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

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

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

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View China 60th Anniversary Video and Photo online

Chinese New Year - Year of the Tiger - February 14 2010

Holidays Greeting from President Obama & Johnson Choi

Feb 28, 2010

Hong Kong*: Hong Kong’s Chow Tai Fook Jewellery Co has paid US$35.3 million for a 507-carat diamond, breaking a record as the highest price ever paid for a rough diamond.

Manulife (International), the regional arm of Manulife Financial (0945), is looking to sell yuan-denominated policies, but there is not yet a timetable and it is subject to the regulators' approval. Manulife (International) Hong Kong chief executive Michael Huddart said the company hopes to tap the yuan-related business through the Qualified Foreign Institutional Investor license, but the size and capital involved will be modest. Commenting on rival Zurich Life and AXA introducing the franchise model to expand their distribution network in Hong Kong, Huddart said the model has had a sparse impact on the local insurance market. Manulife plans to boost agent manpower to 5,000 this year from the 4,443 agents as at December 31. Manulife owns 17 percent of Hong Kong's Mandatory Provident Fund market, with assets of HK$52.55 billion. The Hong Kong insurer posted a record net income of HK$3.05 billion last year, 53 percent higher than 2008. Funds under management surged 40 percent to HK$165 billion last year due to the rebound in stock markets.

Jacky Cheung introduces Crossing Hennessy, a romantic comedy in which he stars that is one of two local films opening the film festival. With the budget having put funding for arts groups on a surer footing, lovers of culture can expect to see more world-class shows in the coming few years leading up to the launch of the West Kowloon Cultural District. The arts community welcomed the additional funding, news of which came on the eve of two of the city's cultural high points: the Hong Kong Arts Festival, which began yesterday, and the Hong Kong International Film Festival, the line-up for which was announced yesterday. They had been fearing a cut in funding this year while the government reviews its criteria for funding the arts. Representatives of some of the nine major arts groups subsidised by the government said the promise of an additional HK$486 million over five years - to allow groups and artists to develop signature performances - would allow them to plan over a longer term and secure for Hong Kong big-name performers who need booking a few years in advance. The money is in addition to annual funding which in the 2009-10 financial year was expected to total HK$272.5 million. Although the government has yet to say how the additional funds will be split between the groups, Chan Kin-bun, executive director of the Hong Kong Repertory Theatre, says it will allow for longer-term planning. "Now we can make plans for our development in the next five years," Chan said. "Some artists, such as famous musicians or soloists, you have to book them three to four years in advance. If we want to invite world-class theatre directors to work with us, we need to make arrangements two to three years in advance. We are more confident about doing this now with the extra funding." Chan said the money would also help groups keep artists in full-time work, which would help the development of signature performances. Katy Cheng, marketing director of the Arts Festival, said it was normal to book performances featuring top artists three to four years in advance. The additional funding would help with planning of the festival and foster the the growth of the whole sector. As well as big groups, smaller ones and independent artists would benefit, she said. Cheng said that up to yesterday, 90 per cent of the 93,000 tickets for the festival's 116 performances had been sold, up from 88 per cent at the same point last year. Half the performances have sold out. Meanwhile, organisers of the Hong Kong International Film Festival announced Roman Polanski's latest film, The Ghost Writer, which won the Silver Bear for best director at the Berlin International Film Festival this week, will be added to this year's line-up of films, which includes two by Hong Kong women directors that will open the festival. They are Ivy Ho Pik-man's Crossing Hennessy and Clara Law's Like a Dream. The festival will feature 70 local films, 30 per cent more than last year. It will also feature a 12-film retrospective of the work of Greek director, and Palme d'Or winner at the Cannes festival, Theo Angelopoulos. The festival runs from March 21 to April 6. Advance online and postal booking opens on February 28.

Secretary for Development Carrie Lam Cheng Yuet-ngor said on Friday the government would provide new subsidies for training courses to attract young workers to the construction industry. Lam said each person taking the courses would receive a monthly subsidy of HK$5,000. On finishing a course, a job with minimum salary of HK$8,000 per month would be guaranteed for six months, she said. If trainees perform well, they can expected to receive a minimum salary of HK$10,000 per month for a six month period. The Development Bureau estimated the subsidies could attract 6,000 workers to the training courses within three years. Lam said that government’s HK$49.6-billion investment in infrastructure could create 62,500 jobs this financial year. “This would boost the confidence of the construction industry,” she added. Among the 62,500 construction jobs, 6,600 will require professional skills and the remaining 55,900 are for general workers. This is an overall increase of 15,400 jobs compared with last year. The unemployment rate for the industry in January was 7.4 per cent, a year-on-year decreased of 5.3 per cent from last January when it stood at 12.7 per cent. The increase in construction jobs is mainly due to new infrastructure projects. They include the Kai Tak Cruise Terminal Building, the Hong Kong-Zhuhai-Macau Bridge boundary crossing facilities and other projects. Permanent Secretary for Development Mak Chai-kwong said the industry still faced challenges. “There is an ageing problem and a misallocation of human resources in the construction industry,” he said. There is also a need for skilled workers to work on these new infrastructure projects. Among 278,100 registered workers, 60 per cent are registered as unskilled, Mak noted. Lam said providing uniforms for construction workers and improving the work environment might also attract young people. “We will hire local workers. We do not want to import external workers if possible,” she said. Construction Industry Council chairman Lee Shing-lee said he welcomed the government’s new measures.

The developer of a low density housing project in Yuen Long is under fire again for filling in part of three fish ponds that are zoned as wetland conservation areas. The ponds, outside the boundary of the Wo Shang Wai development, have been filled with soil in what Henderson Land (SEHK: 0012) calls a "temporary solution" to allow hoardings to be put up around the site to protect the ecology. But the work worried a resident in Palm Spring, who accuses the developer of not taking steps to minimise disturbance. Up to 50 rare black-faced spoonbills regularly visited the ponds earlier this month. Nine days ago three excavators and eight trucks were working near one of the ponds, while a flock of birds, including spoonbills, were feeding at another pond. The resident, Daphne Ma Ngar-yin, has filed a complaint with the Environmental Protection Department in which she questions whether the filling-in work is legal and whether planning rules had been breached. She has previously complained of construction noise frightening away the birds. Under town planning laws, approval is needed in advance to fill fish ponds. In some cases such work is strictly forbidden. A spokeswoman for the Planning Department said yesterday it was still gathering details about the case. Ma said: "I am concerned that this filling-in work has caused a direct reduction in the wetland conservation area, which is part of the important wetland habitat of the Mai Po reserve for migratory birds." Ma said the department should say whether penalties could be imposed on developers who damage such sites and the developer should be more transparent about its work and communicate with residents. A spokeswoman for the developer said it had to fill part of the ponds to consolidate the banks so that the hoardings could be firmly built. "This is rather an unforeseeable move that we have to take temporarily for the construction of the hoardings. Once the hoardings are built, we will dig out the [filling] material," she said. The hoardings are part of the requirements of an environmental impact assessment for the project and have to be in place before actual construction starts next month. More than 170 low-rise houses and 180 duplex units in four-storey buildings will be built on the 21-hectare site. About 4.7 hectares of land will be restored to wetland afterwards. The spokeswoman said the developer had an "understanding" with the pond owners and the environment department was "aware of" the temporary move. However, she could not say if a formal application for filling the ponds had been lodged with the Planning Department. To ease concerns about the threatened spoonbills, she said they had hired an ecological consultant to monitor the birds. "If they have found the birds were around and the work might impact them, the contractor might be advised to stop the work or move their machinery farther away from the work," she said. The spokeswoman stressed the spoonbills were only attracted to the ponds because the water level had been lowered and fish were exposed to the birds. She said it was not usually a hot spot for the birds to winter. A spokesman for the environment department did not directly comment on the complaint. He only said they had started to investigate the complaint and would follow up with the developer. He said the developer was required to meet conditions laid down in the environmental permit issued it in September 2008, including setting up a wetland restoration area before houses were built and minimizing disturbances to the ecology by erecting hoardings and barriers.

The United States' former de facto envoy to Taiwan was named yesterday as the new US consul general in Hong Kong. Ambassador Stephen Young (pictured), who served as director of the American Institute in Taiwan between 2006 and last year, fills the position vacated by Joseph Donovan in August. Donovan left Hong Kong a year into office to become principal deputy assistant secretary of state, one of Washington's key envoys dealing with East Asian affairs. Young, who will take up office next month, has extensive experience in Chinese affairs. Born in Washington, he spent two years of his childhood in the Taiwanese port city of Kaohsiung. He was educated at Wesleyan University and later the University of Chicago, where he received a master's degree and PhD in history. Since joining the State Department in 1980, Young has held positions including director of the office of Chinese and Mongolian affairs, and headed offices responsible for Pakistan, Afghanistan and Bangladesh. He was ambassador to Kyrgyzstan Republic from 2003 to 2005. He has been posted to Beijing and twice to Moscow. Most recently, he was a faculty member at the National Defense University's Industrial College of the Armed Forces in Washington. During his time as de facto envoy in Taiwan, Young saw the downfall of former president Chen Shui-bian and the warming of ties between Beijing and Taipei after Ma Ying-jeou took power. A fluent Putonghua speaker, Young is married to Barbara Finamore, a lawyer who heads the China program at the US Natural Resources Defence Council. Some Hong Kong politicians considered the extended delay in filling the vacancy a reason why the US consulate has taken a relatively low profile in the recent debate over constitutional reform. But they did not expect any major policy change with the arrival of the new consul general, pointing to the delicate relations between Washington and Beijing.

Former Macau chief executive Edmund Ho Hau-wah looks likely to follow in Tung Chee-hwa's footsteps. It has been rumored widely that Ho, 55, who ran Macau between December 1999 and 2009, will become a vice chairman of the National Committee of the Chinese People's Political Consultative Conference. Zhao Qizheng, spokesman for the National Committee of the CPPCC, refused to comment in Beijing on the possible appointment, only saying suitable candidates must be influential and representative. Chan Wing-kee, a standing committee member of the CPPCC, said he has not heard anything concrete about the appointment, but he personally believes Ho would be a suitable candidate and worthy of support. Chan said Ho had contributed a lot to Macau during the last 10 years, making the former Portuguese enclave an international city and bringing wealth to its people. He had earlier praised Ho's success in implementing the legislation on Article 23 of the Basic Law. Currently, Ma Man-kei is the only Macau member who is a vice chairman of the national committee. But Chan said Hong Kong used to have two vice chairmen at the same time, which created no issue. The CPPCC standing committee members are expected to discuss whether they will have new delegates during a meeting from today until Sunday. A list of new delegates nationwide will be endorsed by the standing committee early next month. If the former Macau CE is on the list, it will bring him a step closer to becoming vice chairman of the top advisory body. Former Hong Kong CE Tung Chee- hwa's name was listed in March 2005, shortly before his appointment as vice chairman was confirmed. But his appointment was followed by his resignation as CE on March 10, 2005, citing health problems.

Hong Kong factory owners on the mainland say they are desperate for migrant workers as millions so far have yet to return following the Lunar New Year break.

Taiwan will allow brokerages and retail investors to buy Hong Kong red chip shares directly in a further easing of business ties with mainland, authorities said in Taipei.

Macau's famous Ho clan will take center stage today when the divorce tussle between Michael Hotung and former TVB actress Katie Chan Fok-sang goes to court. Hotung is the son of Winnie Ho Yuen-ki, the estranged sister of gaming tycoon Stanley Ho Hung-sun. Chan and Hotung are expected to appear at the family court in Wan Chai, but have the right to be represented by their lawyers without showing up. The case is scheduled to be heard privately before Judge Chan Chan-kok this afternoon. Custody of the couple's 15-year-old daughter and 12-year-old son, as well as alimony payments, are believed to be at the center of their legal argument. Chan filed for divorce last year in a bid to end her 20-year marriage to Hotung, citing his "unreasonable behavior." The news shocked Hong Kong as the pair appeared to be a perfect couple in public. In December, Chan held a press conference and revealed that Hotung's lawyer had demanded she return three diamond rings or face a lawsuit. But Chan said she would rather go to court, if only to find out why Hotung wants the rings back. The former actress also said she doesn't know where her mother-in-law is, because Hotung would not allow her to meet Winnie Ho. "I tried to see her but Michael wouldn't allow it. He even told the maids not to pass my phone calls to my mother-in-law," she said. Appearing on TVB's My Guest last month, Chan said ending her marriage would be a relief. She said her relationship was not as happy as it seemed, as the family of four was not living together. Their children are living with their grandmother, but their father rarely visits, and neither she nor the children have his mobile number, she said. Chan added she has no income after separating from Hotung and has to use her savings to cover daily expenses for herself and the children. Asked by TVB general manager Stephen Chan Chi-wan during the interview if she hates Hotung, Chan replied: "I have to thank Michael - he helped me end this 20-year marriage."

Wynn Macau said on Friday that the extension of its current casino resort will open in April, helping it to increase its market share to 15 per cent. Shares in Wynn Macau, a unit of Wynn Resorts, soared to a one-month high, a day after the casino operator posted quarterly results that beat analysts’ expectations, boosted by a strong economy and strict cost controls. The casino operator, whose rivals include Sands China and Melco Crown Entertainment, reported a near doubling of fourth-quarter earnings before interest, taxes, depreciation and amortisation (EBITDA) on Thursday to US$142 million. The figure was 4 per cent ahead of JPMorgan’s expectations. Shares in Wynn Macau soared 5.4 per cent to a more than one-month high and ended the day up 1.7 per cent. “The fourth-quarter results are very solid,” said Billy Ng, an analyst with JPMorgan. “The outlook should be good. They are the only ones expanding and putting in capacity in 2010. They should gain some market share.” “The bigger question is how the overall market is doing, with the tightening of liquidity from China. There will be some impact, but it will be limited.” Wynn Macau reiterated that the extension of its current casino resort in Macau, “Encore,” will open in April. The project is expected to cost about US$600 million, the firm said. Ng said he expects Wynn Macau’s market share to grow to 15 per cent after the extension’s opening, from its current 12-13 per cent share now. In a separate statement on Friday, Wynn Macau said it expects its profit for last year to hit HK$2.07 billion, exceeding its original forecast of HK$1.47 billion but largely in line with analysts’ consensus expectations of HK$2.12 billion according to Thomson Reuters I/B/E/S. Last week, Las Vegas Sands said the firm has done well in Macau – where earnings before interest, taxes, depreciation, amortisation and rent (EBITDAR) rose a “whopping” 48 per cent in the fourth quarter – by focusing on mass gaming, hotel and retail businesses, while controlling costs. Sands China is due to report its fourth-quarter results on March 1.

China*: China is conducting “stress tests” in the country’s labour-intensive export sectors to see how much yuan appreciation firms can withstand, a report said on Friday.

China COSCO Holdings Co and nine other shipping firms are planning to increase rates for hauling containers to Asia from the US in a bid to stem losses on transpacific routes.

China National Petroleum Corp (CNPC), the country's largest oil and gas producer, plans to build 10 natural gas storage facilities between 2011 and 2015 to stockpile the fuel in the face of rising demand, said a company executive. The 10 storage sites will be able to store 22.4 billion cu m of natural gas, the 21st Century Business Herald reported yesterday, quoting CNPC Vice-President Liao Yongyuan. The facilities will be located in regions which have rich gas sources and major consuming areas, including the Xinjiang Uygur autonomous region and northern China. The storage facility construction project, part of the government's 12th Five-Year Plan (2011-2015), will account for 8 to 10 percent of the company's total natural gas sales volume, said Liao. At present, the figure is only 3 percent, he added. CNPC President Jiang Jiemin said that the company had decided to build 12 billion cu m of gas storage in its Changqing oil and gas field, which is located in Erdos in Inner Mongolia. The facility will be China's largest gas-storage facility. In order to meet rapidly rising demand for natural gas, China should speed up its construction of storage facilities to better prepare for potential shortages, said analysts. The country should plan more gas storage in eastern regions, as they are high-consumption areas, they said. Compared with Western countries, China started gas storage efforts late. Now global volume of gas storage facilities accounts for around 10 percent of total gas consumption. "There is a lot of room for us to improve," said Yang Lei, an official with the oil and gas department under the National Energy Administration (NEA). Compared with the construction of crude oil storage, which has drawn much attention in recent years, construction of natural gas storage should be treated with equal importance, as the consumption of natural gas will see faster growth than other fossil fuels, said analysts. The country's natural gas market is promising, as the use of the clean energy fits well with China's efforts to build an environmentally friendly economy, said Zhuang Rongjin, director of the natural gas department of the Guangdong Oil and Gas Association. As a clean energy source, natural gas now accounts for only about 3 percent of China's total energy consumption. The government plans to increase the use of natural gas to 5 percent of total energy consumption in 2010. According to a report by the International Energy Agency (IEA), China may be dependent on imports for more than one-third of its total natural gas consumption by 2030. In 2004, China completed first west-east pipeline. The project exclusively uses domestically produced natural gas. China is also building the second west-east gas pipeline. The 9,000-km-long line is the largest of its kind in the world. The pipeline will carry natural gas produced in Central Asia and Xinjiang to the country's eastern and southern regions.

China appears to be secretly buying bonds via third locations to hide its importance as a major creditor to Washington, experts told a congressional forum on Thursday.

Huatai Securities’ modest gains on debut fell short of expectations after it raised US$2.3 billion in mainland’s largest IPO this year, and could set a trend for upcoming listings.

Quanta Computer, the world's largest contract laptop maker, will raise salaries of its mainland production workers by about 10 per cent to fend off a labor shortage as demand picks up for its products. "We estimate salaries will climb by about 100 yuan, or about 10 per cent," said Elton Yang, Quanta's Taipei-based vice-president for finance. Other technology companies have also expressed concern at labour shortages on the mainland, with Acer, the world's No 2 personal computer brand, saying recently that it has been giving orders to its contract manufacturers up to six months ahead to allow them to plan their staffing needs. Quanta currently employs about 40,000 production-line workers around the Shanghai region, Yang said. The company manufactures goods for some of the world's top personal computer brands such as Apple, Hewlett-Packard and Dell. "For Quanta, the impact may not be that big because we're fairly well known," Yang said. "But our suppliers may have some issues with manpower, and if things worsen, we may even step in to send some of our workers over to help them tide through this time." Quanta's suppliers include component manufacturers such as battery maker Simplo, laptop hinge maker Shin Zu Shing and adaptor manufacturer Delta Electronics, all of which manufacture laptop parts. UBS analyst Edward Yen estimates that about 5 per cent of the company's cost goes to labor, and the current labour shortage should ease by May. "We're probably going through the worst right now," said Yen. "Things should ease when China's school year ends in May, and that's when we may see a new batch of people entering the workforce," The salary increase is unlikely to have an impact on Quanta's margins since salaries make up only a small percentage of the company's cost, Yang said, and the firm is further pushing towards automation for its production line. Most major technology brands do some or all of their own design work in-house, but outsource the manufacturing process to firms such as Quanta, Hon Hai and Flextronics, which run large facilities in lower-cost countries.

Shanghai Shipping Exchange, based in China's busiest port, intends to set up a container-shipping derivatives market by year-end as the city tries to challenge London as a global center for shipping finance. The forward freight agreements, or FFAs, which help guard against fluctuations in shipping rates, will be targeted at small- and medium-sized exporters, who don't have the volumes needed for long-term shipping contracts, said Yao Weifu, a director at the shipping exchange. The plan is awaiting government approval. Morgan Stanley last month backed the first FFA tied to a Shanghai container index, as the shipping exchange attempts to persuade the sector to adopt futures. Unlike in the dry-bulk and tanker segments, container-shipping has rarely used FFAs because the wide variety of cargos and customers using each ship makes it more difficult to accurately track rates, said Jay Ryu, an analyst at Mirae Asset Securities Co in Hong Kong. "There is some need for hedging because rates recently have been very volatile," said Ryu. "Still, the trading volume will not be as huge as for dry bulk or tankers." Clarkson Plc, which led the development of FFAs in 1991, helped devise the four-month-old Shanghai Containerized Freight Index to act as a benchmark for container-shipping futures. The securities arm of the world's largest shipbroker also organized the container FFA between Morgan Stanley and shipping line Delphis NV. The trial deal covered a total of 10 cargo boxes to be shipped this month and next, according to the Shanghai Shipping Exchange's official magazine. "The first trade has shown that the index is acceptable to global markets and that it can be used for futures," said Yao. "Now it's time to move on and launch derivatives in Shanghai."

China CNR Corp, one of the two largest train manufacturers in the country, is expanding its business in the urban rail transit equipment sector, which is expected to generate 900 billion yuan by 2015 - benefiting from a speed-up in the development of urban rail transportation systems. China CNR Corp has won a 950 million yuan contract to supply subway cars for the No 8 Subway Line in Shanghai, according to a filing to Shanghai's stock exchange yesterday. China CNR has agreed to purchase a 44.79 percent equity stake in Shanghai Rail Traffic Equipment Development Co from Shanghai Electric Group for 365 million yuan. China CNR will also directly inject 85 million yuan into Shanghai Rail Traffic, making it a 50-50 joint venture between Shanghai Electric Group and China CNR. So far, China CNR controls 55 percent of China's subway car manufacturing market, a senior official of Shanghai Rail Traffic said. Shanghai-based Shanghai Rail - a railway traffic equipment maker - designs, manufactures, distributes and maintains urban mass transit equipment. Shanghai Electric said cooperating with China CNR in urban rail transit equipment would help boost the expansion of Shanghai Rail in the city's urban rail market and offer the firm access to new markets at home and abroad. Shanghai Rail's sales are likely to reach 5 billion yuan by 2014, up from the current 2 billion yuan, as a result of the cooperation, local media reported. Acquiring Shanghai Rail will help Beijing-based China CNR enlarge its market share in southern China, where the company has a weaker market position compared with its chief rivals China South Locomotive and Rolling Stock Corp, which has a 62 percent share of Shanghai's subway car market, according to a research note by Sinolink Securities. The fastest growth in the urban rail transit system will be seen in the Yangtze River Delta and Pearl River Delta regions, both in southern China, the research note said. China CNR, which has won contracts to supply bullet trains for the now under-construction high-speed railway line between Shanghai and Beijing, now generates less than 5 percent of its business from urban rail. China's urban rail transit sector is expected to reach a total length of 2,500 km by 2016, creating huge demand for railway-related business. The country's urban railways will span 1,500 km by the end of 2010, generating 36 billion yuan in demand for railway cars, according to statistics provided by China CNR. China's investment in the railway sector is likely to reach 900 billion yuan by 2015, said Cui Dianguo, chairman of China CNR.

Feb 27, 2010

Hong Kong*: A new study found that 60.8 per cent of people surveyed approved of Financial Secretary John Tsang Chun-wah’s 2010 budget – six per cent higher than after last year's budget.

The High Court on Thursday approved an extension for Tony Chan Chun-chuen to file an appeal after he lost his court battle for Nina Wang Kung Yu-sum's fortune in February.

More yuan investment products will be encouraged and incentives offered for investors to trade Exchange-Traded Funds and bond products. The measures are part of the government's efforts to promote Hong Kong as a testing ground for offshore yuan services. Financial Secretary John Tsang Chun-wah said the government hoped the 6 billion yuan (HK$6.8 billion) sovereign bond launched by the Ministry of Finance in October would be the first of many. "We hope to further promote the development of the yuan bond business in Hong Kong, such as expanding the issuance size of the bonds and increasing the types of bond issuers and the classes of qualified investors," Tsang said. The Hong Kong Monetary Authority announced this month that any local firm could issue yuan bonds. Previously, only mainland financial firms could do so. Hong Kong Exchanges and Clearing (SEHK: 0388) has indicated it plans to launch more yuan-denominated stocks and futures products in the next three years. The Chinese Gold and Silver Exchanges Society also wants to launch yuan-denominated gold products. Tsang proposed measures to boost Hong Kong's stock and bond markets, including extending stamp duty exemption to exchange-traded funds (ETFs), as long as no more than 40 per cent of their assets are composed of Hong Kong stocks. At present, only ETFs that exclusively trace overseas markets are exempt from stamp duty. ETFs are index funds that allow investors to trade a unit of the fund instead of trading a basket of stocks in a certain market. At present, the government collects a 0.1 per cent stamp duty from both buyers and sellers on the value of stocks traded. Brokers said these measures could attract international traders but were of little use to local investors. "If the government really wants to benefit local investors, it should abolish the stamp duty for all stocks," said Louis Tse Ming-kong, director of VC Brokerage. A government official said this could not be done because stamp duty on stocks was a major source of government income. Investors paid HK$25.6 billion in stamp duties to the government last year, representing 10.2 per cent of total government revenue. Chim Pui-chung, lawmaker for the financial services sector, said most international markets had abolished the stamp duty. "Hong Kong should follow this international trend," he said.

China*: Police have detained 18 people on suspicion of assaulting several artists in a Beijing art zone that is slated for demolition, state media said on Thursday.

Chinese tourists spend lots of money abroad - The Chinese Lunar New Year is not only a gala for domestic retail sales, but a feast for overseas retailers, too. Some 1,200 Chinese tourists celebrated the lunar New Year in New York between Feb 14 and 20, spending an estimated $6 million in the United States, said Zheng Wenqing, a public relations manager for New York Tourism Board's China office. Japanese retailers also reaped gains from Chinese tourists during the week. A local home appliance retailer, Bic Camera, reported that its store in Akihabara, Tokyo, saw its sales increase by 20 to 30 percent thanks to Chinese tourists, Japan-based Chinese language newspaper Jnocnews reported. The newspaper quoted a salesman as saying that a Chinese tourist pointed to and bought cameras and lenses worth more than 70,000 yuan ($10,500) at one time. Another Chinese tourist bought 20 rice cookers at one shot. In Berlin, half of eight counters selling luxury watches in KaDeWe department store on Feb 15 were receiving Chinese tourists, Xiao Yun, a tourist who just came back from Europe told Beijing Youth Daily. He also saw the counters of top cosmetic brands crowded by Chinese tourists at the Munich airport, and one of them bought five bottles of a toning lotion priced at 2,000 yuan each. Chinese consumers have become the No 1 spender in more and more countries, studies and experts said. The latest report by Global Refund, a company specializing in tax-free shopping for tourists, said Chinese tourists outspent the Russians in France last year. Chinese tourists spent 155 million euros ($220.2 million) in 2009, followed by the Russians who spent 112 million euros and the Japanese who spent 99 million euros, the report said. The Galleries Lafayette in Paris reported that a typical Chinese tourist spent 1,000 euro in two hours last year, topping tourists from other countries. Some 87 percent of the Chinese's average total bill was on fashion items, including shoes and handbags, and 93 percent of their shopping was done in and around the French capital. Purchases made by the Chinese represented 15 percent of total spending by tourists in France in 2009 and their total bill rose 47 percent from 2008, it said. Chinese tourists are also among the top five spenders in countries like Singapore and South Korea, reports said. Insiders said the shopping craze is mainly due to two reasons - a booming economy in China, and a price gap caused by a high tax levied on luxury goods. "People have more spare money to spend now. I traveled to France a decade ago, and I didn't buy any luxury goods simply because I couldn't afford them," said Cui Xiaoping, in his 50s, who traveled around Europe, including France, with his wife in January. But during the January trip, he bought so many things, including designer handbags and clothes, that he needed to buy an extra suitcase to carry them home. "Chinese people these days are more informed about the luxury brands. For me, I buy luxury brands because they offer quality. Buying them in Europe is a lot cheaper than in China due to the competitive exchange rate between euros and renminbi, plus there is no import tax," he said. In addition, Chinese tourists are impulsive shoppers, said Li Meng, deputy general manager of the outbound department with the China International Travel Service head office. "Chinese tourists are different from the Japanese tourists, who would make shopping lists beforehand. Many Chinese tourists bought everything they thought is cheaper than at home," he said.

The tourism administration has joined Beijing Capital International Airport (BCIA) to apply to extend the current 24-hour Transit Without Visa (TWOV) policy to seven days, after the head of the airport raised the proposal in the municipal people's congress in late January. As many as 4.5 million international travelers are expected to be affected, the tourism administration said. Statistics on spending among travelers said the local tourism industry should benefit from an extra $4.5 billion due to the extension, according to the Beijing News yesterday. Wang Meng, a travel agent for China Wonderful Tour, which receives about 300,000 international travelers annually, said a longer TWOV would attract more international travelers. However, he is not optimistic of a high quantity. "Most of our customers are from the US, Australia, Canada and the UK. They seldom have the chance to travel to China because of the long distance, so they always enjoy themselves when they do. Seven days is not enough," Wang said, from his 10 years of experience in the field. He added that his clients usually stay 10 to 15 days in China to visit the three must-go cities: Beijing, Shanghai and Xi'an. "I think a seven-day TWOV will only attract 10 to 15 percent more international travelers," he said. Kempinski Hotel Beijing welcomed the proposal, believing it would benefit the hotel business and local economy. "We had 170,000 customers last year and 60 percent of them were international visitors," said Li Bo, Kempinski's regional manager of China. Li said a seven-day TWOV could save travelers a mountain of paperwork. However, a police officer from the exit and entry administration of the Beijing public security bureau, who asked not to be named, expressed concern. "This plan will put a lot of pressure on national security," he said, stating that many countries have tighter TWOV rules than in Beijing. In 2009, Beijing received 4.12 million inbound travelers, contributing $4.35 billion. The goal set by the Beijing Tourism Administration in 2010 is 4.25 million trips and $4.8 billion.

China raises global profile with key IMF post - China has won its highest-ever staff position in the IMF in a reflection of its growing economic might and the clamour by emerging nations for a bigger say in global finance. International Monetary Fund managing director Dominique Strauss-Kahn notified the fund’s executive board on Wednesday of his intention to appoint the deputy governor of mainland’s central bank, Zhu Min, as his special adviser. It is the highest-level staff position attained by a Chinese citizen and follows appeals by mainland and other emerging nations for a bigger say in the running of the IMF and World Bank, the twin Bretton Woods institutions. Zhu, who joined the mainland central bank last year after more than a decade as a senior executive of the Bank of China, is expected to assume his position on May 3, the Washington-based IMF said in a statement. Mainland hailed the move, saying it would pave the way for better co-operation between the IMF and emerging economies, which have battled for years for a greater voice at the multilateral table to better reflect their growing weight in the global economy. “I would say that China welcomes Mr. Zhu’s appointment, which we hope will help strengthen co-operation between the emerging economies, including those in Asia, and the IMF, contributing to sustained growth of world economy and international financial stability,” mainland embassy spokesman Wang Baodong said. Strauss-Kahn said that Zhu, who holds an economics doctorate from Johns Hopkins University and was once a World Bank economist, brought “a wealth of experience in government and the financial sector” to the fund. Zhu would strengthen the Fund’s understanding of Asia and emerging markets, he said. Most Asian countries are still wary of turning to the IMF for assistance after its heavy-handed actions during the 1997-1998 regional financial crisis. The IMF had stepped in with major lending programmes for Thailand, South Korea and Indonesia, which were among the worst hit by the financial crisis but the stringent conditions that came attached worsened the situation, critics had said at that time. Malaysia chose instead to peg its ringgit to the US dollar to protect it from currency speculators, a form of capital control that was criticised at the time by the IMF. But the IMF agreed in a report Tuesday that some emerging market countries will have to design policies to manage large capital inflows, reversing the fund’s past opposition to such government intervention. “The right policy responses will differ depending on individual country circumstances, and may include ... when necessary, carefully designed temporary capital controls,” the report said. Zhu’s appointment and the perception shift over capital controls were all part of a broader change within the IMF over the last 18 months or so, said Derek Scissors, an expert on Asia economic policy at the Heritage Foundation. “IMF has changed its tune over China dramatically,” he said, cautioning that the fund might have to grapple with increasing criticism from the United States and Europe that mainland deliberately undervalues its currency for trade gains. Zhu’s appointment followed a decision by leaders of the Group of 20 industrialised and emerging nations to give a bigger voice to developing countries at the fund, long considered a rich nations’ club. The G20 also endorsed a shift of “at least five per cent” in quota share, or voting power, to emerging market and developing countries, part of the reform of the governance and structure of the lumbering Bretton Woods institution, founded in the aftermath of the second world war to promote financial stability. Last year, Justin Yifu Lin of mainland became the first World Bank chief economist from a developing country. Key emerging nations have called for the IMF quota share of the most developed countries to be reduced to 50 per cent from 57 per cent. The United States has proposed that over-represented developed countries – an indirect way of designating European countries – transfer 5.0 per cent of their voting rights to the under-represented. Mainland, with its current 3.72 per cent of the vote, has less influence than France, at 4.94 per cent, although its economy is one and a half times the size, according to IMF data.

A magnitude 5.1 earthquake struck the southwestern province of Yunnan on Thursday. There were no immediate reports of damage or injuries.

The United States has misapplied its own rules by taking action against imports from mainland, including the newest duties against steel pipes, Beijing charged on Thursday.

GM to end Hummer as Tengzhong deal fails - General Motors said it would end its celebrated and scorned Hummer brand of sport utility vehicles after a deal to sell the nameplate to Tengzhong could not be finalized.

China's Sun Linlin (L), Wang Meng (2nd L), Zhou Yang (front in R) and Zhang Hui celebrate after the women's 3000m relay final of short track speed skating at the 2010 Winter Olympic Games in Vancouver, Canada, Feb. 24, 2010. China's team won the title of the event with a world-record-breaking time 4:06.610. Twice Olympic champion Wang Meng led the Chinese women to top the podium of the 3,000m short track speed skating relay with a world record at the Vancouver Olympic Winter Games here on Wednesday, as South Korea was disqualified for impeding. "We went into the race prepared for the worst. I'm so thrilled that we won," said the 24-year-old Wang, who awarded China its second gold medal in Vancouver from the women's 500m short track a week ago. "I was in charge of the first half of the relay and Zhou Yang was in charge of second half. Everyone stayed calm throughout the race and I'm so proud of them," she added. Wang and teammates Zhou Yang, Sun Linlin and Zhang Hui clocked in four minutes and 6.610 seconds for the gold medal, the fourth title China has won at the Vancouver Games. The new mark broke the Chinese team's own world record of 4:07.179 set in 2008, and awarded China its first ever relay crown since short track speed skating became an Olympic event in 1992.

A recruiter from a clothing factory in Ruibao town, Guangzhou, holds up a poster with a list of job vacancies yesterday. Companies in the Pearl River Delta, the country's manufacturing heartland, are facing major labor shortages after workers are failing to return after the Spring Festival holiday. Nearly one in 12 migrant workers is not expected to show up after the break in Guangdong province, home to some of the country's leading exporters, according to survey of leading employers. In comparison, one in 20 did not return last year. There are an estimated 150,000 vacancies in Guangzhou alone, compared with virtually zero last year during the depth of the global economic crisis, according to a survey by the Guangzhou Human Resource Market Service Center. Migrant workers stay home - The figures are based on interviews with 270 companies, each employing more than 200 migrant workers. Workers are said to be disillusioned with poor pay and are now finding better job opportunities near their hometowns and villages, which are benefiting from economic regeneration as a result of the stimulus package. Huang Taozhi, 28, a migrant worker from Guizhou province in Southwest China who has worked in Guangdong for five years, said she has noticed a change of attitude among many of her fellow workers. "Many of my friends have left Guangdong and are not coming back. They have decided to stay at home or seek better opportunities elsewhere," she said. Huang, who earns 2,000 yuan per month making polypropylene boards for fridges, said: "Salaries are no longer attractive here. Unskilled workers with little experience can hardly save any money with the low salaries." Wu Changqi, professor of strategic management at Peking University's Guanghua School of Management, said there has often been a problem of migrant workers not returning to their jobs but this year it was clearly more acute. "Working in the major manufacturing centers is no longer as attractive as it once was. When many people returned to their homes for the Spring Festival, they became aware of the opportunities that exist there," he said. "There has been much infrastructure work in rural areas and that has created jobs there. There, the only alternative to working in places like Guangdong is no longer poorly-paid agricultural work." Yu Huanxin, 37, is one example. He used to be a worker in an auto parts manufacturer in Dongguan of Guangdong province but now runs a corner shop in Guiding county of Guizhou province. Yu said he earns only 500 yuan less than he did per month in Guangdong. "Yes, life's exciting in big cities. But here, I'm the boss you know things cost less here ... and I can take better care of my mom," he said. Wu Zhiquan, manager of Zhicheng Recreation and Sports, said it is evident that there has been a major change in the attitudes of migrant workers. The stationary and sports supplies company employs 130 in Foshan in Guangdong province and had an annual turnover of 20 million yuan last year. "Four or five years ago, a migrant worker would come back after the holiday and bring some of his fellow townsmen looking for jobs. Now it seems it is not companies choosing workers, but workers choosing companies, " he said.

Feb 26, 2010

Hong Kong*: The Urban Renewal Authority will take over redevelopment of the dilapidated area in To Kwa Wan where four people were killed when a building collapsed last month. Financial Secretary John Tsang Chun-wah announced the special arrangements as a measure to ease residents' "fear and anxiety". At the same time the Buildings Department said two adjacent blocks - one of which has already been partly demolished - would be pulled down because they were dangerous. Residents will be allowed to return to the flats and pack their belongings today. In the HK$2 billion project, 33 blocks on Ma Tau Wai Road and Chun Tin Street, will be turned into two 30-storey blocks each with 500 square metres of open space at ground level, 1,000 square metres of community facilities and street-level shops. Acquisition will begin in May and construction is expected to take five years, until about 2016. The URA had earlier avoided the project because of increasing private acquisition by investors but Secretary for Development Carrie Lam Cheng Yuet-ngor said it would now take it over instead of partnering with developers as it usually does. Lam said the flats would be less than 500 sq ft to supply cheaper homes for first-time buyers. The buildings will be of simple designs without luxurious packaging and facilities that "inflate" the gross floor areas. "We need special measures to deal with a special case. It will be quicker and more community-friendly," she said. Authority chairman Barry Cheung Chun-yuen estimated a loss of HK$700 million and said more than 500 households would be affected. He said three tenements had been acquired by private developers but the compensation paid to them should not result in a significant increase in costs. Single owners of a whole block usually ask for compensation reflecting the potential redevelopment value of their sites, which is much higher than the total compensation paid to individual flat owners - equivalent to the value of seven-year-old flats. The authority's spokesman said the loss would result from the high financing cost as the authority would not receive the upfront payment usually paid by a developer for such a project. Owners of the collapsed building would also receive compensation from the authority but would have to bear the ultimate legal liability from the accident. Existing owners and shop tenants will be given priority in buying the redeveloped properties. Owners who want to move out before the acquisition starts in May can obtain a partial advance of their compensation. The urgent plan is largely welcome by those living on the same street as the collapsed building but those running businesses there are more hesitant. Hung Shuk-chun, who has run a metal workshop on the same street for the past 40 years, said she did not want to move and rejected several acquisition offers from an estate agent last year. "We have a network of factory and shop clients here. It's hard to find another convenient place." Lau Kin-por, who rents a shop to run a salon at 45F Ma Tau Wai Road, temporarily closed by the government since the collapse, said redevelopment was inevitable because customers worrying about safety would stop coming. "I don't have much hope in claiming compensation from the owner of [the collapsed block] because it is a limited company and can declare bankruptcy."

Financial Secretary John Tsang Chun-wah delivered a budget speech remarkable chiefly for the way he managed to combine open-handed spending with political caution. The government can certainly afford to loosen its purse strings. Tsang originally forecast a consolidated deficit of HK$39.9 billion for the fiscal year ending next month. But by yesterday that deficit had become a projected HK$13.8 billion surplus, thanks to last year's bumper land and stamp duty revenues. Now Tsang is planning to go out and spend, projecting consolidated deficits of HK$45 billion over the next three years. With fiscal reserves at more than HK$500 billion, Tsang could have announced a bold suite of long-term programmes to boost competitiveness, improve health care provision and tackle the city's widening inequalities. Instead, he opted for a grab-bag of one-off sweeteners worth HK$20 billion aimed at appeasing a range of interest groups. The salaried middle class got another tax rebate, worth up to HK$6,000. Public housing residents got a two-month rent waiver. The poorest citizens received a bonus social security payment, and their school-age children were offered a HK$1,300 internet access subsidy. We all got a property rates holiday. Some businesses will enjoy handouts too. The city's financial sector will benefit from broader tax concessions in the bond market and on exchange-traded investment funds. Trademark and copyright payments will be made tax-deductible. But it won't be these piecemeal giveaways that plunge Hong Kong's public finances into the red for the next three years. Tsang's projected deficits will result almost entirely from the government's massive infrastructure spending. After breaking ground on the Hong Kong-Zhuhai-Macau bridge, the Central-Wan Chai bypass and the high-speed rail link to Guangzhou in the current financial year, the government planned to start work next year on additional projects including the Kai Tak cruise ship terminal and a Tseung Kwan O "velodrome-cum-sports centre", Tsang said. All up, spending from the government's capital works reserve fund is projected to reach HK$55.5 billion next year, half as much again as the government is planning to allocate to health care and even more than the HK$52.2 billion Tsang plans to spend on education. For each of the following two years, capital works reserve fund spending will top HK$70 billion. These lavish outlays will certainly keep the construction sector happy. But whether spending more on infrastructure than on education in what is an already infrastructure-dense city is really the best way to create the "knowledge-based and high- value-added economy" Tsang professes to want is less clear. Tsang, though took a swipe at critics. The higher spending on social welfare which they advocate would be unacceptable to society, he said, and defended a "pragmatic approach to economic development". To many, however, Tsang's budget smacked less of pragmatism than a sad lack of imagination.

John Tsang's budget speech is relayed from the giant screen at the Times Square shopping mall in Causeway Bay yesterday. Financial Secretary John Tsang Chun-wah yesterday delivered a HK$20.4 billion relief package in his budget, including a tax rebate of up to HK$6,000 and a property rates waiver for one year. With public coffers expecting to pocket a consolidated surplus of HK$13.8 billion for the current financial year, he proposes a series of one-off relief measures, recognising that the impact of the global financial crisis is not yet over. Tsang offered a salaries tax rebate of 75 per cent, with a HK$6,000 ceiling, which will cost the government HK$4.5 billion and benefit 1.4 million taxpayers. Property rates will be waived for all four quarters for the next financial year at a cost of HK$8.6 billion, subject to a ceiling of HK$1,500 a quarter for each rateable property. People receiving Comprehensive Social Security Assistance, the Old Age Allowance and Disability Allowance will be given an extra month's payment, while public housing tenants will be waived two months' rent. The government will also waive the business registration fee for a year, which will cost it HK$1.8 billion. The administration has handed out HK$87.6 billion since February 2008 to counter the global financial crisis and cushion the impact of inflation. "I must stress that these exceptional means employed during these exceptional times cannot continue for long," the financial chief said. "Otherwise, they will affect the health of our public finances and dampen the enthusiasm for economic progress. "In the long run, we must maintain fiscal discipline to ensure that our children will not be burdened by our spending today," he said. Speaking at a press conference after delivering the budget, Tsang said he had no intention of changing Hong Kong's low and simple tax regime during the remaining two years of his tenure. He said a revamp of the taxation system to redistribute wealth was not what the majority of Hong Kong people wanted. A top government official said there was no absolute poverty in Hong Kong. "[The] Gini coefficient is a trick to fool people. The index was only used by countries to measure income equality, while no city uses it. Cities like London and New York do not adopt the Gini co-efficient," the official said. In Hong Kong, the Gini coefficient - a globally recognised measure of inequality of income or wealth - increased from 0.483 in 1996 to 0.500 in 2006, the Census and Statistics Department says. Chief Executive Donald Tsang Yam-kuen said he supported the one-off relief measures announced in the budget because the full benefits of economic recovery had yet to trickle down to the grass roots and the middle class. Democratic Party chairman Albert Ho Chun-yan said the budget was too conservative, as in past years. "The whole budget has not responded to the needs of the underprivileged," he said. Civic Party leader Audrey Eu Yuet-mee said the budget failed to offer solutions to deep-rooted problems in Hong Kong. She said the government should resume the construction of Home Ownership Scheme flats and dedicate more resources to encourage the use of environmentally friendly vehicles.

  The government is likely to record a budget surplus of HK$20 billion this financial year, up from the estimated HK$13.83 billion announced in the budget speech. This compares with an earlier government forecast of a HK$40 billion deficit and will increase reserves to more than HK$510 billion, enough to cover almost two years of government spending. The relatively strong performance during the unprecedented global downturn was mainly due to increased revenue from stamp duty and land premiums. Critics accused Financial Secretary John Tsang Chun-wah of hoarding cash when many households faced layoffs and businesses were struggling. But a top government official welcomed the government's ballooning war chest, saying "the more, the merrier". "I'd be very happy if the fiscal reserves grew to HK$1 trillion," he said. Tsang said that while he would use the reserves to prop up the economy in down times, the need to support an ageing population and a shrinking labour force meant he "must act with prudence and replenish our reserves as and when appropriate". David O'Rear, chief economist at the Hong Kong General Chamber of Commerce, said "there is room for returning a reasonable portion to taxpayers". Views on the optimal size of the reserves vary. Former finance chief Henry Tang Ying-yen raised the issue in his last budget speech in 2007/08, when the reserves could have covered 29 months of government spending. In 2002/03, then financial secretary Antony Leung Kam-chung pitched 12 months as the desirable level for the reserves. But a top government official said there was no need to review what level of reserves was appropriate. Tim Lui Tim-leung, a tax partner with accounting firm PriceWaterhouseCoopers, said the government could basically only increase fees and taxes to boost revenue, given that spending was rising. Capital expenditure, such as land acquisition and public works, is estimated to increase from HK$55 billion in 2009/10 to HK$66 billion in 2010/11 and HK$80 billion in 2011/12. KPMG tax partner Jennifer Wong How-yee said committing to such spending was worrying since revenue was unpredictable. The economy contracted 2.7 per cent last year after expanding 2.6 per cent in the fourth quarter. It is forecast to grow 4 per cent to 5 per cent this year, partly because of a low base of comparison. Without the stimulus measures introduced to boost the economy, gross domestic product would have shrunk 4.7 per cent last year. It will grow between 2.7 per cent and 3.7 per cent this year, according to government estimates.

Aside from his salary increase being shelved, HSBC chief executive Michael Geoghegan is also facing pressure to waive his annual bonus for the second year running. HSBC (SEHK: 0005) chief executive Michael Geoghegan may have relocated to Hong Kong but he has not escaped the long arm of the British government, which has indirectly scotched the banking giant's plans to give him a pay rise. The bank has shelved its goal to raise Geoghegan's salary 40 per cent to £1.5 million (HK$18 million) from £1.07 million, British media reported. This followed a shareholder revolt evidently inspired by the government, which has been eager to punish bank chiefs for the nation's financial crisis. The HSBC chief was not paid a cash bonus last year after the bank's dismal performance in 2008. Earlier this month, Britain's City minister Lord Myners fired off a strongly worded letter to 50 of the country's leading investment funds demanding that they urge banks to show restraint on executive pay. An HSBC spokesman declined to comment. The bank's remuneration committee will formally recommend a salary package for Geoghegan and the rest of HSBC's board tomorrow, before revealing its decision on Monday alongside the bank's 2009 financial results. But a person familiar with Geoghegan's personal affairs said: "The British government has been keen for banks to toe the line." The bank was set to increase HSBC group finance director Douglas Flint's salary to £900,000, the Financial Times said, but is now likely to freeze his base pay. The HSBC chief is also facing pressure to waive his annual bonus for the second year running. In the past week, chief executives at Barclays, RBS and Lloyds Banking Group have all said they will forgo their bonuses for 2009. This comes after a long-running media storm in Britain over "fat cat" banker pay, which has escalated in the run-up to the country's general election, expected in May.

A representative submits a Kerry Properties tender for MTR Corp's Austin Station property development, at the railway operator's headquarters in Kowloon Bay. MTR Corp has received an enthusiastic response from developers for the planned HK$18 billion luxury residential project above Austin Station in West Kowloon, even though it will require a huge capital commitment. The railway operator yesterday received five bids from six developers in a tender for the project. New World Development teamed with Wheelock Properties (SEHK: 0049) to submit a bid while Sun Hung Kai Properties (SEHK: 0016), Henderson Land Development (SEHK: 0012) and Kerry Properties (SEHK: 0683) joined the bidding separately. Cheung Kong (Holdings) (SEHK: 0001) also submitted a bid, but did not disclose whether it had a partner. The luxury residential project will be built on the top of the new Austin Station in Canton Road, next to a golf driving range that will be redeveloped into a commercial project above the Guangzhou-Shenzhen-Hong Kong Express Rail Link at West Kowloon Station. The site covers 2.74 hectares and could be developed into a commercial-residential project with a total gross floor area of more than 1.28 million square feet. The project could provide 1,200 units. Total investment cost of the project is about HK$18 billion. Sino Land, the most aggressive bidder in the land market over the past two years, did not submit a bid yesterday. However, when asked whether it had submitted a bid with a joint-venture partner, a company spokeswoman said: "We are not the one that submitted the bid." One analyst said developers will face a large investment cost for the project. For example, such a project would boost Sino Land's gearing ratio to about 50 per cent from the current 30 per cent. Sino Land already owns two residential developments in West Kowloon. Nelson Chan Cheong-kit, a director at Lanbase Surveyors, said the response was in line with his expectations. "The bidding for the site will be aggressive as it is in a prime location. Property prices of the project may reach HK$20,000 to HK$30,000 per square foot when it launches. The prices may hit a record high for apartments in Hong Kong," he said. According to transaction data from Centaline Property Agency, prices in Kowloon Station, near Austin Station, have ranged between HK$11,000 and HK$20,600 per square foot in recent months. The Lands Department has imposed a land premium levy of HK$11.7 billion, or HK$9,140 per square foot, on the project. That means the bidders may offer at least HK$2,800 per square foot on top of the levy to MTRC (SEHK: 0066) for acquiring the project. MTRC property director Thomas Ho Hang-kwong said response to the tender was satisfactory. The railway operator will increase land supply this year. A residential project at Nam Cheong Station in Sham Shui Po will be put up for tender next month, he said. It comprises 18 residential buildings, which could provide about 3,000 units.

China Construction Bank (Asia) - the local banking unit of China Construction Bank (0939) - plans to hire at least 200 staff this year and open 12 or 13 outlets in Hong Kong.

Apple, after facing criticism that its board is too close-knit, will hold its first shareholder meeting today with a new co-lead director: Avon Products chief executive Andrea Jung. Jung, the newest director and only woman serving on the seven-member board, quietly took over as co-lead in December. She succeeds former Apple executive Bill Campbell, one of the company's longest-serving board members and a mentor to chief executive Steve Jobs. Jobs is expected to appear at the meeting. Jung's appointment follows complaints by corporate-governance experts that Jobs had too much sway over a group of hand-picked directors. That may have affected the limited disclosures about Jobs' health last year, when he had a liver transplant, said Jeffrey Sonnenfeld, a dean at Yale University's School of Management. Jung's elevation to co-lead director gave the board a more independent voice, he said.

China*: Google has scrapped the mainland leg of a regional tour showing software developers its first smartphone, the Nexus One, that had been scheduled for Beijing, its second such move following its threat to pull out from the mainland market. But the US-based internet search engine operator is recruiting again on the mainland, indicating that it might have reconsidered its threat to leave over concerns about cyber attacks and online censorship. Google China is hiring 40 staff, including engineers, sales managers and research scientists in Beijing, Shanghai and Guangzhou, according to advertisements posted on its website yesterday. The adverts - the first since Google threatened to shut down its mainland operation, apparently as a result of frustration over heightened policing of the internet - are being seen by some as a retreat from its threat to quit the mainland. "They are in the process of resolving this issue [with the government]," Beijing-based analyst Li Zhi , from research firm Analysis International, said. "Their business in China won't change too much this year." Google threatened in January to leave the mainland over what it said were cyber attacks originating from the mainland aimed at its source code and at the Gmail accounts of Chinese human rights activists around the world. It has continued to filter search engine results on the mainland, which has the world's largest number of internet users - 384 million. Google representatives and mainland officials were to resume talks in the coming days after a break for the Lunar New Year holiday, The Wall Street Journal reported on Tuesday. The talks would centre on whether the US firm could deliver unfiltered internet search results on the mainland, it said. Meanwhile, mainland media have criticised Google for teaming up with the US National Security Agency, arguably the world's most powerful electronic surveillance organisation. The Washington Post reported earlier this month that Google would work with the NSA on cyber security issues, with the NSA helping Google analyse the cyber attacks. Quoting security specialists from Japan and France, Xinhua warned that such co-operation could damage other countries' national interests as well as business security. "If Google is likened to an information-gathering machine with global reach, then such an alliance would allow the machine to send information non-stop to the NSA," it said. "It would greatly boost the NSA's capability to gather information." Dr Zhou Yongbin from the Chinese Academy of Sciences' State Key Laboratory of Information Security said Google should tread carefully in such an alliance, but such co-operation was nothing new. He said another American firm, Cisco, had security agents working inside the company, and some mainland hi-tech companies were also involved in military and government projects. "[It's like] no country admits they've dispatched secret agents to other countries, but each has a large army of spies," Zhou said.

Chinese actress Tang Wei is set to return to movie screens on the mainland after a reported ban prompted by her politically sensitive role in Ang Lee's spy thriller, Lust, Caution, three years ago. Tang's new romance, Crossing Hennessy, has cleared mainland censors, said marketing official Veii Chan of Hong Kong production firm Edko Films. But a release date has not been set and it is not clear how widely it will be released, Chan said yesterday. With just a TV series to her credit, Tang was an unknown when Lee cast her over 10,000 other candidates in his 2007 film, Lust, Caution. She became an overnight sensation for her role as a Chinese student activist who seduces a Japanese-allied spy chief in second world war-era Shanghai to pave the way for his assassination. But the politically sensitive subject matter may have caused the actress problems. China is still very sensitive about the Japanese invasion during the second world war and the atrocities committed by its military. To make things worse, Tang's character falls in love with the spy chief and gives away the assassination plot at the last minute. Lust, Caution was released on the mainland - but with heavy editing for political correctness and sexual content. Tang also did not escape unscathed. Mainland regulators ordered TV stations not to report on her and pull ads featuring her, according to news reports. She did not act again until Crossing Hennessy, in which she plays a shopkeeper who is set up with a neighbour played by veteran Hong Kong singer Jacky Cheung Hok-yau. Tang's appearance in a Hong Kong movie was a way to bypass Chinese regulators. Crossing Hennessy will be released in Hong Kong on April 1.

United States-based private equity firm Carlyle Group and Shanghai-based Fosun Group, the largest non-state-owned investment conglomerate in China, have launched a US$100 million yuan-denominated fund targeting the mainland's high-growth companies. The two companies plan to raise more funds from mainland investors for further launches and will invest together in other markets. Hong Kong-listed Fosun has businesses ranging from retailing, pharmaceuticals and financial services to property development, mining and steel. It also has strategic investments in other industries. The conglomerate is run by Guo Guangchang, who was ranked by Forbes as China's 20th-richest person last year. Carlyle already has its own yuan-denominated fund after gaining approval from the Beijing Municipal Bureau last month to set up an onshore fund to invest in large companies in the city. The firm said yesterday that the fund was still open for investment and the size had not been finalised. The firm is the latest US investor to launch an onshore fund in China. China Daily reported in August last year that another US-based private equity firm, Blackstone Group, was planning to raise 5 billion yuan for its first yuan-denominated fund investing in Shanghai after it had been given approval by the local government. In an interview with Reuters yesterday, David Rubenstein, Carlyle's co-founder and managing director, said it was becoming harder to raise capital in the US. "There's no doubt that some of the public pension funds in the United States are probably overallocated to private equity," he said. "We do invest outside China as well, of course, but China will get a predominant share of the money that we have for Asia because it's so much larger and it's such an exciting place [in which] to invest." Carlyle still has substantial investments in two of Hong Kong's initial public offerings last year: forest operator China Forestry Holdings and Shenzhen-based property developer Kaisa Group. Wayne Tsou, the managing director and head of Carlyle Asia Growth Capital, said last year that the firm had no plans to sell its investments following the flotations on the Hong Kong stock exchange. He said the company had a long-term interest in the companies in its portfolio.

Feb 25, 2010

Hong Kong*: Financial Secretary John Tsang Chun-wah unveiled some sweeteners in his budget to alleviate the financial burden on Hong Kong citizens, with the elderly and low-income earners getting particular attention. Tsang proposed reducing 75 per cent of salaries tax and tax under personal assessment for last year 2009-10 - subject to a ceiling of HK$6,000. He said this would cost the government about HK$4.5 billion - and all 1.4 million taxpayers would benefit. The financial secretary also announced rates would be waived for the 2011 year - subject to a ceiling of HK$1,500 per quarter for each rateable property. “It is estimated that about 90 per cent of domestic properties and 60 per cent of non-domestic properties will be subject to no rates in the year. This proposal will cost the government approximately HK$8.6 billion,” he said. To provide a one-off relief measures for those living in public housing, he said the government would pay two months’ rent for around 700,000 public housing tenants. Tsang explained that the new measures would make it necessary for Hong Kong to continue to run a budget deficit. “I consider it necessary to continue to run a budget deficit in the next financial year so as to ensure a solid economic recovery without exerting excessive pressure on inflation.’’ he explained. Other new relief measures announced include: an allowance of HK$1,000 in the next school year to students in kindergartens, primary and secondary schools and tertiary institutions receiving Comprehensive Social Security Assistance (CSSA) or student financial assistance, which is estimated to cost the government about HK$570 million; an allowance to CSSA recipients, equal to one month of the standard rate CSSA payments; an extra allowance to Old Age Allowance and Disability Allowance recipients, equal to one month of their current allowances; a subsidy of HK$1,300 for internet access charges in this year school year to each family receiving CSSA with children studying in primary or secondary schools; a full subsidy of HK$1,300 or half subsidy of HK$650 depending on the outcome of their means test to each family that is eligible for student financial assistance with children studying in primary or secondary; the waiving the business registration fees for one year, which will cost the government about HK$1.8 billion.

Financial Secretary John Tsang Chun-wah delivers the annual budget address to the Legislative Council on Wednesday. Hong Kong's economy has recovered quicker from the global economic meltdown than it did from the Asian economic crisis of 1997-98, Financial Secretary John Tsang Chun-wah said on Wednesday. “Both the job market and the overall economic performance indicate that our economic fundamentals are stronger than before and have shown greater resilience to withstand external shocks,” Tsang said in his third budget address to the Legislative Council. Tsang stressed the severity of the current crisis. “The shock to the global economy, in terms of severity and scale, was more profound than during the Asian financial turmoil in 1997 and 1998. Tsang recalled that during the Asian financial crisis, Asian currencies fluctuated wildly and stock and property markets fell sharply. “Nonetheless, the global economy still grew by 2.6 per cent and global trade expanded by 4.5 per cent in 1998.” he said. “By contrast, the financial tsunami triggered by the US subprime mortgage problem has swept across the entire world. The global economy shrunk by one per cent and world trade plunged by 12 per cent. This recession is the most severe since the second world war,” Tsang said. He noted that Hong Kong’s gross domestic product (GDP) fell by 7.5 per cent in the first quarter of 2009. “But, as the mainland economy returned to faster growth and the European and US economies began to stabilise, our economy improved in the second quarter and resumed year-on-year growth of 2.6 per cent in the fourth quarter. For 2009 as a whole, GDP fell by only 2.7 per cent.” he said. Hong Kong’s goods exports fell by 12.6 per cent in real terms in 2009, the biggest annual drop on record. “We can, however, take some comfort in the fact that consumer sentiment was not seriously affected for most of last year. “Business sentiment also improved distinctly during the latter half of the year, with overall investment recording double-digit growth in the fourth quarter. He also said employment conditions improved from the middle of last year, “with the unemployment rate coming down to 4.9 per cent lately”. The financial secretary argued that government measures had helped the recovery. “More importantly, Hong Kong people have demonstrated once again their tenacity, confidence and ability to rise to challenges.” Tsang cautioned that Hong Kong still faced major challenges. “The external environment is still fraught with uncertainties and the foundations of the recovery are not yet firm. “Therefore, through this budget, I will strive to achieve the three objectives of consolidating the recovery, developing our economy and building a caring society,” he added.

They're everywhere you look in Hong Kong - millionaires, that is. One out of every 14 adults in the SAR is a millionaire, a survey has found. And it seems that when the stock market booms, the millionaires' club does too - with the number last year increasing to 394,000, thanks to investment gains from the recovering economy. The number surged 13.2 percent from 2008 and is second only to the record set in 2007. The rise followed the direction of the Hang Seng Index, said Citibank Global Consumer Group deputy country business manager Simon Chow. "If the HSI surges above 23,000 points, the number of Hong Kong millionaires should break the 2007 record," Chow added when unveiling the bank's Hong Kong Consumer Wealth Review 2009. Hong Kong boasted having 414,000 millionaires in 2007 when the stocks benchmark hit its highest level in seven years. About 57 percent of respondents gained or lost their millionaire status through investments, while for 16 percent it was due to buying or selling property. The survey also found that 18 percent of the current crop of millionaires were born in the mainland. Chow did not give a comparison with last year but he estimates the percentage of mainland-born millionaires will rise in coming years. The total number of individuals with liquid assets - including cash, stocks, funds and foreign currencies - worth more than HK$1 million last year represented 7.3 percent of the adult population. At least 47 percent of the millionaires are classified as "non- working people," including retirees and housewives, while 87 percent are aged 40 or above. Gains in liquid assets and property were the key stepping stones to wealth, but most millionaires are now cautious about real estate investment. About 66 percent said they have no plans to buy property as prices are now very high, while only 12 percent said they will consider buying a new flat. Among their favorite investments are stocks, foreign currencies and mutual funds, Chow said. Citibank's millionaire survey was carried out by City University Professional Services, which interviewed 6,603 adults over the telephone. The average amount of liquid assets of each millionaire was about HK$3.8 million last year, while their net assets were close to HK$10 million. Central and Western districts have the highest number of millionaires. On average there is one millionaire for every seven adults on Hong Kong Island.

Instead of raising the tobacco duty further, the government will abolish the duty-free concession on tobacco products for people entering Hong Kong, says Financial Secretary John Tsang.

Hutchison Whampoa (SEHK: 0013) will raise its presence in the United Kingdom by investing roughly an additional £1 billion (HK$12 billion) over the next two years, its spokesman said on Wednesday. The spokesman confirmed the investment figure first reported by the Hong Kong Economic Journal, which said group Hutchison managing director Canning Fok disclosed the figure during in a panel meeting in the UK. Hutchison will re-invest in businesses including retail, property and telecommunications, the newspaper said. “We hold a positive tone for reinvesting in the UK as it has been generating good investment returns and has good regulations,” another Hutchison spokeswoman had said earlier. Shares of the ports-to-telecoms conglomerate eased 0.99 per cent to HK$54.95 in morning trade, against a 1 per cent drop in the broader market.

Bank of Communications (3328) is seeking to raise as much as 42 billion yuan (HK$47.74 billion) through a rights issue in both Hong Kong and Shanghai to bolster its capital base in accordance with regulatory requirements and to fund expansion. The issue price would be capped at 5.71 yuan apiece based on a total of 7.349 billion new shares. The capped price represents a discount of 29 percent and of 18.7 percent respectively to yesterday's closing price of 8.05 yuan in Shanghai and HK$7.99 in Hong Kong. The news - following a similar move by China Merchants Bank (3968) and an announcement by Ping An Insurance (2318) that a total of 859.8 million existing shares will become tradable on March 1 - dragged down the local market during the morning session. The Hang Seng H-Financials Index touched an intraday low of 15,391 points, before bouncing back to end the day at 15,781. According to BoCom's plan, existing shareholders may subscribe for 1.5 shares for every 10 shares they hold. The fund-raising is expected to boost the bank's core capital adequacy ratio by 2 to 3 percent, enough to support its growth over the next three years, a senior BoCom official told Reuters. Analysts said the rights issue ratio is similar to that of China Merchants Bank's offering and will not have a large dilution effect on BoCom's earnings per share. "The only concern is if its biggest shareholder - the Ministry of Finance which owns more than 20 percent of the lender - will subscribe accordingly," said Dorris Chen, a Shanghai-based assistant director of research at BNP Paribas. HSBC Holdings (0005), the second largest shareholder of BoCom with a stake now standing at just under 20 percent, declined to say if it would subscribe. On Monday, China Merchants Bank said every shareholders may subscribe for 1.3 shares for every 10 shares they already own. The Shenzhen-based lender's rights issue price would be capped at a discount of as much as 46.5 percent from its close on Friday, according to Citigroup research.

Contrary to much speculation China may not buy the International Monetary Fund's (IMF) remaining 191.3 tons of gold which is up for sale as it does not want to upset the market, a top industry official told China Daily Tuesday. "It is not feasible for China to buy the IMF bullion, as any purchase or even intent to do so would trigger market speculation and volatility," said the official from the China Gold Association, on condition of anonymity. He said China would continue to shore up its gold reserves by acquiring gold mines abroad rather than purchases on the international market. Some analysts had earlier said China would purchase the IMF gold in an effort to diversify its dollar asset-dominated foreign exchange reserves. According to estimates, over 70 percent of China's $2.4 trillion foreign exchange reserves are in dollar assets. The IMF said last week that it would expand its bullion sales to the open market. Central banks from India, Mauritius and Sri Lanka had purchased 212 tons of the yellow metal from the institution last year. Zhu Baoliang, a researcher at the State Information Center, said China would not hike its gold reserves given the limited quantity available on the market. "Gold is only a small portion of the nation's reserves," he said. According to the State Administration of Foreign Exchange, China held nearly 1,054 tons of gold reserves as of April last year, a value that equals 1.2 percent of the nation's gross domestic product, but still far below the world average of 10 percent. Gao Rukun, a researcher at Beijing Gold Economy Center, said that such a percentage is far too low and China should increase its gold reserves to 1,800 tons by 2014. However, Asian Development Bank economist Zhuang Jian noted that buying IMF gold would not only help China diversify its foreign exchange reserves but also strengthen the yuan as an international currency. Zhuang said China could have a bigger say in the IMF through the gold purchasing deal. "China can start with small purchases on the international market like the 191.3 tons of IMF gold. In the short term, the market will see volatility, but in the long term the prices will return to normal." Gold gained 24 percent last year after hitting a record high of $1,227.50 an ounce in December as a weaker dollar boosted demand for it as an alternative investment. China has been the world's largest gold producer since 2007 and surpassed India as the world's top gold consumer in 2009.

Air China Ltd, the nation's flag carrier, and Cathay Pacific Airways Ltd intend to sign an agreement to form an air-cargo venture before the end of the week, said three people familiar with the negotiations. The deal will likely be confirmed during talks in Beijing over the next few days, the three said, while declining to be identified, as the discussions are private. Air China will inject seven freighters into the venture, one person said. Cathay will put in five or six planes, two people said. The carriers plan to form the Shanghai-based venture as Chinese exports rebound amid improving consumer confidence in the United States and Europe. They first began talks in 2006 alongside a larger deal centered on Cathay's acquisition of Hong Kong Dragon Airlines Ltd. "Shanghai is the most important cargo market amongst Chinese cities," said Jack Xu, an analyst at Sinopac Securities Co in Shanghai. "It's a positive move for both airlines that helps them challenge China Eastern-Shanghai Air." Despite the sluggish international air cargo transportation market, the joint venture is expected to benefit from Shanghai's growing cargo demand in the medium- to long-term, analysts said. Shanghai Pudong International Airport currently handles over 60 percent of China's international air cargo and is the world's fastest-growing airport for handling cargo. But overseas carriers control over 70 percent of the international cargo market in Shanghai. China Eastern Airlines Corp completed the acquisition of neighbor Shanghai Airlines Co last month. The carrier surpassed Air China as the nation's No 2 airline by fleet size following the deal.

