope they will be happy and healthy," she said. Howard Cheung Sin-ho, president of the Hong Kong Pet Trade Association, said Hongkongers' attitudes towards their pets had changed a lot over the past five to 10 years. "People are spoiling their pets more and more," Cheung said. "Since the birth rate of the city is going down, many families choose to have a pet as their family member and are willing to spend more on them." In addition, newer residential blocks now allow occupants to keep pets. In Tiffany's case, expensive food is only one of the many ways in which she is pampered by her owner. Ng has also turned her love for dogs in general into a business, and three years ago opened high-end pet boutique Paw Palace in Causeway Bay. Aside from selling tailor-made food formulas, the shop also sells dog clothes and toys and offers grooming services including bathing, trimming and a spa, all conducted by professional Japanese groomers. The shop has recorded 10 per cent annual growth in revenue and now has some 1,000 registered customers who enjoy member discounts. "We are the exclusive seller of seven top Japanese brands of puppy apparel in Hong Kong. They're the equivalent of Louis Vuitton, Gucci or Chanel in the human clothing world," Ng said. "Each brand has its followers." In the shop a beige woollen skirt with exquisite black lace costs HK$1,327, and a velvet top plus matching bottom decorated with crystal skull patterns HK$1,200. When it comes to bathing, the staff use different shampoos, all heated in an electrical warmer beforehand, to different parts of the dog, to treat particular skin areas. And puppies receive a special massage to get them relaxed before being trimmed. For a mid-sized toy poodle, the grooming service costs between HK$900 and HK$1,200. But Ng said her shop targeted all puppy lovers regardless of their incomes. Ng, who travels to Japan twice a year to hunt for trendy pet goods, said Hong Kong once lagged far behind the Japanese market in terms of the quality and variety of pet products and services. "But the gap has been greatly reduced in recent years," she added. Census and Statistics Department figures show there were about 286,000 households in Hong Kong keeping a total of 524,900 pets in 2005, including 200,000 dogs and 100,000 cats. The annual expense incurred by keeping one pet was estimated at an average of HK$6,300, producing a local pet-related market with a turnover exceeding HK$200 million a year. Based on these trends, a plan to pamper puppies has been introduced by Pets Park in Deerhill Bay, Tai Po. The park has invested HK$700,000 to build a constant-temperature swimming pool for dogs. Debby Lo Ching-yee, general manager of the park, said the indoor swimming pool of about 600 square feet was the only one of its kind in the city. People can either swim with their puppies or enjoy a ride in a small boat with their dogs in the pool. The kindergarten-turned-pet park also features a grooming room, a dog hotel, a dog cafe/shop and a play area. A visitor to the pool accompanied by a dog weighing less than 20kg must pay HK$250 for a daily pass and HK$1,000 for a monthly one. Eight "pool parties" have been held since the venue opened in September, and it has received more than 500 people and their dogs. But service providers say owners show the most concern for ensuring that their pets eat well and healthily, and two shops, Three Dog Bakery in Happy Valley and Causeway Bay's Dog One Life, are benefiting from this business opportunity. The former is known for its preservative-free oven-baked dog cake, with all ingredients coming from the United States. Clement Lo, a former dentist in the US, brought the American-style goodies to the city in January last year. "Dog cakes are the most popular products in our shop. Their ingredients, even the fresh colours you can see, are all natural," said Lo, who added that the cakes' ingredients included blueberries, sage, vanilla, apples, whey protein and carob. At Dog One Life, the creed is that "every dog has an important life", and the shop has seen a significant part of its revenue coming from the dozens of "pet nourishments" it sells. "Sales of pet nourishments have been better than our initial expectations," shop manager Decky Li Tak-leung said. "We are very optimistic about this market and confident of keeping a 10 to 20 per cent growth rate annually over the coming years."

Nearly 200,000 websites with the ".hk" suffix will be offered an additional domain name under the Chinese character suffix - .香港 - when a multilingual address system is introduced next year. The change will allow people to type a Web address using Chinese characters only, a move the industry expects will lead more people to register domain names in Chinese. In October, the international group that oversees domain names, the Internet Corporation for Assigned Names and Numbers (Icann), announced a technical leap that enables Web addresses to be written entirely in non-Latin scripts such as Chinese, Arabic and Japanese. The Hong Kong Internet Registration Corporation, a non-profit body designated by the government for .hk registration, applied last month to bring in .香港, pending Icann approval. Jonathan Shea Tat-on, chief executive of the company, said it was planning to bundle the registration of .hk and .香港. People who register for one will get the other free. It costs HK$250 a year to host a website with the .hk suffix. Since 2007, the portion of Web address to the left of the full stop has been able to be written in Chinese or English. But only 10,000 websites among Hong Kong's 180,000 have chosen to register in Chinese. "We anticipate that Chinese domain names would prevail as youngsters nowadays are more accustomed to typing Chinese," he said. "It might break the dominance of English on the internet." Shea added that the initiative was significant for businesses seeking to attract the attention of millions of mainland Web users. "Some famous Chinese brands are known only by their Chinese names. They would be very much in favour of a Chinese Web address under which brand names are displayed," he said. The Commerce and Economic Development Bureau, which endorsed the application, said .香港 would strengthen Hong Kong's position as a leading digital city. "It will enable over a billion Chinese-speaking people to access websites of Hong Kong-related organisations using an address that is written wholly in their mother tongue," a Legco paper read. Internet Society Hong Kong chairman Charles Mok said many non-Latin-language countries were considering introducing domain names in their own languages to boost their websites. He added that over the past few years fewer users had been typing entire Web address, but relying on hyperlinks via search engines or social networking sites. Legco's information technology and broadcasting panel will discuss the issue today.

Nine tertiary institutions want to be upgraded to private universities - a step that would allow them to greatly boost enrolment - and they have urged the government to lay down a clear route to that goal. The administration has identified education as one of six "pillar" industries for the city and recently set aside land for private universities. But the real problem, say the tertiary institutions, is that there is no law spelling out the steps needed to become a private university. "There's no use in providing just small pieces of land," said City University Community College principal Jennifer Ng Glok-hong, who argues that there has to be more support measures in place. The city's only private university, Shue Yan University, won its status in 2006 after a two-decade struggle. At present, there is no law governing the establishment of private universities. The only law now applicable to those who aspire to become a private university is the Post Secondary Colleges Ordinance, enacted in 1960. Any institution that passes accreditation by the Hong Kong Council for Accreditation of Academic and Vocational Qualifications can be registered under the ordinance. It then has to apply for degree-awarding status for each programme it intends to offer. If Shue Yan's experience is anything to go by, the granting of degree-awarding status is the first step to getting a private university title. "The government should set up an ordinance specifying rules like the percentage of professors in a faculty that should have PhDs and facility requirements like library size," said Chui Hong-sheung, the principal of Hang Seng School of Commerce. Hang Seng was recently granted degree-awarding status for two programs, in business administration and supply management. Professor Peter Yuen Pok-man, dean of Polytechnic University's College of Professional and Continuing Education, said the indefinite wait for university status was frustrating. "Without a law spelling out the procedures and a road map for establishment of private universities, investors will be at a loss over how many years they have to wait before they can get a university title," he said. Another issue the tertiary institutions would like addressed is "top-up" degrees jointly offered by local tertiary institutions and overseas universities. Running from one to two years, top-up degrees are for those who aim for a degree qualification after completing sub-degree programs. Such degrees are cheaper than locally accredited degrees and come with a shorter study period. There are currently 366 top-up degrees with varying costs and study periods. Ng said locally accredited, self-financed degree programs were no match for top-up degrees with lower costs and shorter study periods. "It takes a long time for an institute to become a private university. The degree certificates awarded by local institutes would not have the title of university on them," she said. "But the top-up degrees are awarded by overseas universities and they cost just HK$30,000 and the study period could be as short as one year. If you are a student, which degree would you choose to study for? "Although we have plans to offer degrees, we will not go ahead with them if the government doesn't do something about the top-up degree market." A severe land shortage is another concern of tertiary institutions that want to develop into private universities. They say sites pledged so far are too small for the construction of a proper university, which should be complete with hostels, sports facilities and other amenities. Four institutions - Polytechnic University's College of Professional and Continuing Education, the University of Hong Kong School of Professional and Continuing Education (HKUSpace), the Hong Kong College of Technology and City University's Community College - say they will contest two urban sites reserved by the government for the provision of self-financed degrees. The Open University also said it would like an extra site. The sites in Ho Man Tin and Wong Chuk Hang can accommodate 4,000 students, boosting the number of self-financed degree places from 9,000 to 13,000. Despite the clamour for more speed, the Education Bureau said a step-by-step approach must be followed. "The objective of developing education as a pillar industry is not to set up an abundance of private universities in a short time," it said. "We will maintain our strict and cautious approach to ensure quality."

Disputes between stakeholders of Asia Television are heating up as more details of the struggle between Payson Cha Mou-sing and Want Want China Holdings (0151) chairman Tsai Eng- meng have been revealed. Cha has struck back at recent Tsai accusations just before the shareholders' meeting this week. Tsai had agreed to invest HK$1 billion in ATV but put in only HK$200 million and stopped investing, breaking his promises, a source told Sing Tao Daily, The Standard's sister newspaper. "When Tsai bought a stake in ATV, he agreed to inject capital of HK$1 billion, but whether the promise was verbal or in black and white, only the two parties would know," the source said. Besides not going through with the capital injection, Tsai's request for an interest rate up to 30 percent on a HK$15 million loan he gave to the loss-making TV station also alarmed shareholders. "The television's secretariat should have a copy of those relating documents. The letter [regarding the HK$15 million loan] did not contain any suggestion of offsetting interest by advertisements," the source continued, as Tsai had told the press. The Cha family wants to be a low- profile controlling shareholder, but Tsai's plans to buy the TV station at such low prices and his broken promises have led them to retaliate, the source said. "The Cha family thought it impossible to sell shares at such a low price. To hit back, they proposed to issue HK$50 million convertible bonds to raise funds for the TV station." The source said an issue of convertible bonds would not cause dilution for Tsai as every shareholder was granted an option to subscribe to the bonds and it was fair. Cha has gained support from the chairman of Phoenix Satellite Television Holdings (20008), Liu Changle, and Chan Wing-kee, who own a combined 26.85 percent stake. Chan has transferred his option for convertible bonds to Cha, according to the source, and Liu is expected to follow suit. Sources close to Tsai earlier denied any promise to invest HK$1 billion and said ATV can repay at an interest rate of 30 percent per annum by broadcasting advertisements, some reports said. Meanwhile, Linus Cheung Wing- lam resigned as the chairman to avoid from getting swept into the row between Cha and Tsai, the source said.

Over the 10 years since Macao's return to China in 1999, the former Portuguese colony has witnessed nothing less than an economic miracle. Macao's gross domestic product (GDP) tripled during that period and reached MOP171.87 billion ($21.48 billion) in 2008, growing at an average rate of nearly 15 percent per year. The 2008 per-capita GDP of Macao, which lies west of the Pearl River and is China's second special administrative region on the southeast coast of the country, stood at $39,036, a figure that ranks it second in Asia behind only Japan. With government coffers expanding from growing tax revenues collected from the gaming industry, the social welfare system in the region, which is home to 549,000 residents, has also improved dramatically in recent years. Beginning in the fall of 2007, the Macao Special Administrative Region (SAR) Government began offering 15 years of free education from kindergarten to senior high school. The Macao SAR Government initiated a "wealth share" handout program in 2008 to allow the public to benefit from its strong budget surplus. Under the program, residents were given MOP5,000 ($625) per person in 2008 and MOP6,000 ($750) per person in 2009. In both years, non-permanent residents received half of that sum. In October, Macao announced a plan to open individual retirement accounts in the central savings regime for the residents of Macao. The government immediately injected MOP3.3 billion ($412.5 million) into the new system, which amounted to MOP10,000 ($1,250) per account. The money was allocated from the MOP25.1 billion ($3.14 billion) budget surplus recorded in 2008. Money in the accounts for all residents 22 years old and higher can be withdrawn once the beneficiary reaches the age of 65. The government calls this measure a new form of retirement social security for Macao's residents. Speaking at the Legislative Assembly in his final official meeting with the local parliament on November 19, Macao's Chief Executive of 10 years, Edmund Ho Hau Wah, said he estimated that 2009 would see a surplus of MOP10 billion ($1.25 billion), according to the Macao News Agency. "Next year, the government will continue to implement measures for exemption and reduction of taxes that it has adopted over the last few years, with the aim of helping companies and citizens to face the pressures and difficulties resulting from the international financial crisis," he said. Celebrations of the 10th anniversary of Macao's return to its motherland included a December 4 seminar in Beijing on the 10th anniversary of the implementation of the Basic Law of the Macao Special Administrative Region, where China's top legislator, Wu Bangguo, delivered a speech reviewing progress made in Macao over the past decade. On December 11, a photo exhibition on Macao's achievements in the last 10 years opened at Beijing's Capital Museum.

China*: A landmark pipeline from Central Asia to China began pumping natural gas on Monday, loosening Russia’s grip over the region's vast energy resources. At a midday ceremony in a field in northeastern Turkmenistan, the leaders of China, Kazakhstan, Turkmenistan and Uzbekistan together rotated a pipeline spigot to raucous applause and cheering, sending the first consignment of gas on its way to the energy-hungry Asian nation. By becoming the first major Central Asia gas export route to completely bypass Russia, the new pipeline will play a key role in wresting the former Soviet republics in the region out of Moscow’s economic sphere of influence. “The pipeline passing through our countries will revive the ancient Silk Road, once a conduit for the intensive exchange of goods between Asia and Europe,” Turkmen President Gurbanguli Berdymukhamedov said in a speech before the opening. The route stretches around 1,800 kilometres (1,120 miles) from Turkmenistan through Uzbekistan up to Kazakhstan’s border with China and then extends more than 4,500 kilometres (2,800 miles) into China itself. “The successful implementation of this project could become a prototype for all international energy partnerships,” Berdymukhamedov said. “This pipeline will have a positive impact across the entire region and beyond, and it will become a major contributing factor to security in Asia.” Turkmen gas deliveries to China through the pipeline are expected to hit around 6 billion cubic metres next year, with supplies increasing incrementally every year until they reach 40 billion cubic metres in 2015. The pipeline is China’s latest success in a vigorous campaign to seize as many energy assets as possible across Central Asia. “China gives the highest priority to co-operation between our neighbours and this pipeline is witness to the uninterrupted co-operation that continues to flourish between our nations,” President Hu Jintao said on Monday. This year alone, China has pledged multibillion dollar loans to both Turkmenistan and Kazakhstan as part of its bid to secure energy assets and drilling rights in the two countries.

Chinese President Hu Jintao (2nd L, front), Turkmen President Gurbanguly Berdymukhamedov (3rd L, front), Kazakh President Nursultan Nazarbayev (1st L, front) and Uzbek President Islam Karimov (R, front) attend the inauguration ceremony of the China-Central Asia natural gas pipeline in the gas plant on the right bank of the Amu Darya River, Turkmenistan, on Dec. 14, 2009.

Vice President Xi Jinping is greeted upon his arrival at Haneda International Airport in Tokyo on Monday. Vice President Xi Jinping on Monday kicked off an Asia tour in Japan, where a row has broken out over a breach of protocol for his hastily arranged meeting with Emperor Akihito. Xi, who is widely expected to succeed Hu Jintao as China’s president in 2012, is on his first visit to Japan since he took office in March last year. The vice president was scheduled to meet Prime Minister Yukio Hatoyama, whose centre-left government took power in September with a promise to seek closer ties with China and Japan’s other Asian neighbors. “I am visiting Japan to promote mutual trust, cooperation and friendship,” Xi said in a statement issued shortly after his arrival, when he was greeted by scores of people, many of them Chinese children waving his country’s flag. Xi was due to meet Akihito at the imperial palace on Tuesday. Hatoyama’s government has drawn criticism for extending special treatment to Xi by allowing him to meet the emperor despite China having missed the usual deadline for requesting such an audience. The Imperial Household Agency normally demands that requests by foreign visitors to meet the emperor be filed at least one month in advance, but Xi’s request for an audience was made on November 26. Japan says the rule for such early notice was put in place because of concerns over the health of Akihito, 75, who underwent an operation for prostate cancer in 2002. Former prime minister Shinzo Abe, still an influential figure in the opposition conservative Liberal Democratic Party, lashed out at Hatoyama’s “political use of the emperor” after the government asked the palace last week to bend the usual rules and facilitate the meeting. “I feel strong resentment,” Abe told reporters. “It’s not too late to ask the Chinese side to drop the plan.” Hatoyama defended himself, saying the meeting “has major meaning for further progress in Japan-China relations. I don’t think my decision was wrong.”

Chinese Vice President Xi Jinping (L) shakes hands with Japanese Prime Minister Yukio Hatoyama in Tokyo, Japan, Dec. 14, 2009.

Ding Junhui celebrates as he lifts the UK championship trophy after beating Scotland's John Higgins on Sunday. China's Ding Junhui became the most successful Asian player in professional snooker history when he beat reigning world champion John Higgins 10-8 in the UK Championship final here on Monday. Victory gave Ding, the 2005 UK champion, his fourth ranking event title - surpassing the three titles won by Thailand’s James Wattana. The 22-year-old collected a cheque for 100,000 pounds (US$162,455) and in the process became only the seventh player - after Steve Davis, Stephen Hendry, Mark Williams, Doug Mountjoy, Ronnie O’Sullivan and Higgins - to win the UK title twice. It was the first time Ding had won a major tournament since taking the 2006 Northern Ireland Trophy and suggested he’d finally overcome the mental scars inflicted by a 10-3 hammering at the hands of Ronnie O’Sullivan in the 2007 Masters final.

China will soon make it possible for Macau residents to buy yuan more easily, in order to meet their growing needs for the currency, the People’s Bank of China said on Monday. Macau residents would be able to buy up to 20,000 yuan (HK$22,690) in each individual transaction, up from the current 6,000 yuan, the central bank said on its website. It said the changes would be rolled out as soon as banks had the technical details ready. The move comes as mainland prepares to celebrate the 10th anniversary of the former Portuguese colony’s return to Chinese rule on December 20, 1999. It runs alongside trial programmes for settling trade in yuan in Macau, Hong Kong and countries neighbouring China, as Beijing tests the waters for giving the currency a greater international role. The yuan is not freely convertible under the capital account and is widely considered as undervalued, giving mainland exporters an unfair advantage in global trade. Under the new rules, Macau residents will be allowed to draw up to 50,000 yuan from their yuan accounts each day in the form of a cheque for use in neighbouring Guangdong province. They will also be able to use yuan to pay for services in Macau including telecommunications, education, conferences and exhibitions, the central bank said, citing approval from the State Council. Currently, only retail and catering services can be paid for directly in yuan in Macau.

Beijing Automotive Industry Holding Co (BAIC) said on Monday it has agreed to buy the intellectual property rights for some assets of General Motors’ Swedish unit Saab.

Ningbo Port Co, one of mainland’s four biggest deep water ports focusing on international trade, plans to raise about 10 billion yuan (HK$11.3 billion) via a Shanghai listing in the first half of next year, sources familiar with the matter said on Monday. Ningbo Port, which had originally aimed to list in both Hong Kong and Shanghai markets, decided to float local currency yuan-denominated A-shares at the Shanghai Stock Exchange first, said the sources. It hired BOC (SEHK: 3988) International, the investment banking arm of Bank of China, to advise on its Shanghai initial public offering plan, said the sources who declined to be identified as the IPO process is confidential. “Right now, Ningbo Port is preparing IPO material including its 2009 annual report. If everything goes smooth, it won’t be a problem for it to list in Shanghai in the first half of next year,” said one source. “Both the securities regulator and local Ningbo government are very supportive about its IPO plan as Ningbo Port is strategically important to China’s imports and exports,” he said. Ningbo Port is competing with Shanghai International Port (Group) Co, which is the country’s No 1 port and already a heavyweight stock at the Shanghai bourse. BOC International declined to comment. Ningbo Port could not be immediately reached for comment.

China's power consumption rose 27.6% year on year in November to 328.4 bln kilowatt-hours, National Energy Administration said Monday.

Dec 15, 2009

Hong Kong*: An exhibition to promote Hong Kong's role in next year's World Expo in Shanghai kicked off at Victoria Park yesterday. Part of the 44th Hong Kong Brands and Products Expo, it includes an introduction to the Shanghai event and images of the Hong Kong pavilion. Secretary for Constitutional and Mainland Affairs Stephen Lam Sui-lung said the expo would provide a great opportunity for Hong Kong to promote its status as Asia's "world city".

Bullish Hong Kong Disneyland chiefs say visitor numbers will start to grow after the opening of the first of three new attractions. Resort managing director Andrew Kam Min-ho made the prediction as he shoveled the first spade of soil for an extension of the Lantau park which will see it expand by 25 percent. Kam said Toy Story Land will be completed in two to three years with Grizzly Gulch and Mystic Point ready within five. Financial Secretary John Tsang Chun-wah said the expansion will boost Hong Kong's attractiveness as a tourist destination. Walt Disney Parks and Resorts Asia president and managing director Bill Ernest said Shanghai Disneyland - which will open in 2014 at the earliest - has the potential to become the world's biggest Disney park. But Ernest said Hong Kong and Shanghai may complement each other. "If you really look at the [Shanghai] park, it has the potential to grow to the same size as other magic kingdoms, for example, Tokyo Disneyland. In fact it can become the biggest park of all," he said. Ernest said talks over the expansion of the Shanghai park are ongoing but much will depend on traffic and demand. He said while Singapore is building more amusement attractions, tourists are attracted to a destination rather than an attraction. This means Hong Kong may be assured of a steady growth in visitors over the next few years. Disneyland has said the expansion will create 3,700 jobs in the construction phase and 600 new full-time jobs on completion. Tsang said 30 million visitors from around the world came to Hong Kong last year and despite the global financial crisis, this year's total is expected to be about the same. He said the government will invest a further HK$17 billion in tourism infrastructure on top of the HK$30 billion in attractions set aside earlier and the HK$100 million Mega Events Fund launched earlier this year. Meanwhile, Ngong Ping 360 confirmed it is finalizing a probe into a rescue carrier which slipped out of position and came to rest against one of the Tower 3 platforms during a regular exercise on November 18.

Cross-border yuan trade settlements could double in the first half of next year as the pilot scheme is likely to expand to include more enterprises and cities, according to a senior executive of Bank of China (Hong Kong). After five months of implementation, rumors are rife the number of mainland enterprises participating in the pilot scheme might expand to about 2,000 from 400 now. The number of cities will also expand, sources said. The total trade settlements completed through BOCHK stands at 137 transactions worth about 320 million yuan (HK$363.25 million), according to Chen Wen, vice department manager in corporate banking and financial institutions at BOCHK (2388). In an interview with Sing Tao Daily, sister publication of The Standard, Chan said BOCHK has already informed authorities about the situation and expects the scheme to be expanded soon. Beijing may expand the testing cities while expanding the scope of business and service types, Chen believes. BOCHK plans to further develop its cross-border services for enterprises in the mainland, Hong Kong, Macau as well as Taiwan on the back of its parent Bank of China's (3988) large client base. "BOCHK has no plans to open a branch in Taiwan yet," said Chen. "But our parent, BOC, may try to become one of the first to set up branches there." BOCHK inked clearing agreements with 50 banks, including Hong Kong branches of five Taiwan banks in July.

Hong Kong produced the game of its soccer-playing life last night to claim a rare gold medal in the city's most popular sport. The scene was set perfectly for the underdogs to win the match - a full house at Hong Kong Stadium, an old rival and a team who had nothing to lose and only glory to gain. Hong Kong, whose soccer team has rarely asked in international glory, became giant-slayers by beating Japan 4-2 on penalties after a 1-1 draw in a tensionfilled final of the East Asian Games. It was a sweet victory, and one for the whole city to savour - from the 31,884 spectators lucky enough to watch it at the stadium to the fans gathered around screens at homes, on streets and in bars.

Chan Siu-ki flew first class for the first time in his 24 years, jetting in from London just hours before Hong Hong's date with destiny. It was money well spent by his soccer bosses. The South China striker, coming on as a substitute in the second half, knocked in a first-class goal which proved the turning point in Hong Kong's historic gold-medal victory. With his first touch of the ball, Chan headed home the equaliser that enabled Hong Kong to draw level with Japan, push the match into extra-time, and then finally win a penalty shootout 4-2. The victory gave Hong Kong their first team gold medal at a multi-sports event. And it is now hoped that last night's fairy tale will also prove to be a watershed for local soccer. "Tonight we showed how football can be important to a country's power," said Hong Kong's South Korean coach Kim Pan-gon. "All Hong Kong citizens came together as one to support our team. It is now our responsibility to develop the sport." From Chief Executive Donald Tsang Yam-kuen to Jockey Club-sponsored schoolchildren, they all cheered Hong Kong on. It was a flag-waving frenzy rarely seen at a local soccer match. Patriotism was the order of the night. The crowd was only silenced momentarily, when Japanese defender Taisuke Muramatsu found himself unmarked inside the six-yard box to volley home the opening goal midway through the first half. But they soon regained their voice. And it reached a crescendo when Chan, who had been at a training camp with English Premier League side Tottenham Hotspur, came on at the start of the second half. He showed his worth immediately when he scored after skipper Au Yeung Yiu-chung floated a cross into the area and the ball was knocked back by Xu Deshuai into the path of Chan, who superbly flicked it into the net with his head. "It was just unbelievable to score that goal," Chan said. "I was a little bit tired but the boss [Steven Lo Kit-sing, South China convenor] arranged first class for me. I had never flown first class, and now I have won a gold medal for the first time." Japan, fielding their under-20 side, were expected to win easily. They have the pedigree - having played in three World Cups, with South Africa next year being their fourth - and a powerful establishment, with more than 29,000 teams in Japan and nearly 900,000 registered players. But a spirited Hong Kong refused to be intimidated by the Asian superpowers. On the night they held their own and, buoyed by Chan's strike, took the game into a penalty shootout. With most of the 31,884 fans - the full-house sign went up before the match - at Hong Kong Stadium baying for blood whenever a Japanese player stepped up to take his penalty kick, it was inevitable the visitors would buckle under the pressure. "I'm really, really happy and the big support was a major factor for us," Kim said. "It was really crucial, especially in the penalties." But it was Hong Kong captain Au Yeung who stuttered first, when his spot kick was saved. The other Hong Kong players held their nerve and with goalkeeper Yapp Hung-fai pulling off one save, and another kick hitting the post, Hong Kong clinched an unprecedented victory. "This is a historical moment for Hong Kong football," said an ecstatic Timothy Fok Tsun-ting, Olympic chief and president of the Hong Kong Football Association. "We have created a legend and I will look back at this moment with pride." Chan, the hero of the day, said he hoped this victory would be the beginning of a new chapter for the local game. "I hope we will get more support from everyone now, for this is a dream come true," he said.

Hong Kong crossed the finishing line at the East Asian Games last night in the glorious glow of 110 medals. The 26 gold, 31 silver and 53 bronze medals added up to Hong Kongs best performance in the Games 16-year history and put the hosts fourth in the overall tally of medals. China topped the table with 113 golds, followed by Japan (62) and South Korea (39). Hong Kong athletes bagged 10 more medals two gold, three silver and five bronze on the final day. But one of the territorys most memorable sporting successes was achieved on Saturday when its footballers beat Japan for gold. It was 1-1 after extra time, and the home team then triumphed 4-2 in a penalty shootout. Strong performances over nine days of competition ensured a rousing finale at the Hong Kong Coliseum in Kowloon, with pop stars from around East Asia teaming up with the Hong Kong Chinese Orchestra for a night to remember. This was after 262 competition events in 22 sports that added up to the largest international multi-sport event ever held in Hong Kong. The president of the Sports Federation and Olympic Committee of Hong Kong, Timothy Fok Tsun-ting, praised athletes and spectators for making the Games a success. We have earned every right to say We are the legend, he declared, taking an obvious cue from the Games theme song, You Are The Legend. Secretary for Home Affairs Tsang Tak-sing was also singing praises: All our athletes have competed fairly and done their best, displaying strong determination, great perseverance and true sportsmanship. The Games, he added, have shown the unifying power of sport as he pointed to their friendship and solidarity. The Games have become an important event on the international sports calendar as well as a platform for friendship and cultural exchanges across the region. Separately from lauding the power of sport in generating regional goodwill, Tsang congratulated and held up Hong Kong athletes for acclaim after performances that polished the SARs reputation. The 110 medals far exceeded the total number of medals won in the past four East Asian Games, he noted. We should be proud of their achievement and have much to learn from their perseverance and exemplary sportsmanship. The efforts by Hong Kong athletes in various events, he added, showed they had achieved levels of skill that ranked them with the best in some major sports. Among those performing at the Coliseum finale were singers Chae Yeon from South Korea, Kousuke Atari (Japan), Richie Jen (Taipei), Dadawa (China) and Hong Kongs Eason Chan Yik-shun. Then, in a rousing climax, they joined the Chinese Orchestra for an international rendition of You Are The Legend. It was also time for Hong Kong to pass the Games baton to the mainland city of Tianjin, which will host the next Games, in 2013. As well as receiving the Games flag, Tianjin put on a display to highlight the characteristics of the city and gave the audience a taste of what to expect in four years time.

Guo Jingjing reacts in the women's 3-metre synchronized springboard diving final in Hong Kong East Asian Games on Sunday. Guo won the gold medal in the competition. Guo Jingjing reigned supreme on the final day of the East Asian Games in Hong Kong on Sunday. The most decorated woman diver in Olympic history and the mainland’s most famous female athlete, Guo claimed gold with compatriot Wu Minxia in the women’s 3-metre synchronised springboard. Their comfortable victory after an indifferent start helped an all-powerful China surge past 100 golds in the medals table on the last day of action, with Japan a distant second and South Korea third. Hong Kong – still revelling in the unexpected gold medal in the football tournament on saturday– sat fourth overall. The 28-year-old Guo’s high-profile reported relationships in recent years have made her prime gossip-column fodder in Hong Kong and on the mainland. There has also been intense speculation that she might be nearing retirement from diving, saying before last year’s Beijing Olympics that she would retire after those Games, but later playing down the comments. Guo has won six Olympic medals during her career, four of them gold, including a double in Beijing.

The endangered humphead wrasse - Hong Kong may have to curb its appetite for endangered live reef fish, with the government set to shut a loophole that allows them to be imported without checks by customs officials because they are not classified as food. The city is the world's biggest consumer of reef-caught fish. Last year we devoured more than 9,000 tons. Conservationists say the legal loophole makes regulating the trade almost impossible, because fishing-boat captains are not required to declare what species they catch or where they fish. A landmark study by three scientists published last year shows 44 per cent of reef fish species gathered in the Indo-Pacific region are headed for extinction. Dr So Ping-man, assistant director of the Agriculture, Fisheries and Conservation Department, has disclosed that the government intends closing the loophole through the introduction of a food safety bill that would classify all fish as food. He spoke at a meeting called last month by global conservation organisation WWF and attended by live-fish traders, conservationists and academics. "Dr So was confident that the legislation is not just about the health of the fish but also what the fish are and where the fish come from," said Geoffrey Muldoon, a leader of the WWF's fight to save endangered fish living on the reefs of the Coral Triangle - the seas around Southeast Asia and western Pacific island nations. The legislation, which lawmakers will discuss in February, would require food importers and distributors to be registered and to keep records of the movement of stock. Conservationists believe it will be based on a government code of practice that encourages the reef-fish trade to report catch volumes and the type, size and source of fish within 48 hours of them being landed. Professor of marine biology Dr Yvonne Sadovy, of the University of Hong Kong's division of ecology and biodiversity, said that if the bill became law it would greatly increase the government's ability to monitor the trade and understand catch volumes and what is being caught where. "By knowing where fish are coming from - like if 85 per cent are coming from the southern Philippines - we know that's where the enforcement management, fishery management and funding can be focused. At the moment, we have no idea." It would also help enforcement of the Convention on International Trade in Endangered Species, which lists reef fish such as humphead wrasse as endangered. Consumption of expensive reef fish is on the rise. Imports last year were up 24 per cent compared with 2004, according to government estimates. Sadovy said the fish being eaten were juveniles that had not had a chance to lay eggs. "If you have a fishery of juvenile coral fish, where are the adults going to come from to replace the population?" Hong Kong diners like plate-sized fish, particularly red ones such as red grouper. Because of the insatiable appetite for them, this fish, plentiful in the 1960s, was rarely seen in markets today, said Dr Andy Cornish, director of conservation for WWF Hong Kong. The same fate may await another red fish, the leopard coral trout, about 3,300 tonnes of which were eaten in Hong Kong last year. Cornish said just because diners were used to seeing a fish species for sale over a long period did not mean it was in plentiful supply: "Those fish are coming from further and further away." He suggested diners ask for reef fish from sustainable sources - farmed or from countries with export quotas. However, calls to 10 seafood restaurants in Sai Kung, a popular weekend destination for diners, to reserve a leopard coral trout showed all served wild-caught specimens. Fish-stall operators at Lei Yue Mun in East Kowloon said the legislation would help trace fish in the event of food poisoning. But one of them, Wong Shek-sing, worried about costs. "If live reef fish are regulated, prices may go up, since importers' costs will be higher because they have to deal with extra procedures." An investigation by Post Magazine and wildlife trade monitoring group Traffic has revealed a smuggling network through which Hong Kong and mainland crime syndicates have imported more than HK$4 billion of endangered shellfish to Hong Kong in the past nine years. Beige abalone from the South African Cape can sell wholesale for more than HK$16,000 a kilogram in Sheung Wan. Cape authorities say much of the imported abalone has been harvested illegally for the gangs, who pay for it with ephedrine, used to make Ice. In the past five years, 4 per cent of Western Cape's people have become hooked on the drug and drug-related crime has surged 250 per cent.

Emerging from the renovated New Yaohan site, Oceanus will open with 260 mass-market gaming tables and 560 slot machines on three floors. SJM Holdings will open the doors to Macau's 34th casino tomorrow in an attempt to take a bigger bite out of the growing market for day-tripping punters. After an 18-month, HK$1.5 billion renovation of the old New Yaohan department store, Casino Oceanus is set to open with 260 mass-market gaming tables and 560 slot machines spread across three floors and 32,000 square metres. It will employ 2,400 people. The interior was designed by casino architect Paul Steelman, who also did the Sands Macao, and the exterior of the building is covered with backlit "bubbles" made of ethylene tetrafluoroethylene membrane, the same plastic material used on Beijing's Olympic Water Cube. With no high-volume but low-margin VIP rooms, no junket operators, and a direct connection to Macau's main ferry terminal through a covered pedestrian footbridge, Oceanus is targeting "pure mass market", according to SJM chief executive Ambrose So Shu-fai. "It will cater to those who come to visit Macau only for a few hours," he says. By converting the department store, which SJM has leased from privately held parent Sociedade de Turismo e Diversoes de Macau (STDM) for HK$4.9 million a month, and by dispensing with rooms or other amenities beyond a few food and beverage outlets and retail shops, the firm has spent only about one-sixth of what it cost to build the Grand Lisboa or the rival Wynn Macau. "We spent a fraction of what our competitors did for a similar number of tables," So says. Oceanus' 260 mass-market tables compare with 240 mass-market tables at the Grand Lisboa, which brought in HK$1.47 billion in casino winnings in the first six months of this year. Wynn Macau, by comparison, booked HK$1.66 billion in winnings from its 220 mass-market tables during the period. Oceanus is not expected to pull in the same level of top-line revenue. Deutsche Bank gaming analyst Karen Tang forecasts the property will generate HK$2.16 billion in sales next year. However, because of the relatively low start-up costs, Oceanus could end up paying for itself within two years. Credit Suisse gaming analyst Gabriel Chan reckons the property could deliver a 46 per cent return on invested capital during its first year in business. That is substantially higher than any major Macau casino opening since the Sands Macao, which debuted in May 2004 as the city's first foreign-owned casino and where Las Vegas Sands Corp famously made back its initial investment in less than one year. "It would be difficult today to replicate the Sands' success," admits So. "But we are confident." Going forward, So says the company plans to build a footbridge connecting Oceanus to the old Jai Alai casino to the west, and to lobby the Macau government to install an automatic travelator on the existing footbridge that connects the new casino with the ferry terminal. While it will be the 18th property operating under SJM's gaming licence, Oceanus is only the firm's third fully owned and operated casino. Aside from the Grand Lisboa and old Lisboa, which are connected by an air-conditioned footbridge, SJM's 15 remaining casinos are in properties either held privately by STDM or owned by third parties. "Oceanus is our second anchor on the Macau peninsula," says So.

Hong Kong's Good Ba Ba raced into history yesterday when he took out the HK$16 million Hong Kong Mile for the third year in succession while Sacred Kingdom turned back what international handicappers had termed the best sprint field this year to win the HK$12 million Hong Kong Sprint for the second time in three years.

China*: Government departments at all levels across the mainland are expected to go on a spending spree in coming weeks in a final push to use up as much as 2 trillion yuan (HK$2.27 trillion), or about a quarter of the annual fiscal spending budget that remains unused in state coffers. Analysts warned the frenzied spending would inevitably lead to widespread misappropriation or waste of taxpayers' money, or in some instances, embezzlement of public funds. As of last month, the Ministry of Finance put government spending at 5.62 trillion yuan, accounting for 73.8 per cent of the annual target of 7.62 trillion yuan earmarked for this year. He Zhenyi, a public finance senior researcher with the Chinese Academy of Social Sciences, a top central government think tank, said provincial as well as central government officials would speed up spending the remaining 2 trillion yuan, as they feared a budget cut next year if they failed to achieve the expenditure target. "If your department spent, say 2 million yuan less than the budgeted 25 million, you would have no grounds for asking for the same amount or more in next year's budget," He said yesterday. It would create the potential for financial malpractices such as building luxury office buildings, buying posh official cars, or giving away fat bonuses to staff, in order to disburse such a large sum in such a short time, he added. Finance Minister Xie Xuren has voiced his concern by urging local governments to strengthen the management of public funds and to take precautionary measures to prevent the spending spree at the end of the year, China Business News reported yesterday. It is not the first time that a proportion of budgeted government spending has not been achieved by the end of the year. But this year's sum is much bigger than previous ones, largely due to the central government's massive stimulus plans to spend its way out of economic recession, said Ma Guoxian, director of the Public Policy Research Centre at Shanghai University of Finance and Economics. Beijing announced a two-year stimulus package of 4 trillion yuan in November last year, which focused on large-scale infrastructure projects in the early stages. Also, as part of the country's proactive fiscal policy, a deficit target of 950 billion yuan was set in March, the highest for the past six years. Ma said two reasons were behind the delayed use of public spending. The first was that large infrastructure projects took time to prepare. Second, local governments had refrained from pushing ahead with budgeted projects due to worries about their finances. The central government only promised to provide 30 per cent of the amount required for local spending projects, with local governments to provide the remaining public funding. "Unlike the central government, which can raise funds through issuing treasury bonds, local governments' revenues largely depend on taxation, which is in tandem with their economic growth," Ma said. The economy did not show clear signs of recovery until the third quarter. Revenue for November rose 32.6 per cent year on year to 503 billion yuan, with the central government collecting 273 billion yuan, up 34 per cent year on year, while local governments took 230 billion yuan, up 31 per cent year on year.

The half-brother of US President Barack Obama has been made an "image ambassador" for Shenzhen. Mark Obama Ndesandjo received the honor on Friday from the Shenzhen Youth League for his volunteer work teaching piano to orphans in the city, where he lives, The Beijing News reported. Since moving to live in Shenzhen in 2002, Ndesandjo had given piano lessons once a week to orphans at the Shenzhen Social Welfare Center, it said. "Life is more than just putting clothes on a child's back and giving them food," he said last month. "It's also about letting them know there is beauty in the world." The son of the US president's late father and his third wife, Ruth Nidesand, Ndesandjo runs a business consultancy. During Obama's visit to China last month, the two had a brief but emotional reunion in Beijing. "We had a big hug. And my wife and he had a big, big hug. He was very powerful, very intense, because he's my big brother," Ndesandjo said in an interview with CNN. The two half-brothers did not know each other while growing up, but have met from time to time as adults and always managed to retain their bond, Ndesandjo said. He revealed in his semi-autobiographical novel Nairobi to Shenzhen that he was often physically abused by his father, Barack Obama Snr - a revelation the president said was not entirely surprising. Talking about Shenzhen, Ndesandjo said in the interview last month: "It is a city that has many virtues ... It's very close to Hong Kong, which makes it great if you're interested in maybe something cosmopolitan. And at the same time it shows it's a beautiful place, which shows the contrasts between the old and the new China."