Last year's stock market rebound helped restore the ranks of Hong Kong's millionaires and saw them claw back much of their losses from the global financial crisis. Their number bounced back to nearly 400,000 - and a majority of them were women - a Citibank survey shows. The number of Hongkongers with more than HK$1 million in liquid assets grew 13 per cent to about 394,000, from 348,000 in 2008, even with global financial markets in disarray. Even so, there were 20,000 fewer millionaires than in 2007. The findings come amid growing concern about the disparity between the haves and have-nots. The income gap has widened consistently since the handover in 1997. The city's Gini coefficient - which measures income inequality on a scale of 0 to 1, where 0 is perfect equality and 1 is perfect inequality - rose from 0.518 in 1996 to 0.525 in 2001 and stood at 0.533 in 2006, the most recent year for which data is available. Of the city's millionaires, 52 per cent are women, the highest proportion in the Consumer Wealth Review's seven-year history. The findings also revealed 18 per cent were born on the mainland, although there were no details about their residency status. One in seven people on Hong Kong Island made the millionaire club last year, compared with one in 18 in Kowloon and one in 17 in the New Territories and outlying islands. Nearly half the millionaires don't get a pay packet. Although each millionaire on average saw their wealth increase to HK$3.8 million last year from HK$3.4 million in 2008, it was still well short of the 2007 average of HK$4.6 million. Combined wealth rose an estimated HK$314 billion to just under HK$1.5 trillion last year, from more than HK$1.18 trillion in 2008. Again, the toll of the global financial crisis still shows - in 2007, combined wealth was HK$1.9 trillion. Simon Chow, Citibank Global Consumer Group's deputy country business manager, said investment performance was the key reason for last year's changes. They were cited by 57 per cent of those surveyed (in 2008 the figure was 72 per cent), while 16 per cent attributed their change in fortunes to property deals, down from 19 per cent in 2008. Chow said the number of millionaires tracked the performance of the Hang Seng Index. The survey found more than one-third were optimistic about the stock market this year. Given the emphasis on investments, many millionaires were hit hard by the credit crunch and global downturn. The survey findings indicated they lost a maximum of just over HK$1 million on average on investments in stocks, foreign currencies and mutual funds. Stock losses averaged HK$862,000 for each millionaire, with mutual fund losses of HK$467,000. Foreign currency losses of HK$88,000 each were recorded. The number of wealthier millionaires, or those worth HK$5 million or more, rose the most, up 22 per cent from 2008, to 80,200. The number of individuals with between HK$1 million and HK$2 million grew 13 per cent to 190,000, Chow said. The number worth HK$2 million to HK$5 million rose 8 per cent, to 123,300. The survey was done between November 3 and December 19, with 6,603 people interviewed by phone.

Dr Lu Ming and his team at Polytechnic University have devised a way for firms to lay underground pipes without digging trenches. Researchers have developed a technology they say could ease the disruption caused by digging up busy streets to lay underground pipes. Researchers at Polytechnic University yesterday unveiled TunnelingGSV, which enables companies to lay utility pipes without having to dig trenches. Engineers in the past 30 years have increasingly used trenchless methods, with pipes installed into holes bored underground. "Trenchless methods minimise the traffic and environmental impact, dust and noise. But these methods are much more costly and time-consuming, compared to open-trench methods," said a spokesman for the Water Supplies Department. The tunnel-boring machines used to lay pipes without a trench are expensive - a mid-range local model costs about HK$12 million, while a high-end German version can cost double that amount. Unforeseen problems can also add to the cost. The ground can be hard or soft, while unseen obstacles sometimes push a drill off-course or trap it underground. "Ninety per cent of all trenchless projects will encounter some difficulty in tunnelling," said Dr Lu Ming, an associate professor at the university's civil and structural engineering department. That is where the university's technology can make a difference, according to Lu, who led the GSV project. Using a complex set of algorithms, wireless communication and computer visualisation, GSV can tell engineers exactly where the drill is and the direction it is headed. If the drill hits a hard patch of soil and is pushed off-course, engineers will know in real-time and can quickly adjust its direction, he said. A prototype was tested last autumn at a commercial site near So Kwun Wat, Tuen Mun. It was used over a three-month period to install a 55-metre section of a 220-metre concrete tunnel. The project was completed in conjunction with Hong Kong and China Gas (SEHK: 0003), CLP Power (SEHK: 0002) Hong Kong, Black & Veatch, Kum Shing Construction and Reliance-Tech, a subsidiary of Chun Wo Development Holdings. Lu said the technology could be commercially available within two years.

The new Shenzhen campus of the University of Hong Kong will be nearly twice the size of its main site in Pok Fu Lam, university chiefs have indicated. The Shenzhen government has provided a 100-hectare piece of land for the campus, which is due to be built within five years under HKU's strategic development plan, vice-chancellor Professor Tsui Lap-chee said at the university's spring media reception yesterday. "The HKU campus is only 52 hectares, so it's [Shenzhen site] a really big piece of land," he said. "The Shenzhen authorities estimate it is going to cost something like 2.7 billion yuan [HK$3.06 billion] to build a campus of that size." Professor Tsui stressed that the figure was based on a generic campus costing. Planning of the HKU extension had not yet begun so the actual estimate for the project was not yet available. "We hope that the Shenzhen government will be able to help us in funding the building of this campus and, of course, in future we hope that they will be able to fund not just the building but also the research and academic development," he said. The university would recruit academic staff for the new campus from the mainland and successful candidates would have to be up to HKU standards in terms of qualifications and international exposure. It did not intend to give a higher proportion of places to mainland students than at its main campus as the primary focus was on recruiting more international students from Southeast Asia and across the globe. Deputy vice-chancellor Professor Richard Wong Yue-chim would be holding discussions with faculty heads over which faculties would be moved to Shenzhen. Professor Tsui said Shenzhen was not the first mainland municipal government to invite HKU to run a university campus in their city. Some six years ago, authorities in Ningbo authorities approached the university with a similar proposal. HKU decided not to accept the offer because at the time the university was facing budget cuts that included cutting staff.

Lim Kok Thay (right), chairman of Resorts World Sentosa, places the opening bet on the baccarat table at Singapore's first casino in living memory. Gambling used to rank with chewing gum as one of the great sins in strait-laced Singapore. Not any more. Judging from the opening of the city state's first casino this month, Singaporeans are eager converts to blackjack and roulette despite long being warned about their evils. The casino, part of the "integrated" Resorts World Sentosa, proved a big draw card with locals despite the fact they have to pay a special entry fee and were warned by Singapore's founding father Lee Kuan Yew that they would "surely lose". With a Lamborghini sports car on display as a slot machine prize and scantily-clad showgirls, the casino represents a break from the past for Singapore, where the world-famous zoo used to be its most exciting tourist attraction. During the first week of operations from February 14, Resorts World Casino received more than 149,000 visitors, said Lim Soon Hua, assistant director of communications for Resorts World Sentosa. Many were Singaporeans or citizens of neighbouring Malaysia. Deep queues of people waited their turn to gamble on the slot machines and gaming tables while a long line of people stood to apply for a S$2,000 (HK$11,000) annual casino membership. Despite the eagerness to get to the gaming tables, the lifting of the country's strict ban on gambling does come with some caveats. The S$6.6 billion Resorts World is called "an integrated resort", because the government did not want to play up the gambling aspect and wanted to project a wholesome family image in keeping with the nation's squeaky clean reputation. Resorts World Sentosa and Singapore's other casino, Marina Bay Sands, which is expected to open later this year, are also restricted to having only a minority of their floor space for gaming. Singapore's twin casinos are not expected to rival Macau, the world's largest gaming market, which has 33 casinos that pulled in a combined US$14.36 billion in revenue last year. However, despite having the world's most stringent gaming regulations, the Lion City's effective tax rate of 12 per cent on VIP casino winnings should help it compete for business from high rollers against Macau, which taxes gaming revenues at an effective 38-39 per cent rate. Four of Resorts World's six hotels - the Hard Rock, Festive, Hotel Michael and Crockford, which feature 1,800 rooms - have been in business since January 20. During the Lunar New Year holiday, all four hotels were fully booked, with an occupancy rate of roughly 80 per cent during other periods, said Resorts World's Lim. The resort's remaining two hotels, Equarius and Spa Villas, will open by early next year, he added.

China*: Mainland’s banking regulator has told commercial lenders to restrict new credit they provide to local governments’ financing vehicles, to ward off potential risks of default.

Rich and developing countries have little hope of overcoming key disagreements over how to fight global warming, China’s climate change ambassador said on Wednesday, warning of a year of troubled negotiations. China’s Special Representative for Climate Change Negotiations, Yu Qingtai, said as nations seek a new global treaty on climate change by the end of this year, major players are unlikely to budge on the issues that stymied stronger agreement at the contentious Copenhagen climate summit in late last year. “There may be some adjustments and shifts in the positions and tactics of the various sides, but I personally believe that on some core issues, the positions of the major parties will not undergo any substantive changes,” Yu said at a meeting in Beijing on China’s climate change policies. After they failed to agree on a comprehensive pact at Copenhagen, negotiators now hope to put together a binding treaty through meetings culminating in Mexico late this year. Yu was not hopeful. “We can expect that in the coming year, there’ll still be a mix of consensus and conflict, of cooperation and struggle, on the stage of climate diplomacy,” he said. “The progress of the international negotiations faces very many difficulties.” Yu’s comments added to recent gloomy forecasts for the climate negotiations, an issue that could add to tensions with the United States. Agreeing a UN climate treaty this year will be “very difficult”, the head of the UN Climate Change Secretariat, Yvo de Boer, said on Tuesday. China has passed the United States to become the biggest producer of greenhouse gas emissions from human activity. Yet China is a developing country with average greenhouse gas output per person far lower than in wealthy countries. That dual status has put Beijing at the heart of disputes with the United States, European Union and other rich economies about how developed and big developing countries should share out burdens for controlling greenhouse gas emissions. Also crucial is how much international scrutiny should apply to the emissions actions of big developing nations. In Copenhagen, China and other poorer countries accused the West of offering too little in the way of emissions cuts and climate funds and technology to the Third World. Britain, Sweden and other countries accused China of obstructing stronger agreement at the Copenhagen summit, which ended with a non-binding accord. China should not expect wealthy countries to change their tune this year, said Yu. “I believe that there won’t be any substantive change in the developed countries’ settled policy of shifting blame to the developing countries,” he said. “They will continue pressuring the developing countries to shoulder unreasonable responsibilities.” Yu said China and other developing countries would defend their right to grow their economies without taking on internationally binding emissions targets. President Hu Jintao said on Tuesday he was committed to fighting climate change and pressing forward with a domestic goal to cut carbon intensity. China has vowed to reduce the amount of carbon dioxide – the main greenhouse gas from human activity – emitted to create each unit of economic worth by 40-45 per cent by 2020, compared with 2005 levels. This goal would let China’s greenhouse gas emissions keep rising, but more slowly than economic growth. But Hu also said Beijing was committed to the “common but differentiated” principle: that developing countries should take action to fight climate change, but not assume the internationally binding emissions targets that developed countries must shoulder under UN-backed climate treaties. Yu said negotiators should not expect China to budge. “When it comes to responsibilities that we should not assume, that harm our national interests, we will resolutely hold out, no matter how much pressure there is in the negotiations,” said Yu.

Google has scrapped the China leg of a regional event to show software developers its first smartphone, the Nexus One, following its threatened pull-out from the country.

Beijing has postponed several high-level exchanges between US and Chinese military leaders since Washington angered Beijing by announcing an arms package for Taiwan.

China's ruling Communist Party has issued an ethics code to curb the widespread corruption that its leaders see as one of the biggest threats to its long-term survival, state media reported on Wednesday. The guidelines spell out 52 banned practices for officials, including accepting cash or other financial rewards as gifts and using their influence to benefit family, friends or associates, the China Daily reported. Party officials are also barred from involvement in for-profit activities and from using public funds for personal interests. “The code is significant for ensuring clean governance... and advancing the fight against corruption and building a clean government,” the party’s central committee said, according to the Xinhua news agency. The party warned officials who violated the rules would be severely disciplined and could face criminal prosecution. President Hu Jintao has for years made fighting official corruption a priority, saying the scourge threatens to undermine the party’s legitimacy. The party’s efforts to squelch internal graft have come amid public anger over regular reports of larcenous officials and stories of excess and debauchery among top officials. Under the new code, officials are banned from spending inappropriately large amounts of government money on vehicles, receptions, new office buildings, expensive recreational activities and overseas travel. The new rules update an ethics code introduced in 1997 on a trial basis “as the party’s fight against corruption is being intensified in the new era,” the party said. The central committee said the party should step up supervision at various levels and that education on stamping out corruption and upholding integrity should be part of officials’ training. The National Bureau of Corruption Prevention and the Ministry of Supervision have made it a priority to better monitor the expenses of “naked officials,” whose family members have moved overseas, the newspaper said. About 4,000 corrupt officials fled the country with US$50 billion between 1978 and 2003 after first sending their spouses and children abroad, the report said.

Chinese mainlanders made more outbound trips during the just-concluded one-week Lunar New Year holiday compared with a year ago, the Ministry of Public Security said Monday. The number of entries and exits by mainlanders across the Chinese mainland border from Feb 13 to 19 grew by 20.8 percent to almost 2.4 million, the ministry said in a statement to Xinhua. Jiang Yiyi, a researcher at the China Tourism Academy, attributed the popularity of outbound trips mainly to rapid economic growth on the Chinese mainland, easier access to visas and people becoming more willing to spend money. According to the China Youth Travel Service (CYTS), popular outbound destinations for Chinese mainlanders included Southeast Asia, Australia and Taiwan. Taiwan tourism authorities said earlier this month that there would be up to 4,000 mainland visitors a day to the island during the New Year holiday. Since Taiwan lifted the ban on mainland tourist groups in June 2008, almost 650,000 mainlanders had visited the island by the end of 2009, spending more than $1.13 billion.

China Southern Airlines, the region's largest airline by fleet size, will issue 1.5 billion yuan (HK$1.71 billion) worth of new shares to its parent China Southern Air Holdings to fund new aircraft purchases and to top up working capital, an official said yesterday. Trading in shares of the Guangzhou-based airline was suspended yesterday after the company said it would receive 1.5 billion yuan government aid, the second bailout from Beijing after a three billion yuan capital injection from its parent last year. "On top of the government aid, we are also studying some plans to further mitigate our debt level," a senior management official at the airline said, without revealing details. "It is possible that China Southern will raise more funds by placing new shares to some individual mainland investors, similar to what China Eastern (SEHK: 0670) did to lower its debt level," said Kelvin Lau, transport analyst at Daiwa Securities SMBC. He said the total liability-to-equity ratio, or gearing ratio, in China Southern will only drop by one percentage point to 85 per cent after the second bailout because the airline's massive asset base is valued at more than 90 billion yuan. Rival China Eastern placed 4.6 billion worth of new A shares to nine individual mainland investors last December as part of the consolidation plan with Shanghai Air, in a bid to prune its debt level. Shares in China Eastern rose 3 per cent to HK$2.97 yesterday on speculation that the Shanghai-based airline would get another 1.5 billion yuan in capital injections, given that Air China (SEHK: 0753, announcements, news) and China Southern Airlines been granted 1.5 billion yuan each this year. Although passenger and cargo demand has rebounded significantly over the past year, with passenger numbers up nearly 20 per cent and cargo up 9.3 per cent year-on-year, profitability is still under pressure from plummeting ticket prices. Moreover, the high gearing ratios in mainland carriers has dented the profits of carriers such as China Southern and China Eastern because of their hefty interest expenses. Morgan Stanley estimates the 1.5 billion yuan in aid will save 51 million yuan of interest expenses for China Southern annually. However, the brokerage said the positive effect for the stock had already been priced in. Shares in China Southern rose 9.6 per cent to HK$2.98 on Monday, the last trading day before its suspension.

BYD, the mainland carmaker in which US investor Warren Buffett has a 9.9 per cent stake, said yesterday that its much anticipated electric car would be delayed because Beijing had not decided the level of subsidy it would offer to buyers. "If the central government can't substantiate the supportive policies, such as subsidisation and safety benchmarks, we can't launch the E6," Du Guozhong, general manager for communications at Hong Kong-listed BYD, said. BYD, which already makes a plug-in hybrid car, had promised to begin large-scale production of the electric car on the mainland by mid-year and to launch it in the United States by the end of this year. But Du said BYD could not meet its original plan. At the same time, the company disclosed that the car would sell for 300,000 yuan (HK$340,000), roughly the price of an Audi A4 or Honda CR-V. The delay could mark a setback for BYD - whose stock sells at a remarkable multiple of 112 times forward expected earnings - and for the mainland, which hopes to become a leader in clean-car technology. It had earlier been reported that Beijing would announce subsidies for clean cars in the first quarter, and BYD had hoped for consumer subsidies of as much as 100,000 yuan. But analysts said the government had baulked at that level of support. Minister of Science and Technology Wan Gang has been a strong advocate of electric vehicles. In April last year, he urged large domestic carmakers to jointly explore development of the components for alternative-fuel vehicles. Beijing has set a goal of having 500,000 fully electric cars on the road by next year. BYD's E6 had been considered the leading contender to meet that target. The company says the car will be able to travel 300 kilometres on a single charge, compared with the 160 kilometres for the Nissan Leaf, which is expected to be launched on the mainland next year. In September 2008, MidAmerican Energy Holdings, a unit of Buffett's Berkshire Hathaway, bought 10 per cent of BYD for US$230 million or about HK$8 a share, sparking a massive rally in the stock. BYD closed 4.01 per cent higher yesterday on the Hong Kong stock exchange at HK$63.55 For some time, questions have been raised about how soon BYD's E6 might appear on the streets. So far, only prototypes of the E6 have been seen at a few car shows. Meanwhile the Leaf, which will not go into production until next year, has been widely tested and analysed. Moreover, BYD - which was to begin manufacturing the E6 in four or five months - has not disclosed what electric motor technology it is using. Car dealers in Guangzhou and Shenzhen said they had not yet received notification from the company of when they would receive shipments of the E6. BYD has said that until it develops a mass market for its electric cars, many of the sales will be to government agencies and corporate fleets. But the company would not disclose the number of orders it has received and has not disclosed its production plans or sales targets for this year. Even when the country's first electric car materialises, the nation faces a shortage of recharging stations.

Jackie Chan croons on giant screens floating on Shanghai's river, Yao Ming beckons to shoppers from huge digital billboards on main thoroughfares and a waving blue mascot named Haibao is on view everywhere. On water and land, in homes and in schools, the propaganda machine in the mainland's largest city has unleashed an unprecedented campaign to promote World Expo 2010, which starts on May 1 and aims to attract up to 100 million visitors. China is trumpeting the expo as a bookend to the Olympics - twin showcases of the country's growing global clout. But observers say the event is a key moment for Shanghai's leaders, who stand to gain influence on the national stage if the mammoth six-month exhibition is a success. "I can't think of any time where a city has gone all out on the publicity front," said Tom Doctoroff, the head of China operations for advertising firm JWT. "It clearly suggests that the event is important to the power structure." The campaign is aimed at keeping residents and officials upbeat about the expo, and to spread the message that this is an event on a par with the Olympics in terms of importance and prestige, Doctoroff said. "You are seeing an old [propaganda] reflex, multiplied by 10," he said. The campaign has not been limited to China. Last month, Chan rode an expo float in the New Year's Day Rose Parade in Pasadena, California - seen on millions of television screens across the United States. "The ultimate goal of the expo is not only to boost the local economy but to promote Shanghai, and China as a whole," said Chen Xinkang, the head of an expo research institute at Shanghai University of Finance and Economics. "When a country is in the process of economic development, image is very important." Even the official expo website boasts that its mascot Haibao - who resembles a stubby version of the US television clay character Gumby - is "ubiquitous". The claim is not entirely hype. Haibao break-dances on screens in taxis, statues of the character line the streets, and he is on every dangling handle in subway cars and every street sweeping machine. Shrubs have been pruned to look like him and he stars in a television cartoon. Even at blood-donation drives, Haibao explains the rules. Suppressing unfavourable coverage is also part of the campaign. Censors ordered City Weekend, a local listings magazine, to rewrite an expo cover story that went beyond "happy Haibaos", according to the publication's website. Videos of Shanghai Doesn't Welcome You - a parody by punk band Top Floor Circus of the Olympics song Beijing Welcomes You - have also been deleted from several websites. The expo campaign has clearly resonated with city residents - but maybe not in all the ways officials had hoped. "I'm not a fan of Haibao and it's all a bit too much for my taste," said Di Weirong, a woman in her 30s, although she quickly added she thought the event was important for China. At a new exhibition on the expo and its image, Shanghai artist Ji Wenyu gave his less-than-flattering take, pasting an expo motto on top of 100 older propaganda slogans and calling it "The History of the People's Republic of China".

Feb 24, 2010

Hong Kong*: Bank of Communications (SEHK: 3328) (BoCom) said on Tuesday that it plans to raise as much as 42 billion yuan (HK$48 billion) via a rights issue in Shanghai and Hong Kong to bolster capital and support expansion. BoCom, about one-fifth owned by HSBC Holdings (SEHK: 0005), will sell up to 1.5 shares for every 10 held by existing shareholders, the lender said in a statement. Selling both yuan-denominated A shares and Hong Kong-listed H shares simultaneously would enable BoCom to maintain its current shareholding structure, while allowing existing shareholders to buy new shares at a discount, the bank said in the statement. The planned fundraising, which still awaits shareholders’ approval, would boost core capital adequacy ratio by 2 to 3 per cent, enough to support BoCom’s growth over the next three years, a senior BoCom official said on Tuesday, declining to be named. Analysts have widely anticipated the Bank of Communications launching a rights issue in the first half of this year due to the low level of its capital reserves compared with rivals such as Bank of China and Industrial and Commercial Bank of China (SEHK: 1398). The bank is "in desperate need of tier-one capital", which includes equity capital and disclosed reserves, according to a report by China Construction Bank (SEHK: 0939, announcements, news) International Securities.

Villagers in Tsoi Yuen Tsuen on Monday urged the government to replicate their village elsewhere so that they can continue their present way of living. Undersecretary for transport and housing Yau Shing-mu said on Tuesday a proposal by Tsoi Yuen Tsuen villagers to build another village in the New Territories was "negotiable". He was responding to a suggestion on Monday by Tsoi Yuen Tsuen concern group chairwoman Ko Chuen-heung. Ko said about 90 families wanted to continue farming in the area. She suggested the government help them to find a suitable plot of land in the New Territories. This would enable them build a village similar to the one in Tsoi Yuen Tsuen. Yau Shing-mu said the proposal sounded practical. He noted that residents had suggested using government compensation to buy or rent land nearby to re-build their village. “I think this is possible, and the existing policy allows them to do so,” Yau told local radio. “I believe many of their requests are negotiable – provided their requests conform with government policy,” he added. Yau urged the villagers to sign their compensation packages, as the final deadline was on Sunday. “They have to sign up for the package so our staff can evaluate their situation and calculate how much compensation they get,” he explained. He said the government would not postpone the deadline. More than 150 households will be forced to move from Tsoi Yuen Tsuen in Shek Kong. The village will be knocked down to make way for a high-speed rail link to Guangzhou. The government said 140 households had agreed to leave. It is offering up to HK$600,000 per household in compensation.

The total number of Hong Kong people with more than HK$1 million in liquid assets amounted to 394,000 in 2009, a new Citibank survey on Tuesday revealed. This was an increase of 13 per cent compared with 348,000 in 2008. This bring the number almost back to 2007 levels – the highest in the survey’s history. The survey was conducted between November 3 and December 19 last year when 6,603 people, aged 21 to 79, were interviewed by telephone. It found that most millionaires had HK$3.8 million, on average, in liquid assets and HK$9.5 million, on average, in net assets. (Net assets = liquid assets + fixed assets – liabilities). The survey revealed that the majority of the millionaires were retirees, accounting for 28 per cent, followed by housewives, professionals, managers and others. It also found 18 per cent were from the mainland. In terms of geographic distribution, the survey revealed one out of seven people on Hong Kong Island were millionaires in 2009. In Kowloon, one out of 18 people were millionaires, and one out of 17 in the New Territories and outlying islands were millionaires. Citibank deputy country business manager Simon Chow said the millionaires had “positive” views about the future of the stock and property markets. “But about one third of millionaires believed the financial tsunami last year had impacted on the status of Hong Kong as an international financial centre,” he said. In recent months, Hong Kong’s economy and financial markets have started to recover from the global financial crisis which hit the territory in late 2008.

Hong Kong's credit unions are being called on to pay tax for the first time in their 40-year history - with some receiving demands for several million dollars. The demands - seeking back taxes for the past seven years - have shocked operators of the 42 co-operative organisations, which use funds deposited by members to lend at low interest rates to those who need money. The demands follow a review of the organisations' business models by the Inland Revenue Department, which says it acted on legal advice. Major government departments such as the police and the Correctional Services Department, and companies such as the MTR Corporation (SEHK: 0066) and PCCW (SEHK: 0008), have their own credit unions managed by staff. Some housing estates, such as Wah Fu Estate, have credit unions to help underprivileged residents in the community. Figures from June last year show that the total assets of the 42 credit unions were HK$5.3 billion from shares of 62,769 members, with the police credit union alone accounting for HK$3 billion. The Credit Union League of Hong Kong, to which most of the unions belong, said members started receiving demands in March last year and had appealed but had received tax return forms for the current year last month. One of the smallest, the Wah Fu Estate Credit Union, says it might have to shut down if it is forced to pay tax. "We were shocked and surprised to receive the demand," treasurer Peter Wong Chun-tat said, adding that the union had only a few dozen members and not much revenue to cover its costs. Police Credit Union president Alfred Ma Wai-luk said the union had consulted its tax experts on the issue. Credit Union League senior manager Lee Yuen-cheong said the league was representing several credit unions in their appeals to the Commissioner of Inland Revenue, especially on whether a credit union's income should be regarded as taxable income and whether they were running as a trading business. Under the Credit Union Ordinance, the unions are allowed to gather deposits from their members and use the accumulated deposits to provide loan to their members for "provident or productive" purposes. The interest rate on any loan cannot exceed 1 per cent per month on the total of the unpaid balance plus any charges imposed in making the loan. The interest rate paid on members' deposits cannot exceed 6 per cent. The Inland Revenue Department said that after the review and legal advice from Department of Justice it considered credit unions should be regards as businesses operating in Hong Kong under the Inland Revenue Ordinance. They should therefore pay tax on any profits from their business apart from those on sale of assets and property. The department said credit unions did not fit the definition of a club in Section 24 of Inland Revenue Ordinance which allows clubs exemption from profits tax. KPMG tax partner Jennifer Wong How-yee said she thought the government might be taxing credit unions because it had decided their income was not exempt.

Shoppers and pedestrians walk on Tokyo's famed Ginza shopping street in this file picture. A survey released on Tuesday showed that Tokyo became the world’s most expensive office market as rents in other cities fell during the financial crisis. Tokyo has replaced Hong Kong as the world’s most expensive office market after rents fell less than in other key markets during the financial crisis, real estate adviser Cushman & Wakefield said. Office rents fell 35 per cent in Hong Kong, to US$160 per square foot, displacing Hong Kong from first place to third, Cushman said. The average cost to rent an office in Tokyo, including tax and service charges, ran US$190 per square foot last year, Cushman & Wakefield said. That was 18 per cent higher than in London’s West End, which took the second spot with an average US$161 per square foot, it said. Last year saw the first drop in global office rents since 2003, as the economic downturn and growing uncertainty over the outlook battered demand for office space. Although developers put some projects on hold in response to the crisis, the supply of office space still grew as companies vacated or sub-let excess space to cut costs, Cushman said. All of the key cities of Asia-Pacific saw falls in office rent last year, with rents in Singapore sinking 45 per cent. Tokyo dropped 21 per cent. In London’s West End, office rents sank 25 per cent, while in New York they fell 23 per cent. But Cushman noted an upbeat outlook for the market going forward, saying a recovery in corporate activity is likely to spur demand for office space. Some of the world’s leading markets, such as the City of London and Oslo, are already seeing higher rents, and rents globally are expected to reach their low point by the middle of the year, Cushman said.

Times Square is typical of the shopping malls where people can eat, socialise and relax and buy brand-name products which represent such a threat to older-style department stores. Brand-crazy mainland shoppers are adding to the woes of Hong Kong's once mighty department stores as they shun them in favor of upscale malls and luxury goods outlets. Traditional department stores, which once boomed in the city, have faced major challenges following the rise of shopping malls and people's changed shopping habits. The hordes of mainland tourists that descend on the city every week are particularly fond of the famous brand outlets, located at malls such as Times Square and Pacific Place. It was not always so. A weekend trip to a department store such as Sincere or Wing On was a must for most Hong Kong families up until the 1990s. Children could shop for toys, fathers for ties and shirts while mothers could get everything from handbags to kitchen utensils. Local department stores first faced serious competition in the 1980s from Japanese rivals. Then a more ominous trend emerged, with the rise of shopping malls. Over the past two decades the number of local department stores has dropped to only a few survivors. Malls have all the "under one roof" convenience of a department store with the added attraction of name-brand outlets. Beijing resident You Xiaojia, a regular shopper in Hong Kong, is familiar with most major retail areas in the city. She and her husband visit at least once a year to purchase clothes, accessaries and cosmetics. But like most mainland tourists, her itinerary is usually filled with visits to shopping malls. Traditional department stores are seldom on the "to do" list. "I dropped by a department store in Central a few years ago but to be honest, I don't think I will go again as it doesn't have the brands I'm looking for and it's also far away from the places where I usually do shopping," said You, 33. During their latest trip to Hong Kong last December, the couple spent around HK$60,000 buying a Chanel handbag, a Hermes leather belt and several T-shirts from other luxury brand stores. You's attitude is typical of mainland shoppers, who have been the main driver of the city's retail industry over recent years. That means department stores are benefiting less than shopping malls from the customer inflow across the border.

China*: China's technology ministry moved to tighten controls on internet use on Tuesday, saying individuals who want to operate websites must first meet in person with regulators.

23 suspects to stand trial for CCTV fire - Twenty-three people will go on trial this week for alleged involvement in a fire caused by a fireworks display that gutted a hotel at the new CCTV building in Beijing last year.

More than one in 10 children sickened by tainted milk still were suffering from kidney problems six months afterward, researchers have found, raising concerns about the long-term effects of the mainland’s massive food safety scandal. At least six children died and nearly 300,000 children fell ill two years ago after consuming infant formula deliberately watered down with the industrial chemical melamine in order to fool inspectors testing for protein. Researchers from Peking University’s Institute of Reproductive and Child Health found that while most children in a rural Chinese area who became ill after drinking tainted milk had recovered, 12 per cent still had kidney problems six months later. The report was published on Monday in the Canadian Medical Association Journal. “The potential for long-term complications after exposure to melamine remains a serious concern,” the report said. “Our results suggest a need for further follow-up of affected children to evaluate the possible long-term impact on health, including renal function.” The researchers conducted ultrasound screenings of 7,933 children under 3 years of age living in rural areas near the headquarters of Sanlu Group, the dairy at the centre of the scandal, in the northern city of Shijiazhuang, in September 2008. The initial screening found that 48 children suffered from kidney stones or swollen kidneys, the report said. The researchers monitored most of these children at intervals of one, three and six months and found that “renal abnormalities” remained in 12 per cent of the children. The scandal came to light in September 2008 when reports of babies suffering from kidney stones appeared in the mainland media, prompting a dairy to recall hundreds of tons of baby formula and the government to launch an investigation. With so many children affected, many parents blamed the government for certifying the contaminated milk powder as safe. To try to defuse public anger, the government offered payouts and free health screenings and medical treatment. Melamine, which can cause kidney stones and kidney failure, was added to watered-down milk to fool inspectors testing for protein content and increase profits. The chemical, which is used to make plastics and fertilisers, has also been found added to pet food and fish feed. Despite tightened regulations and increased inspections on producers, melamine-tainted milk products have shown up repackaged in several places around the country recently, exposing weaknesses in Beijing’s promises to better police the food chain.

Shares in China Southern Airlines were suspended on Tuesday in both Shanghai and Hong Kong markets, after the company said it expected a government cash injection.

People perform the fire dragon dance at a lantern fair in Fuyang, east China's Anhui province, Feb 22, 2010.

High hotel rates scare off tourists - Scalpers who bought Hainan bookings suffer massive losses - Skyrocketing hotel rates in Hainan province during the Spring Festival holiday scared away tourists and tainted Hainan's image as "China's Hawaii", travel experts said. Hainan, China's tropical southern island, attracted a record number of tourists seeking leisure or investment opportunities during the Spring Festival holiday. But hotels in Sanya, a city in Hainan, only had a 60 percent occupancy rate, down from 90 percent in previous years, travel experts said. The province faced criticism from the media and the public for unreasonably high hotel rates and exorbitant charges for services. The hotel rates in Hainan soared to an unbelievable level during the festival. For example, prices for a room at the Hilton Sanya Resort during the festival started at 11,138 yuan a night. Fang Hua, who traveled in his car from Guangzhou, Guangdong province, to Hainan last week, said he was disappointed with the poor service. The no-star hotel he stayed at charged 1,500 yuan for a standard room per night during the festival, up from the usual 200 yuan. Moreover, when Fang asked the hotel to fix problems in his room - no hot water and blocked plumbing - the hotel did not do anything and also refused to give him another room, because the hotel was full. "The rate is that of a five-star hotel, but the service is that of a one-star hotel. How can it expect customers to return?" he asked. The hike in hotel rates is bigger than in the past. Insiders said hotels and travel agencies had high expectations for the travel market during this year's Spring Festival, as not only tourists but also potential investors who think highly of Hainan's real estate market were planning to visit the island during the holiday. The island secured the central government's support at the end of last year to develop it into a top international tourist destination by 2020. According to the latest official statistics, at least 1.06 million tourists from home and abroad visited the island between Feb 13 and 19, up 18 percent year on year. The province yielded 2.8 billion yuan ($410 million) of tourist revenue in the week, up 62 percent. Media reports said local tour agencies had booked thousands of hotel rooms and hoped to sell them to tourists at a premium. But the unusually high price eventually scared away many budget-conscious tourists, who instead camped on public beaches or turned to cheaper family hotels. Liu Qin, from Lishui, Zhejiang province, who stayed at a family hotel with her husband, said the camping idea is brilliant and romantic. "Next time, I will bring a tent and camp under the coconut trees," she said., a leading travel website, said in a press release yesterday that the average hotel room occupancy rate in Sanya was estimated at only 60 percent during the Spring Festival holiday. "In the past, occupancy rates for the Spring Festival holidays were more than 90 percent. But this year, the occupancy rate at high-end hotels in Sanya slumped by 15 to 20 percent on average," said Xiao Baojun, who is in charge of Hainan Kang-Tai International Travel Service Co Ltd. Those who scalped hotel rooms suffered huge losses. Haikou Civil Holiday, a local large travel service, booked at least 1,000 hotel rooms in Sanya. But more than 200 rooms remained vacant during the holiday, incurring a loss of 1.5 million yuan, said General Manager Jiang Yueqin. "It (the unusual price hike in the holiday) reflects an immature market. It is near-sighted, and will eventually harm the tourist industry of Hainan," said Dai Guofu, deputy chairman of Hainan Association of Tourist Attractions. Wang Yiwu, a professor with Hainan University, suggested the industry association should make a full investigation of market demand and give guidance to the hotels. "Hainan has unique natural resources in China, but at a time when going abroad is convenient, Hainan is no longer the only choice. For the same money, many people choose to travel abroad," he said. On Sunday, hotel rates in Hainan returned to their normal level. A 22,300-yuan-per-night suite at one hotel during the festival dropped to the normal price of only 3,050 yuan, according to, a leading online travel service. On average, the booking price for a standard room at a five-star hotel in Sanya dropped to 1,300 yuan this week, which is only one-tenth of the rate during the festival, it said.

Poll finds pooches need their own space - Dog owners in Guangzhou hope that parks can be set up for their pets, and want a cremation service to be offered when their cherished pooches die, a recent poll shows. About 27 percent of the 367 dog owners polled by the Hong Kong-based Animal Asia Foundation said they were unhappy that there were no dog parks available in Guangzhou, capital of Guangdong province. The poll followed the implementation of the city's regulation on the management of dogs for half a year. The regulation prohibits dogs from entering public parks, but allows park administrators, as well as residential and property committees, to designate special zones for dogs. About 18 percent of those polled said they had yet to receive electronic chips for their pets, as stipulated in the policy, which took effect in July last year. Another poll finding was a lack of facilities for processing the bodies of pets that have died, with a request that cremation services become available. According to the regulation, dead dogs should be handed to a special department for the non-hazardous treatment of waste. Other problems highlighted by the poll include a lack of regulation on the adoption of dogs, the unlicensed trading of dogs, the need for public-service advertisements on how to properly keep a dog, the inconvenience of registering dogs and an inadequate channel for complaints. An unnamed official with the public order division of the Guangzhou public security bureau, which is responsible for managing the dog population, told China Daily yesterday it was hoped the survey would solicit public opinion on the regulation since its implementation. Further response to the poll results has yet to become available. Dong Ying, a resident in Guangzhou who keeps a dog, said nothing has changed since the dog regulation was put in place, except that she now paid the required registration fee for her pet. She said she hoped special places for dogs would be built in the city. Liu Xiaowei, another resident, did not think the regulation of dogs had any effect. He said he had to abandon some dogs because only one dog was permitted per household and he was unable to find people willing to take them as pets. With the poll results, the Animal Asia Foundation hopes to convey the concerns of dog owners so that the pledges in the new dog regulation could soon be realized, said Feng Dongmei, who is in charge of dog and cat affairs with the organization's branch in Guangzhou. When the rule is fully implemented, the dog owners will realize the registration fee offers value for money and will be more willing to pay it, Feng added. Chen Jialing contributed to the story.

Safety of food chain ensured at source - Regulation aims to strengthen supervision of animal feed Controls on animal feed will be tightened to ensure animal health amid efforts to restore public confidence in food safety. Animal raisers face a fine of up to 50,000 yuan ($7,320) for improper use of feed and additives, including practices such as adding illegal materials to animal feed and feed additives, and using meat and bone meal for ruminant livestock feed, according to a draft regulation made public over the weekend to solicit public opinion. The draft regulation also stipulates that animal feed and feed additive companies are obliged to immediately recall products upon discovery of any defect that may harm animals or people. Other stipulations in the draft include those covering imports and exports. For example, foreign companies are only allowed to sell feed and additives in China through domestic branches or local agents. Safety of food chain ensured at source - The full text of the draft regulation can be found on the website of the State Council Legislative Affairs Office, and feedback can be sent before March 15. The office said the draft regulation is to meet the increasing public demand for better quality and safety of animal products. Safety issues dogging the feed industry include illegal additives, lack of quality and safety controls over the production process, and light punishment for offenders, the office said. "The most common illegal feed additives are protein materials," Wang Dingmian, former chairman of the Guangdong Provincial Dairy Association, told China Daily yesterday. He said the reason is that the protein level is a major indicator in feedstuff tests. "The higher the protein level, the pricier the feed." He said although not all protein additives may result in harm to animals or people, unregulated usage of such materials could lead to other problems. "Animal feed is the source of the food safety chain. Unregulated feed additives may lower the quality of animal products like meat and milk," he said. Wang mentioned that after the melamine-tainted milk crisis in 2008, which led to the death of at least six children and sickened over 300,000 others, some of the milk which was not confiscated was sold to feed companies. "It is dangerous because once melamine goes into animal feed, it runs along the food chain and may finally end up in human bodies," he said. "So the government is taking action from the starting point," Wang said. Dairy products are the only animal-sourced material allowed in feed and feed additives, according to the draft. Yan Weixing, deputy director of the National Institute of Nutrition and Food Safety affiliated to the Chinese Center for Disease Control and Prevention, told China Daily yesterday that safe animal feed would help ensure healthy animals and people. Citing the mass food poisoning case last year in Guangdong province, he said: "About 70 people fell ill after eating organs, mainly liver, harvested from pigs fed with the banned chemical clenbuterol," he noted. Clenbuterol, which is poisonous to humans and could be fatal, is used to prevent pigs from accumulating fat. Also, malachite green, the chemical which battles fish parasites and fungal infections, is still used in fish farms despite a government ban imposed in 2002, Yan said. "Some farmers continue to use antibiotics because they are cheap and effective," he said. With the residue passing to humans through the food, it would raise bacterial resistance and make drugs less effective for treating various human infections.

Feb 23, 2010

Hong Kong*: Shoppers in Hong Kong don't have to pore over a retail directory or search the internet to find the largest selection of sneakers, the widest choice of flowers or the biggest assortment of dried fish in town. Dozens of wedding gown shops crowd Kimberley Road; sneaker stores line Fa Yuen Street; florists jam Flower Market Road; and abalone and shark's fin suppliers pack Des Voeux Road West. The list goes on and on. Hong Kong has many theme-driven clusters of small businesses that defy the conventional wisdom of avoiding direct competition. Economists refer to the phenomenon as the "clustering effect", saying it acts as a magnet for shoppers. Another version of the cluster-effect phenomenon can be seen in California's Silicon Valley, where hi-tech companies and venture capital firms predominate. So is Bangalore's software outsourcing business, America's movie mecca Hollywood and Antwerp's diamond centre. For vendors, it is a love-hate affair that attracts customers but intensifies competition and can drive up rents. "Birds of a feather flock together, which is good," says Leung Wing-chiu, a co-owner of Tung Hing Tai Kee Marine Products, one of the oldest dried-seafood shops in Des Voeux Road West in Sheung Wan. "The larger the number of shops that gather here, the heavier the traffic." Since Tung Hing Tai Kee debuted in 1919, the number of dried seafood shops in "dried seafood street" has ballooned to more than 100. "We never advertise and pass the savings on to customers, which in turn attracts more customers," says Leung, 72, who has seen dramatic changes in the street over the years. "Not only do our customers return again and again but also their great-grandchildren." Amassing a group of regular customers is key to competing with rivals, Leung says.

Drivers might feel traffic is moving more freely along Connaught Road Central after a new alternative route opens today, but it will be an illusion for some of them. The opening of Lung Wo Road today is expected to draw 400 vehicles an hour away from busy Connaught Road. The new road is the 550-metre first stage of a route that will eventually connect Man Yiu Street - which links Connaught Road with the outlying ferry piers - with Hung Hing Road, the continuation of Convention Avenue used by drivers taking the Cross Harbour Tunnel, in 2017. But most of them will be heading east. There will only be a slight reduction in westbound traffic because motorists have only one access to the new section from Tim Wa Avenue, alongside the Tamar site in Admiralty. Most drivers, other than those heading for the MTR's Hong Kong station, are likely to continue along Connaught Road. "A road as short as [Lung Wo Road] cannot help much on the congestion problem," Hon Chi-keung, the Civil Engineering and Development Department's project manager, said. "The real solution will have to wait till the Central-Wan Chai Bypass is completed in 2017." As for eastbound traffic, there will be an improvement. According to the 2008 traffic census, 5,050 vehicles an hour use the section at peak periods, so removing 400 vehicles will reduce traffic flow by about 8 per cent. Officials said more improvements would be seen when stage two of the road - to service shops and offices on the reclamation - opened next year.

Lead actress Sandra Ng admires the Crystal Bear award on its arrival in the city yesterday after being awarded to Echoes of the Rainbow at the Berlin film festival on the weekend. It was a time before Hong Kong's economy took off; a time when people lived a tough life but kept their chins up, striving for a better tomorrow under the colonial regime. It was the 1960s, a time that director Alex Law Kai-yui wanted to recreate on film and a positive spirit he wants to rekindle among today's youth. "We never complained back in those days. We just thought of how to overcome the obstacles we faced, or come up with an alternative solution," Law said yesterday after returning to the city with a Crystal Bear award for his movie, Echoes of the Rainbow, from the 60th Berlin International Film Festival. "Because of all those social issues like the post-80s generation and the negative energy haunting society in recent years, I had a great urge to make a film telling a story based on my childhood experience," said the writer-director, saying he was very excited and surprised by the win. Echoes, which Law made with his producer wife Mabel Cheung Yuen-ting for less than HK$12 million, beat 14 feature films in the Children's Jury Generation Kplus section over the weekend. It is the first time a Hong Kong film has won the trophy since the Generation category - divided into Kplus for young children and 14-plus for teens - was begun in 1978. Echoes, a heart-warming tale of a shoemaker's family told through the eyes of a child played by eight-year-old Buzz Chung, captured the hearts of the 11-member jury, which praised the film for creating a special atmosphere and for its attention to detail, atmospheric lighting and emotional music. The jury also gave high credit to the film's cast and moving story. Law said the story was largely based on his childhood. "I have been writing diaries since I was little, so the [writing] of the script began decades ago," said Law, who co-wrote 1987's An Autumn's Tale, a Hong Kong-made romance directed by his wife. "I don't think of which audience I have to please when making a film," Law said. A film could touch anyone's heart regardless of its origin, as long as the emotions it portrayed were sincere. He also believed Hong Kong films had to carry a local flavor. Simon Yam Tat-wah, who played the shoemaker, said he appreciated the film's intention to publicise the spirit of the 1960s in modern Hong Kong. "It's about being patient ... knowing how to adjust yourself and adapt to the environment," he said. He added that the award came as a giant lai see for the film's crew, and he hoped for another at the Hong Kong Film Awards in April. Echoes has been nominated for numerous categories at the coming awards, including best screenplay. Female lead Sandra Ng Kwan-yu's performance as the shoemaker's wife and a mother of two won her a nomination for best actress. Two young actors, Chung and Aarif Lee, were both nominated for best new performer. Ng said she was moved by the script. "It still moved me to tears when I read its fifth draft," she said, adding that she and Yam took a cut in pay to perform in the film. At less than HK$12 million, the budget qualified for assistance from the Film Development Fund, which met 30 per cent of the cost, while 35 per cent came from mainland-based Dadi Entertainment and 35 per cent from Big Pictures, a subsidiary of Hong Kong's Mei Ah Entertainment. Cheung said the Echoes project did not become reality until industry veteran John Sham, now executive director of Dadi, took the lead in financing it. She said government investment helped reduce the risks. Mei Ah managing director Patrick Tong Hing-chi said cautious calculations were necessary when deciding to invest in films such as Echoes, as the main income for local stories would only come from Hong Kong. But he said the risks would not stop the company from investing in projects with a strong local flavor. Echoes of the Rainbow opens in Hong Kong on March 11.

Sun Kung Hai bidders fought off 10 others for the lot. Strong sales at its Yoho Midtown development in Yuen Long encouraged Sun Hung Kai Properties (SEHK: 0016) to snap up a mass residential site in Tseung Kwan O yesterday for HK$3.37 billion, more than the market had expected. The sale means the government has pocketed land revenue of about HK$32 billion this financial year, almost double the HK$16.5 billion that it projected in its budget forecast last year. Land revenue last financial year totalled just HK$16.91 billion. The site, next to Bauhinia Garden, is located in the centre of the district, close to Tseung Kwan O MTR station. It attracted 11 bidders including Nan Fung Development, Chinachem Group, Cheung Kong (Holdings) (SEHK: 0001), New World Development and K Wah International. Aside from Sun Hung Kai Properties, Chinachem and Nan Fung Development showed particularly keen interest in the site. Kung Yan-sum, brother of Nina Wang Kung Yu-sum, represented Chinachem at the auction. The group pulled out after the bidding reached HK$3.17 billion. To outbid Nan Fung Development and other competitors, Sun Hung Kai Properties sent at least two bidders to the auction. It finally defeated Nan Fung and acquired the site with the 68th bid. The site's average land price in terms of gross floor area is HK$4,628 per sq ft. Property prices of new housing estates range from HK$4,391 to HK$4,866 per sq ft, according to transaction data from Centaline Property Agency. Chan Cheong-kit, a director at Lanbase Surveyors, estimated that the selling prices of the project will have to reach HK$7,000 per sq ft to generate a profit margin of 20 per cent, and the retail space will have to average HK$10,000 per sq ft. "The auction result is better than the market expected. It shows that developers are bullish about the property market outlook," he said. Chan predicted tomorrow's bidding for the MTR Corporation (SEHK: 0066)'s luxury residential project above Austin station would also be aggressive. Victor Lui Ting, an executive director of Sun Hung Kai Real Estate Agency, expected the total investment cost of the site would be HK$6.5 billion. "We plan to build a project comprising medium-to-large three-bedroom units targeting homebuyers wanting to upgrade," he said. The developer owns a hotel-retail-residential project opposite the site that will be released for sale in the second half of this year. He said the commercial value would be greatly enhanced by joining the two sites into one development. The 132,397 sq ft site can be developed into a mass residential project with a total gross floor area of 728,185 sq ft. Under the development restrictions, the developer can build residential buildings with a height limit of 100 metres, or the equivalent of about 28 storeys, with a maximum of 880 units. Shares in Sun Hung Kai Properties yesterday rose 2 per cent to close at HK$102.10.

The Urban Renewal Authority will press ahead with redevelopment of Wing Lee Street in Sheung Wan despite calls for preservation spurred by an award-winning film made in the street. The authority said the ambience of the street, where three of 12 tenement buildings will be kept intact, would be preserved. It was responding after filmmakers Alex Law Kai-yui and Mabel Cheung Yuen-ting, who won the Crystal Bear award at the Berlinale festival with their movie Echoes of the Rainbow, called for the street's preservation. Cheung, the producer, said Wing Lee Street was the only place in Hong Kong that could have been used for the film, set in 1960s Hong Kong. If it had already been demolished, they would have had to go to Malaysia or Guangzhou to find the right setting. "That would've been ridiculous," she said. The authority said the project already struck a sensible balance between preservation and development. The Town Planning Board's public consultation on the plan - under which nine of the 12 tenement blocks will be demolished and redeveloped into six-storey row houses similar in style to the tenement buildings - ends today. The street is famous for its terrace, an open space in front of the tenement buildings, where neighbours and children can get together and relax. Connie Yam, who grew up in Wing Lee Street and now operates a printing shop on the ground floor of No 7, says the street is full of childhood memories. "I would like to see it preserved. We used to play mahjong and set up our stoves outside the buildings," she said. A Form Five student, named Wing, said the area was a historic gem in a concrete jungle. "I love the place despite the bad hygiene conditions," she said, adding her parents rented a room for their family of three in one of the tenement buildings. The owner of an old-style printing company, Mrs Lee, who has been working at the street for more than 30 years, said business had been getting worse in recent years. "I'm emotionally attached to this place but most neighbours have gone. It's not bad to get some compensation from the authority as it will improve our retired life." Kwong Haap-pak, a tenant living in a newly-refurbished tenement building close to Wing Lee Street, said preservation might not be the best option. "Our building has a nice appearance but the structural conditions are getting worse inside." The authority said a study showed the buildings were dilapidated. Renovating one flat would cost hundreds of thousands of dollars, according to an assessment on refurbishing tenement buildings in Kwun Tong. A spokeswoman for the Central and Western Concern Group urged the authority to protect all buildings in the street. "It's meaningless if its architectural integrity is destroyed."

The civil service is likely to be hit by massive manpower shortages within the next 13 years with half its employees retiring between 2014 and 2023, Secretary for the Civil Service Denise Yue Chung- yee said yesterday.

$200b target - More than a dozen medium and small- sized companies are looking to sell shares on the Hong Kong bourse by the end of June, even as volatility reigns among stocks of newly listed firms.

China*: China leaders have vowed to continue fiscal stimulus spending and appropriately loose monetary policies this year, and say the economy has not yet fully recovered from the impact of the global financial crisis, state media reported yesterday. President Hu Jintao chaired a meeting of the decision-making Politburo yesterday to review the annual government work report to be delivered at the annual plenum of the National People's Congress, which begins on March 5. The announcement, aimed at setting the tone for this year's economic development, is expected to ease concerns Beijing will announce further tightening. It follows the US central bank's decision last week to raise its discount lending rate, seen as its first major move to unwind stimulus measures, which sent jitters through international stock markets. "[China] will continue to maintain the continuity and stability [of the policies]," Xinhua reported, citing the Politburo statement. However, the statement also stressed the need to manage the tempo, strength and focus of policy implementation and strike a balance between supporting growth and managing inflationary expectations. It signals that Beijing will not take major steps to unwind the stimulus package soon, although it has tightened bank lending, raising the reserve requirement ratio for major lenders twice this year. The mainland's economy expanded by 8.7 per cent last year, better than the official target of 8 per cent, thanks to a 4 trillion yuan (HK$4.5 trillion) stimulus package and loose monetary policy. While economic data released so far this year indicates signs of further recovery, economists said Beijing was unlikely to consider unwinding the stimulus measures soon. "The economy has not yet recovered to the desired level and the government still needs to work on the 'three chariots' of our economy - exports, domestic consumption and investment," said Wei Jie, an economics professor at Tsinghua University in Beijing. But monetary and fiscal policies would be tightened slightly to prevent inflation. "The tightening will only be very minor because the government still needs to encourage consumption to support economic growth," Wei said. Record loan growth last year was blamed for surges in property and commodity prices, prompting concerns over inflation and asset bubbles. This month the China Banking Regulatory Commission ordered banks to tighten up on personal loans and loans to businesses for working capital. Zhao Xijun, a finance expert at Renmin University, said the central government faced a delicate situation. It had to strike a balance between boosting consumption and preventing inflation. "Prices have gone up a lot since the latter half of last year, and this year's indicators show that the trend is going up," Zhao said. "The government will have to make sure people keep spending but at the same time that prices don't go up too quickly." Zhao said a major task facing the government was to evaluate carefully the effectiveness of the projects launched under the stimulus package to avoid overcapacity. "Most of the government spending this year will be to finish projects that were launched last year," he said.

A creative team of top Chinese and international journalists have worked tirelessly to deliver a new product that will better inform the world on Chinacentric and global events. We have created a fresh visual look that gives you more engaging stories and easier access to information. It is a multicultural product that combines the best design techniques from newspapers, magazines and books in the East and West. The new China Daily style uses sophisticated typography that combines styles of classicism and modernism in the font world. The fonts are modern versions of classic fonts, and have been specifically drawn for the newspaper medium. In music, the silence between the notes is often as important as the notes themselves. This is a philosophy adopted in our new design. White space has been dramatically increased to make content easier to read. Along with the revamped presentation, the editors at China Daily have also taken an introspective look at our content and have focused in on what you want. We will not only bring you the biggest stories in China, but also analyze the how and why, and explain what trends they might reflect and how they affect the world. Among the many changes in China Daily's content shift you will notice "Cover Story", a daily in-depth report that will cast an investigative eye on China's and the world's most important and controversial topics. While we examine the big picture, we will be looking at the smaller one, too. Another new feature, "China Face", will shed light on the diversity of China's culture. From villagers to rock stars, "China Face" tells the stories that make up the China. Our new opinion pages are a place for diversity. We cherish opinions and commentary from all walks of life. This forum for debate, discourse and discussion is designed to help the world understand China and to help China understand the world. As China continues to rise on the world stage, we will be sending news teams not only throughout China but also across the globe. New bureaus are in the works in Europe, Africa, Asia, Australia and the Americas. Although China Daily will be made in China, it will be read by the world. Don't miss next Monday's issue of China Daily, which will include a comprehensive guide on how to navigate the new design and content. Join us for the start of an exciting new era on March 1, 2010.

China broadband connections, including high-speed mobile phone links, are on track to reach more than 551 million by 2014, after a restructuring of the telecommunications sector two years ago boosted competition. The mainland, which already has the world's largest fixed-line broadband subscriber base at 103.226 million as of December, is expected to hit that new milestone as the country's three integrated fixed and wireless services providers - China Telecom (SEHK: 0728), China Mobile (SEHK: 0941, announcements, news) and China Unicom (SEHK: 0762, announcements, news) - aggressively expand their 3G mobile broadband infrastructure, according to a report from technology consultancy Ovum. "China Telecom, which has expanded its mobile broadband connections the fastest due to a service bundling strategy and better network coverage, will likely be No 1 [in terms of market coverage and connections] by 2014," said Tracey Chen, Ovum's senior analyst based in Beijing. For many years fixed-line market leader China Telecom had to sit and watch China Mobile and China Unicom enjoy the extraordinary growth in the mobile phone services market. That changed with the government revamp of the telecommunications industry in 2008, which mandated all three carriers to operate and develop fixed and wireless network assets. Ovum predicted mobile broadband to account for almost 70 per cent of the country's total broadband connections by 2014. "All Chinese operators have adopted a 3G + WLAN [Wi-fi] strategy for mobile broadband development," Chen said. The report noted that more fixed-mobile bundled service offerings will be rolled out by the three operators in the coming years. "China Telecom, with its `My Own Home' series for residential customers and `BizNavigator' for corporate clients, has gained considerable market traction with bundled services," said Ovum analyst Sherrie Huang in Hong Kong. China Mobile has a bundled service called Qinging 1+1. It has partnered with select cable television network operators to offer consumers their version of fixed and mobile bundling. "In rural areas, where fixed-line infrastructure is limited, we expect mobile-only households to become common as 3G networks are rolled out," Huang said. "The fixed-line population penetration rate in China is only 24.4 per cent, with a wide disparity between cities and rural areas. This provides opportunities for mobile broadband." In the mainland's enterprise market, fixed and mobile broadband service bundling is expected to be more common in the next few years. CLSA analyst Elinor Leung said: "The [country's] mobile broadband population could grow a lot bigger just based on the increasing use of internet-ready smartphones." Current government restrictions are also preventing higher growth. There is no direct competition between the cable TV operators and telecommunications carriers in fixed voice, television and other network services. The State Council, however, last month approved the integration of the broadcasting, telecommunications and internet networks by 2013, following trials to be carried out over the next three years. China Telecom's share price climbed 2.79 per cent to close at HK$3.32 yesterday. Shares of China Mobile rose 2.42 per cent to close at HK$76.30, while Unicom's were up 2.34 per cent to close at HK$8.73.

Chinese investors will be able to begin applying on Monday to open accounts for stock index futures trading, the China Financial Futures Exchange said, in a key step toward the long-awaited launch of index futures trade.

Businessman Xu Zhichun's plans were thrown up in the air when demand for the wind turbine blades his company made suddenly crashed. The vice-general manager of Tianjin Dongqi Wind Turbine Blade Engineering Co discovered few any longer wanted the 37.5-meter blades that were popular two or three years ago. "We were caught unprepared," said Xu. "The blades do not work as well as we thought, and we had to step up production of longer blades." China's wind energy industry sees challenges Wind turbines will become a common feature dominating the landscape in some areas. [CFP] Now the company makes blades that are 40.3 meters long and production rates have been increased to meet demand. "We produced one blade in 36 hours in the past but now we have to make one per day," said an employee in the workshop. Tianjin Dongqi is a unit under Dongfang Electric Corp (DEC), a major State-owned power equipment manufacturing company. The company is one among many blade-making enterprises, which invested a lot in the 37.5-meter blades but are now faced with a change in demand. The problem can be traced back to 2007 and 2008 when companies rushed into the wind power industry. "Many companies didn't have a deep understanding of wind power at that time," said Xu. "And the government, although it drew up favorable policies, didn't come out with a clear plan for the industry." There were only six wind turbine makers in 2004 across the country. That number increased by more than 10 times to more than 70 last year. Similarly, installed wind power capacity was 760 megawatts (MW) by the end of 2004, and it surged to over 20,000 MW in 2009, making China the third largest wind power market in the world. Inadequate research and lack of planning has led the industry to expand dramatically but at the expense of quality. Take turbine blades for example. About 70 percent of the blades in the market are 37.5 meters, which are not long enough to generate anticipated electricity levels, according to Xu. "This echoes what most people call overcapacity," he said. "It's actually excess capacity of products that don't fit the market well." Radical expansion has brought another problem: makers of both turbines and parts have seen their profits slump in recent years.

Feb 22, 2010

Hong Kong*: The city's two top postgraduate schools have seen a 25 percent rise in the number of people returning to study as a result of "extreme market volatility" experienced in last year's financial crisis. Applications to the University of Hong Kong's postgraduate programs rose by 26 percent from 9,500 in 2008-09 to 12,000 in the past academic year. Chinese University of Hong Kong's graduate school received 20,000 applications for both its taught and research programs - 25 percent more than the 16,000 in the previous year, when the economy was enjoying a boom. Like the rest of the world, Hong Kong was severely battered by a poor economy last year with the jobless rate almost doubling from the normal 3 percent to 5.4 percent in the middle of last year. The underemployment rate stood at 2.4 percent. The weak labor market hit not only the workforce, especially those in the financial sector, but also fresh graduates, some of whom stayed in school instead of hunting for jobs. "After seeing all the ups and downs over the past 10 years, people realize they need to sharpen their edge and advance their knowledge from time to time to keep pace with the change," said Paul Tam Kwong-hang, dean of HKU's graduate school. "We can no longer rely on what we learned in school years ago, that would not be enough to meet the expectations of employers." People should further their studies out of self-motivation and interest instead of seeking university as a haven from the poor economy, he said. Wong Wing-shing, dean of CUHK's graduate school, also attributed the rise in applicants to local universities making excellent progress in their academic standing worldwide. This is attracting not only local students, but also people from the mainland and overseas. They make up about one-quarter of postgraduate students at CUHK. According to HKU, its "hot pick" programs are the postgraduate diploma in education, master of economics and master of finance. "Many graduates still regard teaching as a stable career and profession, especially during an economic downturn. That may have driven them to obtain a higher degree in education to stay in the sector," an HKU spokesman said. Those who choose to pursue master of economics and master of finance programs are probably those in the finance sector trying to enhance their competitiveness, the spokesman added. At CUHK, the most popular are the juris doctor program for graduates without a law degree to become lawyers, master's degree in corporate communication, social work and law.

A Hong Kong-made film has won the Crystal Bear award for best feature film in the Generation category of the Berlin Film Festival, a first for SAR filmmakers. The film, Echoes of the Rainbow, was one of 14 competing for the award. The film, whose Chinese name is Shui Yuet Sun Tau, is directed by Alex Law Kai-yui and produced by his wife Mabel Cheung Yuen-ting. It stars Sandra Ng Kwan-yue and Simon Yam Tat-wah. "In addition to the production team and the cast, we would like to thank the Hong Kong government, in particular the Film Development Fund, for their support in production," Law said after the award. "Upon our arrival in Berlin, the Hong Kong Economic and Trade Office, Berlin, continued to offer its support and organized promotional activities at the 60th Berlinale 2010. My crew really enjoyed our stay here." Cheung also expressed her excitement and said she hopes the award will spur local filmmakers. "I hope to encourage the new generation of filmmakers not to give up easily. The younger generation can express their aspirations through films." Law and Cheung have collaborated in several films, dating back to An Autumn's Tale in 1987. That film swept 1988 Hong Kong Film Awards for best screenplay, best actor and best movie. It is also listed on the Hong Kong Film Awards' Best 100 Chinese Films of the Century. Ng described the award as a further encouragement for the Hong Kong film industry. The Generation section of the Berlinale is designed for child ren and youth and is aimed at increasing cultural understanding through film. Jury members are recruited from young audiences. In the film, Ng portrays a can-do mother who works as a saleswoman while Yam plays her shoemaker husband in a Sham Shui Po set in 1969. They have two sons who are the opposites of each other: Cantopop singer Aarif Lee Chi-ting plays the 16-year-old Desmond Law, a handsome and top athlete at an English-language high school, while Buzz Chung Shiu-tiu is eight-year-old "Big Ears" Law, a bad student who wants to be Hong Kong's first astronaut. The film focuses on the relationship between the brothers. Echoes has also been nominated for the Best Screenplay and Best Original Film Song in the 29th Hong Kong Film Awards to be held on April 18. The film will start screening in cinemas from March 11.

The HK$21 billion West Kowloon Cultural District is set to come under European leadership as the authority trims the options down to two finalists for the top job. Hundreds of millions of dollars from the West Kowloon cultural district's multibillion-dollar budget is set to be redirected to enhancing "software" as the government undergoes a dramatic change of heart. The government hopes to switch some funds from the HK$21.6 billion approved by the Legislative Council last July and use them for improving cultural software - that is, the people, programs and events - by training performers and educating audiences, a source said. Local groups, which are expected to benefit most from the revised approach, welcomed the idea. The source said the funding will be used for three purposes: to enhance arts education in schools and non-traditional training centers; to subsidize art groups and sponsor performers to go overseas; and provide free art classes and tickets to performances. Chief Secretary Henry Tang Ying- yen, who is also West Kowloon Cultural District Authority chairman, will have to formally ask Legco to change the use of part of the approved funding. The first phase of the arts hub is set to open in 2014 or 2015. Chung Ying Theatre Company art director Ko Tin-lung said he had suggested that the Arts Development Council spend HK$500 million to improve the software for the cultural hub, which will contain up to 15 performing arts venues and a museum. "The government should not wait for construction of the venues to start training talent," Ko said. He suggested that HK$50 million be used in a trial scheme and, to ensure the most effective use of the money, existing arts groups should be sponsored. On education, Ko said drama, for example, could be added to liberal studies in school. "The students can understand the topic first then do a play on it," he said. "Students can then learn both drama and social issues." Ko said many talented set decorators and lighting crew had left Hong Kong for Macau when the new casinos offered more attractive packages. "The government should now estimate how many people they need when the art venues and museum are open." However, Mathias Woo Yan-wai, creative and program director of arts group Zuni Icosahedron, said the government might not need the money from the cultural hub's budget as it could strengthen existing funding from the Home Affairs Bureau. He said what Hong Kong lacks most is art teachers. "Not all art experts can teach. Not all actors can be teachers," he said. "To set a policy to train the teachers is a very important way to provide more 'software' too."

The Ho family dons glasses to watch a 3D racing game demonstration at Harbour City. Hongkongers could soon be watching 3D TV in the comfort of their living rooms. With Avatar smashing box office records in Hong Kong, it's clear we're a city that loves 3D. So there's probably more than a few million people out there who will relish the news that we could be kicking back at home watching 3D movies this summer. JVC released the first 3D television in January, and now Sony has entered the race, and is set to release its own 3D-enhanced TVs, Blu-ray players, digital cameras and video game players, just as air-conditioners reach their peak in July. Samsung, Panasonic, LG and TCL (SEHK: 1070, announcements, news) are among brands which revealed upcoming 3D products at January's International Consumer Electronics Show in the United States. They have yet to announce when the products will go on sale in Hong Kong. At the moment, no local broadcaster offers 3D television programmes. So, for JVC's 46-inch model, which costs HK$71,800, the most commonly available option to experience its 3D function is via Avatar's Xbox 360 game. Sony said its new TVs will allow 2D content to be transformed into 3D. More movie titles, such as animation Cloudy with a Chance of Meatballs, will also come in 3D Blu-ray formats this summer. A Sony 52-inch 3D TV will cost less than HK$79,800, the price of the current top high-definition TV, the marketing manager of Sony's HD home entertainment department, Benny Yu Ka-ming, said. Viewers will have to wear special glasses, but they will be different to those used in the cinema. The 3D effect on TV is expected to be higher definition than in cinemas, Yu said.

Hubert Yan (left) with a snakeskin gehu, Wong Lok-ting (eco-gaohu) and Yue Shi-chun (eco-gehu), each made with the new PET material. If pythons manage to escape extinction in the region, they may want to salute the Hong Kong Chinese Orchestra. More than 60,000 endangered pythons could be saved each year by the invention of a material that replaces python skin in the construction of Chinese stringed instruments. Since the late Ming dynasty, Chinese orchestras have relied on stringed instruments - called huqin - which require a python skin-covered sound box. But now the orchestra is attempting the first change in construction in more than 500 years. Musicians have discovered that PET (polyethylene terephthalate) polyester membrane, an environmentally friendly product from DuPont, exceeds the musical qualities of snakeskin. It is 10 times cheaper than python skin and makes better music. "The sound is better. It's stable, clearer and brighter. The reaction from the audience has been so good. In Belgium recently, the entire audience stood up to applaud," said Hubert Yan Hui-chang, the orchestra's artistic director and principal conductor. Yan said the better quality of the music produced by the new instruments, known as the Eco-Huqin Series, could boost audience numbers at Chinese orchestras. China makes about 500,000 stringed instruments each year. A 1.2 metre python yields enough skin to make about eight instruments, meaning more than 60,000 pythons are killed annually to make Chinese music. The orchestra, which took four years to research and develop the python-skin substitute, has made 100 instruments using the new material. An Environmental Protection Department spokesman said it had awarded a ProductWise label to the orchestra for its efforts. All pythons are listed as endangered in the 1975 Convention on International Trade in Endangered Species of Wild Fauna and Flora. Python skins from the more endangered larger species are often used to make bigger string instruments. Yuen Shi-chun, the orchestra's research and development officer who invented the new instruments, cited the bass gehu, which used the belly and back skin of a 10-metre python. Yuen said the snakes came from Vietnam, Thailand and Myanmar, and their skins were smuggled into the mainland. Trading and killing of pythons is banned on the mainland, but with prices reaching up to HK$10,000 per skin, many people are prepared to take the risk. Yuen and Yan admitted their initial intention wasn't to save an endangered species. They wanted to overcome the unstable musical qualities of reptile skin, which they believe affects public appreciation of Chinese music. "Python skins loosen in humid weather," Yan said. "We had to use hair dryers to blow-dry skins before performing, causing sound changes." Python skins also harden and sometimes even crack in dry and cold winters, affecting music quality during performances in places like Beijing during the winter. Yan said international controls on snakeskin products was another trigger for their research. "Many countries won't allow us in [on tour]," he said. "We had to apply for a permit in advance each time we performed in other countries. It was so troublesome." He said musicians sometimes had to pretend not to understand English when customs officers in other countries asked whether they had animal skins with them. Now, he said confidently, "we've got a worldwide pass". The orchestra also wanted a solution to the difficulties of buying instruments from the mainland after China imposed a quota on production of python-skin instruments. After about six months' research in 2005, Yuen realised DuPont's membrane could effectively replace python skins used to make the gaohu. In September last year, he successfully applied the new material to all stringed instruments used by the orchestra. Like other orchestra musicians, gaohu player Wong Lok-ting was resistant to the new material, which is pearl-colored and smooth to touch instead of black-banded and scaly. But that changed after she tried one during a Beijing performance in November. Due to a lack of storage space, they had even been forced to leave the instruments outside in freezing overnight weather. "If they had been conventional instruments, the snakeskins would have broken," she said. "But these ones returned to normal within half an hour [of being brought indoors]." "There was a big difference when I played it. I can use all my strength to move the bow without fear of breaking the instrument. And the volume of the music is much more powerful." "The reaction in music circles has been great," he said. "Orchestras in Beijing, Taiwan, Singapore, Malaysia and Hong Kong have placed orders for the instruments." One Taiwan businessman wanted to buy enough to supply Taiwan and Japan. However, Yan said, with little money the orchestra could not begin production and he hoped the government would fund them.

The US$1.25 billion MGM Grand Macau is part of MGM Mirage's venture with Pansy Ho that the casino firm is planning to list in Hong Kong. MGM Mirage has taken a US$548 million write-down on land in the United States as it prepares for a Hong Kong listing for its Macau partnership with Pansy Ho Chiu-king, possibly by mid-year. The casino developer took the non-cash charge on a 120-acre plot of land at Renaissance Point in Atlantic City. The move was part of divestiture settlement negotiations with the New Jersey Division of Gaming Enforcement. Investigators there last year found the Macau joint venture with Ho to be "unsuitable" following a four-year investigation. The US firm previously carried the value of the land at US$745 million as of September. It said the write-down was a major factor behind the US$433.92 million net loss it reported yesterday for the three months to December. Last year's finding by New Jersey gaming regulators meant MGM would likely face a difficult choice. It could keep its business in Macau, which includes the US$1.25 billion MGM Grand Macau. Or it could preserve its 50 per cent stake in Atlantic City's 2,771-room Borgata casino hotel and the wholly-owned plot of undeveloped land surrounding the casino. But not both. An exodus from New Jersey is now all but certain given the write-down on Renaissance Point, ongoing negotiations with US regulators and moves towards a Hong Kong listing of the Macau business. "We disagree with the New Jersey Division of Gaming Enforcement's recommendation to the Casino Control Commission concerning our Macau partner, but believe pursuing a settlement with the DGE represents the best course of action for our company and its shareholders," MGM chairman and chief executive Jim Murren said earlier this month in a statement. "We would like to put this matter behind us and move forward with the compelling growth opportunities we have in Macau." The Macau units of MGM's Las Vegas rivals - Wynn Macau and Sands China - raised a combined HK$33.9 billion by selling shares in Hong Kong late last year. Analysts have postulated that a spin-off of MGM and Ho's Macau business could raise up to US$1 billion at the high end. Murren said on a conference call on Thursday the partners were targeting a mid-year or possibly a third-quarter share sale. The MGM Grand Macau booked operating income of US$22 million on earnings before interest, tax, depreciation and amortisation (ebitda) of US$46 million during the fourth quarter. That was down from US$73 million ebitda during the third quarter but up from US$17 million ebitda a year earlier. Management blamed an unlucky streak on the high-stakes tables for the sequential decrease, and said that by contrast top-line wagering volumes rose between the third and fourth quarters.

China*: French luxury holiday operator Club Med plans to open its first property in China at a northeastern ski resort just as casino investor Lawrence Ho Yau-lung sells down his stake in the resort's financially troubled owner, Melco China Resorts. Club Med signed a management agreement with Toronto-listed Melco China to take over two hotels totalling 288 rooms at the popular Sun Mountain Yabuli ski resort in northeastern Heilongjiang province, the companies announced this week. The deal marks a long-awaited entry to the mainland market for Club Med, which began business in 1950 on the Spanish island of Mallorca and today operates 75 properties in 40 countries. In 1993, the company announced plans to open a tropical resort on southern Hainan Island complete with an 18-hole golf course, a marina and a casino. But gambling had not been legalised on the mainland, and that deal fell through along with several others after the central government heard of Hainan's plans. The agreement with Melco China - which for now remains a unit of Ho's Hong Kong-listed Melco International Development (SEHK: 0200, announcements, news) - calls for Club Med to inject up to US$3 million to improve facilities at the resort's hotels, which opened early last year. Melco China will continue to operate the skiing facilities at Yabuli, as well as a 20-room mountain-top hotel. The Club Med announcement comes just two weeks after financially troubled Melco China revealed that Melco International is selling down its stake via a private placement to a company controlled by mainland businessman and academic Mao Zhenhua. After completion of the 96 million yuan (HK$109.2 million) equity placement, Melco International's interest in Melco China will drop to 28.7 per cent from 49.3 per cent. Wisecord Holdings, a private firm controlled by Mao, will have 49.4 per cent control of the resort operator and will be entitled to appoint most of the company's board. Melco China has lost money every quarter since Melco International spun it off via a back-door listing in Toronto in May 2008. It has divested other resorts and abandoned the purchase of the Sky Mountain Beidahu ski resort in Jilin province last year after it was unable to find the funds. Mao is the chairman and chief executive of mainland ratings agency China Chengxin Credit Management and also serves as a co-director of Renmin University's Institute of Economic Research. Six months after completion of the sale, Wisecord will change the name of the ski resort developer and will no longer be permitted to use the name Melco or its Chinese equivalent.

Passengers come and go at a railway station in Beijing yesterday. A record 6.33 million passengers travelled on the mainland's rail network on Friday as the week-long Lunar New Year holiday drew to a close, the Ministry of Railways said yesterday. Railway stations, roads and airports on the mainland have been swamped since Thursday, with millions of people returning to work or study after the holiday. Friday's passenger numbers were 11.5 per cent higher than for the same day at the end of last year's holiday.

Zhou Yang wins women's short track 1500m final - China's Zhou Yang celebrates after winning the women's 1500m final of short track speed skating at the 2010 Winter Olympic Games in Vancouver, Canada, Feb. 20, 2010. Zhou Yang won the gold medal.

China Saturday issued a regulation on the implementation of the Audit Law, which required close audit to government-funded projects, to make sure financial funds were properly used.

Feb 21, 2010

Hong Kong*: A favorable HIBOR-based mortgage plan launched by Hongkong and Shanghai Banking Corporation yesterday is expected to intensify competition in the home-loans business. The lender's plan is based on the one-month Hong Kong Interbank Offered Rate plus 0.65 percent. This represents a mortgage rate of 0.72 percent, on par with the cheapest plan on the market. Together with a cash rebate of 0.5 percent, HSBC believes it is an "appropriate price to launch the product," said Francesca McDonagh, head of Personal Financial Services Hong Kong. McDonagh said she cannot anticipate what competitors will do, but added "I don't think there's much further that other banks can go." A Bank of East Asia (0023) spokeswoman said the lender will be able to match the lowest rate. On an individual client basis, rates can be as low as HIBOR plus 0.6 percent. The bank is now offering HIBOR plus 0.7 percent, capped at Prime minus 2.8 percent - a rate of 2.45 percent. Centaline Mortgage Broker managing director Ivy Wong Mei-fung said the Hong Kong Monetary Authority warned against aggressive Prime-based plans last year, so banks are focusing on competitive HIBOR-based mortgages. Wong said profit margins are not high: "I believe HIBOR plus 0.6 percent will be the lowest level." She noted rates were as low as HIBOR plus 0.45 percent in 2006. Sharmaine Lau Yuen-yuen, chief economist of brokerage mReferral, expects banks to compete in lowering rate caps. Lau said ordinary Prime-based plans can be as low as Prime minus 2.9 percent, which is around 15 basis points lower than HIBOR- based mortgage caps. HSBC has capped the mortgage rate at Prime minus 2.5 percent.

In less than a week, Nicholas Yang Wai-hung will officially end his mission at Cyberport, moving from creative technology to education. The 55-year-old says one of the most important lessons he has learned in his six years and four months as chief executive of the Cyberport Management Company is the benefit of taking a risk. "Society should be more accommodating towards risk-taking," Yang told reporters yesterday at his last media conference as Cyberport's chief executive before joining Polytechnic University as executive vice-chancellor on March 1. "People like to make quick money, and people know how to do it. That's why the government needs to take risks with a vision, even though taking a chance does not always guarantee success." Yang's philosophy of risk-taking came from his experience with Cyberport, where he strived to turn what was initially perceived by the public as a property project into a fresh breeding ground for creative digital media. Under Yang's leadership, Cyberport has launched a number of initiatives, including an IncuTrain Centre to foster new companies in digital entertainment and media industries, as well as the Cyberport Creative Micro Fund pilot scheme to nurture creative enterprises and talent. Its new Digital Cinema Exchange - a platform to distribute movies to local cinemas via the digital path - is on its way, with its pilot scheme to be in place next month. Yang believed he could have achieved more than that if he had not inherited a "negative legacy" when he took over as chief executive after answering a recruitment ad in the South China Morning Post (SEHK: 0583). He said that because society branded Cyberport negatively, he had to ask the government to pay HK$15 million a month just to cover the bills and salaries. It took him two and a half years to correct the wrongs and to turn the project's balance sheet from deficit to surplus. Hotel Le Meridien at Cyberport was once the major money loser, posting a deficit of HK$30 million a year. But last year it became the most profitable site at Cyberport, making HK$40 million. Since 2006, Cyberport has given pay rises and bonuses to its staff every year. Yang said the government had demonstrated great commitment in cultivating the city's creative industries, but he admitted there had been differences in opinion working with the government. He said the government might be taking things from a political point of view, while those working at Cyberport would opt for a business perspective. Yang was shy about giving details of the differences, but said: "It's just like a couple who argue all the time, but they end up still staying with each other."

A 14-year-old Hong Kong boy has died in a skiing accident in South Korea while on a tour with his parents. Korean news media reported that boy lost control while skiing at the High1 Ski Resort in Jeongseongun in Gangwon province and hit his head on a fence. The general manager of Wing On Travel Agency, Jo Jo Chan Shuk-fong, said the boy and his parents were on a five-day tour. They were due to return to Hong Kong tomorrow. "The tour guide and others were still on a beginners' slope but he was found on another slope," she said. "It is believed the boy suffered a serious head injury when he hit a fence." In a statement, Wing On Travel said the family had taken out insurance and the insurance company has distributed some money to the parents, who are still in South Korea. A Korean media report claimed the resort had sent a first-aid team which delayed sending the boy to hospital for an hour. According to the ski resort's website, it has 18 slopes, all at least 1.5 kilometers long, with the longest about 4.2km. There are five beginners' slopes, three intermediate slopes, eight advanced and two higher advanced slopes on Baegunsan mountain. Ski instructor Leung Tak-shing said beginners should not try to ski on other slopes unaccompanied. "Anyone who wants to ski an intermediate slope should be accompanied by an instructor," Leung said. "It is dangerous to ski alone anyway as no one can help you if you get into difficulties." Travel Industry Council executive director Joseph Tung Yao-chung said it is rare for Hong Kong people to have skiing accidents. He added: "The parents want to stay low-key so we do not know the name of the boy." The Immigration Department said it is concerned about the accident. "The department contacted the travel agency upon hearing about it," a spokesman said. "We will help the family according to its wishes."

The chief executive of Husky Energy, Canada’s second-largest oil producer and refiner, plans to step down and take leadership of the company’s Asian business, which Husky has considered spinning off. Husky said in a statement that John Lau will step down as president and CEO, but did not specify a date for his move. After leaving his position at the top of Husky, Lau will relocate to Hong Kong. The company, controlled by Hong Kong magnate Li Ka-shing, has been considering a plan to create a publicly traded company out of its Asian operations, which include some large fields in the South China Sea. “Our strategy is to create a material oil and gas business in southeast Asia with a focus on China and Indonesia together with diversification into new countries,” spokesman Graham White said. The company’s final decision on a spinoff may occur in the middle to the end of this year, White said. Husky is CNOOC (SEHK: 0883)’s partner in the producing Wenchang oil field in the South China Sea. The company’s crown jewel, however, is the Liwan gas field, 250km southeast of Hong Kong. The field, discovered four years ago, is estimated to have reserves of up to 6 trillion cubic feet. Husky has not yet announced a successor for Lau, but said its board will make an announcement before he steps down.

As the mercury falls, food prices are rising and the outlook for Hong Kong families is expensive. Prices of leafy vegetables have rocketed by up to 300 percent since the New Year, "probably the highest we have seen this past decade," according to Hong Kong Imported Vegetable Wholesale Merchants' Association chairman Yuen Cheung. Yuen added: "Many types of vegetables perish in cold and rainy weather, particularly those from Guangdong province" - the source of up to 70 percent of greens consumed in the territory. Prices are unlikely to fall, he said, until the middle of next month when more vegetables will be available. The cost of other vegetables has risen by more than 50 percent since before the Lunar New Year, with choi sum even selling at more than HK$20 a catty yesterday - three times more than last week. Prices of eggs, oil and meat have soared by up to 20 percent. Those seeking the warmth of their favorite restaurants also face a nasty chill thanks to bigger bills. Benny Ng Chun-choy of Yuen Hing Vegetables at Bowrington Street Market, Causeway Bay, said wholesale prices have doubled since the cold snap hit. "Vegetables like choi sum, Chinese kale and peanut leaves are double or three times the usual price," Ng said. Stallholders at Pei Ho Street Market, Sham Shui Po, also said prices have doubled this week. Shoppers complained about the high prices while resigning themselves to buying fewer or cheaper vegetables. There were also few crumbs. of comfort for those who like to eat out. Tai Hing Roast Restaurants managing director Ken Chan Wing-on said the lunch and dinner sets at its 20 outlets now cost HK$1 more than last week. "With the cost of eggs, oil, sugar, poultry, vegetables, rents and salaries rising, the adjustment is necessary. The 2-3 percent increment is relatively mild," Chan said. However, Hover City Chiu Chow Restaurant manager Ho Wai-mei said prices at its Lai Chi Kok eatery will remain unchanged for now - despite having to pay up to 20 percent more for supplies. But if the spiral continues, menu prices may have to be hiked after all, Ho said. Hong Kong Federation of Restaurants and Related Trades chairman Anthony Lock Kwok-on said a number of eateries have increased their prices by up to 10 percent. "Prices have been rising since the middle of last year," Lock said. Meanwhile, the Hong Kong Observatory said yesterday was the coldest day of the year so far with the mercury sliding to 8.2 degrees Celsius in the morning. Temperatures at Ngong Ping did not rise above a teeth-chattering four degrees the entire day, after hitting an almost polar low of 2.4 degrees. Ta Kwu Ling and Tsuen Wan did not fare much better either, with lows of 6.5 and 5.9 degrees respectively. The weather today will remain cloudy and cold with a few rain patches. However, better times are ahead, with temperatures forecast to rise over the weekend to reach 16 to 20 degrees on Monday.

U.S. Federal Reserve officials moved to calm speculation that a surprise rise in its emergency lending rate signals policy tightening, saying borrowing costs in the economy would stay low.

US navy sailor AOC Williams helps local elderly people celebrate Chinese New Year at the Grace Nursing Home, Durham Road, in Kowloon Tong. Some 20 sailors from the USS Nimitz aircraft carrier braved the cold weather to visit a home for the elderly in Kowloon Tong on Friday. The visit comes after nearly 6,000 sailors on the Nimitz sailed into Hong Kong for a four-day visit on Wednesday. This is despite a threat by Beijing to suspend military exchanges with the United States after it announced a HK$50 billion arms sales to Taiwan. John Miller, the Commanding Officer and Rear Admiral of the Nimitz strike group, said it was a routine port visit. Hong Kong has been a favourite destination for US sailors on R&R since the Vietnam war. Some of the sailors wanted to pay their respects to old people in Hong Kong and to wish them a happy Chinese New Year, local television reported. At the Kowloon Tong care home, sailors were taught to make dumplings and rice cakes. In return, some sang a song in English for the elderly people. One woman, surnamed Bao, said although she did not understand the sailors, she had appreciated it.

A visitor looks at a Toyota's Lexus HS250h hybrid sedan at the Toyota museum in Toyota in this file picture. The automaker's sale in the United States is already nose-diving but Asian consumers seem unfazed by what is troubling consumers in the west. Toyota is stricken by massive recalls in the US and stalled sales at home, but it is not without a lifeline – big, fast-growing markets like China and Southeast Asia where drivers seem unfazed by what is troubling consumers in the west. The world’s No 1 automaker could certainly do with a cushion if it’s going to keep its pole position in the auto world. Recalls totaling 8.5 million vehicles globally for faulty brakes, floor mats that can entangle the gas pedal and sticking accelerators have battered its once stellar reputation. Toyota’s share of the United States market is already nose-diving and a return to profit after big losses from the global recession is imperiled by an estimated US$2 billion in recall costs and lost sales. The backlash in the US, its biggest market, has been swift and merciless. Drivers feel betrayed after being lured by Toyota’s promises of unmatchable quality and safety. But in developing countries, where the scale of recalls was small, it doesn’t face such high expectations. Auto safety problems tend to draw less attention in nations where consumer protection agencies are a relatively recent innovation and compete with more pressing concerns such as ensuring basics like clean water and uncontaminated food. Mainland consumers are all too familiar with quality problems, thanks to a slew of scandals involving everything from tainted milk and medicine to crumbling buildings and roads. The government’s difficulties in preventing such troubles has left many somewhat philosophical about the challenges involved.

Hong Kong bankruptcy petitions in January fell 35.7 per cent from a year earlier, indicating an improving economic environment, government data showed on Friday.

Financial Secretary John Tsang Chun-wah is expected to dole out fresh sweeteners in his forthcoming budget, including a salaries tax rebate of up to HK$6,000 and a property rates waiver for two quarters. Other relief measures likely to be announced by the finance chief in his budget on Wednesday include a one-off allowance for welfare recipients and the elderly as well as subsidies for children from low-income families to help them pay their internet access charges. The relief package will be worth more than HK$10 billion. A person familiar with the government's financial position said the administration would only announce relief measures which had been implemented before. The salaries tax rebate of up to HK$6,000 per taxpayer would take about HK$4.1 billion from the public coffers, while the rates waiver for two quarters will cost the government HK$4.2 billion. The offer of these two sweeteners would be similar to those granted by the financial secretary in his budget last year. He is also likely to provide a matching grant of at least HK$1 billion for applications by universities, to encourage them to seek private donations. Executive councillor Anthony Cheung Bing-leung said yesterday the government should come up with measures to help low-income people who were not welfare recipients. "These people are a sandwich class who are not entitled to relief measures like extra payment of the Comprehensive Social Security Assistance or waivers of public housing rents," Cheung said. Tsang is coming under huge pressure to announce a new round of goodies on Wednesday in light of the significant improvement in recent months of the government's financial position. The administration recorded a budget deficit of HK$1.2 billion over the first nine months of this financial year, after a surplus of HK$37.7 billion in December narrowed the shortfall. In his budget last February, Tsang predicted a HK$39.9 billion consolidated deficit for the 2009-10 financial year. Since the first three months of the year mark the peak season for collecting salaries and profits tax, the administration may end up with a surplus of more than HK$10 billion for the whole financial year. The government has handed out HK$87.6 billion since February 2008. Tsang's maiden budget included measures worth HK$44.11 billion, which the financial secretary characterised as returning wealth to the people. In July 2008, 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. In May last year the government announced further measures, largely extensions or reruns of those delivered in one or more of the three previous packages.

Sun Hung Kai Properties (SEHK: 0016) will release its large residential project in Yuen Long for sale tomorrow at an average price of HK$5,200 per square foot, about 18 per cent higher than secondary transaction prices in the nearby area. The developer unveiled the price list for the first batch of 50 units at Yoho Midtown, the second phase of Yoho Town development, which are being offered at HK$4,522 to HK$9,089 per square foot of gross floor area. The 1,890-unit Yoho Midtown will be the city's biggest housing project to go on sale so far this year. "The average price is at the low end of our expectations of HK$5,000 to HK$6,000 per square foot," said Sammy Po Siu-ming, a director of Midland Realty. The units were offered at about 18 per cent higher than the HK$4,400 per sq ft average transaction prices for units in phase one. "But many owners have held back their units from sale in the secondary market," said Po. "They will revise upward their asking prices if SHKP achieves strong sales over the weekend." He said Midland had received 2,000 expressions of interest in the project from potential homebuyers. Seventy per cent are residents of Yuen Long, while the rest are from Hong Kong Island and Kowloon. "About 30 per cent of these clients are aiming to buy for investment purposes," he said. Centaline Property Agency said about 40 per cent of the owners of the project's first phase had raised their asking prices by 10 to 15 per cent in the belief that SHKP would achieve higher prices for the whole project. Secondary transactions for the first phase of Yoho Town have almost come to a halt. The latest transaction recorded was a 525-sq-ft phase-one unit that sold for HK$2.28 million, or HK$4,343 per square foot, early last month. SHKP said the first batch of 50 units in Yoho Midtown to be put on sale range in size from 503 to 1,251 square feet. The cheapest unit, a 573-sq-ft, one-bedroom flat, is being offered at HK$2.62 million. The most expensive is a 1,218-sq-ft, four-bedroom apartment with a rooftop, and an asking price of HK$11.07 million. Po said about one-third of the units on sale were located on lower floors at cheaper prices. "The lower pricing strategy will draw buying interest and allow the developer to release more units at higher prices later," he said. Amy Teo, a project director with Sun Hung Kai Real Estate Agency's sales department, said the company would release more units if it gets a good response over the weekend. "We aim to sell 700 units for HK$3 billion on Saturday and Sunday," she said. Shares in SHKP remained unchanged at HK$102.90 yesterday.

The International Monetary Fund will soon begin open-market sales of 191.3 tonnes of gold to raise revenue for lending. Gold prices fell 1.13 percent yesterday after the IMF announcement, but managed to recover later in the day. In early afternoon trade in London, the precious metal stood at US$1,109.80 (HK$8,656.44) an ounce. The US dollar had earlier reached a seven-month high against a basket of currencies, helping push down bullion prices and commodity-linked currencies. The drop in gold prices after the IMF statement was "only a short-term impact," said Jerff Lee Cheuk-fung, vice president of Tanrich Bullion. He believes the price will rebound as soon as countries start buying the IMF's gold. The world's third-largest gold reserve institution announced in September that it would sell 403.3 tonnes of gold - about one-eighth of its stockpile - to diversify its sources of income and increase low-cost lending to poor countries. The central banks of some countries have already bought 212 tonnes of IMF gold in private deals. "The open-market sales will be conducted in a phased manner over time [to avoid disruption of the gold market]," the IMF said. In the private deals earlier, India's central bank bought 200 tonnes for US$6.7 billion, Sri Lanka paid US$71.7 million for two tonnes and Mauritius US$375 million for 10 tons. Lee said emerging-market countries will consider buying gold from the IMF to balance their unstable fiscal situation, after a lending spree by their banks last year led to inflationary pressure. "As risks and concerns surrounding bonds and funds grow, gold may be a safer and more stable choice for them." India, Mauritius and Sri Lanka may try to add to their stockpiles but Lee thinks oil-rich countries in the Middle East may also be interested in the open- market sales. He predicts gold will reach US$1,200 an ounce this year, with a support price of US$1,040 an ounce.

Police have raided the home of PCCW (SEHK: 0008) chairman Richard Li Tzar-kai, son of Asia's richest man Li Ka-shing. Officers from the Commercial Crime Bureau visited the PCCW chairman's home and executed a search warrant during the past week, people close to the tycoon confirmed. The investigation, which two people with knowledge of the case said was not restricted to Li and involved multiple search warrants, is linked to Li's failed attempt to take PCCW private last year for HK$15.93 billion. Police also made inquiries at the Hong Kong offices of Fortis Insurance (Asia) earlier this month. PCCW and Fortis last year found themselves at the centre of a court battle with the Securities and Futures Commission, which successfully scuppered Li's buyout attempt. Hundreds of Fortis agents were among 800 people who became shareholders of PCCW shortly before investors accepted the privatisation offer from Li and China Unicom (SEHK: 0762, announcements, news) Group last February. Li made the privatisation offer through Pacific Century Regional Developments, the Singapore-listed firm he controls. "We do not believe Richard Li is the target of any investigation or that any senior management of PCRD or PCCW has committed any wrongdoing. We will co-operate fully with any investigation and wish to see it resolved as soon as practically possible," said Martin Rogers, head of litigation for Asia at international law firm Clifford Chance, who is acting for Li in connection with the investigation relating to the privatisation. A senior police official who asked not to be named said: "There have been a series of police inquiries related to this matter following up from the court decision. Search warrants for certain locations would follow as part of police investigations." In the acrimonious PCCW buyout court action, which was a rare example of a government watchdog pitting itself against a successful tycoon, the SFC alleged the February 2009 shareholder vote blessing Li's buyout attempt had been rigged. The watchdog claimed former Fortis Asia executive Inneo Lam Hau-wah, and Francis Yuen Tin-fan, the deputy chairman of PCRD, conspired to swing the vote in Li's favour by splitting board lots of PCCW shares among Fortis agents. The SFC first lost its case at the High Court. It won in the Court of Appeal last April. The appeals court ruled there had been a clear case of vote manipulation that had influenced the outcome of the takeover decision. After the watchdog won the landmark ruling, SFC chief executive Martin Wheatley said the regulator would continue probing other potential malpractices surrounding the buyout, without specifying details. Li and China Unicom dropped their privatisation bid last May. They withdrew an application to take the case to the Court of Final Appeal in September. Fortis told Bloomberg on February 10 the insurer's office had been approached by police. An official police spokesman refused to confirm an investigation was ongoing or what it was about. "We will not comment on individual cases," a spokesman said. Li's main family home is a luxury mansion in Shek O. He also owns a house on The Peak. It is not known which of his homes the police visited.

The chief executive's live-in housekeeper who had his friends around for a barbecue at Government House has had his contract terminated. A spokeswoman for the Chief Executive's Office confirmed yesterday that the housekeeper was a contract civil servant and both parties had agreed to the termination, which was effective today. "The matter was handled in a solemn and fair manner, and an investigation has been conducted," the spokeswoman said. "It was handled in accordance with procedures."

China*: China's retail sales hit 340 billion yuan (49.8 billion U.S. dollars) during the "golden week" of Spring Festival, up 17.2 percent over the same period of last year, the Ministry of Commerce (MOC) said Friday.

Foreign direct investment (FDI) into China rose for the sixth consecutive month in January, up 7.79 percent year on year to 8.13 billion U.S. dollars, China's Ministry of Commerce (MOC) said Saturday. The government approved the establishment of 1,866 overseas-funded ventures in January, a year-on-year increase of 24.73 percent, the MOC said in a brief statement posted on its website. FDI in January mainly flowed into the manufacturing sector, despite an overall decrease in the sector of 11.57 percent year on year, according to the statement. The sector attracted 48.65 percent of total FDI. In January, China's non-financial investments in foreign markets stood at 2.36 billion U.S. dollars, the MOC said.

Chinese President Hu Jintao (2nd L), who is also general secretary of the Central Committee of the Communist Party of China (CPC), talks with a businessman (1st L) from China's Taiwan Province, at the Zhangpu Pioneer Park of Taiwan farmers in Zhangzhou, east China's Fujian Province, Feb. 12, 2010. General Secretary of the Communist Party of China Central Committee Hu Jintao's talk to Taiwan business people during his Spring Festival visit in Fujian Province delivered goodwill to Taiwan, media and scholars on the island said. Leading newspapers in Taiwan including the China Times and the United Daily News followed the developments of Hu's four-day inspection tour in Fujian, which faces Taiwan. Hu ended his tour on Feb. 15 after visiting Zhangzhou, Longyan and Xiamen and celebrated the Spring Festival, or the Lunar New Year, with local residents and Taiwan compatriots living in Fujian. Hu told Taiwan business people the mainland would try its best in everything that would benefit Taiwan compatriots, and "we will honor our words." He also said the negotiation on the Economic Cooperation Framework Agreement between the mainland and Taiwan would "put into full consideration the interests of Taiwan compatriots, especially those of farmers." The China Times carried a commentary saying the message conveyed in Hu's speech to Taiwan business people was worth careful reading by Taiwan authorities. The online edition of the Central Daily News also released a commentary headlined "Hu Jintao celebrates Spring Festival in Fujian, delivers goodwill to Taiwan people." Hsu Wun-Pin, a renowned lawyer in Taiwan, said Hu's visit highlighted the role of culture and kinship in cross-Strait relations. Hsu's ancestors lived in Tong'an, now a district of the coastal city of Xiamen. Tamkang University prof. Chang Wu-yueh said Hu's choice of visiting Taiwan businessmen in cities that saw thriving cross-Strait exchanges during the most important traditional festival of the Chinese nation clearly displayed the mainland's high expectations of cross-Strait relations.

The combo picture taken on Feb. 19, 2010 shows different phases of trial illumination at the Sunshine Valley of of 2010 Shanghai World Expo, in Shanghai, east China. The construction and exhibition installation of 2010 Shanghai World Expo are proceeding steadily on schedule during the Spring Festival holidays.

An old Chinese saying goes that extreme joy begets sorrow. That was the case Thursday night when fireworks ignited the last standing tower on an ancient city gate in Zhengding county in North China's Hebei province. The tower, on the south gate of the ancient Zhengding city wall, was reported to be on fire at 8:19 pm, and was put out around midnight. No casualties or injuries were reported. The local government estimated financial losses at approximately 1 million yuan ($146,000). Local authorities said yesterday that a preliminary investigation revealed that fireworks ignited the blaze, China News Service reported. The report did not say whether the responsible parties had been apprehended. Zhengding's south gate, the last remaining tower on the fringe of the ancient city, was reportedly 1,600 years old. The east, west, and north gates have long been destroyed. The two-story wooden tower was rebuilt in 2001 at a cost of 4 million yuan. The tower blaze brought back memories for some of last year's fire at Beijing's newly completed Central China Television (CCTV) complex, which was also started by fireworks. The 30-story building, just north of the gravity-defying CCTV tower designed by Dutch architect Rem Koolhaas, burned Feb 9 last year, during China's Lantern Festival. The blaze killed one firefighter and injured six more, as well as injuring two construction workers. Financial losses totaled 163.83 million yuan ($24 million). A total of 71 people, including Zhao Huayong, former head of CCTV, and his deputy, Li Xiaoming, bear responsibility for the fire, the State Council announced earlier this month. The latest figures released by the Beijing municipal government show that 90 fires were ignited in the capital and 347 fireworks-related injuries were reported between New Year's Eve and Thursday. Meanwhile, the Nanjing Morning Post also reported yesterday that hospitals around the eastern city had many fireworks-related injuries. One local resident surnamed Zhang, was being treated in Nanjing People's Hospital's emergency room for severe burns to his mouth and eyes, according to the report.

China has entered another crucial traffic crunch period, with millions of migrant workers heading back to coastal provinces after the week-long Lunar New Year holiday. The Ministry of Railways said its network handled about 5.44 million passengers on Thursday, the fifth day of the Lunar New Year, up 12.5 per cent on the same day of the holiday last year, Xinhua reported. Nearly 40,000 migrant workers from Sichuan set out for Guangzhou on Thursday, a rise of 36 per cent. Nearly 10,000 passengers were stranded in Chengdu's Shuangliu Airport yesterday after it was shut down for four hours because of heavy fog. China News Service reported that 113 flights were delayed and four others were cancelled. Xinhua said more than 43,000 rail passengers had left Chongqing each day since Wednesday and more than 90,000 were leaving Anhui each day. The Ministry of Railways said nearly nine million passengers used trains to head back to work on Tuesday and Wednesday, a double-digit percentage rise compared with a year earlier. Yesterday was the last day of the Lunar New Year holiday on the mainland, and the ministry said the number of long-distance travellers was up because more people had decided to make earlier return trips to avoid the worst of the crowds. The ministry estimated that 210 million passengers would travel during the 40-day holiday travel season beginning on January 30, 9.5 per cent more than last year. The holiday officially lasts six days but many migrant workers take a month off. "The nation's railway departments introduced many measures to ensure smooth transport for travellers," Xinhua quoted ministry department head Gao Xiaobing as saying. An average of 3,945 passenger trains were put into use every day. The trains had an average daily capacity of 5.57 million passengers, 430,000 more than last year.

Dell, the world’s No 3 PC seller, expects to log solid double-digit growth in mainland this year, following a near doubling of sales in its latest quarter.

Beijing says it wants to spur Chinese inventions with a "Buy China" policy that gives preference to domestic technology companies. But the tactic has provoked an outcry from Washington and business groups that say it will choke off access to a massive market for goods from software to clean power equipment. Foreign companies have been alarmed by the government's announcement that it will favour technology developed in China when buying computers and other goods on which it spends billions each year. The plan, part of a decade-old effort to promote "indigenous innovation", would channel money to Chinese companies and add to pressure on foreign technology creators to shift research work to China and know-how to local partners. The move reflects Beijing's growing assertiveness as it tries to make Chinese industry more autonomous after depending on foreign money, markets and technology for three decades to drive its economic boom. Trade groups say it violates the spirit of China's World Trade Organisation free-trade commitments and its pledges to avoid protectionism that might harm the global recovery. Washington and the European Union have complained but Beijing retorts that it has yet to sign a treaty that would apply WTO rules to government purchasing. The impact on companies is unclear because no details of how it will work have been released. But the government is China's biggest software buyer and a key customer for other technology. Losing that market might hurt companies including Microsoft, Intel Corp and Motorola. Suppliers worry the rules could be extended to buying by key state-owned companies in power, telecommunications and other fields. Some companies would consider pulling out of China if they decided the loss in sales would be too great, US and European trade groups say. "It's going to have a direct impact on their expansion plans," said Richard Vuyrsteke, the president of the American Chamber of Commerce in Hong Kong. "When you ... restrict growth you can ride it out for a while but then you have to consider, is it worth it? Is it absolutely necessary to stay in this market?" The anxiety comes amid a string of incidents that have rattled foreign companies - Google's dispute with Beijing over censorship and e-mail hacking, last year's arrest of four Rio Tinto employees on commercial spying charges and a government threat last month to punish US companies for Washington's approval of a US$10 billion arms sale to Taiwan, the self-ruled island claimed by the mainland as its territory. US companies are appealing to Secretary of State Hillary Rodham Clinton and Secretary of the Treasury Timothy Geithner to make the procurement plan a priority in their annual strategic and economic dialogue with Beijing in June. Beijing's policy will create "barriers to competition in the Chinese market for our most innovative companies", said a coalition of 19 American groups including the US Chamber of Commerce and the Business Software Alliance in a letter to Clinton and Geithner. Beijing has launched "Buy China" campaigns before to favour local suppliers in building and other projects. But the technology buying rules are unusually explicit in their large-scale rejecting of a foreign role. The wave of alarm stems from Beijing's surprise announcement in November that procurement will favour Chinese producers in six technology areas - computers, clean power, communication, office equipment, software and energy-efficient products. Companies were given just three weeks to apply to be treated as domestic suppliers, a status trade groups say few are likely to qualify for, even those such as General Electric and Microsoft that have research and development centres in China. There has been no word on whether any were accepted. A second announcement in December listed 18 technologies to receive tax breaks and other support. They covered most Chinese industries, including oil and gas, power construction equipment and aircraft.

Zhang Yesui, envoy to the United Nations, will become ambassador to the United States, a diplomat said. He will be replaced in New York by Li Baodong, who is now stationed in Geneva. The appointments of Zhang and Li will not be announced for several weeks, according to the diplomat. Zhang, 56, has been China's UN envoy since 2008 and previously served as vice minister of foreign affairs. He will succeed Zhou Wenzhong in Washington. Li, 54, is the top envoy to UN agencies based in Geneva. He has been ambassador to Zambia and head of the Foreign Ministry's department of international organizations. The fresh appointment puts a non- specialist in US affairs in Washington amid rising bilateral tensions. Zhang has spent much of his career dealing with international issues and is not widely known in Washington. Those who have dealt with him describe him as a sophisticated, nuanced diplomat who has effectively represented China's interests at the UN. Sino-US relations are tense over issues from trade to the planned US$6.4 billion (HK$49.92 billion) arms sales to Taiwan to the value of the yuan. Zhang has some expertise in another area where the two countries have disagreed. He was in the middle of UN efforts to craft a response to Iran's nuclear program. Beijing has pushed for a diplomatic solution, resisting US efforts to implement sanctions. When Zhang served as a vice foreign minister, his portfolio included arms control and disarmament, as well as policy planning and oversight of Europe and North America. His wife, Chen Naiqing, is a former ambassador to Norway who also served as an envoy on Korean affairs.

Feb 20, 2010

Hong Kong*: The weather on Thursday in Hong Kong was the coldest this year – with the Hong Kong Observatory recording temperatures of 8.2 degrees Celsius. Tong Yu-fai, a scientific officer with the observatory, said a monsoon had brought cold and rainy weather to southern China. “As of 5am, the minimum temperature recorded at the observatory was 8.2 degrees Celsius – the lowest this winter,” he said. “In general, temperatures in other parts of Hong Kong were around 7 to 8 degrees Celsius only,” explained Tong. But temperatures in Tsuen Wan and Kowloon City were even colder, at 6.3 and 6.5 degrees respectively,” he said. Tong said the observatory expects the weather to remain cold and cloudy with a few light rain patches for the next few days – with moderate to fresh northerly winds. “The highest temperature on Thursday will be around 11 degrees Celsius only. “We expect temperatures will rise gradually over the weekend, and the temperature on Sunday will rise to about 15 degrees Celsius,” he said. Tong reminded people to wear plenty of clothes and to keep warm. “If you must go out, avoid prolonged exposure to the wind. You must also ensure adequate indoor ventilation,” he said. The Senior Citizen Home Safety Association reported that as of 6am, more than 120 needy elderly people requested assistance via the Elderly Hotline Service. About 14 senior citizens were hospitalised. In other developments, because some parts of China have experienced very cold weather and snowstorms since January, some vendors said the prices of some imported vegetables had risen by 30 to 50 per cent.

Hong Kong stocks began the Year of the Tiger on a robust note, opening 400 points higher supported by financial counters. The Hang Seng Index surged to 20,657.86 points at the opening, but gains were trimmed in the afternoon. The benchmark ended the day up 1.31 percent, or 265.32 points, at 20,534 - the highest in seven sessions. Hong Kong Exchanges and Clearing (0388) chairman Ronald Arculli said at a ceremony to mark the start of trading in the new lunar year that he expects the financial market and the economy to be more stable in 2010. HKEx chief executive Charles Li Xiaojia said the index's sharp rise in early trading bodes well for the Year of the Tiger. More than 10 firms have gained approval to list in Hong Kong and the regulators are studying another 30 applications, Arculli said. He added that during a visit to Russia, many firms - mostly energy and state-owned transportation companies - expressed interest in following in the footsteps of UC Rusal (0486) and floating shares in Hong Kong. Castor Pang Wai-sun, a research director at Cinda International, said: "The way the HSI opened so high was unexpected, as the local bourse followed the US market while shrugging off the fact that the mainland central bank raised the reserve requirement ratio for banks." The People's Bank of China announced last Friday that the ratio will be raised by 50 basis points. Even so, Industrial and Commercial Bank of China (1398) climbed 2.15 percent yesterday to HK$5.70 and China Construction Bank (0939) rose 0.67 percent to HK$6. Pang warned the impact of the central bank's move to tighten liquidity by 300 billion yuan (HK$341 billion) may be reflected in February's loan growth data. "The weak performance of mainland property developers showed the market's worry," said Pang. R&F Properties (2777) slid 0.35 percent to HK$11.32 and Agile Property (3383) dropped 1 percent to HK$10.14. Mainboard turnover shrank to HK$39.12 billion, but Pang said there is still liquidity in the market unless the Hong Kong Interbank Offered Rate goes up. Index heavyweight HSBC Holdings (0005) rose 1.92 percent to HK$82.30 and China Mobile (0941) climbed 1.39 percent to HK$76.75. Pang projected the HSI to trade between 20,200 and 21,000 points this week. Quam (0952), meanwhile, forecast the index to reach 30,000 this year because mainland capital sees the local bourse as a safe haven, said deputy chairman Kenneth Lam. The index is unlikely to test the 16,000 to 18,000 level, he said. "It's a double-edged sword. It's good that funds will keep coming to Hong Kong," Lam said. "But it's bad in that asset bubbles will easily form." Cody Leung, a Quam Securities senior investment strategist, predicted the HSI would touch 26,000 this year, a price-earnings multiple of 17.

The Medical Council's ethics chief has set his sights on a new practice manual to boost the professional standards of frontline doctors. Tse Hung-hing told The Standard he will use his term as ethics committee chairman to clear the way for the manual. He is undeterred by the recent row over his public remarks about the need to make doctors more responsive to patients. He said the current code of practice only sets out a "minimum standard" but he is keen on "pursuing excellence." "The current code of practice is only a pass grade - that is not enough by today's standards." Tse said countries like the United Kingdom already have a good practice manual covering a wide range of areas, including ways to collect information from and communicate with patients and families, as well as good attitude and professional ethics at work. He is now preparing to propose the plan to the ethics committee, even though it will involve a lot of manpower and time to produce the manual. "We should not simply copy the UK manual as we need to look into the unique features and culture of Hong Kong," he said. But medical services lawmaker Leung Ka-lau said it would not be an easy task drawing up a manual to cover all areas, from clinical management to doctor-patient relationship. "Even if we have such a manual, I wonder how much of it we can put it into practice, especially in public hospitals which are short of resources and manpower," Leung said. Tse admitted he was frustrated by recent scandals involving renowned medical professors and junior doctors. He admitted he does not know how much the manual can help clean up doctors' conduct. "But I believe it can at least remind our medical colleagues to maintain good conduct and ethics in serving our patients." The former head of surgery of the University of Hong Kong medical faculty, John Wong, is being investigated by the Independent Commission Against Corruption over financial arrangements at the school. The probe comes months after his colleague and the University of Hong Kong's former dean of the Faculty of Medicine, Lam Shiu-kum, was jailed for 25 months for pocketing HK$3.8 million in donations meant for medical research. In November, Tuen Mun Hospital doctor Lo Chung-hong, 26, was jailed for nine months for touching a 15-year- old schoolgirl's breasts during a consultation for an upset stomach.

A plot of land in Tseung Kwan O could fetch as much as HK$3.4 billion for government coffers when it goes for auction on Monday, according to surveyors. The 132,397-square-foot site in Area 66B Tseung Kwan O station will go under the hammer with the opening bid set at HK$2 billion. The market expects the final bid to range from HK$2.6 billion to HK$3.4 billion. With a plot ratio of 5.5, the site's total gross floor area amounts to 728,185 sq ft and contains at most 880 homes. Midland Surveyors director Alvin Lam Tsz-pun estimates the site to cost HK$3.4 billion, representing more than HK$4,600 per square foot in gross floor area. "[Future property prices] depend on the market," Lam said. "But judging from this site's particulars, it is expected to fetch more than HK$6,000 psf." He said the idle plots nearby - currently reserved for residential and park uses - may affect the site's views and hence the final bid, but the government has not yet decided when to launch them. Lam believes developers with ongoing projects in the area may benefit from synergy. HSBC Securities said around 5,900 homes in Tsueng Kwan O will hit the market by 2012, of which Cheung Kong (Holdings) (0001) will account for 80 percent. Sun Hung Kai Properties' (0016) comprehensive hotel and shopping complex atop Tseung Kwan O station in nearby Area 56 is a boon to the development, according to Lam. Pang expects big developers to win Monday's auction. The east side of the site has to make room for a 75-meter-wide breezeway. The winning developer may build shops along it, which will give the maximum 66,199 sq ft non-residential GFA much potential, Lanbase Surveyors director Chan Cheong-kit told Sing Tao Daily, sister publication of The Standard.

Police on Thursday were investigating the death of a 15-year-old British teenage girl - who died after her scarf became entangled in a go-kart at a track in Tuen Mun on Wednesday. The girl was operating a kart at Diamond Coast International Kart Circuit, Lung Kwu Sheung Tan village. The teenager was asphyxiated when her scarf was caught in the workings of the go-kart. She remained unconscious and was rushed to Tuen Mun Hospital, but confirmed dead at 5.17pm on Wednesday. Police officers on Thursday visited the Tuen Mun circuit in Lung Kwu Sheung Tan village. Tuen Mun assistant police commander John Li Wai-chi said the officers studied the racing circuit and examined its safety procedures. “We will submit information we have collected to the Department of Justice later,” he said. Li said there was video at the circuit to remind players to avoid wearing scarfs when operating go-karts. The Home Affairs Department on Thursday held an emergency meeting with the Hong Kong Kart Club to discuss ways to improve safety. Deputy Secretary for Home Affairs Jonathan McKinley said regular inspections were done by a special governing body responsible for go-karting. “There are also occasional site visits by the Leisure and Cultural Services Department – although they are not responsible for the technical monitoring,” added McKinley, who said this was done by the governing body. Home Affairs Bureau principal secretary Benjamin Mok Kwan-yu said the girl’s family members had returned to Hong Kong from Australia. Mok said the bureau would offer assistance to them. “We have not received any requests for assistance so far,” he said. Mok said they would ask the Hong Kong Kart Club to submit a report about the incident soon.

Rising demand in mainland and Hong Kong helped Swiss watch exports post their first year-on-year rise since 2008, figures released by the Federation of the Swiss Watch Industry on Thursday showed. Roaring demand in mainland helped Swiss watch exports post their first year-on-year rise since 2008, the latest sign the beleaguered sector is recovering, data showed. Exports ticked up 2.7 per cent in January to SFr 976 million (HK$7.07 billion), after falling 7.2 per cent in the previous month, the Federation of the Swiss Watch Industry said on Thursday. Exports to mainland rose 87 per cent, while exports to Singapore more than doubled and demand in Hong Kong rose 26 per cent, offsetting a 34 per cent drop in exports to the United States. “Growth was back in the frame for Swiss watch exports in January 2010 after 14 months in the doldrums,” the federation said in a statement. “The watch exports have finally gone positive, reflecting what has been happening at the retail level for the last couple of months,” said Kepler Capital Markets analyst Jon Cox. “Hong Kong and China are the biggest drivers and now account for almost a third of exports and we expect this trend to continue through the rest of the year,” he said. The Swiss industry – home to Swatch Group, the world’s largest watchmaker, and rival Richemont – faced its steepest slump in demand in over two decades during the global financial crisis as customers cut back on luxury treats and retailers tried to run down high stock levels. But a flurry of upbeat comments from industry leaders since the start of the year have fuelled hopes that the sector will improve this year. Swatch Group said last week it was aiming for its best ever year this year after seeing a strong pick up in sales in January and February.

A selective toll increase on heavy users of the Cross-Harbour Tunnel has emerged as a potential answer to chronic congestion by diverting traffic to the other two, under-used, harbour crossings. The prospect of higher charges for trucks was raised in a government-commissioned study that highlighted big differences between the toll structure in the congested Cross-Harbour Tunnel and those in the eastern and western crossings. Senior government officials speaking on condition of anonymity have acknowledged that across-the- board increases for all motorists would be politically impossible. However, in a reminder that any solution to long-standing traffic congestion will involve bitter wrangling with road users, truck drivers have threatened to blockade traffic in protest if they are forced to pay more to use the central crossing. Apart from charging much less overall, the government-owned tunnel between Hung Hom and Causeway Bay charges the heaviest trucks just HK$10 more than a private car, while in the other two tunnels they pay up to three times as much. Designing Hong Kong concern group co-founder Paul Zimmerman said the only way to ease traffic congestion was to increase the cost for vehicles using the Cross-Harbour Tunnel, but the government lacked the political will to do so. "The government is hesitant to raise the toll because it is afraid of opposition from the transport sector," he said. "That's wrong. We can't continue to reclaim land and make roads [to solve congestion]. We have scarce land ... and a proportion of useable land is already covered with roads." But Medium and Heavy Truck Concern Group chairman Lai Kim-tak warned there would be chaos if operators were hit with any increase.

Hong Kong’s unemployment rate stood at 4.9 per cent between November and January, official data showed on Thursday, as hiring continued in the service and export sectors.

Warmly dressed crewman Mark Sashegyi stands guard on the fight deck of the nuclear powered USS Nimitz aircraft carrier as it enters Hong Kong waters. A US aircraft carrier arrived in Hong Kong yesterday despite cooling Sino-US ties - but there was little warmth in the welcome from the PLA garrison in the city. While local PLA chiefs usually snap up US consulate invitations to tours and parties aboard US carriers in Hong Kong, none are expected to accept offers to visit the USS Nimitz and its four support ships during their four-day rest and recreation stop in Hong Kong, according to officials. Senior PLA brass were conspicuous by their absence at the traditional welcoming reception on the Nimitz last night - an apparent snub following Washington's recent decision to sell US$6.4 billion worth of arms to Taiwan, an act that saw Beijing promise to shelve military exchanges between the two nations. The visit comes amid a tense time in the relationship. US President Barack Obama hosts the Dalai Lama in the White House today, while reports have confirmed that China has dumped a record amount of its US Treasury debt. China sold some US$34 billion in US Treasury securities in December, a move which means Japan replaces it as the largest US creditor. China still holds US$755.4 billion worth of US debt. As US sailors on security watch shivered on the flight deck of the nuclear-powered Nimitz on the coldest day of Hong Kong's winter so far, the atmosphere was also chilly below decks as carrier strike group commander, Rear Admiral John Miller, repeatedly stressed the routine nature of the visit. He skirted questions about whether he would be hosting local PLA garrison officials aboard, saying the focus of the visit would be on rest and recreation for more than 5,000 crew now close to the end of an eight-month deployment at sea. "For us, this is a routine port visit," Miller said. "We requested the port visit through normal channels and we're delighted that we received permission from [China's] Ministry of Foreign Affairs to be able to come in." He referred questions about the guest list to the US Consulate, whose spokesmen said it was not policy to reveal details. Generally a range of leading professionals from the city were invited, they added. A range of other officials have confirmed invitations went out to the Chinese side, however. "We're being sent a clear message," one US official said. "But it is not the end of the world. The fact that we have still been allowed in here is probably a more important symbol. These visits are important for the relationship and for our sailors and I think that is understood by Beijing." Reaching out to mainland military brass has been a key part of previous visits, with visiting US naval counterparts toasting them aboard and stressing the value in improved communication and co-operation. While Miller avoided describing the current state of the Sino-US relationship, he did say there was room for co-operation amid broader disagreements. Ongoing multinational co-operation - including from China - in the fight against Somali pirates threatening the key sea lanes linking Asia to Europe was an "excellent example" of what was possible among "like-minded" nations, Miller said. "There are a lot of areas where nations that don't always agree on a variety of issues can find agreement," he said. Song Ronghua, spokesman for the Office of the Commissioner of the Ministry of Foreign Affairs in Hong Kong, said the commissioner had not received any invitations from the USS Nimitz. "We have not received any related invitations so far. I don't have any information about whether the commissioner will board [the US warships]." TVB (SEHK: 0511) News quoted a spokesman for the PLA's Hong Kong garrison as saying the visit was just a routine port call and did not constitute a military exchange. While Beijing has occasionally halted ship visits to Hong Kong during times of tension, US warships have visited frequently over the past year. China last stopped an aircraft carrier visiting in late 2007.

Veolia Transport China, a subsidiary of French multinational Veolia Environment, has taken full control of Hong Kong Tramways, promising to improve services. The French company that bought a 50 per cent stake in the century-old Hong Kong Tramways last year has exercised its right to buy the remainder from Wharf Holdings (SEHK: 0004). Veolia Transport China, a subsidiary of Veolia Environment, and Wharf Transport did not disclose the price. Veolia first bought half the company and took over the running of the tram system last April, saying at the time that the price was "far less than €100 million [HK$1.06 billion]". Daniel Cukierman, Veolia Transport China chief executive, said yesterday: "From our very first approach to Wharf Transport, it has always been our intention to own the tram business fully. After nearly one year of management of the company, we are confident and ready to execute the option." He said the company was conscious that the tram was a cherished part of Hong Kong's heritage, and that the firm would take this into account while improving the network. Veolia operates transport systems around the world, including tramways in 10 European countries. Andrew Cheng Kar-foo, deputy chairman of the Legislative Council's transport panel, said: "There has been no change in the operation of Hong Kong Tramways over the past year since Veolia bought a stake, so I do not think the new operator will ruin the character of our trams in the future. Veolia is a well-known transport operator. I hope they can improve the service of Hong Kong Tramways." Veolia has already started modernising the trams and the system and has plans to expand the 163-tram fleet to offer a greater frequency of service. Last year it began testing a new braking and cable system, trying out new maintenance methods on rail tracks to reduce noise and working with the government on ways to revamp its routes to improve the trams' speed, frequency and efficiency. Managing director Bruno Charrade said earlier this month: "We hope passengers will not ride on trams simply because we are the cheapest but also because of our service quality." For Wharf, the tram company has not been as profitable a business when compared with its property investment, telecommunications and logistics arms. Hong Kong Tramways made a profit of around HK$2 million a year between 1996 and 2006, then earnings surged to more than HK$10 million in 2007 and more than HK$30 million in 2008. Shares of Wharf rose 2.12 per cent to close at HK$40.90 yesterday.

China*: Thailand’s Finance Ministry signalled on Thursday it would clear the way within days for a foreign buyer to take control of ACL Bank, giving fresh momentum to a US$530 million bid by ICBC. “I think everybody sees the merits of the deal,” Finance Minister Korn Chatikavanij said in an interview. Industrial and Commercial Bank of China (SEHK: 1398) (ICBC), the world’s largest bank by market value, said last September it wanted to bid for the bank, after agreeing to buy a 19.26 per cent stake from Bangkok Bank for 3.52 billion baht (HK$823 million). The Finance Ministry is the largest shareholder in ACL, Thailand’s smallest lender, with 30.6 per cent. Its stake, combined with Bangkok Bank’s 19.26 per cent, would give ICBC 49.86 per cent of ACL. Foreign holdings of more than 49 per cent in a bank need official approval. “The Ministry of Finance has been looking at the recommendation by the Bank of Thailand. The permanent secretary’s job is to present his recommendation to me. It’s now on my desk,” Korn said. “I should be able to put my signature on this within days.” “The recommendation is for me to use my powers to allow a foreign buyer, that is ICBC or whoever else that might choose to outbid ICBC in the tender.” “It would be the first time that such power under this new law is used in a ’non-distress’ situation,” he added, referring to a 2008 law on bank ownership. ICBC agreed to pay 11.5 baht per share for Bangkok Bank’s stake.

China's Wang Meng competes during the women's 500m final of short track speed skating at the 2010 Winter Olympic Games in Vancouver, Canada, Feb. 17, 2010. Wang Meng claimed the title of the event with a time of 43.048 seconds. Turin Olympic champion Wang Meng of China retained the women’s 500 meters short track speed skating title here on Wednesday at the Vancouver Winter Games. The reigning world record holder crossed the line first at 43.048 seconds to extend China’s dominance in this event since the Salt Lake City Games in 2002 when Yang Yang ended the Chinese gold drought at Winter Olympics. Marianne St-Gelais of Canada settled for the silver with 43.707 while the bronze medal went to Italian Arianna Fontana in 43.804.

An earthquake of magnitude 6.7 hit near the China-Russia border on Thursday, but its epicentre was extremely deep and there were no immediate reports of casualties or damage.

European Union trade inspectors have launched a probe into whether imports of coated fine paper from mainland are being dumped in the bloc’s market.

Logo of luxury brand is seen dispalyed on a shop in Wenzhou, Zhejiang in this file photo. Gucci Group reported a 21 per cent sales jump in Asia last year. Retail-to-luxury group PPR SA reported a 7 per cent increase last year’s profits on Thursday and said it is launching a sales offensive to boost revenues in fast-growing markets such as China. PPR, owner of the Yves Saint Laurent and Gucci brands, said net profit rose to €984.6 million (HK$10.5 billion) after it sold its African distribution business CFAO. The Gucci Group division reported a 21 per cent sales gain in Asia apart from Japan, which included a 46 per cent increase in mainland that helped “offset a decline in mature markets”. The sale in December raised €806 million and is part of PPR’s strategy to “refocus” on its luxury and lifestyle businesses. The group did not break out quarterly profit figures. CEO Francois-Henri Pinault said he is starting the year “with determination and confidence”. “We are launching an energetic sales offensive aimed at further strengthening our leadership on the highest-growth markets, such as e-commerce and emerging countries, and at raising our business and financial performances in 2010,” he said in a statement. CFO Jean-Francois Palus told journalists in a conference call that PPR is switching from a priority of cost reduction to trying to boost sales through product launches and catalogues. Revenue fell 4 per cent to €16.52 billion last year and 3.2 per cent in the October to December quarter. Revenue at PPR’s Gucci Group subsidiary, which comprises luxury fashion and leather brands such as Yves Saint Laurent and Bottega Veneta as well as its namesake Gucci brand, was down 0.3 per cent at €929.2 million in the fourth quarter. PPR’s FNAC books and electronics chain reported a 0.8 per cent increase in quarterly revenue to €1.56 billion, and its Conforama furniture stores saw 0.1 per cent sales growth to €848.8 million in the period. The Redcats catalogue unit reported a 9.9 per cent fall in revenue to €904 million. PPR’s German sportswear company Puma AG on Wednesday reported a doubling of net income for the fourth quarter to €16.2 million as the company lowered expenses and saw higher operating profits.

Shanghai Pudong Development Bank intends to seek a listing in Hong Kong this year, raising at least 20 billion yuan, Ming Pao newspaper reported on Thursday, citing analysts. The mainland bank is seen in need of funds to boost its relatively low core capital adequacy ratio and after it secured a number of deals to provide loans to infrastructure projects in the mainland, the newspaper said. The capital adequacy ratio of the bank is seen at 10.16 per cent, slightly above the 10 per cent level required by regulators, while its core capital adequacy ratio is at only 6.76 per cent, below the industry average and regulatory requirements, the paper added. The bank was not immediately available for comment.

China Unicom, mainland’s No 2 telecoms carrier, on Thursday denied it or its state-run parent had any involvement in a US$2.5 billion bid for Nigeria’s former state telecoms monopoly.

Tourists take photos of the snowy view at the Huangshan Mountain, east China's Anhui Province, Feb. 16, 2010.

Photo taken on Feb. 16, 2010 shows the snowy view of the Huangshan Mountain, east China's Anhui Province.

Photo taken on Feb. 16, 2010 shows the snowy view of the Huangshan Mountain, east China's Anhui Province.

Feb 19, 2010

Hong Kong*: Hong Kong's leading mobile network operator Create a Simple Life (CSL), its parent company Telstra International and the ZTE Corporation said on Tuesday that they have made good progress in introducing Long Term Evolution (LTE) into public use. The LTE is the method used for the next generation of mobile broadband technology and is expected to enter into widespread commercial use in 2011. Addressing the Fifth Mobile World Congress in Barcelona, Christian Daigneault, CTO of CSL, said the three companies had already begun testing the LTE at 20 active and fully operational cell sites on the streets of Hong Kong. "A unique aspect of this trial is that it has moved out of the laboratory and 'into the streets'. We are now testing the cell sites with a 'consumer ready' LTE USB modem and field trials of this are presently being conducted throughout our LTE network," said Mr. Daigneault. "We are very pleased with the results of these trials and the USB modem is performing extremely well, showing peak download speeds upwards of 100Mbps on the streets of Hong Kong." "This means that maybe we have to revise the time in which LTE will be commercially available and rolled out in networks across the world," he added. The CSL and ZTE's experimental work has helped position them at the head of the global mobile telecommunications industry. "Data traffic has increased by 20 times over that of the legacy 3G network and has now eclipsed voice traffic within our network." "With the constant evolution of the network to higher speeds toward LTE and the proliferation of Smartphones and other devices, CSL expects the exponential growth in data traffic in Hong Kong to continue for many years and will continue the investment in LTE technology to build one of the world's most advanced networks in Hong Kong," said Tarek Robbiati, group managing director of Telstra International and CEO of the CSL.

Michelle Yim, girlfriend of former soccer star and actor Wan Chi-keung, appears with Wan's sister, Connie Wan (left), to discuss arrangements for his memorial service at Kowloon Tsai House Owners Association, Kowloon Tong on Wednesday. The girlfriend of footballer and actor Wan Chi-keung on Wednesday confirmed there would be a memorial service for the striker, but said details had yet to be confirmed. Actress Michelle Yim said she was still waiting for some of Wan’s friends to return to Hong Kong after the Chinese New Year holiday. “When his friends come back, we will discuss the date [of the memorial service] and let you know,” she told reporters. The 53-year-old, who died on Tuesday, had enjoyed a considerable following. Yim, facing the media for the first time since Wan’s death, said details about the memorial service would be announced on TVB (SEHK: 0511). She also expressed her gratitude to Wan’s fans, journalists, hospital staff and the public for their support. “He left bravely and peacefully. His strong spirit, and passion for life will be in our hearts forever,” Yim said.

Soccer star and actor Wan Chi-keung - dubbed "Asia's best centre-forward" during his heyday on the pitch 30 years ago - has died aged 53 from organ failure related to his cancer treatment. Wan, best known by his nickname Wan Lo, made the "best 11" at the Hong Kong Top Footballers Awards for three consecutive years, from 1978 to 1980, before retiring and becoming in actor, appearing in several popular movies as well as ATV dramas. He was rushed to the Prince of Wales Hospital about 7.30am yesterday after he fell into a coma at his home in Lok Ma Chau. At about 8.45am, doctors said they could not revive him because of organ failure. Wan was diagnosed with nasopharyngeal carcinoma, or cancer in the nasopharynx, in 1992. He recovered a year later after a series of treatments. His family said the cancer did not recur. Wan's long-time girlfriend, award-winning actress Michelle Yim, and family members who were with him when he died said he had passed away peacefully. The iconic striker who ruled the Hong Kong soccer scene in the 1970s and 1980s was remarkable not only on the soccer pitch; he was also known for being kind and funny - personality traits that earned him many friends. Former soccer manager Peter Leung Shou-chi, who had known Wan for nearly five decades, was saddened by the loss of a comrade. "He was two years younger than I am. We have known each other for so many years, from South China Athletic Association to Lai Sun Double Flower [a team in the local league]," Leung said, trying to hold back his tears. "We used to play football at Blake Pier when we were kids." Leung said that he last saw Wan a few months ago at the hospital. "He was still very optimistic when I last saw him," Leung recalled. He said Wan was admitted to the intensive care unit a few months ago and, even then, he still sent text messages to his friends. "He was a very caring friend." Wan's soccer career began in 1974 when he became a member of the Hong Kong youth team. He joined the South China Athletic Association as a full-time player shortly afterwards, and played for Seiko and Lai Sun Double Flower before retiring in 1989. The popular footballer represented Hong Kong in international matches for more than 10 years. In 1977, he represented Hong Kong in the World Cup qualifiers, and the team beat Singapore to become the winner of the preliminary round. In the 1985 World Cup qualifiers, Wan helped Hong Kong defeat the mainland team in the famous "519" match on May 19, 1985, lifting Hong Kong to the top of the preliminary round again. Wan's outstanding performance got him named, for three years from 1978 to 19780, among the "best 11" team at the annual soccer awards. "In our day, we had Wan Chi-keung who was really fast and had the ability to score goals. But now none of the Chinese players can compare with him," Wan's former teammate Ku Kam-fai once said. Chan Fat-chi, Wan's teammate in the "519" match, praised Wan's talent, especially his power in the air. "He was very talented and very strong. Still, he worked extra hard in order to achieve what he had achieved," Chan said. Veteran soccer commentator Ho Ching-kong said that Wan had every quality that one looked for in a football star. "He had the speed, the ability to score, and great physique," Ho said.

Wan was the golden boy of the local soccer scene when he had his first taste of show business, appearing alongside Chow Yun-fat in the crime thriller The Executioner. After retiring from soccer in 1989, he joined ATV as an actor and host, appearing in many TV drama series. But his TV career did not last long. In an interview with the South China Morning Post (SEHK: 0583, announcements, news) in 2005, Wan described acting life as "too time-consuming" and "too limiting". He also did not enjoy the increasingly strained relationship with entertainment reporters. "Back then we were friends with reporters. Now we're like feuding foes," he had said. He still appeared in movies, however, and his most memorable recent role was as a police inspector in the Infernal Affairs trilogy opposite Andy Lau Tak-wah, who played a mole planted in the police force by triads. "I didn't do it for the money - it was all out of curiosity," Wan said of his movie appearances. Wan was also known for his long-time relationship with Yim since they met in 1983. Wan founded sports-goods distributor Wanasports in 1998, and the company had a female clothing line named Michelle. Yim was at his side until the last moment. Fans and participating teams of today's Lunar New Year Cup will be asked to observe a minute's silence in memory of Wan before kicking off. Condolence messages poured in as fans paid tribute to their soccer hero. Video clips of Wan's most classic moments on the pitch during his golden days, including the game between South China and Caroline Hill during the 1979-80 Viceroy Cup, were widely circulated on YouTube. Yim's fans have also left messages of condolences on her blog.

The USS Nimitz. The US aircraft carrier sailed into Hong Kong on Wednesday despite a Chinese pledge to suspend military exchanges with the United States after its pledge of arms sales to Taiwan. The US aircraft carrier USS Nimitz sailed into Hong Kong on schedule on Wednesday despite a Chinese pledge to suspend military exchanges with the United States after its announced arms sales to Taiwan. Speculation had swirled on whether China might prevent the Nimitz from visiting over the US$6.4 billion (HK$50 billion) arms sales and in retaliation for a planned meeting between the Dalai Lama and US President Barack Obama in the White House on Thursday. “For us, this is a routine port visit,” said John Miller, the Commanding Officer and Rear Admiral of the Nimitz strike group. “We had a request pending, and about a week or so ago it was approved and we’ve been on our way ever since,” he told reporters aboard the aircraft carrier, which had sailed from Malaysia with four accompanying ships. He offered no comment, however, when asked whether military exchanges would be held with China during the four-day visit. Hong Kong has been a favourite destination for US sailors on R&R since the Vietnam war. Some of the nearly 6,000 sailors in the strike group, anchored in the western reaches of Victoria Harbour on a cold and wet day, soon spilled ashore to the lively Wan Chai bar district. Tensions with Washington have arisen over issues from trade and currencies to the US plan to sell US$6.4 billion of weapons to self-ruled Taiwan, which China considers a renegade province. Miller played down tensions, calling China a “like-minded nation” while praising its role in multilateral anti-piracy missions off the Horn of Africa. “We’re nations that don’t always agree on a variety of issues, but can find agreement, and certainly counter-piracy is one of those examples,” he said. While US warships have long made periodic port calls to territory, Beijing has occasionally barred US ships from entering at sensitive moments. In 2007, the USS Kitty Hawk was denied entry to Hong Kong as it neared the city’s waters for a Thanksgiving visit. Analysts linked the refusal to then-US President George W. Bush awarding the US Congressional Gold Medal, one of the country’s highest honors, to the Dalai Lama, the Tibetan spiritual leader branded a separatist by China. The Nimitz, whose home port is San Diego, recently completed a five-month tour of duty in the North Arabian Sea, where it supported US operations in Afghanistan. The carrier group will resume its routine deployment in the Western Pacific.

The Jockey Club has had a roaring start to the Year of the Tiger, toting up the highest single-day turnover since the racing season began in early September. More than 78,000 people turned up at Sha Tin racecourse yesterday, shoveling more than HK$1.15 billion into the tote. The main features of the day were the Chinese New Year Cup for Class 1 horses and the Hong Kong Derby Trial for the highest rated four-year-olds in training. Both events threw up new contenders for the HK$16 million Hong Kong Derby, coming up in four weeks' time. The New Year Cup was won by trainer Caspar Fownes' Fair Trader - so far unbeaten in four career starts, two of them in Australia. Though the horse has never raced beyond 1400 meters, Fownes is confident he will ace the Derby distance of 2,000 meters. The Trial went to English trainer Sean Woods, whose King Dancer belied his relatively low rating to defeat early Derby favorites Super Satin and Beauty Flash at level weights. Beauty Flash, winner of last month's Classic Mile over 1600 meters, was widely tipped to be the first horse to win the Derby-Triple comprising the Mile, the Trial and the Derby itself. His only challenger was expected to be Super Satin, with four wins. The festivities began with Financial Secretary John Tsang Chun- wah, club chairman John Chan Cho-chak and chief executive Winfried Engelbrecht-Bresges "dotting" the eyes of lions that then pranced around the parade ring. Entertainers Ella Koon and Charmaine Sheh then took centerstage, as did celebrity chef Chow Chung, who showed off his recipes. The San Diego Charger Girls helped raise temperatures on the chilly day with a precision performance. They were joined by the Russian dance ensemble Siverco and the Italian Flag Wavers. However, the most popular "act" came from Engelbrecht- Bresges, who was mobbed while handing out lai see packets to the crowd. "I think everyone had a good time, and that's the main thing," he said after escaping to safety with the help of security personnel.