Vincent Lo says Shui On Private Group has no plans to sell its stake in the project and he is still considering launching a buyout. HNA Group's plan to take an 85 per cent stake in two luxury hotel towers in Shanghai could be stymied by Vincent Lo Hong-shui, a minority shareholder, who says he has the "right of first refusal" on the properties. Lo's Shui On Private Group has a 15 per cent stake in the project and he says he is still considering whether to exercise his right to launch a buyout. Earlier this month, HNA, which co-owns Hainan Airlines with George Soros, announced plans to buy the stake in the hotels from Leo Investment, which is run by Indonesian businessman Leo Koguan. The price would be below three billion yuan (HK$3.4 billion), mainland media have quoted HNA as saying. Lo says Shui On has no plans to sell its 15 per cent stake. "This is a prime site. We had a disagreement with the other shareholder. Now we have to face up to the reality and make the decision," he said. Construction of the hotel towers is almost complete, but work has been suspended since the beginning of the year amid rumours that construction payments had not been settled. The unfinished properties have become eyesores and the Shanghai city government hopes to get them finished before the World Expo next year. "Hopefully, we will find a solution in the near future. We can still finish the project before the expo," said Lo. He did not discuss the disagreement between the two parties. "There is nothing I can do because it is not really my decision to hold up the hotel. Let's keep our fingers crossed that we find the solution," he said. The hotel towers are in the upmarket Xintiandi area of Luwan district. The area is home to trendy boutiques, restaurants and shops. Developed by Shui On Group, Xintiandi also features commercial and residential properties. The potential buyout has also added uncertainty to the hotel management deals signed in 2006 between Leo Koguan and Hilton Hotels Corp to operate the two towers under the Conrad and Jumeirah brands. At the time, the hotels were scheduled to be completed in 2008. "The legal situation is being reviewed," said Lo. Regarding the potential change in ownership, Jumeirah said in a written reply that the opening of the hotel has not yet been decided. "We remain fully committed to the Jumeirah Han Tang Xintiandi project and continue to work closely with the owner and developer on a timeline for the opening. As soon as the launch date is agreed, it will be announced," it said. Conrad Hotel could not be reached for comment.

Fujian-based fabric maker Hontex International Holdings plans to use the majority of the proceeds from its HK$1.04 billion to HK$1.39 billion initial share sale to expand its own brand of casual wear. Hontex chairman and co-founder Shao Tenpo said the group, which specialises in quick-dry, wicking and other chemical fibre knitted fabrics common in sportswear, would launch an advertising campaign for its MXN-branded clothing and open a series of flagship retail outlets across the mainland. The company and its Taiwanese founders plan to spend about 35 per cent of the share sale proceeds to establish 20 self-owned and operated flagship MXN shops in key cities, and spend a further 26 per cent on a major new ad campaign. Currently, MXN has a mainland network of more than 500 franchised retail shops. A further 13 per cent of proceeds would be used to improve and expand manufacturing facilities at its plant in Fuqing, Fujian, which employs 1,900 staff and has an annual capacity of 16,000 tonnes of fabric or 2.5 million pieces of apparel. Hontex is selling a 25 per cent stake or 500 million shares priced at HK$2.08 to HK$2.78 each. The retail offering begins today and closes on Thursday when pricing is expected to be set. Trading begins on December 24. Mega Capital is the bookrunner on the deal. Meanwhile, South Korea-based and listed electronics and coating materials maker SSCP Group will today unveil a plan to spin off its Germany-based coating materials unit, Schramm Holding, in Hong Kong. Schramm plans to raise HK$142.9 million to HK$224.6 million by selling five million shares at HK$28.58 to HK$44.91 each this month, said people familiar with the deal sponsored by Guotai Junan Securities. After being taken over by SSCP in late 2007, Schramm expanded from Europe into Asia by acquiring SSCP's plants in Shanghai and Huizhou late last year and its Tianjin and Thailand plants in September last year. SSCP's Korean coating operation is excluded from the listing. Schramm produces coating and paint for global makers of car parts, electronics and home appliances, with an annual output capacity of 43,700 tons. Turnover fell 23.8 per cent year on year to €37.5 million (HK$428.85 million) in the first half amid the global downturn.

Harbin Distillery's ethanol plant in Harbin uses corn as raw material and plans to make high-grade feed for livestock from corn stalks. Two former shareholders of Harbin Brewery Group who were at the centre of the first global takeover bid for a mainland firm, as a result of which the group was sold to United States brewer Anheuser-Busch in 2004, are returning to the alcohol business. But this time around, after a brief flirtation with handbags and dairy products, they are looking at hard Chinese liquor rather than beer. Peter Lo and David Sun, both former directors and major shareholders of Harbin Brewery through investment vehicle China Enterprise Capital (CEC), bought a 75 per cent stake in handbag maker Wealthmark International (Holdings) for HK$4 million in 2005. That represented a 95 per cent discount to the then market price. They took advantage of Wealthmark's loss-making situation at the time and the fact that its former chairman, Wong Chor-wo, was being charged by the Independent Commission Against Corruption with embezzling HK$20.8 million from the company. A few months after gaining control of Wealthmark, Lo and Sun engineered a diversification into the dairy business, buying a 70 per cent stake in a loss-making and cash-strapped Tianjin-based Sino-foreign joint-venture milk and yoghurt plant from state-owned Tianjin State Farms Agribusiness Group for 55 million yuan (HK$62.44 million). But Wealthmark did not keep the handbag and dairy businesses for long. By mid-2007, its board decided to swap the assets for CEC's ethanol business. Wealthmark was renamed Bio-Dynamic Group in July last year, with Lo as its chairman and Sun an executive director. CEC paid only HK$1.56 million for both the handbag and the dairy operations. At the time, Wealthmark said the price was arrived at "with reference to the diminishing business prospects in the handbag and garments manufacturing sector and with the increasingly competitive business landscape in the [mainland] dairy segment". It said the price also reflected the capitalization and cancellation of 82.5 million yuan of loans owed by the operations to Wealthmark. "The mainland dairy business is very tough; margins are razor-thin," Lo said last Monday. Meanwhile, CEC sold a 72.7 per cent stake in ethanol maker Harbin Distillery to Wealthmark for HK$100 million. The remainder was held by state-owned Harbin Light Industry, the same mainland partner CEC had in Harbin Brewery before its sale. Harbin Distillery plans to build a 150,000 ton a year, 320 million yuan ethanol plant in Harbin, of which 60,000 tonnes of capacity is to come on stream by the end of last year and 90,000 tons by the end of next year. It uses corn as raw material. The 60,000 tonne phase has just begun commercial operations, a year later than planned. Lo said the plant's gross profit was 200 yuan to 300 yuan a ton, about 5 per cent of the selling price of ethanol at 5,000 yuan a ton. To bolster profits, he said, the plant planned to make high-grade feed for cattle and sheep from corn stalks, and that could fetch 1,600 yuan a ton. In addition, the plant plans to use the ethanol to produce white spirit by June next year. This process will be outsourced to external plants. Lo said white spirit production could yield a gross margin of more than 10 per cent. It can be sold for 25,000 yuan a ton, after mixing ethanol with base liquor, made from sorghum, that costs 15,000 yuan a ton. CEC also sold Wealthmark a 15,000 ton a year ethanol plant in Yinchuan, Ningxia, using beetroot as feedstock, for HK$120 million. The plant had planned to expand annual production capacity to 40,000 tons by next year after a 40 million yuan facility upgrade. But operations were suspended last year because of its small production scale and high energy cost, resulting in Bio-Dynamic booking a HK$9.7 million asset impairment. Lo said Bio-Dynamic was now considering using the Yinchuan plant to make animal feed and ethanol fuel that replaces diesel and petrol, but that would only be viable if global oil prices stayed high. Beijing has banned expansion of ethanol plants using grains as feedstock. Beetroot is a non-grain plant. Last month, CEC agreed to sell to Bio-Dynamic for HK$37 million a 70 per cent interest in a Guangzhou alcohol distribution business that runs 25 stores and has franchised 50 others in the city. The operation turned a tiny profit on sales of about 100 million yuan last year.

China's inflation perception control should be more forward looking: report - China should take more forward looking and preemptive measures to fight inflation expectations following this year's credit boom and runaway property prices, said a report released by a leading Chinese bank. Bank loans should be extended at a more reasonable pace with improved structures next year and policy fine-tuning is necessary.

People come to the Nanjing Massacre Memorial Hall to mourn the victims of the Nanjing massacre committed by Japanese invading troops during World War II, in Nanjing, capital of east China's Jiangsu province, Dec. 12, 2009. Dec. 13, 2009 is the 72nd anniversary of the Nanjing massacre, which left 300,000 Chinese people dead.

Dec 14, 2009

Hong Kong*: The financial secretary yesterday denied he had been lax over the collapse of US investment bank Lehman Brothers last year and the global financial meltdown, which he described as not predictable and unprecedented. Testifying for the first time before members of the Legislative Council subcommittee investigating the Lehman minibond debacle, John Tsang Chun-wah deflected blame for the situation. Hong Kong investors lost billions of dollars on minibonds guaranteed by Lehman Brothers when the bank went bankrupt in September last year. Minibonds are not corporate bonds, but are high-risk, credit-linked derivatives. They are marketed as a proxy investment in well-known companies. Tsang also dismissed criticism from lawmakers that regulators had been too slow with investigations. Since Lehman Brothers collapsed, disciplinary action has only been taken in one non-minibond case. Tsang said many resources had gone into investigating complaints about the soured minibonds, and he hoped the non-minibond investigation could be completed by March. The Hong Kong Monetary Authority said 765 Lehman-related non-minibond complaints were currently under disciplinary consideration. A total of 334 non-minibond cases have been referred to the Securities and Futures Commission for further action. By December 9, 24,418 of the 24,688 investors, or 98.9 per cent, had agreed to settle their claims against the banks that sold them the minibonds in a deal brokered by the authority. The offer by 16 banks to repurchase soured minibonds from about 25,000 investors meant those who accepted the terms would recoup between 60 per cent and 70 per cent of their initial minibond investments. Many lawmakers and investors had expressed dissatisfaction with the offer, which they said was unfair, but Tsang argued that the settlement was in the best interests of investors. The government did not play a major role in brokering the deal, he said. "Our role was limited to encouraging the regulators to expeditiously deal with the matter," Tsang said. Tsang will testify again next Friday.

Regent on the Park in Kennedy Road, Mid-Levels, could receive new lift motors and lights in a government energy efficiency drive. A HK$450 million push to raise energy efficiency in private buildings might be expanded as the Environment Bureau has received a keen response from the owners of more than 7,000 blocks. The number of applications means that the scheme will cover one in every six privately owned buildings in Hong Kong - a response better than expected, Katharine Choi Man-yee, principal assistant secretary for the environment, said yesterday. The government has already spent HK$30.4 million on 901 buildings, with funding mostly spent on installing more efficient lighting. Sixty-five per cent of the buildings are residential properties, with a third being individual tower blocks while the rest are in residential estates. The projects approved so far will result in savings in electricity consumption of 20.8 million kilowatt-hours per year. The government is still vetting applications covering 6,000 buildings. Apart from the most popular choice, of more efficient lighting, some applicants want grants to fund more efficient lift motors. While much more expensive than replacing lights, such motors can offer more energy-saving potential. Other property owners want to replace air-conditioning systems. Asked if the scheme needed more funding, Choi said: "We are considering the matter and will communicate with the vetting committee of the Environment and Conservation Fund to see if there is such a need." The committee comprises professionals and officials. The scheme was set up in April to fund energy audits of residential, commercial and industrial buildings, and carry out improvements. Subsidised work is confined to common areas within the properties. Wong Kok-man, technical director of Power Control, one of 240 companies involved in the building improvements, said he was involved in a scheme to improve Regent on the Park, a 24-year-old property in Mid-Levels. That project, which is awaiting funding, would involve replacing six lift motors to enable the use of variable voltage depending on the number of passengers. Lighting would also be upgraded. Wong said, in general, conversion of a lift motor cost between HK$300,000 and HK$400,000. He said the scheme was a good incentive to reduce energy consumption in the city because, in his experience, "many people just pay the bill without bothering about how to reduce it".

Striker Chan Siu Kim celebrates after scoring against Japan during the men's soccer gold medal match at the East Asian Games. The match finished 1:1 after extra time. Hong Kong went on to win gold after winning the penalty shoot 4:2. Hong Kong shocked a young Japan side in the final of the football competition at the East Asian Games on Saturday, winning 4-2 on penalties in front of a sell-out 40,000 crowd. Defender Wong Chin Hung was the hero for Hong Kong, scoring the decisive penalty to send the home fans delirious after the game ended 1-1 after 120 minutes of stalemate. The Japanese, represented by their under-20 team, took the lead early in the 22nd minute at a vociferous and partisan Hong Kong Stadium, defender Taisuke Muramatsu scoring unchallenged from close range. Japan had the quality but Hong Kong the spirit and the home support, and two minutes after half-time the East Asian Games hosts and surprise finalists were level, substitute striker Chan Siu Ki heading home from close range. Chan, Hong Kong’s star player, was reportedly rushed back from training with English Premier League side Tottenham Hotspur especially for the match, which neither team deserved to win during normal time or in the 30 minutes of extra time. Hong Kong had disposed of North and South Korea on the way to their unexpected appearance in the final.

He was the man they had all come to see, and Liu Xiang didn't disappoint, easing to victory in the 110 metres hurdles at the East Asian Games yesterday. Liu, 26, gold medallist at the 2004 Athens Olympics, had a capacity crowd of 3,500 in raptures at the Tseung Kwan O sports ground as he won in 13.66 seconds from compatriot Ji Wei (13.88).

Some of the brands represented at the Hong Kong Brands and Products Expo in Victoria Park. The fair has attracted more than 350 exhibitors and is expecting 2.2 million visitors. Exhibitors at the Hong Kong Brands and Products Expo are looking to the improving economy and visitors in town for the East Asian Games to boost sales. The 44th fair, which has drawn more than 350 exhibitors, opens at Victoria Park today and runs until January 4. A spokeswoman for the Chinese Manufacturers' Association of Hong Kong, which organises the fair, said it would attract about 2.2 million visitors and sales were expected to be more than HK$300 million. Exhibitors say they expect to see a growth in sales this year. One exhibitor, the Tung Chun Soy Sauce and Canned Food Company, is offering a bottle of oyster sauce for just HK$1, compared to the original price of HK$7 a bottle. "The economy has started to recover. There will be more people to buy our products at the fair," Terence Kam Chun-sang, the company's senior marketing executive, said. "With the effect of the East Asian Games, there will be more visitors to the fair and an increase in sales." Kam said the company would offer discounts to boost sales. "We will also give out free trolleys when customers buy particular products. We will have a limited number of trolleys and expect long queues at our booths," he said. He said the company hoped that sales would increase by 30 per cent this year compared with a year ago. The Super Star Group, a seafood restaurant operator, will sell packs of four abalone for HK$100. "The Christmas and Lunar New Year holidays are approaching. We also think that the economy has started to recover. More customers will come to the fair," the firm's senior corporate communications officer, Erica Cheng Tsz-yan, said. "The East Asian Games may also draw large numbers of visitors to the fair. We are optimistic about sales at the fair." Cheng said she expected sales to rise by at least 10 per cent on last year and the company would offer discounts to attract more visitors. The Sun Shun Fuk Foods Company will sell limited numbers of food packages featuring its classic noodles. "We are optimistic about sales at the fair ... customers will buy our products for presents during the holidays," the firm's brand manager, Yung Hau-ming, said. Angellia Ho Mei-yi, marketing manager of the Tsit Wing Coffee Company, also said she was optimistic about sales at the fair. "We expect about 10 per cent growth in sales ... but it also depends on the number of visitors," she said.

The Hong Kong border facilities for a multibillion-dollar bridge across the Pearl River Delta are expected to be completed within seven years, a transport official says. Ground exploration works for the border facilities, which will be linked with the planned Hong Kong-Zhuhai-Macau bridge, and an international contest to give ideas for designing the facilities both kicked off yesterday. Highways Department chief engineer Bok Kwok-ming said reclamation for building the border facilities would begin in the third quarter of next year. "We're by no means lagging behind as we keep an eye on the timetables of the three jurisdictions," he said. "Construction of the facilities is expected to finish in 2015 or 2016." Secretary for Transport and Housing Eva Cheng said the start of the ground investigation works was an important milestone for the bridge project. Cheng said she hoped the International Design Ideas Competition would draw innovative ideas and concepts to make the border facilities a new landmark in Hong Kong. The winning ideas will be used as reference for the detailed design of the facilities. The border facilities - which will be completed in time for the bridge - will fit in with the Hong Kong Link Road, Tuen Mun-Chek Lap Kok Link and Tuen Mun Western Bypass to form a strategic road network. Cheng said the network would further boost Hong Kong's status as an international transport and aviation hub. "The Hong Kong-Zhuhai-Macau bridge will serve not only as a regional strategic route but also gear to help enhance the economic development and competitiveness of the Pearl River Delta region," she said. The Highways Department is jointly organising the designing contest with the Architectural Services Department, the Electrical and Mechanical Services Department, the Environmental Protection Department, Institute of Architects, Institution of Engineers, Institution of Highways and Transportation, Institute of Landscape Architects and the Institute of Planners. Professionals in architecture, planning and engineering as well as the general public worldwide are welcome to contribute their ideas and concepts. There are two entry groups for the competition: the professional group and the open group.

Liu Xiang holds his gold medal on the podium after winning the men's 110-metre hurdles final at the East Asian Games in Tsueng Kwan O on Friday. Former world record holder and Olympic gold medallist Liu Xiang easily won the 110-metre hurdles at the East Asian Games in Hong Kong on Friday, as he continues his return from a long injury lay-off. The biggest name at the games and one of China’s most celebrated sportsmen, Liu, 26, eased home in a time of 13.66 seconds in front of an expectant sell-out 3,500 crowd at Tseung Kwan O Sports Ground. He even had time to slow up at the line to enjoy the moment. The performance was far off Liu’s personal best and former world record time of 12.88, and slower than the 13.15 he ran in September when he finished second to US rival Terrence Trammell in his first race after surgery. The world record is 12.87, set by Cuban Dayron Robles in June last year. Liu’s appearance was being closely watched because it was only his fourth since the Achilles heel injury which forced him to pull out of last year’s Beijing Olympics and saw him undergo surgery in the United States in December. Games officials had beefed up security for Liu’s appearance in light of the intense media and public interest that surrounds him. After the event, the 26-year-old said he was delighted that he has the chance to compete in Hong Kong.

Chief Executive Donald Tsang Yam-kuen would attend the commencement ceremony of the Hong Kong-Zhuhai-Macau Bridge project in Zhuhai next Tuesday, a government spokesman said on Friday. Secretary for Transport and Housing Eva Cheng Yu-wah and the director of highways Wai Chi-sing will accompany Tsang at the ceremony. This will be officiated by State Council State Council vice-premier Li Keqiang. Tsang will return to Hong Kong on Tuesday afternoon. During his absence, Chief Secretary Henry Tang Yin-yen will be acting chief executive. Highways Department chief engineer Bok Kwok-ming said reclamation for building the border facilities would begin in the third quarter of next year. “Construction of the facilities is expected to finish in 2015 or 2016.” Eva Cheng said the start of the ground investigation works was an important milestone for the bridge project. The project will start in mid-2011 and be completed by 2016. A 12-kilometre, six-lane road – most of it elevated, but also including a one-kilometre tunnel – will connect the bridge starting from Lantau with customs and immigration checkpoints in Macau and Zhuhai. The work will also involve reclaiming 17 hectares from the sea near the airport off north Lantau and building a 2.3km sea wall. Reclamation work and construction of the bridge started on Thursday.

Vancl (Beijing) Technology, ranked yesterday as the mainland's fastest-growing high-technology firm, plans to expand into Hong Kong soon, as it broadens the reach of its online clothing retailing business. Chief executive Chen Nian disclosed the plan yesterday as Deloitte, the global advisory service, announced that Vancl topped its ranking of the 500 fastest-growing technology companies in Asia. "We want to enter Hong Kong this year," Chen told the South China Morning Post (SEHK: 0583). "We find this market to be very appropriate for Vancl and plan to soon find a distribution channel." The privately held firm that Chen founded in October 2007 runs the internet shopping portal, which directly markets and sells to mainland consumers its own brand of garments for men, women and children, in addition to shoes, accessories and home furnishings. Jolyon Barker, the group managing partner at Deloitte's technology, media and telecommunications practice, credited Vancl for an estimated 29,576 per cent revenue growth rate over the past three years, enough to easily seize the No1 spot in the fast-500 list this year. Online market analyst firm iResearch estimated Vancl had a dominant 28.4 per cent of the mainland's business-to-consumer online garment retailing market in the first half. Vancl, which has more than 800 workers, says it sells about 50,000 pieces of garments a day. William Chou, the lead executive at Deloitte China's technology, media and telecommunications group, attributed Vancl's rapid growth to the growing fondness of mainland consumers for shopping online, the firm's focus on selling strictly apparel, its wide distribution and customer service. Other mainland online vendors offer a broad portfolio of products and often lack customer support. Vancl's lifestyle-brand approach to selling a specific collection of attractive and low-cost merchandise on the internet also combined what appears to be retailing lessons learned from Britain's Marks & Spencer, in the United States and Chen's own e-commerce experience on the mainland. Chen was the founder and executive vice-president of Beijing-based online bookstore service, which was acquired in 2004 by Amazon for US$75 million and transformed into its regional website. "We've only touched the tip of the iceberg, with a customer base of two million to three million buyers out of 300 million internet users in China," said Chen. "We expect further growth as we focus on innovation and improving customer experience." Vancl expects its annual revenue to rise about 100 per cent this year from 300 million yuan (HK$340.59 million) last year. Sales in its first year reached only 1.12 million yuan. The mainland's business-to-consumer online apparel shopping market is forecast to record revenue of 2.4 billion yuan this year and 18 billion yuan in 2012, according to iResearch. Barker said Vancl's stellar performance in the past three years had clearly skewed the average revenue growth rate in the Deloitte fast-500 list's top five, which collectively posted 8,980 per cent in average revenue growth over the past three years. Vancl is the third mainland high-technology firm to make it to the top of Deloitte's annual regional survey. It follows solar-panel maker Trina Solar in 2007 and handset developer TCL (SEHK: 1070) Mobile Communication, the original winner.

China*: President Hu Jintao arrived in Kazakhstan on Saturday, the first leg of a regional visit which highlights Beijing’s growing influence over Central Asia’s strategic energy resources. Hu landed just after midday in Kazakhstan’s futuristic capital Astana, where he will attend an opening ceremony for the Kazakh section of a pipeline that will deliver Turkmen natural gas to Xinjiang province. On Monday, Hu, Kazakh President Nursultan Nazarbayev, Uzbek President Islam Karimov and Turkmen President Gurbanguly Berdymukhamedov will attend the official opening of the 7,000 kilometre pipeline in the Turkmen capital Ashgabat. The pipeline, the first major export route for Central Asian natural gas to the mainland, is seen as the culmination of years of quiet diplomacy by Beijing to gain access to the region’s vast energy supplies. China has taken advantage of recent Russian foreign policy stumbles in Central Asia to boost its own influence, said Sarah Michaels, senior editor for the ex-Soviet Union at Oxford Analytica, a Britain-based think tank. “China’s increasing presence in Central Asia is more the result of Russia’s foreign policy missteps than a directed strategy by Beijing for engaging with its neighbours,” she said. “As Russian relations... have deteriorated over the past year, the leaders of these Central Asian states have taken advantage of opportunities to pursue more ‘multi-vectored’ foreign policies.” Beijing has spent heavily across Central Asia this year, including a US$10 billion loan to Astana as part of a deal that saw it take an increasingly prominent stake in Kazakhstan’s vital energy sector. The deal, reached in April, saw China National Petroleum Company (CNPC (SEHK: 0135)) and state energy firm KazMunaiGas buy a stake together in Kazakhstan-based MangistauMunaiGas from Indonesia’s Central Asia Petroleum Ltd. But the soon-to-open natural gas pipeline from Turkmenistan, which represents years of quiet lobbying and public spending, is the crown jewel in Beijing’s Central Asia policy. Turkmenistan, an energy-rich but isolated ex-Soviet nation, is believed to have some of the biggest gas reserves in the world, nearly all of which is currently exported to Russia via a network of ageing Soviet-era pipelines. A pipeline explosion earlier this year sparked a row with Russian energy giant Gazprom that saw exports of Turkmen natural gas almost completely cut off, prompting Ashgabat to accelerate efforts to secure alternative routes. The EU has been anxious to exploit the rift to secure Ashgabat’s cooperation in a direct export pipeline to help ease Europe’s reliance on Russian natural gas supplies, but has struggled to win concessions. China has been quick to act in its stead, lending Ashgabat four billion dollars earlier this year and moving ahead on the new pipeline. The China National Petroleum Corp. (CNPC) will eventually import up to 40 billion cubic metres of gas per year through the pipeline, the Turkmen government has said.

Zhao Benshan advertises a controversial aphrodisiac. A new regulation banning celebrities from endorsing what the mainland government considers problematic radio and television advertisements will come into force next month. From January 1, actors and celebrities will be forbidden to appear in health advertisements, according to a notice posted on the website of the State Administration of Radio, Film and Television. The rule would also crack down on advertisements that "endanger the unity, sovereignty and territorial integrity of the country" as well as those that spread messages about religious cults or incite ethnic hatred, the administration said. Broadcasters are also prohibited from using the national flag and national leaders' images in adverts. Recently there have been several high-profile scandals in which health products endorsed by celebrities were found to be bogus or defective. Consumers vented their anger on the government for lax supervision. The best-known case was last year, when an aphrodisiac endorsed by the country's top comedian, Zhao Benshan , was later found to have been marketed through a pyramid scheme. Thousands of investors lost their life savings. Last year, television actress Deng Jie and China Central Television talk show host Ni Ping both appeared in television commercials endorsing Sanlu milk products. The products were later found to have excessive levels of melamine, and triggered a food scare around the world. In a drive to clean up "misleading and improper" advertisements, the administration also banned an advert yesterday for formula milk that claimed to "replace breast milk", and those for prescribed medicines and drugs that claimed to cure cancer or improve sexual performance. It is also banning all tobacco adverts. The official censor has this year banned more than 3,600 television advertisements considered misleading, but still found it hard to stem the problem, Xinhua said yesterday. "The clean-up task is still an arduous one," Xinhua quoted Ren Qian, a senior official at the administration, as saying. He said many such advertisements continued to be aired. Programming on the mainland is filled with pharmaceutical adverts, many featuring comedians, singers, actors or television celebrities. Many also feature bogus doctors or patients promoting the curative effect of medications. Medical companies often sponsor talk-show-style phone-in programmes, and have actors playing medical experts to answer questions from callers. A notice issued in February urged radio and television broadcasters to self-censor problematic programs. And in May, the government warned that celebrities who advertised fake or substandard medicine would be treated as accomplices, and prosecuted.

Japan would extend special treatment to Vice-President Xi Jinping , breaking with protocol to allow him to meet Emperor Akihito in a hastily arranged audience, officials said yesterday. The emperor would meet Xi on Tuesday morning, a palace spokesman said in Tokyo. Xi, widely seen as being in line to succeed President Hu Jintao in 2012, is scheduled to visit Japan for three days from Monday. The Imperial Household Agency has normally demanded that applications by foreign visitors to meet the emperor be filed at least a month in advance. But Xi's request for an audience was made on November 26, Japanese media reported. The protocol had been in place because of the health of Akihito, 75, who underwent an operation for prostate cancer in 2002, media reports said. Japanese Prime Minister Yukio Hatoyama made a special request that the emperor meet Xi despite the short notice, Chief Cabinet Secretary Hirofumi Hirano said. "It would be important for the friendly relationship between Japan and China, so I asked the head of the Imperial Household Agency to do the favour if the emperor's health condition permits," Hirano said. Hatoyama, whose centre-left Democratic Party of Japan took power in an electoral landslide in September, has pledged stronger ties with Asia. But the exceptional move involving the emperor raised eyebrows among Japanese media, which said it may be construed as using Akihito for political purposes. Under the post-war constitution, the emperor and members of the world's oldest monarchy serve a largely ceremonial function and are barred from being engaged in political activities. Many Asian countries still hold bitter memories of the past aggression of Japan under Akihito's father, the late emperor Hirohito.

Beijing has found US$1.5 billion in public money held illegally by officials across the country in a crackdown since June, the latest measure of the widespread corruption that has long infuriated its citizens. The country’s anti-corruption chief, He Guoqiang, told a meeting on Friday that the crackdown found more than 22,000 cases in which officials held public money for personal use, and that 81 officials from the government and ruling Communist Party have been prosecuted. Hundreds of other officials received administrative punishment. He said the crackdown should focus on departments directly under the central government, the state-run Xinhua News Agency reported – a sign that the problem exists at high levels. Beijing cracks down regularly on official corruption, a major source of social unrest. Similar nationwide sweeps from 1998 to 2006 found 140.6 billion yuan (HK$159.4 billion) illegally held by officials, state media reported last year. In such cases, officials put aside public money for personal use, which He called “fertile ground” for corruption. In a recent corruption case, a Beijing court in May handed down a suspended death sentence to the accountant of a local state-owned public sanitation company after she was found guilty of embezzling 36 million yuan. The accountant, Yu Shaolan, used some of the money to buy three apartments and hid the rest in a bank account, news reports said at the time. The court said Yu, aged 50, deserved death for the large amount of money embezzled, but suspended the sentence because the money had been retrieved.

China industrial output surged in November to its fastest pace since June 2007, underlining the economy’s brisk recovery from the global downturn and accompanying the return of consumer inflation and import growth. But exports continued to fall from year-earlier levels, contrary to forecasts of a return to growth, feeding into economists’ expectations that the central bank will not be keen to tighten monetary policy significantly in the next few months as it waits to see how external demand holds up. Overall, the results drive home both the solidity of mainland’s contribution to global economic recovery and the looming prospect across the world that rising prices, especially for food, could crop up as policymakers’ next big challenge. Hong Kong shares led a rally across much of the region, closing up 0.9 per cent, with banks and property firms among the biggest gainers. The strong performance also supported oil prices, which rose to near US$71 after earlier dipping below US$70 for the first time in two months. “This is a strong set of figures. But we expect no policy change during the first quarter next year,” said Lin Songli, an analyst with Guosen Securities in Beijing. Factory output rose 19.2 per cent from a year earlier, beating economists’ expectations of an 18.0 per cent rise and picking up from 16.1 per cent in October. Consumer prices rose in November over a year earlier after nine straight months of declines. The increase of 0.6 per cent beat expectations of a 0.4 per cent rise.

China exports fell 1.2 per cent from a year earlier in November in the smallest decline this year, customs figures showed on Friday, as nascent recoveries in the US and other big markets helped revive demand. Imports into the world’s third-largest economy also rebounded strongly, rising 26.7 per cent over the same month last year, the Customs Administration said in reports posted on its website. The figures suggest the global recovery is gaining momentum as consumers in the US and other regions begin spending more after months of holding back. The meagre decline in November’s exports compared with a 13.8 per cent drop in October. Adjusted for seasonal factors, November’s decline was 0.3 per cent, the customs data showed, while imports rose 22.2 per cent. Mainland’s trade surplus fell to US$19.9 billion in November from US$24 billion in October. “With the outlook for external demand improving, net exports should contribute positively to China’s GDP growth next year,” Jing Ulrich, JP Morgan chairwoman for China equities, said in a note to clients.

Iraqi worker at the Nahran Omar oil refinery near the city of Basra, southeast of Baghdad. On Friday, a group of oil majors led by mainland’s CNPC won a deal to develop Iraq’s giant Halfaya oilfield. A group of oil majors led by mainland’s CNPC (SEHK: 0135) won a deal to develop Iraq’s giant Halfaya oilfield on Friday, Oil Minister Hussain al-Shahristani said, in the country’s second bidding round since the 2003 US invasion. CNPC has a 50 per cent stake in the consortium, while Total of France and Malaysia’s Petronas hold 25 per cent each. The group’s plateau production target is 535,000 barrels per day (bpd) from a current 3,000 bpd, and it offered a remuneration fee of US$1.40 per barrel. The Halfaya oilfield has estimated reserves of 4.1 billion barrels of oil. Earlier Royal Dutch Shell and Petronas won the rights to develop one of the world’s largest remaining untapped oilfields. The companies proposed a per barrel fee of just US$1.39 per barrel and pledged to increase output from the supergiant Majnoon field to 1.8 million barrels per day, more than double what Iraq had expected. The fee was lower than Iraq had been willing to pay. Total, partnering with CNPC had also bid for the field. Iraq is offering 10 oilfields over two days in a rare opportunity for oil firms, from western majors to Chinese and Indian state-owned giants, to gain access to plentiful and cheap to drill Middle East oil reserves. The deals have the potential to make Iraqi oil output rival that of top oil producers Saudi Arabia and Russia, and could rattle the geopolitical power balance in the Middle East. Baghdad desperately needs the billions of dollars of revenue these and other deals would generate to rebuild after decades of war, international sanctions and years of neglect and sabotage. Competition had been expected to be fierce as the second auction since the invasion includes the last of Iraq’s supergiant fields – reservoirs holding 5 billion barrels or more. They are among the last untapped fields of their size in the world. Collectively, the fields on offer hold about as much oil as all that held by OPEC-member Libya. Executives from the world’s top oil companies braved the security threat to bid in Baghdad. A series of car bombs killed 112 people in the capital on Tuesday, police said, a bloody reminder of the threat oil firms would face in deploying staff to remote fields across the country. Iraqi army helicopters buzzed overhead while convoys of armoured SUVs carrying the oil executives hidden behind tinted windows raced through town to the auction. Iraqi police trucks and squads of police dressed in commando gear deployed at dawn to line the streets leading to the Oil Ministry, blocking off many side roads. Crowds of uniformed police and army personnel milled around at the ministry next to Iraq army Humvees and police pickup trucks. The auction, which was being held in a large auditorium, did not start on time. With 12.6 billion barrels of reserves, Majnoon in relatively stable southern Iraq is one of the largest untapped oilfields left on earth.

China will scrap local fees and some roaming fees for cellphone users for long-distance calls beginning January 1, the government regulator said on Friday, denting shares of mainland phone companies, as the nation moves towards more simplified billing systems. Analysts said the effects should be relatively small, and possibly none at all depending on how the companies restructured their tariffs under the new simplified system. Shares of China Mobile (SEHK: 0941, announcements, news) , the world’s biggest mobile carrier, dropped 1.05 per cent in Friday trade in Hong Kong, with smaller rivals China Unicom (SEHK: 0762, announcements, news) and China Telecom (SEHK: 0728) both lost 0.6 per cent. Those all trailed a 0.93 per cent gain for the broader market. Under the current regime, callers pay both local and long-distance fees when making domestic long-distance calls. “When cellphone users dial domestic long-distance calls, local communication fees and long-distance fees charged under the current policy will be combined to a long-distance fee only,” said the Ministry of Industry and Information Technology. Wireless carriers could lose certain revenue from the local fees on those calls, but they will still be able to collect the more lucrative long distance fees, said Elinor Leung, an analyst at CLSA. “It’s bad for them, but it’s not that bad,” she said. Roaming fees that are now charged when users make international calls in locations outside their home cities will also be scrapped from January 1, the MIIT said in a statement on its website. However, when subscribers make long-distance calls within the country, the existing pricing would not be changed, it added. Currently, China Mobile, China Telecom and China Unicom have a total of some 700 millions subscribers, making the market the world’s largest. The three operators have jumped into an aggressive marketing war, slashing fees and offering packages to allure and retain customers since Beijing handed out the third-generation network licences early this year.

New bank loans in China rose in November after dipping to the lowest level of the year the month before, the central bank said on Friday, as lenders continued to support massive economic stimulus efforts. New loans totalled 294.8 billion yuan (HK$334 billion) in November, up from 253.0 billion yuan in October, but well off the 516.7 billion yuan lent in September, according to figures released by the People’s Bank of China. The November figure exceeded analysts’ expectations. A survey of nine economists by Dow Jones Newswires indicated they believed that lending would drop to 250 billion yuan. New bank loans reached a massive 7.4 trillion yuan in the first half of the year, hitting a record 1.89 trillion yuan in March, as banks heeded Beijing’s calls to pump money into the world’s third-largest economy. The figure declined significantly to 355.9 billion yuan in July before rebounding in August and September amid concerns that much of the money had been funnelled into stocks and property at the risk of spiking asset prices. Meanwhile, the country’s broad M2 measure of money supply rose by 29.74 per cent from a year earlier at the end of November, the central bank said.

UN Secretary-General Ban Ki-moon receives interview of UN-based Chinese journalists, in New York, the United States, Dec. 10, 2009. Ban on Thursday spoke highly of China's "very important role" in addressing the global challenge of climate change. UN Secretary-General Ban Ki-moon on Thursday spoke highly of China's "very important role" in addressing the global challenge of climate change. Ban made the remarks in an interview with UN-based Chinese journalists before traveling to Copenhagen, Denmark, to push for a global deal on climate change. The UN Climate Change Conference, which opened Monday and will run through Dec. 18, gathered representatives from 192 countries with the aim to map out a plan to combat climate change over the period of 2012-2020. "The recent announcement by China to reduce energy intensity by 40 to 45 percent against the level of 2005 was very much appreciated," said Ban. Recalling a visit to China earlier this year, Ban said he was impressed by the "way the Chinese government and indigenous communities are doing to reduce greenhouse emissions by developing renewable sources of energy, by developing alternate sources of energy." "Just by changing light bulbs in the amount of 4 billion light bulbs, China is going to reduce energy dependency by 7 or 8 percent," he said. "That is quite remarkable." "I visited all those solar factories. That was very impressive," he said. Introducing renewable sources and alternative sources of energy will be "extremely important" for addressing climate change, said the UN secretary-general. Turning to the ongoing UN climate change conference in Copenhagen, Ban again voiced optimism about "a robust, strong political agreement" which will include all four important elements. "That is the ambitious emissions mid-term targets by developed countries as recommended by the intergovernmental panel on climate change, that means a 25 to 40 percent reduction of greenhouse emissions," he said. "And developing countries should also take nationally appropriate mitigation actions, and a strong adaptation package for developing countries and financial and technological support for developing countries, particularly for the most vulnerable countries, and finally, a global governing framework should be agreed upon," he said. The secretary-general regretted that there was still "a gap of trust" between developing and developed countries. "One of the best ways to bridge this gap would be that industrialized countries should come out with sufficient financial and technological support," he said. Ban said he would also make his best efforts to help bridge this gap, in a way that is "absolutely impartial." "I will try to play a very fair and impartial role as an honest broker to bridge the gap between developed and developing countries," he said. He underscored the principle of "common but differentiated responsibilities", which is the basis of negotiations. "That's firm. That is agreed by all. There is no change," he stressed. "I am basically optimistic about the result of Copenhagen because all the leaders believe that we do not have time and the science has made it quite clear that climate change is happening much, much faster than we realized," he said. "We must deliver this planet Earth to our succeeding generations in a more environmentally sustainable way. That is our political and moral responsibility, and that's the responsibility of world leaders," he added.

China Unicom, the nation's second largest mobile phone operator said Thursday that it had sold more than 100,000 iPhone handsets since the sales began at the end of October. "Iphones sell very well on the domestic and we are very pleased with the response from Chinese consumers," Chang Xiaobing, chairman of the company said in a statement on its website. Some 71 percent of the users subscribed for a two-year China Unicom's Third Generation (3G) service that is installed in the cell phone, the statement said. It allows users fast access to online video and news information. China Unicom's WCDMA network covers nearly 285 cities in the country.

China's imports and exports rose 9.8 percent in November year on year, ending a 12-month decline, to stand at 208.2 billion U.S. dollars, the General Administration of Customs announced Friday. The trade surplus was 177.96 billion dollars in the January-November period, down 30.6 percent from a year earlier. Exports stood at 113.65 billion dollars in November, down 1.2 percent from a year earlier, but were up 2.6 percent from October for the fifth consecutive monthly increase. Imports rose 26.7 percent in November to 94.6 billion dollars. From January to November, the country's imports and exports totaled 1.96 trillion dollars, down 17.5 percent compared with the corresponding period last year. Imports for the first 11 months were 893.02 billion dollars, down 15.8 percent year on year; exports dropped 18.8 percent to 1.07 trillion dollars. The EU remained China's biggest trading partner, though bilateral trade declined 17 percent to 326.27 billion dollars in value in the first 11 months; the United States was second with trade at 266.54 billion dollars, down 13.4 percent; Japan followed with trade down 17.4 percent to 203.33 billion dollars.

Dec 12 - 13, 2009

Hong Kong*: A High Court judge on Thursday rejected a judicial review brought by two political activists seeking to challenge the legality of functional constituency elections on the grounds they breach the Basic Law. The judicial review was jointly brought by Lo Hom-chau and Chan Yu-nam. Both are members of the League of Social Democrats. Chan is a taxi driver, while Lo is a self-employed renovation worker. Lo said that before the 1997 handover both he – as a member of the construction sector – and Chan – as a member of the transport sector – could cast an individual vote for a functional constituency lawmaker. But after the handover, this vote was given only to business groups. The pair are concerned that only corporate bodies can now vote in transport, real estate and construction sector elections, but they cannot. Lo and Chan noted that according to the Basic Law, lawmakers should be elected by the people – not by companies or corporate bodies. Consequently, the current system breached the Basic Law, they argued. But Justice Andrew Cheung Kui-nung said functional constituencies enabled industrial, commercial and professional groups to be represented in the Legislative Council. Cheung said the method to elect these members was not stipulated in the Basic Law. Therefore, it was political issue and could not be decided by the court, he ruled. However, he said as this case concerned the public interest, Lo and Chan were not required to pay court costs, local radio reported. Legislator “Long Hair” Leung Kwok-hung said he was not satisfied with the ruling. Leung said he would seek legal advice and decide whether they would seek a judicial review again.

Former Chinese University vice chancellor Dr Charles Kao Kuen receives the 2009 Nobel Prize for Physics from Sweden's King Carl Gustaf in Stockholm. Kao, the father of fibre optics, shared the prize with two Americans, Willard Boyle and George Smith. Physicist Dr Charles Kao Kuen received his Nobel prize from Sweden's King Carl Gustaf with a special honor. Because he suffers from Alzheimer's disease, the physicist did not have to approach the king to receive his medal and award. Instead the king came to him, leaving the podium and walking down to the stage where the beaming "father of fibre optics" walked forward a few confident paces to meet him and shook his hand firmly. The special arrangement was made by the organisers because of doubts whether the Shanghai-born, 76-year-old retired head of Hong Kong's Chinese University could negotiate the full distance to the podium, where the other laureates were to receive their prizes. Various parts of the ritual including bowing to and shaking hands with the king, bowing to past prize winners seated on the stage, and to the 1,500-strong audience, were all dispensed with. A day before the presentation ceremony, Kao's wife of 50 years, Gwen Wong May-wan, after delivering a speech at Stockholm University on behalf of her husband, hinted to media he might receive the prize in person. Kao, who had been in Stockholm with his wife and children since Saturday said excitedly to the press on Wednesday in a rare complete sentence in English: "The only thing you have to do is practice." Hours before the ceremony his wife said he did well in rehearsal. Kao won the physics prize for what the Nobel jury said were his "groundbreaking achievements concerning the transmission of light in fibres for optical communication, that has shaped the foundations of today's networked societies". The award comes with a cash prize of 10 million Swedish kronor (HK$10.8 million), of which Kao will receive half. Two American co-winners of the prize, Willard Boyle and George Smith - for their pioneering work on semiconductors and digital imaging - will split the other half. It was the third time Kao had received an honour from the Swedish king, after winning the Ericsson Prize in 1979 and becoming a foreign member of the Royal Swedish Academy of Engineering Sciences in 1988.

Hong Kong's lumbering but beloved trams are set to get a little faster. They will also run more frequently in some areas and less so in others if plans by the century-old service's new operator come to fruition. It is not known yet by how much the speed and frequency will change, because much depends on whether Veolia Transport can win approval for at least one and possibly two new turning places, including one in Wan Chai or Causeway Bay. Plans to revamp the city's oldest public transport system, worked out eight months after the French transport giant bought a 50 per cent stake from Wharf Holdings (SEHK: 0004), follow a four-month study of passengers' travelling habits and demand. The company plans not just to raise the trams' speed, frequency and technical efficiency, but also to remodel their interiors.

It wants to concentrate services in the western part of Hong Kong Island, where demand is highest. This means long routes such as the one between Kennedy Town and Shau Kei Wan - popular with sightseers as a leisurely way to tour the island's urban area - would become much less frequent, especially during peak hours. The change would release capacity for new shorter routes between places such as Kennedy Town and Wan Chai, Wan Chai and Shau Kei Wan or Whitty Street and Causeway Bay. Hong Kong Tramways managing director Bruno Charrade said the changes were aimed at improving frequency and addressing a mismatch in supply and demand. "Demand in the west is generally higher than the east, but with long-haul trams not able to turn around until they reach their destination at North Point or Shau Kei Wan, trams in the west are always congested and passengers have to wait longer," he said. As well as the Causeway Bay or Wan Chai turning place, the company in the long run hopes to build another in Quarry Bay. But it says gaining Transport Department approval will not be easy - especially for the one in Wan Chai.

Hong Kong toymakers and overseas retailers know what they want from Santa Claus this year: a rocket. Manufacturers said yesterday retailers were "desperate" to replace stocks after shoppers in the United States began their Christmas shopping earlier than expected and quickly emptied the shelves. This left retailers sending in last-minute orders and chasing manufacturers for faster delivery times, they said. "Many are placing orders yesterday and wanting delivery today," said Yeung Chi-kong, a toymaker and an executive vice-president of the Toys Manufacturers' Association of Hong Kong. "They even want rocket shipments because air-cargo space is so tight." Lawrence Chan Wai-luen, the chairman of toy exporter Wynnewood Corp, said clients were pressing his factory in Shenzhen for delivery as soon as possible. "They wait at the factory and ask me the same question every day: when will the toys be ready?" said Chan, who has been in the business of making toys for more than 30 years. "As soon as some pieces are ready, they just want them on the planes right away at any cost." After a year of bleak sales and weak consumer confidence, the toy industry was finishing this year on a markedly better note, Yeung said. He said that overseas retailers had been too cautious with their merchandise orders in the first half of this year, which left their inventories about 10 per cent below normal levels, leading to the recent wave of last-minute orders. After speaking to some key retail chains in the US and Europe, Yeung said they felt "good" about lifting inventories. He expected the situation to continue into the first quarter of next year. "We were worried about sales on Thanksgiving and Black Friday, but it turned out to have some mild growth," he said. "We are cautiously optimistic about Christmas sales." He forecast Hong Kong's toy exports would remain flat this year but return to pre-global financial crisis levels of about 10 per cent growth next year. Hong Kong exporters own and run most toy factories on the mainland, which supplies 90 per cent of the toys in the US.

A judge yesterday struck down a claim by the daughter of the late owner of celebrated teahouse Lin Heung Lau against her cousin for allegedly creating a copycat establishment. Mr Justice Anselmo Reyes, sitting in the Court of First Instance, dismissed the application from Ngan Shun-wah, the daughter of the late Yien Chi-ren, for an order of injunction against Ngan Chuen-fai. Ngan and Yien are different romanised spellings of the same family name. The daughter, acting as the administrator of her father's estate, wanted Ngan Chuen-fai to channel profits generated from his business, Lin Heung Kui in Sheung Wan, to an account pending the results of a trial, on the grounds that the restaurant was passing itself off as the 70-year-old restaurant in Wellington Street. But Reyes said no evidence supported her claim. It was the second time such a claim had been struck down. A similar claim, filed in June this year by Ngan Shun-wah and her three siblings, was dismissed in October for insufficient evidence. Representing Ngan Chuen-fai yesterday, Johnny Mok SC told the court that an agreement had been made between Yien and his client in 2007 in which Yien agreed to sell the business to his client for HK$20 million, while his client would give Yien profits from the new restaurant accumulated up to 2006. But barrister Albert Yau Kai-cheong, for the daughter, said the agreement was possibly a forgery. He also alleged that an entry in Lin Heung Lau's account showing a HK$3.4 million loan made to Yien could also have been forged. In making his ruling, Reyes said the daughter, Ngan Shun-wah, had failed to provide any evidence to support her claim for an order of injunction. He said the court needed cogent evidence to determine if the documents were indeed forged as alleged, and that it should not be invited to investigate mere speculation. In June, Ngan and her siblings - Ngan Chuen-yee, Ngan Jim-wah, and Ngan Chuen-li - lodged a claim against Lin Heung Kui for allegedly passing itself off as the original, and sought damages. The claim was struck down on October 12 by a master of the High Court. On October 10, Ngan Shun-wah filed a similar claim in the High Court against Ngan Chuen-fai. Lin Heung Lau was registered as Lin Heung Tea House & Bakery in 1952. Yien, who died in March last year, had taken over the business after his younger brother died.

Yuki Ishii of Japan right, spikes the ball in front of the Chen Yao, left and Lu Qian of China at the women's volleyball final at the the East Asian Games on Wednesday. Chinese women and Japanese men split the eight gold medals in the swimming pool on Wednesday at the East Asian Games. After four days of swimming events, Japan holds a slight lead with 17 golds to China’s 15. China won in all four women’s events: the 100-metre backstroke, the 400 freestyle, the 200 breaststroke and the 4 x 100 freestyle relay. World championship bronze medalist Gao Chang set a games-record of 59.77 seconds in the 100 backstroke. The Japanese men won the 50 breaststroke, the 100 freestyle, the 100 butterfly and the 100 backstroke, with world championship silver medalist Ryosuke Irie setting a games record of 52.76 seconds in the last event. The Chinese and Japanese extended their rivalry to the volleyball court, with the two countries facing off in both the men’s and women’s gold medal matches on Wednesday. China narrowly won the men’s final 3-2 but swept the women’s final 3-0. Elsewhere, Japan sewed up men’s tennis gold, with both Tatsuma Ito and Yuichi Sugita winning their semifinals. Chinese and Taiwanese pairings moved into the men’s doubles final. In women’s doubles, Taiwan’s Hsieh Su-wei, a seven-time doubles winner on the WTA Tour, and her partner Chuang Chia-jung beat a Chinese team 2-1 to advance to the final, where they will play a South Korean pairing. In squash, Hong Kong continued its domination, clinching gold in the men’s and women’s team competitions by beating Japan 2-0 in both finals, adding to its golds in men’s and women’s singles. In weightlifting, Pak Hyon Suk of North Korea won the women’s 63-kilogram title and Kim Kwang-hoon of South Korea took out the men’s 77-kilogram category. Lu Yong of China was the champion in the men’s 85-kilogram category. In the women’s badminton team semis, China beat Hong Kong 3-1 and Taiwan edged South Korea 3-2. After Day 5, China is still on top of the medals standings with 38 golds. Japan is second with 29 and South Korea third with 21. Hong Kong is fourth with 10 golds.

Tse Yung-hoi (left), president of the Chinese Securities Association of Hong Kong, says it will be an effective platform for mainland firms. Hong Kong and Shanghai will see more listings of mainland securities firms, according to Bank of China deputy chief executive Tse Yung-hoi, who is also the chairman of the Chinese Securities Association of Hong Kong. Tse spoke yesterday at the official launch of the association, which consists of 20 mainland securities firms operating in the city. He said the association would be an effective platform for these companies, which are looking to develop their businesses outside China. Increasingly, mainland securities firms in Hong Kong are underwriting deals and advising Chinese companies needing capital. They were providing investors with a wider variety of products and services that could be offered on the mainland, Tse said. The association members have HK$300 billion in assets under management, making up about 9 per cent of the market share, according to Tse. Referring to the purchase of Taifook Securities Group by Shanghai-listed Haitong Securities, Tse said he expected more cash-rich securities firms to buy assets or acquire operations from banks. Haitong became the first mainland brokerage to buy a Hong Kong-listed brokerage when it paid NWS Holdings (SEHK: 0659) HK$1.82 billion for a 52.9 per cent holding in Taifook last month. Many of these brokers would also see the need to go public, whether in Hong Kong or Shanghai, Tse said. He said the association would take an active role in speaking to the Securities and Futures Commission on issues such as investor protection. However, Tse shied away from saying whether the trade body would offer views on the development of the free flow of the yuan, which would benefit the securities industry. "It's a big issue," he said. "If I tell you what I think, it would be my opinion, only it won't represent the association's. And I am sure different members will have their own views on that."

China*: The United States and China, the world's two largest carbon polluters, clashed at the world climate talks over the blame for global warming and funds to help poor countries cope with the problem. Yu Qingtai, China’s climate ambassador, said developed countries were to blame for today’s greenhouse-gas problem. They therefore had to pay to help poor countries switch to low-carbon technology and shore up their defences against climate change. “Provision of financial support to developing countries by developed countries is not an act of charity or philanthropy of rich people,” Yu told a press conference on Wednesday. “It is the legal and historical responsibility of the developed countries.” But the chief US negotiator at the climate talks, Todd Stern, rejected the notion of “reparations.” “We absolutely recognise our historic role in putting emissions in the atmosphere, up there, but the sense of guilt or culpability or reparations, I just categorically reject that,” Stern said. Developing nations “can’t get a pass” from calls to burn less fossil fuels that cause climate change, he said. Stern added: “I don’t envision public funds, certainly not from the US, going to China.” Asked about these remarks, Yu said abruptly: “Such a question does not exist. China has never sought to become the first candidate of financial support.” Emissions curbs and funding issues are at the heart of the December 7-18 marathon talks under the UN flag for tackling global warming after 2012. China is world’s No 1 carbon polluter, its emissions overtaking those of the United States in 2005 or 2006, as expressed in volume terms, according to various analyses.

China's official swine flu death toll has soared to 325, with more than a third of those fatalities reported in the first week of December, the health ministry has announced. The total number of A(H1N1) influenza cases in the country surpassed 100,000 as of December 6, the ministry said in a statement posted on Wednesday on its website. Of the total deaths, 125 of them were reported in the week from November 30 to December 6, signalling that the death rate was picking up pace. A ministry official was quoted earlier this month by the Beijing News as saying cold weather was to blame for the rapid rise in the number of swine flu fatalities. As of Wednesday, China had vaccinated more than 31 million people against the virus. Beijing aims to vaccinate up to 65 million people by the end of the year. Last month, the health ministry ordered more transparent reporting of swine flu fatalities following comments by a renowned medical whistleblower who questioned official tallies. Medical expert Zhong Nanshan was quoted by a mainland newspaper as saying he suspected authorities in some areas were under-reporting fatalities to convince superiors they were containing the virus. Zhong’s opinion carries weight after he earned wide respect in 2003 for defying the official line on the Severe Acute Respiratory Syndrome (Sars) outbreak to help reveal the true extent of the epidemic. The government had initially tried to hide the Sars outbreak and only owned up after it began to spill over into other countries.

A crane hoists construction material in front of a backdrop of high rising buildings in Shanghai in this file picture. On Thursday, figures from the National Bureau of Statistics showed property prices in mainland cities rose at the fastest pace in 16 months in November. Property prices in mainland cities rose at the fastest pace in 16 months in November, the government said on Thursday, amid growing concerns about bubbles building in real estate. Property prices in 70 medium and large cities rose 5.7 per cent in November from a year ago, the biggest jump since July last year, figures from the National Bureau of Statistics showed. It was the sixth successive year-on-year increase, snapping a months-long slump dating from December last year when the government attempted to rein in runaway prices and as the global economic crisis kicked in. After trying to cool the market a year ago, Beijing this year responded to the economic crisis with tax breaks and other measures to prop up the property sector, which accounts for more than 20 per cent of urban fixed investments. But concerns are rising that bubbles are building in real estate due to rampant speculation. The house price-to-income ratio – the ratio of the median market home price and the median annual household income – is expected to hit 8.3 in mainland this year, the Chinese Academy of Social Sciences said in a report on Monday. A rational range is between three and six, the think tank said. In response to mounting public complaints about excessively high house prices, the government said this week it would curb speculative home purchases next year – possibly by restricting bank loans to the sector.

China CNR Corp, one of the country’s top two train makers, said on Thursday it planned to issue up to 3 billion yuan-denominated A shares in Shanghai to raise 6.44 billion yuan (HK$7.30 billion) for investment projects. The company, which received regulatory approval for the IPO in August, said it would begin taking subscriptions from institutional investors on December 18 and from retail investors on December 21. Bookbuilding will run from December 11 to 16. The company said in a statement it would need 10.04 billion yuan for investment projects to improve its technology, of which 6.44 billion yuan would be raised from the IPO. Mainland has stepped up the pace of large share offerings in recent weeks as companies tap the buoyant domestic stock market for funds while the government aims for private investment to take over from official stimulus to drive the economic recovery. New bank lending has also been moderating after a lending spree in the first half of the year raised worries about bad loan risks. The increase in new share supplies is additionally seen as a means of cooling of the country’s share market, where the benchmark Shanghai Composite Index is up nearly 80 per cent this year and helped to spur recent official warnings about the potential for asset price bubbles. China Shipbuilding Industry Co, the country’s largest ship equipment maker, said on Wednesday it raised US$2.2 billion in a heavily subscribed IPO priced at the top end of expectations, despite a tough outlook for the global shipping industry. XD Electric and Huatai Securities have also received the regulatory green light to proceed with Shanghai offerings aiming to raise more than US$1 billion. China CNR’s offering, underwritten by China International Capital Corp, would be equal to up to 34 per cent of its expanded capital.

Melamine-tainted milk is back, more than a year after it killed six children and made 300,000 sick. But police in Shaanxi province managed to stop five tons of contaminated milk from entering the market. Police have detained three people suspected of selling more than five tons of tainted milk powder. Liu Ping, general manager of Shaanxi Jinqiao Dairy, and two of its employees, Miao Wenjun and Lu Xiaoqiang, were detained on December 2 on suspicion of producing and selling toxic food, Xinhua reported. All 5.25 tonnes of the melamine-laced milk powder were made between May and September last year by Jinqiao, but Liu had waited for almost a year before he attempted to sell it. The provincial Public Security Bureau is still investigating the source of the melamine and other materials in the products. In September, Liu sold about 10 tons of milk powder to the Nanning Yueqian Food Additive Company in Guangxi, bureau deputy chief Xu Qiang said. But the company discovered last month that 5.25 tons of the milk powder contained melamine, which can cause kidney stones and kidney failure, Xu said. Melamine is an industrial chemical used to make plastics and glue. It is added to substandard food, such as watered-down milk, to boost its nitrogen content, allowing it to pass testing for protein levels. The Shaanxi Quality and Technical Supervision Bureau confirmed that 11 of 200 sacks of the milk powder had excessive melamine. Xinhua did not say whether the other five tons of milk powder was safe. According to Xu, all five tons of toxic milk powder had been sealed up for re-examination in October last year. Liu placed some higher quality milk powder packages on top of the toxic products so that the batch would pass when the local quality supervisor took samples. As a result, the melamine-products passed in the re-examination in November last year. In September, when the Guangxi additive company requested 10 tons of whole milk and skimmed milk powders from Liu, he sent them five tons of melamine-tainted products and another five tonnes of tested powder. All of the tainted powder had been confiscated on November 18, Xu said. When the scandal broke last year, it was found that many of the children suffered kidney stones, kidney failure and urinary tract problems. Twenty-one people have been convicted for their roles. Two men were executed last month, while the former boss of now-bankrupt Sanlu Group - the dairy giant at the centre of the scandal - was jailed for life.

Dec 11, 2009

Hong Kong*: A Hong Kong family who wish to remain anonymous sent a HK$1 million cheque last week to Operation Santa Claus, the holiday fund-raising appeal organised by the South China Morning Post (SEHK: 0583) and RTHK. Before posting the cheque, the family called Bryan Curtis, RTHK's head of English programme services, to tell him of their intentions. "I'm supposed to be a grizzled old hack - 25 years in the news business - but I got so choked up when they called me, I couldn't speak," Curtis said. "I teared up. It was embarrassing but I hope to have that feeling again." The family has donated HK$1 million before - once in 2003, then again in 2005. This year, the elderly patriarch, on behalf of his family, attached a note along with the cheque. It reads: "With Yuletide approaching, perhaps it is time for me to contribute to this meaningful endeavour again. I certainly hope I can continue to take part for many years to come. Enclosed please find my cheque for HK$1 million for Operation Santa Claus... Merry Christmas and Happy New Year to you and your family." This year many generous Hongkongers, groups and companies have already donated. As well as the HK$1 million cheque, two other individuals have sent HK$100,000 cheques. Still, Operation Santa Claus and its 13 local beneficiaries need your support. "We would like to gently encourage people that this has been a tough year and we really need a lot of help," Curtis said. "During difficult times, it's more important than ever to help the disadvantaged." Deon Lai, the project director of Operation Santa Claus, said online donations have been slow to come in. "We still need to spread the word to ask people for their support," she said. "Individual donors, ordinary donors, can help a lot." Operation Santa Claus was a well-designed campaign with about 98 per cent of donations going to the charities due to low administrative costs, Curtis said. It "finds smaller, lesser known charities that have trouble attracting funding. We give them not only money but publicity, which to them is the lifeblood for further funding for years to come". Larger charities are considered, especially if their project is significant or unable to receive funding elsewhere. The process is relatively simple. Every July, the Post and RTHK let beneficiaries know they are accepting submissions, and charities apply for funds for a project or projects that can be completed in a year. After receiving proposals, a steering committee makes selections. The committee is comprised of Post and RTHK representatives, major donors and members of the Hong Kong Council of Social Service. During the campaign, the beneficiaries are announced and daily appeals are made to the public.

Nobel laureate in chemistry Dr Roger Yonchien Tsien reckoned himself luckier than Dr Charles Kao Kuen, since he didn't have to wait decades to be awarded the honor. Tsien, an American biochemist from the University of California at San Diego, won the Nobel prize in chemistry last year for his contributions to the discovery and development of green fluorescent protein, which can be used for observing the interaction between proteins inside bodies. He is in Hong Kong to receive honorary degrees from the University of Hong Kong and Chinese University. Hongkonger Kao won this year's prize for physics, 43 years after publishing his seminal paper. Tsien - whose father's cousin is Qian Xuesen, known on the mainland as the father of China's space and missile programs - said he was lucky to be accorded the honor, with two other chemists, while still at his prime. "We got it very quickly," he said. "We started our work in 1992 and we didn't publish anything until 1994. It was very fast for that type of thing. It's better to get it 15 years after you started than to wait for 40 years." Despite of the honor and glory associated with the prize, Tsien said he was learning not to take it too seriously. "Though the Nobel is a very nice thing to have, it doesn't have much effect on me. Work is what really matters." While green fluorescent protein helped Tsien get the most prestigious award in the scientific world, the biochemist has moved beyond his award-winning research to concentrate on fluorescent imaging, which has the potential to revolutionize cancer treatment. Fluorescent imaging can help surgeons single out various cancerous cells that could be difficult to pinpoint for surgery at present. It could also help doctors distinguish between cancerous cells and surrounding nerve fibers. Tsien said they expected the technology could be tested on humans over the next few years. Since many Chinese Nobel laureates conducted their groundbreaking research in the West, Tsien said, China needed to allow more intellectual freedom to let scientists thrive. "Standard science could be done in a state of censorship or dictatorship. But real top scientists need intellectual freedom. They can't do their work in repressed conditions."

Old Trafford ambience fills Manchester United Cafe Bar in Seoul, which opened last Friday. A sister outlet will also open in Hong Kong. Manchester United Food & Beverage Asia (MUFB Asia) is set to announce today it has licensed local partner Pin Point Concept to open a Manchester United restaurant and bar in the city in the first quarter of next year. While the final site had not yet been decided, it would be in Tsim Sha Tsui and have an area of about 7,000 square feet, the operators said. With an investment of more than HK$20 million, the restaurant and bar will feature the English Premier League champions' posters, souvenirs, players' autographs and live telecasts of sport events. MUFB Asia chief executive Andy Yun said the restaurant and bar would take advantage of the football club's "winning energy", attracting mainly young executives and their families. "We don't want to be solely a sports bar, which will not make much money," said Yun. "Our strategy is to cater to different kinds of customers with good food, service and music." Thomas Lau Sum-fai, a director of Pin Point, believed opening a sports bar would be a waste of the Manchester United brand name. "In most people's minds, only middle-aged men hang out in a sports bar. Even their girlfriends don't want to go there, because they're worried their boyfriends won't pay them any attention," said Lau, adding that the Hong Kong outlet would be family-oriented. Singapore-based MUFB Asia, with exclusive rights to open and franchise the Manchester United restaurant and bar chain in the Asia-Pacific, has two outlets in South Korea, two in Indonesia, and one each in Japan, Singapore and Thailand. A new outlet will open in India this month, and the firm is also in talks to seek opportunities on the mainland. "The [mainland] city we are most likely to enter is Shanghai," said Yun. He forecast a total of 14 or 15 restaurants and bars in the region within two years. It is not the first time the famous brand has adorned a Hong Kong restaurant and bar. A "Manchester United" opened in Lockhart Road, Wan Chai, without a license in July 2001 but was promptly ruled offside and forced to close soon after opening. Manchester United said then it was cooking up something of its own for Hong Kong - and after an eight-year wait, the restaurant is on its way. The outlet will serve British and American-style food such as chips and grilled meat. Lau estimated the cost of a set lunch would range between HK$100 and HK$150 per head, a dinner would cost about HK$200, and a bottle of beer would cost about HK$50. The restaurant will also offer a "training menu" for health-conscious diners developed by Manchester United nutritionists. "Given that the World Cup kick-off is next year, we're confident of achieving break-even within one year," Lau said.

Hong Kong Exchanges and Clearing (SEHK: 0388, announcements, news) will claim the title of the world's largest initial public offering market this year, but Shanghai is hot on its heels. HKEx chairman Ronald Arculli said the bourse had raised about US$23 billion up to the end of last month, which would ensure it finished the year in first place. While many Western markets have been hit hard by the financial crisis, the Hong Kong and Shanghai markets have benefited from numerous listings by mainland firms. According to the World Federation of Exchanges, Hong Kong ranks as the No1 listing market, raising US$13.83 billion up to the end of October. The Shanghai Stock Exchange is second, with US$12.37 billion, followed by Brazil, with US$11.57 billion, and New York, with US$11.3 billion. "Mainland companies have been the focus of our IPO market since the 1990s. Looking ahead, we aim to attract more mainland and overseas companies to list here," Arculli said yesterday. Some mainland newspapers have predicted that Shanghai, which aims to launch an international board next year for foreign firms to list on, will overtake Hong Kong as the largest listing destination next year. Arculli responded by saying: "Of course, if you ask anyone in Shanghai, they like to say their city will be No 1. If you ask me, of course I will also say I want Hong Kong to continue to be the No 1 ... next year." It is the second time Hong Kong has been at the head of the listing market. In 2006, thanks to the mega listings of mainland lenders such as Industrial and Commercial Bank of China (SEHK: 1398) and Bank of China, the local bourse raised US$42.8 billion. The rivalry between Hong Kong and Shanghai will be keen next year. While Shanghai aims to get its international board off the ground, there are several large listings in Hong Kong's pipeline, including American International Assurance, Asia's largest life insurance company. Also waiting in the wings is Russia's Rusal, the largest aluminium firm in the world, which has had a decision on its listing application deferred twice for more information. Arculli refused to comment yesterday on whether Rusal would become the first Russian firm to list here. Earlier, Arculli told a lunchtime audience at the Foreign Correspondents' Club that the market regulator should look into the risks related to dark pool operations, the electronic trading platform that allows investors to trade a large amount of stock without their identities and trading volume being revealed. The United States Securities and Exchange Commission has already expressed concerns about their lack of transparency. Meanwhile, Singapore has teamed up with a dark pool operator to launch the first exchange-backed dark pool to trade shares in the city state and would expand later to overseas stocks, including those from Hong Kong. "HKEx is not worried about the competition from dark pools, but we are more concerned about the systemic risks, as they have no central clearing to cover the counterparty risk," Arculli said. "We will have discussions with the [Securities and Futures Commission], but it is too early to talk about following Singapore in introducing an exchange-backed dark pool."

Cosplay models pose during the press conference of the Asia Game Show. More than 40 exhibitors will take part in the show. Visitors to the Asia Game Show - combined for the first time with the Hong Kong Online Game Show - will not only be able to browse the latest gadgets and software, they will able to look for a job to help pay for their dream gear. The combined show, held over Christmas, features a government-backed jobs expo at which more than 20 companies will offer 100 game-related positions at salaries ranging from HK$6,000 to HK$20,000. More than 40 exhibitors will present their wares at the show. They will include 19 online game producers including one from Taiwan. It is the eighth Asia Game Show, organized by Asia Game Show Holdings. The online game show, staged by the Hong Kong Game Industry Association, was held for the first time last year. Organizers expect inclusion of the online show and the improving economy to help boost attendance by 100,000 to 450,000 and to increase sales by 16 per cent. "We expect more people will come to the show this year as the economy begins to recover," Asia Game Show Holdings Limited senior project executive, Cheung Wing-suen, said. "The combination of two game shows can also showcase different varieties of products which can attract more people." The jobs fair is being run by the Hong Kong Game Industry Association and Hong Kong Productivity Council's digital entertainment industry support centre with a subsidy from Creative Hong Kong. Jobs on offer include game designers and graphic designers. Hong Kong Game Industry Association founder and convener Sze Yan-ngai said the job seekers should have creativity and passion. "This job expo can help improve the unemployment rate among young people and simulate the development of game industry," he said. Apart from playing games and checking out products, visitors will be treated to a number of events put on by exhibitors and sponsors - including game competitions, cosplay shows, game demos and beauty pageants. The four-day show will be held from December 24 to 27 at the Convention and Exhibition Centre in Wan Chai. Tickets are sold at HK$25 each.

A group of second-generation tycoons is partnering with a design organization in bidding to revitalise the former married police quarters on Hollywood Road - but rivals fear the young businessmen may already have the government's blessing. The rivals, the Creative Professionals Association, are a group of mid-career designers, and are another potential bidder. They point to the fact that the tycoons' group, the Ambassadors of Design, just completed an art event on the site with government financing of HK$1.7 million. The association is concerned that the site would become a mall featuring expensive brands. The Development Bureau and the Commerce and Economic Development Bureau - the latter sponsored the exhibition - are expected to invite organizations within the coming two months to submit proposals for using the heritage site. Since the conservation initiative was announced in the policy address, at least three parties have shown interest. The Ambassadors of Design is working out a plan with the Design Centre, a non-profit umbrella group of various designers' associations, centre vice-chairman Freeman Lau Siu-hong told the Post. Founded in 2006 as a non-profit group, the Ambassadors of Design has young board members from the business field, including Sino Land executive director Daryl Ng Win-kong; Alan Lo Yeung-kit, son of Gold Peak Group chairman and former Executive Council member Victor Lo Chung-wing; and Calvin Tien, son of Tourism Board chairman James Tien Pei-chun. Lau said the partnership would combine know-how in business and design fields in producing a financially sustainable operation plan. Units of the two housing blocks would sell unique local designs, with programs to promote the products overseas, and the rest of the complex would include restaurants, open public space and archaeological findings from the Central School. But lingerie designer Christie Ho Yee-man, who first approached officials in 2007 with a less upmarket idea, said she was worried that it would become a place for those established in the design field. "Many designers do want a place to design and sell their labels, but because of high rent in the city they can only work for foreign brands," she said. Earlier this year she submitted a proposal in the name of the Creative Professionals Association, which has 30 members. It suggested converting the two blocks into a trendy mall similar to those small Tsim Sha Tsui malls that used to provide cheap-rental places for design graduates in the 1980s and '90s. Tanya Chan, lawmaker and Central and Western district councillor, said she wanted the upcoming tender process to be fair and open. The third potential bidder, KF Development, experienced in converting shophouses, will announce its plan today.

New World Development (0017) has earmarked around HK$7 billion to pay for government land premiums next year, said managing director Henry Cheng Kar-shun. The premium will be for a gross floor area of more than two million square feet, spread mostly between sites in Sai Kung, Wu Kai Sha and Yuen Long. Cheng bemoaned the relatively slow approval times for decisions to be made on premiums and said he hopes the government can speed it up in future. NWD will spend over HK$10 billion in five to six years to redevelop the New World Center in Tsim Sha Tsui. NWD will also take part in the auction for two adjacent Pak Shek Kok sites this month. Asked about the HK$1.8 billion valuation that has been put on the sites sites, Cheng said, "Higher costs come with higher prices. If the property market booms, it will certainly be worth it." Chairman Cheng Yu-tung is a little more bullish on property prices, saying he believes they may gain 8 to 10 percent next year because land is in short supply and the economy is recovering. Beijing had revised its GDP growth target up to 9 percent, Cheng said. He believes the Hang Seng Index may hit the 25,000 mark, or 30,000, next year. Asked about the losses he may have suffered from IPOs this year, he said the stocks are only down modestly. He said he is not investing in stocks for just the short haul and will keep investing in IPOs next year. Henry Cheng, also chairman New World China (0917), said the company has more than 10 million square meters in its mainland land bank. He admits it is now more difficult for local developers to compete for mainland sites, as their rivals across the border have better access to information. The developer once worked on two projects with Evergrande Real Estate Group (3333) and they fared well, Cheng said. He sees a "win-win situation" if more cooperation opportunities arise. Cheng believes second- and third-tier cities will see a boom as Beijing intends to narrow the economic discrepancy between big and smaller cities. He said there is no property bubble in the mainland, but home prices in big cities such as Beijing and Shanghai are several times higher than those in less affluent cities such as Changsha. NWD shares closed flat yesterday at HK$16.68 while New World China lost 1.3 percent to end at HK$3.11.

China*: Chinese pianist Lang Lang says he feels honoured that he will perform for Barack Obama when the US president collects his Nobel Peace Prize in Oslo today. The 27-year-old said he went from being "pleased" at being asked to play at the ceremony in Oslo City Hall to "really, really excited" when news broke that Obama was this year's laureate. Lang said he would play Frederic Chopin's Etude Opus 10, No 3 in E major before Obama's Nobel speech today. He said he chose the piece because its movement - from a loud, dissonant middle to a tranquil and melodious end - was consistent with the message of the prize. He said he would also play Franz Liszt's nocturne A Dream of Love at the ceremony. Tomorrow, he will perform George Gershwin's Rhapsody in Blue at the annual Nobel Peace Prize concert. Despite the winter darkness, Lang said he was excited to return to Norway, where he last performed five years ago with the Oslo Philharmonic Orchestra. Obama will be the first sitting US president to visit the Nordic country in a decade. The Norwegian government has spent more than 80 million kroner (HK$108 million) on security for his daylong visit. Lang will join American jazz singer Esperanza Spalding and Norwegian opera singer Solveig Kringlebotn, accompanied by pianist Haavard Gimse, at today's black-tie ceremony. An internationally renowned classical pianist, Lang captured global attention last year when he performed at the opening ceremony of the Beijing Olympics. Tomorrow, he will be among an array of performers that includes British pop singer Natasha Bedington, American country music singer Toby Keith and other international musicians at the annual Peace Prize concert. The other Nobel prizes - in literature, medicine, chemistry, physics and economics - will be presented to the winners by Sweden's King Carl Gustaf in Stockholm today.

China will resettle at least 440,000 people to make way for a massive and much-delayed project aimed at diverting water to meet growing demand in the parched north, state media said. About 100,000 residents a year will be moved to allow construction of the South-to-North Water Diversion project, the Beijing News said. It will divert water from a tributary of the Yangtze river.

Wu Bangguo (R), chairman of the Standing Committee of the National People's Congress (NPC), shakes hands with visiting Deputy Speaker of Egyptian People's Assembly Zeinab Radwan in Beijing, Dec. 9, 2009. China's top legislator Wu Bangguo said Wednesday the country regards Egypt as one of the most important strategic cooperative partners among Arabian and African nations. "We attach great importance to the relations with Egypt," Wu, chairman of the Standing Committee of the National People's Congress (NPC), China's top legislature, told visiting Deputy Speaker of Egyptian People's Assembly Zeinab Radwan.

China will extend stimulus measures in the automobile industry for one more year, with small adjustments, to further support the world's biggest and fastest-growing auto market. The government announced the decision Wednesday after an executive meeting of the State Council chaired by Premier Wen Jiabao.

China has toughened its stance at the UN climate conference in Copenhagen, rounding on rich nations over their "unambitious and deceptive" carbon emissions targets. In a rare public display of anger, top Chinese negotiators accused developed nations of making "empty promises" and putting impossible demands on their developing counterparts, which they said would jeopardise hopes of an agreement. Senior negotiator Su Wei, from the National Development and Reform Commission, went on the offensive at a rare press conference by the Chinese delegation in the Danish capital on Tuesday afternoon. He said the United States - the world's No 2 emitter of carbon dioxide, behind China - had set a goal that was "not notable", the European Union's target was "not enough" and Japan had set impossible preconditions. Analysts said China had seldom given news conferences at previous climate talks and it was also uncharacteristic of Beijing to name names of major climate players instead of collectively calling them "developed countries". China's top climate negotiator, commission vice-minister Xie Zhenhua, put it more bluntly on the sidelines of the climate talks on Monday. "Given the fact that developed countries have done nothing but empty talk, they have no right to make further requests," he said. Analysts voiced surprise at the unusually tough stance adopted by China since the opening of the meeting in Copenhagen on Monday. Delegates from nearly 200 countries are trying to seal a new climate deal to combat global warming. "But it is understandable from China's perspective because it is frustrating that its effort to slow down the pace of carbon emissions has yet to be recognized in the West," said Yang Ailun, a Greenpeace China campaigner in Copenhagen. Analysts said China's muscle-flexing, two days into the talks, underscored deep rifts between the developing and developed worlds, and the bleak prospects for a strong global deal by next week's deadline. But it was seen as a well-planned move, part of China's overall strategy for the long-stalled negotiations. "China would not want to sacrifice its economic growth for binding carbon targets any time soon, but it still wants to claim the moral high ground in the debate," said Professor Pang Zhongying, a researcher on international affairs at Beijing's Renmin University. China appears to have gained confidence since it promised late last month to take voluntary measures to cut its economy's carbon intensity - carbon dioxide emissions per unit of gross domestic product - by 40 per cent to 45 per cent from 2005 levels by 2020. Greenpeace's Yang said China's negotiators were notably more high-profile in Copenhagen than in previous talks. Yang, who has followed international climate negotiations for years, cited two media briefings on the sidelines of the talks, including one by Xie for mainland media on Monday, and the presence of foreign ministry spokesmen at the press centre in Copenhagen. In the briefing for international media on Tuesday, Su, China's No 2 negotiator, scoffed at a fast-start fund of US$10 billion a year meant to help developing countries from 2010 that rich countries are expected to approve. "This US$10 billion, if divided by the world population, it is less than US$2 per person," he said, adding it was not even enough to buy a cup of coffee in Copenhagen or a coffin in poorer parts of the world. "Climate change is a matter of life and death," he said. Su said the 2020 targets by the US, EU and Japan broadly fell short of the emissions cuts recommended by a UN scientific panel. The panel has said cuts of 25 per cent to 40 per cent below 1990 levels by 2020 are needed to avoid the worst of global warming. He dismissed the target for 2020 that US President Barack Obama has laid out and slammed Washington for failing to rein in its emissions, unlike other developed nations. Su said that the success of the Copenhagen talks hinged in part on the US offer, which promised to reduce emissions by 17 per cent from the 2005 level. He said the offer, actually equal to 3 per cent below 1990 levels by 2020, "cannot be regarded as remarkable or notable". He called a unilateral EU cut of 20 per cent insufficient and insincere, and said an even sharper 30 per cent cut - which the bloc has said it may shift to, depending on other cuts - was still too easy and disappointing. Su also attacked the new government in Japan for setting "impossible" conditions on its offer of a 25 per cent cut by 2020, which was a considerable increase on the goal set by the previous administration. Japan, the world's fifth largest emitter, has said its commitment depends on ambitious targets being agreed to by major emitters. Professor Zou Ji, a climate expert at Renmin University, said the series of public statements showed Beijing had realised the importance of direct communications with international media to ease concerns and gain support. "The tone may sound a bit different, but the content is still the same," he said, adding that it was a reiteration of China's basic stance, which demands rich countries commit to steeps cuts and provide finance and technology to help developing nations combat global warming.

The World Bank forecasts that a planned United States law to cut carbon emissions could result in higher tariffs and slash Chinese exports to the country by up to 20 per cent.

China plans to withdraw a tax incentive introduced late last year to revive the property market. The resale lock-up period for a property will go back to the original five years after it was shortened to two years under the incentive introduced in 2008. Last year's change meant owners could resell a property after two years without paying a 5.5 per cent tax. The agency said all other stimulus measures would continue. Analysts said a return to the five-year period would hit speculative demand for homes and expected sales activity in the first six months of 2010 to slow. But it was unlikely to cause a big correction in prices because of strong end-user demand. Beijing said late last year that it was shortening the lock-up to stimulate the faltering property market. It was one of a series of measures announced by the government to boost the market at the time. Other measures included relaxing liquidity requirements and lowering the deed tax to 1 per cent from 1.5 per cent for first-time buyers of ordinary housing units smaller than 90 square meters. It also suspended the stamp duty and land appreciation tax on individual housing transactions. Since then, both sales activity and prices have risen significantly. According to property consultant Knight Frank, secondary home prices in key cities, including Beijing, Shanghai, Guangzhou and Shenzhen, had rebounded by September to levels surpassing their peaks of the previous upturn by 6 to 9 per cent. Lee Wee Liat, a senior analyst at Nomura International, said the move was in line with expectations. "I do not see a big impact because the remaining stimulus measures, particularly those for first-time homebuyers, are still intact," he said. "Mainland property stocks started to correct [yesterday] afternoon. But I think [today] we should see a rally as the statement by the government said all other stimulus measures will continue. This is much better than expected." Liao Qun, a senior vice-president and chief economist at Citic Ka Wah Bank, expected a decline in speculative demand and predicted overall sales volume would fall in the first six months of next year. However, he did not expect a large correction in prices. Meanwhile, analysts said developers had reaped strong pre-sales revenues, which partly could be carried forward to future financial years. The developers had no pressure to significantly lower prices.