China*: South Korea plans to launch a joint research with China and Japan on the feasibility of a free trade agreement (FTA) among the three Northeast Asian countries.

China trimmed its holdings of U.S. debt by 34.2 billion U.S. dollars in December 2009, leaving Japan as the largest holder of U.S. Treasury securities, the U.S. Treasury Department reported on Tuesday. The figures reflect demand for U.S. Treasury obligations and other assets, including stocks and government agency debt, a key to funding the massive U.S. balance of payments deficit with the rest of the world. According to the Treasury International Capital (TIC) report, foreign holdings of U.S. Treasury securities fell by 53 billion dollars in December, surpassing the previous record drop of 44.5 billion dollars in April 2009. The 53-billion-dollar decline in holdings of Treasury securities came primarily from a drop in official government holdings, which fell by 52.3 billion dollars. The holdings of foreign private investors fell by 700 million dollars during December. While China cut its holdings of the U.S. long-term securities, Japan and Britain increased their stakes. Japan boosted its holdings of U.S. Treasuries by 11.5 billion dollars to 768.8 billion dollars in December, outpacing China's December total of 755.4 billion dollars. Next on the list, Britain also increased its holdings to 302.5 billion dollars from 277.6 billion dollars in November. Brazil lifted its holdings to 160.6 billion dollars in December from 157.1 billion dollars in the previous month.

A woman takes a look at a model of a property development in Haikou, Hainan province yesterday. Properties on the island province have become hot targets for the newly-rich Chinese. Chen is one of the China's rapidly expanding "rich class". He has several properties in Beijing, including a grand courtyard house he uses solely to entertain friends and business associates. The large siheyuan, a traditional house found in the capital's sprawling hutongs, cost Chen 12 million yuan ($1.75 million), suggesting he is far removed from those who sweat and struggle for years to afford small, humble homes. China has seen a massive expansion in the rich class in the past five years, according to analysts. "The country's fortune is increasing at a skyrocketing speed and is converging toward the rich class," Rupert Hoogewerf, founder of the Hurun Rich List, told Outlook Weekly. "The number of people with a personal wealth of more than 1 billion yuan has rapidly risen since 2004. Then, there were 100. In 2009, we discovered that 1,000 people are now in the club." A spokesman for the Forbes China Rich List also said the threshold for being among the 400 richest people on the Chinese mainland had risen from 1.22 billion yuan in 2008 to 2.05 billion yuan last year. The growth in Chinese millionaires alone has attracted interest for multinational companies, including Deutsche Bank AG, which is planning to target more services to China's rich class, reported the German press. According to other experts, the rich class is a group with only one thing on their mind: property. A recent poll of wealthy people in Beijing and Shanghai by the Beijing Youth Daily found most owned at least three properties, while many subscribe to the traditional belief that, if you have money, you should invest in property. Some also had shares in listed companies that have thrived in the country's real estate-fueled stock market, the survey found. "The most significant difference between the 400 richest people in the United States and in China is that the real estate business owners have been removed from the US list. Meanwhile, hundreds of their Chinese counterparts crowd China's lists," said Russell Flannery, Forbes' Shanghai bureau chief. Despite the increasing fortunes, however, the rich list features mostly people in East China. More than half of the richest people live in Beijing and Shanghai, as well as Guangdong, Zhejiang, Jiangsu and Shandong provinces, Cherry Leung, managing director of Boston Consulting Group Greater China, told Beijing Youth Daily. Although the rich class is becoming richer, analysts said their reputation for lacking social responsibility and a moral conscience often evokes mistrust among the public and criticism in the press. The image of the rich class has also been damaged by several scandals involving business leaders on wealth lists. "Money cannot make someone an aristocrat. A mature rich class will burden social responsibility," Hoogewerf told Outlook Weekly.

Alcatel-Lucent says record data transmission rates have been achieved on China Mobile's 4G trial network for World Expo in Shanghai. China Mobile (SEHK: 0941)'s efforts to extend use of the country's own high-speed wireless communications platform received a major boost this week, with leading technology suppliers launching key projects. Bill Huang, general manager of the China Mobile Research Institute, said rapid progress was being made in technical co-operation with key partners. At the annual Mobile World Congress conference and exhibition in Barcelona, US-based chipmaker Marvell and French networking equipment vendor Alcatel-Lucent introduced advanced new products that support handsets geared for the mainland-developed TD-SCDMA 3G standard and a trial network for long-term 4G standard. China Mobile, the world's largest cellular network operator with 522.283 million subscribers as of December, has experienced a difficult rollout of its TD-SCDMA 3G services because its handsets have paled in terms of functionality, features and range compared with those offered by more mature mobile phones on rival China Unicom (SEHK: 0762, announcements, news) 's wideband CDMA 3G network. "China Mobile faced a headache in being the only operator in the world to deploy an unproven TD-SCDMA, particularly in the lack of compelling handsets," said Duncan Clark, the chairman at telecommunications advisory firm BDA China. The carrier has moved to overcome that disadvantage with its so-called "OPhone" platform, which will enable production of feature-rich TD-SCDMA smartphones priced at less than 1,000 yuan (HK$1,135) each and run on a version of the free Linux operating system. Marvell is touting its new Pantheon 920 processor as a solution to kick-start mass production of high-performance yet affordable TD-SCDMA OPhones that are competitive with WCDMA handsets. China Mobile's partner OPhone makers include Lenovo Group (SEHK: 0992) and Dell. "The OPhone delivers what [mainland] consumers today want most: instant access to live Web content; rich media and video, and compelling 3D experiences all at affordable price points," said Dai Weili, co-founder of Marvell. The firm has invested about US$400 million to develop in Shanghai the PXA920 chipset for TD-SCDMA handsets. Alcatel-Lucent said its advanced base stations and packet core systems have helped achieve record data transmission rates of more than 80 megabits per second on China Mobile's 4G trial network for the World Expo in Shanghai in May. "This new milestone reinforces Alcatel-Lucent's ability to make [4G network services] a reality," said Romano Valussi, president of Alcatel-Lucent Shanghai Bell. The tests showed China Mobile's readiness to cope with very high bandwidth demands, he said.

Feb 18, 2010

Hong Kong*: Former football star Wan Chi-keung, dubbed "Asia's top striker," died yesterday after a long illness. He was 53. Wan, who was a member of the Hong Kong squad that defeated China in the World Cup qualifiers in May 1985, was found unconscious in his home at Banyan Path, Lok Ma Chau at about 7.30am yesterday. He was certified dead at about 8.45am at Prince of Wales Hospital, according to a family statement. Michelle Yim, his girlfriend of 26 years and a veteran TV actress, was by his side, as were his other family members. Funeral arrangements are being made. Wan was diagnosed with nasopharyngeal cancer in 1992 and was said to have suffered a recurrence in recent years. His family told the press that Wan did not die of cancer but of organ failure. Wan began his professional career as a striker and was a key player in the Hong Kong team for over a decade during the 1970s and 80s. He was a member of the Hong Kong teams which played in the FIFA World Cup qualifiers in 1977 and 1985, defeating Singapore and China respectively. At the local club level, Wan played for First Division League South China and Seiko. After he hung up his boots in 1989, Wan started a golfing apparel business. He also set up Wanasports Holdings with a friend. It was listed on the Growth Enterprise Market. Wan also dabbled in acting, usually playing positive roles such as police officers. One of his most notable roles was that of a senior police officer in the award-winning crime thriller trilogy Infernal Affairs. The Home Affairs Bureau expressed condolences to Wan's family and praised his contribution to local football. Leung Shou-chi, a veteran footballer and coach, said that Wan, although outspoken, had always worked in harmony with teammates. "We've been good friends for many years. The last time I met him, he was in hospital fighting cancer and he was optimistic," said Leung.

Nearly 75,000 worshippers braved the teeth-chattering nine degrees Celsius cold snap yesterday to pray for good luck in the Year of the Tiger at Che Kung Temple in Sha Tin. The Hong Kong Observatory has warned temperatures will remain cold in the coming few days, with the minimum temperature hovering around 10 to 12 degrees for the rest of the week. But the biting cold did not stop thousands of worshippers from thronging to the famous temple in Sha Tin to celebrate Che Kung Festival, held on the third day of the new lunar year. With queues snaking from a nearby underpass to the temple precincts, it took 10 to 15 minutes to get inside. Worshippers wishing to change their luck spun the bronze blades of fans in the temple, rung small bells on the pinwheels and banged booming drums. "I don't mind the crowds squeezing past me, or the wait to get into the temple, because we can experience the festive atmosphere of the new year," said housewife Chan who had two children in tow. It is believed that praying and turning the blades of the fans will bring good fortune in the new year. Many visit the temple year after year. As the crowds jostled to light joss sticks and squeezed into the main altar to pray at the giant golden statue of Che Kung, it seemed most of them prayed for good health. "For me, the most important of all is for my family to be in good health," Chan said. Insurance agent Carol Tong Yuk- ming, in her early 40s, had the same wish. "I come here every year to pray for my whole family's good health," said Tong who was with her husband and son. "And this time, I also hope the Hong Kong economy will be better in the coming year." Her wish for a better economy was echoed by clerk Maggie Tang Deng, 26. "I wish for more money in the coming year," she said with a laugh. For 86-year-old Kwan Kay-yip the annual ritual is a must-do tradition. Kwan said he prayed for blessings for the whole city. "I'm here to pray for the whole of Hong Kong to have jobs and homes to go back to, that the economy will thrive in the coming year, and that there will be peace in the city."

The government is considering setting up its own insurance company to compete for the proposed voluntary medical insurance scheme in an effort to keep the existing players "honest". A government official said such a "public option" could ensure there was real competition in the market, to guard against price-fixing. But the official said the government did not plan to turn its new programme into a social insurance scheme with itself as the sole provider. The proposal will be put forward during negotiations with the insurance industry over the voluntary insurance scheme, which is part of the coming health care reforms. The government will launch a public consultation later this year about the voluntary scheme, which it sees as a way to relieve the financial pressures on the heavily subsidised public health sector. Insurance providers are in talks with health officials about the scope of the coverage, and on how to use the scheme's HK$50 billion start-up fund to attract more people to sign up for voluntary insurance. The South China Morning Post (SEHK: 0583, announcements, news) reported last week that the issue of whether patients with pre-existing conditions will have to pay a higher premium has emerged as the major roadblock in the negotiations. Now the government "does not rule out the possibility" of setting up a subsidiary insurance company to compete with the private insurers. There are concerns among officials that, as the six biggest companies control 80 per cent of the medical insurance market, they could easily co-operate to control the market and push up prices. "To keep the insurance companies honest, the government may set up a company to compete with them so if their prices are too high, consumers can choose the public option," the official said. The insurance company set up by the government would run on "commercial principles", he said. But Chan Kin-por, the insurance sector legislator, criticised the idea. "The government is not good at insurance services. It should leave it to the private sector ... I can't see the extra benefits in doing it. There will be a transparent mechanism on premium adjustment in future, to guard against any possible cartels." But Peter Tam Chung-ho, executive director of the Hong Kong Federation of Insurers, said the industry "would not feel threatened" by the public option. "It will be good to have more competition in the market ... but we need to know the details before commenting further, such as if the company will operate on commercial principles or with a public subsidy," he said. In a recent submission to the government, the insurance sector outlined an agreed "basic plan" that removes exclusions for mental illnesses and congenital diseases, and makes premiums age-specific. But the sector is standing firm on not including people with pre-existing conditions in the basic plan, meaning chronically ill patients would have to pay a higher premium for coverage. The insurance sector has called on the government to use some of the HK$50 billion start-up fund to subsidise the higher premiums for people with pre-existing conditions. But the government official said that was unacceptable. "The purpose of insurance is to share risk: what is the point of selecting only the healthy people in the pool? Before asking the government to commit to any subsidy, the insurance companies have to do their work in cost control first," the official said.

Every weekend, dozens of shopping or theme tours depart Guangzhou. Tour organisers, many working with major mall developers, offer shopping coupons, free shuttle buses and sometimes a free lunch. Many of the excursions are free, but sometimes there is a small fee, usually less than 50 yuan. There is no requirement on how much each shopper must spend. The organiser will often ask shoppers to either hand in or photocopy their receipts. Shoppers get a souvenir in return. The tours are often centred about a theme - baby milk formula, jewellery, Chinese herbs and dried seafood, electrical appliances, designer labels and luxury goods. Generally the theme shopping tours go to only one mall, usually in the New Territories, such as Sheung Shui, Tai Po, Sha Tin, Tsuen Wan and Tseung Kwan O. The malls give the tour shoppers a meal coupon and some discount coupons. Sun Hung Kai Real Estate is active in weekend shopping excursions. Maureen Fung Sau-yim, general manager for leasing, said they organised 180 tours last year, bringing 8,500 shoppers to 12 shopping malls. The visitors spent a total of HK$28 million. She expects shopping tour business will rise 15 to 20 per cent this year. Fifty tours with 2,400 shoppers are expected to visit Sun Hung Kai's 12 malls during the Lunar New Year period. Henderson Land (SEHK: 0012), which organised tours for Shenzhen shoppers at five of its shopping malls during Lunar New Year, said it focuses on Hong Kong's residential neighbourhoods. "They all know Tsim Sha Tsui and Causeway Bay very well, but there are many big malls in Hong Kong," said a spokeswoman. "By taking them to those malls, they will learn where to go the next time they come. Also, they can't get baby milk formula or dried seafood in those top-grade malls." To attract more big spenders from across the border, Elements, a large mall in Kowloon Station, recently launched a Lunar New Year promotion focused on mainlanders. The first eight people who spent at least HK$48,888 during the first three days of the new year received a gold plate, expensive French champagne and a photo-shoot inside a Mercedes-Benz sports car decorated with Swarovski crystal. "We find mainland tourists are very fond of taking pictures with the fancy decorations inside our mall," a centre spokeswoman said. Located near several new, high-end residential blocks in West Kowloon, Elements also attracts wealthy shoppers on property-purchasing trips to Hong Kong. "Their average spending is around HK$25,000 per person, which is higher than other customers," the spokeswoman said. Over the past few months, some shopping centres have run "point-to-point" bus lines, picking up shoppers at the Lo Wu or Lok Ma Chau checkpoints. Times Square in Causeway Bay started to provide return bus services between the mall and the Shenzhen Bay checkpoint in Yuen Long, only a half-hour ride from Shenzhen's Baoan International Airport. "There are people taking domestic flights to Shenzhen before coming into Hong Kong," said Winnie Leung, a spokeswoman for Times Square. The bus charge is HK$45 for a single ride, but shoppers get a free ticket and more gifts if they spend at least HK$5,000 at the mall. Gu usually joins the baby milk formula tour. "I once joined a tour to a shopping mall in Sheung Shui," she said. "But I never tried those designer label theme tours. There is a misconception that mainland shoppers are all big spenders. Most of the people are like me - a regular mother who comes here because she does not trust the milk powder sold on the mainland." On a trip just before the Lunar New Year, Gu and her family took the opportunity to buy imported chocolates - which is roughly 30 per cent cheaper than in Guangzhou - as gifts for relatives. Gu, a frequent shopper, has developed a routine for her afternoons in the mall: she usually has the free lunch first and finds a place where she can sit comfortably for some time before buying what she needs. But not every shopper is so relaxed. Fifty-nine-year-old Zhang Yuqi, who buys milk powder for his seven-month-old grandson, prefers to get his shopping done as quickly as possible. He joined a themed shopping excursion to Hong Kong last July and splashed out HK$3,000 on milk powder. This time, he and his wife, each pushing a trolley, decided they would not eat until they had bought enough milk formula for their grandson. "We don't trust dairy products on the mainland. We trust only those we can get in Hong Kong," Zhang said.

Gu Jie, like thousands of other mainlanders, is a seasoned cross-border shopper. Every two or three months, Gu gets up at six o'clock on a Saturday morning, drives to Guangzhou city centre to catch a tour bus to a Hong Kong shopping mall, where she buys baby milk formula for her two-year-old daughter. Ever since the mainland's tainted milk scandal in 2008 cost the lives of six infants and made 300,000 children sick, Gu regularly makes the trip to Hong Kong to buy formula manufactured in Japan, the Netherlands or the United States. "There are plenty of tours of this kind," said Gu on a recent Saturday at a Tsuen Wan shopping mall with 100 other Guangzhou mothers. "Usually I join the tours that are free of charge. Sometimes I go alone. Sometimes I go with my husband and sometimes, the whole family goes together. It is a pretty good activity. We have to buy imported baby milk formula anyway, so sometimes we grab some medicine, toiletries and beauty products as well." According to an estimate by the Tourism Board, the number of mainland arrivals in Hong Kong rose 6.5 per cent to almost 18 million last year. And the board expects a record 19.3 million for this year, meaning six out of every 10 visitors to Hong Kong will come from the mainland. Experts attribute the growth to a variety of factors. One is the individual traveller scheme under the Closer Economic Partnership Arrangement, which makes it easier for mainlanders to come to Hong Kong. The depreciation of Hong Kong currency against the yuan is another. But one of the biggest reasons is that mainland shoppers have confidence that in Hong Kong they can buy safe and genuine imported goods. The milk powder is free of melamine, the handbag really is a Gucci and a Rolex is a Rolex. "For buying gold, we must visit Hong Kong," said Gu, who has also come to Hong Kong to shop for jewellery. "Gold is expensive, and we can't afford to be cheated. Also the designs of the jewellery in Hong Kong are more fashionable than what we can get on the mainland." That confidence extends to more mundane items. "I trust the dried seafood I can get in Hong Kong must be genuine," said housewife Zhang Jieli, who joined a tour to shop in Tseung Kwan O where she planned to buy some dried seafood. "The laws in Hong Kong are better than those we have in [mainland] China, and people abide by the law." Zhang also noted that a Hong Kong catty, at about 600 grams, was heavier than a so-called "market catty" on the mainland, at 500 grams. "When the Hong Kong currency is cheaper than the yuan and one catty is heavier, buying in Hong Kong is value for money," she said.

China*: Singapore's Senior Minister Goh Chok Tong said on Tuesday that China will become even more important globally and Singapore must find opportunities to ride on China's growth. Speaking at the Business China spring reception on Tuesday night, Goh said that China has over the past year weathered the global economic downturn with exceptional resilience. Despite shrinking external demand and rising unemployment, China's timely and bold policy responses have enabled its economy to grow at a sizzling 8.7 percent last year, he said, adding that China is now reinforcing its role as the engine for growth in Asia, if not the world. Goh said that the city state recognized China's potential early, soon after China began to open up its economy in 1978. Because of the early efforts made by the Singapore government and Singaporeans, China is today the city state's third largest trading partner and top investment destination, Goh said. As for riding on China's growth, Goh said that the Singapore government will help its companies gain an even stronger foothold in China, and continue to catalyze business opportunities in China. The seven provincial-level business councils, as well as other high-level dialogues and platforms, help open opportunities for companies, reinforce the Singapore brand name and increase its mindshare in China, Goh said.

Saudi Arabia on Monday played down suggestions it could encourage China not to block sanctions against Iran over its nuclear program by giving Beijing oil supply guarantees. Saudi Foreign Minister Saud al-Faisal said after talks with US Secretary of State Hillary Clinton that Beijing needed no prodding from Riyadh over how to deal with Iran in the UN Security Council. The Chinese “carry their responsibility” as one of the major world powers and “they need no suggestion from Saudi Arabia to do what they ought to do,” Prince Saud said at a joint news conference with Clinton. He was questioned about suggestions that Saudi Arabia could provide oil supply guarantees to China to win Beijing’s support for sanctions sought by Washington against Iran over its controversial nuclear program. “Sanctions are a long-term solution but... we see the issue in the shorter term because we are closer to the threat,” Prince Saud said. “If we want security for the region, it requires an Iran at peace and happy with themselves,” he added. Clinton said that “increasingly, more and more aspects of Iranian society... are being controlled not by the clerical leadership, not by the political leadership” but by the Revolutionary Guards. She warned earlier that Iran was turning into a “military dictatorship” bent on building a nuclear bomb. Clinton held more than four hours of private talks with King Abdullah at his desert camp 60 miles northeast of Riyadh, aiming to rally support for tough new UN sanctions against Iran. Ahead of her talks with Prince Saud and the king, aides said she would press Saudi leaders to use their influence with China to secure a change of heart on sanctions against Iran over its controversial nuclear program. China appears to be the strongest holdout to sanctions among the five veto-wielding permanent members of the UN Security Council. Clinton’s top assistant for the Middle East, Jeffrey Feltman, told reporters travelling with her that China had an “important trading relationship” with the Saudi oil kingpin. “We would expect them [the Saudis]... to use their relationship in ways that can help increase the pressure that Iran feels,” said Feltman, the assistant secretary of state for Near East Affairs. Speaking to students earlier on Monday in Qatar, Clinton said the whole region had reason to fear Iran’s nuclear program and the growing influence of the elite Revolutionary Guards. Clinton said the United States was not aiming to use military action to curb Iran’s nuclear ambitions but rather seeking to build support for tough new sanctions at the UN Security Council. She said the package Washington wanted adopted “will be particularly aimed at those enterprises controlled by the Iranian Revolutionary Guard, which we believe is in effect supplanting the government of Iran. “We see the government of Iran, the supreme leader, the president, the parliament is being supplanted and Iran is moving toward a military dictatorship,” she said. “They are in charge of the nuclear program.” Saudi leaders were also expected to raise the Middle East peace process in their talks with Clinton amid growing frustration with the failure of US efforts to relaunch talks. Israeli-Palestinian negotiations have been frozen since Israel launched its devastating offensive against Gaza in December 2008. “The peace process is the main issue, of course,” said Saudi foreign ministry spokesman Osama Nugali. “Our position is still the same... that we need to revive the peace process.” In Qatar, Clinton said she was optimistic that talks would resume this year. “I’m hopeful that this year will see the commencement of serious negotiations,” she said. The White House, meanwhile, announced that US Vice President Joe Biden will tour the Middle East in early March with stops in Israel, the Palestinian territories, Egypt and Jordan. Clinton travelled on to the Saudi Red Sea city of Jeddah where she was to wrap up here Gulf mini-tour on Tuesday by meeting the head of the Organisation of the Islamic Conference.

United States conglomerate GE is negotiating with China's Ministry of Railways to use mainland technology in President Barack Obama's multibillion-dollar plan to build a high-speed rail network across America. "We're going to need to bring high-speed rail technology from outside because there is no indigenous high-speed rail technology in the US. China is the world leader in high-speed rail. We plan to leverage Chinese-developed technology," said Tim Schweikert, the China president of GE transportation. "Based on GE's conversations with the ministry, the Chinese are very interested in participating as a partner with US companies," Schweikert said. Obama announced on January 28 a plan to develop the country's first high-speed rail system to be funded through the government's US$862 billion economic stimulus package. It involves the construction of 13 high speed rail routes across 31 states, according to a White House statement. The total investment required is much larger than the initial sum of US$8 billion announced by Washington. California alone will need US$45 billion for the 354km/h link between San Francisco and Los Angeles that will begin running by 2017. "From the first railroads to the highway system, our nation has always been built to compete. There's no reason Europe or China should have the fastest trains, or the new factories that manufacture clean energy products," Obama said last month. Schweikert said: "High-speed rail is the reversal of the basic model, as it takes Chinese technology to the US for manufacture by US workers." The plan calls for GE to manufacture the electric high-speed trains and signalling equipment. "We will not import high-speed rail products, so about 80 per cent of the components will be made in the US. There will be a strong requirement for localisation, to be built and operated by US companies and US workers," Schweikert said. "What the Chinese will get is they will prove to the world there is a different China that exports high- value products of sophisticated technology, not just low value-added products." In dollar terms, the deal would not be that big for Chinese firms, said Evan Auyang, a former infrastructure consultant at McKinsey and now deputy managing director of Kowloon Motor Bus Company. Even California's high-speed rail budget of US$45 billion over the next seven years was small compared with the trillions of yuan China is spending on its railway networks, Auyang said. The mainland is going to be the core market for Chinese railway companies in the next few years because it was by far the world's largest railway market, Auyang said. "The reason Chinese railway companies want to go out is they want to build international credibility. Being able to win a significant contract in the US attests to the Chinese companies' ability to penetrate a foreign market like the US, which is heavily regulated. It brings them international credibility to tackle other developed markets," Auyang said. Schweikert said the US was the first stepping stone in Sino-US partnership in high speed railway. "Beyond the US, we're looking for projects in other countries." Since 2005, GE has had more than US$1 billion worth of business from China's railway sector.

For years, ships laden with oil, machinery, clothes and other cargo sped past the Sri Lankan fishing hamlet of Hambantota as part of the world's brisk trade with China. Now, China is investing millions to turn the town on the south coast of the island into a booming new port, furthering an ambitious trading strategy in South Asia that is reshaping the region and forcing India to rethink relations with its neighbors. As trade in the region grows more lucrative, China has also been developing port facilities in Pakistan, Bangladesh and Myanmar, and it is planning to build railroad lines in Nepal. These projects, analysts say, are part of a concerted effort by Chinese leaders and companies to open and expand markets for their goods and services in parts of Asia that have lagged behind the rest of the continent in trade and economic development. But these initiatives are irking India, whose government worries that China is expanding its sphere of regional influence by surrounding India with a "string of pearls" that could eventually undermine India's pre-eminence and potentially rise to an economic and security threat. "There is a method in the madness in terms of where they are locating their ports and staging points," Kanwal Sibal, a former Indian foreign secretary who is now a member of the government's National Security Advisory Board, said of China. "This kind of effort is aimed at counterbalancing and undermining India's natural influence in these areas." India and China, the world's two fastest-growing economies, have a history of tense relations. But they also do an increasingly booming business with each other. China recently became India's largest trading partner, and they have worked together to advance similar positions in global trade and climate change negotiations. Chinese officials deny ulterior motives for their projects in South Asia. And Indian leaders have tried to play down talk of rivalry with China, saying there is enough room in the world for both economies to rise simultaneously. As recently as the 1990s, China's and India's trade with Sri Lanka, Bangladesh, Nepal and Pakistan was roughly equal. But over the last decade, China has outpaced India in deepening ties. For China, these countries provide both new markets and alternative routes to the Indian Ocean, which its ships now reach through the Strait of Malacca. India, for its part, needs to improve economic ties with its neighbours to broaden its growth and to help foster peace in the region. Some of the shift in trade toward China comes from heightened tensions between India and Pakistan, which has hampered trade between the two countries. But China has also made inroads in nations that have been more friendly with India, including Sri Lanka, Bangladesh and Nepal.

Shen Xue kisses her gold medal as Zhao Hongbo looks on, after they won the pairs free program figure skating competition in Vancouver on Monday. Shen Xue and Zhao Hongbo delivered gold to end China's barren Olympic figure skating spell and immediately turned their thoughts to creating the next generation of champions. Wearing the new additions to their medal collection around their necks having broken Russia’s 46-year hold on pairs gold, the giggling couple switched their focus to the idea of a new addition to their family. “I think it’s hard to continue skating so maybe it’s time to have a baby,” Shen told a news conference on Monday. The duo came out of retirement for a fourth attempt at winning their sport’s top prize and achieved their goal in spectacular style, earning a standing ovation from flag-waving fans as they ended the remarkable grip on the event held by the Russians since the 1964 Games in Innsbruck. “This is a dream come true, we’ve had this dream for many, many years. Every time we heard the anthem or saw the flag when we won something, we wished it was the Olympic Games,” said Zhao, a three-times world champion with Shen. “Records are set to be broken at some point,” he added. “This is an embodiment of the Olympic spirit,” he said with Shen adding: “This is the attraction of the Olympic Games.” It was China’s first Olympic figure skating gold and there were double celebrations after Pang Qing and Tong Jian won silver, with all four skaters holding on to the corners of their country’s flag for the victory lap around the packed rink. The runners-up’s rousing routine had fans on their feet and Tong on his knees kissing the ice, confident they had done enough to lift themselves up from fourth on to the podium. “I’m still very thrilled,” said Tong. “When I kissed the ice I don’t know what got into me – I think a power made me do that.” While the Chinese skaters barely stopped smiling in the news conference, German bronze medalists Aliona Savchenko and Robin Szolkowy could not hide their disappointment. Their glum faces only broke into a smile when Zhao was asked what advice he could give the Germans on how to lift themselves up enough to try for gold at the next Olympics. Having won bronze in 2002 and 2006, Zhao has plenty of wisdom on the subject. “Don’t wait until you’re 37 to get your gold,” he told them.

China finish 1-2 to snap Russia's winning streak in Olympic pairs figure skating - China's comeback stars Shen Xue and Zhao Hongbo became the first ever non-European couple to be crowned at the Olympic pairs figure skating in history here on Monday. Shen and Zhao's gold medal was China's first in figure skating history of Winter Olympic Games, and it's also the first time in 46 years that the Olympic top podium of pairs missed the Russian skaters. The two-time Olympic bronze medalists scored a personal best of 139.91 points in Monday's free skating to take the Olympic title with a total of 216.57, a new world record edging the previous 214.25 mark of their own set in December's Grand Prix Finale. China's Pang Qing (L)/Tong Jian perform during the pairs free skating of Figure Skating at the 2010 Winter Olympic Games in Pacific Coliseum stadium, Canada, Feb. 15, 2010. Pang Qing/Tong Jian won a silver medal with a total of 213.31 points.

Australia and China will resume stalled free trade talks this month despite tensions over the trial of an Australian mining executive in China, but agriculture remains a stumbling block, Australia's trade minister said. “The political will in my judgment is there,” Simon Crean said on Tuesday in announcing the resumption of Free Trade Agreement (FTA) talks in Canberra after a break of more than a year. “The stumbling block still, in essence, remains the sensitivity surrounding agriculture. These are sensitivities that, I believe, we can address but we can’t ignore,” the trade minister told the Foreign Correspondents’ Association in Sydney. “It is clearly impossible for Australia to accept an FTA outcome that is lesser than China has already offered to New Zealand when it comes to agriculture.” Chinese state-owned companies are eager to buy into Australian mining assets to secure supplies of raw materials in its rapidly growing economy, the world’s third largest, and China wants more clarity on Australian foreign investment rules. But Beijing is reluctant to open its market to Australian agriculture and the two have unresolved differences over the lack of strong rules to protect intellectual property in China. China and Australia announced plans for a free trade deal in April 2005, but there have been no negotiations since the 13th round of talks in Beijing in December 2008. China is Australia’s biggest trading partner, with two-way trade worth some A$76 billion in the year to June 30 and China buying more than A$25 billion worth of Australian iron ore and coal. Relations between Australia and China plummeted in June last year over a failed bid by China’s state-owned Chinalco to buy a US$19.5 billion stake in mining company Rio Tinto. The arrest of Australian Rio executive Stern Hu in the mainland, who was indicted to stand trial last week on charges of bribery and stealing commercial secrets, has also strained ties. “We can’t impose our legal system or our standards on China, just as we would not want China imposing theirs on us,” said Crean, again calling for quick and transparent action by China. Crean said the Australia-China economic relationship was driven by the fact both economies are heavily dependent on each other, adding he believed ties could deepen and diversify. “China has continued to argue its desire to invest in this country and in the main practically all of those investment proposals have been approved,” he said. In January, Australia approved China’s biggest-listed gold miner Zijin Mining Group (SEHK: 2899)’s US$498 million bid for Australia’s Indophil Resources NL.

Picture taken on Feb. 16, 2010 shows a restaurant in the luxury ocean liner Queen Mary 2 at the Port of Shanghai, east China. Queen Mary 2 arrived at the Port of Shanghai Monday afternoon, making its first port call in China since its maiden voyage in 2004.

Participants pose during a show of Mongolian winter dresses in Dong Ujimqin Banner, Xilin Gol League, north China's Inner Mongolia Autonomous Region, on Feb. 16, 2010. Twenty teams from various parts of Inner Mongolia took part in the show on Tuesday.

Feb 17, 2010

Hong Kong*: A subsidy aimed at encouraging owners of old, polluting diesel trucks and vans to replace them early is failing because most of the people taking the grant would be buying a new vehicle anyway as theirs are worn out, owners and academics say. They say the low take-up rate of the grants shows the scheme is ineffective for phasing out dirty old commercial vehicles, with one academic calling for punitive measures to be considered instead. The HK$3.2 billion voluntary replacement scheme expires at the end of next month. It was launched in April 2007 and targets commercial diesel vehicles registered before 1995, when the so-called Euro 1 emissions standards were launched, and the later Euro I vehicles. Owners are eligible for grants if their new vehicles comply with the latest Euro IV standards, which are up to 30 times less polluting than the older ones. By the end of January, the Environmental Protection Department had approved 13,798 applications, involving HK$595 million, just 18.6 per cent of the fund. Of the applications, 89.2 per cent involved goods vehicles, 6.9 per cent non-franchised buses and 3.8 per cent light buses. There are about 39,500 such old vehicles on the roads, 23 per cent fewer than before the scheme. But the number of old vehicles taken off the roads include 3,000 that were simply deregistered by their owners. Lai Kim-tak, chairman of the Medium and Heavy Truck Concern Group, said most subsidies went to owners who needed to buy a new truck, not people changing their vehicles earlier than necessary. Goods vehicles make up 92 per cent of pre-Euro and Euro I commercial diesel vehicles on the roads. Lai said the scheme was not attractive to truck owners because it offered them little financial help to buy a new vehicle. The average grant is HK$43,000, while a Euro IV truck costs between HK$650,000 and HK$800,000. "The scheme did not spur our members to replace trucks earlier because the subsidy is small and trucks are so expensive. We buy a new truck when ours no longer work and then we apply for the fund," he said. "But by that time, with or without the grant, we need to buy a new truck." Dr Alexis Lau Kai-hon, an associate professor in the environmental division at the University of Science and Technology, said this was not the aim of the scheme. "The aim is to make people speed up replacement of vehicles. It they don't, it means the scheme is not effective. In other words, the money is not well spent." With the scheme proving a failure, the government should consider the threat of punishment to urge owners of dirty vehicles to switch, Lau said. "Apart from carrots, there should be sticks in government policy," he said. "The government should give a clear signal that environmental conservation is its policy direction. "Look at the example of the plastic bag levy. Traders opposed it fearing it would harm their business. But the levy is working very well now." He suggested the government set up low-emission zones or raise licence fees for dirty old vehicles. The Environmental Protection Department said it would not extend the scheme because that would be counter to its objective of encouraging owners to replace vehicles early. Last month, the department said it would consider compelling owners to scrap their polluting vehicles. Last year, lawmakers rejected a proposal to increase licence fees for older vehicles, citing the economic downturn.

Raffle prizes including cars, gold bars, free credit card spending, computers, watches and shopping coupons have gone begging because Hongkongers failed to check whether they held winning tickets. Charity groups say many people do not bother to look for raffle results in newspapers, or call organisations holding raffles to see if they have won. The Scout Association said 39 raffle winners failed to collect prizes totalling HK$86,496 last year. In 2008, a "super prize" of HK$125,000 was among 38 that were not claimed. Caritas, which has been running raffle ticket sales for nearly 50 years, said that in recent years almost 40 per cent of prizes had not been claimed. It raised HK$8.7 million from the sale of raffle tickets last year. Another charity, which preferred to remain anonymous, said two cash coupons worth HK$5,000 and HK$10,000, both for the Sogo department store, had not been claimed in one raffle. Raffles are not the only source of unclaimed riches. In 2008 and last year, HK$53 million in winning horse racing bets and HK$65 million in Mark Six prizes went unclaimed. In 2007 and 2008, the economy was better and people were even less concerned about prize money, with HK$1 billion in Mark Six dividends and HK$54 million in racing bets going uncollected. Unclaimed horse racing dividends go to the Jockey Club Charities Trust for charity donations. Mark Six dividends go into the prize pool for snowball draws. The Democratic Party, which usually offers its publications as prizes for fund-raising raffles, said 40 per cent of prizes were not claimed. "Many people already have the books from attending previous functions such as the July 1 protest," a party spokesman said. Many organisations have been given approval to transfer unclaimed prizes to future raffle ticket sales. A survey by the public opinion programme at the University of Hong Kong found that 5 per cent of 1,007 respondents said they donated to charity by buying raffle tickets in 2008, down from 14 per cent in 2007. Hong Kong Council of Social Service project manager for resources development and fund-raising Christine Kwan said more of its charity members were now issuing "discount tickets" instead of raffle tickets. Approval from the Television and Entertainment Licensing Authority is needed to sell raffle tickets, but approval is not necessary for discount tickets, which people buy to obtain discounts at participating shops. Kwan also said a trend was spreading online, with groups calling for donations after the earthquakes in Haiti and Sichuan appearing on the social networking site Facebook. Associate professor Chan Kin-man of the Chinese University's sociology department says Hongkongers have always been one of the most generous groups of people globally when it comes to donations. "People do not buy raffle tickets for the prizes - they simply want to donate some money," he said. Charities were now placing more emphasis on setting up social enterprises, such as hairdressing salons and organic farms, he said.

China*: Japan held its title as the world's second-biggest economy after fourth-quarter growth beat expectations and kept the country just in front of a surging China.

Millions of Chinese visited families and sent text messages to friends on the first two days of the Year of the Tiger, with a traditional love of wordplay taking on a political twist in some mobile phone text greetings. Yesterday - the second day of the Lunar New Year holiday - saw many Chinese visiting temples in the morning to pray for a good year. Others flocked to temple fairs to enjoy the crowds, food stalls and performances. Despite rain and near freezing temperatures, the queue at Jingan Temple in Shanghai - one of the city's oldest - stretched around the block as people burned incense and prayed for wealth, health and happiness in the year to come. But streets were quiet on the Lunar New Year Day on Sunday, as Chinese gathered at home to eat food whose names are homonyms for words associated with prosperity (SEHK: 0803), fortune and long life. Fireworks blanketed Beijing skies at midnight on New Year's Eve, and phones beeped continuously with New Year's greetings. Some used the many Chinese words that sound alike to send sly puns on Chinese leaders' names and famous sayings. One text message played on the names of President Hu Jintao , Premier Wen Jiabao, Vice-President Xi Jinping, Vice-Premier Li Keqiang and security chief Zhou Yongkang. "In the Tiger year, I wish your card games will be as lucky ["hu"] as Jintao, your wallet as thick ["bao"] as Wen Jia, your mood as calm ["ping"] as Xi Jin, your abilities as strong ["qiang"] as Li Ke, your body as healthy ["kang"] as Zhou Yong," read the message. Hu spent the New Year Day in the city of Xiamen, Fujian province visiting migrant workers still working at the construction site of the mainland's first undersea tunnel, while Wen was on an inspection tour in the southwest Guangxi province from Friday to Sunday. Other text messages riffed on famous sayings by previous leaders of the ruling Communist Party, Mao Zedong and Deng Xiaoping. "Chairman Mao said, this text message makes all your troubles paper tigers. Chairman Deng said, it doesn't matter if you are an earthling or a space alien, everyone who gets this message is lucky," another message read. The message was a play on Deng's famous saying, "It doesn't matter if a cat is black or white, so long as it catches mice", while Mao said, "The United States is only a paper tiger". Elsewhere in the world, fireworks, lion dances and prayers for good fortune ushered in the Year of the Tiger on Sunday. In Sydney, which claims to have the largest Lunar New Year event outside Asia with a 17-day festival, six couples from Beijing and Shanghai marked both the New Year and Valentine's Day by climbing the Harbour Bridge at dawn. Despite rain, the 12 climbed 134 metres above Sydney Harbor to declare their love and shout the Chinese New Year greeting "Congratulations and be prosperous", organisers said. In South Korea, millions journeyed over snow-covered and slippery roads to their home towns or villages to pay their respects to ancestors. The prime minister of Singapore urged citizens to make more babies and ignore superstitions that children born in the Year of the Tiger will have the animal's attributes. At the Vatican, Pope Benedict offered greetings to the millions celebrating the Lunar New Year, praising the occasion to "strengthen family and generational bonds", after reciting his weekly Angelus prayer. In a statement issued in Washington, US Secretary of State Hillary Rodham Clinton offered "warm wishes" to those celebrating the occasion. Babies born in the Year of the Tiger are believed to be independent and strong but superstition holds that it is a bad year for marriages and for those who do tie the knot, the husband may die before the wife. "Tiger years are typically marked by dramatic changes and even upheaval and 2010, much like the tiger itself, sees an energetic and powerful, but impulsive and risky year ahead," independent brokerage CLSA wrote in a tongue-in-cheek research note.

Last April, when global financial markets were collapsing, a Chinese website named made a bold move to spin off its online gaming unit and list it on the Nasdaq. The bet paid off:, the unit, became one of the year's most popular initial public offerings, setting off a flurry of Chinese stock offerings that raised more than US$55 billion and turned China into the world's top source of companies going public. With that kind of money up for grabs, Wall Street investment banks, in one of their worst dry spells for initial public offerings, are scrambling to get more business from China, despite the risks of buying shares of Chinese companies and growing concerns that a bubble may be forming in Chinese listings. The New York Stock Exchange and the Nasdaq, where the number of IPOs withered last year from hundreds a decade ago, also are stepping up plans to lure even more Chinese listings to the United States. "Last quarter was one of the busiest quarters in years," Robert McCooey Jnr, who is in charge of new listings at Nasdaq, said of Chinese listings. "And my sense is we'll have another strong year this year." Global private equity companies, Silicon Valley venture capitalists, New York hedge fund managers and global investors are setting up joint ventures with the Chinese government or finding other means to vie for a piece of what the American investor Wilbur Ross Jnr called "the China miracle". Over the last five years, Chinese companies have raised about US$210 billion globally through initial public offerings, according to Dealogic, which tracks global initial public offerings. American companies, by contrast, have raised US$184 billion. The global economic crisis sharply cut the number of new listings in the US and around the world last year, with the exception of China: In 2009, 11 of the 14 foreign public offerings made on US exchanges were of mainland Chinese companies, according to Renaissance Capital. As the recession ebbs, investors are betting that the market for IPOs in the US, Europe and Latin America will rebound this year. But no country is likely to produce more lucrative listings than China, where hundreds of companies are expected to raise tens of billions of dollars going public this year. Just two companies - the Asian arm of American International Group and the Agricultural Bank of China - that could go public this year are expected to raise a total of US$30 billion to US$40 billion, about what American companies raise in a year. "A fund manager with a global portfolio is being reckless if he doesn't have exposure to China," says Mark Machin, co-head of Asian investment banking at Goldman Sachs. Investors are motivated by stories about how companies like Naspers, a media and entertainment group in South Africa, invested US$30 million in Tencent (SEHK: 0700), a Chinese internet company, for a 36 per cent stake in 2001. Today, that stake is worth more than US$13 billion. At the same time, performance can be sketchy. The top three initial public offerings listed in the US last year were Chinese companies, including - but three of the five worst performers were also Chinese companies, according to Renaissance Capital. New stock listings have pumped billions of dollars into China, capitalised scores of companies and helped create a class of billionaires. According to Forbes, China had 79 billionaires in 2009, up from just one in 2003. Most of that money is tied to shares of newly listed companies. That is one reason why Chinese investors - largely restricted by law to buying on the Shanghai and Shenzhen exchanges - are also keen on IPO shares, which almost always have a big first-day price increase. In 2009, shares of newly listed companies on those two exchanges jumped, on average, 74 per cent on the first day of trading in China. US exchanges have been strengthening their ties with China and creating opportunities to grab a piece of the business. The New York Stock Exchange has even been loosening its listing standards to lure more Chinese listings to Wall Street. That has elicited concern from some analysts who say it could let in lower-quality companies. Critics have long warned about a host of unknowns that already come with investing in Chinese companies: insider trading scandals, the lack of transparency, poor regulatory oversight, volatile prices and a lack of clarity on shareholder rights. "Are you really getting disclosure?" asked Carl Walter, a Beijing-based investment banker and co-author of Privatizing China: Inside China's Stock Markets. "Do you really know who the investors are in these companies when they all act through nominees?" he said. Officials at the NYSE and Nasdaq insist investors have strong protections. "The NYSE lowered the financial requirement," said Michael Yang, the chief representative in China for the New York Stock Exchange Euronext. "But we never lower other requirements, including corporate governance, transparency, disclosure, financial report, etc."

Chinese President Hu Jintao has called for efforts to accelerate the construction of the economic zone on the western side of the Taiwan Strait during his four-day inspection tour to Fujian Province that ended Monday.

A florist prepares roses for Valentine's Day. Despite a slowdown, flower shops in the capital city are not planning any discounts, but instead plan to raise prices during the holiday.

White tiger cubs of about 100 days' old play in an enclosure at the Yunnan Wild Animals Park in Kunming, capital of southwest China's Yunnan Province, on February 10. The white tigers in the zoo attracted huge crowds as the Chinese Year of the Tiger approaches

Feb 16, 2010

Hong Kong*: Hong Kong's luck will improve in the Year of the Tiger according to the results of an annual Lunar New Year fortune-telling ceremony held on Monday. In a closely watched ritual, lawmaker Lau Wong-fat shook a bundle of numbered bamboo fortune sticks until one fell to the ground, number 53, which was later interpreted by a stick-reader to be the harbinger of better times. The draw was good news for Lau whose unlucky pick of 27 last year – the Year of the Ox – predicted doom and gloom for the city of seven million as it was wracked by the global financial crisis. The ritual, carried out on the second day of Chinese New Year at Che Kung Temple in Sha Tin, is seen by many as an indicator of what the coming year has in store for the financial hub. In 2003, home affairs minister Patrick Ho picked number 83, an unlucky number according to Chinese custom. His selection was followed by 12 months of crisis in which the Severe Acute Respiratory Syndrome (Sars) virus killed several hundred people and ruined the economy, while unprecedented political protests left the government in turmoil.

Financial Secretary John Tsang Chun-wah is unlikely to raise the tobacco tax in his budget this month. That's because the administration is concerned about the increase in cases that involved smuggled cigarettes following the 50 per cent rise in duty announced in last year's budget, a person familiar with the government's anti-smoking efforts said. The finance chief would unveil other measures, such as devoting more resources to helping smokers quit and stepping up tobacco control enforcement, when he delivered his third budget on February 24, the person said, adding that the government was still studying the effectiveness of last year's tobacco tax increase in encouraging people to quit. The likely tobacco tax freeze comes as a surprise to both anti-smoking activists and smokers amid heated speculation that the finance chief would raise the duty again this year. The Food and Health Bureau is conducting a survey on the effect on smoking rates of last year's rise in the tobacco tax. It is due to be completed in the middle of the year. "As the survey is still continuing, the administration does not have strong evidence to justify another hike in the duty this year," the person said, adding that the administration would raise tobacco duty in the long run. Tsang bumped up the tobacco tax by 50 per cent last year, adding HK$8 to a packet of cigarettes. The increase was the first in eight years. A spokeswoman for the Customs and Excise Department said it handled 8,419 cases in connection with smuggling, storage, distribution, peddling and bringing in excessive duty-free cigarettes last year, an increase of about 67 per cent year on year. Philip Morris, a major cigarette manufacturer, said last week that of 1,500 discarded cigarette packets found around the city last year, all of which were its brands, 9.1 per cent were counterfeit, a rise from 3.2 per cent in 2008. Ma Siu-leung, vice-chairman of the Hong Kong Council on Smoking and Health, said he was disappointed with the government's decision. "We are adamant that raising the tax is an effective way to encourage people to quit smoking and discourage young people from picking up the habit," he said. Ma said an increase in cases involving smuggled cigarettes did not mean the government should spare any effort in encouraging people to quit smoking. The council has called for an annual 15 per cent increase in tobacco tax to match international practice. It has also proposed bans on people lighting up in the street in certain areas and a ban on the depiction of smoking in films. In a submission to Financial Secretary Tsang in December, Dr Judith Mackay, senior adviser to the World Lung Foundation, urged a tax increase of 75 per cent of the price of a packet of cigarettes, the World Health Organisation standard. A University of Hong Kong study released early this month showed that the number of young people calling its quit-smoking hotline, 2855 9557, jumped by 111 per cent after the tax increase. But the Tobacco Control Concern Group, a group of tobacco manufacturers and retailers, has been lobbying the government to freeze the tax, saying it could not be proved that the increase had been effective in discouraging smokers.

The good news is that most of the cold restaurant dishes tested by watchdogs last year were safe. The bad news is that a few were not, and that two of the 114 samples were found to contain salmonella, a bacteria that can cause nausea, fever, diarrhoea and vomiting. It was the first large-scale test in the city of restaurant food that is served cold, and included meat, seafood, vegetables and other dishes. The survey, conducted randomly by the Consumer Council and the Centre for Food Safety, tested samples taken from Cantonese, Chiu Chow and Shanghainese restaurants between July and October last year, the council said yesterday. The salmonella was found in samples of drunken chicken from a restaurant in Tsz Wan Shan and tofu with lime-preserved eggs from a restaurant in Tin Shui Wai. Dr Anne Fung Yu-kei, principal medical officer with the centre, said salmonella infection could have more severe symptoms among babies and the elderly. The chicken dish could have been contaminated because it was not cooked thoroughly, Fung said. To check whether food is well cooked, people should look closely at the bones to see if there is any blood around them, she said. Food should not be eaten if blood or pink liquid is visible. Both restaurants were sent warnings by the Centre for Food Safety, which classifies food containing salmonella as class D - the lowest level under its guidelines for ready-to-eat food. This means they contain unacceptable levels of pathogens and can be hazardous to health. A follow-up test at Kings' Lodge found a sample of the chicken dish to be satisfactory. China Lang Restaurant has stopped selling the tofu dish. Samples from 11 other restaurants were found to contain relatively high levels of bacteria including Escherichia coli - which points to contamination of food by faeces - and Staphylococcus aureus. The latter came to widespread public notice recently after a patient died from infection with the bacteria and swine flu. A jellyfish dish at a Sham Shui Po branch of the well-known Super Star Seafood Restaurant chain was graded class C - "suboptimal" - because of bacterial contamination, but a follow-up sample tested in December was deemed satisfactory. The restaurant chain said it would install water filters to reduce the chance of future contamination. The council's advice to diners is to consume cold dishes as soon as possible, and store them at a temperature no higher than 4 degrees Celsius.

China*: A China court has charged the founder of home appliance giant Gome – once the country’s richest man – with bribery, insider trading and illegal business dealings, state media reported. The indictment of Huang Guangyu brings China one step closer to what is expected to be the highest-profile trial yet in the country of a private entrepreneur, and one that will be watched closely in the business community. Huang, who had been held by authorities for 14 months without charge, will be tried in a Beijing court, without specifying a start date, the Xinhua news agency said on Sunday, citing local media. He is suspected of manipulating trading in two mainland-listed companies, China’s Securities Regulatory Commission has previously said. A court official declined to comment on the case when contacted by reporters on Monday. Huang, 40, once known as the “Price Butcher” for the low prices at his chain of consumer electronics stores, was named China’s richest man with an estimated net worth of US$6.3 billion by the Hurun Report in October 2008. He was detained and placed under investigation a month later, and resigned as Gome director and chairman in January last year. Two top police officials, including a former deputy minister of public security, were detained on suspicion of bribery in connection with the case. Before his arrest, Huang was revered in the media as a model entrepreneur who rose from nothing by successfully capitalising on China’s decades of economic reforms. A high school drop-out, he started building his fortune when he was 16, with a roadside stall in Beijing selling radios and gadgets that he bought from factories near his hometown in Guangdong province. Gome Group is now China’s largest electronics and appliance chain with more than 1,200 stores in more than 200 cities.

China's Shen Xue and Zhao Hongbo celebrated St Valentine's Day and the Chinese New Year by posting a new world best in the pairs figure skating short program at the Vancouver Olympics on Sunday. The married duo were the first skaters on the ice at the Pacific Coliseum and didn’t disappoint the crowd, hitting all their elements during their two-and-a-half minute routine to Queen’s Who Wants to Live Forever. Shen, 31, and Zhao, 36, lead the way with 76.66 points, to better the mark they already held by 1.30. But they face a battle for the title with Germany’s reigning two-time world champions Aliona Savchenko and Robin Szolkowy just 0.70 behind in second place. Russia’s Yuko Kavaguti and Alexander Smirnov are third 2.50 behind the leaders. “It was a good Valentine Day’s gift, and a brand new start for a brand new year,” said 36-year-old Hongbo. “We have not competed much in the last two years and we came back to compete at the Olympic Games as it is our dream to win an Olympic Gold medal. “Even if this past year has been very difficult it feels good to be back at the Olympics.” But he remained cautious ahead of Monday’s free skate final. “Today’s just the short program, tomorrow is more important. Hopefully we’ll be as good as today.” Chinese national coach Yao Bin paid tribute to the three-time world champions who returned after two years retirement to challenge for gold after bronze at the last two Olympics. “There was a lot of pressure. To be able to put in a performance like that is incredible,” said Yao. Savchenko and Szolkowy have had mixed fortunes this season losing their European title to Kavaguti and Smirnov but showed they are still in the fight scoring a personal best 75.96 for their routine to Send in the Clowns. Japanese-born Kavaguti and Smirnov want to keep the title in Russian hands. They gave an error-free performance to Camille Saint-Saens’ The Swan, scoring 74.16. China’s Pang Qing and Tong Jian, the 2006 world champion, after in fourth with 71.50 after receiving a one point deduction for running over time, with Olympic silver medallists Zhang Dan and Zhang Hao in fifth with 71.28.

Scholars and business people across the Taiwan Strait said President Hu Jintao's visit to Taiwan-funded businesses ahead of the Spring Festival showed the mainland's sincerity in promoting peaceful development of ties and full support to Taiwan compatriots. Zhu Weidong, deputy director of the Institute of Taiwan Studies under the Chinese Academy of Social Sciences, said the visit signaled the central government's consistency in Taiwan policies. "It's a declaration that the central government's sincerity in improving cross-Strait relations and care for Taiwan compatriots has not changed," Zhu said. Hu visited a business park for Taiwan farmers in Zhangzhou city of southeastern Fujian Province Friday ahead of the Spring Festival to extend New Year greetings. "We will try our best in everything that will benefit the Taiwan compatriots, and we will honor our words," Hu told the Taiwan business people during the visit. "About 40 percent of Taiwan people are of Zhangzhou origin. The choice of the time, venue and project of the visit was undoubtedly a clear and strong signal," Zhu said. During Friday's visit, Hu said the on-going negotiation on the cross-Strait Economic Cooperation Framework Agreement, or ECFA, between the mainland and Taiwan would "bring win-win results" and would "put into full consideration the interests of Taiwan compatriots, especially those of farmers." Chen Wu-hsiung, director-general of Taiwan Federation of Industries, said "Taiwan's industrial and commercial circles have aspired the early inking of the ECFA to prevent the island from being marginalized, but some business people from traditional industries are still worried their interests will be hampered." "The mainland's commitment made through the top leader's visit made us more confident of smooth signing of the ECFA," he said.

Chinese President Hu Jintao (R Front) meets with tunnel construction workers in Xiamen, southeast China's Fujian Province, during his inspection tour in Xiamen from Feb. 14 to 15, the first two days in China's Lunar New Year.

A nationwide survey shows six out of 10 Chinese expect income growth in 2010, indicating Chinese people are confident in the country's economic outlook, a senior economist said Monday. In an article published by the Beijing-based Guangming Daily, Yao Jingyuan, chief economist at the National Bureau of Statistics (NBS), said the survey was jointly conducted by the NBS, China's flagship television network CCTV, and China Post. According to the survey, residents in south China's Hainan island were the most optimistic about income growth this year, with 27 percent of survey respondents expecting a significant income rise in 2010. A computer was the item most respondent wanted to buy in 2010, while travel was the second most popular. A car was the third popular product, with 32 percent of those polled intending to buy a car. Among those potential car-buyers, 65 percent said they would buy a car worth no more than 100,000 yuan (14,641 U.S. dollars), according to the survey. Some 54 percent of those surveyed said their biggest annoyance is soaring house prices. In Beijing and Shanghai, more than 60 percent of respondents said they will not consider buying a home this year. Yao said the survey questionnaire was sent by mail to 100,000 families in 300 counties nationwide among the mainland's 31 provincial-level regions. Nearly 88 percent of those sent the survey returned an answered survey. In 2009, the per-capita disposable income of urban Chinese residents was 17,175 yuan, up 8.8 percent from a year earlier, NBS figures show. Per-capita disposable income of rural residents stood at 5,153 yuan last year, up 8.2 percent from a year earlier.

Feb 15, 2010

Hong Kong*: The most influential business chamber in Hong Kong believes that the city's leader should have political ties to help ensure policy support. Reflecting frustration over political bickering and infighting within the Legislative Council, the Hong Kong General Chamber of Commerce says the requirement that the chief executive be apolitical should be "seriously addressed". It also says consideration should be given to a more balanced representation of business interests through the functional constituencies in Legco. The views are included in the chamber's submission to a government consultation on what people would like to see happen in 2012 as a transition period for reforming the political system. The deadline for submissions is next Friday. "At present the government does not have any secured support in Legco. The entire Legco is effectively a grand opposition. It requires renewed negotiations between the government and the political parties for every new policy and legislation. This situation is clearly not beneficial to good governance and efficient policymaking," the chamber said in its submission. "The chief executive's party can be a leading member of a governing coalition in Legco, like multiparty coalitions operate in some European democracies. The chief executive should also be able to nominate at least some of the principal officials from among like-minded legislators belonging to the coalition, to further cement the link between the administration and the legislature." The Chief Executive Election Ordinance forbids the appointed leader of Hong Kong from belonging to a political party or anything to that effect. Despite this requirement, the fact that pro-establishment allies and functional constituencies occupy almost two-thirds of Legco seats means government bills and legislation, which require only a simple majority, are always passed. But securing adequate support for weightier issues, including political reform, is more troublesome for the government because a two-thirds majority is required and Democrats control 23 of Legco's 60 seats. After Legco voted down his 2005 constitutional reform proposal, Chief Executive Donald Tsang Yam-kuen found it increasingly difficult to gain legislature support for his policies. Although the chamber supports the functional constituency system as a way to represent business interests in Legco, it is open to discussion on broadening the voter base and nomination arrangements. The trade-based seats have long been seen by many in the prodemocracy camp as giving special-interest groups too much say in the electoral process. This is because the ability of organisations and companies to vote in functional constituency elections gives some individuals a disproportionate voice in Legco. A chamber insider said fixing the number of votes each company is entitled to could be considered as more equitable.

Fuelled by an influx of hot money and historically low mortgage interest rates, the Hong Kong property market is heating up. But just how hot is it? The case of an apartment that has just changed hands for HK$5,900 a square foot gives a good illustration. It's not an upmarket private apartment in a fashionable location, but a Home Ownership Scheme flat in Shau Kei Wan. The 829 sq ft flat in Block B of Tung Yuk Court sold for HK$4.89 million in January. Property agency Centaline says it is the highest price for such a flat since the peak of the market in 1997. Some agencies are predicting that this year or next could be the one when prices finally climb over that peak after languishing for 13 years amid successive financial crises and the Sars epidemic. HOS developments are commonly viewed as secondary to private flats since they were built with government subsidies for homebuyers who could not afford to pay full market prices. But demand for them is rising with the rest of the market. Centaline says the number and value of transactions for HOS units in January rose 19.6 per cent and 22.9 per cent respectively over December. Would-be buyers might ruefully recall the teasing reply by Chief Executive Donald Tsang Yam-kuen in October to a doctor and her lawyer boyfriend who claimed on a radio phone-in that rising prices were making it difficult for them to enter the market. Saying they were too picky, Tsang said: "If you just read the newspaper, you can find plenty of flats selling for HK$4,000 per square foot." Nowadays, even flats on old private estates in the New Territories such as City One in Sha Tin and Fairview Park in Yuen Long are pulling in more than HK$4,000 a square foot, thanks to the influx of hot money and low mortgage rates. More than HK$640 billion in hot money is estimated to have flooded in since late 2008, and local banks and regional lenders have cut their mortgage rates - in some cases to less than 1 per cent - luring more people to bet on a property boom. Total deposits in Hong Kong stood at a high of HK$6.38 trillion at the end of December 2009, up HK$321.5 billion from a year ago and more than double the HK$2.73 trillion saved in July 1997, Hong Kong Monetary Authority (HKMA) figures show. Bankers are scratching their heads for ways to lend out the excess money.

When Li Jianhang first saw sand painting on a video clip, he started experimenting by playing with sand on his coffee table. Three years on, he has made a name for himself on the mainland, with more than 100 performances in the past year. Li will treat Hongkongers to his first show outside the mainland tomorrow on the Hong Kong Jockey Club's Lunar New Year Parade float. Sand painting emerged as an art form about five years ago. It involves using your hands to draw a series of pictures on top of a light box and projecting them onto a screen. "When I first saw the video clip I watched it 10 times," Li, 30, said. The art teacher was fascinated, but as the video did not explain what happens behind the scenes he had to figure it out for himself. "In the beginning I used very rough sand to paint on a coffee table, with a lamp under the glass," Li said. He finally bought a glass sandbox to use as his palette. Through trial and error he figured out that fine sand was much better and got a friend to collect sand from Inner Mongolia. The sand is collected while it is blowing in the wind to ensure it is light and fine. Li prepares about 1kg for each performance. He said sand painting was more engaging than Chinese oil painting because it was accompanied by music. He loved the texture of sand and there was no limit to what he could draw. Sand painting was fluid and is responsive to the slightest touch. Artists could use different parts of their hands to make an impression. For example, one could use the side of a fist to make the body of a jellyfish and fingernails to draw the tentacles. Li doesn't bother taking photos of his impressive creations, preferring to just leave them for a day or two so he can admire them and then draw over them. The Jockey Club's float will be the second in the parade and features a large drum with Li's creations projected on both sides of it. The biggest challenge would be painting on a moving vehicle, he said. "The float will be moving but I will have to keep my hands still," he said. But he said he was confident his first outdoor performance would go off without a hitch. It would include a series of images depicting Victoria Harbour, equestrian events and a Lunar New Year message. The parade, organised by the Tourism Board, starts at 8pm at the Cultural Centre in Tsim Sha Tsui. It will pass along Haiphong and Nathan roads before ending at the New World Centre. Meanwhile, the Observatory issued a cold weather warning at 4.20pm yesterday. It is expected to be wet and cold throughout the Lunar New Year break as Hong Kong comes under the influence of a cold northeast monsoon affecting southern China. Temperatures today will range between 12 and 16 degrees Celsius in urban areas and a couple of degrees cooler in the New Territories. The mercury will rise a little tomorrow, ranging from 14 to 18 degrees, but drop again next week, with the minimum temperature falling to 11 degrees on Thursday and Friday.

Bank of East Asia (0023) said full-year net profit for 2009 rocketed a whopping 65 times to HK$2.56 billion on rising mainland loans and the absence of collateralized debt obligations.

Wing Wah is expecting rice pudding sales to show double-digit growth this year but says mooncake - with industry-wide sales of around HK$700 million a year - will remain the king of festive cakes. Food has been always been at the core of Chinese festival culture. During the Mid-Autumn Festival, mooncake is a must-have snack that represents family reunion. At the Dragon Boat Festival, people are accustomed to eating rice dumplings as a way to commemorate the ancient poet Qu Yuan, who died for his nation. Rice pudding, also known as rice cake, is considered an auspicious food to consume at Lunar New Year. Its Chinese name is nian gao in Putonghua or nin gou in Cantonese. Nian is "year" or also "sticky", while gao is "cake". Together they indicate a wish for a "higher year" ahead. Although the three major Chinese festival foods are equal in cultural value, they vary greatly in commercial value. Wing Wah general manager Lee Ying-kuen said rice pudding generated less revenue than mooncake due to the keen competition among cake makers and the food's shorter shelf life. He explained that making rice pudding was simpler and involved fewer ingredients than mooncake, so many small bakeries and also housewives would also make supplies. "At this time every year, you can find rice pudding sold in every corner of the city, from street shops, restaurants to big hotels," Lee said. "We cannot expect it to generate sales volumes as big as mooncakes, which are only available at big bakeries and hotels." Rice pudding usually can only be stored for a month in a refrigerator, whereas the shelf life of mooncake is as long as two months. "This is important if we want to develop the overseas market," Lee said. Wing Wah's mooncakes are sold in Europe, the United States and Australia, and are also available throughout the year at its counter in the Hong Kong International Airport. But rice pudding is only produced for the Hong Kong market. The city's largest catering group, Maxim's, says Lunar New Year is the second-biggest festival food market. Maxim's sells mooncake in more than 80 locations around the world, but this year for the first time it will promote its Hong Kong-made rice pudding outside the city. Guangzhou, Shenzhen and Foshan have been chosen as the first batch of cities to sell the products. Angela Chan, Maxim's branded products manager, said the turnover of rice pudding would increase this year due to bigger demand in Hong Kong and the new market across the border. But the group did not expect sales to exceed mooncake sales. "It's hard in terms of the demand and value," Chan said. "A box of mooncake is priced at HK$200 on average," yet rice cake usually sells for between HK$30 to HK$100. Even so, retailers have gone to great effort to innovate, with new pudding flavours and packing in order to attract more buyers. In addition to the traditional turnip, taro and coconut pudding, novel products being marketed this year include "bird nest" pudding from Wing Wah, durian-flavoured pudding from Taipan Bread and Cakes, and Hello Kitty-shaped cakes from Maxim's. Some retailers are also following the green trend and packing their products in boxes that can be reused instead of vacuum-sealed plastic bags. Designer-turned-cook Xu Yuan is trying to turn the annual delicacy into art. Saying traditional rice pudding is "boring", Xu started to apply her imagination to the cakes six years ago. This year, about 100 of Xu's puddings were snapped up by friends and customers at her restaurant in Wan Chai a couple of weeks before the Lunar New Year. The most popular ones are "star pudding" and "tiger pudding", which feature colourful stars and tiger skin patterns with carrot, water chestnut, sesame and other ingredients - all from Xu's own organic farm in the New Territories. Xu has stuck to tradition, using a stone grinder to produce the rice flour and firewood to steam the pudding which, she said, creates a much better taste. As a result her products are more expensive, ranging from HK$200 to HK$350 each. "Honestly, I cannot make much money from this since it takes too much time," Xu said. "For me, it's a statement of my food philosophy rather than a business." A lover of traditional food since her childhood, she said the little cakes always reminded her of happy moments celebrating the festival with her family. "Although my puddings are fancy in appearance, their flavour is 100 per cent traditional. I think people love this traditional flavour because they do love the warm feeling of sharing with their loved ones," she said.

Chinese New Year marked worldwide.

Just over half of Hong Kong people accept the government's constitutional reform package although some of them do not see it as a step towards democracy, a university poll has found. In a Chinese University telephone survey of 1,009 people between January 28 and last Thursday, 51.2 per cent thought the Legislative Council should pass the government's proposal, 29.4 per cent opposed it and 19.4 per cent gave no view. The support rate, which was slightly higher than the 50.8 per cent found in the previous poll in December, exceeded the percentage of interviewees who considered the government package a step forward to democracy (40.3 per cent). Only 28.3 per cent said the proposal was the best one the government could offer under current circumstances, while 60.3 per cent said it was not. Asked about the 2007 decision by the National People's Congress Standing Committee, which said Hong Kong might implement universal suffrage for the chief executive in 2017 and for all legislators afterwards, 63.6 per cent said they accepted it - up from the 57.7 per cent in December. Another 24.7 per cent rejected the decision. Political scientist Dr Ma Ngok, who was responsible for the study, said the results showed that many citizens were accepting the government package unwillingly. "The government has a responsibility to respond to public opinion by putting forward a more progressive proposal, which will gauge more support," said Ma, a core member of the Alliance for Universal Suffrage. Speaking at a forum held by the pollsters, Secretary for Constitutional and Mainland Affairs Stephen Lam Sui-lung said the fact that more than half of the respondents supported the government package "provides a good basis for us to move forward". All percentage figures in the findings had margins of error of below plus or minus 3.09 per cent.

Hang Seng Indexes, which manages the Hang Seng group of indices, said the technical glitch in its system which disrupted trading late last month was caused by an unusual sequence of events. Updating of major indices for half an hour on January 22 was disrupted by the glitch and the group said it was carrying out a study to identify possible areas for improvement. In a report to the Legislative Council's financial affairs panel, Hang Seng Indexes said the factors that caused the problem were so rare that it could not have been foreseen. "We're talking about something that happened within a thousandth of a second, or even less," Vincent Kwan Wing-shing, director of Hang Seng Indexes, said. Kwan said the incident was the first major technical mishap that had occurred in the system, which remained "highly resilient". The glitch meant that the Hang Seng Index and the Hang Seng China Enterprises Index could not be calculated properly from 10am to 10.32am, although individual share prices continued to function. The company resorted to using a backup system and e-mailed index updates to vendors every 15 minutes. Hang Seng Indexes said it has not received any complaints from people seeking compensation. Kwan denied the problem had anything to do with the huge volume of trades that the system manages, or was caused by the sheer weight of indices that the company compiled. He said it would not be necessary for the Hong Kong stock exchange to move towards a US-style model where there are multiple index companies in operation. The company has set up a working group to look into improving its contingency system to shorten the time required to inform the market should another technical error arise. "We cannot say that something like this won't happen again, but if it does we are confident we have the capacity to handle it," Kwan said.