Dec 10, 2009

Hong Kong*: Conglomerate Swire Pacific (SEHK: 0019) has formally appointed at least three investment banks to handle its proposed US$3 billion property arm spin-off, sources close to the deal said on Wednesday. Goldman Sachs, HSBC (SEHK: 0005) and Morgan Stanley were appointed to handle the offering, the sources said. “It is too premature to tell exactly how much the firm wants to raise, but it’s roughly about US$3 billion,” one of the sources said. The aviation-to-property conglomerate had said previously it was considering a separate mainboard listing for its subsidiary Swire Properties. Swire Properties holds interests in hotels, including a 20 per cent stake each in JW Marriott, Conrad Hong Kong, and Island Shangri-La hotels in Pacific Place on Hong Kong Island, and Novotel Citygate in Tung Chung in the New Territories. The unit also owns a stake in the Mandarin Oriental Hotel in Miami, and owns four hotels in UK cities, according to an earnings statement from Swire Pacific in August. Swire Pacific holds a stake in Asia’s No 4 air carrier Cathay Pacific (SEHK: 0293). A CLSA research note said the spin-off could raise HK$30-40 billion and “create an efficiently priced vehicle that could fund aggressive future growth.” Swire’s spokesman was not available for comment. Shares of Swire Pacific rose 78 per cent this year outperforming the benchmark index’s 51 per cent rise. Swire Properties, which was first listed in June 1977, was taken private by its parent and delisted from the stock exchange in July 1984. It reportedly tried to list its property projects in 2007 in the form of a real estate investment trust. More companies try to spin off their assets to raise funds for expansion and to reflect the company’s value. Lafarge, the world’s largest cement maker, and Shui On Construction and Materials Ltd (SEHK: 0983, announcements, news) are set to spin off their cement joint venture, aiming to raise US$500 million to US$600 million from a Hong Kong IPO next year, sources close to the matter said last month.

CCB International (Holdings), a wholly owned investment banking arm of China Construction Bank (SEHK: 0939, announcements, news) Corp, is close to launching a US$1 billion private equity fund in Hong Kong, CCB International CEO Hu Zhanghong told a conference on Wednesday. The private equity fund is planning to take a 15 per cent stake in Bank of Shanghai, Hu told reporters on the sidelines of the conference. HSBC (SEHK: 0005) also holds a stake in the bank. Bank of Shanghai said it had hired Goldman Sachs Gaohua Securities, the China investment banking joint venture of Goldman Sachs, as financial adviser to help it list on the domestic stock market. Hu said the fund would invest only in financial institutions and was also in talks to buy a stake in Huatai Insurance of China, in which ACE Group is a strategic investor. Mainland banks are moving to broaden their sources of revenue, especially with interest margins falling in their mainstay lending business and the government starting to tighten credit. CCB International several months ago launched its first yuan-denominated private equity fund, a 2.6 billion yuan (HK$2.95 billion) fund to invest in healthcare firms.

Air cargo throughput via Hong Kong in November rose 18.8 per cent from a year earlier, rising for a second straight month and signaling global trade flows are continuously picking up, data from Hong Kong Air Cargo Terminals showed on Wednesday. Cargo exports from the city in November increased 18 per cent from a year earlier, and imports were up 29.1 per cent. For the first 11 months of the year, the cargo exports fell 15.3 per cent from the year-ago period, and imports were down 6.8 per cent during the period. Hong Kong is a centre for trade in re-exports between Asia and the rest of the world. Air cargo volumes through Hong Kong in November totaled 241,157 tons.

Consumer goods exporter Li & Fung (SEHK: 0494) and Hudson’s Bay Trading Company announced a global sourcing partnership for the North American retailer’s four main retail banners. The new buying agency arrangement with Hong Kong-listed Li & Fung will go into effect next year, the firms said in a joint statement. It gave no financial details of the deal. The American retailer’s Canadian retail entity, Hudson’s Bay Co, operates the Bay, a major department store; Zellers, a mass merchandise format; Home Outfitters, a kitchen, bed and bath speciality store, and value-priced Fields stores. In the United States, Hudson’s Bay Trading includes Lord & Taylor, an upscale specialty retailer with 46 stores in nine states.

China*: China Shipbuilding Industry said on Wednesday it priced its A-share initial public offering at 7.38 yuan (HK$8.36) a share, as expected at the top of an indicated range, raising 14.7 billion yuan. The IPO by the country’s largest ship equipment maker had tied up 961.2 billion yuan in subscriptions as investors were keen to participate in the offering, the company said in a statement published in the official Shanghai Securities News. The heavy subscriptions contributed to a modest rise in short-term money market rates, sending the weighted average seven-day repo rate to a six-week high of 1.502 per cent last Friday. China Shipbuilding Industry had said it would issue 2 billion A-shares denominated in yuan to be priced from 6.15 yuan to 7.38 yuan each for a listing on the Shanghai Stock Exchange. Mainland companies typically price their IPOs at the top of the indicated range. The IPO’s final price values the company at 42 times its last year earnings on a fully diluted basis, much higher than sector rivals Guangzhou Shipyard’s historical price earnings (PE) ratio of 25 times and China State Shipbuilding’s 18 times, and 29 times for the overall Shanghai market. The firm appointed China International Capital Corp as the offering’s lead underwriter. Mainland has witnessed a resurgence of approvals of large IPOs in recent weeks, with XD Electric and Huatai Securities also recently receiving the regulatory green light for Shanghai offerings aiming to raise more than US$1 billion. Companies are rushing to raise money from the mainland stock market, where the benchmark Shanghai Composite Index has risen 81 per cent so far this year, while the authorities, worried about potential asset price bubbles, are looking to use new share supplies to help cool the market. The offering comes, however, as the global shipping sector faces a second year in a row of hard times due to tight financial conditions and a slow recovery in global trade.

Su Wei, chief negotiator for China on climate change, is surrounded by journalists after a press conference in Copenhagen on Tuesday. Senior Chinese negotiator Su Wei, after weeks of low-key diplomacy, said that number two emitter the United States had set a goal that was “not notable”, the European Union’s target was “not enough”, and Japan had set impossible preconditions. China has been pushing hard for a strong commitment from developed countries at the December 7-18 climate talks in Copenhagen but the broadside was unexpected. China has rarely given news conferences at previous climate talks and the possibility that Beijing and Washington were close to some kind of agreement rose last month when they unveiled emissions targets within a day of each other. But China’s attack suggested that just two days into the talks in the Danish capital, long-running north-south rifts were undermining hopes of reaching a strong global deal by a deadline next week. Su also derided a mooted US$10 billion in yearly financial help from rich nations as a drop in the ocean. “If divided by the world population it is less than US$2 per person,” he said. This would not cover a coffee in the rich world or a coffin in poor countries that are at the sharp end of changes in climate, he said. Su said that the success of the Copenhagen talks hinged in part on the offer brought to the table by the United States, the world’s number two emitter behind China. He dismissed the target for 2020 that President Barack Obama has laid out and slammed Washington for failing to rein in its emissions, unlike other developed nations. “Currently the target is to reduce emissions 17 per cent from the 2005 level, I think for all of us this figure cannot be regarded as remarkable or notable,” Su told a news conference on the sidelines of the summit. Su said all the rich nation targets broadly fell short of the emissions cuts recommended by a UN panel of scientists. The panel has said reductions of 25 to 40 per cent below 1990 levels by 2020 were needed to avoid the worst of global warming. He called a unilateral EU cut of 20 per cent insufficient, and even a sharper 30 per cent cut – which the bloc has said it may shift to depending on other cuts – was still too easy. Su also attacked the new government in Japan for setting “impossible” conditions on its offer of a 25 per cent cut by 2020, which was a considerable increase on the goal set by the previous administration. Japan, the world’s fifth largest emitter, has said its commitment depends on ambitious targets being agreed by major emitters. Su said the demands on poor nations violated international agreements that allowed them to put economic growth first, and the demands on the United States were unrealistic given its clear stance on climate change. “The Japanese have actually made no commitment because they have set an impossible precondition,” he said.

People walk past a solar-looking LED board in the Bella Center, venue of the the 15th United Nations Climate Change Conference (COP15) in Copenhagen, capital of Denmark, Dec. 7, 2009. The UN Copenhagen climate talks are in disarray after developing countries reacted furiously to leaked documents that show world leaders will next week be asked to sign an agreement that hands more power to rich countries and sidelines the UN's role in all future climate change negotiations. The document is also being interpreted by developing countries as setting unequal limits on per capita carbon emissions for developed and developing countries in 2050; meaning that people in rich countries would be permitted to emit nearly twice as much under the proposals. The draft text obtained by the Guardian newspaper in Britain is likely to have changed considerably since it was issued on Nov. 27 but it has already created a rift between those attending the Copenhagen Climate Change conference. Three hours after the "Danish text" had been leaked to the Guardian, Lumumba Di-Aping, the Sudanese chairman of the group of 132 developing countries known as G77 plus China, spelt out exactly why the poor countries he represents were so incensed. "The text robs developing countries of their just and equitable and fair share of the atmospheric space. It tries to treat rich and poor countries as equal," Di-Aping said. The text is a draft proposal for the final political agreement that should be signed by national leaders including Barack Obama and Gordon Brown at the end of the Copenhagen summit on Dec. 18. It was prepared in secret by a group of individuals known as "the circle of commitment" but understood to include the US and Denmark. Five hours later, the UN's top climate diplomat responded. "This was an informal paper ahead of the conference given to a number of people for the purposes of consultations. The only formal texts in the UN process are the ones tabled by the chairs of this Copenhagen conference at the behest of the parties (involved)," Yvo de Boer said. But the representatives of developing nations say they feel betrayed by the intent of the proposals in the draft. "This text destroys both the UN convention on climate change and the Kyoto protocol. This is aimed at producing a new treaty, a new legal initiative that throws away the basis of [differing] obligations between the poorest and most wealthy nations in the world," said Di-Aping. The text may now be withdrawn because of its reception by China, India and many other developing countries. It suggests that rich countries are desperate for world leaders to have a text to work from when they arrive next week. Few figures are included in the text as these would be added later after negotiation by world leaders. However, it does seek to hold global temperature rises to 2°C, the safe limit according to scientists, and it mentions the sum of 10 billion U.S. dollars a year in aid to help poor countries cope with climate change, starting in 2012. Last night the G77 reaction was seen by some developed world analysts as an exaggerated but fundamentally correct response to the way that the US, the UK and other rich countries have sought to negotiate. Development NGOs have been particularly scathing in their criticism. Antonio Hill, climate policy adviser for Oxfam International, said, "This is only a draft, but it highlights the risk that when the big countries come together, the small ones get hurt." "It proposes a green fund to be run by a board, but the big risk is that it will run by the World Bank and the Global Environment Facility (a partnership of 10 agencies including the World Bank and the UN Environment Programme) and not the UN," Hill said, "That would be a step backwards, and it tries to put constraints on (emissions in) developing countries when none were negotiated in earlier UN climate talks." Alden Meyer of the Union of Concerned Scientists described it as "a starting point document" noting that on the 1st and 2nd of December Danish negotiators consulted with representatives of the developed and developing world in Copenhagen. "I assume they made pretty extensive revisions to that based on the comments they got and based on inputs from a variety of negotiating blocs" he said. "What they (Denmark) put out early next week or whenever they decide to actually put it out to Ministers will probably be very different to what is on the Guardian website, but who knows, this is in Danish hands." With regard to the negotiating text rather than this political text, he said "My understanding is that they want to make a whole series of decisions next week in the conference of the parties based on the negotiating text as well as this political text." Controversially the text contains passages that imply international measurement, reporting and verification of developing country actions and that developing country emissions must peak between now and 2050. Chinese negotiator Su Wei told a press conference on Tuesday evening that he hadn’t seen the proposal. He welcomed the idea of a global peak in emissions, presuming that developed countries did most of the work, but said that "it is too early to talk about a peak concentration year for developing countries." He noted that many people who live in developing countries still do not have access to electricity. He also rejected the notion of international measurement, reporting and verification of Chinese emissions. Over the coming days several new texts will emerge and out of them a possible contender to be carried by consensus of all the countries. Despite the controversy Di-Aping said that the G77 remained committed to the talks. "We will not walk out of the talks at this late hour, because we will not allow the failure of Copenhagen. But we will not sign an inequitable deal; we will not accept a deal that condemns 80 percent of the world population to further suffering and injustice."

China's exchange rate regulator said Tuesday it would work to promote balance of payment next year by stabilizing exports while expanding imports. The promotion of balance of payment should be the fundamental of the work in 2010 in order to safeguard the nation's economic and financial security, said Yi Gang, head of the State Administration of Foreign Exchange.

China steel firms with production capacity of less than 1 million tonnes per year will be eliminated from the sector, according to a draft policy document released on Wednesday. As part of its efforts to impose “order” on the fragmented steel sector, Ministry of Industry and Information Technology will also raise environmental standards on steel mills, forcing them to upgrade their equipment or have their licenses revoked. Mills should not use more than 92 kg of coal and 6 tons of water for each tonne of steel produced. Waste water emissions should not exceed 2 cubic meters per ton of steel produced, and sulphur dioxide emissions should also be limited to 1.8 kg per ton of steel. Those enterprises that fail to meet the new standards will be forced to restructure, while “those enterprises with no hope of rectification must gradually withdraw from steel production”. The proposals will help step up the campaign to curb overcapacity in the sector, the ministry said. The ministry has identified excess capacity as one of the major challenges facing the steel sector, saying that enterprises are continuing to produce at record levels despite a heavy decline in exports over this year. It said earlier this month that it would ensure that as much as 16.91 million tons of outdated capacity would be closed down by the end of February next year in order to meet its environmental and safety targets for the industry. Total crude steel output for this year is expected to come in at a record 571 million tonnes, with production capacity standing at 700 million tons.

Japan’s Suntory Group has agreed to buy a 70 per cent share in Shanghai-based ASC Fine Wines Holding, a major importer and distributor of foreign wines in China, the companies said on Wednesday. Don St. Pierre Jnr, son of the founder of ASC, will keep a “significant amount” of equity in the company and stay on as CEO along with other senior management, ASC said without providing any further details or financial figures. Suntory has been expanding in mainland and other markets, recently making a binding offer to buy European drink maker Orangina from private equity firms Blackstone and Lion Capital. The Japanese brewer will purchase shares in ASC from Wine Holding GmbH, an Austrian holding company, ASC said, explaining that long-time entrepreneur in mainland, Don St. Pierre Snr, intends to retire once the transaction is complete. “It is the right time for ASC to forge the partnership with a new investor,” the company said in a statement. The deal with ASC calls for Tokyo-based Kokubu & Co, Japan’s biggest wholesale food distributor, to take a 10 per cent stake in the company, which imports wines from 15 countries including France, Spain and Australia. It has wine shops in major mainland cities and Hong Kong. Suntory said it plans to use those shops to expand its reach in mainland, describing ASC as a “long-term strategic asset”. ASC, founded in 1996, reported 7.1 billion yen (HK$620 million) in sales last year, according to Suntory. Don St. Pierre Snr started the company after working in the automotive industry and other sectors, at one time heading American Motors’ joint venture Beijing Jeep Corp.

Fuelled by a fast-expanding internet user population and a plethora of popular low-cost titles on offer, China's online games market is forecast to soar further, with mainland analysts forecasting annual revenue will reach 73.13 billion yuan (HK$83 billion) in 2012. That is almost triple the 26 billion yuan the industry expects to generate this year, according to the latest market survey from Beijing-based Analysys International. The rosy projection comes amid a dispute between two mainland regulators with overlapping jurisdictions over the online games business that has raised concern about a disruption to the sector's steady growth. Analysys, a technology research firm and consultancy, predicted yesterday the deep penetration of online games across the country would help swell the number of players to 272.2 million by 2012. The mainland had an online population of about 338 million on June 30. Technology experts Yu Yi and Fang Li from Analysys estimated the number of internet game players in the country at 107 million, rising to 139 million next year. They said Tencent Holdings (SEHK: 0700), Shanda Games, NetEase, Perfect World and Changyou were likely to remain the country's top five online game providers this year and over the next 12 months, based on the popularity of their product portfolios. They and other online game providers are credited by Analysys with offering a broad range of more technically advanced and entertaining titles spanning diverse genres such as martial arts, adventure and strategy games, played on personal computers by enthusiasts or on internet-ready mobile telephones by casual gamers. These have either been created locally or licensed from other developers, such as the hugely popular World of Warcraft. Shanda Games, for example, offers 31 online games, 10 of which are licensed from third-party domestic and overseas developers. In 2005, Shanda became the first Chinese online game operator to adopt an item-based revenue model, in which players buy virtual accessories, such as swords and currency, they need to advance. This has since become the prevailing revenue model for online games on the mainland. JP Morgan Asia-Pacific Equity Research said roughly 76 per cent of the mainland's online game revenue last year was generated from item-based titles. The State Council has also given strong support to the industry, creating various tax benefits, investment funds and other policies. Still, the mainland's online games sector had experienced share price weakness in the past two to three months because of regulatory concerns, JP Morgan said. That arose from a conflict between the Ministry of Culture and the General Administration of Press and Publication. Their turf war recently put NetEase's commercial operation of World of Warcraft on the mainland in legal limbo, caught up in the complex approval regime. The ministry gave NetEase the go-ahead after being given the authority to do so by Beijing last year, while the publication watchdog wanted that commercial release stopped based on its decade-old standing as the market's regulator. Dick Wei, a vice-president for equity research at JP Morgan Securities, said: "We expect more clarity on the functions of each body by the end of this year, which is the target date set by the State Council for a transition of power between the two regulators."

Drivers lead the train trough the tunnel on the Wuhan-Guangzhou Railway, Dec. 9, 2009. The High-Speed Passenger-dedicated Wuhan-Guangzhou Railway, which extends to 1068.6 km in full length and scheduled to be operational by the end of 2009, has made its trial operation on Wednesday.

The test-running trains prepares for their first journey at the station in Guangzhou, capital of south China's Guangdong Province, Dec. 9, 2009.

Dec 9, 2009

Hong Kong*: Hong Kong won 14 more medals yesterday - taking its tally to 37 after three days of competition at the East Asian Games. The haul put a smile on the face of Chief Executive Donald Tsang Yam-kuen, who called on Hong Kong people to support their athletes and help them and the city to greater international status. Two golds, seven silvers and five bronzes were won yesterday which, together with the six golds, six silvers and 11 bronzes won earlier, took Hong Kong to fourth place in the medals table behind China, Japan and South Korea. Nine teams are taking part in the competition. The sporting success coincided with praise for Saturday's opening ceremony from International Olympic Committee president Jacques Rogge.

Leung Kwok-kei, general manager for Hong Kong and Macau, UPS - Christmas demand from the United States and Europe has seen United Parcel Service's Hong Kong export volume soar to 2007 levels, if not beyond. The world's largest package delivery company said yesterday it expected to record year-on-year fourth-quarter growth in its international business due to the resumption in purchasing power of the Western economies. The number of flights operated by UPS between Hong Kong and the US has increased to 21 per week, compared with 12 to 15 in the first half, while weekly flights to Europe have gone from six to nine. "Our export volume from Hong Kong has returned to the level of 2007, if not exceeded it," Leung Kwok-kei, UPS general manager for Hong Kong and Macau, said yesterday. Besides express deliveries, UPS also handles less time-sensitive general cargo. About 400 million packages would be handled by UPS globally from Thanksgiving to Christmas, surpassing last year's volume, Leung said. He expected shoppers in the West to continue to buy less expensive electronic products during the holiday season, which will benefit air cargo more than the sea-freight market. FedEx Corp, a smaller rival of UPS, said yesterday that its second-quarter profit would exceed forecasts as international and ground shipments increased. Unlike airlines, which have cut capacity by about 20 per cent by grounding freighters in the desert earlier this year, express cargo operators can react to market demand more promptly as they did not cut capacity as much. Leung conceded that some of the firm's air cargo business was spilling over from airlines. "I predict that the overall cargo tonnage in Hong Kong International Airport will have single-digit growth in the fourth quarter compared with last year," said Leung. "Meanwhile, our business in Hong Kong will outperform the general market." He would not make a concrete projection but said the peak season for air cargo would extend into mid-February and the Lunar New Year.

Count on having more money in your pocket next year if statements from some of Hong Kongs top companies and tycoons are anything to go by. First up yesterday were Cathay Pacific Airways (0293) and sister company Dragonair. The carriers said that eligible staff will get a payrise of 1.8 percent on average next year with an ex-gratia payment of at least HK$8,000 or half a months salary. At Hong Kong Exchanges and Clearings (0388), general staff can look forward to a 2 percent salary increment in 2010, HKEx chief executive designate Charles Li Xiaojia told reporters. Hongkong and Shanghai Banking Corp, Hang Seng Bank, Bank of China (Hong Kong) and Sun Hung Kai Properties (0016) all said their boards of directors are expected to decide on any salary adjustment next year, mostly around February and March. Local tycoons are also looking at boosting pay. Cheung Kong (Holdings), controlled by billionaire Li Ka-shing, said in a statement: Every year we adjust staffs salary based on individual performance. New World Group, controlled by tycoon Cheng Yu-tung, is studying whether to raise staff salaries, according to Henry Cheng Kar-shun, managing director of New World Development (0017). And Henderson Land Development (0012) chairman Lee Shau-kee last Friday said his employees will get a 2 percent to 3 percent payrise on average. Survey findings also back up payrise expectations. A poll of 451 hiring and human resource managers in the city by global recruitment firm Ambition found that most expect their firms to raise salaries by an average of 1-3 percent next year. About 59.7 percent of respondents across 12 sectors salaries believe wages will rise while 37 percent noticed a rebound in business from the third quarter, the survey found. Another recent survey by consultants Morgan Mckinley found that 66.2 percent of financial services employers still plan to definitely hire staff in the next six to 12 months. Cathay, meanwhile, said that amid the uncertain recovery in the aviation industry it cannot pay the usual discretionary year-end bonus of one months salary. While we have seen a noticeable, and very welcome, pick-up in business over the past couple of months, it cannot compensate for the massive slide in business seen in the first nine months, chief executive Tony Tyler said. And we still dont know whether the current upturn will continue into next year. The payrise, however, fell flat with Cathays flight attendants union, which said it is very surprised and disappointed about it. The union also urged the airline to pay back salaries for crew who have taken no-paid leave. Monthly paid staff are excluded from the salary increment announced yesterday, as their salary increases annually according to a master pay scale. Cathay took several measures in response to the economic downturn, including asking staff to take unpaid leave, cutting capacity and route frequencies, parking aircraft and delaying the construction of a cargo terminal.

HSBC (0005), Standard Chartered (2888) and four other banks are in talks with ailing Dubai World about rescheduling its US$3.5 billion (HK$27.3 billion) of debt maturing on Monday.

Hong Kong's economy is expected to grow 5.5 percent next year with an inflation rate of 3 percent, according to DBS Bank (Hong Kong) senior economist Chris Leung Shiu-kay.

A view from Fei Ngo Shan of the Choi Wan Estate, with Kai Tak in the background. CLP Power has been given approval to raise its tariff by 2.6 per cent from January 1. CLP Power (SEHK: 0002) was yesterday given government approval to raise its tariff by 2.6 per cent next year, including the basic tariff, which was adjusted for the first time in 10 years. But Hongkong Electric (SEHK: 0006)'s charges for next year will be frozen. The approved increase for more than two million power users in Kowloon and the New Territories triggered fears that it would push up inflation, and raise more questions on the future cost of clean energy. From January 1 CLP Power's charge per kilowatt hour will be 91.5 HK cents - 2.3 cents, or 2.6 per cent, higher than the existing 89.2 cents. The increase includes a 2.6 cent rise in the basic tariff, which is partly offset by a fall in the fuel charge of 0.3 cents made possible by stable prices over the past year. It means more than 70 per cent of domestic and commercial users will see monthly increases of less than HK$10 and HK$40, respectively. CLP Power attributed the basic tariff increase to a rise in capital investment on emissions controls, and provision of a replacement gas supply, along with a rise in the cost of raw materials such as copper and aluminium. "We are seeing in 2010 a slightly higher level of capital expenditure compounded by higher material costs," Richard Lancaster, CLP Power's chief operating officer, told the economic development panel yesterday. Lancaster said emissions control projects must be carried out to meet licence requirements, and new gas supplies had to be made ready by 2012 before the existing source from Hainan ran out. The company is working on a desulphurisation project, and planning new pipelines from Shenzhen to receive natural gas from Central Asia and a LNG terminal. The company also has to provide about HK$5 billion for power supply infrastructure at new developments such as in Kai Tak. Lancaster said it was the first time in 10 years that the firm had raised its basic tariff, and the new net tariff would still be lower than last year's level. Environment secretary Edward Yau Tang-wah said yesterday that while anti-pollution measures at power plants were necessary, they were not the only reasons behind the tariff rise. He said emissions control accounted for less than a third of the total capital spending of CLP Power, with about a half being spent on power transmission and distribution to new developments. Hongkong Electric will freeze its tariff at 119.9 cents per kilowatt hour, without changes to either the basic rate or fuel charge.

A deadlocked battle between the two major shareholders of ATV Payson Cha Mou-sing and Taiwan billionaire Tsai Eng-meng has prompted the resignation of the broadcasters chairman and director, Linus Cheung Wing-lam. Cheung, hired by Cha a year ago, is said to have been under intense pressure in recent months to secure a deal between Tsai and Cha. Tsai, chairman of Taiwan food and soft-drinks giant Want Want, became involved with ATV early this year. Antenna Investment, which has 47.58 percent of ATV shares, is 51 percent owned by Cha and his family, and Tsai owns the other 49 percent. Cheung was caught in the middle, being accused on the one hand of not protecting Chas interests and on the other of not acting as a chairman should, an insider said. Cheung refused to comment on the situation last night, saying only that it has been a very tiring two to three months. I need a rest. He plans to go on holiday, but is not saying where. According to a source, talks between the two major shareholders are under way again as Cha now wants to buy Tsais shares. This follows an attempt by Tsai in recent months to buy out Cha, but his offer was described as much too low. In his resignation letter, Cheung reportedly referred to the other party in his employment contract, Mingly Corp, which is held by the Cha family, and concerns of unfairness at board meetings. This could not be confirmed. Cheung joined ATV together with City Telecom chairman Ricky Wong Wai-kay on December 4 last year. Just 12 days into the appointment, Cheung said he had accepted Wongs resignation as chief executive. After denials from Wong, on December 17 ATV confirmed he had quit but appointed him as a consultant. Cheung insisted his target was to end continuing deficits in revenue within two to three years and to eventually get ATV listed in the stock market. ATV shareholder Liu Changle, chairman and chief executive officer of Phoenix Satellite Television Holdings, said he has no plans to sell his shares, and no idea regarding reports on the possible injection of Chinese funds into ATV. Liu said he is a small shareholder and an outsider, and he hopes all parties may regard harmony as a virtue. ATV non-executive director Chan Wing-kee declined to comment on a possible shareholder reshuffle but insists he too will keep his shares. Cheungs resignation was confirmed by ATV, though no reason was given. Ip Ka-po, vice president of production, administration and public relations, said he has no idea why Cheung quit. There was no change in the composition of shareholders and other members of the management. Chief executive officer Nancy Hu Gin-Ing continues to lead the company. The company is stable and our advertising revenue is improving, Ip said. A Commerce and Economic Development Bureau spokesman said the Broadcasting Authority has received a note from ATV regarding Cheungs resignation for personal reasons. The government will closely monitor developments and will work with the authority to ensure ATV will continue to provide a service in accordance with its license.

Households using electricity supplied by CLP Power (SEHK: 0002) will have to pay more for their power after the Executive Council on Tuesday approved the company’s proposal to raise its electricity tariffs by 2.6 per cent from next month. After the tariff adjustment, 70 per cent of CLP residential customers will face a monthly increase of about HK$10, while 70 per cent of its business customers will see a monthly increase of up to HK$40. CLP Power (Hong Kong) acting-managing director Richard Lancaster said the company had to raise its tariffs because of increasing cost pressures. The higher tariffs would allow the company raise funds to help meet the government’s emissions reduction targets and to support infrastructure development, he said. Lancaster said the company had tried to keep the “adjustment” to a minimum. “CLP has not increased its basic tariff in more than 10 years and has offered over HK$4 billion in rebates to its customers through stringent cost controls and improvements in its operational efficiency,” he said. “The basic tariff, after this adjustment, is still lower than it was 10 years ago,” he added. Another electricity supplier, Hong Kong Electric (SEHK: 0006), said its charges would be frozen next year to help Hong Kong recover from the financial crisis and minimize the impact on electricity users.

More Hong Kong companies said they were planning to hire additional staff in the first quarter of next year, according to a new survey released on Tuesday.

Tourists and travelers could find it easier to exchange different currencies in Hong Kong under a proposed relaxation of money-laundering rules on money changers that will help bring the city's legislation into line with international requirements. The move, which is part of government efforts to comply with global money laundering standards, would generally free money changers from having to record a customer's personal data unless the amount exceeds HK$120,000, up from the current HK$8,000. This is equivalent to the threshold of US$15,000 or €15,000 set by the Financial Action Task Force, the global policy-making body combating money laundering and terrorist financing. But money changers are still required to report suspicious activities regardless of the amount.

China*: China has for the first time surpassed New Zealand and Britain as Australia's biggest source of migrants as both countries try to ease diplomatic tensions over Chinese investment in Australia and separatist rights. A record 6,350 migrants arrived in Australia from the mainland over four months to October, surpassing the 5,800 who arrived from Britain and 4,740 from neighbouring New Zealand, government figures showed. Australia’s ties with China have been tense for months after China’s state-owned metals firm Chinalco failed in a bid to take a US$19.5 billion stake in Rio Tinto, an Anglo-Australian mining company.

Migrants working in Guangdong will be able to "earn" residency, and therefore rights similar to those of permanent residents, through a points system already implemented in one city.

China Mobile and Research in Motion will offer BlackBerry handsets and internet service to consumers as well as smaller firms in mainland, the two firms said on Tuesday.

China state-owned engineering and construction firm Sinohydro Corp has won a US$167 million contract to upgrade a main highway between Bangladeshi capital Dhaka and the country’s main Chittagong port, Bangladesh government officials said on Tuesday. They said the Communication Ministry will soon sign US$240 million worth of deals with Sinohydro and local firms Reza Construction and Taher Brothers to upgrade the existing 230km two-lane highway to a four-lane expressway in three years. “The deals will be signed as soon as possible as the government purchase committee approved the tender results late on Monday,” a senior ministry official said. The tender, which saw 18 foreign and local firms compete, closed on September 8. The project is being funded by Japan under the Japan Debt Cancellation Fund. State-owned Sinohydro, which is also mainland’s largest hydropower station builder, will upgrade seven of the 10 road segments, with the two local firms upgrading three other parts. The highway is a major artery for Bangladesh, ferrying goods to and from the port. Traffic is estimated to be increasing by 10 per cent a year.

China on track of low-carbon development - The closing of China's Central Economic Work Conference on Monday, which coincided with the opening of the 15th United Nations Climate Change Conference in Copenhagen, left a message that China was determined to pursue a path of low-carbon development.

China's passenger vehicle production and sales in November both more than doubled from a year earlier, continuing the robust growth and causing China's auto market to lead the global industry for the whole year. It's also the first time the domestic monthly production and sales broke the 1 million units barrier. Sales of passenger vehicles, including cars, multi-purpose vehicles (MPVs), sports-utility vehicles (SUVs) and minivans, reached 1.01 million last month, surging 103.7 percent year-on-year, and increased 9.5 percent from October, Rao Da, secretary-general of China Passenger Car Association, said yesterday. The total output of the sector hit 1.08 million units, 101 percent higher than that of November 2008. "It is strong evidence of how hot automobile sales are in China, despite the oil price hike and bad snow which had an impact on logistics in November," said Rao. He predicted that the market performance of the passenger vehicle segment would continue to hit record highs in December, with production and sales figures 80,000 to 10,000 units more than those in November. "And the sales peak is coming in January," he added. "It will be unprecedented in any country's auto industry that the monthly sales continued to break records for seven months in a year," said Rao. China's total vehicles sales exceeded 12 million in the first 11 months, retaining its lead as the world's top auto market since January, reported Xinhua News Agency, citing the China Association of Automobile Manufacturers. The association is going to release the details this week. Boosted by government stimulus measures such as tax cuts and subsidies for trade-ins, sales of all automobiles for the whole year are set to break the 13 million barrier, compared with 9.38 million units last year.

Dec 8, 2009

Hong Kong*: Hong Kong’s government is “very concerned” about the risk of an asset bubble developing although a bubble is not apparent yet, Financial Secretary John Tsang told legislators on Monday, referring to a surge in the city’s property prices this year. Residential property prices have jumped 30 per cent this year, and price gains for luxury property have topped 40 per cent, as the city has drawn massive capital inflows – amounting to a record US$73 billion between October last year and November 13, this year – with foreign investors attracted by its low interest rates. Wealthy mainlanders have also been snapping up luxury Hong Kong apartments. Tsang said the financial system was sound and the city could cope with capital inflows and outflows but echoed Chief Executive Donald Tsang and central bank chief Norman Chan, who have also warned recently about the risk of an asset bubble developing. “We are very concerned about the risk of an asset bubble,” Tsang said. “The risk is there but it is not very apparent.” The Hong Kong Monetary Authority recently reduced the mortgage limit for luxury property to 60 per cent from 70 per cent to try and cool the market, and mortgage demand has eased from a few months ago. A government economist told legislators that speculation in the property market was not too heated and demand mainly user-oriented, with 90 per cent of transactions for mass-market property. Housing affordability meanwhile was above a 20-year average. Tsang said the government would monitor the situation but did not comment on the possibility of further measures to reduce the risk of an asset bubble.

The Guangzhou-Shenzhen-Hong Kong Express Rail Link is right on track to get the final go-ahead. The HK$66.9 billion project will now go to the Finance Committee after a Legislative Council panel yesterday gave its approval. While the link was being discussed inside the chamber, more than 50 protesters - many from the threatened villages of Choi Yuen Chuen and Tai Kok Chui in the New Territories - spread rice outside to express their anger at the project. They could barely hide their frustration when members of the public works subcommittee voted 12 to eight for the construction of the link and non-railway works, with one member abstaining. The nays came from pan-democrat lawmakers. When Albert Chan Wai-yip of the League of Social Democrats walked out to protest what he claimed was unfair treatment of residents, voting for land acquisition involving special ex-gratia payments resulted in 12 votes for and seven against. Medical sector lawmaker Leung Ka-lau abstained, saying he was concerned the project will be a white elephant if the government overestimates the number of passengers and its returns. "I did so as the government failed to convince me on its cost- effectiveness," Leung said. The pan-democrats made a last-ditch effort in the afternoon to press for more documents and reports relating to the project before it goes to the Finance Committee for final approval. They also called for a special relocation arrangement for all Choi Yuen Chuen villagers. But Secretary for Transport and Housing Eva Cheng Yu-wah insisted this could not be done because it would set a bad precedent, saying the residents are illegal occupants of government land. "If we allow such an arrangement, it will have a great impact on government policy as there are over 300,000 squatter houses in Hong Kong," Cheng said. Choi Yuen Tsuen Concern Group chairwoman Ko Chun-heung said it is wrong for Cheng to say villagers cannot be relocated together because they are illegal occupants. "We have lived there some 50 years. The government encourages new immigrants - that's our parents or grandparents - to live here for farming. Now the government is abandoning us," Ko said. Group member Lo Ming-kwong said they will do their best to persuade lawmakers not to support the funding when the Finance Committee meets two weeks today. Some Tai Kok Tsui residents accused the six lawmakers of the Democratic Alliance for the Betterment and Progress of Hong Kong of betraying them.

Hong's Ko Lai Chak, top left, and Tie Ya Na, beat compatriots Jiang Hua Jun, bottom left, and Tang Peng in the mixed doubles table tennis finals on Monday. Hong Kong has won another gold medal at the East Asian Games - taking the total so far to eight. In the table tennis mixed doubles final on Monday, Ko Lai-chak and his partner Tie Ya Na beat their teammates Jiang Hua Jun and Tang Peng to win their second gold medal for Hong Kong. In indoor cycling, artistic men's pair Yu Sum-yee and Lo Tin-hin beat their teammates Ip Hin-bon and Yu Po-man to clinch another gold medal for Hong Kong. Speaking after the competition, Yu said he was really enjoying the games and that the event was of an “international” standard. Hong Kong has so far won 11 silver and 15 bronze medals at the East Asian Games.

There are at least eight candidates for listings in Hong Kong in the next three weeks, aiming to raise a combined HK$9.3 billion. Among them are large IPOs by China Pacific Insurance and aluminum producer UC Rusal, which will be the first Russian firm on the Hong Kong bourse. Sunac China Holdings, the ninth developer chasing a place on the local market this year, opens its retail book today with the aim of raising up to HK$2.22 billion. It plans to sell 600 million shares from HK$2.90 to HK$3.70 each, with 60 million shares for the Hong Kong offering and 540 million shares for the international sector. The minimum entry fee for one board lot of 1,000 shares is HK$3,737.34. The company is scheduled to go public on December 18. Sunac China has Bank of China (3988) as a cornerstone investor. The bank has subscribed to shares worth nearly US$20 million (HK$156 million). Sunac's first-half net profit slid 5.7 percent to 117.14 million yuan (HK$132.97 million) from a year earlier, with turnover slumping 25.4 percent to 728.28 million yuan. Chairman and chief executive Sun Hongbin said he has no plan to dispose of Sunac in the event it cannot list on the Hong Kong exchange. The question was raised as another of his firms, Sunco Group, was sold to Road King Infrastructure (1098) after Sunco's listing plan was scrapped in 2004. UC Rusal, which has a second listing hearing today, is expected to begin meeting investors tomorrow if it gets the green light from Hong Kong Exchange and Clearings (0388). And China Pacific Insurance starts its roadshow today. Mainland cloth manufacturer Hontex cleared its listing hearing on Friday and will start a roadshow on Thursday. It is expected to raise up to HK$1 billion.

International Olympic Committee (IOC) chief Jacques Rogge hailed an "absolutely smashing" opening to the East Asian Games in Hong Kong, as China cemented their lead on Monday in the overall medals table. In a statement issued by the Hong Kong government, Rogge said the opening ceremony, which took place on the waterfront of the world-famous Victoria Harbour, was as good as any he had seen before. “It was an absolutely smashing and brilliant opening, very nice choreography, very original, creative and probably the nicest backdrop you can ever dream of,” he said of Saturday’s extravaganza. “I have seen many opening ceremonies in my long career with the Olympics. And this deserves a gold medal.” Although the games, which feature nine teams, officially kicked off on Saturday, some sports have been going since Wednesday. The opening ceremony, which started and finished with a flurry of spectacular fireworks lighting up the night sky, was a departure from usual games openings because it did not take place in a stadium. Instead, a few athletes from each team paraded on a stage that jutted out onto the water, overlooked by some of the world’s tallest buildings. Hong Kong authorities are promoting the games as the first international multi-sports event to ever take place in the city and are hoping a successful games will boost their chances of hosting the Asian Games in future. China pocketed two early gold medals Monday, in the men’s shooting and 48kg women’s weightlifting, to take their overall tally of golds to 18 at the top of the medals table. Japan moved up to 11 golds in second place, followed by Hong Kong and South Korea with eight each. The games, which feature 22 sports and take place every four years, finish on December 13.

Canadian Prime Minister Stephen Harper (front, left) honors Canadian soldiers who fought to defend Hong Kong in the second world war. Hongkongers aged 18 to 30 will be able to live and work in Canada for a year under a new working holiday arrangement reached in the city yesterday. Young Canadians will have the same privileges in Hong Kong. There will be 200 places under the scheme for Hongkongers to live, work and have holidays while experiencing a foreign culture in Canada. Visa applications will be accepted from March. Canada is the sixth country, and the first in North America, to sign a working holiday arrangement with Hong Kong. Witnessed by Chief Executive Donald Tsang Yam-kuen and Canadian Prime Minister Stephen Harper, Secretary for Labor Matthew Cheung Kin-chung and Canadian Minister of International Trade Stockwell Day signed the memorandum at Government House. A working holiday arrangement with Japan will take effect from next month, with an annual quota of 250. By last month, more than 9,450 young Hongkongers had traveled to Australia, New Zealand, Ireland and Germany under such schemes while about 1,280 from those countries had arrived in Hong Kong. The program was launched in 2001. The annual quota is 1,000 for Australia, 200 for New Zealand, 100 for Ireland and 100 for Germany. Details on visa application procedures for Hong Kong applicants can be found on the Canadian consulate's website: Harper also attended an annual remembrance service at the Sai Wan Bay War Cemetery, in Chai Wan, to honour the 1,975 Canadian soldiers who defended Hong Kong during the second world war, of whom 550 died. Patricia Osborn, daughter of Company Sergeant-Major John Osborn, who received the Victoria Cross for his war efforts, was also present. The service has been held annually on the first Sunday of December, since 1947. War came to Hong Kong on December 8, 1941.

Dragonfly diversity on an ecologically important site in Tai Po may be on the decline due to environmental damage brought by extreme weather and lack of active management, a study has indicated. But the results have been denied by the government, which said the decline could be natural fluctuation and the site remained healthy. The study, commissioned by Green Power, reported a substantial decrease in the number of dragonfly species in Sha Lo Tung, home to about two-thirds of the city's 115 dragonfly species. In 36 visits to the site between April and October, researchers could only find 49 dragonfly species, compared to 72 species recorded by the Agriculture, Fisheries and Conservation Department since 2002. Some of the missing species, however, are commonly seen species, such as the greater blue skimmer, and researchers were surprised by their absence. The study also reported sightings of three species new to Sha Lo Tung, including the white-tipped grappletail which has never been spotted in the city and is one of two protected dragonfly species in China.

State Councillor Liu Yandong completed her 24-hour whirlwind tour of Hong Kong Sunday with what seemed to be an outstretched hand to help the city board the mainland's economic express train. At the cocktail reception for the 2009 Boao Youth Forum, Liu said the central government had always supported, and done what was best for both special administrative regions, Hong Kong and Macau. She urged Hong Kong to grasp the opportunities arising from the nation's economic development under the 12th five-year plan. "The coming 12th five-year plan will study the positioning of Hong Kong and Macau in the nation's reform and modernization. I hope you will seize the opportunity and ride the express train of development," she said. Liu's remarks follow revelations that Hong Kong officials have been busy talking to their mainland counterparts about how the city can play a bigger role in the country's economic development under the 12th five-year plan, which is due to start in 2011. In 2006, for the first time since the handover, Hong Kong was briefly mentioned in a five-year plan. Yesterday morning, Liu had breakfast with former chief executive Tung Chee-hwa, before touring the University of Hong Kong. She visited 92-year old Jao Tsung-I, one of the most revered living Chinese humanities scholars. Liu said Premier Wen Jiabao had personally requested that she pay Jao a visit and send his regards. During the afternoon, she also found time to meet various tycoons, while in the evening she made herself available for an official photo with more than 130 representatives of various pro-Beijing youth groups.

Financial Secretary John Tsang Chun-wah is expected to use his next budget speech to announce measures to make Hong Kong more competitive, and fiscal stimulus measures to help the city ride out the global economic downturn. But there will be no repeat of the big handouts to households that were a feature of his budgets this year and in 2008, although the government is not ruling out some modest relief measures. In a speech two weeks ago, the financial secretary said the government did not see offering sweeteners as a solution to Hong Kong's economic problems. Tsang will begin consultations on next year's budget today with a briefing to lawmakers on the latest economic situation. He will hold the first of several meetings with political parties and unionists tomorrow. The government has doled out HK$87.6 billion since February last year. Tsang's maiden budget included measures worth HK$44.11 billion, which the financial secretary characterised as returning wealth to the people. In July last year, the government announced measures worth HK$11 billion to address inflation. Last year's budget, delivered in the wake of the global financial crisis, included measures worth HK$10 billion targeting jobs, competitiveness and economic development, though Tsang did not describe them as stimulus measures. They included salaries tax rebates of up to HK$6,000 per taxpayer and a waiver of property rates. In May, the government announced further relief measures, largely extensions or reruns of those in one or more of the three previous packages, which Tsang characterised as the fourth phase of a stimulus package. A person familiar with the government's position said continuing such big handouts would create a dependence on the government that would not be conducive to sustained economic growth. "We hope to set out the principles regarding fiscal prudence in the next budget," the person said. "What is more important is how to revitalise our economy." Tsang is expected to maintain an expansionary fiscal policy - meaning higher spending or lower taxes, or a combination of both - to counter the effects of the downturn. In his blog posted on the government website yesterday, the financial secretary pledged to take seriously the views of the public, and noted that the first drafts of his budgets had each undergone more than 100 changes.

China*: Geely Automobile Holdings (SEHK: 0175), whose parent is bidding for Ford’s Volvo Car, said on Monday that it will continue to seek acquisition opportunities and is interested in projects including parts and engines. The company was optimistic about mainland’s car market and aimed to sell 400,000 vehicles next year, up from a target of 300,000 for this year, Ang said. Geely Auto also aimed to lift capital spending by 25-43 per cent next year to about 1 billion yuan (HK$1.13 billion), initially for expanding capacity and building a new model platform, he said. “The battered US and European auto markets continue to provide us with buying opportunities,” Lawrence Ang Siu-lun, an executive director of Geely Auto, told reporters after the company’s shareholder meeting. Geely had been in talks on General Motors’ Saab unit, which GM has put up for sale, but the talks ended without result some time ago. Asked whether the talks would be revived, Ang replied “Who knows?” Zhejiang Geely Holdings, which had been named by Ford as the preferred bidder for its money-losing Swedish unit Volvo, was seeking at least US$1 billion in loans from mainland banks to finance its US$1.8 billion bid, sources said in December. Geely Auto, which used to make and sell some of mainland’s cheapest cars, raised US$334 million earlier this year by issuing convertible bonds and warrants to an affiliate of Goldman Sachs. Part of the proceeds would be used to fund acquisition plans, Ang said. Shares of Geely rose more than 7 per cent to record high on Monday on the positive sales forecast. The stock rose to a record HK$4.37, up 7.11 per cent, before easing slightly to HK$4.35 at noon.

Screenshot photo shows the actors and actresses of the love story "Jane Eyre" present at National Center for the Performing Arts. Charlotte Bronte's 1847 love story "Jane Eyre" was adapted for the stage earlier this year at Beijing's National Center for the Performing Arts. Now the drama is set to begin a second round of performances starting this week on December 10th. Leading actress Chen Shu and actor Wang Luoyong were at the National Center for the Performing Art last Wednesday. They were joined by five "Jane Eyre" fans who were fortunate enough to get to meet the Chinese versions of Jane Eyre and Edward Rochester. The new adaptation of "Jane Eyre" played to full-houses for ten nights in June. And Wang Luoyong was widely lauded as the enigmatic master of Thornfield Hall, Edward Rochester. But still he says there is room for improvement. Wang Luoyong, actor, said, "This time I will put more emphasis on the mental transformation of the character. He is cold and upset until he meets Jane Eyre. The girl helps dig out the better parts of his personality. That's an enormous change." Chen Shu, who became well known for starring in a number of prime-time TV dramas, is cast in the title role of Jane Eyre. Chen Shu steps into the shoes of former lead actress Yuan Quan who performed in the first round. Chen Shu, actress, said, "Yuan Quan and I are totally different from appearance to temperament. So there will be a different Jane Eyre you can look forward to." The drama "Jane Eyre" will run at the National Center for the Performing Arts from December 10th to the 23rd.

China leaders wrapped up an annual strategy meeting on Monday vowing to keep economic stimulus and easy credit policies in place to support a stable recovery, while improving the quality of the country’s often chaotic economic growth. The meeting in Beijing, presided over by President Hu Jintao and Premier Wen Jiabao, ended as expected with calls to ensure the recovery from the global crisis remains stable, the official Xinhua News Agency said in dispatches posted on the government’s main website. “While handling next year's economic work, it is important to make thorough efforts to advance the transformation of our development mode,” Xinhua said of a decision made at the meeting. “We must maintain the continuity and stability of our macro-economic policy and continue to implement a proactive fiscal policy and a moderately loose monetary policy.” Officials attending the three-day Central Economic Work Conference agreed that the global slowdown had added to the urgency for mainland to adjust its model of economic growth, which many economists say is excessively dominated by state-led industries, rather than more sustainable, consumer-led demand. Mainland's economy is forecast to grow 8.3 per cent this year, after dipping to a low of 6.1 per cent in the first quarter and since recovering to 8.9 per cent in July-September. Like other major economies, the country remains wary of pulling back from stimulus policies put in place late last year, given the weakness of key export markets in the US and Europe, where unemployment has continued to rise despite signs the worst of the crisis may be past. To counter the slump in exports, Beijing announced a 4 trillion yuan (HK$4.5 trillion) stimulus package and urged state-controlled banks to lend lavishly to support a slew of public works projects. Now, the emphasis is shifting to promoting consumer spending and private investment – drivers of domestic demand that are seen as crucial for future growth. While consumer demand has remained resilient despite the slowdown earlier in the year, it still accounts for less than half of mainland’s economic activity – well below the levels in many other major economies. Meanwhile, the government is struggling to control the expansion of industries viewed as already overheated, such as steelmaking and cement. The rapid credit expansion has added to risks in mainland’s banking sector, the Basel, Switzerland-based Bank for International Settlements warned in a quarterly report issued Sunday. Apart from the easing of standards to allow banks to issue some 8.95 trillion yuan in new loans in January-October, up from a total of 4.2 trillion yuan the year before, future tightening of monetary policies might leave some projects short of funds before they are completed, leading to a buildup of bad loans, it said. Meanwhile, inflows of outside capital into the world’s fastest growing major economy are adding to inflationary pressures, especially in real estate and stock markets, the BIS report warned. “Chinese policymakers may face significant constraints on their monetary and credit policy in the years to come,” it said.

China's greenhouse gas emissions will peak between 2030 and 2040, the country’s science and technology minister said on Monday, as crunch talks on climate change were set to get under way in Copenhagen. Wan Gang said the precise timing of the level would depend on China’s economic growth, rate of urbanization and level of scientific development. “There are some uncertainties here, so it is difficult to say whether it will be in the beginning, the end or the middle, but I can say for sure it will be within that range [of 2030-2040],” he told the Guardian newspaper. China, the world’s largest carbon gas polluter, has promised to make gains in energy efficiency, but has yet to announce a peak date for emissions. World leaders gather in Copenhagen from Monday for landmark UN talks on tackling global warming beyond 2012. Its task is to craft a global pact that will dramatically reduce man-made carbon dioxide emissions -- invisible gases that trap solar heat and warm the atmosphere, interfering with Earth’s delicate climate system. Developing nations, including China, insist that developed nations should bear most of the cost of tackling climate change. Wan said the priority at Copenhagen would be to establish a framework for transferring funds and money, rather than getting hung up on figures. “If we can achieve this goal, that is good enough,” he said. “Copenhagen is very important to all governments and politicians. It’s an important turning point, but it is also just the start of human efforts to tackle climate change. It is not the end.” Beijing said last month that by 2020 it would curb emissions per unit of gross domestic product by between 40 and 45 per cent compared to 2005 levels. The pledge then was not to cut emissions but was essentially a vow of greater energy efficiency that would see China’s emissions continue to grow along with its economy.

Another giant wind turbine is assembled at the Dabancheng Wind Farm in the northwestern region of Xinjiang. China plans seven new wind-power bases for the next decade. Under the mainland's green-power strategy, one-third of the electricity generated by 2050 will come from renewable resources. The coal-dependent mainland, the world's biggest greenhouse gas emitter, said last month it would cut the amount of carbon dioxide produced for each yuan of national income by 40-45 per cent by 2020, compared with 2005 levels. Depending on economic growth projections, total emissions will still rise. By 2020, renewable energy should account for 15 per cent of national primary energy consumption, supplying electricity equivalent to 600 million tonnes of coal, Xinhua said at the weekend. It cited a renewable energy blueprint laid out by Han Wenke, director general of the Energy Research Institute under the top planning body, the National Development and Reform Commission. By 2030, renewable energy's share should rise to 20 per cent of the national energy mix, displacing one billion tons of coal, Han said, and by 2050, it would supply one-third of the mainland's energy, displacing two billion tons of coal. Coal now supplies more than 70 per cent of the mainland's electricity, and hundreds of coal-fired power plants are built every year to keep pace with demand, but Beijing is also investing heavily in renewable energy. For instance, the mainland is focusing on non-grain bioethanol and biodiesel to avoid diverting grain from the food and feed supplies. It also plans to build seven large wind-power bases over the next decade, and it trails only the US, Germany and Spain in installed capacity, at 12.2 gigawatts - about equal to the energy produced by two-dozen average-sized coal-fired plants. But not all those turbines are hooked up to the electricity grid. Only 0.4 per cent of the mainland's electricity is now supplied by wind - or about 3GW.

A file picture showing the unveiling of Mercedes- Benz GLK 220CDI at the Auto China 2008 auto show in Beijing. On Monday, the company's officials said Mercedes-Benz sold in November 224 per cent more cars in the country from a year earlier. China auto output and sales exceeded a record 12 million units each in the first 11 months of the year, state media said on Monday, cementing the Asian giant’s status as the world’s largest car market. Citing the China Association of Automobile Manufacturers, the official Xinhua news agency said sales and production of vehicles for the whole year were expected to both exceed 13 million units. In November, sales reached more than 1.35 million units, the report said, citing preliminary statistics. Shanghai Automotive Industry Corporation, mainland’s largest automaker, sold around 2.4 million vehicles in the first 11 months of the year, up 54 per cent year-on-year, according to the report. China’s total car sales outstripped those of the United States for the first time in January to make the Asian giant the world’s biggest auto market, helped by Beijing’s efforts to stimulate domestic consumption. These measures included slashing taxes on cars with engines smaller than 1.6 liters and subsidizing alternative-energy vehicles. Last year, a record total of 9.4 million vehicles were sold in mainland, up eight per cent from the previous year. Daimler AG’s Mercedes-Benz unit in November sold 224 per cent more cars in the country from a year earlier, a senior executive said on Monday. Bjoern Hauber, general manager of sales and marketing for Mercedes Benz in mainland, told reporters that 8,500 cars were sold in that month. Hauber said that given the strong performance in the first 11 months, with sales up 68 per cent from a year earlier to 59,200 units, full-year sales in mainland were expected to exceed the company’s previous target of 65,000. “Given the first 11 months’ figure, I think full-year sales will be more than 65,000,” he said. The booming mainland auto market remains one of the few bright spots for German luxury carmakers.

SouFun Holdings, the operator of the mainland's largest property website, will pursue an initial public offering next year after shelving plans for one this year. Australian telecoms giant Telstra Corp, which has a 51 per cent controlling stake in SouFun, yesterday said the Beijing-based firm's shareholders recently voted to go ahead with the offering next year. The listing will allow Telstra to sell down its shares in the company, which it acquired in August 2006 for US$254 million. However, there was no decision yet on where SouFun will list, Telstra said. A spokesman for Hong Kong-based Tarek Robbiati, the group managing director at Telstra International, declined to comment. Telstra's newly formed international business unit is responsible for all of the company's international assets outside Australia and New Zealand. Vincent Mo Tianquan, the founder and chief executive of SouFun, said in June that the company had considered floating its shares in either Hong Kong or New York. SouFun, which competes against Sohu and Sina for online advertising revenue in the mainland property sector, was founded in 1999 and has since expanded its operations to around 100 mainland cities. It has the mainland's most comprehensive database of new and pre-owned homes, homes to rent, and information on furnishings and fittings. Mo said SouFun's successful geographic expansion was supported by growth in its adjacent services such as home finance and insurance. Since acquiring a majority share in SouFun in August 2006, Telstra has transferred media-communications capabilities to the firm through its advertising subsidiary, Sensis. That included sales management and advertising programs designed to improve sales, according to Telstra. SouFun was ranked third this year among the world's top 25 revenue-generating property portals in a survey by Classified Ad Ventures. It put SouFun's online ad revenue at US$119 million in the year to June 30.

More than 87 million Chinese bought goods on the Internet this year, about 24 million more than last year and an increase of 38.9 percent year-on-year, the Beijing Times reported, citing a recent report by the China Internet Network Information Center (CNNIC). Most online shoppers are students or white-collar workers between the ages of 18 and 30, with a monthly income of 1,000 yuan (146 U.S. dollars) to 3,000 yuan (439 U.S. dollars). More women shop online than men, and clothing and home-use products are the most popular goods bought online. According to the "Report on China's Online Shopping 2009", the total sum of national online consumption for the first half of the year was 119.5 billion yuan (17.5 billion U.S. dollars), 89 percent of which through consumer to consumer websites like CNNIC estimates the total sum of annual online shopping will reach 250 billion yuan (36.6 billion U.S. dollars) this year.

Dec 7, 2009

Hong Kong*: The Office of the Telecommunications Authority (Ofta) Friday began a public consultation that could pave the way for PCCW (SEHK: 0008) to adjust certain fees charged to other operators for connecting to its fixed-line network. The interconnection tariffs PCCW can charge are governed by Special Condition 3.4, contained in its fixed-carrier licence. As the long dominant fixed-line telecommunications services provider, PCCW is the only operator with that condition. The rule provides a rigid pre-approval scheme for any proposed adjustment of interconnection charges. These include connections between value-added services such as dial-up internet access, and the public switched telephone network operated by PCCW, as well as business-focused services such as broadband copper local loop and exchange co-location services, internet protocol virtual private network services, and residential cell relay services. "We are pleased that Ofta is reviewing the appropriateness of this licence condition left over from 1995, which is unique to PCCW and no longer necessary in a competitive market," a PCCW spokeswoman said. PCCW made a request to the regulator on July 16 to review the special condition and applied for it to be removed from its licence. An Ofta spokesman said the regulator considered it appropriate to conduct a review because of the impending expiry of PCCW's fixed-carrier licence in June next year. It also noted significant changes implemented recently in the domestic telecommunications sector. The deregulation of fixed-mobile interconnection charges, for example, took effect in April. This brought an end to a scheme stipulating that mobile-telephone service operators pay as much as HK$600 million annually in interconnection charges to PCCW for traffic to and from its network. That set-up did not require PCCW to pay the mobile-telephone service providers. Upheld by the Court of Appeals in April, the new regime calls for a two-way payment arranged by commercial agreements for telephony traffic between mobile-telephone service providers and fixed-line network operators. Ofta has identified two options for the PCCW special condition, the regulator's spokesman said. One is to remove the restriction as the operator requested. The other is to keep the condition but remove individual tariff items on a case-by-case basis. Stephen Chau Kam-kun, the chief technology officer at mobile network operator SmarTone-Vodafone, said: "Our preliminary opinion is that this will have a major impact on other operators because PCCW remains the dominant fixed-line network operator and handles plenty of the market's traffic." Spokesmen for Hutchison Telecom (SEHK: 2332) Hong Kong and Wharf T&T both said they were keen to study Ofta's consultation paper and would submit their views. Ofta expects the public's comments to be submitted on or before February 4 next year.

Gold medal winner Steven Wong of Hong Kong leads the men's BMX field ahead of Masahiro Sampei of Japan, Zhao Zhiyang of China, Alex John Hunter of Hong Kong and Liu Ka Ho of Hong Kong during the Men's Elite Final match at the East Asian Games on Saturday. Steven Wong clinched gold for Hong Kong at the East Asian Games on the BMX cycling track on Saturday while the mainland bagged the first two of what are expected to be many more gold medals, as Tian Pengfei prevailed in an all-Chinese men’s snooker final and Ma Liyun won the women’s BMX final. Wong won gold in the men’s BMX cycling final, crossing the line in 30.181 seconds, just over half a second before Japan’s Masahiro Sampei. Zhao Zhiyang from the mainland was third, 1.646 seconds behind the leader. In a 4-2 victory on the snooker table, Tian beat compatriot Yu Delu, who upset world number 8 Marco Fu of Hong Kong in the quarterfinals. Ma crossed the finishing line of the BMX track in the women’s event after 35.746 seconds, just over a second before Japan’s Ayaka Miwa and more than three ahead of compatriot Jiang Nannan. South Korea also got onto the medals table with gold and silver in the men's 10-metre air pistol. Two more golds - men’s team snooker and men’s English billiards - are up for grabs before the opening ceremony in Victoria Harbor. Although the Games officially open at 8 pm on Saturday, 10 of the 22 sports were already underway The first major event takes place on Sunday, when a strong China team will be looking to assert its dominance in the swimming pool. About 2,300 athletes from nine regions will be vying for 262 golds at the Games, which are scheduled to run until Sunday, December 13.

David Li Kwok-po is known for his urbane manner. But the Bank of East Asia (SEHK: 0023) chairman lost his cool at a shareholders' meeting yesterday, becoming involved in a testy exchange with an investor who persistently questioned the bank's fund-raising plans. Small investors, who usually attend such meetings principally for the dim sum and soft drinks, were captivated by the exchange that livened up what should have been a routine address by senior executives of Hong Kong's third-biggest bank. That changed when a shareholder, who only gave his surname as Leung, repeatedly fought for the microphone to challenge Li on BEA's fund-raising plans. After several rounds of verbal jousting with the man, the veteran banker finally told the shareholder he could sell his shares if he opposed the bank's plan. At stake was approval for a US$500 million hybrid securities offering, which is similar to a convertible bond. BEA intends to use the proceeds from the offering to boost its capital and enhance profitability. The bank can redeem the note after 10 years if holders do not convert it into preference shares. The offer was popular with the market, drawing US$5 billion in subscriptions. Leung said he spoke on behalf of an elderly shareholder whom he did not identify, and that he opposed the deal because the 8.5 per cent interest rate to be paid for the hybrid securities was too high. He asked why BEA did not follow the example of HSBC Holdings (SEHK: 0005), which launched a rights issue to raise funds. A rights issue involves offering stock to existing shareholders. "The rights issue price of HSBC was only HK$28 but now the bank is trading above HK$90. This shows that shareholders could benefit from a rights issue. I cannot understand why BEA is not opting to have a rights issue," Leung said. Li told the meeting BEA had considered a rights issue but the timing was not right. "Standard Chartered Bank had a similar issue and the interest rates are similar," Li said. "Why can Standard Chartered offer the bond and not BEA?" He also reminded shareholders that the offer had been fully subscribed and the bank would have to repay investors if the shareholders' meeting did not approve it. In the end, he simply told Leung: "If you are not happy, you can sell the shares." After the meeting, Li said that while he appreciated the support of all small shareholders, he was annoyed that one individual did not understand "the details and benefits of our fund-raising plan. "The current fund-raising plan is the best for the interests of shareholders and it is much better than having a rights issue," he said. "I am not losing my temper but I only feel helpless when some shareholders do not understand our action." Li, who represents the banking sector in the Legislative Council, is also a director of several Hong Kong-listed companies including SCMP Group (SEHK: 0583), the publisher of the Post. Despite the drama, the ending was uneventful. The plan was approved by a 99.76 per cent vote.

Chief executive Zhang Zhiyong says Li Ning will focus on developing its mainland market for the next five years and look abroad later. Sportswear retailer Li Ning (SEHK: 2331) is benefiting from improved market sentiment, recording growth in same-store sales and forecasting a 15 per cent rise in turnover next year. The mainland sportswear maker opened its first shop in Hong Kong yesterday, on the eve of the official opening of the East Asian Games. The badminton-themed street-level outlet in Cameron Road, Tsim Sha Tsui, also sells apparel and shoes. Chong Yik-kay, Li Ning's chief financial officer, said retail sales at the company's more than 7,000 shops across the mainland started to pick up in October, while same-store sales had returned to growth in the past two months. "We are quite confident that our same-store sales in the fourth quarter this year will be a positive number," said Chong. The company should be able to achieve its target of 7,100 outlets on the mainland by the end of this year, while turnover next year should jump 15 per cent to 16 per cent, he said. While the company strives for a bigger share of the mainland market, Li Ning is also targeting overseas markets in a long-term strategy to make the brand more international. The Tsim Sha Tsui outlet is Li Ning's second outside the mainland after it opened a store in Singapore earlier this year. Zhang Zhiyong, the chief executive, said a United States store would be opened next year, in Portland, Oregon. However, he stressed that the mainland would remain the focus of its development plan for the next five years. The global strategy would be high on the agenda of the company's next five-year plan to be drafted in June 2012, he said. Li Ning, the third-biggest player in the mainland market, is facing stiffer competition from bigger rivals Nike and Adidas and other home-grown sportswear makers like Anta Sports Products, China Dongxiang (SEHK: 3818), and 361 Degrees International. Chong said the market had changed in recent years. "Fast expansion by opening up more shops is no longer the only way to win in this market. Developing innovative products to attract different types of customers and improve the recognition of your brand name are even more important," he said. Li Ning had turnover of 6.69 billion yuan (HK$7.59 billion) last year. The company said it planned to raise product prices by 1 per cent to 5 per cent next year. Shares in Li Ning fell 1.1 per cent in Hong Kong yesterday to close at HK$26.90.

Ronnie Chan is optimistic about the luxury housing market because he says demand will be supported by wealthy mainlanders. Hong Kong's housing market will be a "good bet" because of a shortage of new supply, according to Hang Lung Properties (SEHK: 0101) chairman Ronnie Chan Chi-chung. Chan said he was "positive" about the city's luxury housing market because demand would be supported by wealthy mainlanders. "We have to get used to a newer level of demand" from the mainlanders, he said. Record-low borrowing rates, near-zero interest on savings deposits and buying by mainlanders have helped boost home prices more than 30 per cent this year. Chan spoke after the International Monetary Fund said on Thursday the city's banks should tighten lending to prevent an investment-asset bubble. Builders completed 5,500 private homes in the first nine months of the year, the Transport and Housing Bureau said on October 23, without giving figures for the same period last year. For all of last year, 8,800 homes were built, the fewest since at least 1997, the bureau's figures showed. Hang Lung rose 1.5 per cent to close at HK$30.45 yesterday. The stock has gained 79 per cent this year, compared with a 68 per cent advance in the Hang Seng Property Index. Hang Lung, the city's fourth-biggest developer by market value, may resume buying land "if there is a repeat of 1999", Chan said, without elaborating. The developer last bought land locally in 2000, he said. "We always like to buy when there is nobody around. Right now, too many in Hong Kong want to buy land." The government has adjusted supply to deal with changes in the property market. In November 2002, it suspended scheduled land sales as home prices continued to fall following the 1997-98 Asian financial crisis, the 2000 bursting of the dotcom bubble and the September 11, 2001 terrorist attacks in the United States. The government resumed land sales in January 2004. Hang Lung would buy more land on the mainland, where investment returns are better, Chan said, adding the commercial property market there is "a better bet" than in Hong Kong.

They may seem strange bedfellows: Hong Kong, one of the world's freest markets, and the mainland, a communist planned economy - even though they are in the same country. Even less likely, it might be assumed, is the prospect of lively, capitalist Hong Kong actively campaigning to be a part of a mainland five-year plan, a foundation of the planned economy since the days of Mao Zedong. But this is exactly what is happening, as the city strives for greater integration with the vast, fast-growing and often aggressively capitalist market across the border, amid fears it may otherwise be marginalised and warnings that it may have been already. Hong Kong officials are now busy talking to their mainland counterparts about how the city can play a bigger role in the country's economic development under the 12th five-year plan, which is due to start in 2011. Underpinning this effort, according to one of the government's top advisers, is a growing anxiety in Hong Kong about being shoved aside by cities such as Shanghai - and a surprising level of community support for greater involvement in the country's blueprint for the next five years. The National Development and Reform Commission, the mainland's top planning body, is holding preliminary talks on the five-year plan. In 2006, for the first time since the handover, Hong Kong rated a mention in a five-year plan. But it was a brief one - just two lines of text in the 90-page 11th plan referring to the central government's support for preserving Hong Kong's status as an international financial, trade and logistics centre. This is probably because the Hong Kong government did not show interest in securing a role in the plan until late in the drafting process. According to one Hong Kong official, the government's reticence stemmed from a desire to avoid creating the impression the central government intended to interfere in Hong Kong affairs. This time things are different. The effort - involving several arms of government and co-ordinated by the Constitutional and Mainland Affairs Bureau - has seen visits to and from the mainland by officials and academics in the past year. Such a dialogue would have been inconceivable in the first few years after the handover, when most Hong Kong officials were happy to keep their distance under the banner of "one country, two systems", and mainland officials followed the rule of non-interference in Hong Kong affairs. Attitudes started to change after 2003, when Beijing began helping to revitalise Hong Kong's economy after it had been battered by the severe acute respiratory syndrome outbreak and the Asian financial crisis. Professor Lau Siu-kai, head of the Central Policy Unit, the top Hong Kong government think tank, said there was a "growing and pervasive anxiety" among Hongkongers about the city's role in China's economic development being usurped by mainland cities or it being sidelined by the nation's rapid development. "The pace of change in the mindset of Hong Kong people is faster than we expected," Lau said. More than 70 per cent of people polled by the think tank in September said Hong Kong needed greater participation in drafting the next five-year plan. A similar proportion hoped the plan would elaborate on the city's role in the country's economic development. Those who believe the anxieties are justified include Lu Ping. The chief mainland official overseeing Hong Kong affairs in the run-up to the handover, he says the city needs to develop a "sense of crisis". "To be honest, Hong Kong has already been marginalised," the former director of the State Council's Hong Kong and Macau Affairs Office said in a recent interview. As part of efforts to ensure this does not happen, National Development and Reform Commission (NDRC) vice-chairman Liu Tienan led an 18-member team of mainland officials to Hong Kong in late September. They attended an economic conference organised by Lau's unit. Twenty academics from Hong Kong were invited to join a closed-door seminar in Beijing in October on Hong Kong's role in the 12th five-year plan. Co-organised by the Hong Kong Development Forum, a political group founded by business leaders, and the central government's liaison office in Hong Kong, it was also attended by top officials from the NDRC and the Hong Kong and Macau Affairs Office. Lau said Hong Kong should study where it needed the support of the central government in the next five years and "how Hong Kong can use its strengths to contribute to the nation's economic development". Service industries were one obvious area, given efforts by mainland authorities to develop them, including financial services, he said. The Hong Kong government is also hoping to inject into the blueprint the thrust of a landmark agreement now being thrashed out with Guangdong for development of the Pearl River Delta in the next decade. The Plan for the Reform and Development of the Pearl River Delta (2008-2020) released by the NDRC last December spells out the central government's determination to turn Hong Kong, Macau and Guangdong into an international metropolis. A framework agreement on the proposals is expected this month.

Gwen Wong, wife of Nobel laureate Charles Kao, says Hong Kong does not have the patience to support long-term scientific research. The research that led to this year's Nobel prize for physics for Dr Charles Kao Kuen could never have been done in Hong Kong as the city's academic circle wants quick results, the laureate's wife said yesterday. Gwen Wong May-wan was speaking at a public lecture on Kao at the Central Library. Wong, married to Kao for 50 years, encouraged the audience of about 100 students, saying: "My husband hopes students can pursue lifelong learning." Wong said Hong Kong did not have the farsightedness to support scientific research that took time to bear fruit. "Research takes a long time and requires a lot of money. In Hong Kong, they will want you to make money three to four years after [the research begins]. He wrote the paper [proposing the use of optical fibres to transmit data] in 1966 and pre-production didn't begin until 10 years later. The template was only ready another 10 years later. And it began to make money only 20 years later. This kind of research could not be done in Hong Kong." Recalling life in Britain before Kao took up the post of vice-chancellor at Chinese University in 1987, Wong said her husband always helped with housework even after a hard day at his research laboratory. Dr Wong Po-choi, a professor in information engineering at Chinese University, heaped praise on Kao's work. He said that Kao, who set up the university's engineering department in 1991, went to great lengths to raise money to support information technology projects. Gwen Wong will leave for Sweden today where she will deliver a speech titled "Sand from centuries past; Send future voices fast" on behalf of Kao on Tuesday. The Nobel award ceremony takes place on Thursday.

To celebrate the opening of the East Asian Games on Saturday night – a spectacular HK$40 million ceremony was staged on a floating platform outside the Cultural Centre in Tsim Sha Tsui. The games are being hosted in Hong Kong from Saturday until next Friday. The ceremony will include boat parades and a large fireworks display. “The fireworks will be held from 9.15pm until 9.30pm on Saturday,” a government spokesman said on Friday. About 2,300 athletes from the mainland, Hong Kong, Korea, Japan, Korea, Macau, Mongolia, Chinese Taipei and Guam will compete for 262 gold medals in 22 events. State councillor Liu Yandong will visit Hong Kong from Saturday and Sunday to attend the opening. Speaking at a flag raising ceremony on Friday afternoon, Home Affairs Secretary Tsang Tak-sing said the games were a chance to “learn from each other, in sports development as well as in other fields”, He said other attractions had also been arranged. “We have also organised a number of cultural events and exchanges during the games,” he said.

The American International Group Inc.(AIG) said Thursday it chose Hong Kong as the listing venue for its Asian life insurance unit American International Assurance (AIA), media reports said on Friday. The troubled but bailed-out U.S. insurer will go ahead with the up-to-10 billion U.S. dollar initial public offering. Preparations for the offering, aimed at raising funds to repay a U.S. government bailout, had stalled since Bob Benmosche took the helm at AIG in August. People familiar with the situation said AIG has appointed Deutsche Bank AG and Morgan Stanley as joint global coordinators for the planned initial public offering. It has yet to name the rest of the bookrunners. AIG said on Tuesday it had closed a pact with the New York Federal Reserve that slashes its debt under a credit facility by more than half, to 17 billion U.S. dollars. AIG shares rose more than 11 percent to 31.72 dollars, partly reversing a steep fall in the stock on Monday after investors were spooked by concerns over a possible shortfall in reserves for non-life insurance claims. The debt reduction is the result of a deal first announced last March to give the New York Fed a preferred stake in two of AIG's biggest life insurance units, American Life Insurance Co and American International Assurance, effectively swapping debt for equity. "AIG continues to make good on its commitment to pay the American people back," Chief Executive Robert Benmosche said in a statement, which also warned of volatility.

Tickets for the East Asian Games can now be bought at venue counters. The new system was put in place yesterday after several people complained they could not buy tickets at the venues even if these were only half-full. Tickets at the seven venues will be sold from two hours before each competition to one hour before they end. Tickets are still available for eight Games events.

Hong Kong players celebrate a goal in their shock 4-1 victory over South Korea at Siu Sai Wan Sports Ground last night. The hosts won their opening East Asian Games match - their first win over South Korea in more than 30 years - with the help of a passionate crowd. A passionate crowd of more than 5,000 fans inspired Hong Kong's soccer team to a shock 4-1 defeat of South Korea at Siu Sai Wan Sports Ground last night. The Bauhinia flag was raised proudly as the hosts made a fairy-tale start to the tournament, winning their opening group B match with surprising ease in front of a noisy, partisan crowd who cheered and applauded every move made by the home players. After 20 minutes of sustained pressure, Hong Kong were rewarded with a superb opening goal when Chan Wai-ho rose to power a header home in the 21st minute. Wong Chin-hong's clever lob caught out the goalkeeper to add a second after 30 minutes, before South Korea's Go Min-gi pulled a goal back before the break. However, the writing was on the wall. Two more goals from Hong Kong - Xu Deshuai's low strike in the 65th minute and Chan Siu-ki's solo effort, after he dribbled through the centre of the pitch and fired home in the 81st - completed a magical night for the hosts. It was just the kind of start Hong Kong wanted and sets them up nicely for next week's intriguing clash with China, which could determine the group winners. The top two in each group reach the semi-finals. "Naturally, I'm surprised by the result, but there is no big secret to our success," Kim Pan-gon, Hong Kong's delighted coach, said. "I just encouraged the players to play their best. It's something they can tell their children one day - that they played for Hong Kong and beat South Korea. "Our players really gave their best and Hong Kong can be proud of them. I didn't expect our team to play so well. I believe we can still improve and can challenge for a medal. "I heard the Koreans got together only a few weeks ago. I felt they were tired both physically and mentally. Our team played with a lot of ambition and they were passionate." The South Korean squad does not include a single member of their World Cup-bound team for South Africa next year; their team comprised players from the Korean K2 division and started training for the Games about a month ago. Yet the result was an outstanding victory and one for the record books: Hong Kong had not beaten South Korea for more than 30 years. Hong Kong Football Association chairman Brian Leung Hung-tak enjoyed the game, saying that it was played with a lot of passion.

Leong Che-hung believes that making HKU more international will attract students and staff. The University of Hong Kong should become more international by lifting the cap on the number of mainland and overseas students, the new chairman of the university council, Dr Leong Che-hung, says. Leong, who succeeded Dr Victor Fung Kwok-king three weeks ago, said one of the missions of his three-year term was to make it one of the world's top 10 universities. The university's plan to expand into Shenzhen - including a new campus and a public hospital - would make it more competitive and overcome space constraints at its campus in Pok Fu Lam, he said. Chief Executive Donald Tsang Yam-kuen said in his policy speech in October that the government wanted to internationalize the education system, and would further relax the rules for overseas students. "We want to see the ceiling relaxed or even lifted so we can freely admit overseas students," Leong, an executive councillor and former legislator, said. "It won't affect our resources for local students because the overseas students have to bear the cost. "Having more overseas students here would help our local students develop a global perspective and mix with different cultures." No cap is set for overseas students in postgraduate courses. HKU's overseas undergraduate-student ratio is capped at 20 per cent, with only 4 per cent receiving government funding. But it cannot meet even that cap, mainly due to a lack of student quarters, and its overseas and mainland undergraduates account for only about 12 per cent of total admissions. Leong said the university's celebration of its centenary in 2011 would help consolidate support from alumni. But even the Centennial Campus, to be completed in 2012, would be too small to meet the rising demand for student accommodation and teaching space. He said one possible solution was to turn vacant factories into student accommodation. In October, the Times Higher Education-QS World University Rankings rated HKU the 24th-best university in the world. It came second in Asia, behind the 22nd-ranked University of Tokyo. HKU's highest position was 18th, in 2007. "I would like to see HKU among the top 10," Leong said. He added that he thought that internationalizing would attract good students and teaching staff. The university has no plan to go completely private.

The public will get a chance to pay final tributes to the late "King of Broadcasting", Chung Wai-ming, next Saturday at the headquarters of RTHK, where he spent most of his working life. The public memorial service will take place after family and friends say their goodbyes at a private funeral for the broadcasting veteran, who had worked in the industry since 1947. Chung, 78, collapsed in Prince Edward MTR station while on his way to work last Friday. He was declared dead at Kwong Wah Hospital. His son, Danny Chung Yan-kit, said yesterday private funeral services would be held at Hong Kong Funeral Home in North Point on Wednesday and Thursday. "The service will be a private one that only my father's close friends and family members will attend," he said. "As my father was a very low-profile person and liked to keep things simple, the funeral will also be a low-key one." However, members of the public will still have the chance to bid farewell to Chung. "We understand people's concern and support for big brother Chung, and they all want a chance to say goodbye to him," assistant director of broadcasting Tai Keen-man said. "So we will arrange a memorial service at RTHK in Broadcasting Drive in Kowloon Tong next Saturday." The memorial service will be held from 3.30pm to 6.30pm. Tai said the venue was not big, but would be a fitting one since Chung had worked there for most of his life. He said tickets were not required, but if too many people showed up crowd control measures would be implemented. "We might have live broadcasting of the service online," he said. "The memorial service will also be attended by Chung's close friends. We do not have the list now since Chung had so many friends." Chung, one of the city's favourite voices, spent his life in broadcasting. In 1992, he became the first Chinese broadcaster to be awarded an MBE. RTHK is also arranging an exhibition in February to allow the public a glimpse into Chung's collections, including books, magazines and vinyl records. "He had so many such valuable collections," Tai said. "We are now trying to find a place, it might be a museum, it might be a shopping mall. There will also be a corner where people can hear Chung's work again. We want the public to know more about him." Danny Chung said the family was still recovering from his father's sudden death, but had got over the initial shock.

Thomas Kwok (right), with fellow Sun Hung Kai Properties vice-chairman Raymond Kwok, hopes more sites will be available next year. Sun Hung Kai Properties (SEHK: 0016) vice-chairman Thomas Kwok Ping-kwong said yesterday the company would join the bidding for two luxury residential sites in Tai Po at the end of the month. Kwok said he hoped the government would put more residential sites on the land application list for the next financial year. The Real Estate Developers Association of Hong Kong (Reda) has suggested the government remove certain government land sale sites in urban areas from the application list to ease environmental degradation. However, Kwok said the best way to alleviate the "wall effect" was to reduce the development plot ratio and height limit. "A sharp cut in the supply of residential sites would have a negative impact on the property market. The urban land supply is tight already. But the demand is strong," he said. Kwok was cautiously optimistic about the outlook for the property market next year. Vice-chairman Raymond Kwok Ping-luen said the property market would continue to benefit from low mortgage rates and loose bank lending. "Prices of mass residential are reasonable. The average price of mass residential is still 30 per cent less than at the market peak in 1997," he said. The developer planned to launch five new projects in Hong Kong in the second half of next year. On the mainland, the company planned to sell three projects next year and generate turnover of 3 billion yuan (HK$3.4 billion).

The global hotel business is in a deep funk, but that has not kept the industry from betting on Asia, the one region of the world where growth is strong. In October, two major upscale hotels opened in Hong Kong, each with views of the skyscrapers huddled between the city's mountains and harbour. One is a 381-room Hyatt Regency, on top of a shopping mall in the Kowloon district. The other is the 117-room Upper House, owned by the Hong Kong conglomerate Swire and within walking distance of the central business district on Hong Kong Island. A 300-room Ritz-Carlton is among the hotels due to open here next year.

The Guangzhou-Shenzhen-Hong Kong Express Rail Link is right on track to get the final go-ahead. The HK$66.9 billion project will now go to the Finance Committee after a Legislative Council panel yesterday gave its approval.

Kimmie Wong Lai-chu, the political assistant caught in a sexual harassment squabble, has finally broken her silence to talk about what she claims went on with legislator Kam Nai-wai. According to Wong, she was sacked because she spurned advances from the Democratic Party legislator. Wong told her side of the story two weeks after Hong Kong Human Rights Monitor which had been asked by the party to look into the issue to avoid a conflict of interest dropped an investigation because of her failure to testify. She believes in the sanctity of marriage, Wong said, as she explained that she would neither love Kam nor accept his love as he was married and had a daughter. Saying she was breaking her silence in the hope it would end speculation and bring closure to the case, Wong produced a statement with her story.

Henderson Land Development (0012) chairman Lee Shau-kee has fine-tuned his investment strategy, saying he will cut his stock exposure if the Hang Seng Index climbs to 24,750 points, but will buy should the benchmark plunge to 20,250. "Take 22,500 as the middle range, I will sell some if the index rises 10 percent," Lee said yesterday. "If it goes down 10 percent then I will buy." In October, the tycoon said he would reduce his portfolio by 10 percent for each 1,000-point rise in the benchmark. Lee said Henderson has confidence in the property market and plans to invest HK$25 billion on development in coming months.