Taiwan has approved laws that will loosen restrictions on mainland investments by the island's liquid crystal display (LCD) and chip foundry sectors, government sources said yesterday.

Beijing has expanded the scope of yuan business in Hong Kong to allow non-mainland companies to issue yuan bonds and borrow yuan funds in the city, according to the Hong Kong Monetary Authority. It also allows non-trading firms to transact business in yuan. Confirmation of the bond-related policy came as Hong Kong's de facto central bank issued guiding principles on broader yuan business after a review aimed at making processes simpler and more flexible under existing policies. "Non-Chinese entities can issue yuan bonds in Hong Kong but cannot remit [the funds raised] across the border," HKMA chief executive Norman Chan Tak-lam told a news briefing. He noted that these companies will have to satisfy Hong Kong laws and market principles in order to issue bonds, while fund remittance has to follow mainland regulations. Chan said yuan raised through bond issues can be used outside China for trade finance and cross- border projects in Southeast Asia. The new broadened guidelines also allow non- trade business to settle their servics or product sales in yuan. "The scope for personal yuan business has not changed," said Chan. As such, direct equity buying and capital account financing are not allowed. They are restricted by another set of laws. So the new guidelines are applicable to accountants and lawyers, but not insurers or brokers. Hong Kong has been lobbying Beijing to allow the city to expand its yuan banking business, including permitting non-financial companies to issue yuan bonds, after cross-border yuan trade settlement began last July. Hong Kong Association of Banks chairman Benjamin Hung Pi- cheng welcomed the new measures. He thinks local yuan deposits are currently small in value. The new guidelines will allow companies to open accounts and borrow yuan, which will increase yuan stocks and circulation, Hung said. He said allowing businesses to issue bonds will give investors more channels and increase the flexibility of local yuan trade development.

The HK$2 tram ride looks set to become history as Hong Kong Tramways prepares to ask the public to dig deeper to fund service improvements. "To keep the tram alive, we need to improve it. And we need the resources to improve," managing director Bruno Charrade said. "But I must emphasize the tram must remain the cheapest form of transport in Hong Kong. We will maintain a balance between the cost and the level of services we can provide to the public." Charrade refused to disclose any figures, saying the company needs to study its balance sheet first. He said a survey of 3,000 people in July last year revealed passengers are aware they would likely have to pay more for better services. "Our ridership has been decreasing bit by bit over the years. We are already such a cheap form of transport, so obviously they have left the tram not because of the price, but because of the service," Charrade said. "So we will be focusing on improvements, not price." But money would obviously be needed for the slew of suggested improvements, the company said. These include investing in new hardware, such as material and new technology, as well as software and more staff. Some ideas that will likely be implemented in the coming month include the maintenance and upgrading of tram tracks through welding and grinding, improving the overhead line system with better wires, and increasing the frequencies of trams.

Troubled fung shui master Tony Chan Chun-chuen, whose claim to the late Nina Wang Kung Yu-sum HK$100 billion empire was ruled a forgery, has asked the court to order police to return some of the documents they seized when they arrested him earlier this month.

China*: South Korean exports to China posted their biggest-ever annual growth last month, easing fears that Beijing's crackdown on excessive lending would reduce demand. "China is trying to prevent asset markets, especially the property sector, from overheating but at the same time it is trying to boost consumption," Park Sang-hyun, the chief economist at HI Investment & Securities, said. "That may put pressure on exports of construction goods but will keep supporting sales of consumer electronics and chips. The current policy is not strong enough to hit overall Korean exports." Recent moves by China to head off asset bubbles and prevent its economy from overheating have fuelled concerns that its demand for raw materials, commodities and other imported goods may slow even as demand from major Western economies remains tepid. South Korea has been one of the most worried about such a scenario as China is its largest overseas market. Those fears grew after data showed the Korean economy lost almost all of its recovery momentum in the fourth quarter last year. But customs data yesterday showed its exports to China in January jumped 98.5 per cent over a year earlier, though the bulk of the gain came from the effect of a low base as global trade was hit hard by the financial crisis. Average daily exports last month to its giant neighbour rose 4 per cent to US$394 million from US$379 million in December, an official at the Ministry of Knowledge Economy said. The monthly numbers are not seasonally adjusted. For last year as a whole, shipments to China fell 5.1 per cent. Shipments to the United States rose 16.5 per cent in January from a year ago, the biggest annual gain since a 19.3 per cent rise in September 2008. Chinese trade data on Thursday showed its export and import growth last month remained robust, although the figures were muddied by quirks in the calendar.

Chinese President Hu Jintao (R) talks to people from all walks of life during a gathering in Beijing, capital of China, Feb. 12, 2010.

Berlin film festival opens with Chinese movie - Director Wang Quan'an (L), actress Lisa Lu (C) and actress Monica Mo arrive for the screening of the movie "Tuan Yuan" (Apart Together) at the 60th Berlinale International Film Festival in Berlin February 11.

China Southern cut economy-class tickets to 560 yuan from 700 yuan on flights between Guangzhou and Changsha, after a high-speed train started service in December. China Southern Airlines Co, the nation's largest carrier, and Air China Ltd are slashing prices to compete with the country's new high-speed trains in a battle that Europe's airlines have largely already ceded. Competition from trains that can travel at 350 km per hour is forcing the carriers to cut prices as much as 80 percent at a time when they are already in a round of mergers to lower costs. Passengers choosing railways over airlines will also erode a market that Boeing Co and Airbus SAS are banking on to provide about 13 percent of plane sales over the next 20 years. "There's no doubt that high-speed rail will defeat airlines on all the routes of less than 800 km," said Citigroup Inc analyst Ally Ma. "The airlines must get themselves in shape, increase their profitability and improve the network." China Southern cut economy-class tickets to 560 yuan from 700 yuan on flights between Guangzhou and Changsha, Hunan province, after a high-speed train started on the route in December. The trip now takes two-and-a-half hours by train instead of nine hours. "The high-speed train is invincible on this route," said a civil servant from Guangzhou, who opted to travel by rail. "There's no doubt it's more convenient for trips to the cities along the line. Airlines can't compete with trains for the spacious seats."

Labor shortages in the Pearl River Delta are prompting Hong Kong factory owners to offer perks such as films, better food, air conditioning and even bonuses to retain migrant workers and lure new employees. As exports begin to recover, tens of thousands of Hong Kong factory owners are offering such incentives in the hope of stemming feared staff shortages after the Lunar New Year, a deputy chairman of the Federation of Hong Kong Industries, Stanley Lau Chin-ho, says. Adding to their problems, owners expect an increase in the minimum wage in some Guangdong cities this year. The trade body estimated the rise could be more than 10 per cent, after a closed-door meeting with the provincial Labour and Social Security Bureau on Monday. "Labour shortages are a big headache," Lau said. "Many factories dare not take new orders because of insufficient workers." The worsening labor shortages mark a dramatic reversal from five years ago when migrant workers were queuing for jobs. Factories now also have to cope with smaller orders and shorter delivery times. Lau said some orders from the United States require delivery in 30 days or less, compared with about 60 days before the global financial crisis. Before the onset of the financial crisis, Hong Kong factory owners were the largest employers of migrant workers in the Pearl River Delta, accounting for about 9.6 million workers out of roughly 30 million. Shutdowns and a lack of orders during the crisis have shaved off about four million jobs in Guangdong. Tommy Lam Chin-ming, whose Dongguan factory produces high-end jackets for the US, is offering a 300 yuan (HK$340) cash bonus for any migrant worker who brings someone to join the factory. "It is very difficult to hire workers, which is an industry-wide problem," said Lam, who is expecting more orders after the holiday. He said the factory was using cash incentives for the first time as it tried to add about 200 workers to the existing 800. As for the potential increase in the minimum wage, Lau said factory bosses had to offer more than was required. He said in Dongguan, where the minimum pay is 780 yuan a month, migrant workers often shun offers below 1,200 yuan. Migrant workers soon might be better off staying in their home towns in Hunan , Hubei and Sichuan , said Nelson Siu Nai-sun, president and human resources consultant at the Hong Kong Professionals and Executives Association. Rapid urbanisation inland was creating more jobs, higher living standards and lower living costs relative to Guangdong. Siu said factories may eventually have to migrate to other parts of the country or climb the technology ladder by making higher-value goods.

Sir Percy Cradock was present at talks on the Joint Declaration with Deng Xiaoping in Beijing. Whether it is our human rights safeguards, the existence of a Court of Final Appeal or simply the fact that a separate currency continues to circulate, much of what we take for granted in Hong Kong today can be traced back to the highly detailed promises British negotiators extracted from their reluctant Chinese counterparts during the negotiations that culminated in the signing of the Sino-British Joint Declaration in 1984. For much of that, Hong Kong can thank Sir Percy Cradock, the British Foreign Office sinologist who recently died in London, aged 86.

Sir Percy Cradock was present at talks on the Joint Declaration with Deng Xiaoping in Beijing and Sir Percy Cradock was central to the shaping of post-handover Hong Kong.

A medium-sized dairy company in Xian has been exposed for using only melamine-tainted milk to manufacture baby formula over the past five years, even though nearly 300,000 children fell ill in an earlier toxic milk scandal. State media reported that the Jintian Dairy Company in the Shaanxi capital had purchased tens of tonnes of inferior milk that had been rejected by major dairy manufacturers since 2004. Truck drivers said they used to send spoilt or obviously tainted milk to the company for a price much lower than the market average until it was closed last month, The Southern Metropolis Daily reported. Following a 10-day milk safety crackdown launched by the central government, Shaanxi announced that at least three unscrupulous dairy companies - in Xian, Xianyang and Weinan - had recycled milk powder that contained illegally high traces of the toxic chemical. One of the shamed producers, Lekang Dairy in Weinan, was closed after four people were arrested for selling 28 tonnes of tainted milk powder. Elsewhere, another seven dairy companies - from Hebei , Liaoning , Ningxia , Shandong and Shanghai - were shut down for repacking melamine-tainted milk powder seized more than a year ago. Official figures show that five dairy manufacturers from Shaanxi, Ningxia and Liaoning recycled more than 200 tonnes of melamine-tainted milk powder in the past year, with only 80 tonnes having been recalled. The authorities declined to reveal how much melamine-tainted milk powder was repacked and sold by other manufacturers recently named and shamed by the Ministry of Health. In Liaoning, the provincial food safety watchdog sent five inspection teams to examine dairy products and food markets in 14 cities after three dairy manufacturers were found to have intentionally laced milk powder and ice cream with melamine. The provincial health bureau seized more than 10 tonnes of tainted milk powder from a manufacturer in Yingkou and two ice cream makers in Liaoyang and Tieling between April last year and last month, Xinhua reported. In Ningxia, two dairy manufacturers sold nearly 165 tonnes of melamine-tainted milk powder to Guangdong, Fujian and Inner Mongolia. Only 70 tonnes have been recalled. Beijing vowed to implement stricter safety measures in late 2008 after a toxic milk scandal that killed at least six children stoked widespread public anger. State media reported that regional governments recalled some 10,000 tonnes of toxic milk powder but failed to trace how dairy companies handled the contaminated products. The mainland announced a new food-safety campaign on Wednesday, headed by Vice-Premier Li Keqiang , who vowed to "thoroughly" investigate the repackaging of tainted milk products and to punish manufacturers involved.

China's former skater Yang Yang elected as new IOC member.

Feb 12 - 14, 2010 (Happy Chinese New Year  on February 14th - Year of the Tiger)

Hong Kong*: The Hong Kong IPO of American International Group’s Asian life insurance division is targeting a listing committee meeting for the end of March, people close to the matter said on Thursday. AIA hopes to begin the roadshow for its more than US$10 billion IPO in mid-April, according to the sources who have direct knowledge of the offering but were not allowed to speak publicly about the deal. AIA will hold an analyst briefing on Friday with the nine underwriters it has chosen for the offering, an IPO that could be Hong Kong’s largest since 2006. The banks selected were Citigroup, Credit Suisse, Goldman Sachs, BofA Merrill Lynch, UBS, CCB (SEHK: 0939) International and ICBC International. AIG, bailed out by the US government during the financial crisis that started in 2008, has made certain that no major investment bank with a significant stock underwriting presence in Hong Kong is left out of the IPO. Investment bankers in Hong Kong were anxiously awaiting the selection, as the offering will produce one of the highest deal fees in recent memory. Should AIA raise US$10 billion, the standard 3 per cent charge would generate an estimated US$300 million in fees spread throughout the banks. The wide selection ensures that everyone is happy but also may cause some grumbling because it spreads out the fee pool. AIA was not immediately available to comment. J.P. Morgan is advising AIG through its restructuring process along with Blackstone Group. AIG already chose Deutsche Bank and Morgan Stanley as joint global co-ordinators for AIA’s IPO last year. The selection of underwriters signals that the IPO is moving forward after months of little to no news on the offering. In what first looked like a roughly US$5 billion IPO, the size of the listing of one of Asia’s largest insurers grew throughout the year with the rising markets. One source close to the deal expects AIA to raise US$10 billion to US$15 billion. Another source also close to the deal said it could raise at least US$20 billion.

The government is planning to launch a digital audio broadcasting service later this year or early next year, Secretary for Commerce and Economic Development Rita Lau Ng Wai-lan revealed on Thursday. Lau told reporters that up to 13 CD-quality audio channels could be provided. Transmission facilities could be shared by more than one operator. Lau said the government was now inviting interested parties to apply to operate the new broadcasting services. "Any party, who is interested in providing such services, whether they are existing sound broadcasting licensees or new licence applicants, is invited to submit applications to the Broadcasting Authority by April 30," she said. "Radio Television Hong Kong might also submit proposals to provide such services for approval by the government," Lau added. It is expected that each operator would have to invest about HK$35 million to HK$40 million. Digital audio broadcasting (DAB) is form of broadcasting using digital compression technology to deliver audio, text, pictures and data in a binary bit stream.

Conglomerate Swire Pacific said on Thursday, it had submitted a listing application to the Hong Kong Stock Exchange for its proposed plan to spin off its property arm.

Henderson Land Development expects to sell HK$10 billion worth of residential units as it forecasts a 15 per cent rise in property prices in the Year of the Tiger.

Sun Hung Kai Properties aims to achieve record sale prices for the second phase of its HK$10 billion Yoho Town development in Yuen Long, which will go on sale after the Lunar New Year.

Top US hotel companies are scouting out new brands to expand their reach abroad and keep their best customers from defecting to rivals as new rooms growth slows down. In recent months, Choice Hotels International, Hyatt Hotels Corp and Wyndham Worldwide Corp have all expressed interest in acquiring a brand. Buying a brand allows a company to offer more hotels at different prices and give frequent guests more options, keeping them away from competitors. It also helps a hotel company diversify into new market segments and regions without the cost of developing a chain from scratch. "You're trying to be everything to everyone," said Stifel Nicolaus analyst Rod Petrik. Loyalty program members book a large number of rooms, according to companies that operate and manage hotels. For example, roughly half of Marriott International's room nights are purchased by loyalty program members. And about 25 per cent of the domestic gross room revenue of Choice Hotels comes from frequent guests. "When so much of your business is driven by loyalty programs, you want to have all those offerings available to your customers," Petrik said. Acquiring a brand might be a good way for hotels to seize market share as new room construction slows down, analysts said. Data firm Smith Travel Research projects supply will grow 1.8 per cent this year and 1 per cent in 2011. Last year, the number of new rooms grew 3.2 per cent. In an interview last month, Hyatt said it was looking to buy hotels or a brand to bolster its presence in gateway cities such as New York and London. Wyndham has said it is looking overseas for growth. "Acquiring a brand is one way to jumpstart the international presence of a brand umbrella," said David Loeb, an analyst with Robert W.Baird. He expected hoteliers to especially look at opportunities in India and China. Hotel operators have had success buying brands before. In 2005, Starwood Hotels & Resorts Worldwide bought the Le Meridien brand for about US$225 million, according to an annual filing. The hotels added new management fees to Starwood's coffers, accounting for 8 per cent of its overall management and franchise fees in 2006. "If there were another opportunity like Le Meridien, we'd be interested," Starwood chief executive Frits van Paasschen said last month. But van Paasschen said there were few new hotel brands with "critical mass" in terms of size and popularity. "What may be interesting for a smaller player from a brand acquisition standpoint may not be for us." Analysts said there were more brand-buying opportunities abroad, given that there are few independent brand firms based in the United States. One US exception is Spokane, Washington-based Red Lion Hotels Corp, which owns and operates hotels, and a handful of other small luxury and boutique hotel chains. French firm Accor may spin off its hotel business, which could be an attractive purchase for major brand companies, Loeb said. Accor, which runs the Sofitel and Motel 6 hotels, declined to comment. Red Lion did not return calls. A hotel operator buying a brand of another major firm is not out of the question either, analysts said. "Hoteliers may be able to pick up a brand for roughly 12 to 14 times its annual cash flow, in line with where brand companies are currently trading," Loeb said.

The only known aerial photographs of the World Trade Center as it collapsed on September 11, 2001, were released by ABC News on Wednesday. The photos, taken from a helicopter by New York Police Detective Greg Semendinger, show the twin towers in flames, falling amid huge, billowing clouds of dust, debris and smoke that envelop downtown Manhattan. The 13 photographs were among thousands of pictures that ABC News sought under the Freedom of Information Act from the National Institute of Standards and Technology, which investigated the collapse of the towers, agency spokeswoman Gale Porter said. While other photographs of the falling towers were taken on September 11, 2001 from satellites, rooftops and other aircraft, these photos are the only ones known to have been taken up close from an aircraft flying overhead in city airspace. Nearly 3,000 people died when the twin towers were attacked by hijacked airliners. The aerial photographs had been partially published in the past but now are publicly available to researchers. “With these pictures, you move from a specific slice of information to much greater context,” said Jan Ramirez, chief curator at the National September 11 Memorial and Museum.

A cloud of smoke engulfs central New York after the twin towers collapsed on September 1, 2001.

Smoke, ash and dust engulf the area around the World Trade Center in New York on September 1, 2001.

Smoke billows from the grounds of World Trade Center in New York after terrorists flew two airliners into the towers on September 11, 2001.

Children from low-income families may get subsidies to help them pay internet access charges as a growing number of schools require students to do homework online. This was being considered by the government in its next budget after research showed that seven to eight in 100 children from low-income families had no internet access, a person familiar with the government's fiscal position said. It comes at a time when both lawmakers and welfare groups have been drumming up expectations for such a subsidy. In a survey by Oxfam last month, 75 per cent of 502 respondents agreed the government should provide an internet subsidy. More than 77 per cent said internet access was a basic necessity for primary and secondary students, while 73 per cent regarded the lack of it an obstacle to studies. Eighty per cent said free internet access in libraries and shopping centres was not a perfect solution. Some said the noisy environment would distract students, while others pointed to the need for queueing and the time limit on internet use. The Computer Recycling Scheme, launched by the Education Bureau in 2005, has provided recycled computers and one-year free internet access to about 20,000 families. But Oxfam said this was not a long-term solution. Wong Huen, a single mother with a secondary two daughter and primary four son, said a computer given to her by the government broke down the day after she received it in December last year and had yet to be repaired. Now her children must do their homework in public libraries and the son blamed her for the problem. Three hundred low-income families are planning a march to Government House to press for the subsidy. The government-friendly Democratic Alliance for the Betterment and Progress of Hong Kong has urged Financial Secretary John Tsang Chun-wah to provide a Web subsidy in his third budget, scheduled for delivery on February 24. Demand for the subsidy was also included in a motion passed by the Legislative Council on February 3.

International Mining Machinery Holdings yesterday became the latest new issue to fall below its offer price, dropping 13.5 per cent on its Hong Kong debut.

The number of boys born in Hong Kong is soaring compared with girls, spurred by an influx of mainland mothers who prefer sons. Many use sex-selection services that are illegal across the border. Figures from the Census and Statistics Department show that the ratio rose from 109.8 boys for every 100 girls born in 2005, to 111.4 in 2006, 112 in 2007 and 113.6 in 2008. At this rate it may soon approach the 120 to 130 found in some provinces on the mainland. The trend is backed up by the first comprehensive study of its kind in Hong Kong. The researchers noted that many mothers came to Hong Kong specifically to learn the sex of their babies. Some would cancel their birth bookings on finding that they were expecting girls. Since a landmark Court of Final Appeal ruling in 2001 gave permanent resident status to children born in Hong Kong to mainland parents, the city has become a "birth hub". These Hong Kong-born children may not be raised in the city during their early childhood, but they can come here at any time to enjoy their full rights to education and social services. In 2008, mainland mothers accounted for 42.6 per cent of all births in Hong Kong. The overall male-to-female ratio in Hong Kong was only 106.4 to 100 in the 1980s and 1990s, on a par with the international average of 105 to 107. The study by three obstetricians and gynaecologists at hospitals in Kowloon West - Grace Wong Ying, Leung Wing-cheong and Robert Chin Kien-howe - was published recently in the Journal of Perinatal Medicine. The team retrieved data on all the 194,602 babies born in public hospitals between 2003 and 2007. Of these, 140,962 (72.4 per cent) were born to Hong Kong Chinese and 52,741 (27.1 per cent) to mainland mothers. The overall sex ratio at birth during that five-year period was 108.8 to 100. But the ratio is lower for Hong Kong mothers, at 107.8, than for mainland mothers, 111.6. Wong, the study's chief author, said the rapid rise in the ratio was a result of an influx of mainlanders who practised sex selection more than locals. The researchers said as most mainland women giving birth in Hong Kong came from southern China, biological or environmental reasons alone probably could not explain such a "skewed" sex ratio. "The most plausible explanation for this is the practice of sex selection. However, these findings do not provide direct evidence that such a high sex ratio is a result of selective abortion of females in women of higher birth order," the report said. "It is also possible that patients from mainland China tend to spend more resources on their sons, and are more willing to give birth in Hong Kong if their pregnancy is of a male baby." Wong, who formerly worked at the public Princess Margaret Hospital and switched to private practice a year ago, said almost 90 per cent of her patients were from the mainland. "We have come across several cases in which the mainland mothers have defaulted or cancelled their booking for a delivery in Hong Kong after learning that they are carrying a girl. Some even disappeared without paying the medical fee after an ultrasound scan," Wong said. The team also analysed the sex ratio of each birth order. They found that while mainland women did not have a clear preference for a son in their first pregnancy, they may have practised some form of sex selection from their second pregnancy. For Hong Kong women, the sex ratios were 106 to 100 for the first baby, 107.3 for the second and 118.4 for the third child or above. The ratio increases much more steeply among mainland women - from 104.7 for a first baby, 114.9 for the second and 174.5 for the third child or above. The researchers warned that the "abnormally skewed" sex ratio may have disastrous social consequences. "High sex ratios at birth have deprived female fetuses of their birth rights. Mothers also suffer from tremendous psychological pressure and reproductive health risks while undergoing abortion. "Discrimination against women is detrimental for both men and women, hindering the overall economic development. The phenomenon of missing girls will lead to a shortage of marriageable females," the team said. There are now more women than men among the Hong Kong population aged 20 to 35. But University of Hong Kong demographer Dr Paul Yip Siu-fai said the changing sex ratio at birth would only have a limited effect on the overall sex ratio. "This is because many Hong Kong men will marry mainland women and bring them to Hong Kong, and women's life expectancy is longer." He called on the government to monitor demographic trends and prepare for an influx of Hong Kong-born children from the mainland.

The Vocational Training Council says it will increase the number of available places in 2012 in order to help accommodate about 70,000 new diploma candidates graduating alongside 39,000 A-level students. From the 2009-10 academic year, government-run and funded secondary schools will switch to a "3+3+4" system. The old system involved five years of schooling (leading to the HKCEE examination), two years of A-levels and three years at university. The HKCEE and A-level examinations will be replaced by the Hong Kong Diploma of Secondary Education. In 2012, candidates of the last A-levels and those of the inaugural diploma exam will fight for places. Leung Yam-shing, education adviser with the council, said there would be a big increase in the number of places for the so-called double cohort year. The council offers about 12,000 places for Form Five graduates and about 3,000 places for Form Seven graduates every year. Leung said the council would increase the number of available places, perhaps by more than 50 per cent. He also said the council would implement measures to accommodate the wider discrepancy in graduates' standards following the launch of the new diploma. "Now we have two public exams, the Form Five and Seven exams, to screen candidates. In future, there will just be one exam, which means the standards of graduates applying for our courses could vary a lot. "We are considering whether to conduct admission interviews as further screening. Those who get admitted with lower language proficiency will be made to complete extra hours on weekends or at night to help them catch up. The future curriculum for new diploma graduates will be devised according to the different abilities and needs of students." The Education Bureau said last month five Level 2 passes would be the minimum entrance requirement for sub-degree programmes, including associate degrees and higher diplomas offered by the council. Leung said priority would be given to those who had taken relevant courses as applied learning subjects at secondary schools. As schools will not take in any Form Five repeaters this year following the launch of the new senior academic structure, Leung expected a rise in the number of applicants for the council's courses this year. He said that the council would increase the number of places by up to 10 per cent for this year's Form Five graduates who will take the swansong Hong Kong Certificate of Education Examination. "We expect 55,000 applicants this year, compared with 50,000 last year. With the opening of the Hong Kong Design Institute in Tiu Keng Leng, there will be more room for an increase in the number of places." He also expected that the rising number of applicants will push up their entrance requirements this year.

Beijing has approved a visit to Hong Kong by the USS Nimitz aircraft carrier battlegroup next week. That has raised many eyebrows given Beijing's recent vow to cut military ties and impose sanctions in protest against Washington's arms sales to Taiwan. The strike group had been given Foreign Ministry clearance to visit Hong Kong next week, Commander Jeff Davis, a public affairs officer with the US Navy's 7th fleet, said yesterday. "Hong Kong is a favourite port of call for US Navy sailors, and the ship's crew is looking forward to the visit," he said. A member of the Servicemen's Guides Association in Hong Kong, who spoke on condition of anonymity, said the battle group's 5,000 crew members would spend four days in Hong Kong from February 17. The Ministry of Foreign Affairs and the Ministry of National Defence did not respond to requests for confirmation yesterday. The Nimitz, a nuclear-powered aircraft carrier and one of the world's largest warships, is at present in port in Kuala Lumpur, Malaysia, on routine deployment in the region. The Nimitz completed a mission to support coalition troops in Afghanistan on January 25. The Hong Kong visit has surprised many military observers who believed Beijing's approval would have been impossible given the bilateral tensions triggered by two rounds of US arms sales to Taiwan. Beijing retaliated over the sales by suspending planned military exchanges and, for the first time, vowing to impose sanctions on US firms involved in the arms sales. The Defence Ministry said in a strongly worded statement on January 30, a few days after the second arms sale, that Beijing had "decided to suspend planned mutual military visits". To add to Sino-US tensions after a honeymoon period last year, the White House says US President Barack Obama plans to meet the Dalai Lama, despite repeated protests from Beijing.

  Rising rents and surging prices of apartments in Hong Kong are driving a trend towards conversions of older industrial and commercial buildings into lofts. Created with or without formal government approval in old or disused industrial and office buildings, loft apartments appeal to buyers or tenants in Hong Kong, say agents, because of their big spaces, high ceilings, and more importantly, rentals or prices that are far below market prices. "With a HK$4 million budget you can probably afford no more than a standard 500 square foot on Hong Kong island, but your living space will double if you pick up an old and inferior (or grade-C) commercial building turned apartment in Sheung Wan," said a property agent of Kamson Property Agency in Sheung Wan. The agent, who asked not to be named, said he had recently arranged for an expatriate to buy an 800 sq ft commercial-turned residential unit for HK$3.2 million. The buyer will use the unit as his home and office. "Rents of homes in Sheung Wan range from HK$20 per square foot to as much as HK$40 per square foot, but tenants in such loft apartments are paying less than HK$15 per square foot, he said. But buyers and tenants would have to trade off these attractions against setting up home or office at a distinctly unfashionable address, in a rather run-down neighbourhood, and run the risk of breaching government regulations, said the Kamson agent. Some locations, such as Tai Shing Building or Yu Hing Mansion, were converted to residential use by individual owners a long time ago.

Singapore's first casino is set to open on Sunday at Sentosa, the operator Genting Singapore said on Thursday. Singapore opens its first casino on Sunday, coinciding with the start of the Chinese New Year, as the city-state makes the latest roll of the dice to turn itself into a playground for the rich. Genting Singapore said its Resorts World Sentosa casino in Singapore would have its “soft opening” – to a restricted number of guests – on Sunday and welcome the first member of the public at what the casino says is the auspicious time of 12.18pm the same day. The casino is part of a S$6.59 billion (HK$36 billion) resort located on Sentosa Island – off Singapore’s southern coast and a former Malay graveyard turned British military base during the colonial period. Singapore is betting on casinos to increase tourism revenue and boost business for its wealth management industry. Resorts World Sentosa hopes to lure gamblers away from lavish facilities in Macau, Malaysia and Australia and has already opened four of the resort’s six hotels as well as a number of restaurants and shops. Known for shopping malls, efficiency, cleanliness and a “nanny state” social environment, Singapore is already home to the highest density of millionaires in the world. Resorts World Sentosa, and a rival casino likely to open nearby later this year, will add to the glamour generated in the Southeast Asia state by an annual Formula One night street race. A Chinese astrologer said a midday opening time, which falls on the Year of Metal Tiger under Chinese zodiac signs, is supposed to be the most propitious for business. “Midday is supposed to be the hottest time of the day,” Thai Fung Shui master Panuwat Punvichartkul said. “And this year is the year of a high-spirited Tiger. This will give a double boost to the casino with a very brisk and bright business future.” The casino secured its licence on February 6, but a purported opening on Thursday or Friday this week never materialised. “Month ends, particularly year-ends, aren’t considered to be particularly auspicious for the truly traditional Chinese, as they mark an end,” said blogger auntieLucia. Genting, a unit of Malaysian casino operator Genting, will also allow the public to visit its Universal Studios theme park on February 14, although the rides will only be operational in early March. Resorts World secures bragging rights as Singapore’s first casino ahead of Las Vegas Sands, whose facility at Marina Bay Sands is under construction and unlikely to open before June. Deutsche Bank on Monday forecast Genting would make S$1.7 billion in gross gaming revenue in its first year. But it also suggested Genting shares may later fall, as happened with Hong Kong-listed firms after the opening of their Macau casinos.

China*: Lenovo Group (SEHK: 0992), basking in the glow of record market share gains and its strongest results in six quarters, will this year invest more in research and development, emerging economies and new mobile internet devices. The world's fourth-largest supplier of personal computers yesterday reported a net profit of US$79.52 million in its fiscal third quarter to December, reversing a US$96.72 million loss a year earlier, to post its second consecutive quarter in the black and handily beat analysts' estimates. That was driven by a 33 per cent year-on-year increase in global sales, thanks to significant demand from the company's core mainland market and emerging economies such as India, and improved margins and operating efficiency. "These are very strong numbers," said Jenny Lai, a CLSA analyst in Taiwan. "The US$51 million [profit] forecast we made was already the highest in the market, which generally was looking for [a range of between] US$40 million and US$50 million." Lenovo also recorded a net gain of US$43 million from the disposal of certain listed securities during the quarter. Revenue reached US$4.78 billion, up from US$3.59 billion in the previous year, as the company's personal computer shipments grew 41.8 per cent to 7.87 million units. Notebooks made up 62 per cent of sales, while 47 per cent of total revenue was derived from the mainland. Chief executive Yang Yuanqing said Lenovo, for the first time since acquiring International Business Machines Corp's personal computer division in 2005, "was the fastest-growing personal computer company in the world". He added that its domestic market share reached a record high of 33.5 per cent in the past quarter. Lenovo also secured its highest global market share to date, at 9 per cent, according to research firm International Data Corp. It comes in behind Hewlett-Packard, Acer and Dell, each of which has a double-digit global market share. Wong Wai-ming, the chief financial officer at Lenovo, said the company also achieved greater business efficiency by whittling down its expense-revenue ratio to 9 per cent from 12.7 per cent a year ago. It is the lowest that key operations indicator has reached since the purchase of IBM's personal computer business. Despite the strong results, Lenovo's share price was up just 0.18 per cent to close at HK$5.69 yesterday. Chairman Liu Chuanzhi said the near-term challenges for the company included the typically low demand in the first quarter, higher computer component costs and lower product prices. Yang said the improving economy will allow Lenovo, with net cash reserves of US$2.42 billion as of December, to pour more investments into research and development, the emerging markets and its mobile internet devices strategy, the first products of which will be introduced on the mainland this year. The company already has invested US$200 million to buy back the handset manufacturing unit it sold in 2008. Lenovo sees the mainland government's implementation of new standards that enable network operators to deliver combined telecommunications, broadcast and internet services as a boon for mobile internet device makers. "If China's 3G [cellular services market] takes off this year, the outlook [for Lenovo's mobile internet strategy] should be good," said Vincent Chen, an analyst at Yuanta Securities.

Air China (SEHK: 0753) has agreed to buy 20 A320 aircraft from Airbus with a list value of US$1.63 billion. The aircraft will be delivered between 2011 to 2014 and will be supplied at a significant discount by Airbus, Air China said in a statement on Thursday to the Shanghai stock exchange. “The transaction will mainly support hubs-building in Chengdu and expand the fleet capacity of the company in southwestern China while supplementing, to an appropriate extent, the flights in eastern China,” according to the statement. Air China, the country’s flagship carrier, said the new aircraft will increase its fleet’s tonne-kilometre capacity by 5 per cent from its December 31 level. It will finance the acquisition through cash generated from its operations and commercial bank loans. China Southern Airlines also said last month it had agreed to buy 20 Airbus A320 aircraft with a list value of US$1.54 billion. Air China and other mainland carriers are expected to handle a total of 260 million passengers this year, up about 13 per cent from last year, an aviation official was quoted as saying last month. Mainland airlines, which also include China Eastern Airlines (SEHK: 0670), returned to profitability last year on government cash aid and a fast recovery of domestic air travel, after losing billions of dollars the year before.

Every day at Yang's Fry-Dumpling, a Shanghai institution, customers defiantly queue up despite the choking clouds of dust as workers break up the restaurants on either side with jackhammers. With less than three months to go before Shanghai welcomes the world to Expo 2010, the popular Wujiang Road night market is enjoying its final days as authorities spruce up the city - sometimes with a wrecking ball. "Since the theme for the Expo is `Better City, Better Life', we need to provide residents with a neat, clean environment," explained Chen Chang, a spokesman for the city's Jingan district, where Yang's is located. "We believe that during the World Expo, foreign friends should see a clean environment." In preparation for the expected arrival of up to 100 million visitors from May 1 for the World Expo, city officials have ordered a major municipal makeover, from the historic Bund to sleepy residential lanes. But those renovation efforts also include razing time-honoured areas like Wujiang Road - a move that has not gone down well with residents. "I know it's going to be torn down. I am going to miss it," Zhang Meici, a 61-year-old retiree, said outside Yang's after eating traditional soup-filled fried dumplings with her 11-year-old nephew. Shanghai has been rapidly replacing old buildings since the 1990s, but the pace of demolitions appears to have increased in the run-up to the six-month exhibition. In the past year, wrecking balls knocked down the 106-year-old Shanghai Rowing Club, the art deco-style National City Bank of New York behind the Bund and several sites in the Jewish quarter. Thousands of residents have also been forcibly evicted, China Human Rights Defenders, an activist network, said in a report released this week. Shanghai officials insist all relocations have been conducted according to the law. Wujiang Road - a lane of three-story buildings with stone balconies and red tile roofs off famed shopping haven Nanjing Road - has been a hive of activity since the early days of the US-British International Settlement in the 1850s.

A senior US official has criticised China and other leading developing countries for trying to weaken the Copenhagen Accord to fight global warming and raised the prospect that a fuller international pact may be not be struck by year's end. A United Nations-sponsored climate change meeting in Copenhagen in December fell short of its intended goal of producing a binding treaty, but did take some nonbinding steps toward further controlling greenhouse gas emissions blamed for global warming. "The statements that we have seen from China and the other Basic countries do evince a desire to limit the impact of the accord," Todd Stern, the Obama administration's senior climate negotiator, said on Tuesday. Basic countries are Brazil, South Africa, India and China. Stern complained that Basic countries were vague on how they would carry out pollution reduction under the Copenhagen deal and warned that countries should not "cherry-pick" parts that they like, while ignoring other provisions. The next annual global meeting, in late November, is to be hosted by Mexico with the goal of reaching a binding treaty for 190 countries to deal with climate change after the Kyoto Protocol expires in 2012. Stern described the Copenhagen meeting as a "snarling, aggravated, chaotic event" that at one point "really did appear to be doomed". Anticipating more tough talks this year leading up to Mexico, Stern said in a speech at the Centre for American Progress that he hoped a full binding treaty could be reached. But he added that falling short of that goal would not mean a failure and that countries needed to focus on taking "significant, pragmatic steps". The Copenhagen Accord was hammered out in the final hours of a two-week marathon that saw world leaders in nitty-gritty talks. The deal was largely brokered by US President Barack Obama and Basic leaders in last-minute talks. Together, the five countries contribute about one-half of global carbon dioxide pollution. But since leaders and diplomats left Copenhagen, some of the major developing countries have been criticised as being less than enthusiastic about the deal. "Basic submissions have been a bit ambiguous," Stern said, referring to those countries' vows to cut their carbon emissions by 2020. The failure of the UN to wrap up a binding climate deal has prompted some to question whether smaller forums might be more effective in finding ways to force countries to reduce their fossil fuel use in favor of alternative energy.

The narrow street, known for bustling crowds lining up under the glow of neon lights for skewers of grilled squid or helpings of tofu, is a dim shadow of its former self. One-time landmarks like St Anna's Ballroom - where Earl Wheatley and his Red Hot Syncopaters, an all-black swing band from Seattle, held court in the 1930s - have been boarded up for demolition. "New business hub", reads a billboard at the end of the street, alongside a photo of a Western businessman surveying the interior of a glass office building. "All of this will be flattened by the end of March," said one elderly security guard. "It will be surrounded by banners welcoming the Expo." Seeing the writing on the wall, with excavators hovering in sight of the door, the owners of Yang's have maintained their original location while also opening a new restaurant in a mall at the renovated opposite end of the road. The mall contains several other food outlets such as KFC, but some have struggled, with Burger King and a Singaporean dessert restaurant shutting down within the past year. "That section has no atmosphere ... It's too polished," 32-year-old Chen Meilin, a Yang's customer, said. Plans for the site after the demolition are unclear. City and district officials did not respond to queries. But Chen said: "A night market is a dynamic place, but we can't have a dynamic place at the cost of the environment."Shanghai-based author Paul French - who has written about the history of Wujiang Road, once dubbed "Love Lane" for its numerous brothels - says the sweeping changes made ahead of Expo 2010 have eroded the city's unique flair. "If you look at Wujiang Road, at the bit that they've already redone, which has got a Starbucks and a Costa Coffee, who's going to come to Shanghai to see that when it looks like every other high street in the world?" French said.

China’s consumer inflation unexpectedly slowed last month, but a leap in lending and a rise in factory-gate inflation will keep policymakers alert to the risk of overheating.

Feb 11, 2010

Hong Kong*: Toyota's sole Hong Kong dealership Crown Motors said on Tuesday that Toyota Motors in Japan would recall all third-generation Toyota Prius sold in Hong Kong. “Although we have not received complaints from Hong Kong customers about the brake fault or reports of any accidents, Toyota Motors in Japan and its manufacturer have decided to recall about 270 third-generation Toyota Prius sold in Hong Kong to upgrade their anti-lock braking system. The whole service would take about an hour and is free of charge,” a spokeswoman said on Tuesday. The spokeswoman said they Crown Motors are contacting car owners by phone, text message and by registered mail to notify them about the arrangements for the software upgrade. She stressed that this recall would not affect the owners of the first- and second-generation Toyota Prius.

Actor Francis Ng Chun-yu on Tuesday pleaded not guilty in Kowloon City Court for assaulting a man on January 1 this year. Ng, 48, appeared in court on Tuesday morning. He is alleged to have assaulted a 29-year-old man in the Cérès bakery in Kowloon City after his wife got into an argument with a customer. The man was reported to have suffered cuts to his head and ears and required two stitches, local media reported. The actor’s case was adjourned until April 1. He was allowed out on bail of HK$5,000. Ng, whose original name was Ng Chi-keung, was an office boy before he joined and graduated from TVB (SEHK: 0511)’s training classes in 1985. He has starred in over 100 television dramas and films. He won best leading actor in the 37th Annual Golden Horse Awards in Taiwan in 2000.

The Financial Services and the Treasury Bureau said on Tuesday it wants to establish a financial dispute resolution centre in the wake of complaints about the mis-selling of Lehman Brothers minibonds and other financial products. Treasury Secretary Chan Ka-keung said the new body would resolve disputes between individual consumers and financial institutions. “At present, outside of the courts, there is no independent mechanism in place to settle a dispute between a consumer and a financial service provider,” explained Chan. “This will offer an alternative to litigation,” he added. The government said the centre would be able to handle a maximum claimable amount of HK$500,000. Consumers would be charged HK$500 for using the service, local radio reported. He said the centre would not have any disciplinary powers against financial institutions. But Stanley Wong Yuen-fai, an executive director at ICBC (Asia) (SEHK: 0349), was critical of the proposal. “There are already many channels [for customers to file complaints about financial institutions] under the current system,” he said. The government is also proposing the creation of an investor education council (IEC) to help enhance the financial literacy of the public. The company would be wholly owned by the Securities and Futures Commission (SFC). No extra levies or charges would be imposed on investors. Since the global financial crisis hit Hong Kong in late 2008, many small investors have been attempting to recover financial losses incurred from the purchase of minibonds and other financial instruments.

China*: Authorities in Shanghai will raise the city's retirement age to relieve pressure on the pension fund as they struggle to cope with an ageing population and falling birth rates, state media said on Tuesday. Vice Mayor Hu Yanzhao said the city’s pension fund had fallen into a deficit as more than a fifth of the population had reached the end of their working lives, the Shanghai Daily reported, without giving a figure for the shortfall. “We will put off the retirement age of citizens, especially for female professionals,” Hu was quoted as telling a government meeting on Monday. The retirement age is currently 60 for men and 50 or 55 for women, depending on the job, the report said. Hu did not say by how many years the retirement age would be raised, but experts have recommended five years, the report said. The number of people aged 60 and older in the mainland’s biggest city is expected to rise to 3.12 million this year, the report said. Shanghai’s head of family planning made headlines last year by encouraging couples to have two children if they qualified under exceptions to the country’s one-child policy. If both members of a couple are only children, they are allowed to have more than one child under the rules. The attention given to the announcement highlighted the struggle between demographers alarmed by a shrinking workforce and greying population, and officials convinced that China has too many people, experts said. Shanghai’s former Communist Party boss Chen Liangyu is currently serving an 18-year prison sentence for his role in a massive pension scandal that rocked the city and the country when it came to light in 2006. Dozens of senior Shanghai officials were tried and convicted in connection with the scandal, in which hundreds of millions of dollars were illegally siphoned from the city’s pension fund for real estate investments.

Lou Jiwei, the chairman of CIC, said the mainland sovereign wealth fund would steadily accelerate its overseas investments this year, mainland media reported on Tuesday. China Investment Corp (CIC) will manage more of its investments in developed markets in house this year, the head of the US$300 billion sovereign wealth fund said in remarks carried by official media on Tuesday. Lou Jiwei, the chairman of CIC, said the fund would steadily accelerate its overseas investments this year, the China Securities Journal reported, citing an article he published on Monday. It did not say where the article appeared. “As of now, most of CIC’s overseas funds are managed by outside portfolio managers, but we will gradually increase in-house investment in more efficient developed markets in the future,” the newspaper paraphrased Lou as saying. His comments follow a regulatory filing last Friday by CIC with the US Securities and Exchange Commission detailing some of its investments in the United States. CIC said in its Form 13F filing that it owned equity stakes in more than 60 US companies worth $9.63 billion at the end of last year, including small holdings in Apple, Citigroup, Coca Cola and News Corp. The list is not exhaustive. It includes CIC’s stake in Morgan Stanley but not its holding in private equity house Blackstone. CIC’s biggest listed stake, after its Morgan Stanley holding, is a US$713.8 million investment in fund manager BlackRock. CIC has been investing intensively in resources and commodities since last year mainly because there is still plenty of room for price gains in those sectors, Lou said, according to the China Securities Journal. CIC also needed to hedge against the risk of inflation as the world economy picked up, he added. Lou restated CIC’s policy that the fund is a financial investor seeking to maximise its returns, not to control the companies in which it invests. Stakes held by CIC, as per the list filed in the US include: US$498 million in the US-traded stock of Brazilian miner Vale; US$29.8 million in Citigroup; US$19.9 million in Bank of America; US$14.7 million in American International Group; US$9 million in Coca Cola; US$6.3 million in Apple; US$4.1 million in News Corp.

Stewardess of both China Eastern Airlines and Shanghai Airlines show up at a joint meeting by the two airlines in Shanghai, east China, on Feb. 8, 2010, during which the two Chinese air companies announced their successful merger.

A staff member hangs red lanterns outside the entrance of Ditan Park in Beijing, China, Feb. 9, 2010. Red lanterns are seen in many parks in Beijing as the traditional Chinese new year approaches.

Red lanterns are hung at Ditan Park in Beijing, China, Feb. 9, 2010. Red lanterns are seen in many parks in Beijing as the traditional Chinese new year approaches.

China passenger car sales in January jumped 115.5 percent from a year earlier, the country’s official industry association said on Tuesday, as car buyers packed showrooms before the Lunar New Year. A total of 1.32 million passenger cars were sold last month in mainland, the world’s largest auto market, compared with 610,600 units sold a year earlier and 1.1 million units sold in December, the China Association of Automobile Manufacturers said. “Demand remains strong in January as many people want to get a new car for themselves for their loved ones before the Chinese New Year,” said Zhang Xin, an analyst with Guotai Junan Securities. The week-long holiday, which starts on February 14, is the biggest shopping season in the country where people spend lavishly on items ranging from flat-screen TVs to the latest digital gadgets. But analysts noted robust January sales growth was somewhat distorted by a low comparative base a year earlier when car sales declined 7.76 per cent on a slowing economy at that time. Auto sales in mainland rebounded strongly since last April making the country a major bright spot amid a global industry downturn thanks to Beijing’s policy incentives, including a halving of sales tax for small cars to 5 percent and subsidies for buyers in rural areas. To continue shoring up its auto industry, a major economic growth engine, the government expanded its subsidies for vehicle buyers in rural area at the beginning of 2010. The sales tax rate on small cars, however, was increased to 7.5 per cent, but was still lower than the previous rate of 10 per cent. Analysts expect auto sales will return to a slower but more rational growth rate of roughly 10 per cent this year on continued policy support from the government even though the renewed tax incentives for small cars were not as aggressive as anticipated. Industry executives, including Chen Hong, president of SAIC Motor Corp remains sanguine about the outlook this year, due largely to pent-up demand in smaller cities where cars are no longer a luxury item as wealth grows. Overall vehicle sales, including buses and trucks as well as cars, totalled 1.66 million units in January, up 126.3 per cent from 735,500 units a year earlier, official data showed.

China on Tuesday rejected speculation that its increased power would prompt the country to seek a leadership or hegemonic role in the world, stressing its path for peaceful development. "I think neither of your arguments holds water as China has always pursued an independent foreign policy of peace," Foreign Ministry spokesman Ma Zhaoxu told a regular press briefing. China dismisses intent for world's hegemonic role Wen calls for more peace efforts from Israel, Palestinians. Ma made the comments in response to a reporter's assertion that China's increasingly tougher line in the international arena signified the country's attempt to seek a leadership role in the world. "We always maintain that nations, big or small, strong or weak, rich or poor, are equal members of the international community," Ma said. "We neither bully other countries nor interfere in their domestic issues." "We never allow any other country to meddle in China's internal affairs or undermine China's sovereignty or security," Ma said. Ma said the Chinese people understood the country was still a developing country and had a long way to go before accomplishing modernization. With its increasing power, China would continue to play a constructive role in international affairs and assume its due responsibilities and duties, Ma said. "China will stick to the path of peaceful development. Both at present and in the future, China will never seek hegemony," Ma said.

Feb 10, 2010

Hong Kong*: The "white knight" consortium headed by local investor Stanley Choi Chiu-fai submitted a tender to buy bankrupt mainland caterer Fu Ji Food and Catering Services Holdings (SEHK: 1175) yesterday. As a gesture of sincerity, the consortium was willing to place a HK$200 million deposit in a designated account agreed by the provisional liquidator if its tender was accepted, said a person with knowledge of the deal. The consortium hoped the due diligence could be completed within 30 working days, the person added. Fu Ji Food's provisional liquidator, Derek Lai Kar-yan of accountancy Deloitte, could not be reached for comment last night. The submission came a week after Choi, an executive director of financial services provider Simsen International, announced that he and two partners - Cai Dabiao, the founder of mainland fast-food chain Real Kungfu, and Hong Kong-listed HyComm Wirelessfast - had formed a venture to bid for the Olympic Games caterer last Tuesday. Choi said they had HK$1 billion to fund the purchase and future operations of Fu Ji. Choi holds a 50 per cent stake in the consortium. The three-party consortium is the second "white knight" to show interest in the Shanghai-based caterer, which filed a winding-up petition in October last year after failing to repay HK$2.2 billion of convertible bonds it sold to global investors. Hong Kong Resources chairman Wong Ying-ho also announced a plan to join Tan Changan, founder of Sichuan-style hotpot chain Tanyutou, to buy the company last month.

The property market has risen too fast and buyers must look out for a bubble, Cheung Kong (Holdings) executive director Justin Chiu Kwok-hung said yesterday. "The rise is a bit unusual," Chiu said in a Bloomberg Television interview. "There should be a correction at some point." Low mortgage rates and buying by rich mainlanders drove a 29 percent gain in home prices last year. The territory faces a huge potential risk of bubbles forming in asset markets as low interest rates and high liquidity drive up prices, Norman Chan, chief executive of the Hong Kong Monetary Authority, said last week. Cheung Kong (0001), controlled by Li Ka-shing, last month forecast luxury home prices may rise 15 percent this year. Those for new mass-market residences may climb 15 percent to 20 percent, the company said. "House prices now are still almost 50 percent below the 1997 high and affordable to households," said Buggle Lau Ka-fai, chief analyst for properties at Midland Holdings. "It is too early to call it a bubble." Prices in the territory rose about 40 percent from June to January, and buyers must not expect the same pace of growth in prices in 2010, Chiu said. "When people make their buying decisions, they should be cautious," he said. "A low interest rate environment will not last forever." Prices for luxury homes, defined as those costing at least HK$10 million or bigger than 1,000 square feet, may rise 20 percent this year, real estate broker CB Richard Ellis Group said on January 12. Prices for non-luxury homes may rise 15 percent, it said. The government has taken appropriate steps to warn investors about overheating in the market and will increase land supply this year to curb gains in home prices, Chiu said. Cheung Kong shares rose 0.6 percent yesterday to HK$90.65 at the close of trading in Hong Kong. The shares climbed 37 percent in 2009, underperforming the 66 percent advance in the Hang Seng Property Index.

A three-month period of public consultation began yesterday on how mediation could be used to save time and costs in civil court battles. "All civil disputes commenced by writs can be solved by mediation," said Secretary for Justice Wong Yan-lung. "A case solved by mediation takes one to two weeks, while the same case can take one to two years in court." Speaking at the launch of the consultation exercise, Wong said meditation can be used to deal with financial, family, commercial, labor or even medical disputes. According to a report by the Working Group on Mediation which Wong chaired, a single body for accrediting mediators is ideal in the long term. Wong said mediators do not need to be accredited by a single body at this stage. Such a body may be set up in the long term but the present aim is to promote mediation among the public to shorten the long queue of civil cases. However, Lester Huang Garson, chairman of the accreditation and training sub-group on mediation, said now is not the right time for such a body. "Introducing a single body will require other bodies to surrender their jurisdiction. If they are willing, it would be fine," he said. "If not, we will have to introduce legislation." There are now several hundred mediators who are accredited by various organizations including the Law Society of Hong Kong. Wong has written to all the mediation service providers and reminded them to adopt the Hong Kong Mediation Code, which was drafted as a code of conduct by the group. He added the need for a single mediation accrediting body will be reviewed in five years. "Hong Kong can be described as a latecomer in mediation. The five years will allow us to see how things can change," Wong said. To maintain flexibility, Wong said the judiciary will not provide mediation services, nor will it introduce compulsory referral to mediation. But the working group has recommended a new Mediation Ordinance which will set out the objectives and underlying principles and define key terms such as "mediation" and "mediator."

The government may soon inspect drug factories outside Hong Kong under a revamp of the drug monitoring system. The move comes after the administration was criticised in a recent audit report following a series of drug-related blunders last year. At a meeting of the legislature's Public Accounts Committee yesterday, Director of Health Dr Lam Ping-yan said the government might soon send pharmacists or overseas consultants to inspect drug makers or contractors outside Hong Kong, especially on the mainland. Some overseas countries inspected factories outside their borders before approving a medicine's registration, and Hong Kong might follow suit, Lam said. Lawmakers questioned the efficiency of the health department at the hearing - a continuation of the first one held in mid-December. Democratic Party legislator Andrew Cheng Kar-foo cited the audit report saying that the department inspected the 37 local drug makers only once a year, and did not carry out more frequent inspections on those with poor records. Lam said in advanced overseas countries, such as Singapore, each drug maker was only inspected once every three years. "But we will inspect the drug makers more frequently, since the public is very worried about drug safety," he said. More than 100 extra staff members would be needed in order to perform the wider duties. Legislators also voiced concerns over the time it took for the department to take samples to and from the government laboratory for testing. In an extreme case, the department waited 303 days before taking a sample to the laboratory. It also took an average of 51 days before it retrieved test reports from the laboratory. Department chief pharmacist Anthony Chan Wing-kin said this was because the laboratory could only test a limited number of samples in a given period. The department would obtain more samples from drug makers when more inspections were carried out between April and June, when most makers applied for an extension of their licences. He said the laboratory would inform the department immediately should the reports reveal any irregularities. Lam said the department would now outsource non-urgent and regular testing to accredited private laboratories, so that the government laboratory would be freed to carry out more urgent tests. Drug safety came under scrutiny last year after a series of drug-related blunders. A government-appointed review committee drafted 75 recommendations in December, including setting up a drug safety office to co-ordinate the reforms.

Worshippers worried about missing fortune sticks spoiling their readings should proceed to Wong Tai Sin Temple next month, when it introduces a hi-tech system to ensure all sticks are present and correct. Picking the bamboo sticks from a container to find out what lies ahead is a tradition in Hong Kong. The system will be based on similar technology to the Octopus smart card, said Wilson Or Wai-shun, director of Sik Sik Yuen, the organisation that runs the Kowloon temple. "Some worshippers have told us they are concerned about the accuracy of stick-picking, because they have no way of telling whether a stick is missing from the container," Or said. "So we want to put people's minds at ease with this new system, which is fast and accurate." Sticks at the temple will be implanted with a chip, at a cost of HK$2 to HK$3 apiece. A container of the bamboo sticks can be checked by placing it in the temple's HK$20,000 machine, which detects missing or repeated sticks using radio frequency identification technology. "Put the container into the machine and it will tell you whether you have the correct set of sticks in five seconds," Or said. Until now worshippers wanting to make sure they have a full set of 100 sticks have had to count them or ask temple staff to do so. Or said the new system will cut counting time from five minutes to five seconds - with three staff on hand to help temple-goers, rather than the previous 10. The temple will suspend fortune stick-picking on Lunar New Year's Eve to reduce congestion over the busy period. The system will begin on a trial basis from next month and it is scheduled to go into regular use after six months. The temple has had 500 bamboo sticks, or 50 sets, implanted with the chips and that number is expected to increase to several thousand. Meanwhile, the temple yesterday reopened its main altar - which had been closed for renovation work over the past year - ahead of the Lunar New Year. With the expansion work on the altar completed, police expect the temple will draw about 800,000 people during Lunar New Year - 10 per cent more than last year. The revamped altar's terrace for praying has been enlarged by 40 per cent to 750 square feet and can hold 2,000 more worshippers. The temple will also set up a wall for wishing notes for the first time during Lunar New Year. The temple will be open to visitors from 9pm on Lunar New Year's Eve, Saturday, until 6.30pm on Sunday. The temple has urged visitors not to bring candles, oil or excessive amounts of incense to the temple for environmental and safety reasons. Police security measures will be in place at the temple from 7pm on Saturday until 6.30pm on Sunday, and daily between 7am and 6.30pm from February 15 to 21 and on February 23, 25, 27 and 28.

Just two years after scrapping a buyout bid for Joyce Boutique Holdings, Peter Woo Kwong-ching has unveiled another offer that critics say once again undervalues the retailer by double-digit percentages. Woo, chairman of property conglomerate Wheelock (SEHK: 0049) & Co, has offered to put up HK$88 million, or 20 cents per share, for the remaining stake in Joyce Boutique that he does not already own. The bid undercuts the stock's previous closing price by 11.1 per cent and its consolidated net asset value by 30.1 per cent.

While tiger and Valentine's Day products dominate the Lunar New Year fair at Victoria Park this year, controversies involving Chief Executive Donald Tsang Yam-kuen are providing inspiration for young entrepreneurs eager to profit from political sarcasm. In spite of the intermittent downpours and overcast sky, stall owners set up their booths to welcome visitors on the first day of the fair with great enthusiasm yesterday. Many were university students from business schools trying their hands at commerce for the first time. One group, from the Vocational Training Council's school of business and information systems, its stall bedecked with pairs of fluffy tiger-shaped gloves, said their idea was to sell products that combine the themes of love and tigers. "The gloves, which are bought in pairs, are for couples to keep warm during the cold winter," student Patrick Tsang Kwai-yan said. Twenty three students from the school have spent HK$50,000 renting the stall, buying 125 pairs of gloves and other tiger-themed products. Heart-shaped cushions made of fake tiger skin, which sell for HK$108 apiece, are the invention of another group of business students. As part of their school project, 18 higher diploma students from the Institute of Vocational Education (Morrison Hill) spent HK$50,000 and designed the cushion and a set of Cantonese slang poker cards for sale at the fair. "It's the first time for us to do business. As we need to prepare a budget and source manufacturers on the mainland, it's a great challenge for us," fourth-year student Nicholas Chan Ho-kwan, 20, said. Controversies surrounding the Tsang administration provided the inspiration for other groups of young entrepreneurs. Textile studies student Siu Cheuk-lam, 20, and her classmates from Polytechnic University have designed an inflatable light bulb to ridicule Tsang for what they said was his poor handling of a proposal last year to issue vouchers to encourage the use of energy-saving bulbs. Each bulb sells for HK$68 and can be switched on or off. Siu said they wanted to convey their dissatisfaction with the Tsang administration through their products. Another stall manned by a group of University of Hong Kong students featured bow-tie-shaped cushions, T-shirts with cautionary reminders to Tsang and poker cards with images of last year's incidents involving the chief executive. "We want to draw people's attention to the many controversies involving Tsang last year," said second-year engineering student Jacky Ting Man-chun. The League of Social Democrats and Civic Party will use the fair to promote interest in the Legislative Council by-elections that they see as a de facto referendum on the pace and scope of democratisation. The Civic Party is selling windmills and bouquets of plastic flowers. Its leader, Audrey Eu Yuet-mee, said the windmills symbolised a better turn of luck in the quest for universal suffrage. The League of Social Democrats is selling figurines of its three legislators - who, with two Civic Party colleagues, quit their Legco seats to trigger the by-elections - and banana-shaped decorations recalling the league's throwing of bananas at Legco meetings. Former league leader Wong Yuk-man said success at the fair would be critical to the referendum cause. With rain forecast until the end of the week, many stallholders are worried about their business prospects this year. One, who rented the most expensive stall at the fair for HK$490,000, said it would lose money if the rainy weather persisted. "The rent has gone up from HK$350,000 to HK$490,000 this year. We still believe we can make money as the retail market has rebounded a bit. But if it keeps on raining, we might be in the red," said the stallholder, who has invested more than HK$1 million and employed over 100 staff for the venture.

The MTR Corporation (SEHK: 0066) has been urged to adopt a risk strategy normally used only for high-risk infrastructure such as chemical plants and oil refineries to evaluate the impact on old residential blocks of construction of the express rail link to Guangzhou. The HK$66.9 billion rail project, which will pass under 19 buildings in Tai Kok Tsui, has worried residents. They fear the blocks, built 40 years ago, may not withstand the construction work. Professional Commons, a lobby group opposed to the link's alignment, said the MTR should do a qualitative risk assessment to predict the likelihood of work on the link causing a disaster and assess the likely number of deaths resulting from such an accident. "There are many unforeseeable risks in a works project despite all the surveying work," the group's chairman, Albert Lai Kwong-tak, said. Carrying out such an assessment could ease residents' fears. Qualitative risk assessments are usually conducted on projects near infrastructure that may pose a safety hazard to a neighbourhood, such as a chemical plant. Some old buildings in Tai Kok Tsui are built on soil and have short concrete footings rather than pilings anchored in rock. However, the MTR said that, based on data that it collected from a comprehensive investigation, the railway tunnel would not affect the structural safety of the buildings' foundations. "A typhoon actually has a greater loading on buildings than our tunnel boring machine, which works 20 metres below ground," an MTR officer in charge of the project said. Land outside the Cultural Centre in Tsim Sha Tsui subsided by about a metre when the MTR's Kowloon Southern Link was being built two years ago. Dr Greg Wong Chak-yan, a veteran civil engineer who has worked for the MTR, said ground settlement could cause buildings to subside. However, the impact of the railway work should not be that great. "The tunnel boring machines are so sophisticated these days it is impossible to induce large-scale ground settlement, and it takes a fairly big hole to cause even a little subsidence to a building," he said. The MTR is assessing how the work will affect 3,500 flats in the area and will provide each household with a copy of the survey results.

China*: In a bid to raise China's voice on the world stage and compete with Western media, Beijing is planning to assign an elite team of 100 specially trained journalists to the staff of leading state-run media outlets. Under a program that began last year, Beijing Foreign Studies University, the capital's Tsinghua University, Communication University of China and Renmin University, and Shanghai's Fudan University have each enrolled about 20 hand-picked postgraduate students in two-year master of journalism courses that will provide talent for the likes of Xinhua news agency, China Central Television and China Daily. A recruiter at Beijing Foreign Studies University's department of international journalism and communications said the students were the first batch to receive multidisciplinary training specifically aimed at extending the international reach of state-run news outlets. "The Communist Party's Central Committee has required agencies in charge of international communications to work more closely with the designated schools and, in return, the universities will get extra funding," he said. Fudan University's journalism school is believed to have persuaded some postgraduate students to alter their fields of study to meet the quota. As part of a tailor-made curriculum, the university has invited editors from the English-language Shanghai Daily and municipal propaganda officials in charge of international communications to give lectures to the students. The training programme comes on top of a plan to spend between 35 billion yuan (HK$39.8 billion) and 45 billion yuan to expand state-run news outlets. Xinhua, which is directly controlled by the party's Publicity Department and is expected to receive a major share of the windfall, launched a TV network last month, taking it a step closer to its ambition of becoming a global media empire to rival the likes of CNN and BBC. The 24-hour satellite news network, China Xinhua News Network, is running a world news service in Chinese and will introduce an English-language service in July. French, Russian and Spanish channels are also planned, meaning it will have to recruit a significant number of multi-talented journalists. China Daily, the only national English-language newspaper on the mainland, is planning to launch a US edition, although a staff member said no time frame had been set. It sent its first correspondents to New York and Washington last year. The paper launched a Hong Kong edition in October 1997, which now has around 30 staff in the city.

Chery: 17 new models this year - China's top homegrown carmarker plans all-new or upgraded models under its four marques: the Chery, Riich, Rely and Karry. Chery Automobile Co, China's top homegrown carmaker, aims at blistering growth in sales of 40 to 80 percent this year by providing a record number of new products. The company based in the eastern city of Wuhu said in a statement to China Daily that it will "ensure sales of 700,000 vehicles and shoot for 900,000 units" at home and abroad in 2010, up from 500,000 units last year. As one of the most aggressive measures to reach the ambitious goal, it plans to launch 17 all-new and upgraded products under its four marques: the Chery, Riich, Rely and Karry. The number of new models, up from 12 last year, will set a record as the most intensive year for new products since Chery was formed in 1997. In January, Chery's sales rocketed by 157 percent year-on-year to a record monthly high of 73,433 vehicles. The company said planned products to be unveiled this year include six new-energy models, such as an ISG (integrated starter and generator) petrol-electric hybrid, a plug-in hybrid and a purely electric-powered vehicle. Jin Yibo, the company's spokesman, said Chery will build more domestic capacity to produce the additional models and meet future demand. It began construction on a 200,000-unit facility in the northeastern city of Dalian last September. The company is also planning an additional domestic manufacturing base distant from its home in Wuhu, Jin said, without revealing details. The Dalian plant will be operational in the middle of 2011 to makes cars for both the domestic and overseas markets. The carmaker now has several plants in Wuhu with a total production capacity of 650,000 vehicles a year. China's vehicle market is widely predicted to grow by 15 to 20 percent this year from 13.6 million units in 2009.

Beijing's efforts to cool the mainland property market appear to be working, with a prime commercial site in Shanghai selling for 22 per cent less than the price it fetched nearly three years ago. The site in Shanghai's busiest shopping area sold yesterday for 3.41 billion yuan (HK$3.88 billion), well below the 4.4 billion yuan price in a sale, later cancelled, during the boiling real estate market in 2007. A joint venture formed by two Shanghai listed firms - Shanghai New Huang Pu Real Estate and Shanghai New World Co - won the 13,709 square metre site at East Nanjing Road. "The outcome will send a positive message to Beijing that the market is cooling down," Raymond Ngai, an analyst at JP Morgan, said. "The central government may defer introducing more austerity measures to control property prices." In 2007 the site, that could produce a total gross floor area of 65,743 square metres, was sold to Nanjing Suning Development for 4.4 billion yuan, or a record 66,927 yuan per square metre. After 300 rounds of bidding, Suning beat major developers such as Sun Hung Kai Properties (SEHK: 0016), Wheelock Properties (SEHK: 0049), Tishman Speyer Properties and Hong Kong Construction. However, the sale was cancelled in August 2008 after the Huangpu district government failed to hand over the site before the deadline and returned a deposit to Suning. The sale was terminated because construction work on a subway line under the area took longer than expected. Beijing has announced a slew of tightening measures in recent weeks, including a clampdown on bank lending and the scaling back of discounts on mortgage interest rates. Industrial and Commercial Bank of China (SEHK: 1398) (ICBC) said it would halt lending to property developers that were hoarding land and may even call back some loans, in an effort to guard against credit risk. ICBC, the world's biggest bank by market capitalisation, said it planned to increase lending in a "reasonable and balanced manner" for the rest of the year after lending roughly 110 billion yuan in January. "The bank will strictly control the quality of new lending, strengthen the management of potential risks and ensure a stable quality of credit assets," ICBC said in a statement. Jim Yip Kin-shing, head of the investment department at DTZ (North China), said the price of 3.41 billion yuan, or 51,823 yuan per square metre, was reasonable. The winning bidder still has to pay additional construction costs of about 10,000 yuan per square metre, he said, bringing the total investment cost to more than four billion yuan. "The auction results are less crazy than last year when the market was flooded with capital," he said.

Sportswear retailer Swire Resources expects its mainland business to contribute a growing share of revenue as it opens more outlets in second and third-tier cities across the border.