China*: Chongqing party boss Bo Xilai and his predecessor, Guangdong party boss Wang Yang , finally stood side by side before the press yesterday, in a meeting much anticipated since Bo launched a massive crackdown on triads in Chongqing. The two rising political stars presided at a signing ceremony for trade agreements worth 50 billion yuan (HK$56.65 billion) in Chongqing yesterday. Officially, Wang is leading a 1,000-strong delegation to forge business co-operation between the inland municipality and the coastal province. But analysts believed the meeting sent an important political message - it is a show of unity likely ordered by the central leadership aimed at quashing speculation about a rivalry between them. Wang and Bo, both Politburo members and candidates for its elite Standing Committee in the next Party Congress, in 2012, are seen as competitors jockeying for the coveted seats in the committee. Bo, a former commerce minister, took over from Wang as Chongqing Communist Party chief in December 2007. He has since acquired a reputation for tough crackdowns on crime and corruption - as well as his ability to draw much-needed investment for the municipality. Since he arrived in Chongqing, Bo's heavy-handed crackdowns on triads have brought down dozens of senior officials, including Wen Qiang , former justice bureau director and former deputy police chief, who had worked for Wang. Observers say this has increased Bo's political capital for further promotion, but has also embarrassed his predecessor. Bo, a media-savvy politician, had diplomatically said in public that Chongqing had much to learn from Guangdong on crime busting, but speculation is rife about a rivalry between him and Wang. Analysts said the trip was probably ordered by the central leadership to quash such speculation.

A global giant at last has right recipe for China - They may be after-school favourites for millions of American children, but when Kraft Foods tried to introduce the iconic Oreo cookies to the mainland 14 years ago, consumers were unimpressed. The Oreo - two chocolate biscuits with a cream filling in the middle - has been the top-selling cookie in the United States since its launch in 1912. But on the mainland it was deemed too sweet for local tastes. Oreos languished on grocery store shelves for almost a decade, prodding Kraft to the realisation that it had to change to make some headway in a biscuit market that had become big business. The mainland biscuit market is worth US$1.6 billion a year, market research company Nielsen estimates. "The business model we had in China was based on what we did in the US," said Singapore-based Shawn Warren, vice-president for marketing at Kraft Foods Asia. "We lost market share and we had to change our mindset." It shows that even one of the world's savviest marketers can still get its recipe wrong for the China market. In 2005, Kraft launched a lighter, less sweet version of the Oreo in China. It also changed the look, launching a version in 2006 that had four thin, crispy wafers, a layer of vanilla cream sandwiched between two thin layers of chocolate cream and finished with a coating of chocolate. Another variation is a tube-shaped wafer lined with cream, which has been marketed as the perfect accompaniment to drinking milk, a growing habit on the mainland. (Consumers in Hong Kong have the best of both worlds, with the original Oreos and the made-for-China versions sold in stores.) The changes were, by Kraft's standards, fundamental, but they were not the only ones. It also embarked on the marketing equivalent of a "shock and awe" campaign to raise the Oreo's profile. There were super-sized displays in supermarkets, "Oreo ambassadors" on bicycles handing out free biscuits to hundreds of thousands of people, and Oreo basketball games. To make the biscuits appealing to customers on lower incomes, it reduced the number in a packet from 14 to seven and cut the price from 5 yuan to 2 yuan. The revamp paid off. The US food giant is now well ahead of nearest rival Tingyi (SEHK: 0322) Holdings, with 22.4 per cent of the biscuit market. Tingyi has 8.3 per cent. Fujian Dali Food Group is ranked third, with 5.7 per cent. Kraft's main rival, Nestle, the world's largest food company, is fifth, with 2.6 per cent. Oreo is now Kraft's top brand in Asia. Kraft has doubled its share of the mainland market since buying Groupe Danone's biscuits division, including its LU and Prince brands, for US$3 billion in 2007. Making the biscuit more palatable to Chinese consumers was probably just as essential as investing heavily in marketing. But the Oreo experience also underscores the fact mainland consumers can become fans of a product that they initially disliked. Kraft may tailor its products to different markets, but the company is convinced that the way to sell them remains the same: visibility. The chocolate cream-filled biscuits are certainly more visible to Chinese customers than ever. Walk into a Wal-Mart store and huge walls of Oreos in bright blue packets greet you. The food business is a risky one, especially on the mainland, which has a poor record on product safety. Last year, British confectionary giant Cadburys had to recall 11 products from stores on the mainland and in Hong Kong, Taiwan and Australia because of fears of melamine contamination arising from the adulteration of mainland-produced milk with the industrial chemical to artificially boost its nitrogen content. Warren said Kraft tested all its products after the scare, and that most of its lines do not contain milk. Kraft said it could not disclose its sales figures in China. But globally, biscuits accounted for 22 per cent of its consolidated net revenue of US$42.2 billion last year. Based on Nielsen's report, Kraft's biscuit revenue in China was US$358.4 million, meaning it accounts for 8.5 per cent of Kraft's biscuits business. The world's second-largest food company, which counts billionaire American investors Warren Buffett and Nelson Peltz among its shareholders, it opened a development centre in Suzhou in May to devise new products and markets.

U.S. automaker General Motors Co. reduced its 50-percent stake in its main Chinese venture with Shanghai Automotive Industry Corp. Group (SAIC) to 49 percent Friday in an unexpected move, the company said in a statement. GM also announced that the two automakers had formed a new venture to manage their joint expansion efforts in India and other emerging markets. GM said it was transferring 1 percent of its stake in Shanghai GM to SAIC Motor, a Shanghai-listed company. "This will assist China's leading listed automotive company in consolidating Shanghai GM revenue into SAIC Motor, which will provide investors a clear understanding of its business," the U.S. automaker said. It is reported that the two automakers will use GM's auto assembly and power train facilities in India to build small cars from the Shanghai GM range and mini-commercial vehicles from the SAIC-GM-Wuling line. "These products will join GM's global vehicles, allowing GM India to quickly add entries in growing market segments," GM said. GM and SAIC currently operate eight joint ventures in China that have helped to make GM the No. 2 seller of passenger cars in China. This year, China has overtaken the United States to become the world's largest auto market. GM and SAIC became venture partners in 1997 and began producing vehicles two years later.

Canada and China agreed to avoid disputes on contentious issues and seek a "significant new era" in relations, as Canadian Prime Minister Stephen Harper was set for more talks in Beijing on Friday. A joint statement e-mailed to reporters late on Thursday and issued after separate talks between Harper – on his first official trip to China – and his hosts President Hu Jintao and Premier Wen Jiabao laid out the aspirations. “The two sides agreed to work together to further promote China-Canada co-operation in all bilateral areas and international affairs, as bilateral relations enter a significant new era,” the statement said. Ties between the two sides have languished in recent years as Harper’s government has been outspoken in criticising Beijing over its human rights record and allegations of Chinese spying. The joint statement bound both sides to respecting each other’s views on contentious issues such as human rights. “Both sides acknowledged that differing histories and national conditions can create some distinct points of view on issues such as human rights,” it said, adding that they would increase dialogue on the thorny issue. It also said the two sides pledged to respect each other’s “sovereignty and territorial integrity, core interests and major concerns” and acknowledged that each country has “the right to choose its own path.” Premier Wen Jiabao appeared to refer to the frosty relations on Thursday, noting that the last visit by a Canadian leader came five years ago. “Five years is too long for a relationship like ours, and that’s why there have been comments in the media that this should have taken place earlier,” he told Harper. The trip by Harper, who arrived on Wednesday, has been viewed as motivated at least in part by fears in the Canadian business community that an aloof relationship with China could hurt trade ties. The two sides on Thursday signed a series of agreements on areas including climate change. They would work together in areas such as energy efficiency, environmentally friendly technology and adapting to climate change, according to a statement on the website of Canada’s embassy in Beijing. Sino-Canadian trade hit 53.1 billion Canadian dollars (US$50 billion) last year, according to Canadian officials, who said before the trip that commercial relations were at a “historic high.”

A customer looks at jewellery at an Indian shop in this file picture. On Friday, a major metals consultancy said China is set to become the biggets buyer of the yellow metal, edging out India, as demand for jewellery and investment has shot up in the country. Mainland looks set to overtake India as the world’s largest gold consumer this year, with total demand for jewellery and investment forecast at 432 tonnes, a senior official at major metals consultancy GFMS said on Friday. High gold prices are putting a larger damper on appetite for gold in India than in China, with Chinese demand robust, especially in the investment area, said Philip Klapwijk, GFMS executive chairman, at a gold conference. “To answer the question, will China overtake India to become the world’s top gold consumer, according to our forecast, it looks as if it is happening this year,” Klapwijk said. GFMS forecasts total gold demand from mainland this year to be 432 tonnes, compared with that of 422 tonnes from India. Mainland’s investment demand alone was forecast at 83 tonnes, exceeding India’s 53 tonnes. These figures exclude central bank purchases, Klapwijk said. India bought 200 tonnes from the International Monetary Fund. Which country will become a bigger gold demand market will depend on prices, he said, adding that sensitivity to market prices is significantly bigger in India than in mainland. Gold hit record highs above US$1,225 an ounce on Thursday as the precious metal continued to attract investors looking for an alternative to the US dollar. “There is a huge latent demand in India and it will explode if prices fall significantly from current levels. India will react far more strongly than China to lower price environment,” Klapwijk said. In comparison, growth in jewellery consumption in China has been strong, especially in the last three to four years. Very high local gold prices are discouraging investors to buy gold in India while China’s gold buying has not been discouraged even when prices were rising to record highs, said Klapwijk.

The central government has approved a plan to develop the Yellow River Delta in the eastern province of Shandong into an environmentally friendly economic zone, the first of its kind in the country. The State Council, the mainland's cabinet, recently approved the "Development Plan of an Efficient Eco-Economic Zone in the Yellow River Delta", Xinhua reported yesterday. The world is expecting the mainland, the world's top carbon emitter, to play a leading role at next week's United Nations' climate summit in Copenhagen. Premier Wen Jiabao will attend the meeting. The delta is the eighth region to be included in the government's regional development plan this year. Analysts said the government had shifted strategy from a focus on speeding up economic growth in a particular area to an emphasis on regional planning for balanced and co-ordinated development. "Unlike the development plans approved in the early years of the mainland's opening up, the new batch of development plans are designed to match the restructuring of industry in coastal regions," said Zhu Bo, of the Academy of Urban Planning and Design. According to the blueprint, the "eco-economy" zone would include 19 county-level regions with 26,500 square kilometres of land. Each would contain a number of companies adopting clean production technologies, environmentally friendly industrial clusters and an economic system characterised by resource conservation or recycling. Four industrial bases next to ports - in the cities of Dongying , Binzhou , Weifang and Laizhou - are expected to be at the centre of the zone and form an economic belt with hi-tech development zones, industrial parks and eco-farming pilot areas. The plan would result in sharp regional economic growth, Xinhua said. Last year, the region's output value amounted to 475.6 billion yuan (HK$539 billion). It is expected to reach 930 billion yuan by 2015 and 1.5 trillion yuan by 2020, according to media reports. Shandong committed to investing 1.5 trillion yuan on developing the delta during the 11th five-year plan (2006-2010), according to a local development plan released in March last year. It aimed for regional growth of 15 per cent a year while lowering energy consumption per unit of gross domestic product by 24 per cent. Some analysts doubt the practicality of the plan and say the ecological aspect is a political manoeuvre. Li Wenhua, of the Chinese Academy of Engineering, said the Yellow River Delta region faced greater challenges than others in achieving environmentally friendly economic growth, due to its heavy dependence on energy resources. The region is also running short of water and having difficulty cleaning up its polluted environment.

Chongqing municipality announced a pilot plan this week requiring judicial officials in important positions to declare their assets - thus becoming the highest-level government to make such a mandate. Only a handful of counties and towns have previously required officials to declare their assets, a move the public has long regarded as necessary to combat corruption. Chongqing is the first provincial-level government to do so, following months of a high-profile crackdown on triad activities, which led to the fall of gangsters and corrupt officials. Nearly 3,000 people have been detained. According to a report after the municipality's Communist Party meeting this week, four bureau-level and 14 county-level judicial officials have been sacked or implicated. Chongqing People's High Court former judge Wu Xiaoqing, who reportedly committed suicide while in detention last week, was found to have received more than 3.5 million yuan (HK$4 million) in bribes over 10 years and had more than 5 million yuan from unknown sources. Details of the measure remain sketchy. Some mainland anti-corruption experts are worried that this might end up a show like other pilot schemes implemented since the beginning of the year. For example, Zhejiang's Cixi county asked 675 vice-township-level cadres in February to declare items including ownership of real estate, cars, and the occupation and education status of family and children. However, the publication of the information is limited to a three-day public notice within each government unit. Hunan's Liuyang county broadened the extent of the declaration in March to include sums used for work-related travel and monies received for weddings or funerals, when it declared the assets of its township-level officials in the media. However, certain county-level officials may be exempt from the media publication. Tsinghua University's anti-corruption expert, professor Ren Jianming , said the pilot schemes skirted the thrust of the problem. "Such declarations must begin with the No 1 official in whichever level of government, not the deputies," Ren said. "We must have a national-level plan for such an important anti-corruption measure. "But above all, we must have the political will to push this forward." As early as 1994, a draft income declaration law was included on the legislative calendar but it never got any further. Beijing has issued several documents - most notably a party document in 2001 requiring provincial-level officials to declare their family property - but none was successfully implemented. The issue was again raised at a party congress in September.

Mainland official said on Friday that the country has maintained a consistent allocation of its foreign exchange reserves despite the current weakness of the US dollar. Mainland has made no big adjustment to its foreign exchange reserves management, Wang Xiaoyi, deputy head of the country’s forex regulator, the State Administration of Foreign Exchange (Safe), said on Friday. “We are not making any big adjustment in how to manage our foreign exchange reserves, and all our operations are in line with our existing forex management goal,” Wang said before a conference in Beijing. “We now have similar proportions of different currencies in our forex reserves as we had before.” Mainland says it manages its yuan exchange rate with reference to a basket of foreign currencies and lets it move within a narrow band, but in practice the yuan has been pegged against the US dollar since the summer of last year. That has caused tensions with some trade partners, and competitive devaluation by Vietnam, since as the US dollar weakens against other world currencies, the yuan does as well. Trade partners complain this gives mainland exporters an unfair competitive advantage. “The weakening of US dollar will be a long-term trend but we don’t see big fluctuations in the near term,” Wang said. Mainland officials have repeatedly expressed concern over the value of the US currency since most of mainland’s foreign exchange reserves are parked in US treasuries. Beijing’s desire to see a stronger dollar was reinforced by an opinion piece in the People’s Daily, the main newspaper of the ruling Communist Party, which said that the slumping greenback was harming the world economy. Global markets have periodically been shaken by the idea that mainland could dump dollars, as it is estimated to hold about two-thirds of its currency reserves in dollar-denominated assets. Beijing itself has long declared that it aims to diversify its forex reserves, the world’s biggest such stockpile. “We now have similar proportions of different currencies in our forex reserves as we had before,” Wang said on the sidelines of a conference in Beijing. Despite expressions of concern about the yawning US debt, mainland has continued accumulating US dollars this year as it must buy those streaming into the country through its trade surplus to keep the yuan from appreciating. The weak dollar has complicated monetary policy in China, as in other countries that fix their exchange rates to the US dollar. Raising interest rates would widen their rate differential compared with the United States, potentially attracting speculative capital. But keeping rates flat is arguably too loose for economies that have recovered as strongly as mainland’s.

State-owned Sinopec (SEHK: 0386) said on Friday it has signed a 20-year contract with Exxon Mobile to buy gas from Papua New Guinea, in the latest of a flurry of foreign deals to secure fuel for mainland’s booming economy. The liquefied natural gas will come from a project being developed by Exxon Mobil and other investors in Papua New Guinea’s central highlands. Sinopec gave no financial details. Sinopec, also known as China Petroleum & Chemical Corp, is mainland’s second-biggest oil and gas company and Asia’s biggest oil refiner by volume. The contract calls for Sinopec to buy some 2 million tons of gas per year, which it will import through a terminal in Qingdao. The supplies “will play a positive role in meeting the local demand, optimizing the energy mix and improving the local environment”, said Sinopec’s senior vice-president, Wang Zhigang, in a statement.

Beijing Automotive Industry Holding Corp (BAIC) has obtained a 20 billion yuan (HK$22.67 billion) line of credit from the Bank of China, the bank said on Friday. BAIC has said it might still be interested in buying General Motors’ Saab unit, after a consortium led by tiny Swedish luxury car maker Koenigsegg, pulled out of talks last week. BAIC was a member of that consortium. BAIC declined to comment. Major mainland carmakers are hungry for money to upgrade their technologies, expand production scale and eventually tap into the global market, and it is reasonable for mainland banks, controlled by the government, to provide them with liquidity. The credit that BAIC, the country’s fifth-biggest carmaker, gets is seen enough to boost the production scale of the Beijing-based automaker, which does not even have its own car brand.

Wu Bangguo (R), chairman of China's National People's Congress Standing Committee, meets with Canadian Prime Minister Stephen Harper at the Great Hall of the People in Beijing, capital of China, Dec. 4, 2009.

Dec 5 - 6, 2009

Hong Kong*: Hong Kong should step up tightening of bank lending to ease asset price inflation, the IMF said on Thursday, as the city’s surging property prices have raised the risk of an asset bubble. “With substantial liquidity in the system, there is a prospective risk that a credit-asset price cycle could take hold, ultimately leading to macroeconomic volatility,” the International Monetary Fund said in the final version of an annual report on Hong Kong, published on Thursday. The Hong Kong government has already warned of the risk of a property bubble as mass residential property prices have risen 30 per cent this year and luxury property prices have surged by more than 40 per cent. In late October the Hong Kong Monetary Authority reduced the mortgage limit for luxury property to 60 per cent from 70 per cent for luxury property and capped the maximum loan amount for mass-market property at HK$12 million. It has also told banks to be prudent in lending. The IMF said Hong Kong authorities should go further to ease price pressure. It suggested they ensure that banks differentiate appropriately between loans to finance investment properties and by tightening eligibility criteria for mortgage insurance. “In addition, the authorities could explore lowering the existing maximum debt servicing ratio for mortgages [which is currently set at between 50 and 60 per cent] based upon the nature and size of the underlying loan,” it said. The surge in property prices is partially driven by wealthy mainlanders, who are snapping up luxury apartments, and by the view that Hong Kong interest rates will stay low for some time. Hong Kong tracks US interest rates because its currency is pegged to the US dollar. Hong Kong equity prices have also rallied, rebounding 70 per cent since March, amid keen demand for the Hong Kong-listed shares of mainland companies which are likely to benefit from the mainland economy’s return to robust growth and expectations that the yuan could soon start to appreciate again.

A Legco subcommittee on Thursday voted to approve funding for the controversial Hong Kong-Guangzhou high-speed rail link – despite recent protests against the HK$65.2 billion project. After debates on Wednesday and Thursday, members of the Public Works Subcommittee of the Legislative Council voted in favor of funding the rail link. The project is a high-speed rail link between Hong Kong and Guangzhou via Shenzhen. The votes were 12 in favor, eight against, with one abstention. Lawmakers also voted on whether to fund the government’s HK$86 million compensation package for villagers in the New Territories, who will lose their homes because of the rail link. The votes to approve the financial compensation were 12 in favor, seven against, with one abstention., local media reported. On Thursday afternoon, League of Social Democrats lawmaker Albert Chan Wai-yip and lawmaker Leung Kwok-hung, or “Long hair”, left a legislature debate on the subject to protest what they called the “unreasonable” plan to demolish villagers’ homes in Tsoi Yuen Tsuen. During the debates on Thursday, other lawmakers also raised concerns about the compensation offer. Some suggested the government consider relocating the villagers. But Secretary for Transport and Housing Eva Cheng Yue-wah said the homes in Tsoi Yuen Tsuen were illegal squatter huts. “If the government moved all the villagers to another site, this would mean it recognized these squatter huts as legal in Hong Kong,” she said. The government will now wait for Legco’s financial committee to give the final approval for funding of the rail link on December 18. The controversial express rail line, linking between its terminus at West Kowloon and Shibi in Guangzhou, is about 140km with intermediate stations at Futian, Longhua and Humen. It is expected to be completed by 2015.

Hong Kong stocks extended recent strength on Thursday, ending up 1.19 per cent for a fourth consecutive day of gains, with banks and mainland property shares leading the rise.

Linus Cheung Wing-lam has reportedly resigned after only one year as chairman of Asia Television (ATV) – one of Hong Kong two free-to-air broadcasters. Local media reported that Cheung had handed in his resignation and ATV’s board had accepted it. However, ATV spokesman Gilbert Au told he had not been informed of the resignation. Asia Television vice-chairman Yip Ka-po on Thursday also told local media that he had not received any confirmation of Cheung’s resignation. Cheung, a former deputy-chairman of PCCW (SEHK: 0008), was appointed in December of last year to great fanfare. He joined the broadcaster on the same day that fellow telecommunications executive Ricky Wong Wai-kay got the job of chief executive. The two men were widely expected to lead a revival at the city’s smallest and loss-making terrestrial broadcaster. However, Wong lasted just 12 days in the job after what was believed to be an instant and fatal clash of wills and style with Cheung.

Business activity rose in November for a fourth straight month as the purchasing managers index (PMI) hit 55.9, up from 54.6 in October and its highest reading since November 2007. The PMI adds to recent economic data showing the economy is picking up after pulling out of recession in the second quarter. New orders rose for a fourth straight month and at a much faster pace than in October, driven by a surge in orders from the mainland. Companies stepped up hiring from October although headcount additions were modest. Staff costs rose for a fourth month but by a small margin. Companies’ costs (input prices) rose for a fifth month and more sharply than in October due to rising raw material costs. However, for the first time in 14 months firms stopped reducing prices they charged, although strong competition limited price rises. “Although overall input prices continued to increase, the rise in output prices suggests companies are less stretched on their profit margins,” said Janus Chan, economics analyst at HSBC (SEHK: 0005), which sponsors the Hong Kong PMI. “This is likely to benefit local employment, which has seen growth for two successive months,” Chan said. The PMI accurately indicated Hong Kong’s descent into recession in the third quarter of 2008. A PMI reading above 50 indicates growth in activity, while below 50 signals contraction. The PMI survey compares business conditions with those a month earlier, based on data from 300 private Hong Kong companies in manufacturing, services, retail and construction.

More jobs are available for university graduates this year - another sign the economy is picking up. Figures from the latest quarterly report by the Joint Institution Job Information System showed 1,894 vacancies available from September to November, a rise of 11 per cent on the same period last year. The joint information system, developed by the eight tertiary institutions, keeps track of vacancies available for all university graduates. The median monthly salary for the latest quarter was HK$9,500, the same as for June to August. This is still 5 per cent short of the HK$10,000 income for September to November last year. According to the latest quarterly figures, there are a total of 1,861 jobs that pay HK$6,000 to HK$20,000 per month, a rise of 11 per cent from the 1,678 jobs in the same salary bracket for the same period last year. The number of jobs paying HK$20,000 to HK$40,000 dropped from 34 to 32. The sectors that recorded the most increases in job vacancies included advertising, public relations, banking, art and design, and media and communication. There were 79 employers from financial institutions in the latest quarter, compared with 53 for the same period last year - a rise of 49 per cent. The number of employers in the real estate sector was up from 24 to 32, or 33 per cent.

Sun Hung Kai Properties (SEHK: 0016), Asia’s largest property developer by market value, is “cautiously optimistic” about the Hong Kong residential market in the coming year, executives said on Thursday. Hong Kong’s residential prices have risen by around 30 per cent since the beginning of the year, industry figures showed, with analysts expecting prices to trend higher with the global and domestic economies on the mend. “All I can say is we are cautiously optimistic and it’s hard to give any figures today,” Thomas Kwok, a vice-chairman of Sun Hung Kai, told a news conference in Hong Kong. “Hong Kong’s market is a little unique as it depends on the global economic recovery. I believe we’ll see quite good growth in residential prices,” Kwok said after the company held a shareholders’ meeting. The company, Hong Kong’s largest developer that competes with other firms such as Henderson Land (SEHK: 0012), tried to allay fears of a property bubble forming in Hong Kong. “Residential prices in Hong Kong are reasonable now, especially since mass market residential prices are still around 30 per cent lower than [the peak] in 1997,” Raymond Kwok, another vice-chairman, said. In September, the company set a modest apartment sales target of HK$23 billion for 2009/10, against a target of HK$20 billion for 2008/09 and actual sales of HK$25 billion for that year. Executives said on Thursday they expected sales in mainland to hit about HK$3 billion for the fiscal year ending June next year. For the full year ended June, its underlying profit, which excludes gains from the revaluation of investment properties, was HK$12.42 billion, against HK$12.19 billion a year ago, the developer said. Sun Hung Kai’s shares have risen about 80 per cent since the beginning of this year, outperforming the Hang Seng index’s over 50 per cent advance.

China*: Air China (SEHK: 0753) vice-president Fan Cheng was named a senior official of Shenzhen Airlines on Tuesday, adding fuel to speculation that the world’s most valuable airline would take over the Shenzhen-based carrier. Fan was appointed party secretary of Shenzhen Airlines on December 1, two sources with direct knowledge of the matter said on Thursday. He is now in charge of the daily operations of Shenzhen Airlines, the country’s fifth-largest air carrier, a source said. “It suggested that Air China will lead Shenzhen Airlines and it will have a synergy effect on both airlines,” Alfred Chan, chief dealer at Cheer Pearl Investment. Privately-owned Shenzhen Airlines said earlier this week Li Zeyuan, a senior adviser who effectively controls the airline, was under police investigation, although the airline continued to operate normally. Shares of Air China erased opening losses and rose to a new 19-month high of HK$6.23, before settling at HK$6.17, up 0.3 per cent on Thursday morning. An Air China spokesman declined to comment. The stock jumped as much as 10 per cent on Tuesday, on speculation that Air China would take over Shenzhen Airlines, allowing the country’s flag carrier to fend off competition from the merged China Eastern Airlines (SEHK: 0670) and Shanghai Airlines. “Air China is set to benefit from a bigger market share and operation scale. It is similar to the case of a bigger bank taking over a smaller rival. The bigger bank is always seen to have a bigger benefit than the one being taken over,” Chan said. Air China holds a 25 per cent stake in Shenzhen Airlines while Li owns about 65 per cent through a company.

The UN body that oversees carbon credit trading said on Thursday it was reviewing 10 mainland wind power projects amid questions about how Beijing obtains money through the system. The board of the Clean Development Mechanism is looking at how Chinese power prices affect the viability of the projects, which would influence whether they are eligible for CDM money, the board’s chairman, Lex de Jonge, said in an e-mailed statement. The CDM is expected to be a key issue at next week’s global climate summit in Copenhagen, Denmark. European governments want to change the system, due partly to its failure to slow rapid emissions growth in China – the biggest emitter of carbon dioxide and other gases that scientists say trap the sun’s heat and are changing the climate. China has received millions of dollars through the CDM, which allows industrialized economies to meet commitments to cut greenhouse gas emissions by paying developing countries to curb their own instead. But environmentalists say some Chinese wind and hydropower projects improperly receive CDM money without showing they would not be built anyway, a requirement known as “additionality.”

Revenue generated by mainland tourists to Taiwan is likely to be lower than expected, despite a significant hike in their numbers as ties between the two sides warm, a report said on Thursday. This year around 480,000 mainland Chinese are expected to visit Taiwan, bringing in NT$16.9 billion (US$528 million) in tourism revenue, the United Daily News said, citing a study by Taipei’s Institute for Business Development. The study was compiled from interviews with 28 local tour guides and 120 mainland tourists, it said. The figure was lower than the NT$30 billion forecast by the official Tourism Bureau, the report said, adding the bureau over-estimated mainlanders’ accommodation, transportation and shopping spending. Institute officials were not immediately available for comment. A total of 407,237 tourists arrived from the mainland in the period from January to October, up 479 per cent from the same period last year, according to the Tourism Bureau. A key factor in boosting the numbers was a decision by President Ma Ying-jeou’s Beijing-friendly government in July last year to treble the daily quota of mainland tourists to 3,000.

Canadian Prime Minister Stephen Harper (R) and his wife Laureen Harper visit at the Badaling Section of the Great Wall in Beijing, capital of China, on Dec. 3, 2009.

The 2009 MTV Style Gala was held at the Shanghai Grand Theatre on Wednesday night with the attendance of famous movie stars and singers from home and abroad.

The Shanghai Disneyland project has a partner, Shanghai Shendi Travel Resort & Development Co. Ltd., a source close to the matter disclosed Wednesday. It will have a 57 percent stake in the Walt Disney Company in Shanghai. Also, the shareholders of Shanghai Shendi, which was established last year, have also been set. Shanghai Lujiazui Development (Group) Co. Ltd. holds 60 percent, Shanghai Jinwin Investment Co. Ltd. has 30 percent and Shanghai Nanhui Real Estate Co. Ltd. holds 10 percent. The establishment of the names of the shareholders signals that investment for the Disneyland project has begun rolling out formally. As Shanghai Shendi will have a 57 percent share of the Disney project that means Shanghai Lujiazui Development (Group) Company Limited holds a 34.2 percent stake in the whole Disneyland project, Shanghai Jinwin Investment Co., Ltd. holds 17.1 percent, and Shanghai Nanhui Real Estate Co. Ltd. holds 5.7 percent. Shanghai Lujiazui Development (Group) Company Limited will be the second-largest shareholder of the Disney project after US-based Walt Disney Company. The registered capital of Shanghai Shendi is 130 million yuan. Meanwhile, the operating model of Shanghai Disneyland was still undecided. Analysts said that if the Shanghai project follows the management model of the Disneyland in Hong Kong or Tokyo, US-based Disney will send a management team to Shanghai. But the establishment of Chinese shareholders also influences the future operations of the project, analysts pointed out.

Shanghai plans to recruit 116 financial professionals during its second overseas recruitment to help fuel the city's ambitions to be a financial hub by 2020. The Shanghai Financial Services Office will lead representatives of 17 institutions, including banks, insurers and brokerages to hire experienced senior professionals. The team will be in New York on Saturday, Toronto next Wednesday and Singapore on December 13. "The city is eager for senior financial professionals to help build itself into an international financial center," Ji Wenguan, Party chief of the office, said yesterday. "We are not lacking head count in the financial industry but are short of experienced professionals." He pointed out that talent is key to propel the establishment of a financial center, citing that more than 700,000 financial professionals work in New York, about 400,000 in London and 350,000 in Hong Kong. There were 230,000 financial professionals working in Shanghai by the end of last year, he added. As part of the move to lure and retain financial professionals, the city has launched initiatives to address quality-of-life concerns such as health care and education. Around the end of this year it will also implement a cut in the rate of income tax that they have to pay, according to Ji. Shanghai recruited 66 overseas financial professionals from 4,000 candidates in its first overseas hiring campaign on Wall Street and in the City of London last year.

Dec 4, 2009

Hong Kong*: Stocks in Hong Kong chalked up a third consecutive session of bargain-hunting gains on Wednesday after positive US home sales data restored confidence in a global economic recovery and lifted stocks on Wall Street. The Hang Seng Index rose 0.8 per cent, or 176.42 points to 22,289.57. The China Enterprises Index of top locally listed mainland stocks gained 0.85 per cent to 13,341.17. Sentiment in overseas stock markets also received a lift as concerns receded about the impact of Dubai’s debt troubles following news that Dubai World planned to restructure about US$26 billion in debt. Hong Kong’s benchmark index has now regained all losses from last Friday’s steep sell-off amid concern over a possible debt default by Dubai World. But stocks erased some of their earlier gains in morning trade, as investors took profit, traders said. “The market rebounded sharply in the past three sessions,” said Conita Hung, head of research of Delta Asia Financial. “There needs to be some consolidation, but I see support at 22,000 – I don’t expect there to be a sharp drop.” Other investors said the recovery could be short-lived. “What happened with Dubai World is not that simple,” said Peter Lai, director at DBS Vickers. “We have to wait for more figures from Dubai before we can buy. The market will fluctuate wildly. For the present, short-term speculation is recommended.” Lai said the upside for Hong Kong’s stock index would be limited to the 23,000 level for the next two to three weeks. Turnover increased to HK$77.9 billion from Tuesday’s HK$74.9 billion. Geely Auto (SEHK: 0175) rose 9.3 per cent during morning trading to an all-time high, boosted by a report that its parent was a step closer to completing its acquisition of Ford Motor’s Volvo unit. Geely ended the day at HK$4.11, up 5.93 per cent. Macau casino operators rose on reports gambling revenue had risen 59 per cent from a year earlier, signalling sustained growth in the world’s largest gambling market. Recent debutant Sands China, the Macau unit of Las Vegas Sands, was up 6.71 per cent at HK$10.18, while Wynn Macau, a unit of Wynn Resorts gained 6.23 per cent to HK$10.40. Gold counters soared after gold futures rose to a record high on Wednesday as weakness in the US dollar spurred buying of the precious metal as a safe haven investment. Realgold Mining rose 1.62 per cent to HK$15.06, Sino Gold Mining gained 8.11 per cent to HK$60, and Zijin Mining (SEHK: 2899) advanced 3.35 per cent to HK$8.94.

Legislators have deferred voting until Thursday on funding for the controversial HK$65.2 billion high-speed rail link between Hong Kong and Guangzhou.

Primus Financial Holdings, picked by AIG as the buyer for its Taiwan unit Nan Shan Life, said on Wednesday that it intends to resubmit its application to Taiwan regulators seeking approval for the US$2.15 billion deal. Wall Street veteran Robert Morse, chairman and CEO of Hong Kong-based Primus, said in an interview that the approval process could take three to six months. The decision to re-apply came after some Taiwan officials voiced concern late last month that the buyers of Nan Shan Life may be backed by mainland China-sourced funds, a politically sensitive issue. However, Morse said Primus and its partner China Strategic, a Hong Kong-listed battery maker whose new business focus is financial services, were confident of winning approval for the deal after recent talks with Taiwan regulators to clarify their concerns. Morse said none of the money backing the Primus and China Strategic acquisition of Nan Shan was sourced from mainland and that he would reassure Taiwan regulators on this issue. Nan Shan is the largest asset put up for sale by AIG, once the world’s largest insurer, following its rescue by the US government during the global financial crisis. Beijing has claimed sovereignty over self-ruled Taiwan since 1949, when Mao Zedong’s forces won the civil war and Chiang Kai-shek’s Nationalists fled to the island. Beijing has vowed to bring Taiwan under its rule, by force if necessary. However, ties have warmed since President Ma Ying-jeou took office last year, brokering landmark trade deals. More recently, Taiwan and Beijing signed a landmark memorandum of understanding (MOU) to allow the island’s financial firms to tap the mainland market, and paving the way for banks on both sides to invest in each other. Morse, a former top banker for Citigroup in Asia, said he planned to expand Nan Shan’s insurance business into the mainland market under the Taiwan-Beijing financial MOU. Morse said he had met the management of Nan Shan, and said the vast majority of Nan Shan’s insurance sales agents had expressed support for Primus and China Strategic’s acquisition.

Relax - Shanghai's at least 25 years behind us: tycoon - Property tycoon Ronnie Chan Chi-chung reckons it will be about 25 years before Hong Kong feels the full blast of rivalry from Shanghai. So he is not spending a great deal of time worrying on that score. What is gnawing at Chan right now is Hong Kong's political infighting, which he says is preventing the SAR from benefiting fully from the extraordinary growth in the mainland. As things are now, says the chairman of Hang Lung Properties (0101), it is impossible for Hong Kong to fully utilize its historical advantages to grow by up to 8 percent every year. "Hong Kong is no longer as much an economic city as it once was," he said yesterday. "Politics is now playing a much bigger role." Shanghai leaders may be very "effective" and "wise in their decisions," Chan said, yet Chief Executive Donald Tsang Yam-kuen is "very capable" and SAR officials are good by international standards. But Hong Kong politicians create problems and then blame them on the government, Chan said in response to a query about why small developers need such a long time to get their projects approved. "It's not that the government doesn't want to get things done," he said. "It's the legislators who prevent it from doing so." The central government sees the relationship between Hong Kong and Shanghai in a cooperative rather than competitive light, Chan said. He believes Beijing leaders have even been bending over backwards to help Hong Kong. "They develop Shanghai the way it ought to be, including being an international center. "And Hong Kong - they will take advantage of it as long as we let the mainland benefit from our purses." While Shanghai is catching up rapidly, Chan said, it will take the metropolis 25 years to match Hong Kong in GDP per capita if both maintain their growth rates. He also believes luxury homes in Shanghai have more upside in the long run when compared to those here, where the price is a steep HK$40,000 per square foot - at least four times as much. For those interested in buying homes in Shanghai, he suggests central locations, including projects by Shui On Land (0272) and Sun Hung Kai (0016). "If you were to buy in Hong Kong, I suggest you buy - of course, Hang Lung better - the high end and luxury apartments," he said jokingly, saying they may then be sold to mainlanders. Chan, of course, can afford to smile after Hang Lung collected HK$7.5 billion from selling more than 400 homes at The HarborSide atop Kowloon Station in August. They made HK$5 billion profit. Griping about politicians on another front, Chan held that Hong Kong's tertiary education is "truly world class." But he criticized lawmakers for capping the percentage of funds spent on overseas students as "short-sighted" since the entire world vies for talent nowadays. Singapore's example of granting full scholarships to top mainland talents is one to follow, he said. These students will stay in the city- state or feel attached to it even after returning to China.

The Hong Kong Jockey Club agreed yesterday to help build facilities and offer supporting and professional services for the equestrian events of the 16th Asian Games to be held in Guangzhou next year. The agreement was signed in Guangzhou by club chief executive Winfried Engelbrecht-Bresges and Guangzhou Vice Mayor Xu Ruisheng. Officiating guests included club chairman John Chan Cho-chak, Guangzhou Asian Games Organizing Committee vice president Lin Musheng, and HKSAR Chief Secretary Henry Tang Ying-yen. The establishment of Asian Games equestrian venues and activities to follow will be the responsibility of a joint venture set up by the HKJC and the Pearl River Enterprises Group. Chan said the club's provision of world-class equestrian venues and a wide range of supporting and professional services for the 2008 Olympics and Paralympics had won acclaim from the International Olympic Committee. "We are now pledging to make good use of the advanced technologies and experience gained from the Olympic equestrian events to contribute to the Asian Games equestrian venues and facilities as well as provide technical support," Chan said. The Asian Games equestrian venue at Conghua in Guangzhou will comprise an events and training area, supporting facilities and stables. The HKJC will offer its consultancy and expert support on a wide range of professional services, including horse transportation, quarantine control, clinical laboratory services, site maintenance, veterinary services and equipment, and stable staff and appliances. There will also be special equipment for competitions. An internationally recognized "specific equine disease-free zone" has been established all the way from Hong Kong to Conghua with the co-operation of the Ministry of Agriculture, the General Administration of Quality Supervision, Inspection and Quarantine and the Agriculture, Fisheries and Conservation Department. This will mean horses from around the world can return to their countries with a set of quarantine protocols for transportation. It also implies that the Conghua venue will be the only location in the mainland that can host international equine races and events. After the games, running from November 12 to 27 next year, the venue will be adapted for racehorse training.

China Longyuan Power locked in over HK$200 billion as its public offering was 230 times oversubscribed, making its IPO this year's fourth-largest deal in terms of frozen liquidity. The mainland's biggest wind power generator plans to raise HK$17.5 billion by floating 2.143 billion shares at HK$6.26 to HK$8.16 each. "Shares of Longyuan can jump 15 percent on its trading debut as investors may be willing to pay a premium for exposure to the wind power sector," said Redford Securities head of research Kenny Tang Sing-hing. He recommended Longyuan shares because of the positive outlook of the firm as a market leader, with a 25 percent share of China's wind power market. A clawback mechanism will increase the retail portion of Longyuan's offering to 428.57 million shares accounting for 20 percent of the total size from the original 5 percent. Bright Smart Securities general manager Nelson Chan Kai-fung expects the stock to be priced at the high end and rise by at least 10 to 15 percent on its first trading day. Shares of China Forestry (0930), meanwhile, rose as much as 8.7 percent before closing up 5.31 percent at HK$2.18 in the gray market, according to Phillip Securities. Investors posted a paper gain of HK$220 per board lot of 2,000 shares. Listing candidate PCD Stores is aiming to reduce its gearing ratio to 30 percent from 180 percent after its IPO, chairman Alfred Chan Kai-tai said. He added the company will have a positive cashflow after raising as much as HK$3 billion in its initial public offering. PCD's retail book opens today and its shares will be priced between HK$1.65 and HK$2. The minimum spending for a board lot of 2,000 shares is HK$4,040.36. PCD plans to invest 41 percent of the proceeds on setting up new stores, 28 percent on acquisitions and 21 percent on the development of the second phase of its Xian project. The firm projects its net profit to grow 26.6 percent to 220 million yuan (HK$249.74 million) for the year ending December 31. And a German-based company has asked for a listing hearing in a bid to raise over HK$100 million.

Emperor International Holdings (0163) plans to invest HK$5 billion to HK$5.5 billion in property projects over the next five years. The company's residential developments on Des Voeux Road West in Western District and Java Road, North Point, are scheduled for presale next year.

Fung shui master Tony Chan Chun-chuen has sold off another asset as his lengthy legal battle over the estate of the late billionaire Nina Wang Kung Yu-sum drags on. After selling a home on The Peak and private jet earlier this year, Chan struck a deal on October 9 to offload his entire stake in UURG Corp, a small information technology consultancy to a mainland investor at less than 10 per cent of the shares' last traded price. He realised about HK$38.2 million from the deal, selling 3.47 billion shares at 1.1 HK cents each. The sale would have netted HK$569.1 million more if he had sold at the last traded price. "It is interesting that Chan is willing to sell his stake so cheaply and urgently," financial services sector legislator Chim Pui-chung said. "That [may stem from costs ] from the court case about the fight for the assets of Nina Wang." Chan sold a house on The Peak for an estimated HK$240 million and a private jet he bought in 2006 for US$30 million. He has also disposed of other properties this year. UURG alerted the market in September that Chan had begun preliminary discussions to dispose of his stake in the company.

Angels Ho Chun-hei (left) and Lee Yuet-yee flank Catherine Lee Oi-wa of Maxim's and Ideal vice-chairman Chung Chi-wai at the launch of the Maxim's Group campaign yesterday. Hongkongers can have their cake and eat it, too - all while helping Operation Santa Claus. The Maxim's Group will be donating money to the annual holiday appeal every time a customer purchases one of four specially designated items from December 7 to 22. The company will donate HK$10 for each roasted whole US turkey sold at m.a.x. concepts restaurants, HK$5 for each creme angel cake or chocolate devil cake sold at Maxim's Cakes outlets, and HK$2 for each fresh brew coffee sold at Maxim's MX fast-food outlets. The Maxim's Group announced its campaign yesterday during a launch at its Simplylife Foodplace eatery in Central's Citibank Plaza. Michael Wu, chairman and managing director of the Maxim's Group, presented staff with "thank you" certificates for their previous volunteer efforts and then asked members of the Intellectually Disabled Education and Advocacy League (Ideal) to join him as part of the celebrations. "Being socially responsible is part of our mission. Maxim's Group has initiated various charitable activities and is proud of our staff's participation and good deeds," Wu said. "This is the second year we are participating in this meaningful campaign. Through our 250 participating outlets, we hope to encourage our customers to 'Be an Angel' and join us to support the Operation Santa Claus program." Also in attendance at yesterday's event were Hugh Chiverton, head of RTHK's Radio 3, Deon Lai, director of Operation Santa Claus, and Ideal vice-chairman Chung Chi-wai. Ideal has been helped by the Maxim's Group in the past, Chung said. The company has donated mooncakes to the group to assist with its fund-raising efforts. Chung then spoke of Operation Santa Claus, saying his fellow Hongkongers should consider giving to the holiday appeal, which this year benefits not only Ideal but 12 other local beneficiaries. "I think there are plenty of associations, such as Ideal, that need help," he said. Joining Chung yesterday were Ideal program officer Jakey Yiu Ling-yan, Ideal members Lee Yuet-Yee, 9, and Ho Chun-hei, 11, and the children's mothers. The children, who both have Down's syndrome, donned angel gowns for the event.

Macau casino revenue last month soared 59 per cent year on year to 12 billion patacas, the city's second biggest haul after a record-setting October that netted 12.6 billion patacas in casino winnings. SJM Holdings continued to lead the six licensed casino operators with a 32 per cent share of the market by revenue, according to preliminary figures leaked to Portuguese news agency Lusa that have historically proved accurate. Casinos in Macau have been on a hot streak since August, when monthly winnings began bouncing back sharply as government stimulus and rebounding economies helped boost disposable income levels across Greater China. After declining 12.4 per cent in the first half of the year, casino revenue in the first 11 months has now risen 6.5 per cent from a year ago to 107.66 billion patacas, according to official and preliminary data. Macau is easily on track to beat last year's record casino winnings of 108.77 billion patacas, and analysts now expect the market to show annual growth of 8 per cent to 10 per cent once the final numbers are in. "Tourist arrivals are increasing and rising incomes are driving higher average bet spend in the mass market," said Aaron Fischer, the head of Asian consumer and gaming research at CLSA Asia-Pacific Markets. "But the biggest contributor is the increased liquidity in China and Hong Kong that is making its way into the Macau VIP segment." Last month's tally is all the more impressive as it appears to have defied seasonality: November is usually a "soft" month, falling between the holiday months of October (golden week) and December (Christmas). Shares in casino firms surged on the news, climbing 3 per cent to 6 per cent yesterday. Wynn Macau gained 6.2 per cent to close at HK$10.40 - above its October initial offering price of HK$10.08 for the first time in two weeks. Rival Sands China rose 6.7 per cent for its highest close since debuting on Monday, ending the day at HK$10.18 but still below its HK$10.38 offering price. Fuelled by surging VIP gaming volumes, Macau appears to have shaken off recent moves by Guangdong to limit travel by residents on individual visas to visiting the territory once every two months from October, down from once a month previously. While analysts said monthly casino revenue in the 12 billion patacas region should be sustainable, the recent headline-grabbing growth figures are partly because of comparisons against the Macau market's weakness during the second half of last year. "The comparisons for gaming revenue have been expected to 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 impacted results in the second half," Susquehanna International Group gaming analyst Robert LaFleur wrote in a research note.

China*: Foreign firms and individuals will be allowed to set up limited partnership firms in mainland from March next year, a move that could make it easier for some overseas investors to tap the domestic market. But it remains unclear how far-reaching the rule change, announced on Tuesday, will be. The State Council said it would not apply fully to “investment-oriented” partnerships in mainland. “As for venture capital enterprises and private equity funds, we still lack necessary knowledge regarding whether there are big risks, what the risks are and whether strict rules must be adopted,” the cabinet said in a statement explaining the new regulation. “Relevant sides still have different understandings,” it said. At present, foreign-invested private equity funds can be structured as limited partnerships through complex offshore platforms, but are required to be structured as corporations or unincorporated entities if investing onshore through yuan-denominated funds. Only mainland investors in onshore yuan funds can opt for the limited partnership structure, which offers tax advantages and caps liability. Under the new regulation, foreign investors would be permitted to set up limited partnerships in mainland by themselves or with local partners. The government added in its announcement that existing rules covering venture capital and private equity funds might still be applied. Investors are required to contribute capital in the form of “fully convertible currency” or yuan. Registration of these limited partnerships will take place at the local level and will not need approval from the Ministry of Commerce, it added.

Canadian Prime Minister Stephen Harper arrived in Beijing on Wednesday for a four-day visit that will include talks with top leaders in Beijing as he bids to boost trade and turn around languishing ties. For years, Harper’s Conservative government has aggressively criticized Beijing over human rights and alleged Chinese spying, spurring criticism from a Canadian business community that fears a backlash in trade ties. Harper will meet with China’s President Hu Jintao, Premier Wen Jiabao and other leaders during the visit that also will take him to Shanghai and Hong Kong. “After nearly four years of stagnation in bilateral ties..., Harper will finally visit China, his first trip to the country since taking office in 2006,” a commentary piece in the state-run English-language China Daily said. It said the Canadian leader would receive a warm welcome on the “ice breaking trip” but urged him to avoid contentious issues. Trade and investment, energy, the environment, and public health will top Harper’s agenda, senior Canadian officials said in Ottawa. North Korea, Afghanistan, and upcoming climate talks in Copenhagen are also likely to be discussed. The official visit comes as Sino-Canadian two-way trade is at a “historic high” – 53.1 billion Canadian dollars (US$50 billion) last year – and bilateral investments are “accelerating,” Canadian officials said.

China's largest bank, ICBC (1398), is in talks to buy a stake in Taiwan's Cathay Financial, sources said yesterday, in a potential US$3.4 billion (HK$26.5 billion) deal that would be the first direct investment by a mainland bank into a Taiwan financial group.

Beijing has approved genetically modified strains of rice and corn in a move that could dramatically boost crop yields and help avoid food shortages. The Ministry of Agriculture has issued initial production licenses for genetically modified rice and corn, paving the way for commercial cultivation of high-yielding and pest- resistant grain and cereal crops. However, further approvals are needed before the genetically modified crops can be grown commercially. Huang Dejun, chief analyst with Beijing Orient Agribusiness Consultant, said the government wanted the agricultural industry to be prepared for a potential grain shortage. The technology could increase rice and corn yields by about 30 percent. Beijing said last year it aimed to cultivate high-yielding and pest- resistant genetically modified grains as it faces the challenge of feeding its 1.3 billion people. China is a major producer of modified cotton and vegetables such as peppers and tomatoes.

China's manufacturing sustained rapid growth in November, shored up by the country's strengthened economy and improved profit margins among producers, according to a pair of definitive indexes released Tuesday. An index produced for HSBC, based on a poll of purchasing executives in manufacturing, hit a record high of 55.7 in November, while a parallel official index was unchanged at an 18-month peak of 55.2. Together, the surveys showed that China's economy has largely recovered from the global downturn thanks to aggressive pro-growth measures adopted a year ago. The official Purchasing Managers' Index, measuring manufacturing activity, settled at 55.2 last month, the same as the figure in October and up from 54.3 in September, the China Federation of Logistics and Purchasing said.

Work on the hotel towers has been suspended since the beginning of the year amid rumors construction payments had not been settled. HNA Group, which co-owns Hainan Airlines with billionaire investor George Soros, has emerged as a white knight for two uncompleted hotel towers in Shanghai, reviving hopes they can be built before the city's World Expo next year. The state-owned enterprise was in advanced talks to buy an 85 per cent stake in the two unfinished developments from Leo Investment of the United States, sources said. The hotel towers are in the Luwan district, famed for its high-fashion shopping and restaurants. The price under negotiation is about four billion yuan (HK$4.54 billion), two people familiar with the deal said. Construction of the hotel towers is almost completed, but work has been suspended since the beginning of the year amid rumors construction payments had not been settled. Leo Investment is run by businessman Leo Koguan. Shui On Private Group owns the remaining 15 per cent of the hotel towers. Leo Investment is responsible for all financial arrangements, according to a source close to the joint venture. "The deal between the two groups is very close to being clinched," said the source. "The city government may feel relief once it becomes a done deal." The two projects have become an eyesore, and the city government is worried they may not be finished before the World Expo. Sources said it was still unknown if the purchase would include the remaining 15 per cent owned by Shui On, which is privately owned by Hong Kong businessman Vincent Lo Hong-shui. Shui On declined to comment on the deal. HNA Group and Leo Investment could not be reached for comment yesterday. News of the deal may unsettle Skyfame Realty, a troubled Hong Kong-listed developer that entered provisional liquidation last month. Skyfame, which owes US$196 million to foreign bondholders, including US investment bank Merrill Lynch, had agreed to sell its main asset, the Westin hotel in Guangzhou, to HNA Group to extricate itself from its financial problems. A Skyfame spokesman confirmed the company was still in negotiations with HNA but the talks had not been completed. Meanwhile, several construction workers visited the office of Leo Investment in Shanghai last Friday to discuss construction payments pertaining to the hotel towers. "They were informed by the company's executives that HNA Group has emerged as the new owner of the hotels," another source said. Earlier, it was reported by mainland media that a company owned by the city government, Shanghai Industrial Investment, would buy out the developments in an effort to ensure they were completed before the Expo. However, negotiations terminated amid rumors that the two parties could not agree on a price. Under the original plan by Leo Investment, one of the hotels was to be run by the Dubai-based Jumeirah chain and the other would be managed by Conrad Shanghai, part of the Hilton Group. HNA Group, built under the approval of the State Administration of Industry and Commerce in January 2000, is a conglomerate with businesses ranging from aviation to hotels and property. By December 2007, the total assets of the group reached over 68 billion yuan, and the company had total staff of more than 36,000, according to its official website. Its property unit owns several residential and commercial projects, such as Beijing HNA Building and New HNA Building. There are rumours circulating in Shanghai's property community that HNA intends to establish a real estate fund targeting various properties in the city.

Dec 3, 2009

Hong Kong*: Shoppers splashed out on more shoes, soft drinks and skincare products as retailers rang up about HK$22.8 billion in October, a 9.8 per cent increase on a year ago. The growth in sales is up from the 2.6 per cent rise in September and exceeded the 7.6 per cent jump many economists had expected, Census and Statistics Department figures show. By volume, sales rose 8.2 per cent, better than the consensus estimate of 6.5 per cent and the 1.2 per cent recorded in October last year. Although October's sales growth was the best since at least August last year, a government spokesman attributed part of the strong gain to a low base of comparison a year ago, when the global financial meltdown forced consumers to cut their spending. "The expected progressive improvement of the local economy, aided by a more stable labour market, should continue to support consumer confidence and hence the performance of retail trade," he said. For the first 10 months of the year, sales shrank 2.2 per cent in value and 3.1 per cent by volume from a year earlier. Given the relative pick-up in business, the Retail Management Association predicts 3 per cent overall sales growth for Christmas. Chinese Manufacturers' Association of Hong Kong vice-chairman Irons Sze Wing-wai said that the East Asian Games, expected to attract about 10,000 visitors, and the easing of restrictions on travel by migrant workers in Shenzhen to Hong Kong would boost tourism and sales figures. "The economic environment has improved a lot compared to a year ago," Sze said. The association's 24-day Hong Kong Brands and Products Expo will start in Victoria Park on December 12, with many of the more than 350 exhibitors expecting a sales boost because of the improving economic situation. Ladder Yu Po-chun of exhibitor Wai Yuen Tong Medicine said she expected to double last year's sales of "several million dollars".

Retailers' tills are ringing in a bright Christmas as sales soar back to pre-crisis levels. Shoppers are spend, spend, spending - with retail sales climbing 8.2 percent in October, figures released yesterday show. Adding to the festive cheer, cosmetics retailer Bonjour Holdings (0653) forecasts revenue during Christmas to grow 20 to 30 percent against last year's figures. Shopping malls are also expecting the season to be merry. Harbour City expects double-digit revenue growth this month - with Christmas Eve foot traffic alone estimated to rise 10 percent to 330,000, said Canis Lee Lai-yi, the mall's assistant general manager responsible for leasing business. Bonjour's turnover for the first 11 months ended November 30 rose more than 20 percent and same-store sales also surged 20 percent. With such strong sales growth, it plans to open up to four stores in Hong Kong next year. It has opened four stores over the past two months and another will open in January. Footwear retailer Le Saunda (0738) is also targeting double-digit growth of same-store sales during the holidays, chief executive Alice Lau Shun-wai said last month. JPMorgan economist Grace Ng said: "Going forward, consumer sentiment and household spending is likely to continue to improve steadily in the coming quarters." Consumption is expected to benefit from the global economy recovery, falling jobless rate and "notable gains in the asset markets," Ng said. Others are cautious, noting that the largest jump in retail sales in 14 months was chiefly due to a low base set in October last year when the global financial crisis hit. The Hong Kong Retail Management Association expects growth in the retail market to moderate to 3 percent during Christmas as fewer mainland tourists are expected. "But if the Shenzhen non-resident visa is available then we might see more upside," the association said. It said the strong October sales were partly due to the longer Golden Week this year coupled with the Mid-Autumn Festival. The government sees improvements in the economy supporting retail sales. "The expected progressive improvement of the local economy, aided by a more stable labor market, should continue to support consumer confidence and hence the performance of retail trade," a spokesman said. Bank of East Asia (0023) chief economist Paul Tang Sai-on projects retail sales in November and December to grow modestly. "Retail sales may grow 8 percent to 9 percent in the fourth quarter, with November and December rising by a high single digit," Tang said. He expects total retail sales for 2009 to dip 0.8 percent when compared with last year. According to data from the Census and Statistics Department, retail sales value reached HK$22.8 billion in October, with sales of medicine and cosmetics rising 18.4 percent. Department store sales were up 15.9 percent while sales in jewelry and watches increased 17.9 percent by value.

Developers are hitting back at moves by the government to stop awarding them extra floor area for putting green features in their projects, saying its approach is "too simplistic" and is "not addressing the real issues". The Real Estate Developers Association said the real solution to the proliferation of wall-like buildings, poor ventilation, rising urban temperatures, lack of green space and air pollution was to sell less urban land and to use sites now planned for sale to create more open space. It also urged the government to "consider carefully" the impact of its proposals on the value of land developers had bought but not yet built on. The comments came in a statement issued a little more than a week after Chief Executive Donald Tsang Yam-kuen said he might introduce a law to require developers to provide green facilities without concessions. It was the association's first response to a consultation, launched in June, on whether developers should continue to gain bonus floor area as an incentive to build such features as balconies and sky gardens. Developers have been allowed to build so-called green features without paying a premium for them for about a decade. Facilities such as mailing rooms and balconies have been exempt in the calculation of the development's area. In Hong Kong, properties are sold based on their gross floor area but there is no clear definition of what a gross floor area is. As a result, developers may pass the cost of exempted green features on to flat buyers. The practice of granting bonus floor area has been blamed for encouraging developers to build unnecessary or oversized amenities that increase the gross floor area that buyers are charged for and for helping to create tall, bulky, "wall-like" buildings across the city. The consultation paper, overseen by the Council for Sustainable Development, was composed by members of several professions and one developer representative. It asks the public if the concession policy should continue, and how much they are willing to pay for greener buildings. Initial findings in October showed there was general support for a limit on the floor area awarded. But the association said the government had no proof that the practice was the cause of the bulky buildings. Noting that the proposals would affect land they had bought but not yet built on, the developers said: "The introduction of any measure which may impact negatively on rights of ownership needs to be considered carefully, and only implemented if no alternative is available." To back up its argument, the association cited a consultancy study it had commissioned which said 16 out of 26 urban sites in the land sale list would add to the wall effect and cause congestion on the harbourfront - and therefore should be removed from the list. "Sites on the sales list which would create problems should be replaced by sites in new development areas, and be rezoned for public open space and community uses," it said. It went further to suggest, with illustrations, that prime waterfront sites in North Point and Hung Hom should be taken off the list and turned into public parks.

A boat is lit up in the harbour in Wan Chai last night during a rehearsal for the East Asian Games opening ceremony on Saturday. Tens of thousands of ferry and bus passengers will have to take alternative transport when Victoria Harbour is sealed off for three hours for the opening ceremony of the East Asian Games on Saturday night. The government said yesterday that 14 ferry routes - seven for the inner harbour and seven for outlying islands - would be suspended during the ceremony, and over 90 bus routes would be suspended or diverted. The HK$40 million ceremony will be staged on a floating platform off the waters of the Cultural Centre in Tsim Sha Tsui. Police expect more than 300,000 people to line both sides of the harbour to see the festivities and fireworks display. The Marine Department said a navigation ban on Victoria Harbour would be in place from 7pm to 10.15pm, an hour longer than was usual for fireworks displays on National Day and Lunar New Year. It said the ferry suspensions would affect about 20,800 passengers. Thirteen large television screens will be set up in Central, Wan Chai, Tsim Sha Tsui and West Kowloon to broadcast the ceremony live. Permanent Secretary for Home Affairs Carrie Yau Tsang Ka-lai called on the crowd to wear red on the day of the ceremony. "We are now fully geared up for the preparation," she said. "We should wear red clothes and accessories on the day to show our solidarity to support this first-ever regional sports event in Hong Kong." The East Asian Games Company said tickets for the opening ceremony, together with 14 sports events, were already sold out. Less than 30 per cent of tickets remained in the box office. Yau said that although the tickets were going fast there might not be a full house for some preliminary events, including soccer, that start today. About 300,000 people are expected to line both sides of Victoria Harbour to watch Saturday's opening ceremony of the East Asian Games. Organizers have prepared an elaborate celebration that will be topped off with the release of fireworks from four barges and the rooftops of 10 buildings. The traditional Games march-past of athletes from participating countries as well as the torch- lighting ceremonies will be held in Tsim Sha Tsui. Ferry services will be suspended from 7pm to 10.15pm, affecting about 20,000 people, according to the Transport Department. There will be road closures and diversions in Tsim Sha Tsui and at the northern end of Hong Kong Island from 5pm. Principal transport officer Albert Su Yau-on said special traffic arrangements will be enforced from 6pm in West Kowloon, where a giant TV screen as well as food stalls operated by social enterprises will be set up. Buses on more than 90 routes will have to be diverted or changed. Police public relations branch chief superintendent David Ng Ka-sing said special crowd-control measures will be brought in. Police will be out in full force, with around 3,000 officers deployed. Only those with tickets will be allowed to enter the Hong Kong Cultural Centre in Tsim Sha Tsui. Permanent Secretary for Home Affairs Carrie Yau Tsang Ka-lai said about 70 percent of the Games' tickets have been sold so far.

The Hong Kong Brands and Products Expo is expected to draw record crowds and turnover with exhibitors offering bigger discounts than ever. Great buys including bottles of bird's nest selling at HK$1 each, HK$2 per bottle of Florida Water and a buy-one-dozen, get-one- dozen-free promotion on essence of chicken are tipped to lure bargain-hunters to Victoria Park from December 12 to January 12. Chinese Manufacturers' Association of Hong Kong vice- president Irons Sze Wing-wai is confident the 44th expo will surpass last year's record attendance of 2.16 million and turnover of more than HK$300 million. Aside from its bottled bird's nest and Young Yum pills, Wai Yuen Tong will also be selling Ban Lan Gen packs as well as herbal jelly at HK$1 each. Assistant key account manager Ladder Yu Po-chun said they attained a seven-figure turnover last year and wants to hit eight figures this time. "There are too many fake products in the market. People have more confidence in old reputable brands," Yu said. The booth of local skin-care manufacturer Two Girls should be one of the busiest among the 780 at the expo. A travel-size version of its signature Florida Water with an original price of HK$12 will be sold for HK$2 while its HK$400 whitening anti-spot cream will be offered for HK$100. Joinluck Corporation, an organic food importer, will offer a buy-one, get-one-free discount on Canadian toasted wheat germ sold at supermarkets for HK$62.80. Three packs of dried black fungus originally sold for HK$23.80 each can be had for HK$35. Electric appliances maker German Pool's vice-president of marketing and project development Karen Chan Ka-ying said the trade show has become the most important promotion platform of the year. "This year, shoppers making a purchase of HK$1,500 will be offered free gifts valued at about HK$1,000, compared to about HK$500 in the past," Chan said. For the first time, BRAND's will run a buy-one-dozen, get- one-dozen-free promo for its essence of chicken priced at HK$203.80 per dozen. Organizers also expect more mainland visitors with non- Guangdong residents living in Shenzhen allowed to travel to Hong Kong under the individual visit scheme starting this month. For the first time, the expo has allocated seven booths to secondary school and university students for free to cultivate their entrepreneurial skills. Admission is HK$10.

Fun times are set to roll across the region as Ocean Park teams up with 11 theme parks in a bid to bring in more overseas visitors to each venue. As of yesterday, visitors to Ocean Park and 11 theme parks in the mainland, Singapore and Taiwan can enjoy a 10 percent discount on admission if they present tickets from any other member park, or a 15 percent cut if they are annual pass holders. The promotion will last until December 31 next year, except at Beijing Aquarium, where it will continue till April 30, 2011. Ocean Park is also seeking more strategic partners, such as in South Korea and Canada, according to park chief executive Tom Mehrmann. The 11 parks in the alliance are Beijing Aquarium, Shanghai Ocean Aquarium, Shenzhen's OCT Happy Valley, OCT East Knight Valley and OCT East Tea Stream Valley, Panyu Chimelong Paradise in Guangzhou, Taiwan's Leofoo Village Theme Park and Hualien Farglory Ocean Park, and the Singapore Zoo, Night Safari and Jurong Bird Park. The discount for the next theme park visit is offered when the full admission price is paid at the first park visited. "On top of adding value for our guests, we're hoping to strengthen the Ocean Park brand in overseas markets," Mehrmann said. "We want to attract tourists from the region and beyond." He hopes it will ultimately be a win-win situation for Hong Kong's tourism industry as well as all the theme parks in the alliance. An Ocean Park spokesman denied the alliance aims to counter the popularity of Hong Kong Disneyland or prepare for competition from Disney's upcoming park in Shanghai. Travel Industry Council chief executive Joseph Tung Yao- chung said the discount will not only benefit consumers and the alliance but also help promote Hong Kong.

Developers feel the government is using the Council for Sustainable Development as a tool to advance its agenda of curbing gross floor area inflation. And the council is aware of this perception, chairman Bernard Charnwut Chan said. The council has been asked to advise the Development Bureau on revamping exemption regulations. Both Chief Executive Donald Tsang Yam-kuen and Secretary for Development Carrie Lam Cheng Yuet-ngor have expressed reservations about developers' misuse of bonus floor area, given to them to incorporate "green features," by often using it to artificially inflate flat sizes. In an interview with Sing Tao Daily, The Standard's sister publication, Chan admitted he was aware of allegations that the government already has preconceived ideas on the matter and is only seeking public support through the council's consultation, launched in June. "It's better to say from the start we agree to this [regulation review]," Chan said. "If it's a manipulation, so be it." The Real Estate Developers' Association of Hong Kong and the Business Facilitation Advisory Committee hold that the inflation issue has been exaggerated. But the council as a whole - including Cheung Kong (0001) deputy chairman Victor Li Tzar-kuoi - is favorably disposed toward the review, Chan said. He stressed that the council neither has a definite stance nor has been "pressured" by the government. The major concern is time as the authorities do not want the issue to drag on, he added. Initial results from the four-month public consultation show a preference for limiting exemptions, Chan said. But the limits are not of a single standard as that would stifle the flexibility of building design. "If you force them [developers] to do it, they for sure can do it," Chan said. "But will there be any costs, and what costs?" Unless the public supports similar capping percentages with regard to the total development floor area, the council may not be able to make a "numerical" suggestion to the government, Chan said. The Institute of Architects last month said the cap should be 12 percent. The council will present public opinion collected from over 60 forums in a report to the government by mid- 2010.

PCD Stores kicks off its roadshow today and will open its retail book tomorrow in its bid to tap the market for up to HK$3 billion. In the first half, the net profit of the high-end department store operator surged 29.2 percent to 123.8 million yuan (HK$140.49 million) while turnover edged up 1.4 percent to 358.9 million yuan. The company - controlled by Ports Design (0589) chairman Edward Tan Han-Kiat and managing director Alfred Chan Kai-tai - is burdened by loans as its debts were 1.8 times its total equity as of October 31. Market sources said the firm plans to float 1.5 billion shares - 500 million secondary shares and one billion new shares - at HK$1.65 to HK$2 apiece. PCD owns and operates nine mainland department stores with a total gross floor area of 192,527 square meters. Another listing candidate, Mobi Development which is aiming to raise HK$614 million, is planning to expand its overseas sales network through mergers and acquisitions. "We aim to reserve 45 percent of proceeds from the flotation for acquisitions," said chairman Hu Xiang. "There is no agreement yet with potential sellers but we are targeting companies that will provide with us with advanced technology and an overseas trading platform." The communication systems maker plans to invest 30 percent of its IPO proceeds to expand production capacity, 15 percent on research and development and 10 percent as working capital. Its largest customer is ZTE (0763). China Longyuan Power, which closes its retail book today, saw its retail tranche 46 times oversubscribed according to subscriptions through margin financing orders. Kaisa Group, the eighth mainland developer to be listing on the local bourse this year, received a lukewarm response as its public offering was only two times oversubscribed locking in HK$1 billion, a source revealed.

Marking the opening of the new-look store are (from left) Ikea area manager, business relations, Ed De Bont, Princess Birgitta of Sweden, Lars Danielsson, Sweden consul general, and Caroline Mak Sui-king, North Asia regional director and China chief executive of Dairy Farm Group. After seeing off British home improvement giant B&Q last year, Jardine Matheson's Ikea is now rolling out a supersized version of flat-pack and Allen key retail heaven. Following a year-long renovation, the retailer reopened its Sha Tin store yesterday featuring 120,000 square feet of floor space, 35 display rooms, 7,500 items and a 130-seat Swedish restaurant. An even bigger outlet is now planned at Kowloon Bay. With its lightweight, knock-together furniture better suited to the city's cramped living space, Ikea proved a formidable competitor to B&Q whose outdoor barbecue sets and garden supplies were more applicable to European homes. The Sha Tin outlet is the biggest of Ikea's three stores in the city and takes up the fifth and sixth floors of Sun Hung Kai's HomeSquare in Grand Central Plaza. Ikea's Hong Kong operations, controlled by Jardine Matheson Holdings through Dairy Farm International Holdings, also has shops in Causeway Bay and Telford Plaza, Kowloon Bay. Benjamin Birks, general manager of Ikea Hong Kong, said the Swedish home furnisher had benefited from the fact that Hongkongers had become more attached to their homes during the recent tough economic times. "Home becomes even more important to people as they spend much more time there and are more aware of the value of a beautiful home," said Birks. Ikea is now planning to open an even bigger outlet in MegaBox at Kowloon Bay in the middle of next year, to replace its Telford Plaza shop. The 150,000 sq ft space at MegaBox was vacated earlier this year by B&Q, which became a victim of punishing rents and the economic slowdown. Europe's biggest home improvements retailer said it was closing owing to poor business performance and the fact it had not found the right location with the right space and at the right price. The opening of HomeSquare Ikea is expected to bring a double-digit increase in customers and turnover at the shopping centre, which aims to become the city's biggest one-stop retailer for home updaters.

Members of the Hong Kong Aids Foundation yesterday distributed red ribbons to mark World Aids Day. A crossed red ribbon has become the global symbol of Aids awareness. Blockbusters such as Twilight, Sex and the City and Death Note have become the latest weapons in the arsenal of Hong Kong health officials to combat the rise of HIV infection among gay men, as a safe sex campaign based on popular films gets under way at gay pubs and discos. The pre-Christmas campaign has also distributed a few thousand modified movie posters to bars and pubs. For example, movie names were changed to "Safe night", "Sex, do it safely" and "Safety Note" to drive home the importance of safe sex. Dr Francis Wong Wai-ming, a Department of Health medical officer who is in charge of the campaign, said film was chosen as this year's theme because the gay community tended to be more artistic. "They love things that look pretty. Also, movie-going is popular among young people," he said. Medical professionals will be on hand at pubs and discos to conduct HIV tests. The department will also disseminate more than 100,000 free coasters, movie postcards and boxes resembling film reels, which contain condoms, at coffee shops, bars and saunas. The film campaign was launched in late June, but testing started only yesterday, on World Aids Day. Wong said the effort was to prepare for Christmas - a time of partying when unsafe sex was more likely to happen. Sex between men has been the most common route of HIV transmission in Hong Kong since 2005. In the third quarter this year, it accounted for more than 37 per cent of new HIV cases. A total of 123 new HIV infections were recorded this quarter, the second highest quarterly number reported since records began in 1984. The number of new cases peaked in the third quarter of last year, at 125. There were also 56 new cases of Aids, the department said. New HIV infections up to September this year totalled 325, compared with 435 in the whole of last year and 414 in 2007. The department's HIV/Aids consultant, Dr Wong Ka-hing, said that although the number of new cases generally had been stable in recent years, Hongkongers should not be complacent. "There are still over 400 cases a year, meaning more than one person was infected every day on average," he said. While heterosexual men were more likely to catch HIV overseas, more than 69.5 per cent of homosexual men who tested positive had contracted the virus locally, he said. He urged those who were in doubt to be tested. Hong Kong has seen 4,372 HIV infections since 1984. Of these, 56 developed into Aids.

An MTR technician demonstrates the use of the Thermovision Camera System in E-Lab, which began operations earlier this year. The MTR Corporation (SEHK: 0066) has become the first company in the world to use thermal imaging technology for railway maintenance. The Thermovision Camera System was one of the machines on show when the MTR Corp opened the doors of its E-Lab in Tsuen Wan to the media yesterday. E-Lab, which came into operation this year, is one of the largest railway-linked electronic laboratories in the world. Its 150 engineers and technical support staff are responsible for the maintenance of all electronic equipment used throughout the MTR network, including the Airport Express and Light Rail lines. Dr Jacob Kam Chak-pui, chief of operations engineering for MTR Corp, explained the usefulness of the camera in relation to the electronic cards - some as complex as minicomputers - in use throughout the system in air conditioning, train door operations and communication systems. When the cards develop problems, the thermal camera is one machine used to inspect them and diagnose the trouble. Based on the principle that electric currents generate heat, the machine creates images that indicate a range of temperatures using different colours, Kam said. When a working electronic card is placed next to a malfunctioning one under the camera, defects can be identified easily by spotting the differences in colour. This method is seventy-five per cent faster than the old method, which involved checking voltages at different points on the cards, Kam said. Before the work was consolidated at the Tsuen Wan depot, electronics maintenance was done at various depots across the network. "We concentrate [our work] in Tsuen Wan mainly to pool our expertise, resources and experiences in order to increase the reliability of the entire network," said Kam. E-Lab also has a temperature chamber that recreates the high temperatures at which electronic cards normally operate. As the temperature in the chamber increases, a malfunction can be identified if the card placed inside stops working before reaching 60 or 70 degrees Celsius.

Henderson Land Development (SEHK: 0012) expects to sell at least seven billion yuan (HK$7.95 billion) to eight billion yuan worth of residential units on the mainland next year, as it sees no threat of property bubbles forming. Henderson also planned to fork out one billion yuan to buy more land on the mainland in coming months, said executive director John Yip Ying-chee. Property developers are banking on the mainland's economic growth for more sales, but some analysts and policymakers are worried over risks of inflating asset bubbles, which would hamper country's financial system if they burst. Yip was unfazed at the prospect of an overall housing bubble as inflated prices were mainly limited to the luxury residential sector because of scarce supply. "I don't think there is [a bubble forming]. These are only restricted to certain districts of certain cities, and to a specific kind of property," he said. Henderson, which had just begun building residential property aggressively on the mainland, was developing about 10 projects mainly in second- and third-tier cities and would start selling units next year, Yip said. "It all depends on the market response and how much floor space we can sell next year, but we hope we will be able to make at least seven billion yuan to eight billion yuan. If it's an ideal market for us, we will speed up development," he said. Henderson also plans to buy more land as it is bullish on mainland cities such as Nanjing and Suzhou, where there is real demand and less speculation. Henderson planned to increase its mainland land bank to 150 million square feet in gross floor area from about 130 million sq ft now, said Yip. "Our strategy is to sell and then replenish. And we won't expand our land bank just for the sake of increasing it because we need to go according to our development plans," he said. "We're very confident that we'll develop more next year. There will be more projects in 2011 and we'll have more land bank than we have now." Since the start of this year, housing prices in China have rebounded by an average of 13 per cent to 33 per cent, against Singapore's 32 per cent and Hong Kong's 29.5 per cent, analysts said. Government measures such as lower deposits and mortgage rates and tax cuts helped lift prices.

Driven by strong demand from mainland buyers who have targeted the area, prices of luxury flats in West Kowloon have recovered to within a whisker of the levels they reached at the halfway mark last year before the onset of the global financial crisis, latest research from CB Richard Ellis shows. According to the CBRE report, prices of luxury units in the area rose 13 per cent quarter on quarter at the end of the third quarter to an average of HK$13,239 per square foot. That put them just 1 per cent below the price measured by CBRE at the end of the second quarter last year. By comparison, despite a 19 per cent quarter on quarter rise in luxury flat prices on The Peak, prices in the most expensive housing district in the city (average price of HK$23,354 per square foot) remain 22 per cent below their levels reached at the halfway mark last year. Island South prices still lag last year's pre-crisis levels by 16 per cent, Mid-Levels prices remain 8 per cent lower, and prices at Jardine's Lookout are just 2 per cent down on their halfway levels last year. Units at Kowloon Station were popular among mainland buyers because they enjoyed high liquidity, said Shih Wing-ching, chairman of Centaline Property Agency. "It was easy for flat owners to sell their luxury apartments in the market and prices in the area had upside potential. But now there is a question of whether prices will continue to increase as sharply," he said. However, Benedict Ma, associate director of the research department at the firm, remained optimistic on the market outlook for West Kowloon which he said had gained importance and emerged as a new luxury residential district in recent years due to massive infrastructure changes to the area. The major infrastructure includes Kowloon Station, the recently completed Kowloon Southern Link and the newly approved Guangzhou-Shenzhen-Hong Kong Express Rail Link. Kowloon Southern Link connects the MTR's West and East Rail Lines at Austin Station. The Express Rail Link will connect Hong Kong to Guangzhou through a high speed rail with a travel time of only 48 minutes when completed in 2015. It will help Hong Kong further integrate with the Pearl River Delta, as well as act as an artery to connect Hong Kong to the Greater China national rail network. Ma expects the planned West Kowloon Cultural District will also help to enhance the area's attractiveness as a place to live and play. Shih said properties in the area with new infrastructures or developments would have a higher upside potential. He was optimistic about the outlook for property in Sai Wan and Hung Hom, which he said would benefit from the construction of new railway lines. The MTR West Island Line, which will connect Sheung Wan and Kennedy Town, is under construction and will have intermediate stations at Sai Ying Pun and the University of Hong Kong. The project is scheduled for completion in 2014. The government also plans to build a Kwun Tong Line Extension to connect Yau Ma Tei to Whampoa in Hung Hom. "Property prices in these areas are cheaper than the areas accessible by rail. This situation is going to change after the railway is developed," Shih said.

The global hotel business is in a deep funk, but that has not kept the industry from betting on Asia, the one region of the world where growth is strong. In October, two major upscale hotels opened in Hong Kong, each with views of the skyscrapers huddled between the city's mountains and harbour. One is a 381-room Hyatt Regency, on top of a shopping mall in the Kowloon district. The other is the 117-room Upper House, owned by the Hong Kong conglomerate Swire and within walking distance of the central business district on Hong Kong Island. A 300-room Ritz-Carlton is among the hotels due to open here next year. Many of these projects began before the downturn hit the travel industry, but even in the midst of the gloom, hotel companies big and small are pressing ahead with expansion plans in Asia. But the slowdown that has caused a drop in occupancy worldwide has also struck Asia. For the entire Asia-Pacific region, hotel revenue is down 28.4 per cent, echoing the situation in Europe, as businesses and tourists cut back on overnight stays and events, forcing operators to offer deep discounts. Although some hotel firms say occupancy rates have started to pick up, room rates remain under intense pressure. And many economists say they believe the global economy is not yet out of the woods, given that US consumer spending - the driving force for much of Asia's growth - will take years to return to normal. "Europe and the United States are still in a total mess, and Asia is not immune to what's going on there," Albert Edwards, head of global strategy at Societe Generale, said. Still, hotel managers stand by their belief that Asia is the place to be. "We're growing more rapidly here than in any other region of the world," said Michael Issenberg, who heads Accor's Asia-Pacific business. Accor, the French hotel giant that runs the Novotel, Mercure and Sofitel brands, is opening 54 hotels, with about 10,000 rooms, in Asia this year and about as many again next year. In India alone, Accor plans to have 50 hotels, with more than 10,000 rooms, by 2012, up from five hotels now. "The growth opportunities in Asia-Pacific are unsurpassed perhaps anywhere in the world," said Frits van Paasschen, chief executive of Starwood, whose brands include Sheraton and Le Meridien and which just opened its 150th hotel in the region. Smaller local hotel operators are also joining the rush. Amari, a Thai hotel management company with 11 properties and 3,000 rooms, announced plans in October to add 40 hotels by 2018. Also in October, the Park Hotel Group, which is based in Singapore and runs eight large hotels, announced that it planned to open as many as 12 in the next three to five years. Not all projects have gone as planned. In Beijing, a 34-storey building under construction and designed by the architect Rem Koolhaas was ravaged by a blaze in February, ignited by an illegal fireworks show. The building was to be completed in May and house a Mandarin Oriental hotel. A number of hotels opened in Beijing and Shanghai for the Olympics last year and for the 2010 World Expo, adding a lot of supply at a time of generally low demand. Revenue per available room, a key measure of hotel performance, plunged 56 per cent in Beijing in the first eight months of this year, according to a recent report by the Deloitte consulting firm. In Shanghai, the figure was down 35 per cent as many hotels stood half-empty. But many operators see growth opportunities, particularly in developing regions. "Look at the statistics: the United States currently has 4.9 million hotel rooms catering to a population of 300 million. Europe has about 5.3 million rooms. China, with its population of 1.3 billion, has only 1.7 million, and India barely has 120,000. There's a lot of runway left in these countries," said Paul Foskey, who heads Marriott International's Asia business. Marriott has 72 hotels, with 19,000 rooms, in its Asia pipeline, adding to the 113 hotels it operates in the region now.

China*: Chinese carmakers are poised to take over Volvo and Saab from their troubled American owners, a move that will catapult China to the top tier of the global vehicle industry. Geely Automobile Holdings (SEHK: 0175) is close to acquiring Ford Motor's Volvo passenger car unit while Beijing Automotive Industry Holding is interested in picking up parts of General Motors' Saab unit. Mainland carmakers are planning increasingly aggressive acquisitions overseas as part of a strategy to enhance their technological know-how and build more attractive models for Chinese consumers. Geely's parent, which is seeking funds to acquire Volvo, would get at least US$1 billion in loans from Chinese banks to finance its US$1.8 billion bid, sources said. At least three lenders - Bank of China, China Construction Bank (SEHK: 0939, announcements, news) and Export-Import Bank of China - had agreed to extend loans to the Zhejiang-based company, said banking sources briefed on the plan. The loans are expected to have a five-year tenor. "Money is not a problem for Geely," said one source. "They definitely have strong support from Chinese banks and there are a number of private equity funds queuing up to invest in Geely." Privately owned Geely will not get government funding for overseas purchases. Bohai Industrial Investment Fund, a private equity fund backed by Beijing, was in talks with Zhejiang Geely Holding Group, the parent of Hong Kong-listed Geely Automobile, to support its bid for Volvo, said the sources.