Construction of China Pavilion at World Expo completed - Construction was completed Monday on the China Pavilion at the 2010 Shanghai World Expo, with fireworks, floating balloons, red lanterns and ribbons, and deafening gongs and drums to celebrate the occasion. Almost 1,000 spectators, including pavilion designers, construction workers and government officials, attended a completion ceremony outside the iconic structure, dubbed the "Oriental Crown," in the Pudong New District of Shanghai on the eastern bank of the Huangpu River. "The project allows visitors to experience China's splendid civilization and brilliant modern achievements. It is a key platform for cross-cultural exchanges," said Yu Zhengsheng, secretary of the Shanghai Municipal Committee of the Communist Party of China. "Completion of the construction of the China Pavilion is a significant step and it paves way for further exhibition layout," said Han Zheng, mayor of Shanghai. "It is a satisfying day," said 34-year-old Chen Bifeng, a worker from neighboring Zhejiang Province. He has been in charge of the installation of fire-prevention equipment at the pavilion. "The China Pavilion has attracted the attention of the whole nation's 1.3 billion people, and I think my labor and sweat of the past year were worth it," he said. Standing 63 meters tall and red in appearance, the China Pavilion takes the shape of an emperor's crown, with the upper layers larger than the lower ones. Covering 160,000 square meters in floor space, the pavilion is composed of a national hall and a regional hall. Construction on the China Pavilion began on Dec. 18, 2007. The design of the China Pavilion was picked from a total of 344 designs put forward by Chinese from around the world. "The pavilion possesses both traditional and modern features," said 72-year-old He Jingtang, chief designer of the China Pavilion from the Architecture Design Institute under the South China University of Technology. "For example, it is red in appearance, which bears the elements of traditional Chinese culture, and it is green indoors, with the use of energy-saving and environment-friendly techniques," said He, also an academician of the Chinese Academy of Engineering. The Shanghai World Expo will run from May 1 to Oct. 31 this year, and is expected to attract 70 million visitors from across the globe. It is estimated that 400,000 people will visit the Expo and its 140 pavilions every day during the period, but the China Pavilion is only able to receive about one tenth of the total, organizers have said. How to accommodate so many people in the pavilion remains a tough task for operators of the project. "Luckily, the China Pavilion is built as a permanent structure. After the Expo is over, the China Pavilion will continue to be open to visitors," said Zhong Yanqun, deputy head of the executive committee of the Shanghai World Expo.

Many customers were eager to get their hands on some decorative explosives - even if some had their enthusiasm extinguished by the cost. "There were customers waiting for us before we opened our counter at 9 am this morning," said a female storeowner, surnamed Chen, from her business near the Ito Yokado store on the North Fourth Ring Road. "Customers have been coming in throughout the morning," she said. "Most of them were kids who came and bought some less powerful fireworks. We are open until 9pm, so most parents are likely to drop by after work," she added. Around 30 customers stopped by the store while METRO was there to check out the merchandise, although only two bought items, spending around 500 yuan. "I think I could not get as many fireworks this year as I did last year for the same money, the price is higher," said a female customer who spent 300 yuan on firecrackers. "My husband and son like setting off fireworks on Chinese New Year's Eve, so I just bought some for them." A male customer agreed that the price was a little steep. "I feel most fireworks are more expensive than last year," said the man, who was in his mid 40s, after browsing for about 20 minutes. According to the municipal government's fireworks regulations, the shops can stay open until Feb 28.

A frantic rush of outbound shipments has hit the country's busiest port, Shanghai, on the eve of Chinese New Year following an unexpected spike in export orders. "The outgoing vessels that mainly head for Europe and America have been over-booked since last December in Shanghai," said Michelle Wang, deputy general manager of the ocean freight department for east and central China at UniLogistics, a privately owned Chinese freight forwarding company. "We've seen the container freight price increase as high as $200 per Twenty Equivalent Unit (TEU) since the start of this year." According to Wang, the shipping price for cargo containers, on average, has risen three times on average a week since January. China Containerized Freight Index (CCFI), the world's only gauge tracking the container freight market, rose 7.7 percent in a month to stand at 1,081.67 points on Feb 5, reflecting the turnaround in international seaborne trade. Among all international trunk lines, the Eastern America service has seen the highest increase at 11 percent during the same period. "The recent super-spike of outbound container business has surpassed our expectations," said Li Dong, an analyst at Zheshang Securities. "It's a very strained shipping capacity in the market, despite the price hikes on several occasions this year." Figures from Shanghai International Port (Group) Co (SIPG), the exclusive operator of all the public terminals in the port of Shanghai, showed that both the container transport turnover and freight throughput in December 2009 saw year-on-year growth for the first time after an 11-month consecutive decline. The shipment spike amid the price hikes partly arose from the export boom on the back of the shaky recovery of major Western economies. It was also a result of the intention of shipping firms to lift prices via a curb on capacity and the reduction of the ships' service speed during what is traditionally a slow season, said Yu Jianjun, an analyst at Huatai Securities. "The city's ocean-going shipping is in a hectic condition now, resulting from the fact that lots of container carriers withdrew capacity in tonnage last year after suffering huge losses, which in turn led to a current short-supply of freight space," said a spokeswoman at Shanghai Quanmei Logistics Co, who declined to be named.

Feb 9, 2010

Hong Kong*: Seventy-seven per cent of the money raised by mainland corporates in the Hong Kong equity market in the first 11 months of 2009 has stayed in the Hong Kong dollar account. That tally will swell to HK$300 billion by the end of last year.

Peanut Florists owner Vince Chan says she had few takers when she offered to deliver flowers to offices during the week before Valentine's Day. A date with your wife or your mother-in-law? That is the strange dilemma facing romantically inclined Hong Kong men on Sunday. For the first time in decades, Lunar New Year falls on the same day as Valentine's Day, meaning for many a tough choice between a traditional meal with extended family and a romantic dinner with the spouse. The clash of dates is turning into a problem not only for lovers. Valentine's Day is usually a big money-spinner for florists and restaurants, as lovers try to impress with bouquets, wine and food. "We expect sales to drop about 50 per cent, as there will be no orders to send flowers to offices," said Vince Chan, owner of Peanut Florists. For her, Valentine's Day is the biggest day of the year and can represent two to three months of sales. Chan has tried to encourage clients to order before Valentine's Day and offered to make office deliveries in the week leading up to the big day. "The strategy failed, and we received very few orders for early deliveries," she said. Her shop will break Lunar New Year tradition and open on the day, and her team will be on hand to send flowers around the city. Industry operators estimate that HK$150 million worth of cut flowers are imported into Hong Kong each year. Valentine's Day sales, which exceed those for Mother's Day, are estimated to represent about 5 per cent of all sales, or about HK$7.5 million. Wholesale prices for cut flowers on Valentine's Day can be 50 per cent higher than for normal days and can run from HK$500 to several thousand dollars per bouquet. Kennis Wong, a recently married beautician, said she would give up a romantic dinner to have dinner with her family but insisted on flowers. "I have told my husband that it is a must for him to give me flowers on our first Valentine's Day after marriage," Wong said. "I know many flower shops are closed, but he may get some from the flower market on Lunar New Year's Eve." Rococo Flowers manager Suki Mak said orders for Valentine's Day had been cut in half. Part of the reason may be bragging rights. Mak said many women want flowers sent to their offices to impress their colleagues and are not so keen on receiving flowers at home. Meanwhile, restaurant owners that usually cash in on Valentine's Day are crying into their tablecloths, as people who would usually come out for a romantic meal will be at home or visiting their relatives for a Lunar New Year home-cooked meal. While most restaurants will be closed, some still hope to pick up lovers seeking a night out alone. Amigo Restaurant says this year will be the first time in its 34-year history it will be open on Lunar New Year's Day. Valentine's Day dinner is big business for restaurant operators, which can charge a big premium to provide candlelight, heart-shaped desserts and roses. At Amigo, couples can expect to pay about HK$1,300 per person for a four-course dinner - double the normal set dinner price of about HK$600 to HK$700 per head. "We have already got a lot of bookings for Valentine's Day, and we expect to be booked out," a spokesman for the restaurant said. Some restaurants are trying to make the best of the situation. DiVino Group, which runs four Italian restaurants in the city, is running an extended Valentine's Day promotion from February 8 to 15. Allan Zeman, chairman of Lan Kwai Fong Holdings, said it was "double happiness" to have both festivals falling on the same day. "We will decorate Lan Kwai Fong in a way to celebrate both the Lunar New Year and Valentine's Day, and restaurants will be open for lovers and for families," Zeman said. His company will offer a special bartender service delivering flowers and cocktails to people's homes. "I do not see this year to be a challenge, as it provides good business opportunities," Zeman said. Maxim's Group is also taking advantage of the clash of dates. Its cake shops will offer both Chinese puddings and Western-style Valentine's Day cakes. Major hotels do not find the clash to be a problem, since most of their restaurants are open all year round.

Chief Executive Donald Tsang Yam-kuen might not be voting in the forthcoming Legco by-elections, as he says they have been "deliberately engineered". Saying that whether he voted or not was his right, Tsang also warned against becoming too dogmatic when deciding if functional constituencies in the legislature should be kept beyond 2020. In an interview with the South China Morning Post (SEHK: 0583), in which he also addressed the economy, the property market, his successor and offered an olive branch to the twenty-somethings generation, Tsang described the exercise being conducted by the Civic Party and the League of Social Democrats as a "drama" that needed to be understood carefully. Five lawmakers - two from the Civic Party and three from the league - have resigned to force by-elections, which they view as a de facto referendum on the pace of democratisation. "I have been exercising my right to vote all my life, but on this occasion I have to think hard on what I need to do. I have not made up my mind yet," Tsang said. "This by-election is a very strange one. It is not a natural vacancy which occurs. It is deliberately engineered through resignation and re-election of the same people, in order to introduce what they call a so-called referendum. "It has a completely different texture altogether. We must understand this very carefully. So I have to think very hard about my position. I know where my duties are. My duty is to the people." Since a statement by the State Council's Hong Kong and Macau Affairs Office last month branded the referendum exercise as a breach of the Basic Law and a "blatant challenge" to Beijing's authority, government allies in Hong Kong have vowed to boycott the polls by not fielding any candidates. Immediately after the five lawmakers' resignations, Tsang issued a statement saying they had "gone astray", pointing out that some members of the public considered the exercise an abuse of the electoral system and that the HK$159 million cost of staging the by-elections was a waste of public resources. But none of his officials or government allies have yet called on voters to stay away from the polling stations. Tsang also gave his view on functional constituencies, which currently comprise half the 60-seat legislature. "If there was only one formula for universal suffrage - one man, one vote and one chamber, life would be much simpler," he said. "In Hong Kong's case, we have to accept the system of functional constituencies now." Pan-democrats have long called for the abolition of these seats representing vested business and professional interests, which have an electoral base of just over 230,000 out of three million voters. While saying the trade-based seats had "not met the test of universality and equality" and the system "will change" when universal suffrage was introduced, Tsang said even advanced democracies, such as those in Britain and the United States, respectively had hereditary seats in parliament and indirect elections for the presidency. "When we reach the final destination it would be dangerous for us to be dogmatic at any one stage without any room to accommodate other people's views and coming to a consensus on what we should have in Hong Kong." He said he had to be pragmatic and could not take sides over whether to abolish functional seats in 2020 or retain them indefinitely, because either way he would "sacrifice" chances to reach a consensus for the 2012 electoral reform, currently the subject of a public consultation. Asked what the government was willing to sacrifice in exchange for pan-democrats' support for its 2012 proposals, Tsang said he would be willing to negotiate although the pace and scope for democratisation laid down by Beijing in 2007 would not leave much leeway. "Some of these have to be discreetly discussed in order to distil sufficient candour in order to reach consensus. I am confident the final package will not be exactly the same as what we have proposed. We must be reflecting more on what the community wants at the end of the day." He urged all sides to build consensus on how the chief executive and all members of Legco would be elected in 2012, rather than using the consultation to "ruffle things". On the issue of governance Tsang said the sluggish legislative process and implementation of policies were the results of democracy. "This is the price to be paid for an open society in finding consensus. Eventually it is what democracy is all about." Taking the collapse of an old building in To Kwa Wan last month where four were killed as an example, Tsang said only when such "wake-up calls" happened could community consensus - in this case mandatory building inspection - emerge. Saying Hong Kong was no longer in the colonial era, when, for example, former chief secretary Sir David Akers-Jones had decided to build Tuen Mun Road in the 1970s "literally on the back of an envelope over one afternoon tea chat with former governor [Murray] MacLehose", Tsang said time was needed if public views were to be accommodated. "One must not confuse the issue of poor governance with the speed of doing things. Excellent governance is the respect of divergent views and coming to a consensus representing the majority view. The process necessarily is slow."

Politics runs in the family for (from left) Stanley Ho, Chan Un Chan, Angela Leong, Pansy Ho, Daisy Ho, Lawrence Ho. Macau tycoon Stanley Ho Hung-sun's living room could double as a mini mainland political consultative conference in the future. Chan Un Chan (also known as Chan Yuen-chun), Ho's third wife, made it six of a kind for the family when she became a delegate to the Guangdong provincial Chinese People's Political Consultative Conference at its recent annual meeting. A successful businesswoman, Chan's first foray into mainland politics builds on the family's interpersonal network and influence, with six members now delegates to political advisory bodies at various levels. Ho, 89, is a member of the standing committee of the national CPPCC, China's top political advisory body. The casino magnate's health has been watched closely by the Hong Kong and Macau media since a blood clot on his brain was removed in August. His fourth wife, Angela Leong On-kei, a former dancer, is a delegate to the Jiangxi provincial CPPCC and that of the Guangdong city of Zhuhai . Besides two of his four wives, the second generation of Ho's family is also making itself heard by officials in the big mainland cities. Pansy Ho Chiu-king, 46, one of his 17 children and the managing director of shipping, real estate and hotel developer Shun Tak (SEHK: 0242, announcements, news) , was previously a delegate to the Guangdong provincial CPPCC and is now on the standing committee of the Beijing municipal CPPCC. Sister Daisy Ho Chiu-fung, 44, is a delegate to the Tianjin municipal CPPCC and brother Lawrence Ho Yau-lung, 33, is a delegate to Shanghai's municipal CPPCC. Joining advisory bodies and being elected to the National People's Congress are two ways for prominent people from Hong Kong and Macau to take part in mainland politics. The Ho family probably has the biggest representation on advisory bodies but other famous families also wield some influence despite lacking its numerical advantage. Ricky Tsang Chi-ming, the third son of NPC standing committee member Tsang Hin-chi, and Brian Li Man-bun, the second son of Bank of East Asia (SEHK: 0023) chairman David Li Kwok-po, joined the national CPPCC in 2008. Political analysts said that being a CPPCC delegate or NPC deputy is like a business card that Hong Kong and Macau businesspeople could use on the mainland to gain more respect from local officials. But local officials also liked to first invite prominent figures to join local bodies, with a view to attracting investment later. "But obviously the status of Hong Kong and Macau businesspeople is much lower than before," one Guangzhou-based political analyst said. "Compared with state-owned giants and multinational enterprises, most of them are too small." And while the Ho family's representation looks impressive at first glance it should be remembered that there are more than 3,000 CPPCC branches at various levels, with more than half a million members.

A taxi group is pushing the government for the mass installation of closed-circuit television cameras in Hong Kong's cab fleet, a move it says will improve road safety and record bad behaviour but which could come at the cost of passengers' privacy. The cameras, which come with "black box" data recorders, have already been fitted to two taxis for testing. They are placed next to the rear-view mirror, one to record what goes on in the cabin, the other to film what happens in front of the vehicle. Other transport operators already use cameras. Some MTR and KCR trains have them to monitor passenger cabins, as do double-decker buses. Some ferries have cameras for security and safety reasons. Taxis in Japan, Australia, the UK and parts of the US and Europe are fitted with cameras. And they are fitted to taxis in Beijing; the capital's fleet has voice recorders too. While a small number of taxis are already fitted with external cameras, no taxi group has previously installed cameras in the cabin - despite a spate of taxi robbery incidents last year - for fear the public would reject them. Some taxi owners are sceptical of the idea. They fear the risk of footage shot by cameras in the passenger cabin being leaked could put people - especially celebrities - off hiring cabs, and that that would hurt their business. The Urban Taxi Drivers Association Joint Committee - one of the main driver unions, and the one behind the idea - said cameras would be secured in a metal box that only the security company supplying them, or the police, could open. Drivers would not be able to tamper with the images captured. Ronnie Kong, of the devices' supplier, PD Asia, said video would be overwritten when the cameras' data cards were full, though particular incidents could be saved by the driver pressing a button. But Ng Kwan-sing, chairman of another trade group, the Taxi Drivers and Owners Association, said there was always the risk of a security breach. "If data protection was 100 per cent, Gillian Chung Yan-tung would not have ended up like now," Ng said, referring to the Twins star's forced hiatus from show business after pictures of her involved in sex acts with singer Edison Chen Koon-hei were posted on the internet. The Transport Department said the trade did not need prior approval to try out the cameras, but it must not breach any law, including the Privacy Ordinance. The privacy commissioner said he did not support fitting cameras in taxis but that the ordinance did not explicitly prohibit it. The Urban Taxi Drivers Association Joint Committee wants the government and the commissioner to approve the fitting of cameras to most or all of the 18,000 taxis. The group will meet police and officials from the Transport Department and Office of the Privacy Commissioner next month to present the results of its trial of the cameras. The insurance industry believes installing the cameras would help clarify responsibility in road accidents involving taxis and would avoid unnecessary litigation. That in turn would mean lower premiums for third-party insurance for the trade. Premiums have surged from around HK$7,000 a year in 2008 to HK$18,000 now due to a jump in claims from road accident victims. Taxi accident rates have fallen over the years, but the number of claimants has surged due to a boom in so-called no-win-no-fee legal services. "If drivers behave with more restraint behind the wheel because they know they are being monitored, obviously there will be fewer road accidents," said Peter Tam Chung-ho, chief executive of the Hong Kong Federation of Insurers. Kwok Chi-piu, president of the joint committee, said the in-cabin cameras would help scare off robbers and provide evidence of crimes. "There will be a sign outside the taxi informing passengers of the cameras, so they can decide whether they want to take the cab," he said. Kong, of the company supplying the cameras and black box, said the latter's sensor would automatically save recordings of unusual movements or vibration of the vehicle, such as a sudden increase in speed, an abrupt turn or a collision. If the joint committee's idea wins approval, it may not be long before the devices gain popularity with owners and drivers. Each two-camera unit costs about HK$2,500, but the union is considering leasing the device to drivers. It is also inviting the insurance trade to offer insurance premium discounts to drivers who buy the device.

The trucks can travel 11.2 kilometres on one litre of diesel. With pollution levels on the rise it's hard to find a positive Hong Kong environmental story these days, but the introduction of FedEx's first hybrid delivery truck here is at least a move in the right direction. In a bid to help reduce greenhouse gas emissions and fuel costs, FedEx Express in Hong Kong has got its first ever diesel-electric hybrid trucks. The two trucks, which are manufactured by Japanese firm Hino and distributed by Crown Motors, will help improve the city's environment by reducing carbon output by 30 per cent, compared to the diesel vehicles that FedEx currently uses. It was a double celebration this week for FedEx as it was their specially adapted Panda Express Boeing 777 that transported giant pandas Mei Lan, three, and Tai Shan, four, from Washington to Chengdu , where the pair will join China's panda-breeding program. The pandas were born while their two sets of parents were on loan from China to US zoos. Loaned pandas and offspring must eventually return to China, and that's where the Panda Express came in. FedEx's Panda Express had a giant panda's face painted on it, while their two hybrid trucks are branded with the FedEx EarthSmart logo, a symbol of their commitment to promoting environmentally friendly innovation. The two trucks will be used predominately in the Tsim Sha Tsui, Mong Kok and Jordan areas, which have some of the highest "stop and go" traffic levels in Hong Kong. Each hybrid truck travels 11.2 kilometres on one litre of diesel, the highest fuel efficiency performance in its class. With a fleet of 234 trucks operating in Hong Kong, running just two diesel-electric hybrids might seem a paltry number, but the company said it hoped to add more. "FedEx is proud to be the first express delivery company to deploy these kind of hybrid trucks in Hong Kong. It's only our first step and we hope to lead by example in the industry," Anthony Leung, managing director of FedEx Express Hong Kong and Macau, said. "We have a long-term plan with Hino to make more environmentally friendly vehicles in the future. I hope that others can follow our approach."

The Edison Chen Koon-hei sex-photos saga is long dead, but its impact lingers. Almost two years after the explosive showbiz scandal that shocked the whole of Asia (and the Chinese-speaking community around the world), some Hong Kong women admit they have been inspired by those racy pictures - not in the bedroom, but in the grooming department. Beauty salons have observed a mild increase in local Chinese women going for hair removal treatments - including traditional waxing, laser and intense pulsed light - for their private parts. Such treatments are common in the West, but to the relatively conservative local Chinese women, the idea of a Brazilian wax, which removes almost all the hair in the pelvic area except for a thin strip, is still alien - and in some cases unknown. Beauty salon operators said more local customers are seeking a clean bikini line, and some are opting for the almost all-gone Brazilian style popular in the West. Some were apparently motivated by the sex photos, which featured a string of well-known female celebrities, including award-winning actress Cecilia Cheung Pak-chi, as well as Gillian Chung Yan-tung, of girl duo Twins, with whom Chen was rumoured to have been romantically linked. The revealing photos sparked discussion, among other things, of hair removal habits - or lack thereof. "We have had more customers [turning up] after their husbands or boyfriends [mentioned] those Edison Chen photos," said a veteran Brazilian wax therapist at a beauty salon in Admiralty. Vivien Tang, marketing manager of upmarket spa chain Sense of Touch, which has specialised in Brazilian waxes for seven years, confirmed the trend. She said that the spa has had a mild increase in local Chinese and Japanese customers seeking Brazilian waxing. Local beauty chain Be A Lady also said they were getting more requests for bikini waxing. A 35-year-old marketing executive, who is a Hong Kong-born Chinese, said she had been having Brazilian waxes for years, for both aesthetic and hygiene reasons. She said it also improved her partner's sex drive. Still, it is unclear whether this hair removal trend will take off in the city. "Foreign women are still our major customers, and despite a mild increase in Asian women coming here for Brazilian waxes, most of them still prefer bikini waxes, the demand for which will increase sharply in summer because they want to wear bikinis," Tang said. A spokeswoman for Be A Lady said: "We are a very localised company and we serve local people. To many Hong Kong women it is still very embarrassing [to expose their private parts for waxing], and some find it shameful. "Only 10 per cent of our clients [who get body hair removed] have asked for a clean bikini line." The marketing executive said that when she brought up the subject with her local Chinese colleagues, they were shocked. "They had never heard of such waxing treatments. We all live in Hong Kong, but how come we are so different?" Sexologist Rene Lien said pubic hair existed to reduce friction during sexual intercourse, but more women were getting hair trimmed or removed - mostly because they wanted to wear bikinis. But at the end of the day, waxed or not, it all comes down to personal preference, Lien said.

China*: A top Chinese think tank forecasted the nation's economy would experience a mild rebound this year, with gross domestic product expanding around 10 percent year on year. Among the three economic engines, investment is expected to contribute 6.3 percentage points to the GDP growth, while consumption will contribute 4.2 percentage points. Net export will drag down the growth rate by 0.5 percentage points, the Center for Forecasting Science of the Chinese Academy of Sciences said in a report issued Saturday. The GDP may expand 11 percent in the first quarter and see a moderate slowdown in most of the remaining year, the report said. The annual GDP growth rates for the second, third and fourth quarters are projected at 10.2 percent, 9.5 percent and 9.8 percent, respectively, it said. Investment would continue to increase as a result of the government's economic stimulus measures, with focuses in agriculture, transportation, and industries relating to people's livelihood, but the annual investment growth would slow down from 30.1 percent in 2009 to 25 percent, the report said. Foreign trade is expected to see a marked recovery as overseas demand rises due to the recovery of the world's economy. Total value of the foreign trade would advance 17.6 percent year on year, with export up 16.6 percent and import up 18.9 percent, according to the report. The report also estimated that consumption price index (CPI), a major gauge of inflation, would rise 3.06 percent from a year earlier, as a combination of economic revival, ample liquidity, and inflation expectations would drive up the prices. The producer price index (PPI) would jump 5.22 percent year on year, it added. Data from the National Bureau of Statistics (NBS) showed China's economy expanded 8.7 percent last year, of which investment growth contributed 8 percentage points, consumption contributed 4.6 percentage points, while net exports dragged down GDP growth by 3.9 percentage points due to sluggish external demand.

With the Lunar New Year less than a week away, room rates at luxury hotels in the beach town of Sanya in the southern province of Hainan are going through the roof. With an average rate of 15,000 yuan (HK$17,000 or US$2,200) a night over the holiday period, the tropical resort island has easily become the most expensive tourism destination in the country. Most five-star hotels in Sanya have tripled their prices for the week starting from Saturday, Lunar New Year's Eve, while luxury hotels at Yalong Bay, considered as providing the best sea view in town, have increased their rates fivefold, travel agencies say. Even budget hotels have doubled their prices. Mainland tourists, especially wealthy ones from northern areas who crave tropical sunshine and beaches during the winter, are usually willing to splash out a little on a new year holiday in Sanya, touted as the mainland's answer to Hawaii. But prices this year have surprised travel agents. "Nearly all luxury resort hotels on the waterfront at Yalong Bay are now asking for somewhere between 10,000 (US$1,450) and 16,000 (US$2,318) yuan for a standard room with a view," Tang Yiting, marketing manager of Guangzhou-based GZL Travel Service, said. "For the previous several years, the rates during Chinese New Year were just about 5,000 yuan." An official at the Hilton hotel in Yalong Bay said the rate for a sea-view room was about 14,000 (US$2,028) yuan a night during the new year holiday, while the same room went for about 3,500 yuan during the National Day holiday last year - the second biggest holiday on the mainland - and less than 2,000 yuan in low season. A sea-view room at Hilton Grand Vacations on Waikiki Beach in Hawaii is about 1,500 yuan. Other resort hotels at Yalong Bay are charging similar rates for sea-view rooms, including the Marriott at 15,341 (US$2,223) yuan and the Ritz-Carlton at 15,180 (US$2,200) yuan. "Booking for luxury resort hotels in Sanya is hot, hot and hot," said an agent from, the mainland's largest online travel agency. "All standard rooms in the Mandarin Oriental hotel have sold out. Now it is only left with rooms where prices range between 18,000 (US$2,608) yuan and 30,000 (US$4,348) yuan." Figures from the provincial travel bureau show the hotel reservations rate in Sanya has reached 85 per cent for the Lunar New Year despite the rocketing prices. Industry insiders say there are several reasons behind the sky-high prices in Sanya and one of them concerns a grand plan rolled out by Beijing about a month ago. The State Council issued a policy statement on December 31 saying that Beijing intended to develop Hainan as a top international tourist destination in the next decade. Property prices and hotel room rates have been rising in the province ever since. Mainland media reported that since last month more than 200 property speculators had flocked to the island and that real estate prices, including hotels, had risen by about 1,000 yuan per square metre on a daily basis for some properties. "A considerable amount of guessing and speculating on Hainan's future, like gambling options, duty-free shopping and property development potential, greatly spurred a fresh wave of interest in Hainan recently, especially Sanya," Li Geng, a Beijing-based tourism researcher said. "And this year you've got the Chinese New Year and Valentine's Day coinciding on the same day. All these factors bring the skyrocketing hotel prices." Another less obvious reason behind the Sanya boom is connected to the recent ban on overseas business trips using public money, previously popular among senior civil servants, industry observers say.

Longxue Shipbuilding had not received new orders for a year until one came for an 80,000 deadweight-tonne bulk ship in November. Mainland shipyards, where new orders dropped more than 50 per cent last year, are expecting a substantial rebound in new building contracts this year as the shipping industry recovers, according to a senior official at China State Shipbuilding Corp (CSSC). "Shipowners have become more active in negotiations for new vessels," Yu Baoshan, an assistant to the president at CSSC, China's largest shipbuilding company. Yu, also the president of Guangzhou Corporation of Shipbuilding Industry, a subsidiary of CSSC, said the shipyard's order book would be better than last year, given that the global economy is slowly recovering. Officials from CSSC said they are in talks with shipowners over various vessel types, except container ships, but declined to provide a figure for the number of contracts being negotiated. The plunge in shipping freight rates as well as credit tightening beginning in the fourth quarter of 2008 reduced new ship orders across the globe. China, the biggest shipbuilding country in terms of new orders, saw orders shrink 55 per cent year on year to 26 million deadweight tonnes last year, accounting for 61 per cent of new orders worldwide. Many shipyards did not receive any new orders until the last quarter of last year. For example, CSSC Guangzhou Longxue Shipbuilding, which is 60 per cent owned by CSSC, had not received any new ship orders for more than 12 months when one came for an 80,000 deadweight-tonne bulk vessel in November, ending the drought. The shipyard, which started operating in 2008, received only two orders for 80,000 dwt vessels last year, compared with 20 outstanding orders on its book. The drop in vessel prices is also luring shipowners back to the negotiating table, a broker from a British shipping agency said. "Prices of various vessels have fallen 40 per cent off their peak in 2007 and early 2008," the agent said. Traditional shipowners, mainly from Greece and other European countries, have returned to the market, placing orders with Chinese and Korean shipyards, he said. Not all vessel types, however, will benefit from the recovery. Demand for Panamax vessels, used mainly to transport coal, and tankers will recover better than for container vessels, said Jack Xu, a transport analyst at SinoPac Securities. "There will be a pickup in tanker demand this year because of the potential increment in oil production announced by Opec," Xu said. Meanwhile, the buoyant demand for imported coal on the mainland due to increased power production and cheaper international coal prices will also shore up the demand for Panamax vessels this year, he added.

GCL Poly Energy, China's largest maker of solar panel raw material polysilicon, plans to make a foray into solar power generation projects overseas to take advantage of stronger government support there than on the mainland. The company will use its joint venture with sovereign fund China Investment Corp (CIC) to bid for projects overseas, head of investor relations Zhou Jiangbo said. "We will focus our efforts on the European and United States markets," he said. "In China, there is government support for solar power but it is limited in scale, whereas in Germany and the US there are no limits." CIC bought HK$5.5 billion worth of GCL shares in November last year, amassing a stake of 20 per cent. Mainland makers of polysilicon and their downstream materials solar wafers, cells and modules are increasingly diversifying into solar panel marketing and installation and even operating solar power projects themselves, as overcapacity in upstream materials production led to lower product prices and squeezed profit margins. The capacity glut was caused by rapid plant construction and a sharp drop in demand as the global financial crisis crimped financing for solar power projects. But demand is expected to pick up in the years ahead as governments in different nations, including the mainland, are stepping up their subsidy programs to spur clean energy consumption and create jobs by grooming their clean energy equipment industry. Credit has also become more ample. CLSA clean energy sector analyst Charles Yonts said in a research report that he expected China's solar power generation industry to grow to 900 megawatts in capacity this year - accounting for 9 per cent of the global total - from 200 MW last year. Still, he said, it would not be sufficient to mop up excess supply this year and next year, as polysilicon plants that secured investment between 2004 and 2008 are still coming on stream. Zhou, however, said many plants in the pipeline are not expected to be completed and utilized, and Beijing will soon impose stringent requirements for polysilicon plants. They include a minimum annual output of 3,000 tons, as well as other requirements on energy consumption, land use and environment protection. "The barriers to entry will be raised so high that only perhaps the biggest five players will remain viable in the long term," Zhou said. "It is difficult technically and not worth it financially for the small plants to be revamped to meet the new standards, because polysilicon prices have fallen so much." Prices tumbled from a peak of US$430 a kilogram in mid-2008 to about US$50 at present. GCL plans to boost its polysilicon output capacity to 21,000 tonnes by the end of this year from 18,000 tonnes currently. Output is estimated to have been 7,500 tonnes last year. It aims to cut its production cost to US$30 per kilogram by the end of this year from US$36 late last year. Yonts said GCL's strategy of expanding into solar power generation projects overseas "makes sense", as the sector receives better government support overseas. Cash-rich GCL can also provide the necessary funding that is still short in supply for solar projects overseas, he added. Returns in western European projects are attractive with return rates in the high-teen percentages, which are effectively government-backed guaranteed returns over 15 to 20 years. This is because governments there allow solar power producers to charge much higher prices - known in the industry as feed-in tariffs - than electricity generated from conventional sources such as coal, and heavily subsidize it. In China, while the government has launched a programme to subsidise about half the infrastructure cost of domestic solar projects, it only involves several hundred small-scale projects. Although there had been expectations that Beijing would launch feed-in tariffs by the end of last year, that has yet to materialize on the national level, since government departments have yet to agree on the size of the subsidy and how to fund it. Only Jiangsu and Zhejiang provinces have launched their own feed-in tariffs. Yonts said GCL may face potential political opposition and protectionism in its overseas foray, since the renewable energy industry is seen as a platform for job creation, which is much needed in the US and Europe. One way to relieve this is for it to partner with local companies and hire local staff to do marketing, panel assembly and mounting. This will also help the company to circumvent its lack of local market knowledge, he said. Still, Yonts is optimistic that GCL will be able to win projects despite keen competition abroad. "They are still at a very early stage of overseas expansion," he said. "There is no question that they will be able to get some projects. It's just a matter of how quickly it may happen."

Google's near-silence and seeming inaction since its bombshell announcement it may exit China reflects the internet search leader's fear of running afoul of the law and jeopardising a multipronged strategy for the world's top internet market. Google sent shock waves across the business and political worlds when it declared on January 12 it would stop censoring Chinese search results. But in the three weeks since, the Web giant has trod cautiously. Despite early reports suggesting Google had lifted filters on certain search results, the company insists it has made zero changes to its Chinese search engine and that it remains in dialogue with Beijing. Otherwise, executives have mostly been tight-lipped about the entire affair. That guarded, restrained approach reflects the thorny legal issues surrounding the situation and the high stakes involved in its stand-off with China, the world's No 3 economy and largest internet market by users. Many analysts believe the Chinese government would have no qualms shutting down an uncensored search engine. But experts on Chinese law warn that Google employees in China could also face prosecution for breaking the law. China's detention of four Rio Tinto employees including Australian Stern Hu in July last year on accusations of illegally obtaining commercial secrets amid contentious iron ore contract negotiations has underscored the risk when business matters cross into politically sensitive areas. "If they have a lot of personnel in China and they suddenly decide to change what they are doing in a way that was not permitted by the Chinese government, then that could lead to problems," said Donald Clarke, a professor of Chinese law at George Washington University Law School, noting Google staff could be at risk of everything from arrest to harassment. And with political momentum building - US Secretary of State Hillary Clinton and the Senate have voiced strong support for freedom of expression on the internet - Google has room to sit back and let others advance its cause. A sudden move by Google to lift search censorship in China could hurt other business interests in the country, including its fast-growing Android cellphone products, advertising sales and its research and development operations. Websites in China are prohibited from publishing content that jeopardises the security of the nation, divulges state secrets and disturbs the social order. "It would be normal for anybody running a high-profile, politically controversial operation in China to anticipate worst-case scenarios, and to do everything possible to guard against them," said Rebecca MacKinnon, a fellow at the Open Society Institute who has written extensively about internet censorship in China. Google is therefore more likely to voluntarily shut down its search operation if it is unable to reach a compromise with China, rather than unilaterally lift censorship, she said. Google chief executive Eric Schmidt said last month the company was still censoring search results in China, but that it would be making changes in a "reasonably short time". He added that Google was committed to having some presence in China. The company does not disclose the size of its business in China, where it has several hundred employees and is the No 2 search engine after Baidu. Analysts estimate it generates US$200 million to US$600 million a year in revenue. While many experts believe Beijing is unlikely to let Google operate an uncensored website, some say last summer's "Green Dam" software episode can offer a lesson for the firm as it looks for a way forward. Beijing backed down from a controversial plan that would have required personal computer makers to install special internet filtering software on computers in the face of opposition from industry groups, activists and Washington officials. "What you saw is a pretty much global pushback on what were pretty onerous and odious regulations on the part of the government. And guess what? As of today, there is no requirement" to install filtering software, Ganesan said.

Chinese top leaders Hu Jintao, Wu Bangguo, Wen Jiabao, Jia Qinglin, Li Changchun, Xi Jinping, Li Keqiang, He Guoqiang and Zhou Yongkang pose with performers for a group photo after an evening party welcoming the upcoming Chinese traditional Spring Festival, at the Great Hall of the People in Beijing, capital of China, Feb. 6, 2010.

Passengers enter the railway station under a shelter against the rain in Guangzhou, south China's Guangdong Province, Feb. 7, 2010. In spite of a heavy rain, the Guangzhou Railway Station was estimated to transport 230,000 passengers on Saturday, 5,000 more than the peak day of last year.

Australian mining magnate secures coal export deal with China - "This is Australia's largest single, non-syndicated, finance deal and the interest from China highlights the strength of the project and the benefits for Queensland and Australia in developing a new world class coal region such as the Galilee Basin," Queensland mining magnate Clive Palmer told reporters.

An actress (C) dressed as China's first female emperor Wu Zetian is accompanied by other actors, dressed as her entourage, walk after their ride on the maiden journey of a high-speed train from Zhengzhou to Xi'an, Shaanxi province, to celebrate the start of the train service, February 6, 2010. A high-speed railway linking central China city Zhengzhou and northwestern city Xi'an, went into operation Saturday, Xinhua News Agency reported. Picture taken February 6, 2010. Three bullet passenger trains running between Zhengzhou, central China's Henan province, and Xi'an in Shaanxi province were cancelled Sunday due to bad weather and faulty equipment, reported. Some high-speed trains on this route were delayed. The Zhengzhou railway department told its staff members and workers to maintain security and provide free meals to the delayed passengers, the report said. This high-speed train route just went into service on Saturday. The 505-km Zhengzhou-Xi'an high-speed railway, the first of its kind in central and western China, cut the travel time between the two cities from former more than six hours to less than two hours.

Chinese peacekeeping anti-riot and civilian police officers pose for a group photo to send new year's greetings to their motherland, at the encampment of the Chinese peacekeeping anti-riot police team in Port-au-Prince, capital of Haiti, Feb. 6, 2010. According to Chinese Lunar calendar, this Saturday is the 23rd of the twelfth lunar month, marking the end of the year and the start of a series of Spring Festival activities in China.

Chinese peacekeeping anti-riot police officers pose for a group photo to send new year's greetings to their motherland, at the encampment of the Chinese peacekeeping anti-riot police team in Port-au-Prince, capital of Haiti, Feb. 6, 2010. According to Chinese Lunar calendar, this Saturday is the 23rd of the twelfth lunar month, marking the end of the year and the start of a series of Spring Festival activities in China.

Feb 8, 2010

Hong Kong*: Chief Secretary Henry Tang Ying-yen has pledged to push forward regional infrastructure development with Guangdong despite recent heated protests in Hong Kong against a cross-border express railway. Speaking after meeting Guangdong and Macau officials yesterday, Tang said opposition in Hong Kong would pose no barriers to cross-border development. "It will only encourage us to strive harder in partnering with Guangdong to consolidate co-operation," Tang said. Hong Kong must strengthen economic ties with Guangdong in order to push development to a new level, he said, adding: "Therefore our effort and perseverance in driving infrastructure to foster cross-border development is unshakable." His comment came at the end of the Third Liaison and Co-ordinating Meeting of Hong Kong, Guangdong and Macau and the 14th Working Meeting of the Hong Kong Guangdong Co-operation Joint Conference in Guangzhou yesterday. Last month, opponents of the HK$66.9 billion high-speed railway to Guangzhou staged rounds of aggressive protests in Hong Kong in an attempt to block funding for the controversial project. During meetings with Guangdong vice-governor Wan Qingliang and Macau's Secretary for Economics and Finance Francis Tam Pak-yuen, officials from the three jurisdictions reviewed the Pearl River Delta development plan. Tang said they would push for the plan - which calls for closer regional co-operation on infrastructure, tourism and finance - to be included in the national 12th Five-Year Plan. On tourism, Tang said Hong Kong benefited from the more than 1.47 million visitors from Shenzhen between April and December. This was the result of a mainland scheme that allowed Shenzhen permanent residents to make multiple visits to Hong Kong in a year with just one single application. Eligible non-Guangdong residents living in Shenzhen could apply under the scheme since December. Tang said he would continue seek Beijing's approval to gradually extend the scheme to cover all of Guangdong province. Other major initiatives to be pursued by the three governments included conservation, low-carbon development, personnel exchange, transport and cultural development. "We are making good progress and expect that the compilation of the plan will be completed by the second quarter of 2010," Tang said, adding that the Pearl River Delta quality living plan would be showcased at the Shanghai World Expo. Tang also said a pilot electronic payment scheme - combining the Octopus and Shenzhen Tong smart cards on one card - would be launched in a year's time.

As many as 35 giant turbines, each as tall as a 27-storey building with blades as long as the wing of a Boeing jetliner, will be dotted across the sea southwest off Lamma five years from now if a HK$3 billion plan by Hongkong Electric (SEHK: 0006) to use wind energy to produce power comes to fruition. The proposed project, with a capacity of about 100 megawatts, could produce enough electricity a year to power 50,000 households. This would account for about 1per cent to 2 per cent of the company's annual electricity output. The project, scheduled to be completed in 2015, calls for 28 to 35 wind turbines, each capable of producing 2.3MW to 3.5MW, to be installed in a 600-hectare sea area about four kilometres southwest of Lamma. Hongkong Electric, in outlining the plan yesterday, said using wind power could supplant the use of 62,000 tonnes of coal a year, thus reducing carbon dioxide, sulphur dioxide and nitrogen oxide emissions by 150,000, 520, and 240 tonnes respectively. The Hongkong Electric plan comes about six months after CLP won approval of its environmental impact assessment report on an offshore wind farm project. The proposed CLP wind farm, said to be the biggest in Asia, would be located about nine kilometres east of Clearwater Bay peninsula and five kilometres east of South Ninepin Island. The HK$6.7 billion CLP project involves 67 turbines, with a total capacity of 200MW. Following government approval of the report, CLP has begun the second stage of a feasibility study, which may take one or two years. Both wind-farm projects by the two power companies were in response to a government target, set in 2005, of generating 1 per cent to 2 per cent of Hong Kong's electricity from renewable sources by 2012. Hongkong Electric general manager Frank Lau Fuk-hoi said the company's consultant had studied eight potential sites. The Lamma site was preferred partly because it was close to the company's power base on the island which could provide logistics support during construction stage. "Wind turbines can first be assembled at the power station before being delivered to the site for installation, offering extra convenience and reducing project costs," Lau said. He declined to speculate about whether the company needed to raise power prices because of the development but said it could mean a decrease in coal costs. "And bear in mind, wind is free of charge," he said. According to the company's environmental impact assessment, which will be the focus of a month-long public consultation from Monday, the project would not greatly harm the marine ecology and the site was not within a bird habitat. Lau said measures would be taken to minimise possible adverse effects, including restricting the speed of construction ships, and avoiding foundation work during peak marine mammal activity times. Edwin Lau Che-feng, director of Friends of the Earth, said: "I am not saying it is a bad thing but I am not sure if it is a good environmental investment. Some HK$3 billion is to be used but that will only generate some 2 per cent of the company's total electricity output." Greenpeace senior campaigner Gloria Chang Wan-ki called on the government to do more. She said: "We cannot cope with climate change by developing one or two wind farms. The government should show its determination and lay out a clear policy direction." At present, Hongkong Electric operates a small wind turbine in Tai Ling, Lamma.

Actor Jackie Chan holding tiger dolls, poses for a photo at a news conference for the launch of WildAid's public conservation campaign to save tiger in Beijing February 5, 2010. There are as few as 4000 tigers left in the wild and this number is decreasing rapidly, according to the WildAid, a non-profit international conservation group campaigning for the protection of wildlife.

Software upgrade to disrupt British passport services in HK - The British Consulate-General will not be able to provide normal passport services from February 23 until the beginning of March, a spokesman said on Friday.

Nobel Prize laureate in Physics Professor Charles K. Kao, sits with his wife Gwen Wong May-wan at the opening ceremony for the Nobel exhibition at the Chinese University of Hong Kong on Friday. The Chinese University of Hong Kong would establish a scholarship named after Nobel physics laureate Dr Charles Kao Kuen to honour his work in fibre optics, university chancellor Vincent Cheng Hoi-chuen said on Friday morning. Kao, a former CUHK vice-chancellor, and his wife Gwen Wong May-wan were making their first public appearance in Hong Kong since Kao received the Nobel Prize last year. The couple opened a CUHK exhibition on Kao’s work. The event was also attended by Chief Executive Donald Tsang Yam-kuen and leading academics. Tsang said Kao was an inspiration. “I encourage young people to consider Professor Kao as a role model in continuing technological advancement and maintaining our city’s position as an innovation and technology hub,” he told reporters. Vincent Cheng said the CUHK’s new scholarship would aim to encourage students – particularly those studying physics. The university will also erect a statue of Kao on its campus. Kao’s wife thanked the university on behalf of her husband – who is suffering from Alzheimer’s disease. Gwen Kao said they want to raise public awareness about Alzheimer’s disease. She said they hoped Hong Kong would develop more services to support Alzheimer’s patients and their families in the future. Charles Kao and his wife will be participating in other events in Hong Kong. This includes visiting his old school, Saint Joseph’s College, which is having its 135th anniversary open day on Sunday. Kao was awarded half of the last year Nobel Prize for Physics for “groundbreaking achievements concerning the transmission of light in fibres for optical communication”. He has been the vice-chancellor of CUHK for nine years. Kao and his wife now live in California.

Hongkong Electric (SEHK: 0006) Holdings said on Friday it planned to develop a wind power project comprising about 28 to 35 wind turbines on southwest Lamma, a company spokeswoman said on Friday. She said the project was expected to cost up to HK$3 billion and have a capacity of about 100 megawatts (MW). This meant it could provide power for 50,000 households. The spokeswoman said this would account for up to two per cent of the company’s annual electricity production. The project is expected to be completed in 2015. HK Electric general manager Frank Lau Fuk-hoi said the company considered developing a wind farm after completing an environmental impact assessment (EIA) study. “The EIA study reviewed the environmental efficiency of eight potential sites in total. It affirmed that the location is four kilometres from Lamma Island and is the best option,” Lau said. He said the study also assessed the environmental impact of the new windfarm. “The project contributes positively to the environment as it can supplant the annual use of 62,000 tonnes of coal, reducing carbon dioxide, sulphur dioxide and nitrogen oxide emissions by 150,000, 520 and 240 tonnes respectively,” Lau argued. He said the EIA report would be available for the public from next Monday until March 9. Seperately, CLP Holdings (SEHK: 0002) , the larger of Hong Kong’s two electricity providers, announced plans to build an offshore wind farm project at Clearwater Bay with a capacity of 200 MW and an investment of HK$6.7 billion.

Now that UC Rusal has become the first Russian enterprise to be listed in Hong Kong, investors have begun looking into another interesting energy firm, this one based in Mongolia. Toronto-listed SouthGobi (1878) has attracted global attention after claiming to be a strategically located premium coal producer. This may not be reflected in the stock's 11 percent slide on its first trading day in Hong Kong on Friday. But the future holds much promise for this Canadian company, which raised US$439 million (HK$3.42 billion) from its latest initial public offering. Big names like the mainland's sovereign wealth fund, China Investment Corp, has invested in the firm that holds coal reserves in the region bordering China and aims to sell thermal coal to mainland end users. SouthGobi says after CIC became an investor, its treatment by state- owned enterprises and mainland officials have changed for the better. The CIC connection has allowed the firm to cut through a lot of red tape, enabling direct negotiations with potential end users, namely several state-owned steel enterprises.pared for terrorist attacks, epidemics, explosions, riots, fires, traffic jams and other problems, the report said.

China*: A total of 41 Chinese mainland companies launched initial public offerings in markets around the world last month to raise a combined $7.1 billion, an industry report said yesterday.

China's automobile market continued its robust growth in January, with sales surging 84 percent from a year earlier, heavily boosted by minivans, China Passenger Car Association said on Friday. Rao Da, the association's secretary-general, said a total of 1,218,722 cars, sport-utility vehicles, multi-purpose vehicles and minivans were sold last month, an increase of 84.2 percent year-on-year and 5.1 percent from December. The sales boost was largely driven by the minivan segment, which jumped 88.9 percent year-on-year and 44.4 percent from the previous month. This was mainly a result of subsidies for trade-ins and tax cuts introduced as part of the government's stimulus program. Thanks to its soaring minivan sales, Chongqing-based Chang'an Automobile reported an outstanding market performance last month, with 198,400 vehicles sold, up 123 percent over last year and 82 percent from December. GM's mini commercial vehicle joint venture SAIC-GM-Wuling, China's largest minivan maker, reported year-on-year sales growth of 59.6 percent in January, with 119,969 units sold. Rao predicted that passenger car sales in February would grow 50 percent from last year. And in the first quarter, he said it was his "conservative estimate" that 900,000 more passenger cars would be sold in China than in the same period last year. He also predicted that China's total vehicle sales would hit 17 million this year, up 25 percent from a year earlier. Last year, China's passenger car sales jumped 52.9 percent to 10.3 million, as the auto industry witnessed total sales of 13.6 million vehicles, up a record 46 percent year-on-year, making the country overtake the United States to be the world's biggest auto market for the first time.

The high-speed railway linking Zhengzhou in Henan province and Xi'an in Shaanxi starts operation Saturday, with its first train leaving from Zhengzhou at 11:25am, Zhengzhou Evening News reported. This is the first high-speed passenger railway in western China, Xinhua reported. The train, with a speed of up to 352 km/h, finishes the 505km distance in one hour and 48 minutes instead of six hours, according to China Railway First Survey and Design Institute. The line, part of a major east-west railway artery between Xuzhou in Jiangsu province and Lanzhou in Gansu, cost about 35.3 billion yuan.

If it's well into the day and you're seeing droves of pyjama-clad people, young and old, running errands in alleyways, taking shelter from the summer heat or roaming supermarket aisles in search of bargains, you must be in Shanghai. People wearing pyjamas in public has been a hallmark of Shanghai street culture for decades. Now it's a focal point for heated public debate after a controversial government-backed public etiquette clampdown targeting the practice ahead of this year's World Expo. The crackdown on pyjama-wearing in public has reminded many of a similar crackdown in Beijing - on the capital's hordes of topless males - ahead of the summer Olympics in 2008. The Qiba neighborhood in Shanghai's New Pudong district, only three bus stops from the World Expo site, has mobilized neighbourhood committee officials and volunteers since July to talk people out of the habit of wearing pyjamas in public. The initiative has split public opinion. Some see pyjama-wearing in public as an embarrassment, while others view it as a tradition and a right. China News Weekly quoted Qiba Neighbourhood Committee director Shen Guofang as saying it had started the campaign because it was worried that the sight of people parading about in their pyjamas could leave a bad impression among foreign visitors. "We're the hosts. Even if a trivial matter goes before the public, it becomes huge and we can't let Shanghai lose face," she said. Dismissing the campaign as overkill, detractors even cited a collection of photos taken by a National Geographic photographer showing people wearing pyjamas in the street as a charming endorsement of the cultural phenomenon. Shanghai office worker Wang Shuai said choosing what to wear was a matter of personal liberty and nobody else's business, as long as it was not indecent. "People are free to choose what they wear and you're are free to choose what you're looking at," Wang said. "If you don't like it, then try to ignore it." Wearing pyjamas as a fashion statement has its roots among wealthy social butterflies in 1930s Shanghai and the practice regained popularity in the late 80s. But in recent years, the wearing of pyjamas in public has often been associated with elderly Shanghainese living in shanty neighborhoods and the jobless, who have little incentive to dress up. Shanghai Academy of Social Sciences sociologist Zhang Jiehai said wearing pyjamas in public started as a matter of practicality because people lived in cramped conditions with no clear line between public space and private place. People then began to take the practice for granted. He said the tradition had outlived its usefulness and people should try to give it up because it was not hygienic, among other things. However he said the anti-pyjama drive was an attempt to whitewash Shanghai for the expo but there were better ways to achieve the desired result than ill-conceived government campaigns. "If you want to tell someone how to do things, you should try to awaken the internal decency inside them," Zhang said.

High-speed trains wait for departure at Guangzhou south railway station in Guangzhou, capital of south China's Guangdong Province, on Jan. 30, 2010. The Asia's biggest railway station came into use on Saturday, the first day of Chinese spring festival transport rush of 2010. Those of my readers who are old enough to have seen Dustin Hoffman in "The Graduate" (1967) must remember one classic scene in which Mr McGuire lectures on career advice with only one word - "plastics." That was in the late 1960s. When a group of my undergraduate students came to me recently asking for career advice, I impulsively uttered one word as well - "railways." There was a moment of suffocating silence in the room. And I had the feeling I seemed like a snake oil salesman. Rail transport is hardly eye-catching career advice in times of sex, lies and mobile handsets. But that is where the money is, and that is where the opportunity abounds. And here is the reason why. Towards the end of last year, another landmark was achieved in China's railway history. The latest feast is Harmony Express' opening service linking Wuhan, Hubei Province, and Guangzhou, Guangdong Province, reducing the previously 12-hour-long trip to a record time of about only three hours. This is the world's fastest train, running close to 400 km per hour at top speed. At this speed, rail for the first time becomes a viable competitive alternative to air travel. What is more remarkable is that the Wuhan-Guangzhou rail connection is just one of a series of grand railway developments that will unfold in the next few years involving trillion of yuans of investment. In 2007, China improved the speed of its conventional trains to 200-250 km an hour. In 2008, the high-speed rail that links Beijing and Tianjin at a speed of up to 350 km an hour started service. Thirty-six more passenger rail lines stretching altogether 13,000 km will open by 2012. The most exciting of all, and this is even personal to me as a Shanghainese who frequently commutes between Shanghai and Beijing, is the ultra high-speed, ballastless-track railway service running at three-minute intervals connecting the two cities within an incredibly short time of a bit over three hours. Construction is under way. Wow, I can't wait to throw away my Eastern Airline's preferred passenger card, because the habitual delays have tested, and exceeded, my patience many times over. Ode to the Ministry of Railways! Based on my study, this is one of the few state-owned monopolies that show a remarkable level of investment and operations efficiency, at least compared to its peers in leading developed countries. The technology development model of China's high-speed railway is also a textbook example of success. In sharp contrast to the automobile industry, where China's "market for technology transfer" industrial policy in the last 20 years has generated despicable results, the state-of-art railway technologies from the Ministry of Railways is truly a wonderful combination of advanced foreign pedigrees and audacious indigenous innovations. Before China, France, Japan and Germany have already developed world-class high-speed rail technologies, and have succeeded in commercializing their technology. However, China acquired its advanced high-speed train technology through limited technology transfer from these companies in combination of its own research and development. The trains operating on the Wuhan-Guangzhou line for example are built by China South Locomotive and Rolling Stock Corp. These technology accumulations include not just the tricks for constructing tracks and manufacturing passenger cars, but also various other technologies on telecommunication signals, control systems, and other system management issues. With cutting-edge technologies and a vast domestic market to exploit economy of scale, vendors under the Ministry of Railways are now in a position to flex their muscles on international markets. China's rail technology has export competitiveness thanks to its stable quality and low construction cost, which is about 20 percent less than that of other countries. And China is currently seeking alliances with Russia, the U.S., and India on high-speed train projects. If you look at the 4 trillion yuan (586 billion U.S. dollars) fiscal stimulus package that started last year, I would say 60 percent goes into transport, and the bulk of that is spent on railway-related projects. Construction of a high-speed rail network of such a large scale has driven the growth of upstream and downstream industries, like transport, cement, mechanical engineering, and steel industries. Construction of high-speed rails is also expected to affect logistics, relocation of industries and boost tourism industry in areas near high-speed rail lines. The ripple effect will be felt many years into the future, and the economic impact is tremendous, percolating into many sectors of the economy.

Pulling suitcases and hefting heavy bags on their shoulders, millions of mainland workers are boarding trains to head home for the Lunar New Year - a holiday that triggers the world's biggest annual migration of people. This year some may not come back from the holiday, which begins February 14, a growing worry for factory owners facing labour shortages but also a sign of improving opportunities for workers throughout China, not just in the coastal regions that have long been its manufacturing base. “During the holiday, I’ll check to see if I can get a decent job around my hometown,” Li Beiyong said, standing by her large suitcase this week in the crowded station in Guangzhou. “The pay might be lower, but the cost of living isn’t as high. I might do better there.” The buoyant job market is a dramatic reversal from a year ago, when the global financial crisis was battering China’s exporters. Millions of migrants were told to stay home because there wouldn’t be much work in Guangzhou and other usually booming southern cities. Then, as business started picking up during the middle of last year, factories were caught short-handed. China has experienced labour shortages frequently during the past decade, but many businesses now say they expect it to be worse this year than ever before. Migrants are finding jobs closer to home as the poor interior provinces become more prosperous. The supply of young labourers is decreasing as an effect of China’s one-child policy, and fewer are willing to work for sweatshop wages as their parents did. Farm-friendly policies are encouraging many to stay in rural areas on the land. And China’s massive stimulus package has created jobs across the country, sucking labour from coastal factories. “We’ve raised the monthly salary of our workers twice during the last year, from 1,200 to 1,700 yuan (US$250), but it’s still not that easy to keep workers,” said Lu Lei, general manger of Shanghai Reisheng Industrial Product Company in Shanghai. But even with the hikes, his salaries struggle to keep pace with rising living costs in the city that have discouraged workers from applying for jobs at his plastic pipe factory, he said. Over time, higher wages could translate into rising prices for Chinese-made goods worldwide. They may also increase the buying power of workers, which in turn could help the nation reduce its dependence on exports by boosting domestic demand – including potentially for imported goods. Li, the worker at the Guangzhou station, said she earns about 1,500 yuan a month in a hotel in the east coast city of Ningbo, south of Shanghai. But now she has a range of options: Besides looking for a job in her hometown, the 24-year-old woman also is considering shifting to neighbouring Guangdong province, where she worked in an electronics factory for 500 yuan a month in 2005. “I would never work for such little money again,” said Li, whose family grows rice in the Guangxi region in the south. “My bottom line is 1,000 yuan, but I can easily get more than that. The market is good for workers now.” As she talked, a river of people flowed into the massive square at Guangzhou’s train station. About 210 million passengers – more than the population of Russia – are expected to ride the rails during the 40-day New Year travel season. The holiday officially lasts six days, but many workers take a month off. With beads of sweat dripping off their faces, some used bamboo shoulder poles to haul their belongings in plastic bags. Others carried plastic buckets stuffed with instant noodles, peanuts and rolls of toilet paper for trips that can last up to 20 hours on hard wooden seats. The packed square produced a cacophony of police whistles, loudspeaker announcements and the rumble of rolling luggage being dragged over concrete. Passengers who arrived a few hours early had to wait in a crowded, cage-like area made of police barricades. Textile worker Yao Jian waited for his train to Hunan province in the holding area. The 37-year-old man made 3,000 yuan a month as a machine operator outside Guangzhou, but he wasn’t pleased with the conditions and said he would look for a new job after the New Year. “A lot of factories are short on workers, but they’re the ones that don’t pay enough,” said Yao, who was confident about finding another job in textiles. “They’re sweatshops. Who will work for them anymore?”

The Ministry of Railways is expecting more than 200 million passengers to take trains home during the Lunar New Year holiday, as the mainland enters the peak travel period today. About 24.9 million people are expected to depart from Guangzhou, Guangdong's capital, alone. But for the millions of migrant workers making the journey home, it is not as simple as just clambering aboard a train. First, they must queue up at ticket counters at least a week before departure. Thousands of people have packed ticket halls and surrounding areas at stations in Guangzhou, Fuzhou , Shanghai, Beijing and other major hubs since Sunday. The busiest period for long-distance advance ticket sales begins today and will run until Tuesday, according to a spokesman for the provincial railway authority. Those seeking advance tickets for shorter journeys, such as within Guangdong, will be queuing up next Friday and Saturday, the spokesman said. The crowds invite greater security, and more than 300 armed police officers were sent to Guangzhou Railway Station last month in anticipation of the travel peak. In addition, 350 volunteers, mostly high school and university students, were recruited this week to help maintain order at the station, local media reported. Since last month railway police and public security authorities in Guangdong have been co-operating to crack down on ticket scalping, the China News Service reported. A pilot programme in Guangdong and Sichuan required passengers to present one of 20 types of identification to buy tickets, which would bear their names. This was intended to thwart scalpers, who in the past have bought blocks of tickets - as names were not required - which they resold at a profit. At least 12 ticket scalping networks have been shut down and 56 suspects arrested, the report said. However, many migrant workers complained they had been unable to go home because of the new policy, since their identity documents were either in their hometowns, lost or invalid as they had been in Guangdong for many years. The ministry responded by relaxing the restrictions, the Guangzhou-based Southern Metropolis News said. Nine categories of documents - including invalid residence booklets, invalid identity cards, temporary residence permits, student passes and other personal documents issued by local authorities - are now accepted for ticket purchases. "Thanks to the new policy, my wife has finally been able to buy a ticket as she only has an invalid residence booklet," a Hubei migrant worker surnamed Feng told the Metropolis. "Otherwise, we wouldn't have been able to go home together this year." Guangzhou railway authorities also put together three risk-management plans for the peak travel season, the Guangzhou Daily reported. At least 960 police officers will be deployed and a nearby exhibition centre with room for 50,000 people will be made available for temporary accommodation when more than 30,000 passengers are stranded at the railway station, it said. If more than 100,000 people are stranded, 1,500 police officers will be deployed, while that number will be 3,550 police if 150,000 passengers are stranded, the newspaper said.

Li Na was more than a little surprised to be greeted by throngs of media, flowers and banners when she arrived back in Beijing from the Australian Open, where she and Zheng Jie made history by becoming the first Chinese women tennis players to reach the singles semifinals of a Grand Slam event together. New world No 10 sets sights on WTA finals - After playing the game for almost 20 years, 27-year-old Li said she felt like a star for the first time and she wants that feeling to continue. Having reached a career-high ranking of 10 in the world, she is eyeing even greater progress this year and wants to compete in the WTA tour finals at the end of the season, an event which features the world's top eight players. "I planned to return to Beijing quietly and I booked a very early flight. So I was a surprised when I saw the cameras at the airport and doubted they had come to see me at the beginning. It felt different but I won't change. I'm still myself," Li said. "I hope I can remain in the world's top 10 and qualify for the WTA finals. If possible, I hope I can reach a ranking as high as possible this season." Although she lost to world No 1 Serena Williams 7-6 (4), 7-6 (1) in a two-hour semifinal thriller, Li confirmed her new status in the sport when she upset seven-time Grand Slam winner Venus Williams 2-6, 7-6 (4), 7-5 in the quarterfinals in Melbourne. "The quarterfinal against Venus was the most memorable match for me. Not only because I won but also as two Chinese players reached the semis. I think it was an exciting point in the development of China's tennis," said Li. "As for the semifinals, I feel a little bit of regret as I just didn't convert one or two key points. The gap is not that big." At the season-opening Grand Slam in Melbourne, China boasted two players in the last four of a Grand Slam for the first time. That's a feat that has only been matched by the United States, Russia, Belgium and Serbia in recent years. That success has been largely attributed to the "fly away" policy launched by the Chinese Tennis Association at the end of 2008, when Li, along with Zheng, Peng Shuai and former Australian Open doubles champion Yan Zi, left the state-run sports system and started managing their own back-up teams and schedules. However, Li said the four had not "flown away" and insisted they were still national team players first and foremost. "We are not flying away from the national sports system. We have just chosen different ways to develop," Li said during a celebration party held by the Sony Ericsson WTA Tour in Beijing on Wednesday. "We are still national team players and when the country need us, we will play for China anytime. I would like to thank the sport's governing body for giving us the opportunity to choose our own ways freely. We are on a professional road now but we are still linked to the national team." That clarification eased rumors that Li, who is considered to have a strong personality, was at loggerheads with China's sports officials and the local system. "I don't care much about how others look at me; only my friends," said Li. "I won't worry about clarifying any misunderstandings others may have about me." For reaching the semifinals of the Australian Open, Li won more than 2.4 million yuan. She joked it was the start of a collection for her future baby. However, that child won't be coming anytime soon. "I may consider having a baby after I retire ... but I am still young and can still play for now," Li said.

Feb 6 -7, 2010

Hong Kong*: Hong Kong stocks fell 3.33 per cent on Friday, as rising sovereign debt problems in the eurozone prompted investors to dump assets like Esprit Holdings and HSBC.

Hong Kong businessman Balram Chainrai yesterday said he had no interest in owning struggling English Premier League soccer club Portsmouth and had only taken over the reins "to remove the previous owners". Chainrai's company, Portpin, took over the 90 per cent shareholding in Portsmouth held by previous owner Ali al-Faraj after the club had allegedly missed deadlines to repay money Chainrai was due after he gave it a £17 million (HK$208 million) loan earlier this season. It has been a year of upheaval for Portsmouth. Facing debts of about £60 million, the club faces a winding-up order in the High Court on Wednesday for unpaid taxes, and could be forced into administration. The club is bottom of the league and, up to last month, players had had their wages delayed four times. The club's official website was also temporarily closed down because of payment problems. However, rather then celebrating the fact he had become the second Hong Kong businessman to control a Premier League club after Carson Yeung Ka-sing's takeover of Birmingham City, Chainrai played down his role. He said he was unhappy at being referred to as the club's owner and stressed that although he had taken over a 90 per cent shareholding in the club, he had no interest in being its owner. Chainrai said the only reason he had acted was to oust the old regime so that a new long-term owner could be found. He said his aim was merely to stabilise the club before selling it on to new owners and eventually recouping his investment. "I have zero interest in buying Portsmouth and it's completely untrue that I am the new owner of the club," he said. "As far as I am concerned, I have just confiscated the shares of the previous owners ... "It's nothing to do with controlling the club. I don't know anything about running a football club. I just love the game and that's why I've taken this action. We have exercised our right to take control of the shares, and to remove the previous owners." Alexandre "Sacha" Gaydamak and Sulaiman al-Fahim had been in control of the stricken south coast club earlier this season. Chainrai effectively saved the club from administration in October by providing Faraj with a £17 million loan to settle unpaid tax bills. Those loans were reportedly secured against the stadium, the club's future television revenue and Faraj's 90 per cent share. However, Chainrai ran out of patience after Portsmouth's failure to make repayments on the financing, despite continually extending the deadlines. He then instructed his lawyers to take action immediately. Under the terms of the loan, Faraj's 90 per cent shareholding in Portsmouth was frozen and passes to Chainrai. Chainrai denied that recovering the money he had loaned was the reason why he had been forced to act. "It's all about protecting the club's interests ... It's about finding someone who ... has the club's best interests at heart." He stressed that all he wanted now was to try to find someone who would like to invest in and take over the running of the club. He said Portsmouth's board would be very happy to speak to potential buyers. "Believe me, someone will come in and buy this club. This is Premier League football we are talking about. We are eagerly looking for an investor to come in and take over," Chainrai said. "I don't have a time frame to find a prospective buyer. I would like to have one here today if I could, but we'll just have to wait." Chainrai runs a successful consumer electronics group in Hong Kong and has British interests, including a property investment firm, Hornington Investments.

Spectators at the annual Lunar New Year fireworks display will be treated to more elaborate graphics this year, including the face of a tiger - the zodiac animal of the new year. The fireworks will start at 8pm on the second day of the Lunar New Year, on February 15, and are expected to attract 400,000 people. The 23-minute display will consist of nine sets with different themes, with each set accompanied by oriental or western music. "We spent three months testing the tiger graphics," Pyromagic Productions chief executive Wilson Mao said. "It actually looks like a cat." He said the whiskers were the most difficult part to create. He said the company had accumulated experience over the years in creating detailed fireworks graphics. The two-dimensional and symmetrical tigers are part of the second set, and will look the same from both sides of Victoria Harbour. Graphics of golden ingots and the Chinese character for "luck" are also part of the set. The organiser is also celebrating the World Expo in Shanghai. The seventh set of fireworks will bear the message "EXPO 2010". The finale will be in three colours - red, yellow and green - and will last for 45 seconds. Red represents China, yellow for the skin colour of the Chinese people and green the world. It display also symbolises a spectacular year for Hong Kong - good health, happiness and world peace. Weather conditions may affect the display, but Mao said it was a challenge they had to overcome every year. The Observatory has forecast fine weather for the night. "If we set it [tiger graphics] off 10 times, you can at least see it three or four times," Mao said. The fireworks display will cost the sponsors HK$3 million, about the same amount as last year. The music will be played through loudspeakers set up near the Cultural Centre and Avenue of Stars in Tsim Sha Tsui East, and outside the Hong Kong Convention and Exhibition Centre in Wan Chai.

Changes to the school curriculum have sparked a rise in the number of visitors to an education and careers fair, exhibitors say. Consultant Jessie Tang, of HKIES Overseas Education Centre, which represents 20 universities in Britain, said the number of inquiries from students on the first day of the 20th Education and Careers Expo was higher than last year. "They asked whether they could go straight to university after they finish the new diploma exam in 2012," Tang said. "Although they are very concerned about the new diploma qualifications we don't know the exact requirements, as British universities are still doing qualification matching [with the Hong Kong government]." Karen Cheng, a counsellor with the Introducing Australia Studies Centre, said there were more inquiries from Form Four students. But Warren Ma Siu-kwong, a director of the Cultural Link Centre, said he had fewer visitors. "You just need to study for three years for UK universities, but need four years for those in the US. So those under the new system might prefer the UK, as they can graduate one year earlier." From the 2009-10 academic year, government-run and funded secondary schools will switch to a "3+3+4" system. The old system involved five years of schooling (leading to the HKCEE examination), two years of A-levels and three years at university. The HKCEE and A-level examinations will be replaced by the Hong Kong Diploma of Secondary Education. Many visitors at the expo's first day yesterday were students and parents seeking information about studying abroad. Richard Lui, a parent of a Form Five student who will take the last A-levels in 2012, said he was worried about his daughter's chances of entering Hong Kong universities. "The first batch of diploma graduates under the new system and the last batch of A-level graduates will fight for limited university places at the same time. I think it will be very chaotic," Li said. Form Four student Kwok Chun-kue, 15, from the Immaculate Heart of Mary College, wants to study abroad to avoid the competition. "You need to fight with many people for a university place. Although the government says graduates from the new and old systems will be processed separately, I am still worried." The expo, held at the Convention and Exhibition Centre, attracted more than 500 education institutions, government departments and commercial and vocational agencies from 13 countries. It ends on Sunday. Meanwhile, the British Council's Education K Exhibition at the weekend recorded about 9,600 visitors.

Hong Kong should not cut its corporate tax rates now, Executive Council convenor Leung Chun-ying says. His remark, which came three weeks ahead of Financial Secretary John Tsang Chun-wah's release of the government budget for the next financial year, was in response to an appeal by the Hong Kong General Chamber of Commerce for a reduction of corporate profits tax from 16.5 per cent to 15 per cent. Speaking at a seminar on poverty and economic development held by the Hong Kong Council of Social Service yesterday, Leung warned against a widening wealth gap in the city. "Remember, you only have to pay profits tax if your business is earning money," he said. Citing official statistics, Leung said the wages of low-income workers, who formed 30 per cent of the local workforce, had fallen between 1996 and 2006 despite the city's per capita gross domestic product growing 34 per cent during the period. "We need to look at the whole issue of [wealth] distribution in Hong Kong. I think those people who propose cutting corporate tax rate should reflect on why this proposal should be laid out when 1.1 million people do not benefit from Hong Kong's economic growth," Leung said after the seminar. He also said he had observed a growing anti-business sentiment among citizens, which could be a result of uneven wealth distribution and a public perception of collusion between government and business. Tsang, speaking after a regional consultative session on the budget, said that the government was concerned about the wealth gap in Hong Kong. It had dedicated a high proportion of public spending to helping those in need and would continue to study ways to help alleviate poverty, he said. Meanwhile, accounting firm Deloitte Touche Tohmatsu has estimated the government will have a HK$5 billion surplus for 2009-10. Other accounting firms have said they expect a small deficit of about HK$10 billion. The government's original official forecast was for a HK$39.9 billion shortfall. But for 2010-11, Deloitte is forecasting a deficit of HK$7.5 billion. Deloitte suggested the government offer greater tax incentives for 2010-11, including a salaries tax rebate of up to HK$10,000 for individuals and deductions of up to HK$100,000 home loans principal for 10 years. For businesses, it recommended a phased reduction in the profits tax rate over three years to 15 per cent, as well as a HK$10,000 tax refund. Deloitte also called for tax incentives to foster six industries identified by Chief Executive Donald Tsang Yam-kuen.

Hopewell Holdings (SEHK: 0054) and its highway construction unit plan to invest nearly HK$12 billion in the next six years in Hong Kong and Guangdong to develop residential and commercial projects and build expressways. By 2016, Hopewell will invest HK$9.2 billion to develop properties in Wan Chai, said Thomas Jefferson Wu, the managing director of Hopewell and its subsidiary, Hopewell Highway Infrastructure (HHI). About HK$4.2 billion will go towards its Lee Tung Street project and HK$5 billion to Hopewell Centre II. The Lee Tung Street project is Hopewell's 50-50 joint venture with Sino Land. Residential and commercial properties are planned for the site, with a gross floor area of 835,000 square feet, scheduled to be completed in 2015. The initial plan for Hopewell Centre II is a conference hotel with 1,024 rooms, with a targeted completion date of 2016. In Guangdong, Hopewell plans to invest at least one billion yuan (HK$1.14 billion) in the Liede commercial property project in Guangzhou, scheduled to be completed in the second half of 2015. HHI, 70.27 per cent owned by Hopewell, will invest 1.38 billion yuan by 2012 in phases two and three of the Western Delta Route toll expressway in the Pearl River Delta. Phase 2 will connect the cities of Shunde and Zhongshan, while Phase 3 will connect Zhongshan with Zhuhai. "Even after that (investing in the expressway), HHI will still have cash," said Wu, the son of Sir Gordon Wu Ying-sheung, the chairman of Hopewell and HHI. "Perhaps there are other transport opportunities in China we might consider investing in. Both companies have cash on hand and very strong balance sheets for future investment." At the end of last year, Hopewell and HHI had a cash balance of HK$3.5 billion and HK$2.7 billion, respectively, as well as available bank credit facilities of HK$16.5 billion and HK$3.6 billion. The global financial crisis affected Hong Kong's property rental market and manufacturing in Guangdong, which in turn reduced traffic on HHI's highways in Guangdong, Wu said. Although rental income in Hong Kong softened last year, it will probably strengthen this year, and truck traffic on Guangdong's highways recovered strongly in the second half of last year. Hopewell's net profit jumped 171 per cent to HK$931 million for the six months to December, while earnings before income and tax (ebit) soared 97 per cent to HK$1.26 billion. The near-doubling of ebit was partly due to the fair-value gain of Hopewell's investment property under construction, Broadwood Twelve.

Integration between the Hong Kong and mainland economies is expected to spur more enterprises to adopt the Chinese-character suffix of the ".hk" internet domain name for their Web addresses. "We may be able to attract a larger number of applicants, including local companies and mainland firms doing business in the city, to use the suffix when the multilingual system for online addresses is introduced later this year," said Jonathan Shea Tat-on, the chief executive of the government-backed Hong Kong Internet Registration Corp. The non-profit body administers the .hk country code top-level domain name. This type of suffix denotes the location of a user, unlike the so-called generic top-level domain names such as .com, .org and .gov. Shea said there is "a huge potential" to double the total number of .hk registrations, which reached 183,231 as of last month, because "having a full Chinese-character website address represents the next logical step for companies in Hong Kong and the mainland to enhance awareness of their brand in each other's market". This development follows the decision in October by the United States-based Internet Corp for Assigned Names and Numbers (Icann), which oversees all internet domain names, to end the exclusive use of Latin scripts for website addresses and pave the way for typing Web addresses using characters from other languages, including Chinese, Arabic and Japanese. "It is our hope that Icann will give us the green light to implement this new internet address system around June," Shea said. "The backlog of applications Icann must review, however, means the go-ahead for Hong Kong could be much later this year." The city's domain name administrator plans to offer the Chinese-character registration free to all .hk users. "We see the Chinese and English .hk domain names becoming complementary to each other, fostering further growth of the internet community among the Chinese-speaking population," Shea said. It is expected that most of the Chinese-character domain name applications will be submitted by corporate brands, government departments, not-for-profit organisations and small and medium-sized enterprises. A number of early inquiries identified by the city's domain name registrar included privately held property company Sino Group and creative online exchange platform According to a survey by the China Internet Network Information Centre, more than 60 per cent of mainland internet users said they preferred to deal with addresses in Chinese characters to help search for websites.

Hong Kong Disneyland celebrates upcoming Spring Festival.

The government is moving to prevent a rejection of funds for the upcoming by- elections by including the estimated HK$159 million needed as part of the next fiscal budget for the Registration and Electoral Office. A paper by the Constitutional and Mainland Affairs Bureau to the Legislative Council says: "For the purpose of budgetary planning, provisions for conducting elections/by- elections have all along been included in the annual estimates of the [registration and electoral office's] head of expenditure." The administration would, therefore, include the by-election expenses in the budget for the office for next fiscal year, which begins on April 1. Details will be set out when Financial Secretary John Tsang Chun-wah delivers the budget on February 24. Democratic Alliance for the Betterment and Progress of Hong Kong president Tam Yiu-chung said the government's plan to include the HK$159 million in the next budget is intended to make it easier to pass. He said the party still considers the money for the by-election as "a waste" but it will decide on the voting for the budget after a meeting of legislators. But Hong Kong Federation of Trade Unions legislator Wong Kwok-kin said he will not rule out the possibility of tabling a private member's bill to delete the particular expenditure for the by-election. The Constitutional and Mainland Affairs Bureau estimates the total cost of the by- election will be HK$159 million, comprising HK$31 million for the staff, HK$3 million for publicity and HK$125 million for election expenses. It said the Registration and Electoral Office would set up over 530 polling stations in the five geographical constituencies and another 30 for registered electors who are imprisoned. The by-election was triggered after five pro-democracy lawmakers resigned last month. They said the by-election will be a de facto referendum for universal suffrage. In the paper, the bureau repeated the Basic Law does not provide for any referendum mechanism so any form of so-called "referendum" in Hong Kong will have no legal basis and will not be recognized by the government." The government also said it noted some views that "the legislation should be amended to avoid the recurrence of similar situations" and it will take into account any proposals for amending the relevant legislation during the consultation exercise for the two electoral methods of the 2012 elections.

China*: China Aerospace International Holdings, a Hong Kong-listed subsidiary of the developer of the Shenzhou VII spacecraft, said yesterday it will build a space theme park in Hainan to compete with Shanghai Disneyland. Both parks are expected to open in three to four years. "I believe our theme park will be more attractive than Disneyland," China Aerospace president Zhao Liqiang said. "There are so many teenagers and kids who love to see rockets. There are so many space fans ... in China." The space theme park will include a full-scale rocket, an aerospace botanical garden, an educational camp and entertainment facilities. It will also offer the only public access point to the launch centre being built in Hainan. The State Council approved plans to establish the Wenchang launch centre, China's fourth, in September 2007. "The theme park will be opened when the launch centre is completed, by 2013," Zhao said. "It is the first of its kind in the world to be planned and constructed together with the adjacent launch centre." The Shanghai theme park, the mainland's first Disneyland, is expected to be operational the same year. It will cover 116 hectares, the smallest yet of the US entertainment giant's five parks worldwide. The space theme park, the cost of which is estimated at less than one billion yuan (HK$1.14 billion), will be developed through the company's 65 per cent-owned Hainan Aerospace. Its parent, China Aerospace Science and Technology, which developed the Shenzhou VII spacecraft, owns the other 35 per cent. It is planned to initially host three million visitors a year, expected to expand to five million. Major revenue will come from ticket sales, with other sources of income from dining and retail sales, launch site visits and sponsorships. The theme park development is part of the Wenchang city government's proposed 20 billion yuan property-tourism project. Covering four million square metres, the project will also include housing, hotels and retail areas. Hainan Aerospace has been appointed to start pre-development work, such as resettling existing residents, site formation and planning. The company has not decided whether to invest in residential and hotel projects. China Aerospace raised about HK$581 million through a recent share placement. These proceeds will be used to fund the pre-development work, and Zhao also hinted at a possible asset injection by its parent. According to a survey last year by Horizon Group, roughly 150 billion yuan has been invested in about 2,500 theme parks on the mainland, but only 10 per cent are making a profit. Last August, Guangzhou's Shijie Daguan (World Park) shut its gates with a deficit after being in business for nearly 15 years. In 2007, Hangzhou Future World closed with 260 million yuan in lost investment. But Zhao is confident. "The Kennedy Space Centre remains profitable after 40 years of operation and still attracts more than 1.5 million visitors each year," he said. Another key factor is that the State Council has approved the development of Hainan for international tourism, with hopes of making it a popular holiday destination by 2020.

French President Nicolas Sarkozy (R) shakes hands with visiting Chinese Foreign Minister Yang Jiechi in Paris, France, Feb. 4, 2010. French President Nicolas Sarkozy met visiting Chinese Foreign Minister Yang Jiechi at Elysee Palace Thursday on bilateral ties. Bringing New Year's greetings on behalf of Chinese President Hu Jintao to Sarkozy, Yang recalled recent sound developments in the bilateral relationship. He noted that there have been two successful meetings between Presidents Hu and Sarkozy in London and New York since last year. During the meetings, the two leaders reached important consensus, providing guidance for the direction of bilateral ties. The later visits of French National Assembly Speaker Bernard Accoyer and Prime Minister Francois Fillon were fruitful, which vigorously enhanced mutual political trust and pragmatic cooperation in various areas, Yang said, adding that the momentum for China-France ties has been accelerated. The Chinese minister noted that France was an influential country in the world, and China always attaches great importance to its ties with France. China is willing to work with France to intensify high-level visits, deepen mutual political trust, adhere to the principles of mutual respect, equality and mutual benefit, take care of each other's major concerns, and expand pragmatic cooperation in economy and trade, Yang said. He said China is also willing to increase negotiation and coordination with France on major international and regional issues, and enhance the strategic significance of the bilateral ties, so as to promote progress of the China-France relationship. Welcoming Yang's visit and asking him to bring greetings to President Hu, Sarkozy noted the current state of France-China relations is sound. He said France always attaches great importance to relations with China, and highly appreciates the progress China has achieved and the role China has played in international affairs, hoping to further enhance bilateral cooperation in climate change and international finance. The president reaffirmed France's firm adherence to the one-China policy. Sarkozy said he is looking forward to attending the Shanghai World Expo, and he believes this event would be as splendid and impressive as the 2008 Olympic Games in Beijing. Previously, Yang met with his French counterpart Bernard Kouchner on Wednesday during his two-day visit to France, which is the third leg of his five-nation tour. He has already visited Britain and Turkey, and will attend a security policy conference in Munich, Germany, from Feb. 5-7.

With Beijing striving to be world-class and develop new services for foreigners and locals alike, four specialist money-changing companies will be allowed to establish outlets in the capital. But while the door has been cracked open to competition in the foreign currency exchange sector, the companies will still have to find their way in the shadow of the State-owned banks that currently dominate the sector. China's central bank and the foreign reserve authority are set to announce their approval of the four companies, bringing the total operating in Beijing that can serve both foreigners and locals, to five. Liu Dong, general manager of Beijing United Currency Exchange, told METRO yesterday her company is set to open, along with Holland-based International Currency Exchange, Beijing National Insurance Agency and Huanjiuzhou Currency Exchange. London-based Travelex is already established in the city and able to serve both foreigners and Chinese. The Beijing United Currency Exchange is also currently operating but is only allowed to serve foreign customers. With the new approval, all the companies will have equal rights. The move is part of Beijing's ambitions to be recognized as one of the world's top cities, something city officials have spoken about recently. "Beijing is set to become a world city and the opening up of personal foreign exchange businesses will help to build a good financial environment," Li Xiaohong, deputy secretary-general of the Beijing municipal government, said at the city's legislators' meeting at the end of January. "Compared to State-owned banks, these non-bank companies could provide more professional services," he said. In 2009, 13.95 million trips were made through Beijing's border control, including 7.01 million by overseas visitors. Heesco Khurelbaatar, an Australian working in Mongolia, usually completes his money transfers at Beijing's international airport. He told METRO he likes them because they are open 24 hours a day. Banks are usually closed at night. "I encountered many such outlets in Australia's Chinatown. I think more outlets in Beijing will, for sure, help travelers," he said. Observers have dubbed non-bank currency exchange companies as "7-Elevens" while domestic banks, such as the Bank of China, have been called the "Carrefours" because most of the transactions happen in the banks. "I prefer banks, since they are reliable and charge less in processing fees," said Zhang Li, a student who recently returned from Ireland. "Unless I am short of money in emergencies, I would not go to specialist foreign exchange operators." Before Beijing United Currency Exchange was granted permission to serve Chinese customers, the company had to turn Chinese customers away, Liu said. "Sometimes, Chinese people accused us of discriminating against them, because we did not do currency exchanges for them," Liu said. Liu's company was one of the largest retail foreign exchange dealers in Beijing, operating four branches at Beijing Capital International Airport and one in Sanlitun's Yashow Clothing Market. Cameron Hume, general manager of Travelex China, told METRO yesterday that foreign exchange companies only have around 1 percent of Beijing's market at the moment. However, he said their share will quickly grow. With four new competitors, Travelex China says it plans to quicken its pace of expansion. "We are now focusing on expanding our presence into downtown sites in Beijing and expect to open five-plus sites during the next 12 months in Beijing," Hume said. Travelex has around 70 staff in Beijing and a total of 110 in China. Hume said the beginning of last year was challenging due to the economic crisis, swine flu and a fall in passenger numbers at airports, but he had seen a strong rebound in business during the past six months.

China will levy initial anti-dumping duties ranging from 43.1 to 105.4 percent on US chicken products exported to China, the Ministry of Commerce said on Friday, in a move likely to further aggravate trade ties. The ministry's initial investigation showed that US companies had dumped chicken products into the Chinese market, according to the ministry's website The investigation was announced after the US imposed safeguard duties on Chinese-made tires, which China is now fighting at the World Trade Organisation. Chicken wings and feet, which are virtually worthless in the US market, are a delicacy in China. Many US poultry producers count on the Chinese market to round out their profits. Companies that appealed the finding will see duties of 43.1 percent to 80.5 percent on their products, with Tyson Foods, an active investor and lobbiest in China, getting the lowest rate. Those that did not appeal would pay duties of 105.4 percent, the ministry said. The duties begin on February 13, or Chinese New Year's Eve, thus helping ensure that prices of the popular delicacies do not rise in a Chinese market that already faces vegetable inflation.

In a major leadership reshuffle at the Ministry of Foreign Affairs, China's ambassador to the UN, Zhang Yesui, has emerged as the leading candidate to become Beijing's next ambassador to the US, officials familiar with the arrangements say. The new ambassador in Washington will have to deal with a chill in Sino-US ties, with Beijing angered by US arms sales to Taiwan and plans by US President Barack Obama to meet Tibetan spiritual leader the Dalai Lama in Washington this month. The United States, for its part, has criticised Beijing's curbs on internet freedom and what it says is an artificially undervalued yuan. Obama warned on Wednesday that Washington would take a tough line on trade with countries such as China to ensure that US goods did not face competitive disadvantages. He Yafei, who is stepping down as deputy foreign minister, was expected to replace Li Baodong as the ambassador to the United Nations in Geneva, ministry officials said. Li would then move to the UN headquarters in New York to replace Zhang.

China takes EU shoe tariff dispute to WTO - China launched an unfair trade case against the European Union yesterday, accusing the 27-nation bloc of imposing illegal duties on Chinese shoes, the World Trade Organization said.

The plane carrying giant pandas Mei Lan of Atlanta, and Tai Shan of Washington, taxis for departure for a trip to China, Thursday, Feb. 4, 2010, at Dulles International Airport in Chantilly, Virginia.

Giant panda Tai Shan back home.

Giant panda Tai Shan back home.

A tiny gold tiger sculpture is displayed in a jewelry shop Wednesday in Yinchuan in Northwest China's Ningxia Hui autonomous region. The pure gold pieces each weigh between 36 grams and 66 grams. They are on sale for 333 yuan per gram. The coming Chinese New Year is the Year of the Tiger.

Feb 5, 2010

Hong Kong*: Britain will streamline student visa application procedures for Hong Kong youngsters following an increase in the number of documents being issued. The improvements to the visa process will be introduced from February 22, said UK Border Agency international group director Barbara Woodward. The agency is responsible for controlling migration to the country. "The new system is an electronic process that only requires students to provide a confirmation of acceptance for studies reference number on their application," Woodward said. "Students will no longer have to wait for an original visa letter from their sponsor education institution before they apply." She said the new arrangement will lead to greater convenience in handling applications, but charges and processing times for the documents will remain unchanged. Britain issued more than 5,400 student visas from April to September last year in Hong Kong, an increase of 7 percent over the same period in 2008. During 2008 and 2009, there were 6,465 such visa applications in Hong Kong, a 4 percent increase on the 6,195 applications received between 2007 and 2008. It is estimated the refusal rate is about 6 percent, with most failing to get a visa because of missing documents. It is hoped that the simplified procedure will avoid such incidents. Katherine Forestier, director of the British Council's education and science services, said the inclusion of the Hong Kong Diploma of Secondary Education in the UCAS tariff point system for admission to higher education in Britain should make it easier for more Hong Kong students to go there after senior secondary school. "Competitive universities are likely to be looking for Level 4 and Level 5 applicants in HKDSE. But students with Level 3 and 4 in at least two subjects should also find suitable courses in higher education while those below Level 3 will seek other pathways, such as foundation courses," Forestier said. Many British schools are aiming to provide flexible entries for Hong Kong students. Some are proposing accepting Secondary 2 and 3 graduates into GCSE programs. Lo See, an education specialist, expects at least a 10 percent increase in the number of applications with the new HKDSE system beginning in 2012. "Some parents think it is a springboard to universities in UK because their children may study one year less compared with the system in Hong Kong," Lo said. But the increasing number of applications may not lead to fiercer competition between universities, as many have plenty of places.

Li Ka-shing, the head of Cheung Kong Holdings, was once again Hong Kong’s richest person with a US$21.3 billion fortune, according to the annual list released by Forbe. Hong Kong's tycoons are worth a combined US$135 billion, with many of its wealthiest people boosting their fortunes from investments on the mainland, Forbes said on Thursday. The top 40 richest people have added US$53 billion to their wealth over the past year, much of it due to a stock market recovery and soaring property prices in Hong Kong and mainland. Li Ka-shing, the 81-year-old head of conglomerate Cheung Kong (SEHK: 0001) Holdings, was once again the financial hub’s richest person with a US$21.3 billion fortune, according to the annual list compiled by Forbes business magazine. Forbes in November ranked Li as the 16th wealthiest person in the world when his net worth was just US$16.2 billion. Li had fared particularly well from Hong Kong’s soaring property prices. He was the only one of the city’s tycoons to make the top 25 world ranking list, which placed Microsoft founder Bill Gates as the globe’s richest person with a US$40 billion fortune. Li’s son Richard Li Tzar-kai was in 26th on the Hong Kong list with US$1.3 billion. Henderson Land (SEHK: 0012) chief Lee Shau-kee, 82, grabbed second spot with US$19 billion owing to his company’s soaring share price, the magazine said. Following were property giants the Kwok family at US$17 billion, developer Cheng Yu-tung with US$7 billion, and real estate magnate Joseph Lau at US$6 billion, the magazine said. Macau casino tycoon Stanley Ho, 88, took 17th spot with a US$2.1 billion fortune. Twenty-four people on the list bumped their net worth by at least 50 per cent from a year ago and not one grew poorer, Forbes said. The only woman on the list is Hong Siu-chu, ranked 34th with a net worth of US$1 billion. The 88-year-old co-founded Hong Kong’s Shiu Wing Steel with late husband Pong Ding-yuen. Forbes said it compiled its list based on shareholding and financial information gleaned from stock exchanges, analysts and the tycoons themselves. The combined wealth of all 40 tycoons falls short of the record US$79 billion treasure chest the magazine recorded in 2008.

Cashed-up mainlanders snapped up almost one in five luxury flats sold in Hong Kong last year, a sign of their growing economic might in the city. Research by Centaline Property Agency shows mainlanders comprised made up 18.1 per cent of buyers of flats worth more than HK$12 million last year, compared with 11.2 per cent in 2008. In 2007, 9.2 per cent of buyers in the luxury residential market were mainlanders. A luxury flat is usually defined as one worth more than HK$10 million. It was the sharpest growth in mainland purchases in six years, said Wong Leung-shing, an associate director of research at Centaline. He said the buyers had taken advantage of a sharp fall in prices. "From 2004 to 2008, mainland buyers grew only one to two per cent a year, but the growth was steady," Wong said. "The substantial increase in 2009 was due to the sharp fall in luxury property prices." Prices of luxury properties in Hong Kong plunged 40 to 50 per cent after the global financial crisis began in September 2008. "This attracted rich people from the mainland, as they caught the best time to buy. Prices of luxury properties have since surged 50 per cent to 70 per cent from the bottom and have generated attractive profit," Wong said. In the overall property market, including mass residential properties, only 5.6 per cent of the buyers came from the mainland last year, compared with 4.3 per cent in 2008. Alva To Yu-hung, the head of consulting, North Asia, at DTZ, said the loose monetary policy on the mainland was another factor contributing to the influx of mainland buyers last year. However, he expects the number of mainland buyers to drop this year as the central government tightens its monetary policies. The mainland appetite for luxury real estate in Hong Kong was evidenced by the sales at The Cullinan at Kowloon Station last year. The upmarket project attracted the highest proportion of mainland buyers among new projects in the city. Property agents said about 10 per cent of buyers at the project held Chinese passports, while a further 20 per cent held Hong Kong identity cards with Putonghua phonetic transcriptions. Henderson Land Development (SEHK: 0012) recently sponsored a mainland TV programme to promote its Beverly Hills luxury residential project in Tai Po, and Cheung Kong (Holdings) (SEHK: 0001) plans to promote Festival City, a new mass residential project in Tai Wai, on the mainland after the Lunar New Year.

Ten dishes that are the pride of Cantonese cuisine are vying for a place on the menu of China's intangible cultural heritage - with a world listing as a long-term goal. The Guangzhou Catering Service Association announced its plan to elevate the dishes to heritage status on Tuesday, with the support of the municipal authorities, saying they would become national treasures if the plan won central government approval. The 10 dishes are: Shahe rice noodle; boat congee with beef, squid and jellyfish; traditionally made rice noodle rolls; milk with ginger juice; barbecued pork bun; wonton noodle; beef offal with radish; shrimp dumpling; coconut ice cream; and water chestnut cake. Ni Hong, secretary general of the association, said the 10 dishes had been carefully selected for their Cantonese characteristics. He said they had a long history, the way they were made had been handed down by craftsmen and they still flourished in daily Cantonese life. Ni said the association's move was also bolstered by the Los Angeles Times naming fried rice noodles with Chinese chives, shrimp and pork as the champion of its 10 best recipes last year. "It thinks the best food is authentic Cantonese cuisine," he said. "And every Cantonese knows the best rice noodle is from Guangzhou's Shahe town." Shahe rice noodles were first created in the early 19th century. White in colour, broad, and somewhat slippery, their texture is elastic and a bit chewy. They do not freeze or dry well and are generally purchased fresh, in strips or sheets that may be cut to the desired width. "We had never heard that our Shahe rice noodle was so favoured and famous around the world until the American newspaper said it," Ni said. "We were shocked at first. But we felt shame in hindsight. As Cantonese, especially in Guangzhou, the capital, we have done too little to promote Cantonese culture and Cantonese cuisine." Xu Zhihua , a senior official at the Guangzhou Economic and Trade Commission, said the department was confident the dishes would soon be approved by the State Council and named as part of China's national intangible cultural heritage. "Recognition would definitely enhance Cantonese cuisine brands across the country and the rest of the world, boosting development of the industry," Xu said. "After national recognition, many Cantonese food makers expect to increase their sales networks both inside and outside Guangdong. As more people become aware of the benefits, we think the market for Cantonese culture will grow." Cantonese food, known for its light cooking of fresh ingredients, has represented Chinese culture since a wave of immigrants from Guangdong began spreading across the world, and especially the United States, in the 18th century. Guangzhou trails other regions like South Korea, which has nominated kimchi for world heritage listing. "We are already late," Ni said. "It's time to think about how to meet the requirements for listing under the UN Convention for the Safeguarding of Intangible Cultural Heritage."

European aircraft maker Airbus said on Thursday that it had signed a memorandum of understanding (MOU) to sell six Airbus A330-200 aircraft to Hong Kong Airlines.

Abusive, high-handed doctors had better watch out. Physicians who swear or shout at their patients or continuously ignore repeated inquiries could now be guilty of professional misconduct. That is the provision under an amendment to the Medical Council of Hong Kong's code of practice. However, there remains the problem of proving such behavior. A patients' rights spokesman said the code will be difficult to enforce unless the patient carries a tape recorder or has a witness. The new code was announced after a council meeting yesterday following a spate of complaints about the attitude of doctors. Ethics committee chairman Tse Hung-hing said the question of verbal abuse of patients had not been seriously handled by the council in the past. Under the new guidelines, doctors who use offensive language or speak disrespectfully to patients may be liable to disciplinary action. "It could be a very subjective matter," Tse admitted. "However, if their peers also regard their attitudes and communication methods as unacceptable, they could be found guilty of misconduct. For instance, if a doctor completely and deliberately ignores a patient's repeated inquiries about the treatment, this can be seen as professional misconduct." Of the 493 complaints received by the council last year, 45 were about doctors' attitudes. Council chairwoman Felice Lieh Mak said the code does not specify what behavior amounts to misconduct. The new guidelines are not intended to encourage patients to complain, she added, but to remind doctors of the importance of their behavior and attitude at work, and not only of their standard of medical service. Patients and doctors generally supported the principle behind the move. Patients' Rights Association spokesman Tim Pang Hung-cheong said he does receive complaints about doctors' attitudes. However, he said it will be difficult for patients to substantiate their complaints unless they record the conversation or can produce witnesses. "Rarely will patients carry a recorder to see a doctor," Pang noted, while agreeing that, on occasion, the supposed insult may just be a matter of miscommunication. "In one case, a patient felt his doctor was being offensive when he was told his condition was so serious there was no treatment." Medical-sector legislator Leung Ka- lau said most doctors are gentle and caring. But he too warned of a possible gray area in the new code as judging a person's attitude is subjective. "Different people have different perceptions and feelings," he said. "A doctor who is confident may be seen as arrogant."

Four people in northern China have been arrested amid a new crackdown on milk products tainted with melamine - the chemical responsible for six deaths in 2008. Hong Kong authorities reacted quickly, and say all imports are safe and tests satisfactory. The four people arrested were involved in the dairy industry in Weinan, Shaanxi province, and face charges of "manufacturing and selling food that does not meet hygiene standards," Xinhua News Agency said. Three were officials with Lekang Dairy Company, which had previously been blacklisted by the authorities over the scandal involving melamine-laced milk products. The scandal was blamed for the deaths of at least six babies. More than 300,000 fell ill, mainly with kidney problems. The suspects associated with Lekang Dairy were identified as general manager Zhang Wenxue and vice general managers Zhu Shuming and Tong Tianhu. The fourth suspect was Ma Shuanglin, a milk powder dealer. The report came a day after state media said the mainland had launched a new probe into food safety after the discovery that melamine-tainted products had found their way back on to the market. The national food safety office has sent eight inspection teams to check products in 16 provinces, an unnamed official said. The sweep, which started on Monday, comes after milk products tainted with the industrial chemical melamine were pulled from shelves in Shanghai and the provinces of Shaanxi, Shandong, Liaoning and Hebei, Xinhua said. Some had been recalled in the previous scandal and repackaged. "In some places, the work to lock up and destroy milk powder from the 2008 scandal has not been thorough enough," the official said. The case was especially troubling because Shanghai Panda Dairy Company was one of the 22 dairies named by the mainland's product safety authority in the 2008 scandal. Shanghai Panda has exported products to Hong Kong and 14 countries. ParknShop and Wellcome said they had not imported milk products from the blacklisted mainland companies. Meanwhile, a spokesman for Hong Kong's Centre for Food Safety said yesterday said from 2007 to last year, it has tested more than 680 milk powder samples for melamine and other microbiological and chemical agents. All samples were satisfactory.

Tony Chan is driven from his home by police yesterday, a day after a judge ruled that the will he claimed had been written by Nina Wang, leaving him her fortune, was forged. Fung shui master Tony Chan Chun-chuen was being questioned by police last night after being arrested on suspicion of forging a document. His arrest came a day after a judge ruled that a will Chan claimed had been written by tycoon Nina Wang Kung Yu-sum, leaving him her multibillion-dollar fortune, was forged. Officers seized documents and a computer from Chan's home in Gough Hill Road on The Peak. Chan was taken to The Peak police station and later transferred for questioning at police headquarters in Wan Chai. Afterwards, he was taken to Cyberport, where his company is located. He had not been charged. His wife, Tam Miu-ching, was also taken in, but left police headquarters around 9.15pm. Officers from the commercial crime bureau raided Chan's home about 15 minutes after he had returned there at about 3.30pm. They spent about three hours inside. The 50-year-old and his wife were then driven to The Peak police station in two unmarked police vehicles. The officers had a search warrant and acted after seeking advice from the Department of Justice, according to a senior officer. "Our investigation is focusing on the will that was ruled as a forgery in court," the police officer said. Chan had earlier left home in a black seven-seater vehicle at 1.15pm, with his bodyguards following in another car. He was followed by a group of journalists. He arrived at the Aberdeen Marina Club at 1.30pm. Without identifying anyone, a police spokesman said last night that a 50-year-old man surnamed Chan had been arrested on suspicion of forging a document. On Tuesday, Mr Justice Johnson Lam Man-hong handed down his 326-page judgment on the sensational battle between Chan and the Chinachem Charitable Foundation. He concluded that the will Chan claimed Wang had signed on October 16, 2006, was forged. The judge ruled in the Court of First Instance that Chan was not a credible witness and many things he said in court were "tailored to suit his convenience". Chan claimed that Wang - who was the richest woman in Asia when she died in 2007 aged 69 - had bequeathed her estate to him because they had been lovers. Lam affirmed the validity of the will Wang made on July 28, 2002, as her last will, which he found truly reflected her long-held intention to leave her estate to her foundation. Confronted later by journalists outside his solicitor's firm in Central, Chan vowed to appeal and insisted he had not forged the will. The 2006 will is being kept by the court and police will have to apply to obtain it.

Police officers in protective gear yesterday dig through the rubble of the building that collapsed last Friday in To Kwa Wan. Building officers inspected the tenement in To Kwa Wan twice in November and December before it collapsed but identified no structural risk, the Buildings Department said. The department's revelation came as a woman, purported to be the owner of the collapsed block at 45J Ma Tau Wai Road, said she had invited officers to check the block before removing illegal structures last month. A woman, identifying herself as Chak Oi-luen, who, according to the Companies Registry, owns block J through two companies, told Next Magazine that she wanted to apologise to families of those killed in the collapse of the 55-year-old, five-storey building. Block J became rubble in less than 20 seconds last Friday, killing four people and leaving dozens homeless. Chak said she had relied on an accountancy firm and two estate agencies to take care of units on the top four floors. She said she was ignorant of how the units were managed, including how they were subdivided. The ground-floor shop was under her charge. After building officers examined her block, she hired a contractor named Chu to remove illegal structures and renovate the ground-floor shop unit last month. The building collapsed during the fourth day of Chu's work. But Chu had said he had not removed any load-bearing columns, the report said. Four load-bearing columns in the shop were "broken" before renovation started, he said, adding that he removed only an air-conditioning vent and boards. The South China Morning Post (SEHK: 0583, announcements, news) yesterday went to the Ho Man Tin home address of Chak Oi-luen, as stated in the Companies Registry. A young woman answered the door but denied Chak lived there and said no one there was in charge of the block that had collapsed. Wai Wing Construction Decoration, which Chak said was Chu's company, could not be located. The firm is not in the Companies Registry, nor is it on the list of the Buildings Department's "authorized persons" who can carry out building works. The department confirmed that officers had been sent to inspect 45J Ma Tau Wai Road in November and December.

Prince Max von und zu Liechtenstein says the need for offshore banking and diversification is now more obvious. The Liechtenstein prince would prefer to discuss his country's pivotal role in the global economy than the tax scandals that spread around the globe and touched Hong Kong in 2008. "The story is becoming very, very old and dated," said Prince Max von und zu Liechtenstein, the chief executive of LGT Group, during an interview in Hong Kong. "We [are] continuing our expansion strategy here and we are in a better position than ever to do that." Liechtenstein and LGT, the bank owned by the country's royal family, have been stuck in the headlines since an ex-employee absconded with client data and sold it to German tax authorities in 2008 for a reported €5 million (HK$54.4 million). The information netted hundreds of suspected tax cheats, including the head of German logistics giant Deutsche Post, who resigned under pressure in February 2008. Prince Max was also caught up in investigations after authorities accused him last year of dodging tax obligations connected with LGT during brief stays in Germany. Germany is said to be in the market for more stolen financial data and may be nearing a deal to pay €2.5 million for information on suspected tax cheats using Swiss banks. Liechtenstein, along with 30 other countries, was given an ultimatum last year by the United States and major European countries to make its banking system more transparent or risk being considered a tax haven. Hong Kong was reportedly considered for that so-called "grey list" until China intervened and insisted it not be named. "The pressure has come and risen very rapidly, and essentially all offshore locations globally have felt it," Prince Max said. "But overall, the need for offshore banking and the need for diversification after this financial crisis have become more obvious again." Liechtenstein returned to the good graces of tax enforcers after it reached agreements with multiple countries to make its banking system more transparent. "We are a small country, we are agile and we are quick, and we have probably reacted a little faster than some of the others," Prince Max said. "We have tried to be creative and take advantage of the changed environment and not just suffer from it." The US and other major countries facing historic budget deficits have combed through financial centres across the globe, hunting for unclaimed tax revenue that could refill their coffers. The dragnet widened after UBS reached a US$780 million settlement with Washington over charges of aiding tax evasion, and investigations showed that several of the Swiss bank's convicted cheats had hidden money in Hong Kong-based dummy corporations. The US is currently pushing through legislation that would attempt to plug the holes by allowing it to impose unprecedented oversight over foreign banks with US account holders. It has also beefed up the Internal Revenue Service, with 800 new agents tasked for overseas enforcement. Hong Kong has tried to take a similar tack to Liechtenstein. Lawmakers passed an amendment to the Inland Revenue Ordinance last month that could allow authorities to swap information on expatriates' tax liabilities with their home governments. The prospect of global oversight over financial data challenges the private banking model that emanated from the Swiss Alps centuries ago. But traditional banking centres can still move from strength to strength by leveraging their expertise and stability, said Prince Max. "Look at the rest of the world and you see much less political and economic stability," he said. "A lot of people in Iceland would have been very happy if they had put some of their money into Swiss francs." Meanwhile, LGT has remained profitable through the turbulent times. The bank recorded 94 million Swiss francs (HK$694.37 million) in net income in the first half of 2009, down 24 per cent from 2008. It has about 200 employees in Asia, split between Hong Kong and Singapore. The European nation sandwiched between Switzerland and Austria is one of the world's smallest countries in terms of area and population. It is only twice the size of Hong Kong Island and has fewer than 50,000 inhabitants. Liechtenstein is a highly concentrated financial services centre. It has nearly twice as many registered companies, foundations and trusts as it does inhabitants, according to an International Monetary Fund report from 2008. However, an estimated 90 per cent of the companies were not considered commercially active.

Painful journey but no regrets for a patriot - Lo Hoi-sing 1949-2010 - Loving one's country can be a painful exercise if the experience of Lo Hoi-sing and his father is anything to go by. The native son of Hong Kong grew up in a patriotic family; his father Lo Fu was a left-leaning journalist and former chief editor of the now-defunct New Evening Post. He established extensive trading links with the mainland and built up contacts with officials, yet he would end up in jail for helping mainland dissidents flee. Last night, about 300 people attended a memorial service at the Universal Funeral Parlor in Hung Hom......

Among them were former lawmaker Lau Chin-shek, former chairman of the League of Social Democrats Wong Yuk-man and Assistant Director of Broadcasting Tai Keen-man. Like many children of prominent leftist figures, Lo entered the Guangzhou Institute of Foreign Languages in 1965 after graduating from the pro-Beijing Pui Kiu Middle School. He started his long career in China trade in 1970 when he joined a trading company in Guangzhou. He was appointed chief representative of the Hong Kong Trade Development Council's (TDC) Beijing Office in 1986. Lo was effectively Hong Kong's top man on the mainland as the council was the only body linked with the Hong Kong government at the time that had a presence north of the border. The Hong Kong government did not set up its Beijing office until 1998. Last year Lo said: "At that time, we handled a lot of cases of people seeking assistance when they faced difficulty while working or travelling on the mainland, such as loss of their identity documents." In his years stationed in Beijing, Lo found time to visit his father regularly; Lo Fu was detained in Beijing from 1982 to 1993 for spying for the United States, but was allowed to return to Hong Kong in 1993. In January 1989, Lo Hoi-sing resigned from the TDC and set up in business, using the personal contacts he had built up with mainland officials and businessmen. But the pro-democracy movement in 1989 and the June 4 crackdown changed Lo's life forever. "I still pinned some hope on China before the Tiananmen Square crackdown. But it was totally unacceptable that the Chinese government fired on its own people." He took part in a risky operation soon after the crackdown - helping dissidents flee the country. His mission began when he helped mainland writer Lao Gui, who wanted to flee, get in touch with the Hong Kong Alliance in Support of Patriotic Democratic Movements in China. Lo was also asked by John Shum Kin-fun, a film director and co-founder of the alliance, to help find the whereabouts of dissidents and pass them messages. The alliance financed Operation Yellow Bird, which smuggled students and intellectuals overseas. At the height of the operation, in 1989 and 1990, more than 100 rescue missions were mounted. Prominent dissidents who used the "underground" route to flee included protest leaders Wuer Kaixi and Chai Ling. Lao escaped to Britain and asked Lo to help Chen Ziming - a prominent dissident who was branded the "black hand" organiser of the pro-democracy movement - to flee the country. Lo passed on the message to the alliance and met a friend of Chen in Guangzhou in August 1989. But he was arrested at the Lo Wu checkpoint on October 14 that year, a day after learning the attempt to rescue Chen had failed. Lo was sentenced to five years' jail in Guangdong in 1990. He was freed on parole in 1991 after then British prime minister John Major requested Lo's release during a visit to China that year. After his release, he found it impossible to return to the business world as no company in Hong Kong was willing to hire him because of his conviction. Lo, who worked in several media organisations in the ensuing years, said he had no regrets. "But in hindsight, the alliance's rescue actions were quite unorganised. They even didn't tell me on the eve of my arrest the timing of their actions," he said. Lo's home-return permit was confiscated in 1993 and he made six attempts to apply for one. He was finally issued with a 10-year permit at the end of 2005 with the help of a friend. He was diagnosed with leukaemia in the same year. Lo, 61, died in Queen Mary Hospital last month from the combined effects of a lung infection, diabetes and a weak immune system. He is survived by his wife, a daughter and a son.

China*: China launched an unfair trade case against the European Union on Thursday, accusing the 27-nation bloc of imposing illegal duties on shoes made in the country, the World Trade Organisation said. The dispute concerns an EU decision in December to extend trade charges on leather shoes made in Vietnam and mainland by 15 months to protect European shoemakers. Mainland has complained about the antidumping duties, which it says are protectionist and damaging to free trade. European importers and retailers had also called for an end to the charges, saying they cost shoppers millions of euros each year. Documents outlining mainland’s case, which Vietnam did not participate in, weren’t immediately available. Its official complaint initiates a 60-day consultation period, after which Beijing can ask the WTO to establish an investigative panel. If the WTO rules against Brussels, it can authorise mainland to target European goods with higher tariffs or other penalties in retaliation, though cases generally take years to reach that point. The European Union introduced the trade charges in October 2006, claiming European producers were being harmed because mainland and Vietnamese rivals were illegally selling shoes below cost in Europe. However, shop owners and some shoe brands say they are the real victims because the charges forced them to pay more for the vast number of shoes now made in mainland. The European Footwear Alliance – which represents Timberland, Ecco, Hush Puppies and Adidas – said last year that the prospect of the charges staying in place until 2011 “will cost European consumers and businesses hundreds of millions of euros” and generate €1 billion (HK$10.8 billion) in tariffs. It said the move would not help Europe’s struggling shoemakers because shoes from mainland and Vietnam were now being replaced by imports from other emerging countries, meaning the tariffs wouldn’t help Europe recoup lost manufacturing jobs. EU officials say mainland is guilty of “uncompetitive behaviour”, causing significant harm to EU manufacturers, which employ 260,000 people in Europe. The charges add between 9.7 per cent and 16.5 per cent to the import price of mainland shoes and 10 per cent to Vietnamese shoes. But the EU says the extra fees haven’t hiked consumer prices or damaged distributors’ “healthy” profits, noting that the price jumps less than €1.50 for shoes that sell for €50. That’s because the average import price is €9.

Beijing dismissed US threats to get tough on trade and exchange rates to ensure American goods are not disadvantaged, saying on Thursday that its currency was at a reasonable level. US President Barack Obama said his administration was pushing China to enforce trade rules and further open its markets, adding to a range of issues weighing on relations between the world’s biggest and third-biggest economies. A Foreign Ministry spokesman in Beijing responded by saying the yuan was already at a reasonable level, and that China did not deliberately pursue a trade surplus with the United States.

Sales reports from major automakers, including GM and Toyota, suggest the current year is shaping up to be another boom year for car sales in China, the world’s biggest vehicle market.

Yum Brands, the company that owns the Taco Bell, KFC and Pizza Hut chains, said on Thursday the strength in mainland sales kept its worldwide operating profit flat in the fourth quarter even as its US profit fell. Riding strong overseas growth, especially in China, restaurant operator Yum Brands posted a 6 per cent gain in fourth-quarter profit overnight on Wednesday, making up for lower US sales across its leading brands. The company that owns the Taco Bell, KFC and Pizza Hut chains said the strength in mainland kept its worldwide operating profit flat in the quarter even as its US profit fell 23 per cent. Yum’s operating profit in mainland rose 24 per cent for the fourth quarter and 23 per cent for the year, adjusted for currency fluctuations. Sales at US Taco Bell, KFC and Pizza Hut restaurants that have been open more than a year fell for the quarter. The figure – a key indicator of a restaurant operator’s fiscal health – fell 5 per cent at Taco Bell, 8 per cent at KFC and 12 per cent at Pizza Hut. “It’s a challenging economic environment,” Yum spokesman Jonathan Blum said. Across Yum’s US operations, the figure fell 5 per cent for the year. Many US restaurant chains have faced tougher competition and falling sales during the recession as consumers cut back on eating out. Even in mainland, sales at established restaurants slipped, as it did in Yum’s separate international division for the quarter. Still, Yum surpassed US$1 billion in overall full-year profit for the first time in its history, Blum said. As well as strength overseas, Yum has benefited from rapid growth in the number of restaurants it operates overseas. Looking ahead, Yum predicted earnings-per-share growth of at least 10 per cent this year. Chairman and CEO David Novak said the company’s opening of new stores overseas will help it grow and compensate for slowing sales at restaurants that have been open at least a year. Larry Miller, a restaurant analyst with RBC Capital Markets, said the soft sales figures were “concerning”, but Yum’s profit growth reflects the strength of its diversified business, he said. Edward Jones analyst Jack Russo said the figure’s decline at Taco Bell – Yum’s “stalwart” in the US – shows the challenge the company faces. “They need to get the sales trends moving in the right direction, and that’s hard to do in the restaurant industry right now,” he said. For the quarter that ended December 26, it earned US$216 million, or 45 cents per share. That’s up from US$204 million, or 43 cents per share, a year earlier. Excluding several one-time items, the company earned 50 cents per share for the quarter, up from 46 cents per share. Its quarterly revenue fell 1 per cent to US$3.37 billion. On average, analysts polled by Thomson Reuters, who generally exclude one-time items from their estimates, expected the company to earn 48 cents per share on revenue of US$3.34 billion. For the full year, the company earned US$1.07 billion, or US$2.22 per share, compared with US$964 million, or US$1.96 per share, in the prior year. Excluding several one-time items, the company earned US$2.17 per share for fiscal 2009, up from US$1.91 the prior year. Analysts expected Yum to report profit of US$2.16 per share for the year on revenue of US$10.8 billion. Yum opened a record 509 restaurants last year in mainland and 898 in its international division. Sales at its restaurants in mainland that have been open more than a year declined 1 per cent for the year and 3 per cent for the fourth quarter. But Yum’s margins in the country increased for the year and fourth quarter, mainly due to lower commodity costs.

Beijing’s Olympic aquatic centre will be reborn as a water park with slides and a wave machine, state press said Thursday, as the city struggles to prevent its 2008 Games venues becoming white elephants. The revamp of the Water Cube, where superstar Michael Phelps swam to eight Olympic gold medals and which is famed for its distinctive bubble-wrap skin, will cost 200 million yuan, the China Daily reported. The park will include seven-storey slides, a wave machine, shopping arcades, cafes, and performance stages when it reopens in July, the report said.

Mainland environmentalists have taken on the fight against big polluters by directly appealing to consumers not to buy products made by those manufacturers. An open letter jointly issued yesterday by 34 mainland environmental non-governmental organisations lists 19 food, beverage, car and electronics brands produced by 21 companies, which they say should be blacklisted. "China needs consumers to use their purchasing power to stop pollution," it said. The Green Consumer Choice campaign began three years ago to enlist public support in the country's uphill battle against pollution. "Consumers may encourage companies to save energy and cut emissions by examining the products manufactured by non-compliant factories. This is consumers' green choice," the letter stated. The appeal comes amid widespread disappointment over the government's anti-pollution drive, which environmentalists said had yet to control the degradation across the mainland. Despite Beijing's claims of progress in cutting water and air pollution, billed as the country's chief contribution to the global fight against climate change, the mainland has seen an increasing number of oil spills, toxic metal leaks and subsequent disputes and demonstrations. Ma Jun , of the Institute of Public and Environmental Affairs, said that although mainland consumers suffered from pollution, they had yet to use their increasing sway to help rein in unruly polluters. "This lack of consumer reaction sends polluting companies a distorted market signal, implicitly encouraging them to lower their environmental standards to gain market share," he said. "It is essential to encourage the public to use their numbers to influence polluting companies." The list includes subsidiaries of multinationals as well as producers of some of the best known brands, such as telecommunications giant Motorola, electronics manufacturer Philips, Tsingtao beer, Mengniu Dairy (SEHK: 2319) and Shineway (SEHK: 2877) meat products. Ma, a key organiser of the campaign, said his group was not against any particular brands or companies. The firms were selected from hundreds of polluting factory companies listed on the China Water Pollution Map, a website run by Ma, which collected information from environmental authorities and mainland media reports. "We have chosen some big, well known enterprises to raise more public attention and push forward environmentally friendly consumption," he said. The letter stated the companies had been targeted because they violated mainland environmental laws in the past two years in discharging hazardous pollutants. The campaign also called on domestic and international enterprises to make environmental information, such as the discharging of key pollutants, more transparent. More than 20 green NGOs issued a similar appeal in 2007, urging the public to avoid buying more than 20 brands of food, cars and electronic goods. "Our previous campaign achieved results, and we received positive feedback from blacklisted companies, which emphasised consumers' influence on enterprises," Ma said. The campaign has been praised by the Ministry of Environmental Affairs, the country's top watchdog, as a timely move in helping the government track down polluting firms. Ma said the institute would update its list every few months.

Technicians equip solar energy panels on the China Pavilion for 2010 World Expo in east China's Shanghai Municipality, Feb. 3, 2010. More than 80% of Shanghai World Expo Site is lit with energy-saving LED lights to highlight the China's largest model district of solar cells application. About 60% to 70% of the carbon dioxide emission is to be set off as electric, super capacitor and hydrogen vehicles are put into use as well during the expo, according to experts.

The photo taken on Feb. 3, 2010 shows the Sun Valley of the Expo Axis equipped with LED lights in 2010 World Expo Site in east China's Shanghai Municipality. More than 80% of Shanghai World Expo Site is lit with energy-saving LED lights to highlight the China's largest model district of solar cells application. About 60% to 70% of the carbon dioxide emission is to be set off as electric, super capacitor and hydrogen vehicles are put into use as well during the expo, according to experts.

Photo taken on Feb. 3, 2010 shows Asian pavilions in the Shanghai World Expo Park in east China's Shanghai Municipality. The Asian pavilions of the 2010 Shanghai World Expo have been constructed completely at present.

Workers walk on the roof of the Pavilion of the United Arab Emirates in the Shanghai World Expo Park in east China's Shanghai Municipality, Feb. 3, 2010. The Asian pavilions of the 2010 Shanghai World Expo have been constructed completely at present.

Photo taken on Feb. 3, 2010 shows the Japan Pavilion in the Shanghai World Expo Park in east China's Shanghai Municipality. The Asian pavilions of the 2010 Shanghai World Expo have been constructed completely at present.

The president of Yale University says China's top universities will rival the elite ones in the United States and Britain in 25 years, a week after Premier Wen Jiabao pledged to make the country's universities "world class". In a Guardian interview published on Tuesday in London, Dr Richard Levin said the fact that Beijing spends 1.5 per cent of its gross domestic product on higher education every year to propel its best institutions may narrow the gap in a generation's time. He also said he does not regard the rise of Asian universities as a threat and criticised most mainland universities for lacking the necessary multidisciplinary breadth and the cultivation of critical thinking - prerequisites for a university to earn a worldwide reputation. Beijing has vowed to turn the nation's colleges into world-class ones since 1998 through market-oriented reform of the tertiary education sector. But that campaign has crumbled amid continued reports of corruption, widespread plagiarism, plummeting quality and complaints from employers that colleges did not prepare graduates to join the workforce. Wen told a conference in Beijing last month that a lack of independent thinking and freedom of speech, rather than a shortage of money, had impeded universities. "Only independent spirit makes good universities," he said. "[The current] stereotyped development method doesn't work. Universities should be given decision-making power in administration and curriculums." Universities are still required to strictly follow the government curriculum, which includes Marxism and Deng Xiaoping theories. Although universities say they have tried to encourage critical thinking, undergraduates who express different political standpoints are either given counselling or are punished. Professor Shi Yigong , the dean of the School of Life Sciences at Tsinghua University, condemned depriving students of free thinking. He said it made colleges tedious. "[Overseas] universities are always the most creative places, filled with academic contention, but China's rigid system has long hindered undergraduates' creativity," Xinhua quoted Shi as saying at the Beijing conference. Dr Zhu Qingshi , the president of South University of Science and Technology in Shenzhen and an academician at the Chinese Academy of Sciences, said mainland universities have a long way to go to become world-recognised institutes. "A world-class university is neither about hardware nor grades given by educators, but whether it has accelerated the world's general advancement," he said. "It has to help cultivate the public, and its graduates have to be well recognised by society. Elite universities always give an impetus to the world's development." One telling factor could be the story of a US$9 million contribution last month. A Chinese businessman who attended both Renmin and Yale universities made a donation to the latter, saying the educational system at Yale, one of the famed Ivy League schools, had "changed his life". His decision to not donate to any Chinese university has been regarded as a silent protest against the mainland's tertiary educational system. Many internet users have said mainland schools are not worthy of such largesse, as the donation may go straight into corrupt school officials' pockets. In Hubei province , nearly one-third of the higher education institutions had been hit by corruption scandals, state media reported. More than 26 principals or directors from 19 universities and colleges in the province were arrested for taking bribes in the past 10 years. Universities were permitted to expand their enrolment massively from 1999. This led to large-scale construction of new facilities and campuses, which have proven tempting targets for school officials looking to skim a little off the top.

Changing tastes - Chocolate makers have their sights set on the mainland but will need the right recipe to win over Chinese customers - For any true chocolate lover, the Chocolate Wonderland theme park that opened last week in Beijing is a criminal waste of good cocoa. About 80,000 kilograms of imported Belgian chocolate has been hand-sculpted into a Willy Wonka world with Chinese characteristics. There are hundreds of chocolate terracotta warriors, a life-sized chunk of the Great Wall, Buddha figurines, a fudgy-looking laptop, a Prada bag and a life-sized BMW. However, it will all be thrown out once the park closes in April. Not a single piece will be eaten. Mainlanders, however, are unlikely to feel the loss: most have yet to acquire an appetite for chocolate. On average, each Chinese person consumes about 90 grams of chocolate per year, according to market research firm, Euromonitor. That is tiny compared with about 5kg consumed per person per year in the US and 10kg in Switzerland. Chocolate companies are wrestling against culture, history and taste, trying to turn mainlanders into chocoholics. While it may be a struggle, there are strong signs that the younger generation of Chinese is turning sweet on chocolate. Beijing Artsource Planning, the firm behind Chocolate Wonderland, hopes to use the theme park to drum up domestic demand. Their sponsors include Italian firm Ferrero and Swiss chocolate maker Lindt. The first hurdle may be creating a chocolate to suit the Chinese palate. "It's a delicate balance finding the right recipe," says Jean Marc Bernelin, a technical adviser for top-grade chocolate maker Barry Callebaut, of Switzerland. Mainlanders enjoy Lunar New Year treats such as candied lotus seed and kumquat but it seems they prefer their chocolates less sugary. "They don't like it when it's too sweet, and they don't like it when it's too bitter," Bernelin says as he cooks up chocolate for visitors at the theme park. "So you need to find the right balance, which is not so easy." Barry Callebaut believes it can come up with the goods. In 2008, it moved its Asian headquarters to Shanghai from Singapore and opened a chocolate academy in the city of Suzhou, just south of Shanghai. The mainland has a sweet tooth, it's just not as sweet as the West, says Jennifer 8 Lee, author of The Fortune Cookie Chronicles: Adventures in the World of Chinese Food. "Chinese people don't like things that are too sweet ... even in America, you'll see Chinese bakeries creating cakes that are lighter and less sweet than American cakes," she says. "Refrigeration came late to the Chinese culinary tradition ... you see a lot more sour, pickled, dried sweets in China (suan mei, or sour plum, for example), to keep them from spoiling." Several visitors to Chocolate Wonderland say they prefer dark chocolate because it isn't so sweet. "I don't eat chocolate often, maybe once a month," says Wang Yantong, a 26-year-old woman from Beijing. "I like black chocolate. It tastes better than milk chocolate. Milk chocolate's too sweet." Health is another reason why dark chocolate may become a winner on the mainland. "I like dark chocolate because it's better for your body. It's good for your heart, isn't it?" says Qiao Qingping, 40, who brought her 13-year-old daughter along to the theme park. Chao, who wants to convince consumers that chocolate is a healthy food, has his work cut out. ("It's only the other things that are added afterwards that make it unhealthy, for example, sugar," he says.) But greater health knowledge and concerns about obesity among consumers may mean a greater resistance to the sweet temptation. Mainlanders have long favoured savoury snacks. Convenience stores are packed with salted fish snacks, pork jerky, sour plums and dried fruit. And belief in the traditional concept of balance and moderation in diet still runs deep. "Even though I may want to eat more chocolate I'll control myself," says Li Songlin, a 28-year-old visitor to the theme park. "This is part of our Chinese culture, we shouldn't eat too much of one thing." It may be that chocolate has yet to gain popularity on the mainland simply because what's on offer just isn't good enough. "You don't really have quality chocolate in China," says Beijing-based food critic Eileen Wen-Mooney. "[In the US] you have so many different kinds of chocolate. But here great chocolate is simply not available. The one they have is very waxy. I think Chinese people would love chocolate if there was any decent stuff in the shops." But industry veterans such as Lawrence Allen suggest the pattern is changing. "The little emperors that have grown up eating chocolate, I would say their consumption pattern is probably not that far away from other people around the world," says Allen, a former senior executive of Hersey's and Nestle's mainland operations. Market research bears out his view. Sales of chocolate confectionery grew 7 per cent last year to 7.7 billion yuan (HK$8.8 billion) - according to Euromonitor - higher than the global average. Chocolate also performed better than other confectionery on the mainland. The research firm suggests this is in line with the growing disposable income of the urban youth. With increasing advertising and improved distribution networks, chocolate is reaching more shops in more cities. Allen says companies have battled for the past 10 years over brand domination. Effem (which is owned by Mars), Nestle and Ferrero led sales in 2008, according to Euromonitor. Mars' Dove bar is one of the best selling chocolate bars on the mainland. With Dove, Mars got in early and used the best chocolate in its stable, says Allen. Ferrero, on the other hand, owes its success to "well-heeled Hong Kong businessmen" who brought lavish gifts including boxes of Ferrero Rocher to the mainland in the 1980s to seal business relationships, Allen explains in his book Chocolate Fortunes. This gave Ferrero the status of a luxury gift that it still enjoys today. The idea that they need to make a different kind of chocolate to suit Chinese tastes is rubbish, says Allen. Domestic producers have not been able to compete because consumers view chocolate as a foreign luxury item and favour overseas brands. Moreover, the production of quality chocolate is cost intensive and difficult to copy. With foreign-owned brands dominating the market, chocolate is prohibitively expensive for many people. Dove bars retail at about seven yuan each - about the price of a bowl of noodles. Still, it might simply be a matter of time. The West has had several hundred years of history with chocolate compared to a couple of decades for the mainland. And as Starbucks managed to convert tea-drinking Chinese to coffee, mainlanders may yet swap their salted fish snack for a Snickers bar. "They convinced Chinese people to drink milk, didn't they?" says Lee. "If they could convince the Chinese that chocolate is a luxury product, they could get people to buy it." And as with other ventures, chocolate companies are agog at the potential market of 1.3 billion customers. "The market in China is very big. Even if Chinese people never eat as much as Europeans, if you just double the amount of chocolate they eat per person now, that's going to be a big effect," says Chao.

Feb 4, 2010

Hong Kong*: The Hong Kong Monetary Authority warned yesterday there is a high risk of asset bubbles forming in the city owing to massive capital inflows amid a low interest rate environment. "The global low interest rate environment or the quantitative easing cannot go on forever," said chief executive Norman Chan Tak-lam. "It's hard to predict the timing of exit strategies [that governments will take on stimulus measures], but [governments] will definitely exit." As governments do so, Chan expects interest rates to go up and capital flows to reverse. Chan said a consequence of that may be great fluctuations in asset prices, worsening financial instability. But he also noted that the pressure from capital inflows may persist, if equity fundraising remains active and US interest rates remain low. Chan said a total of HK$640 billion flowed into Hong Kong in the 15 months to the end of last year. Companies got more than HK$500 billion of this through the stock market. "Most of the HK$340 billion mainland companies raised from public offerings hadn't been exchanged into the yuan or foreign currencies by year-end," Chan said. "But these companies have their main business in the mainland, so we expect them to remit their money there." Bank of East Asia (0023) chief economist Paul Tang Sai- on said part of the 9.5 trillion yuan (HK$10.8 trillion) in new loans mainland banks made last year flowed into Hong Kong. "Last month the central government was intent on tightening money supply and previously raised funds may be transferred back to the mainland to meet capital needs" Tang said. "As interest rates surge, the costs of investment will rise, dragging down local and Asian asset prices." DBS Bank (Hong Kong) senior investment strategist Daniel Chan Po-ming said it is uncertain whether mainland firms will remit funds or invest them overseas as bubbles form in both the property and stock markets. Local securities have already seen a huge correction, but homes are still not easily affordable. Chan said home transactions eased to 9,000 last month, from more than 11,000 for each of the five months to September. The proportion of mainland homebuyers has been rising steadily, with some [people in the property sector] believing they account for 10 percent of the HK$400 billion worth of property transactions made last year, he said. Chan said the HKMA has reminded banks to be careful with property valuations and borrowers' debt servicing ability in assessing loans. Home buyers take into account their ability to settle mortgages when interest rates return to normal, he said.

New research has revealed that the swine flu virus can be spread through the eyes, underscoring the importance of personal hygiene to avoid the disease. University of Hong Kong researchers compared the ability of swine flu H1N1 and the seasonal H1N1 and H3N2 flu viruses to replicate in cells and tissue samples from the human upper and lower respiratory tract and in the cells lining the surface of the eye. It found that swine flu is more efficient than seasonal flu in infecting the eyes. The study by the HKU departments of microbiology and pathology was published in the American Journal of Pathology. "We found that pandemic H1N1 flu can actually infect and replicate in conjunctiva [the eyes] while the seasonal flu cannot," said Michael Chan Chi-wai, research assistant professor of the department of microbiology. "The public should be made more aware to wash their hands before rubbing their eyes. It is an important route for pandemic flu." The research also found that unlike bird flu H5N1, swine flu did not lead to a hyper-activation of the human cell cytokine response, a mechanism believed to contribute to the severity of bird flu H5N1 infection. Cytokines are proteins secreted by the immune system. So even if the lungs are infected by swine flu, it is usually mild, Chan said. The researchers also found that the swine flu and seasonal flu viruses have comparable efficiency in replicating in the upper respiratory tract. But at 33 degrees Celsius, swine flu replicates to higher levels in the bronchus, he added. The findings indicate that swine flu differs from seasonal flu viruses in "subtle ways and these differences may explain why the pattern of illness it causes is not identical to that caused by seasonal flu," the team said. Meanwhile, Secretary for Food and Health York Chow Yat-ngok defended the effectiveness of the swine flu vaccine, saying people who came down with the disease had not been inoculated. "This is already good proof [for the need of a vaccine]. It has actually proved that it works," he said. He insisted the vaccine supply is an insurance in case of need. "The reason why we have the vaccine is to ensure that we have sufficient supply for all the patients who are in need. "Obviously, we have sufficient supply for all the five at-risk groups in Hong Kong, plus some extra for people who are willing to take the vaccine," he said. "It is important that we have it in reserve and are able to use it if necessary. "It is like insurance. It is like something you put there in case you need it." So far, 157,440 people have been vaccinated against swine flu.

Major drinks firms have joined forces to launch a forum to promote responsible drinking in Hong Kong. The association of 11 beer and wine producers and traders will distribute 50,000 stickers to bars and restaurants, reminding customers not to drink and drive. The Hong Kong Forum for Responsible Drinking has timed its warning to coincide with the Lunar New Year celebrations. The campaign includes Carlsberg, Heineken, Jebsen, Moet Hennessy and San Miguel. Drink-driving caused 251 traffic accidents between February and December last year, police figures show. Liberal Party lawmaker Miriam Lau Kin-yee, the Road Safety Council, the police Road Safety Unit and the Accident Insurance Association of the Federation of Insurers have pledged full support to the initiative. Forum chairwoman Jenny To Ng Sui-lai called on drinkers to act responsibly. "We are committed to promoting responsible drinking in our community and combating the problem of drink-driving in order to create a safer road environment in Hong Kong," said To, who is a managing director at Pernod Ricard Hong Kong. Drivers who fail the random breathalyzer test may be liable to three years in jail, a HK$25,000 fine, 10 driving-offense points or be disqualified. Meanwhile, a serial driving offender has been found guilty in the drink-driving killing of 21-year- old US student Kurt Leswing in 2008. District Court Judge Stephen Geiser adjourned sentencing of Daniel Sheung Kun-hoo, 34, until February 18 pending background and probation reports.

Shares of Macau casino operators rose on Tuesday on reports that gambling revenue in the enclave rose to a new high in January, signaling sustained growth in the world’s largest gambling market.

HSBC (0005) has downplayed a report that it plans a major investment in one of the mainland's top three lenders, saying it is comfortable with its 19 percent stake in Bank of Communications (3328) as its primary investment vehicle in the country.

Nina Wang's siblings celebrate at press conference in Tsuen Wan after the Chinachem Charitable Foundation won the probate trial to inherit Wang's estate. Wang, the former chairman of Chinachem Group, was at one stage Asia's richest woman. Pictured above are Wang's brother Dr Kung Yan-sum (centre), and sisters Kung Yan-sum (left) and Dr Molly Gong Chung-sum (right). The High Court on Tuesday threw out fung shui master Tony Chan Chun-chuen's claim for the estimated HK$100 billion fortune of late property tycoon Nina Wang Kung Yu-sum after a sensational court battle. Mr Justice Johnson Lam Man-hon said a will in the possession of Tony Chan was a fake, and ruled in favour of a rival claim to her estate by a charity now run by Wang’s siblings. “The court finds that the 2006 will was not signed by Nina,” the judge wrote in his ruling on the case known as the “Battle of the Wills” that has gripped the tycoon-obsessed city. Wang, who was at one stage was Asia's richest woman, died of cancer in April 2007 at the age of 69, triggering a bitter feud between Chan and the charity both claiming they were entitled to her massive fortune. The judge ruled in favour of Wang’s Chinachem Charitable Foundation, saying a 2002 will held by her siblings “truly reflected the long-held intention on the part of Nina to leave her estate to charity”. Chan's lawyers, who had previously warned that he could face criminal fraud charges if his will was deemed a forgery, said they would appeal. Chan's lawyer Jonathan Midgley told reporters his client was "extremely disappointed" with Tuesday's ruling. “But he appreciates how difficult this sort of trial is and will make an appeal,” Midgley said. Chinachem Charitable Foundation lawyer Keith Ho Man-kei said the foundation was delighted with the ruling. “The 2002 will is now regarded as the valid will and the entire estate of Nina Wang will be inherited by the foundation,” he said. Wang's surviving brother, Dr Kung Yan-sum, also said he was “very happy”. “And I think the majority of the people are happy. The money will be used to support charity work,” Kung said. Kung and younger sisters Kung Yan-sum and Kung Chung-sum and their lawyers later appeared at a press conference. “Today's judgment showed that there is justice in the world,”said Kung, who with his sisters, is on the board of the foundation, ”We will try our best to operate the foundation according to my late sister's will and provide money to help those in need,” he said. Kung said if Tony Chan filed an appeal, the foundation was confident of winning. Keith Ho said that following Tuesday's judgment, the foundation had the right to claim legal fees from Chan. But he did not disclose the amount. He said there were a number of legal procedures needed to transfer Nina Wang's fortune to the foundation. This could take several months. But if Chan filed an appeal, these procedures would be delayed further. The case featured a heady mix of sex, family secrets and Wang's fascination with fung shui. Wang used fung shui in a fruitless bid to find her husband Teddy who was kidnapped in 1990 but whose body has never been found. The probate case filled the front pages of Hong Kong’s media for weeks after it first opened in May last year, with the court hearing from 36 witnesses. The charity's lawyers accused Chan of being a charlatan who duped the eccentric billionaire, arguing that Wang did not have the mental capacity to execute the alleged will because of her health problems. Lam acknowledged that Chan, 50, and Wang had carried on a love affair, but rejected his claim that she wanted him in charge of her sprawling property empire. “When Nina made he 2002 will, her relationship with [Chan] did not cause her to give him her estate,” he wrote. “As far as her estate was concerned, she placed a higher regard on her charitable objectives than [Chan].” Wang, the judge said, had wanted to keep the affair a secret. “She wanted it buried together with her after her death,” he wrote. The famously frugal billionaire, known for wearing pigtails and miniskirts, won a separate legal battle with her father-in-law for control of her late husband’s estate just two years before her own death. The charity was named after the business empire Chinachem Group set up by her husband, who was declared legally dead in 1999. Wang’s thrifty nature – she preferred cheap brands and fried chicken to designer clothes and five-star restaurants – was widely documented by Hong Kong’s media, which nicknamed her “Little Sweetie” because of her resemblance to a Japanese comic character. Wang rarely went to malls and had most of her clothes and handbags made by friends. Lam did not deliver the ruling in court, but a summary of his 300-page judgment was handed out to the media.