The largest reshuffle of regional leaders on the mainland since the 2007 Communist Party Congress lifts the curtain on the political manoeuvring for the next congress in 2012 and may offer an early glimpse of the sixth-generation leadership, analysts say. On Monday, the central government announced a reshuffle that saw several younger, better educated officials who are loyal to President Hu Jintao promoted to top provincial posts. Holding such positions is usually a necessary step towards elevation to the central leadership. "The reshuffle suggests the political manoeuvring for the next party congress has already begun and more will come in the run-up to the 2012 gathering," said Professor Joseph Cheng Yu-shek of the City University of Hong Kong, referring to the 18th party congress. Zhang Ming, a political science professor at Renmin University in Beijing, said: "Such manoeuvres are not just aimed at the top leadership arrangement for the next party congress in 2012, they are also preparing for the installation of the next generation leadership at the 20th enclave in 2022," he said. Hu is China's so-called fourth-generation leader after Mao Zedong, Deng Xiaoping and Jiang Zemin. Incumbent Vice-President Xi Jinping, the front-runner to succeed Hu, and Vice-Premier Li Keqiang, the likely successor of Wen Jiabao as premier, are said to be the core of the fifth generation. Cheng said the latest reshuffle saw the promotion of more allies of Hu and Wen, preparing them for positions on the Politburo, the party's all-powerful decision-making body, in three years. But also catching analysts' eyes is the emergence of two 46-year-old rising stars as possible contenders for the country's future top leadership. Hu Chunhua - who rose from the Communist Youth League, Hu's power base - will become the party secretary of Inner Mongolia. The two Hus are not related. Like the president, Hu Chunhua served in Tibet. His rise has been unusually fast, being promoted after serving less than one year as governor of Hebei province, which was rocked by a tainted milk scandal that killed at least six children and made more than 300,000 ill. Dr Sun Zhengcai has also caught analysts' attention with his promotion to party boss of Jilin province. Sun, whose PhD is in agriculture, spent his entire political career in the Beijing municipal government before being made agriculture minister in 2006. Both Hu Chunhua and Sun were among five young leaders profiled by a state-run magazine in April - a sign they are being groomed for higher office. "The two youngest appointees are not only likely to be tipped as candidates for the next Politburo in 2012 but are also probably to become the core of the sixth-generation leaders at the 20th party congress in 2022," Cheng said. This would resemble the path trod by Hu Jintao, who joined the decision-making Politburo Standing Committee in 1992, a decade before taking over the reins from Jiang. Zhang agreed, saying Hu Jintao was in the position to appoint his proteges to head the sixth-generation leadership, noting that it was Deng who chose Hu Jintao and Jiang who exerted his influence on the appointment of Xi. Cheng said Sun's promotion might also be linked to the premier as Wen's portfolio as vice-premier was based in agriculture. His promotion was also related to the leadership's shift of development emphasis from focusing on manufacturing industry and urban areas to the development of agriculture and countryside. Analysts also noted two other appointees who were linked to the president - 55-year-old Jilin governor Han Changfu, who is expected to replace Sun as agriculture minister, and Jilin deputy party chief Wang Rulin, 56, who will become the new governor. Both have Youth League backgrounds. The changes also include a new woman provincial party secretary, the first in more than two decades. Sun Chunlan, a 59-year-old trade unionist, was elevated to become the party boss in Fujian, replacing Lu Zhangong. Lu, 57, will become party secretary in Henan province, replacing Xu Guangchun, who is reaching the official compulsory retirement age of 65. Jilin province party chief Wang Min, 59, will take over the top post in neighboring Liaoning province. "There is a good chance for the newly appointed provincial party chiefs to make the leap to the elite 25-man Politburo or its Secretariat in 2012," Zhang said, noting that potential Politburo candidates first needed to gain experience in top provincial posts.

Canada's prime minister starts his four-day visit to China today hoping to improve trade between the nations and revive languishing ties.

Premier Wen Jiabao Monday rejected "unfair" calls from European countries for faster reform of China's currency policies, despite lobbying from EU financial chiefs at the weekend. Wen said China will keep the yuan basically stable and carry out currency reform at its own, gradual pace.

Guangdong Communist Party Secretary Wang Yang embarked on a fact-finding trip to Sichuan province and Chongqing municipality yesterday, local media reported. Giving no details on whether Wang would meet his Chongqing counterpart, Bo Xilai, the Guangzhou Daily said the two delegations would sign a strategic co-operation agreement during his four-day visit. The report also said the Guangdong delegation would take part in some activities involving economic and trade communication and co-operation between the two economic heavyweights. Wang and senior Guangdong officials, including vice-governor Huang Yunlong and Guangzhou party chief Zhu Xiaodan, will also reportedly check on the progress of a project sponsored by the province following last year's earthquake. Inter-provincial visits by regional leaders have become routine. In April last year, Wang Hongju, the outgoing Chongqing mayor, visited Guangdong, and Bo has led groups to other provinces.

Dec 2, 2009

Hong Kong*: Gabriel Ricardo Dias-Azedo, once a pillar of Hong Kong's Portuguese community and a former global partner of blue ribbon accountancy firm Grant Thornton, is being pursued through the courts for more than HK$91 million. The latest claim against Azedo is from China Construction Bank (SEHK: 0939, announcements, news) (Asia), which is seeking HK$3.48 million from him. The bank said in a High Court writ that it lent Azedo HK$3.3 million as an instalment loan on July 16 this year. The loan was to be repaid over three years in monthly installments. However, according to the writ, Azedo has not repaid any money and a letter was sent demanding payment on October 21. Azedo is the former president of Club Lusitano, one of the oldest and most respected private clubs in Hong Kong, whose membership is mainly drawn from families of Portuguese and Macanese backgrounds. Azedo's father, the late Cassiano Ricardo Dias-Azedo, was the first life member of the club. China Construction Bank's claim follows two other attempts through the courts to get money from the senior accountant, including one from Archie da Silva and his wife, Betty, the owners of champion racehorse Silent Witness. Da Silva is also a member of Club Lusitano. The da Silvas filed a claim in October against Azedo and Grant Thornton Hong Kong, seeking an account of trust assets allegedly held on their behalf. The da Silvas are seeking the transfer of "all such trust property" to them or the payment of US$2.3 million. Da Silva did not want to comment on his legal proceedings against Azedo. Azedo is believed to have left Hong Kong and could not be reached for comment. "The claims of Mr and Mrs da Silva have been referred to our solicitors and we shall file our defence in court accordingly," Grant Thornton said in a statement. Azedo ceased to be a partner of the firm last year. He continued to be on the global leadership board of Grant Thornton International, a global umbrella network for Grant Thornton member firms, where he used an office until his relationship with Grant Thornton was "terminated" on October 21, the company said. "Grant Thornton has been investigating certain matters concerning Azedo's personal conduct and has discovered that he appears to have used the Grant Thornton name in an unauthorised and inappropriate manner. Grant Thornton has rendered, and will continue to render, its fullest co-operation and support to the authorities on their investigations into the matter," the statement said. The firm said it reported Mr Azedo's conduct to the relevant authorities on October 20.

The Hospital Authority is seeking to halt the brain drain of top doctors by returning to a promotion system that went on the back burner six years ago. The plan revealed yesterday is part of an effort to restore morale among the 5,300 doctors who form the backbone of Hong Kong's medical services. Along with reintroducing senior consultant posts - whittled away to save money since SARS was beaten back - is the idea of hiring experienced doctors from the private sector as part-timers. "There have been no promotions for a number of years," said authority chief executive Shane Solomon, and over the past six years retiring senior consultant doctors have not been replaced. "In view of a recent court case, we have to look at ways of retaining experienced doctors," Solomon added. That was a reference to a long-time legal battle between the authority and doctors over pay and hours. Last month, doctors lost out against the authority when a Court of Final Appeal panel upheld a lower court's ruling that they were not entitled to overtime pay beyond the terms of their contracts. Contracts specify that doctors must work a 44-hour week but be ready for overtime and to accept on-call status. But it was seen by many as a hollow victory, which is why the authority now seeks to improve doctors' prospects. "A lot of money has been pumped into helping junior doctors but not much has gone to senior doctors ... people we want to keep for their experience," Solomon said. "I guess it is the time for us to examine the reintroduction of D3 and D4 [senior consultant doctor grades] promotions for outstanding doctors. Maybe the recognition they get from a promotion will help us keep some of our experienced doctors. We assume we have to do it soon - like the first half of next year." The starting salary is HK$142,700 a month for a D3 post and HK$161,950 for D4. How many senior posts will be available is open to question, but the number of senior consultants has fallen 31 percent over the past five years - from 93 in 2005 to 65 this year. And Solomon's fears of a continuing brain drain are well founded: as The Standard reported in April, 244 doctors, including 72 consultants, quit the Hospital Authority between April 2008 and March this year. The hiring of more part-time doctors from the private sector - there were 118 on the authority's books at the end of October - or even recruiting doctors from overseas to ease the workload in public hospitals and to train junior doctors are also being considered. As Solomon admitted, hiring from overseas would involve thorny issues such as recognition of qualifications by the Hong Kong Medical Council. And he expects some reluctance by managers in public hospitals to hiring part-timers. "The hospital management is afraid of losing staff if doctors are free to go into private practice and come back part-time. The management also thinks it is not fair for someone to come in and out without coming under a proper roster." Lawmaker Leung Ka-lau - also a public-sector doctor - said the re- introduction of senior consultant posts is good news. But he thinks it will involve only about a dozen of about 300 doctors waiting for promotion, making it difficult to lift morale overall. Leung also said hospitals are unwilling to hire more part-time doctors, who work only 20-22 hours a week but receive half the pay of a full-time doctor, who works 65 hours a week.

Dogs arrive in Lan Kwai Fong Sunday after Hong Kong Dog Rescue's annual Peak to Fong fund-raiser. More than 1,000 dogs and their owners took part in the walk, expected to raise at least HK$500,000 for the charity. Founder Sally Andersen said a site in the northern New Territories could become its new home after it leaves Pok Fu Lam in February.

The discovery that two sick dogs in the mainland tested positive for human swine flu (H1N1) does not raise the risk any higher for a more serious form of pandemic flu, experts say. The Ministry of Agriculture reported Friday that two out of 52 samples from sick dogs tested positive for swine flu, with the virus being similar to the one infecting humans. Infectious disease specialist Lo Wing-lok said the virus' ability to transmit to dogs, cats and other animals will make the virus less likely to mutate. "The more hosts that they can infect and survive on, the pressure for them to change or mutate will become considerably less, so the risk of mutation is becoming lower," Lo said. "We can cause our pets to become sick, and our pets can cause us to become sick. Wash your hands and wear a mask if you are looking after sick dogs." Chinese University associate dean of medicine Joseph Sung Jao-yiu said the risk of swine flu to humans will be great if highly mobile animals such as dogs and cats are infected. A spokesman for the US-based International Society for Infectious Diseases said: "This adds another animal species to those already known to become infected by the influenza pandemic H1N1 virus. So far, pigs, turkeys, ferrets and cats have been reportedly infected." He said those animals were most probably infected by humans. Concern was also expressed over mainland reports of at least eight swine flu patients suffering brain damage. David Hui Shu-cheong, a professor in respiratory medicine at Chinese University, said five children with swine flu in the United States and Britain are reported to have developed encephalitis. All survived. As children have no immunity to the new flu, those below five are more prone to complications, Hui added. Meanwhile, an obese 58-year-old man was reported to be critically ill at Caritas Medical Centre with swine flu. The man went to the hospital's accident and emergency department on Saturday suffering from chest infection and respiratory failure. He was immediately admitted to the intensive care unit and put on a respirator. Test results for swine flu came back positive yesterday, and he was prescribed Tamiflu and antibiotics.

The Independent Commission Against Corruption has made a rare entry onto the internet by issuing a video aimed at preventing its image from being tarnished. The seven-minute, 49-second online video simulates two scenarios involving internet lottery scams. The commission has received more than 20 complaints about such scams involving a total of HK$3.6 million in the past 12 months. One of the scams uses people posing as ICAC officers conducting "investigations," to persuade victims to cough up bail money for friends in detention. So far, none of the complainants are from Hong Kong. It was also reported the fraudsters and ICAC "officers" all spoke Putonghua. The ICAC video, recorded in Cantonese and Putonghua, carries a brief interview with senior ICAC investigator Lily Chung Ling-ling. "The ICAC is gravely concerned that some criminals have tried to make use of the public's trust in the commission for illicit purposes," an ICAC spokesman said. "People must be vigilant against such scams." According to the video, the victims are lured by a scam artist or a promoter to pay various fees - handling, bank charges or tax - to redeem the big prizes they have purportedly won, or as part of an "investment" in the Mark Six lottery. Should victims inquire about, or press for, their winnings, an "officer" appears to inform them their "friend," or the promoter, was involved in illegal activity involving the lucky draw or Mark Six and is under investigation. The victims are informed they too are being probed. Some are duped into paying bail money for their friends. The ICAC believes these so-called "officers" are used to frighten the victims to discourage them from filing reports to the authorities. Other internet scams involve people being conned into paying tens of thousands of dollars to the fraudsters for betting. Chung called on all victims to alert local law enforcement agencies should they come across such scams. "ICAC officers will not contact the relatives or friends of an arrestee to collect bail money," Chung said in the video. Anyone found to be impersonating an ICAC officer can be jailed for up to one year and fined HK$20,000. Last Thursday, police arrested two Taiwanese who were allegedly involved in a lottery scam. At least four overseas Chinese claimed they had been cheated out of a total of HK$200,000. The victims had won a HK$500,000 scratch game under the name of "Hong Kong Sight-seeing Tourism Board" and were told to deposit a 5 percent tax payment into a designated bank account in order to collect their "winnings." The Hong Kong Tourism Board said it has received more than 150 reports, which have been referred to police.

Hong Kong's per capita carbon footprint could be as high as 29 tons, one of the highest in the world, because of the city's high level of consumption and massive imports, according to a study.

Developers bidding to build on and manage two waterfront sites in front of the Two IFC skyscraper in Central face strict development conditions, including scrutiny by an advisory committee which will include members of the public. Secretary for Development Carrie Lam Cheng Yuet-ngor said the aim was to ensure that the city's first waterfront project, to be developed under a public-private partnership, would be vibrant and open to all. A large chunk of the site will be reserved for public use. Under the partnership, the government will provide land to a developer which will design, build and operate the waterfront sites. The advisory committee members, appointed by the government and the developer, would advise on the design, scheduling and even tenancy policies. But conditions placed on the development could be difficult for the developer to meet as the project was not considered to be a strong business proposition, Lam said as she revealed her latest harbourfront plans amid concern from some pressure groups that the waterfront would be privatised and dominated by high-end commercial users. The idea proposed by Lam is similar to the model used by property developer Sun Hung Kai, which has set up an advisory committee of government-appointed district councillors and a rural committee member for its Ma Wan Park project. But in that case, the construction of Ma Wan Park was funded by the government through a deduction from the land premium of about HK$800 million. This time, developers are being expected to invest HK$1 billion in construction while only 19,000 square metres of the total 22,000 square metres will be lettable.

Buyers could eventually become losers in an idea being considered by the government to scrap land premium concessions granted to developers for the construction of "green" features such as balconies and utility areas, property analysts said. To sustain profit margins, developers may either drop the features from their building plans or build the features but pass the extra costs on to buyers. Buyers would suffer either way, the analysts said. Chief Executive Donald Tsang Yam-kuen said on Friday the government would review the present system in view of "inflated" residential property prices. Currently, developers can pay a premium of up to HK$196,700 or HK$3,643 per square foot for adding a 54 square foot balcony and also HK$24,680 or HK$1,543 per square foot for adding a 16 sq ft utility platform on each unit. But while developers get an effective discount on the land premium, they must pay to build green features, as buyers pay the full rate for them, which helps developers generate higher profits. Surveyors believe developers would not build green features if the government cancelled the incentive. "If the green features are not built, then clearly purchasers will lose the benefit of having them in their units. But similarly the developer will not be able to charge for what has not been built," said Nicholas Brooke, the chairman of Professional Property Services. But Brooke said some developers would continue to provide green features as a way of differentiating their product from others. He said features that contributed to sustainability should be made mandatory and count for gross floor area calculations, while the remainder should not attract concessions but be left to the discretion of the developer, who might or might not choose to include them for product differentiation purposes. A surveyor said the profit margin of developers would be reduced if the government revised the policy. "Developers were willing to accept a minimum profit margin of 20 per cent before the government released the green policy. But they are now looking at a minimum profit margin of 25 per cent as a result of being able to generate extra profit from selling the areas," he said. "I don't think they would be willing to accept a reduced profit margin of 20 per cent now." Instead, many developers would elect not to build green features if the incentive policy was cancelled and would raise their prices, he said. "Some other developers may try to generate higher profit margins by providing green features. But it remains to be seen if buyers are willing to pay a premium for such units or not," he said. David Ng, the head of regional property research at the Royal Bank of Scotland, said scrapping the green concessions would not reduce the profit margin of developers. "Developers would definitely raise their sales prices further to cover the loss in profit margin. The new residential supply would be tight in the next few years, and they would hold the units for a better price rather than sell at a lower price," he said. The average property price at Sun Hung Kai Properties (SEHK: 0016)' Aria, a new project in Ngau Chi Wan, was 100 per cent higher than at the 10-year-old Scenic View in the same area developed by the same developer. But sales at Aria remained strong, which proved the market had accepted a premium price for new projects, Ng said. "It showed that buyers are willing to pay higher property prices for new projects, a better clubhouse and facilities," said Ng. Eric Wong Chun-yu, a co-head of Asia property research at UBS, agreed that the choice open to buyers was very clear. "They know what is happening. They know the efficiency rates of the new projects are low. They also know what the developers are doing," he said. "But the strong sales of new projects in the last few years showed buyers don't really care about the efficiency rate and that part of the money paid for common areas."

China*: In a sign of better days to come for mainland export-oriented manufacturers, Flextronics International has announced plans to hire about 10,000 migrant workers early next year to meet rising production as the global economy improves. The recruitment is being held to keep Flextronics ahead of an expected first-quarter scramble by factories in the southern coastal regions to hire migrant workers, who typically return to their home provinces weeks before the Lunar New Year holiday, many of them never to return. The high demand for migrant workers is good news for export businesses, many of which had to close factories and lay off massive numbers of workers since the end of last year due to the global economic slowdown. "We are seeing a more stable business forecast," said Grace Wong Yat-men, vice-president for human resources in Asia at Nasdaq-listed Flextronics, the world's second- largest electronics manufacturing services provider. "Our workforce numbers, which are largely determined by customer demand, are back up at breakneck speed now that the economy is recovering." In October, Flextronics said it was hiring more than 6,000 migrant workers to meet Christmas orders. According to a joint study by the Ministry of Human Resources and Statistics and the National Bureau of Statistics, 18 million migrant workers were without jobs when they left the cities to return to their home provinces to celebrate the 2009 Lunar New Year. About 70 million migrant workers went home for the holiday. The bureau earlier estimated there were 225.42 million migrant workers on the mainland at the end of last year. "The challenge today for manufacturing companies is retaining these workers," said Wong, noting that some never come back after the new year holiday. She said the good news for manufacturers this year was that "more migrant workers are returning to southern China".

Jean-Claude Juncker, Euro Group president and prime minister of Luxembourg leading a delegation to the mainland, meets Premier Wen Jiabao during a summit in Nanjing Sunday. An "orderly and gradual appreciation" of the yuan against the euro would be "in the interests of the Chinese economy" and the rest of the world, euro-zone economic policy chiefs told Premier Wen Jiabao yesterday. Jean-Claude Juncker, president of the Euro Group of finance officials, said a policy shift by Beijing would show that the mainland economy was "robust" and signal confidence in the recovery. "We are not advocating there is any need for short-term dramatic change in China's economic policy, but expect a gradual and orderly appreciation of the renminbi," he said. Juncker, leading a European economic delegation, called on Beijing to drop the currency's "de facto" peg to the US dollar - instigated last year in response to the global financial crisis - and resume the currency exchange reforms started in 2005. Juncker was addressing a press conference in Nanjing following the meeting with Wen, and earlier discussions with officials from the Ministry of Finance, the National Development and Reform Commission, and the People's Bank of China, the mainland's central bank. The European delegation also included Jean-Claude Trichet, head of the European Central Bank, and Joaquin Almunia, European Union economic and monetary affairs minister. Trichet said he felt the time was appropriate for a shift in currency policy, which would be "good from all angles of vision". "The Chinese economy has been a remarkable success for several years and has proved in the recent period a capacity to surmount difficulties, which is also certainly remarkable," Trichet said. The talks came on the eve of a summit also taking place in Nanjing today between Wen and Swedish Prime Minister Fredrik Reinfeldt, whose country is ending its turn with the EU presidency. Other topics on the table today are expected to include bilateral relations, human rights and last-minute discussions on greenhouse-gas emissions targets ahead of the United Nations climate change conference in Copenhagen next month.

A designer at work in Peugeot's design studio in Shanghai. The headcount will reach 550 by 2012. When Geely Automobile Holdings (SEHK: 0175) showcased the mainland's nascent vehicle industry with a single low-technology car in Detroit in 2006, carmakers around the world braced for the emergence of a competitor likely to embark on a fast learning curve. The unremarkable, four-door model branded "nondescript" by United States media failed to meet US emission standards and hardly gained attention in Detroit. However, it would only be a matter of time before the company began to shine at motor shows around the world, some thought. That time has come, says Eric Apode, a vice-president of the Peugeot-Citroen China Technology Centre in Shanghai. Peugeot-Citroen makes cars on the mainland in a joint venture with Dongfeng Motor Group (SEHK: 0489), the country's third-largest carmaker. It opened the Shanghai research and development centre last year at a cost of one billion yuan (HK$1.14 billion). "Trends in the motor industry are changing," said Apode. "In the past, the Japanese dominated the world's vehicle markets, but China will soon take over this position." Peugeot said its move to build the research and development centre followed the example set by Japanese carmakers, which established similar centres in the US 20 years ago to gain an understanding of how the world's most important car market operated. China is eyeing total sales this year of 13 million vehicles, up from 9.38 million last year. This will make it the only car market to record growth this year and propel it into the top ranked market in the world in terms of sales, surpassing the US. Peugeot's research and development centre is the first to be wholly owned by a foreign company on the mainland. Other global carmakers are expected to follow suit. For the staff, the benefits of working for a foreign employer rather than a joint venture included less red tape in appointments, said Elsa Zhang, who works on the colour and trim line in research and development. General Motors China, which owns a research and development centre with local partner SAIC Motor Corp, is planning to build another centre on its own and Japan's Toyota Motor Corp is also building a similar centre by next year. Germany's Mercedes-Benz had also started a design studio in Beijing, Volkswagen China is operating a research and development centre with SAIC and Ford Motor's chief designer Chelsia Lau moved to Shanghai from the US early last year to lead a local design team. Peugeot's research and development centre, which has about 300 staff, says more than 90 per cent are local employees. There are 47 designers in the centre and most are graduates from either Tsinghua University or Tongji University. Apode admitted it was difficult to find local talent as car design was not a full course in any local university. But he believed this situation would change gradually. To Chinese designer Peng Hao, who had worked at GM for five years before joining Peugeot recently, the work he is required to do on interior designs of cars and the liaison with engineers are good learning experiences. Peugeot will expand the centre's staff to 550 by 2012 and maintains that by then fewer than 8 per cent will come from overseas. "Only local Chinese can get a sense of what consumers really want here," said Apode, who believes cars designed by Chinese will be sold in Europe and the US in the future. "That's the reason we built the centre in China." Peugeot said it aimed at transferring know-how to Chinese. The first Chinese-designed car will be developed and launched on the mainland by 2011. Meanwhile, the centre will also serve markets such as Brazil and Russia.

Goldman Sachs is in talks to sell a residential property investment in Shanghai for more than US$300 million as it seeks to take profit in the mainland's property market before expected policy risks emerge next year, say sources familiar with the decision. Goldman, which bought Garden Plaza from Japanese developer Daito Trust Construction for 1.43 billion yuan (HK$1.62 billion) in 2007, declined to comment. The development is on Hong Qiao Road in Changning district and comprises 53 villas and 511 apartments. The total gross floor area is 97,227 square metres, comprising 87,385 sq metres of residential space and 2,370 sq metres of non-residential space including indoor and outdoor swimming pools, a golf driving range and other recreational areas. "The property has a stable rental income and has attracted interest from a number of mainland developers and foreign funds," a source said. Shimao Property Holdings (SEHK: 0813) is among the developers that have shown an interest in the property, according to another source familiar with the matter. The Shanghai-based company, in a venture with United States fund Och-Ziff Capital Management Group, had offered an initial bid of about US$315 million.

A clutch of major emerging economies, including China and India, has forged a united front to put pressure on developed countries at next month's climate change negotiations in Copenhagen. After two days of quietly arranged talks in Beijing, the countries said they had reached agreement on major issues, including the need for the West to provide finance and technology to help developing nations combat global warming. The meeting was attended by leaders from China, India, Brazil and South Africa as well as Sudan, which chairs the Group of 77 developing countries. While largely reiterating the known consensus among major developing countries with the much-anticipated UN climate summit one week away, analysts said the agreement set the tone for climate talks after the Copenhagen meeting. China is the world's top greenhouse gas emitter and India is the fourth largest, while Brazil is also a leading emitter, mainly through deforestation. All three, along with South Africa, have announced plans to cut pollution. However, they say that steps by rich nations to fight climate change are not good enough. "The purpose of the meeting was to prepare for and contribute to a positive, ambitious and equitable outcome in Copenhagen," a statement said. "We believe that this work represents a good starting point and we will continue to work together ... towards a consensus in Copenhagen." Developing nations have also expressed alarm at efforts to try to ditch the Kyoto Protocol by creating an entirely new agreement or cherry-picking from the existing pact. The Beijing statement said Kyoto should remain in force, with rich countries taking responsibility to cut emissions in accordance with the protocol's second commitment period from 2013. Developing economies in return would pledge to mitigate their greenhouse gas emissions. Professor Zou Ji , a former member of China's climate negotiation team, said the latest move by developing countries underlined uncertainties hanging over the Copenhagen conference. Despite some positive signals in the lead-up to the summit, he cautioned against hopes rekindled after China and the US unveiled their emission reduction targets last week. "The success of the December 7-18 meeting largely depends on how far major countries are willing to compromise for a binding document," he said. Troubled negotiations launched two years ago in Bali have failed to bridge the divide between rich and poor nations on efforts to curb emissions, how to measure and report them and who should pay. Talks host Denmark has instead backed a plan to seal a political deal at Copenhagen and agree to the legally binding details in 2010. But some developing nations, including China, are demanding a stronger outcome. The participants in Beijing worked off a strategy outlined by Premier Wen Jiabao , the Hindustan Times reported. It said that Beijing's top climate negotiator, Xie Zhenhua , would present the strategy for Copenhagen tomorrow. China has promised to take voluntary measures to cut the carbon intensity of its economic growth by 40-45 per cent by 2020 from 2005 levels, while the US proposed a 17 per cent cut in emissions for the same period. "No country can afford a failure at the Copenhagen talks. But it's unlikely to see a breakthrough next month either. We will ... see how well those promised targets by different parties are received at the meeting," Zou said. Global conservation group WWF said the Beijing statement appeared to be a rejection of Denmark's proposal to aim for a political agreement in Copenhagen. "We are not surprised the emerging economies have laid down this challenge for the developed world," said Kim Carstensen, leader of WWF's Global Climate Initiative. "The Danish proposal is incredibly weak and the developing world governments aren't stupid."

The financial world eagerly awaits what is billed as China's most important yearly gathering of top economic policymakers, the Annual National Economic Conference, that helps form the blueprint for the premier's Government Work Report to the legislature in March. It was originally expected to be held at the end of November, earlier than in previous years, as the government wanted to outline the main policy direction as soon as possible to settle disputes, signal stable development, and instil confidence. However, there were practical difficulties with the timetables of key conference leaders and now it may not proceed until after December 10. Unlike last year when Asian markets soared on expectations that the government would announce economic stimulus plans, this year the financial world is waiting for any clue of possible policy changes, or sophisticated fine-tuning of policy. Even before the closed-door meeting in Beijing gets going, investors have become nervous. The two mainland stock exchanges suffered their biggest single-day falls in nearly three months last week over concerns the government was about to tighten monetary policy. Last year's gathering was held with the government struggling to shore up growth and jobs as export demand shrank and the meeting ended with the announcement of a string of interest rate cuts, tax reductions and spending initiatives in a campaign to bolster growth. This year's meeting comes with a backdrop of regulators issuing stern warnings to banks to strictly comply with capital requirements or face sanctions - the latest signal that Beijing is worried about bubbles in the country's financial system after a year of blow-out lending. With economic growth having accelerated from 6.1 per cent in the first quarter - the slowest in almost a decade - to 7.9 per cent in the second and 8.9 per cent in the third, China has returned to the fast track. Indeed, the momentum amid a nascent global recovery will give Chinese policymakers more room to manoeuvre as calls for reviewing the current ultra pro-growth policy get louder. Yet, accelerated economic growth does not mean that the Chinese government has completed the job. Lingering uncertainty about the global recovery as well as the huge difficulty in transforming the country's growth pattern will require even greater effort to press ahead with critical domestic reforms. Key economists and research institutions have put forward suggestions for the conference based on current macroeconomic policy and predictions for the future. On balance, they say that monetary policy should make a "soft landing" next year, structural adjustment should remain the emphasis of economic work and, while guarding against inflation should be one focus, it should not be the primary preoccupation. Usually, policy principles and documents will have already been worked out by top party and government officials from the Central Committee Secretariat, the State Council, and the Central Leading Group of Financial and Economic Affairs.

Mainland output may hit 310 tonnes, with demand at 450 tonnes as record household savings fuel jewellery buying by middle-class Chinese. China, the world's largest gold producer, may have record demand and output this year as jewellery consumption soars and miners expand production after prices reached all-time highs, according to the China Gold Association. The country's gold demand may be more than 450 tonnes this year, up from 395.6 tonnes last year, and output may climb to 310 tonnes, compared with 282 tonnes a year earlier, Zhang Yongtao, the deputy secretary-general of the association, said at a conference in Kunming yesterday. Annualised growth in China's gold production was 9.5 per cent in the past eight years, he said. China overtook South Africa to become the world's largest producer in 2007 and the World Gold Council said in July that the nation may pass India as the biggest consumer. Bullion hit a record US$1,195.13 an ounce on Thursday as a weaker US dollar drove demand for precious metals as an alternative asset. "The inflation concern this year has boosted the Chinese consumer demand for things like property, vehicles and gold," said Zhou Shijian, a professor at Tsinghua University. Bullion, up 34 per cent this year, is set for a ninth annual gain as central banks, pension funds and individual buyers seek to protect their assets from potential currency debasement and inflation. Gold may climb to US$1,500 an ounce as the dollar falls amid low interest rates, Kenneth Tropin, the chairman of Graham Capital Management, told Barron's in its November 30 issue. Jewellery sales in China will climb at a "double-digit" pace this year as record household savings fuel demand for investment products and wedding gifts, Hong Kong Resources Holdings chairman Kennedy Wong said. Middle-class buyers in China, who have only just started to buy gold as an investment product, drove a 16 per cent gain in gold and silver jewellery sales in the first nine months, said Wong, whose company has 219 jewellery stores on the mainland. The central bank is "quite a likely" buyer of gold from the International Monetary Fund in coming weeks, Ben Westmore, an analyst with National Australia Bank, said. "Record prices boosted profitability of Chinese miners, giving them incentive to expand production," Zhang said. Miners' A shares have jumped this year, with Zijin Mining Group (SEHK: 2899), the country's largest gold producer, soaring 108.3 per cent.

Dec 1, 2009

Hong Kong*: Victor Lam, who works at an advertising firm, will have no difficulty paying his tax bill this year. The difficult part will be passing up a tax loan, since the rates are so good. They are not just good: some of the going rates this year are the best ever. For some loan amounts, such as those between HK$100,000 and HK$200,000, the rates have fallen to a "historically low" level because of the low interest rate environment, says Wing Hang Credit's general manager Hilda Ng Kwok-yan. Hotel privileges are just a click away with The Magic of Dusit. For a HK$100,000 loan, the annual percentage rate or APR offered ranges from 0 per cent to 10.28 per cent this year, compared with 4.21 per cent to 10.41 per cent last year. The rate for a HK$200,000 loan ranges from 2.45 per cent to 7.48 per cent - compared with 3.58 per cent to 9.22 per cent last year. APR is the single percentage that represents the actual yearly cost of funds over the term of a loan. This includes any fees or additional costs associated with the transaction. "The interest rate for a tax loan, which is an unsecured loan, has fallen to the level similar to mortgage rates at as low as 2 per cent," Ng said.

The countdown to Wednesday's start of the East Asian Games events and Saturday's opening ceremony has begun, with dress rehearsals held at competition venues yesterday. The dress rehearsals were held at 11 games venues, including the Queen Elizabeth Stadium in Wan Chai, where the badminton and table tennis competitions will take place. The dress rehearsal started with table tennis matches involving Hong Kong athletes Tang Peng, Jiang Hua-jun, Tie Ya-na and Ko Lai-chak. Between matches, spectators watched Japanese cheerleaders perform with mascots Dony and Ami. A victory ceremony and trial medal presentation were also held. Chief Executive Donald Tsang Yam-kuen, Secretary for Home Affairs Tsang Tak-sing and games planning committee chairman Timothy Fok Tsun-ting were present. Tsang Tak-sing also spoke about the games yesterday on a local radio programme. "It is the first time Hong Kong will host an international and large-scale multi-sport event," he said. "It is a new breakthrough. It is also a challenge and a test of our ability." Contingency plans were in place to ensure the Games ran smoothly. The East Asian Games will run until December 13.

Hong Kong's exports in October fell 13.1 percent year on year to 240.8 billion HK dollars (31.1 billion U.S. dollars), compared with a decline of 8.6 percent in September, statistical authorities said Thursday. The Hong Kong Special Administrative Region (HKSAR) government said the larger year-on-year decline in exports was due to the high base in October last year when many traders reportedly advanced their shipments at the onset of the financial crisis. "On a seasonally adjusted basis, merchandise exports actually improved modestly in recent months," the HKSAR government said in a statement, quoting a spokesman. Imports were down 10.7 percent at 259.9 billion HK dollars (33.6 billion U.S. dollars), compared with a year-on-year decrease of 3.1 percent in September, according to statistics releases by the Census and Statistics Department of the HKSAR government. For the first ten months as a whole, exports of goods dropped by 15.8 percent year on year. Exports to Asia as a whole went down by 8.7 percent in October, with substantial decreases recorded for major destination markets such as Singapore, Malaysia, Thailand, Japan, the Chinese mainland and South Korea. Significant decreases were also recorded in exports to the United Kingdom, the United States and Germany. Increases were registered in exports to some major destinations, in particular Taiwan as well as India and Australia. The external environment, while still subject to considerable uncertainties, has been improving gradually, the HKSAR government spokesman said, adding that this should render support to Hong Kong's external trade if the trend continued.

China*: A court is hearing the country's first civil lawsuit by a man whose child fell ill in the tainted-milk scandal. Parents and lawyers have reported pressure from government officials not to pursue lawsuits over the tainted milk, so the start of the trial on Friday was seen as a breakthrough. "It's a little progress," said Beijing-based lawyer Xu Zhiyong , who attended the trial. He said courts had accepted just six such lawsuits, including Friday's. Xu said he and other lawyers were representing about 200 cases, but other families have dropped lawsuits after reaching compensation deals. The trial brings "a ray of hope" for the rule of law, he and lawyer Peng Jian wrote on Xu's blog. Ma Xuexin, of Henan province , sued the Sanlu Group, the dairy company at the heart of the scandal, for compensation after his 20-month-old boy fell ill, according to China Daily. The report said the trial would continue on December 9 at the Shunyi District People's Court in Beijing after Judge Zhang Nan asked both sides for more evidence. At least six children died last year after drinking contaminated baby formula and more than 300,000 were made ill in one of the country's worst food-safety crises. On Tuesday, a dairy farmer and a milk salesman were executed for their roles in the scheme to boost profits by lacing milk powder with the industrial chemical melamine, which is used to make plastics and glue. Nineteen other people have been convicted and received lesser sentences. Melamine is added to substandard food, such as watered-down milk, to boost its nitrogen content, allowing it to pass testing for protein levels. Ma told the court his son developed a kidney stone after consuming milk powder made by Sanlu.

Staff at Shanghai's Pudong airport examine the site where a Zimbabwean cargo plane crashed on take-off yesterday. The McDonnell Douglas MD11 was on its way to Bishkek in Kyrgyzstan. Shanghai's Pudong International Airport was thrown into chaos Saturday after a Zimbabwean cargo plane crashed on take-off, killing three of the seven crew. The crash resulted in two runways being closed, paralyzing the city's main airport for several hours. Sixty-eight flights, including some from Hong Kong, were affected and more than 4,000 passengers were stranded at the airport. The three dead crew members were American and another American had been injured, US embassy spokesman Richard Buangan said. He did not know the injured person's condition. A thick plume of black smoke from where the plane, a McDonnell Douglas MD11, had broken up and burst into flames was visible for several kilometers. Shanghai television said the other crew members were from Indonesia, Belgium and Zimbabwe, and had been taken to the People's Hospital in Pudong district. The station showed a 61-year-old American, the co-pilot, in a hospital bed saying "thank you" to staff and officials. Jia Ruijun , Shanghai Airport Authority's general manager, said the cause of the crash had yet to be determined and an investigation had started. "The aircraft veered off the runway as it was taking off from the No 1 runway at 8.12am," he said. "Our emergency services received the call at 8.13am. They arrived on the scene at 8.14am, within one minute of being called out." Fourteen fire trucks had battled the blaze, bringing it under control by 9am, he said. He would not specify what the plane had been carrying, saying only that it was "normal cargo". The airport's No 1 and No 3 runways were closed from 8.20am, with the latter opening at 11am, causing significant disruption, he said. Speaking to journalists shortly before 3pm, Jia said the airport had cleared the backlog of delayed flights and was operating normally. He said the airport was now safe for passengers to use. The aircraft was registered in Zimbabwe, and was on its way to Bishkek, Kyrgyzstan. It had reportedly been in Avient Aviation's service for less than a month, having been bought second-hand from Korean Air. Avient is a chartered cargo airline specialising in freight services to Africa. Its headquarters are in Wiltshire, southern England. Calls to the company were not returned, but it posted a brief statement on its website yesterday. "At this time, the full resources of Avient's accident response team have been mobilised and will be devoted to co-operating with all authorities responding to the accident," the statement said. The MD11 is a three-engine freight carrier with a poor safety record. It has been involved in 12 accidents. Ten years ago, a Korean Air MD-11 crashed at the Shanghai's Hongqiao Airport shortly after take-off. A FedEx-operated MD11 crashed on landing at Tokyo's Narita Airport in March, killing two crew members.

China will strive for a higher growth rate for retail sales in 2010 with a bigger contribution tonext year's GDP increase, the Ministry of Commerce (MOC) said on Saturday. Consumption was the key drive force for China's economic recovery in 2009, said Jiang Zengwei, vice minister of commerce, at a forum in Beijing on the development and reform of China's circulation industry. The country's economy grew 8.9 percent year on year in the third quarter this year, accelerating from 7.9 percent in the second quarter and 6.1 percent in the first quarter, according to the National Bureau of Statistics (NBS). The MOC will take measures to boost both rural and urban consumption in 2010 to push up economic growth, said Jiang. He said the MOC will expand the "old-for-new" program to encourage more consumers to buy new cars and home appliances on a basis of discount if they give up their old ones to sellers. Credit consumption and sales promotion, especially those during holidays, will also be encouraged by the MOC, according to Jiang. The country's retail sales are predicted to increase 18.2 percent year on year in 2010, boosted by domestic consumption and income growth, according to a recent report by Beijing-based Renmin University of China. The NBS data showed retail sales in October rose 16.2 percent year on year to 1.17 trillion yuan (171.3 billion U.S. dollars).

China's three leading banks Friday told Xinhua they do not hold the troubled Dubai World bonds. Industrial and Commercial Bank of China, the country's biggest listed lender, said it has no exposure to bonds issued by Dubai World. Bank of China, the country's third-largest, does not hold bonds issued by Dubai World, the Dubai government or any Dubai sovereign funds and related institutions, said Zhao Rong, a spokeswoman for Bank of China. The overseas branches of Bank of China do not have direct credit business relationship with Dubai World, Zhao said. Bank of China will continue to investigate any potential impact on the bank's other businesses and closely monitor related risks, she said. Bank of Communications, the country's fifth-largest, told Xinhua it does not have exposure to Dubai World credit and bonds. China Construction Bank Corp., the country's second-largest bank, told Xinhua their investigation is underway. Dubai said on Wednesday it was asking for a six-month reprieve on paying Dubai World's debts as a first step to restructuring the company. Dubai World, the emirate's leading state-owned company, said it would ask creditors to agree to a standstill on 60 billion U.S. dollars of debt until at least May. Market observers said if Dubai should prove unable to pay the debts, many of the world's leading banks will suffer losses.

Chinese mainland actors and movies received a series of titles of the 46th Taiwan Golden Horse Award Saturday night. Li Bingbing took the best actress award for her performance in "The Message", an espionage movie produced by Huayi Brothers Media Group and Shanghai Film Group.

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

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