CLP introduces the electric vehicle quick-charger, suitable for three brands of Japanese vehicles, at the Centenary Building in Jordan. A network of quick-charge stations for electric vehicles in Hong Kong is one step closer to fruition, with CLP Power (SEHK: 0002) introducing the first station, which can cater to at least three Japanese brands of zero-emission cars. But Professor Eric Cheng Ka-wai, from Polytechnic University, said the lack of a unified quick-charging standard among major carmakers would create confusion among drivers. The new charger can replenish 80 per cent of a car battery's electricity in 30 minutes, providing a driving range of up to 120 kilometres. Standard charging takes up to six hours. The quick-charger has been installed at a cost of HK$400,000 at CLP Power's Centenary Building substation in Jordan. The public can use it free of charge until the end of the year. Access to quick charging will help allay drivers' fears of a loss of electric power in case of emergency, or that they might have to travel a longer distance than expected. "We want to encourage the public to take up electric cars," said Richard Lancaster, managing director of CLP Power. "To kick-start the acceptance, we first have to get the infrastructure in place. He said a network of 10 to 15 quick-charging points in strategic locations within 10 kilometres of each other would be enough. The new network will complement the existing and expanding network of standard charging points in public car parks. The quick-charger - named CHAdeMO (Charge and Move) - was developed by the Tokyo Electric Power Company and is compatible with electric vehicles produced by Mitsubishi, Nissan and Subaru. Mitsubishi and Nissan are expected to supply up to 200 electric cars to Hong Kong this year. Lancaster admitted the new charging point would not be compatible with MyCar, a Hong Kong-made electric vehicle. He said it would take time for a charging standard to evolve. Cheng, from Polytechnic University's department of electrical engineering, which is involved in development of MyCar, said a quick-charger system unique to MyCar would be ready by the end of the year. Lack of standardized charging would lead to confusion and wasting of resources, he said. "It is like mobile phone chargers. You need different chargers for different brands." Leonard Cheng Wai-nam, general manager of sales and marketing at Universal Motors, which distributes Mitsubishi cars, said charging would become standardized in the long term.

Tourists and Christmas shoppers in Hong Kong said good riddance to a year of austerity in December, snapping up expensive jewellery and cars. Their purchases helped boost retail sales for the month 16 per cent in value from a year earlier to a record HK$29.4 billion, official figures show. Transactions rose 11.3 per cent. For the full year, sales rose just 0.6 per cent in value from 2008 but dipped 0.8 per cent in volume. Although December's performance benefited from a comparison with depressed sales at the trough of the global downturn a year earlier, the results surprised economists, who had expected sales to grow 11.7 per cent in value and 9.8 per cent in volume, close to November's figures. A government spokesman attributed the strong results to a rebound in consumer sentiment and an influx of visitors. About 1.85 million mainlanders came in December, 228,000 more than a year earlier, Hong Kong Tourism Board figures show. There were also more visitors from the United States, Australia, South Korea, Indonesia, Thailand, India and Taiwan. And local unemployment, at 4.9 per cent, was close to a one-year low. "Consumer confidence should remain firm going forward, as the economy is on track to recover and the labour market has been improving," the spokesman said. Hong Kong Retail Management Association chairwoman Caroline Mak Sui-king expects sales to be strong in the first half of this year but is less certain about the second half. The performance of retailers during Christmas is keenly followed as a barometer of economic health. The relatively big gap between growth in sales value and volume in December showed consumers were spending on more expensive items, such as jewellery, fashion, consumer electronics and cosmetics, Mak said. Sales of jewellery and watches rose the most in December, jumping 30.4 per cent in volume, followed by car sales, which leapt 29.8 per cent. Preliminary indications from the association's members suggest decent sales during Lunar New Year shopping this month.

In an apparent attempt by the Liberal Party to maintain its grip on the management of the Tourism Board, chairman James Tien Pei-chun is seeking a second term. If Tien is reappointed it would mean 12 consecutive years of Liberal Party leadership on the Tourism Board. He succeeded Selina Chow Liang Shuk-yee, who was at the helm of the board for six years and was deputy chairwoman of the party at the time. Tien became the board's chairman on April 1, 2007, and his three-year term ends in about nine weeks. He was party chairman for 10 years until 2008 when he lost his Legco seat and the party suffered its biggest defeat in the Legislative Council elections. Tien said he spoke to a top government official about his reappointment two weeks ago, and was told a decision would be made after the financial secretary delivers his budget on February 24. "I enjoy my time at the Hong Kong Tourism Board. I believe I have done some good work for Hong Kong and am happy to stay on," he said. Tien took over as board chairman amid tumultuous times for tourism in the city. Shortly after he joined the board, a CCTV report alleged that a diamond pendant and watch sold to mainland tourists in Hong Kong were fake. The report was highly damaging to the city's reputation as a tourist and shopping destination. In 2008, guests staying at the Tatami Hampton Hotel in Mong Kok were evicted after the property was taken over by the Bank of East Asia (SEHK: 0023) over an unpaid loan. Tourism was hurt last year as the global financial meltdown and fears about human swine flu kept visitors away. With Tien's term ending soon, there has been speculation about who will be appointed chairman. Lawmaker Jeffrey Lam Kin-fung, who withdrew from the Liberal Party in October 2008, and Lan Kwai Fong founder Allan Zeman were named as possible candidates, but neither appears to be interested in the position. The board chairman does not receive a salary. The board is the government's tourism marketing arm and helps promote the city to overseas and mainland visitors. The board's main source of income is government funding. Its 2008-09 annual report shows that the government gave it HK$531.61 million last year.

China*: Chinese Premier Wen Jiabao warned Monday the Chinese economy still faces challenges given the uncertainty in the outside and unbalanced development inside the country. But he expressed confidence China will overcome them.

China authorities have launched nationwide checks for melamine-tainted milk products after the industrial compound, which killed at least six children in 2008, reappeared on shop shelves, an official newspaper said on Tuesday. Leftovers of milk powder laced with melamine, which can give a fake positive on protein tests, have been reused as raw materials for dairy products despite an earlier crackdown, the People’s Daily said, citing a conference held by the State Food and Drug Administration. Batches of dairy products made by three mainland companies were forced off market shelves in the southwestern province of Guizhou last month after testing positive for melamine. Tainted milk products were found in several provinces last year, from the northeastern province of Liaoning to the economic hub Shanghai, the newspaper said. “In spite of the current campaign for food safety, some enterprise and individuals are still blinded by greed, ignoring the health and safety of the public,” it said. There have been no reported deaths or illnesses from the latest batches of tainted milk which can can cause kidney stones in children and made 300,000 children sick in the 2008 scandal. Two people were executed in November 2009 for their role in the melamine scandal that further sullied the made-in-China brand after a string of health and product-safety scares.

The most senior official charged in a major crackdown on organised crime and graft in southwestern China went on trial on Tuesday in the climax of a lurid, sensational court marathon. Wen Qiang, former director of the justice department in the giant city of Chongqing, stands accused of accepting bribes, protecting mafia rings and four counts of rape, a court statement said. He was being tried along with his wife and three top police officials in proceedings that began early on Tuesday and were expected to last five days, said the statement by the No 5 Intermediate People’s Court.

The property investment arm of Morgan Stanley is in final talks to sell an apartment complex in Shanghai to a unit of Singapore’s Keppel Land, sources close to the deal said on Tuesday. The overall value of the property is estimated at about 900 million yuan (HK$1 billion). Sources would not disclose the total value of the sale of the luxury apartment complex, which is controlled by Morgan Stanley and partly owned by a local partner.

A prime commercial site on the Bund in Shanghai has been sold for a record 9.22 billion yuan, but an even higher bid was eliminated in the tender and auction exercise in what is being seen as an attempt by the city government to stabilise land prices. The winning bid by Zendai Group for the 57,300 square meter site in Huangpu district was just 2.44 per cent above the nine billion yuan reserve price but still represented the highest amount paid for a commercial plot on the mainland. But the highest of the four tenders - 9.3 billion yuan, submitted by a consortium of Forte group, Shanghai Fosun, Taizhou Linhai and an unknown mainland firm - lost when the group's master plan proposal failed to impress the officials, who gave it the second-lowest points. Zendai and another consortium led by China Enterprise and Pacific Life scored the highest marks after a three-hour study of the tender documents and moved into the auction section of the bidding. Zendai's initial tender was 9.1 billion yuan, while the China Enterprise consortium's was 9 billion yuan. Lee Wee Liat, an analyst at Nomura International (Hong Kong), said the officials' tough scrutiny "indicates the municipal government is trying to control land prices". "It will help deflate the property bubble, and Beijing may now delay introducing tough measures to cool home prices," he said. "We will likely see this pattern being repeated in future land sales." The price Zendai paid is equivalent to 24,918 yuan per square meter, assuming the office-retail site provides a gross floor area of 370,000 sq meters. Jim Yip Kin-shing, the head of the investment department at DTZ (North China), said the site attracted only four bidders because of the huge sum of money involved. "It is not easy to fork out more than nine billion yuan for a site alone. After paying the land price, the winner still has to pay for billions of yuan of construction cost," he said. In November last year, property consultants said the winning bid could top 10 billion yuan, after more than 20 developers were invited to take part in the auction. Lee expects the construction cost for the site's commercial premises to be about 10,000 yuan to 15,000 yuan per square metre. This suggests a construction bill of as much as 5.5 billion yuan, bringing the total investment cost to 14.72 billion yuan or 39,783 yuan per square metre. However, Lee said Zendai should achieve a profit margin of 25 per cent, as commercial properties are fetching 50,000 yuan per square metre. Separately, the Beijing Municipal Bureau of Land and Resources said it had cancelled the sale of a housing site to Beijing Dalong Estates for 5.05 billion yuan, as the deadline for signing the land transfer agreement had lapsed. Beijing Dalong will forfeit its 200 million yuan deposit.

Wen Jian Bao visits village,community to seek opinions on gov't work.

A model of C919 made by Commercial Aircraft Corp of China is displayed at the Singapore air show. The State-owned company expects to build 2,000 C919s over 20 years.

McDonald's has become the latest catering chain to offer free Internet access to customers as more young professionals come to regard wireless online access as an essential part of life.

Feb 3, 2010

Hong Kong*: The Buildings Department began to inspect about 4,000 Hong Kong dwellings over 50 years old to ensure they were safe, a department spokesman said on Monday.

Cathay Pacific Airways CEO Tony Tyler said in Singapore on Monday that he was cautious about the 2010 outlook for the aviation sector and said the airlines is planning a slight increase in its capacity this year. Cathay Pacific Airways (SEHK: 0293) is considering a small capacity increase this year, which it may add to if faced with stronger demand, its CEO said on Monday. Tony Tyler said he was cautious about the outlook for the aviation sector and pointed to the growing importance of mainland for Cathay. “We are planning a small increase in capacity this year and reinstating some of the frequencies that we dropped last year,” Tyler said in an interview in Singapore, ahead of an airshow being held in the city. “We are looking at low single-digit increase in capacity overall, both on the freight and passenger side. If demand picks up, we will have the ability to add flights.” Asked about a recovery in the airline sector overall, he said: “I’m cautiously optimistic. We saw a recovering trend in the last quarter of 2009 and some of the strength in both the premium passenger market and the cargo market have carried through into the first quarter of this year. “That gives us rather more comfort than we had last year.” Cargo volume is a leading indicator of global trade, with mainland a crucial source of air freight for Cathay, Tyler said. “Most of our cargo revenue is mainland China,” he said. “As far as the passenger side, greater China is clearly number one and the mainland China component of that is the fastest growing.” The airline reported a net profit of HK$812 million for January-June 2009, compared with a loss of HK$760 million a year earlier. It booked fuel hedging gains of HK$2.1 billion, while turnover fell 27 per cent to HK$30.9 billion. The aviation industry suffered its worst ever period last year as the global financial crisis hammered demand and would face a still tough environment this year, the International Air Transport Association (Iata) said last week. The association said on Monday that Asia-Pacific region has overtaken North America as the world's largest air travel market with 647 million passengers last year. By contrast, 638 million people flew on commercial flights in North America last year, Iata announced at an aviation business conference on the eve of the Singapore Airshow. Within Asia, mainland has eclipsed Japan over the past decade as the region's largest domestic market, with 1,400 aircraft compared with Japan's 540 and 5.7 million weekly seats against 2.6 million in Japan. Iata director general Giovanni Bisignani told the conference that the Asia-Pacific market would continue to grow rapidly with an estimated 217 million additional air passengers a year in the region by 2013. “While we see dynamism and diversity within the region, the aspect of Asia-Pacific that excites me most is its potential,” said Bisignani. “More than a quarter of the 2.2 billion people who flew last year, or 647 million people, flew within Asia-Pacific markets. “It has eclipsed travel within North America as the traditional leader in traffic numbers.” Bisignani told the conference that Asian airlines were projected to narrow their losses collectively to US$700 million this year from US$3.4 billion last year, about a third of the industry's global losses last year. “It is tough in all regions but Asia-Pacific's prospects are improving faster than other regions,” he said.

The total value of retail sales rose 16 per cent year-on-year in December 2009 to HK$29.4 billion, latest statistics released on Monday showed. “After netting out the effect of price changes over the same period, the volume of total retail sales increased by 11.3 per cent in December 2009 when compared with a year earlier” the government said in a statement. Comparing December 2009 with December 2008, the volume of sales of jewellery, watches and clocks, and valuable gifts increased the most – by 30.4 per cent, the Census and Statistics Department figures showed. This was followed by sales in motor vehicles and parts (up 29.8 per cent); electrical goods and photographic equipment (up 23.0 per cent); apparel (up 9.6 per cent); commodities from department stores (up 9.3 per cent); miscellaneous consumer goods (up 8.4 per cent) and consumer durables (up 4.7 per cent); furniture and fixtures (up 4.0 per cent); footwear, allied products and other clothing accessories (up 3.6 per cent); food, alcoholic drinks and tobacco (up 2.1 per cent); and fuel (up 1.1 per cent). However, the volume of sales of commodities in supermarkets decreased by 3.8 per cent in December 2009 compared with a year earlier, the figures showed. A government spokesman said retail sales continued to improve in December 2009. “With the economic recovery gathering pace, consumer sentiment strengthened during the festive season, as evidenced by the marked increases in the sales of big ticket items. The further growth of inbound tourism also contributed,” the spokesman said. He said consumer confidence should “remain firm” this year.

The estimated number of residential mortgage loans (RMLs) in negative equity in Hong Kong fell 44 per cent to 466 cases at the end of December from 835 cases at the end of September as property prices rose, data from the Hong Kong Monetary Authority showed. The aggregate value of RMLs in negative equity declined to HK$700 million at the end of December, from HK$1.5 billion in September.

University students and new graduates in Hong Kong are joining the queue for public flats in increasing numbers. Many think high property prices are the reason for this but analysis shows that it is probably not, and that deteriorating social conditions for young people are a contributory factor. Housing Authority figures show the total number of single people aged under 30 waiting for public flats has increased by 60 per cent in the past four years, from 13,400 in 2006 to 21,300 applicants last year. While the number of those from the so-called post-80s generation accounts for more than 40 per cent of all single applicants, interviews by the South China Morning Post (SEHK: 0583) found that some had applied before graduating from university. Surveys by the authority last year found that 37 per cent of applicants in this age group had received post-secondary and tertiary education in contrast to the 20 per cent recorded in 2005. Faced with criticism that well educated youngsters are competing for public resources along with the deprived, the authority introduced a quota system for single and non-elderly applicants in 2005. This limits the number of flats allocated to such applicants to 2,000, or about 8 per cent of the total number of flats allocated each year. The system accepts only single applicants whose salaries are not higher than HK$7,789, including the 5 per cent contributed to the Mandatory Provident Fund. A points system was also devised in 2005 to give lower priority to younger applicants, with no points given to those aged 18 and three points given for every year of age above 18. Hence, those who are 19 receive three points while those who are 59 get 123 points. The higher the score, the faster applicants are given public flats. Despite the government intervention, the number of new applicants aged under 30 was more than 4,000 last year - just 200 fewer than the 4,400 applicants registered in 2005. The authority did not disclose how many eventually obtained a flat, but the queue is lengthening. "The unreasonably expensive flats have made our life difficult, especially those who want to move out and live their own life," Fredrick Fan Cheung-fung, external vice-president of the Chinese University student union said. Fan, whose university friends are queuing for public flats, said his generation was facing intense competition when searching for jobs, with small pay rises and longer queues for promotion. "We are living in a less favourable environment compared to the last generation. Why should we give our money to developers? Those criticising us for opting for public flats do not understand and do not respect our rights," he said. Recognising the difficulties faced by the post-80s generation, experts studying the property market said the property boom was not the direct cause of young people's desire to secure public flats. Quoting his study on the supply of flats sold or rented at low-to-medium prices, chair professor of the University of Hong Kong's department of real estate and construction Professor Chau Kwong-wing said flats renting for about HK$5,000 a month were freely available in the city. "These flats are usually smaller than 700 square feet and most are located in the New Territories, which may not be appealing to the new generation," he said.

China*: China economic recovery continued its pace, with two surveys showing the factories humming along at a healthy pace. The official purchasing managers’ index (PMI) showed a slight fall to 55.8 in January from 56.6 in December, but it was the 11th straight month that the official PMI has stood above 50. A reading over 50 indicates an expansion of activity in the manufacturing sector, while one below 50 suggests contraction. In the second PMI released by HSBC (SEHK: 0005, announcements, news) , the figure rose to a record high of 57.4 in January from 56.1 in December, underlining the momentum behind the country’s vast manufacturing sector. The data compiled by the China Federation of Logistics and Purchasing (CFLP) and based on a survey of more than 700 companies across mainland, said it was the first month-on-month deterioration since May 2009. The reading compared with a record low of 38.8 plumbed in November 2008. Six of the 11 sub-indices were stronger than in December, while 16 of the 20 industries surveyed had a PMI above the 50 boom-bust threshold. Zhang Liqun, a researcher with the Development Research Centre, a think-tank under the State Council said the PMI showed the economy was stabilising after its brisk recovery from the global downturn. “The new export order sub-index has increased, which indicates a continued improvement in the export sector; and the purchasing price sub-index has risen further, which means production costs for companies will increase,” he said in a statement released by the federation. The HSBC survey was compiled by British research firm Markit, showed the export orders sub-index rose modestly, to 58.1 in January from 57.9 in December. Input and output prices rose at the fastest pace since July 2008. “Industrial activity continues to accelerate, implying stronger GDP growth in the first quarter. But rising input and output prices also point to greater inflationary pressure, which will likely prompt more tightening measures in the coming months,” Qu Hongbin, chief economist for China at HSBC, said in a statement.

China banks issued net new yuan loans of nearly 1.6 trillion yuan (HK$1.82 trillion) in January, the Economic Information Daily reported on Monday, pointing to a much slower pace of lending in the last 10 days of the month. The newspaper, which is published by the official Xinhua News Agency, did not give a source for its information. The authorities ordered banks to rein in their lending after a burst of credit at the start of the month and reinforced their message by announcing a half-point increase in reserve requirements on January 12. Banks lent 1.1 trillion yuan in the first half of January, according to bankers familiar with the central bank; by January 19, the total had reached 1.45 trillion yuan, local media reported. If the figure given by the Economic Information Daily is confirmed when the People’s Bank of China releases official data next week, it will mean that net lending last month was actually lower than a year earlier. In January last year, when banks were being encouraged to lend freely to support the government’s economic recovery programme, net new local-currency lending came to 1.62 trillion yuan. The paper also said that China Construction Bank (SEHK: 0939) was aiming to lend 750 billion yuan, and Bank of China 600 billion yuan, over the course of this year. Mainland’s banking regulator has said the target for full-year lending will be about 7.5 trillion yuan, down from 9.6 trillion yuan last year. The central bank is unlikely to raise interest rates before the second half of this year, the newspaper added. “An interest rate increase is not necessarily the best option. The central bank will raise rates only once this year, if at all, as quantitative and administrative measures will be sufficient to keep the rhythm of lending well controlled,” the newspaper said.

China's large textile businesses took in 133.15 billion yuan (19.57 billion U.S. dollars) in profits in the first 11 months of last year, according to figures released by the China Textile Industry Association. The profits were up by 25.39 percent year on year, 36.40 percentage points more than that in the Jan.-Feb. period. The industry posted a total production value of 3.43 trillion yuan and 3.35 trillion yuan in sales value, each up by 9.71 percent and 9.82 percent as all major products saw production rise. The industry also witnessed a slow recovery in export. In the 11 months, garment export fell by 11.02 percent to 154.1 billion U.S. dollars, but the drop narrowed by 0.19 percentage points compared to the first 10 months. By contrast, domestic sale accounted for 79.89 percent in the total sales, up by 3.15 percent.

China's auto market grew at a blistering pace in 2009 and unseated the US to become the world's No 1, powered by the nation's continuing economic growth. This has been seen by many as a truly exceptional performance, particularly as it came amid the hardships that faced the automotive industry globally as a result of the world's financial crisis. Vehicle sales in the year surged by 46.15 percent to 13.64 million units, exceeding all of the analysts' forecasts made at the beginning of the year.

Feb 2, 2010

Hong Kong*: PLA special forces soldiers are routinely serving aboard Hong Kong-registered ships during China's anti-pirate convoys around the Horn of Africa. Confirmation of their use on local shipping comes amid a rising debate about the need for arms aboard merchant ships as an international naval effort struggles to contain the reach of Somali pirate gangs across vital trade routes linking Asia to Europe. The shipping industry is bracing for a widening spread of attacks and rising pirate-related costs as gangs travel deeper into the Indian Ocean and ransom settlements reach as much as US$7 million. The director of Hong Kong's Marine Department, Roger Tupper, confirmed Chinese naval officers running convoys of Hong Kong, mainland and Taiwanese ships sometimes offered "naval personnel" to be stationed on slower, more vulnerable ships during runs through the pirate-plagued Gulf of Aden. He said Hong Kong ships had accepted the offers, but he did not know whether Taiwanese ships had. Naval officials involved in the international operation off Somalia said the teams offered by China were generally armed, and drawn from PLA naval special forces units that are part of China's historic three-warship deployment off Somalia. Speaking at a shipping conference in Singapore last week, Tupper outlined a bleak picture of the piracy situation in the Indian Ocean and described the PLA's convoys as one of the few bright spots. "They [pirates] have shown themselves to be able to adjust tactics and operate at ever greater distances," Tupper said. "It is now possible that piracy is the most lucrative Somali industry going ... it is the only way to improve their lives." While he said there was room for an expanded international naval presence to counter the spread of pirates out beyond the Seychelles, Tupper said he did not want to see ships resorting to teams of armed private security guards. "The convoys are working very well," he said. "But having armed security guards operating outside of a normal, military-run operation would lead to an unnecessary escalation in violence from the pirates," he said. "More guns, more shooting, more firepower - that is something that, overall, the industry wishes to avoid. We certainly support more naval activities taking place to protect shipping."

They are petite and sweet and are increasingly taking on egg tarts as the city's bite-sized treat of choice. Cupcakes - small confection topped with icing and also known as fairy cakes - are being gobbled down in increasing numbers in Hong Kong. There are now at least three specialist cup-cakeries in the city, with restaurant chain Maxims also eyeing the market. So what is the big deal about a small, relatively expensive, cake topped with fancy and colourful icing? Part of the attraction may be the cupcake's star appeal. The birth of the modern cupcake craze can be traced to the United States about a decade ago when characters in the hit show Sex and the City ate them at Manhattan's upscale Magnolia Bakery. The cupcake fever eventually spread to Hong Kong, resulting in the opening of three dedicated bakeries in the past three years - Babycakes Asia, Sift Patisserie and Cup Cakery. They are now adding new shops, new flavours and expanding into wedding, corporate and birthday parties. Hong Kong Maxim's Group is also joining the fray, with sources close to the company saying it is planning to open a cafe in Sai Kung offering cupcakes, coffee and tea in a project that could be expanded into a chain. Maxim's, through a spokeswoman, said it had "no such plans at this stage". The magic of cupcakes draws people of all ages and gender, including Lachlan Campbell, a banker-turned-baker. "Like the take-off in coffee culture in recent years, cupcakes are turning into a big business," said Campbell, the founder and "chief cupcake officer" at Hong Kong's first dedicated cupcake cafe, Babycakes. A chartered accountant by training and an erstwhile banker with HSBC Holdings (SEHK: 0005) and Deutsche Bank in the early 2000s, Campbell chose a new career path by opening the cupcake bakery in the middle of 2007. "As a banker, I worked as a small part of a big business and could go home without thinking about it," he said. "As a baker, I enjoy the freedom of being the boss, managing creativity and meeting customers, especially seeing kids pushing cupcakes into their mouth not fast enough." Babycakes' cheapest confection, a two-bite cupcake, costs HK$13, or four times the price of an egg tart. A normal-sized cupcake costs HK$28. Despite the price tag, demand is high. On a good day, about 3,000 cupcakes are sold while during the recent Christmas holidays, 6,000 cupcakes were consumed on a daily basis, Campbell said. Babycakes has reinvested profits into equipment and marketing. To branch out of its Ap Lei Chau base, the bakery planned to add two shops in high-traffic areas such as Central and Causeway Bay in the next few months, he said. Eyeing this development closely is Babycakes' arch-rival, Sift Patisserie. Babycakes' office is located a few floors below Sift at Horizon Plaza, Ap Lei Chau. Founded in 2006 by Jennifer Cheung Hing-wai, also a former banker, Sift is negotiating rental contracts for two shops in addition to its outlets in Central and Wan Chai and cafe at Horizon Plaza. "We target the high-end market," said Cheung, who sells about 800 cupcakes a day, each costing at least HK$22. "Hong Kong has got many dessert choices such as egg tarts and cheese cakes, but we compete on quality." Worrying the cupcake craze may eventually fizzle out, Cheung has sought to retain customers with top-quality imported French ingredients such as butter, chocolate and almond flour as well as flavourings made from fresh fruits. She has also expanded the menu to French pastries like macaroons. After three years of trial and tribulation, Sift broke even in December, she said. It has so far been a venture with no regrets for Cheung, who left her investment banking job in Hong Kong to become a pastry cook and work at French restaurant Per Se in New York. "Money can't buy happiness," said Cheung, who used to work 100 hours a week during her 12-month stint with the investment bank. "Although it's a one-man show, I enjoy it." Joey Cheung, a co-founder of Cup Cakery in Mong Kok, is also a firm believer in quality, competing on price even though it imports butter and cocoa powder from France, natural flavourings from Italy and flour from the United States. "We have a very thin profit margin, as ingredients alone account for half of the HK$8 price of our cakes, not to mention rent and wages," she said. The shop has sold 1,800 cupcakes a day on average since its debut in August last year. She said that two more bakeries would open in Mong Kok and Tsim Sha Tsui this summer, also specialising in cupcakes. As punishing as the competition is among the bakeries, Hong Kong's growing band of cupcake bakers agree on one thing. Hongkongers do not like their cupcakes too sweet. "Hong Kong people are brainwashed about low sugar intake," Joey Cheung said. "I have lowered the sugar level to one-tenth of the American recipe and customers still find the cupcakes too sweet." She said the bakery was looking for an alternative to icing sugar while maintaining the authenticity of cupcakes. Campbell said Babycakes intentionally kept the level of sweetness to one-third below its competitors'. Joey Cheung is also frustrated at some customers' complaint that her cupcakes were not spongy enough and her pistachio cupcakes did not taste like pistachio. "Many people have got used to artificial flavourings so much so that they can no longer tell the taste of authentic ingredients," Cheung said. "Isn't it ironic?" Still some customers, like Vanessa Lam, an office lady in Mong Kok, recently gave cupcakes a bite and snapped up half a dozen of the treats at Cup Cakery. "We used to have egg tarts, but we want to try something new," said Lam, who was shopping with her colleague. The pair could not take their eyes off the cute cupcakes topped with pink, white and green icing and chocolate blast candies.

A malicious and vigorous struggle over political reforms will only deepen conflicts within society, Chief Executive Donald Tsang Yam-kuen warned yesterday - three weeks before the end of public consultation on constitutional reform. Tsang made the warning after attending a signature campaign organized by the Alliance for Constitutional Development of which executive councillor and Hong Kong Federation of Trade Unions president Cheng Yiu-tong is convener. "A malicious and radical fight, a refusal to compromise, these basically will only deepen division without making any progress in the constitutional reform arrangement and keeping it at the starting point forever," Tsang said. He said although constitutional reform is difficult owing to different opinions on the pace and the priorities of political democratization, it is not hopeless as long as there is positive political discussion and communication. Last week five pro-democrat legislators resigned to fight by-elections that are being seen as a referendum on the slow pace of political reform. Tsang did not say as to whether the slogan "to liberate Hong Kong" being used by the five legislators may be seen as an act of sedition as suggested by Tam Yiu-chung, chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong. Asked whether the government will call on the people to vote, he replied: "The public will make their own decisions." Cheng said slogans used by the Civic Party and League of Social Democrats will only cause public fear. "At first it was about a by-election, then it became an uprising and now they say they are liberating Hong Kong," he said. "People will not accept such things and I appeal to them [the two parties] not to use such radical language that cause public fear." However, league chairman-elect Andrew To Kwan-hang defended the use of slogans, saying Hong Kong needs controversy to make real changes. "Our goal is clear enough, to call on voters to use their ballots to express their view on constitutional reform. Will they [the pro-establishment camp] not take part in the next election if we use the so- called radical slogans like uprising and liberation?" To asked. He is certain some candidates from the pro-establishment side, disguised as so-called independent candidates, will take part in the by-elections. The league yesterday voted in a new executive committee which has an average age of 34.4 years. At 43, To will be the youngest chairman of a leading political party. Meanwhile, a pan-democratic group reiterated it is still hoping for a meeting with the central and Hong Kong governments to discuss constitutional reform. Eleven pro-democracy groups have formed a coalition named Alliance for Universal Suffrage to push for a pragmatic and rational strategy.

New World Development (0017) sold around 80 percent of the homes at Belcher's Hill in Sai Wan - the first major project put on the market in two months - within two days of the launch. The developer raised prices slightly, said Jeff Lau Chung-leung, a senior manager in sales and marketing. Most of the 116 homes on offer were sold, but some flats on the lower and upper floors are still available, he noted. There are 152 apartments in the single-building project. Lau said the developer will put more homes on the market given the satisfactory sales. New World launched eight more homes late yesterday afternoon. The most expensive unit sold is a 964-square-foot home that fetched HK$12.6 million. At HK$13,093 per square foot, it was 55 percent above the average of HK$8,432 psf for the first batch of 32 flats. Lau said 70 percent of homebuyers are from Hong Kong Island. The largest single transaction involved only two apartments because homes were allocated by drawing lots, he said. The developer did not sell any duplex or triplex apartments, but said on Saturday that the most expensive units in these categories will command more than HK$20,000 psf. Meanwhile, Kerry Properties (0683) opened the show room of Island Crest in Sai Ying Pun to property agents. Midland director Jeffrey Ng Chong-yip said the successive launches of two nearby projects are good for the market. "In the past few months the focus was on the secondary market. Some homeowners, especially those of smaller homes, asked for higher prices," he said. "With the new projects now, there is a market reference for secondary home prices, so we cansee a slowdown [in the secondary market]." As Belcher's Hill absorbed some purchasing power, secondary home transactions at three major Hong Kong Island estates fell 35.7 percent to just nine over the weekend, Midland said. Three flats were sold in Tai Koo Shing, down from seven in the previous weekend while four homes were sold in South Horizons versus six a week ago. Transactions at four major Kowloon estates was up 18.2 percent to 26, while those at three New Territories estates went down 15.4 percent to 33.

A month into the first civil service pay cut in five years, the government has launched the annual pay adjustment exercise, which could bring a pay rise as early as April. The move means that a pay cut of 5.38 per cent for 18,200 civil servants may last for just three months if a pay trend survey on private companies shows pay rises were given in the private sector over the past year. The Pay Trend Survey Committee endorsed the research method last Tuesday and will soon send out letters to more than 100 companies for their pay adjustments between April last year and March this year. The figures form the basis for the annual adjustment. With all signs pointing to a continued economic recovery, civil service unionists hope they will receive a 2 to 3 per cent pay rise. A regional survey by consultants Hewitt Associates forecast that Hong Kong firms would give their staff an average 3 per cent pay rise this year, while a survey by the Hong Kong Institute of Human Resource Management estimated the average pay rise level at 2 per cent. "We don't have high expectations. The market improved a bit in the fourth quarter of last year, but the economy was still gloomy in the first two quarters ... Perhaps the pay trend survey will find a positive number [of salary adjustments in the private sector], but I think it wouldn't be a high one, probably 2 to 3 per cent," said Leung Chau-ting, chairman of the Hong Kong Federation of Civil Service Unions. Li Kwai-yin, vice-present of the Chinese Civil Servants Association and a staff-side member of the committee, said: "The private-sector market seems to have improved, but we still need the survey data before making a conclusion. Some sectors, such as property, have performed very well, but others are still fighting with difficulties." A total of 18,200 senior civil servants earning more than HK$48,401 a month had their salaries cut by 5.38 per cent this month, after the legislature spent nearly six months to approve a pay cut bill, in December. The new round of pay adjustments is effective from the start of the next financial year in April. Leung said he hoped the public would understand that it was the legislative process, not the civil servants, which had delayed the implementation of the pay cut. Dr James Sung Lap-kung, a political analyst at City University, said the government should introduce a salary adjustment system which would not require legislative amendment every time it proposed a pay cut. "If a long debate in the Legislative Council just results in a pay cut for three months, the public will find it meaningless." A spokeswoman for the Civil Service Bureau said: "We are not yet in a position to advise whether, and if so, how civil service pay should be adjusted in 2010-11." The Executive Council usually makes a final decision on pay adjustments in June, based on the pay trend survey and other factors such as staff morale, cost of living and the government's financial position. Any pay rise would be backdated to April if legislature's Finance Committee approves the funding in the summer. Ngai Sik-shui, who represents the staff side of the Disciplined Services Consultative Council on the committee, said: "Many civil servants may hold positive anticipations in view of news reports of labour market indicators going up. "But the survey is only one of the six factors the government considers when deciding on any pay adjustment." The others are staff morale, the overall economic situation, the government's financial position, staff pay claims and changes in the cost of living.

London Stock Exchange, traditionally a major overseas market for Russian companies, has played down competition from Hong Kong, which has stepped up its effort to get listings from the resource-rich country. Giant aluminium producer Rusal listed in Hong Kong last Wednesday, making it the first Russian firm to have a presence on the city's bourse. The listing is seen as part of Hong Kong Exchanges and Clearing (SEHK: 0388) 's effort to attract more international firms. "I do not think London and Hong Kong can only be competitors. Instead, we can be partners," said LSE chief executive Xavier Rolet in Hong Kong last week. Rolet said London, New York and Hong Kong could well develop some co-operation. He said there was no keen competition among them because these three markets are trading at different zones and have different investor base. "Pension funds, hedge funds and other institutional investors need to trade in different markets. London, Hong Kong and New York are platforms for investors from Europe, Asia and the United States to trade," Rolet said. "Companies could choose where they want to list according to what investors they want to target."

Emergency inspections will be carried out on at least 4,000 old buildings across Hong Kong within the next month after the collapse of a five-storey building in To Kwa Wan that left four people dead. Barry Cheung Chun-yuen, chairman of the Urban Renewal Authority, warned of another collapse at any time if problems with older buildings were not addressed. The URA is responsible for renewing urban areas. Block J of 45 Ma Tau Wai Road turned to rubble in seconds on Friday afternoon. The collapse was the worst in decades, and saw workers digging through rubble with their bare hands to rescue survivors. Engineers believe the collapse could have been caused by recent renovations or unauthorized structures. The 55-year-old building had commercial premises at street level and mixed commercial and residential uses above. There are 2,799 private buildings between 50 and 70 years old in the city's 18 districts, a Home Affairs Department database shows. "It is not only a problem in To Kwa Wan, but also in many other places," Cheung said. "If no timely and comprehensive solution is implemented, what happened on Friday may not be an isolated incident. When it is obvious that it is too late to repair a building, there needs to be consideration of redevelopment. "Urban renewal projects have raised much controversy in recent years. As well as this, it takes a long time to finish a project." It takes at least seven to eight years for the authority to complete a renewal project on a small or medium scale, and 13 years for large ones. Projects are likely to take longer when they are in a particularly busy location, an authority spokesman said.

The police chief yesterday defended officers who used pepper spray recently during a clash with protesters outside the Legislative Council, saying it was used in accordance with strict rules. Officers in riot gear used the pepper spray to subdue hundreds of demonstrators - angry after government funding was approved for the HK$66.9 billion high-speed railway to Guangzhou - outside the Legco building on January 16. Police Commissioner Tang King-shing was responding on-air to criticism from callers to an RTHK radio show yesterday, who condemned police for not respecting people's rights. They said police should not have used violence. One caller said: "Do the police have guidelines for the use of pepper spray? The protesters did not attack police. It was unacceptable to use pepper spray on the protesters." Tang responded: "We act in accordance with our rules and the situation when police use any violence. If any police officer uses violence, they need to be responsible for their actions. Police have had training. They know how to respond to different situations." Tang said police would improve communication with young protesters to try to ensure rallies are staged lawfully. "It is important for us to enhance communication with young people, to understand their thoughts," he said. "The government respects freedom of assembly and speech. The police's duty is to ensure public safety and public order." One caller said it was inappropriate for police to use cameras to record footage of the demonstration. Tang said the recordings would be used as evidence and that police did not film individuals. Separately, when asked about the niece of a Court of Final Appeal judge, Mr Justice Kemal Bokhary, Tang said she had been detained in the interest of public safety. The woman was arrested for slapping a policeman and refusing to take a breath test after her car collided head-on with a tour bus in Happy Valley on January 27.

A legendary 1897 stamp fetched HK$5.52 million, a record for a Chinese stamp, at an auction yesterday in Hong Kong. The Red Revenue Small One Dollar, issued during the Qing dynasty, sold for a hammer price of HK$4.8 million plus 15 per cent of buyer's premium levied by the auction house, Hong Kong-based InterAsia Auctions. With a small one-dollar overprint on a three-cent Red Revenue stamp, it is one of 32 known copies of the original 50 that were overprinted. Its presale estimate was HK$2.5 million to HK$3 million, and the auctioneer boasted that it was the best of the 32. The sale broke the record set by a rare 1968 stamp less than three months ago at a Hong Kong auction. The politically significant 1968 rarity, known as The Whole Country is Red, does not show Taiwan on a red map of China. It sold for HK$3.68 million in November. In September, a Beijing collector bought the Red Revenue Small One Dollar stamp for €226,000 (HK$2.44 million), then a record for a Chinese stamp, at an auction in Hong Kong. The InterAsia auction, which featured 1,800 lots of stamps from China, Hong Kong and Asia, continues today. It is expected to fetch in excess of HK$45 million. Another highlight was a mint block of six Small Two-Cent Red Revenue stamps, with inverted surcharge errors. It has a presale estimate of HK$1 million to HK$1.2 million. Then there is the "Red Ruby" mint block of four - one of two known sets - from the 1897 Dowager Surcharge issue. It has a presale estimate of HK$2.4 million to HK$2.8 million. Of high contemporary interest is the special catalogue of the "Treasures of the Cultural Revolution", including a stamp showing Mao Zedong and Lin Biao on the balcony at Tiananmen Square under a blue sky. The issue was to have been destroyed after Lin was condemned as a traitor following his death in 1971. A copy of The Whole Country is Red also goes under the hammer but it is unclear whether it was the same as the one that fetched HK$3.68 million in September.

China*: China could wave goodbye to its GDP data discord as the national statistics bureau chief claims that he will unify provincial and central GDP calculation methods and improve grassroots statistical quality this year. Ma Jiantang, head of the National Bureau of Statistics (NBS), has criticized some local officials who inflate the GDP figures they report to the NBS. The problem has affected the nation's statistical credibility and produced disunity between central and provincial data, Ma said. The aggregate of the GDP figures reported by local governments reportedly is often larger than the overall national figure released by the NBS, arousing concerns that the local governments may have rigged the statistics to show how capable they are of managing local economy. The new move by NBS is expected to change that, at least partially. "That's a positive signal for macro economic analysis," said Cai Zhizhou, director of National Economic Accounting and Economic Growth Research Center at Peking University. Data accuracy, credibility and cohesion would be improved a lot if the central government can count provincial economic growth indexes directly, he said. The statistics matter because they have a crucial bearing on the country's macroeconomic policies, Ma said at the national statistics conference on Jan 28. According to the bureau, in the first half of 2009, the sum of provincial GDP figures exceeded the national GDP figure, calculated by the bureau independently, by more than 1.4 trillion yuan, or about 10 percent of the total GDP. In 2004, the difference was 3 trillion yuan, or 19.3 percent of the national GDP that year, which was the biggest gap in history. Ma said that some provinces reported 18 to 20 percent year-on-year GDP growth amid the country's economic slowdown in 2009. This has raised an alarm for statisticians, because the national GDP growth in that year was only 8.7 percent. China will release quarter-on-quarter growth data this year, which will help monitor the economy's short-term growth trend more effectively, Ma said. "The unification and quarter-on-quarter growth data to be released will lay a foundation for making statistics more transparent, which is crucial for economic analysis and prediction," said Zhou Mingjian, an analyst with Pacific Securities. He predicted regional economic growth data would show some declines as the central government begins to enforce the accounting rules, but the national GDP won't be affected noticeably. But some analysts warned that if the country pays too much attention to GDP growth and continues to judge local officials' performance on local GDP growth, the problem of statistical inaccuracy would remain difficult to solve.

Washington's latest plan to sell US$6.4 million worth of arms to Taiwan will have little impact on warming cross-strait relations, considering that it involves less sensitive weapons, analysts say. Nor will it seriously upset the highly delicate triangle of Sino-US-Taiwan relations, they note. The arms sale plan, announced shortly after Taiwanese President Ma Ying-jeou left Los Angeles on a transit stop on his way back to Taiwan from the Dominican Republic, drew an angry protest from Beijing. But it has focused its criticism on Washington while doing nothing so far to punish Taiwan. The only reference so far about Taiwan in this dispute was a statement issued in Beijing by the State Council's Taiwan Affairs Office, which stressed that the deal would only create a wrong signal to pro-independence activists in Taiwan and "ran counter both to the sound development of the cross-strait relations and to the fundamental interests of the Taiwan people in the long run". Analysts say while it is routine for the mainland to protest against arms sales to Taiwan, Beijing has been careful in both words and deeds not to sabotage cross-strait relations, which have dramatically improved since Ma took office in May 2008 and adopted a policy of engaging the mainland. They said the weapons to be sold to Taiwan could in no way create a serious threat to the mainland. "Although these weapons can somewhat increase Taiwan's defence capability, they are falling far behind what is needed really to be able to defend Taiwan," said Alexander Wang Chieh-cheng, professor at the Institute of International Affairs and Strategic Studies at Tamkang University. Professor Lin Chong-pin, at the same institute, said while Beijing was expected to be infuriated by the deal, it was unlikely to make any retaliatory move against Taiwan. "The grand strategy of Beijing is well oiled. It will avoid making things uncontrollable," he said. Lin Cheng-yi, a senior researcher of American and European studies at Taiwan's top academic institution Academia Sinica, said as long as the more advanced C/D versions of F-16 fighter jets and the submarines were not included in the deal, the impact on Taiwan would be very limited. "And the impact on the US will be short-lived, too," he said. Taiwan has been seeking to buy the advanced C/D versions of F-16 fighter jets and diesel submarines from the United States, but so far Washington has not approved such requests. Yen Chen-shen, a researcher at the Institute of International Relations under National Chengchi University, said President Hu Jintao's planned US visit later this year would be a good occasion to gauge the true impact of the arms deal on Sino-US ties. He said by selling those less-sensitive weapons to Taiwan, the US has slightly improved the military balance now strongly tilted towards China while avoiding seriously angering Beijing. "It also helps the Ma government find a good argument in defending its policy to engage the mainland when it tries to seek support from the opposition or the pro-independence camp in Taiwan," he said. The pro-independence camp has expressed worries that without adequate defensive capability, the Ma government would have no teeth at all in dealing with the mainland and will eventually be swallowed up by Beijing. Yesterday, it criticised the arms deal as "trash" while noting that Taiwan has to pay a huge bill for the package which is well above market prices. In response, Premier Wu Den-yih said his government would seek to obtain the package at a "reasonable price." Taiwan needs an additional NT$100 billion (HK$24.3 billion) to buy the weapons, all of which were proposed by Ma's predecessor, Chen Shui-bian, between 2002 and 2007.

The moon is seen in Taiyuan, capital of north China's Shanxi Province, Jan. 30, 2010. The moon seen on Saturday is the biggest full moon of the year. In average, the biggest full moon repeats every 14 synodic months.

Candidates pose during a contest to select the Miss Etiquette for Shanghai World Expo 2010 in Hangzhou, East China's Zhejiang province, January 31, 2010.

Beijing will impose sanctions on US firms which sell weapons to Taiwan and suspend military exchange visits with the United States in protest over planned US arms sales to Taiwan worth US$6.4 billion. The announcements were made after the Obama administration notified the US Congress on Friday of its proposal to sell the arms to Taiwan - regarded as the first test of US President Barack Obama's attitude towards trickier issues in the relationship with Beijing. The Pentagon's Defense Security Co-operation Agency plans to sell Taiwan 60 Black Hawk helicopters, 114 advanced Patriot anti-missile missiles, enhanced command-and-control systems, 12 advanced Harpoon missiles and two refurbished minesweepers. Analysts noted the items are defensive; the package does not include F-16 fighters, which are on Taiwan's wish list. The Foreign Ministry, Defense Ministry and Beijing's Taiwan Affairs Office all piled in with dire warnings. They said the arms sales would affect Sino-US co-operation on major international and regional issues. The Defense Ministry, in a strongly worded statement carried by Xinhua news agency, said: "Considering the severe harm and odious effect of US arms sales to Taiwan, the Beijing side has decided to suspend planned mutual military visits." Deputy Foreign Minister He Yafei summoned the US ambassador to Beijing, Jon Huntsman, to lodge a protest. "The United States must be responsible for the serious repercussions if it does not immediately reverse the mistaken decision to sell Taiwan weapons," he said. Taiwan was the "most important and most sensitive core issue in Sino-US relations", He said, in comments on the Foreign Ministry website. "Beijing will also impose corresponding sanctions on US companies that engage in weapons sales to Taiwan," the Foreign Ministry said, without naming any firms.

You are spoilt for breathtaking views as soon as you enter Angela Chui's penthouse at Shimao Olive Garden in Beijing, the luxury housing complex built by Hong Kong developer Hui Wing-mau. To the south is the Olympic National Forest Park, an 8.7 million square metre panorama of trees and grass and a prized oasis of open green in this claustrophobic capital of cement, tarmac and regular smog. As you look out in awe from the floor-to-ceiling picture windows on this preciously clear winter's day, the forest gives way to modernity 1.5 miles away. The iconic Olympic stadiums, the Bird's Nest and Water Cube, which are illuminated in their signature red and blue colors at dusk, stand proudly in the middle distance. To the southwest, Beijing's central business district looms. The jumbled regiment of 21st century skyscrapers - which popped up on the horizon in just a few years like a novelty children's book - offers a figurative shock and surprise announcement of Beijing and China's rapid rise. The prospect from Chui's kitchen is equally inspiring. To the east are the historical Fragrant Hills and to the north, the protective Taihang and Yanshan mountain ranges. Beijing stands before you, looking impossibly tranquil from this multimillion-yuan room with a view. It is of little wonder Hui made his billions with a canny eye for spotting prime real estate sites. Thanks to its Olympic location and spectacular views, Olive Garden is one of the top five desirable places to live in Beijing, and one of the most expensive. The units were snapped up as soon as they came on the market for between 15,000 yuan (HK$17,000) and 20,000 yuan per square metre five years ago. They have since more than doubled in value. It is also of little wonder the Chuis and their well-off neighbours are now fighting tooth and nail to keep their luxury homes just as they are. The upmarket complex has become the latest salient in the ubiquitous land and property war between citizens and unscrupulous government officials and developers. Overnight, the Olive Garden residents - who are lawyers, factory owners, bankers and financial investors - have become brazen property rights activists. As well as seeking to protect their properties, they are also challenging what they allege is the questionable relationship between a perfidious developer and equally shady government officials. Chui jabs a pointing finger earthwards to the Qing River that flows 100 meters from the Olive Garden perimeter wall. With a look of dismay, she points out the blight that is turning their once idyllic, enviable lives into misery and anger.

The State Council has released a draft regulation on home requisitions and redevelopment compensation for wider consultation in a landmark move to address growing public discontent over forced evictions. If passed after the consultation period, which will last until February 12, the new regulation will replace the controversial housing demolition regulation introduced in 2001, which has been widely criticised for encouraging the excessive use of forced evictions. The draft regulation says regional governments should only demolish housing if it was in the public interest and developers would not be allowed to use excessive measures such as cutting off electricity or water supplies to homes to press ahead with evictions. Under the new regulation, county level and above governments can give the go-ahead to redevelopment projects if at least 90 per cent of homeowners agree. And developers must obtain two thirds of the yes vote from prospective evictees before any compensation package could go to local governments above the county levels for approval. Peking University law professor Shen Kui said the clauses could be a bone of contention over the rights of the remaining 10 per cent of homeowners. Still, academics like Shen hailed it as a big step forward in housing development legislation. They said it represented not only a shift in official attitudes towards housing demolition, but also a substantial break from earlier legislation. Shen, one of five professors who presented the legislature with a letter calling for an amendment to the 2001 housing demolition regulation, said the new legislation was more in line with the country's constitution and the 2007 property law, which favours private rights over development. He served on the panel that drew up the new regulation and admitted that that the classification of public interest could still be open for debate. "But in general, it would play a greater role in limiting what local governments can do in housing demolition," he said. Due to flaws in previous legislation, regional governments have often colluded with developers to press ahead with evictions in order to ratchet up regional economic growth rates. The National People's Congress initially made September 2007 the deadline for the new regulation. Pressure has been mounting after several violent and even deadly confrontations in the past few months between home owners and developers backed by local governments. Tang Fuzhen , a Chengdu woman who set herself on fire after she failed to stop demolition work on November 13, has been hailed as a martyr against forced eviction and her death put the 2001 housing demolition regulation under the spotlight. Mainland media reported that Tang 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 compensation because it claimed the building was illegal. The announcement of the public consultation period yesterday has sparked debate among academics, legal professionals and the public. Wang Cailiang , a rights lawyer specialising in housing demolition studies, said the public consultation was a step forward, although homeowners had been largely excluded in discussions leading to the draft. He said he had reservations about what would constitute public interest, particularly as the regulation regarded the redevelopment of dilapidated and old neighbourhoods as being in the public interest. He said it was up to owners to make sure that buildings were safe for tenants - and not something the government needed to address. Hua Xinmin , a Beijing-based conservationist and campaigner against illegal eviction, has called for scrapping a clause that defines heritage conservation development as being in the public interest. "Under the country's constitution and culture heritage legislation, an individual has the right to own a building of heritage value and the liability of protecting it," she said.

China's vehicle sales may experience a significant slowdown this year because of a large base but growth in the sector is still expected to be impressive, the Ministry of Commerce said on Friday. Auto sales this year are forecast to surge a little more than 10 percent from last year's figures to more than 15 million units, the ministry said. The country's auto sales last year grew by 46.2 percent year-on-year, the fastest in more than a decade. Last year, 13.65 million units were sold to mark the nation as the world's largest auto market by overtaking sales in the United States for the first time. "We are still confident of sales for 2010, as the government's policy to stimulate consumption at all levels will continue. But the robust growth momentum of last year cannot be sustained," said Chang Xiaochun, director of the department of market system development under the Ministry of Commerce. "Double-digit growth is not a difficult goal." Auto analysts said the robust growth last year was mainly attributed to the government's stimulus packages. Last year, China halved the sales tax on vehicles with an engine capacity of 1.6-liter or less to 5 percent. The authorities also provided 5 billion yuan ($732 million) in cash to help consumers replace old vehicles. Sales of small vehicles reached 7.2 million units in 2009, up by 71 percent from 2008, while auto sales in rural areas also surged by 85 percent to 2 million units, ministry statistics showed. To maintain stable growth in the auto market, the government last month also extended stimulus measures for another year, raising the tax on smaller cars to 7.5 percent from a favorable 5 percent last year. "The budget allocated for the renewable vehicle program will rise by large margins and the subsidy for certain categories of vehicles will grow by 200 percent," Chang said. But most analysts interviewed also said growth in the sector this year will not hit levels seen last year because of a large base. "It will range from 15 to 20 percent, but China is expected to continue leading the global auto market," said Tan Jijia, an auto analyst from the Beijing-based Pacific Securities. Klaus Maier, president and CEO of Mercedes-Benz China, told China Daily in an earlier interview that China's auto industry is expected to grow by 10 percent to 15 percent this year. Other sectors are expected to gain from the auto sales growth. "The double-digit growth means an optimistic prospect for steel mills that produce auto sheets," said Yu Liangui, an analyst from the Shanghai-based steel consulting firm Mysteel. "All auto steel sheet producers in China ran with full capacity last year and they plan to expand capacity this year," Yu said. China's largest steel maker, Baosteel, also announced enlarging its auto sheet capacity by 15 percent in 2010.

Feb 1, 2010

Hong Kong*: Demand for public health services in Hong Kong is becoming acute, but health authorities are failing to spot non-residents and charge them the higher fees they are supposed to pay, the Ombudsman says. Alan Lai Nin, appointed ombudsman early last year, said early on that heavy demand on the city's affordable health care services was straining patient-care resources and weighing heavily on government finances, and he promised to investigate checks on patients' eligibility by the Hospital Authority and the Department of Health as a matter of "wide public interest and concern". He has now reported that they have been failing to check the residential status of patients, resulting in more non-residents using services at the price subsidized by taxpayers. A resident is charged only HK$45 per visit for general outpatient services, which costs a non-resident HK$215. The difference is bigger for inpatients: HK$100 per day compared with HK$3,300. According to a six-day survey by the Hospital Authority and Immigration Department last December, 113 non-residents holding identity cards used general outpatient, specialist outpatient and inpatient services under the Hospital Authority. A total of 224,300 identity card holders used these services during the period. Assuming all non-residents used general outpatient services, taxpayers spent at least HK$19,210 subsidising health services used by non-residents during the six days. A rough calculation shows more than HK$1 million of taxpayers' money could have been overspent in a year. Holders of non-permanent identity cards should be told to present their travel documents to show they have not exceeded their stay, the Ombudsman said. "Other departments are able to do it," he said. There is an urgent need for them to make a change as the number of non-residents keeping outdated identity cards has increased, from 140,000 in 2008 to 220,000 last July. The Food and Health Bureau, which overseas the two authorities, accepted the recommendations by the Ombudsman, a bureau spokesman said. An inter-departmental group will explore possible measures, including electronic means in the long run.

MTR Corp said yesterday it had received 14 expressions of interest from developers to build a large-scale luxury residential project above Austin Station in West Kowloon. Among the interested developers are Cheung Kong (Holdings) (SEHK: 0001), Sun Hung Kai Properties (SEHK: 0016), Henderson Land Development (SEHK: 0012), New World Development, Kowloon Development (SEHK: 0034) , Sino Land, USI Holdings, Hang Lung Properties (SEHK: 0101), Kerry Properties (SEHK: 0683), Nan Fung Development and Wheelock Properties (SEHK: 0049). "We are pleased with the good response," said Thomas Ho, a project director at MTR Corp. "We will proceed to shortlist the eligible developers and consortiums who will be invited to submit a tender for the development project." It is the first MTR project to be offered for tender since the start of the global financial crisis in September 2008. The project will be built on top of the new Austin station at Canton Road, next to the golf driving range, which will be pulled down and become part of the Guangzhou-Shenzhen-Hong Kong Express Rail Link at West Kowloon station. "The sites at Austin station will benefit from the two new railway lines and also the development of the West Kowloon Cultural District, said Alnwick Chan Chi-hing, an executive director at Knight Frank. "The Kowloon station area has become a new luxury residential area. It is attractive to developers." Even though the project attracted more than a dozen developers, Chan said he believed only five or six developers could afford the large cost of the project. "We will see developers team up to join the bidding for this project," he added. Transaction data from Centaline Property Agency shows property prices in the Kowloon station area range between HK$8,176 and HK$23,717 per square foot. Chan said the units at Austin station might reach HK$20,000 to HK$22,500 per square foot when the project is launched. Surveyors estimated the land price of the sites to be worth HK$12.8 billion to HK$19.2 billion. That translates into HK$10,000 to HK$15,000 per square foot in terms of gross floor area. The two sites have a total area of 2.74 hectares. The winning bidder could build a commercial-residential project with a total gross floor area of more than 1.28 million square feet providing about 1,200 units. MTR will put the project up for tender once it reaches agreement on the land premium with the Lands Department. To lure more bidders, the company has promised to pay part of the levy.

He was known as "Maggie's Mandarin", the soft-spoken British Foreign Office diplomat who was the chief architect of Hong Kong's return to China in 1997. Sir Percy Cradock died on January 22, aged 86. He worked closely with former British prime minister Margaret Thatcher on the terms on which Hong Kong would return to Chinese rule, ahead of the Joint Declaration in 1984 between Britain and China. Thatcher was opposed initially but quickly came to his way of thinking. Cradock, Britain's ambassador to Beijing from 1978 to 1984, found negotiations with China were troublesome at the outset. "There were no real discussions with China at the beginning," said former chief secretary Sir David Akers-Jones, who regarded Cradock as a friend who he would visit even in recent years on trips back to England. "He warned of the consequences if the negotiations broke off." It was Cradock's view early on that Hong Kong and Kowloon without the New Territories was not economically viable or militarily defensible. A Foreign Office pragmatist, he believed the only kind of democracy Hong Kong would get was one China wanted. It was on a secret trip to Beijing in 1989 that he negotiated the enshrining of a provision in the Basic Law to allow half of the Legco seats to be directly elected by 2003. "He believed strongly in negotiations with people and countries," said Akers-Jones. "He wasn't a pushover by any means. You should pursue your negotiations with tenacity but in the end you should come to an agreement and this is where he disagreed with the governor, Mr Patten." Cradock joined the Foreign Office in 1954 and followed Sir Edward Youde as ambassador in 1978. He also was a diplomat both in Malaysia and Hong Kong. He had a brief posting in Beijing in 1962. He returned in 1966 and became a charge d'affaires in 1968. In 1967, he witnessed the British chancery being burned down amid the mayhem of the Cultural Revolution. He became a foreign policy adviser to Thatcher and her successor, John Major. He retired from government in 1992 and was an ardent critic of governor Chris Patten's policy on unilaterally accelerating democracy. Former Democratic Party chairman Martin Lee was reluctant to speak about Cradock. "It's not nice to say something uncomplimentary on a person's death. When I write my book I'll write everything. I don't think he was Hong Kong's friend. "Clearly he toed a strict Foreign Office line which is ... that an agreement, however bad, is better than no agreement at all." Cradock voiced his animosity towards Patten in an interview with RTHK in 1995, referring to him as "the incredible shrinking governor". Cradock was married to Birthe Marie Dyrlund, who worked at the Foreign Office. He was a non-executive director of the South China Morning Post (SEHK: 0583) from 1996 to 2000.

Nobel physics laureate Charles Kao Kuen was set to return to Hong Kong on Friday evening. For the next two months, Kao will attend the Chinese University of Hong Kong’s Nobel exhibition and with other events. “Professor Kao and Mrs Kao will make their first public appearance in Hong Kong at the opening ceremony of a CUHK exhibition next Friday,” a spokesman said. The exhibition will start next Saturday and run until March 20 at exhibition hall of the CUHK’s main campus library. It will showcase Kao’s Nobel Prize medal, diploma, and other awards. CUHK president and vice-chancellor Lawrence Lau Juen Yee said Kao had been involved with the university for 40 years. The university is also planning a scholarship in Kao’s name. Kao, a pioneer in the field of fibre optics, was awarded half of the last year Nobel Prize for Physics. This was for “groundbreaking achievements concerning the transmission of light in fibres for optical communication”. Kao has been suffering from Alzheimer’s disease since early 2004.

Firefighters were scouring the remains of a 55-year-old, five-storey residential building in Hung Hom for survivors after it suddenly collapsed on Friday afternoon - in a tragedy which has claimed three lives. Rescuers have already pulled five people from the rubble of the collapsed building. Of the five, three people have now been confirmed dead, including a 40-year-old woman who died before arriving at hospital and a 41-year-old man certified dead at the scene. Two people were injured: a 56-year-old man who has been discharged from hospital and a 79-year-old who man is in stable condition in hospital. At least two people are still missing and firemen are continuing to search the mound of rubble. Director of Fire Services Gregory Lo Chun-hung said the rescue work was difficult and dangerous. “Our colleagues, including 20 staff from urban search and rescue teams, are doing their best to get people out as quickly as possible. “But there are dangers, as the remains of the building itself are not stable. It, and the buildings next to it, might also collapse,” Lo said. Director of Buildings Au Choi-kai agreed that two old buildings next to the collapsed one were dangerous. “We have to close them immediately and residents are not allowed to enter them,”Au said. Over 20 nearby residents have already been evacuated, television news reported. The incident occurred when most of the external wall of the building, at 45 Ma Tau Wai Road, crashed down about 1.43pm, a police spokesman said. Firefighters and police rushed to the scene about 2pm. Witnesses said the wall had collapsed instantly. Police closed off the scene and are investigating. Chief Executive Donald Tsang Yam-kuen, who visited the area on Friday afternoon praised the rescuers. “Some people are still trapped inside the building and the firemen are doing their best to save them,’’ he told reporters. Tsang said he, and colleagues from the Social Welfare Department and Home Affairs Department, had met with nearby residents. “Naturally they are frightened, scared, worried. I spoke with them,’’ he told reporters. “Definitely we will look after their accommodation tonight and whatever is needed to ensure they have alternative accommodation and will look after their livelihood.'' He said the building collapse had been a “real tragedy” “We will do whatever we can to ensure this sort of accident will not happen again.” The rescue work is expected to continue overnight. In other developments, the Transport Department said all lanes of Ma Tau Wai Road between Bailey and Man Yue streets were closed to traffic. Motorists were advised to avoid the area.

The block (left) before it was reduced to rubble yesterday and the scene (right) soon after the disaster as rescue crews began their search.

Rescuers comb the debris of the building collapse in Ma Tau Wai Road, To Kwa Wan, searching for a several people believed trapped.

A selection of sweeteners for a broad range of people are on the cards when Financial Secretary John Tsang Chun- wah reveals the budget next month. Tax rebates and rate waivers meant to cheer the middle class and those at the grassroots are in the works for Tsang's third budget presentation on February 24. They are key elements in a package that will include several one-time measures. Tsang and his advisers are understood to have taken lessons from previous budgets to settle on schemes that will provide some relief to those feeling the continuing effects of the economic squeeze. During the first consultation forum on the budget yesterday, Tsang was in Happy Valley to listen to 24 people who had opinions on education, the elderly, teenagers and health and medical services. Recent economic data showed that Hong Kong "had different degrees of improvement," Tsang said at the outset of the forum. Fluctuations could be the results of outside factors, he added, while foreign economies "might have some hidden problems." These problem factors, said Tsang, meant he would be setting the next budget according to practical stability, providing the base for further development, and social responsibility. He noted that no one at the forum had demanded help in particular areas, though there had been "suggestions about how to help people in need." There will be more consultation sessions in Kowloon and the New Territories in the countdown to the budget, though these seem to be cosmetic exercises as most points have already been settled. Earlier this month, Chief Executive Donald Tsang Yam-kuen indicated that more relief measures are on the way to try to resolve "deep-rooted" strains. Also, during a Legislative Council question-and-answer session on January 14, he said he was "seriously studying" further relief measures to help the poorly paid. In his maiden budget speech in February 2008, John Tsang announced tax concessions and rebates worth HK$35.28 billion. Of the total tax breaks, HK$27.6 billion was in one-off tax concessions. The tax breaks included a one- percentage-point reduction in standard salaries and profits tax rates to 15 percent and 16.5 percent respectively. The measures also included HK$1,800 worth of free electricity to 2.4 million households. Underprivileged people received one-off grants, including HK$3,000 for old-age allowance recipients, a one- month rent waiver for public housing tenants, and a HK$6,000 Mandatory Provident Fund injection for those earning less than HK$10,000 a month.

Hang Lung Properties (0101) has committed HK$38 billion on prime commercial projects in the mainland. The developer and landlord is building two shopping malls in Shenyang and Jinan. Four other projects, including two malls in Tianjin and Dalian, are in the pipeline. "[Our capital expenditure] will peak in the coming three years. We've paid HK$10 billion," said executive director Terry Ng Sze-yuen. "We'll spend another HK$10 billion during the period." Hang Lung will bear HK$5 billion construction costs this year, Ng said. Average land costs at HK$270 per square foot account for 15 percent of the committed amount. Construction cost averaging HK$1,600 psf makes up the rest. Shopping arcade Palace 66 in Shenyang will be completed in the middle of this year. Ng expects to lease space for an average of HK$30 psf. The 1.2 million sq ft mall will have 47 percent of leasable area and a 70 percent rental margin. Rentals from mainland shopping centers now comprise 43 percent of its total rentals. The proportion will grow as more malls start operation. Hang Lung will hire about 500 workers for each new center. Locally, Hang Lung has reserved 1,500 primary homes worth up to HK$16 billion. The HarbourSide, which was the interim profit driver, has 284 unsold units. Asked when they will be sold, Ng said Hang Lung prefers "maximizing the margins" rather than selling a number of many homes continuously. The developer will receive a cash payment of over HK$4 billion from the sale of luxury homes at The HarbourSide this year. Ng noted the developer is in a net cash position. Ng said Hang Lung is interested in two Austin Station plots and will hand in an expression of interest to the MTR Corporation (0066). But a decision on whether to tender for them will be made after evaluating returns. Hang Lung's shares surged 3 percent to HK$27.40 yesterday.

Consumer goods exporter Li & Fung (0494) said it has entered into a sourcing agreement to supply Wal-Mart with goods valued at US$2 billion (HK$15.6 billion) in the first year, and expected to grow after that.

The number of public meetings and processions held annually in Hong Kong jumped threefold since the handover in 1997, from 1,190 to 4,222 last year, an average of 11 public protests daily, according to police figures. Ma Ngok, a political scientist at Chinese University, said the rise of protests held in the city since 1997 reflected a more active civil society in Hong Kong as people chose to take to the streets to express grievances. Since the 1,190 public meetings and processions in 1997, the numbers rose to 2,064 in 2000 and then 2,705 in 2003, the year that 500,000 turned out on July 1 to demonstrate their opposition to proposed national security legislation. In 2004 (1,974) and 2005 (1,900) the annual number of protests dropped slightly but rose again to reach 4,000-plus each year in 2008 and 2009. An average of three protests was staged daily in 1997, seven in 2003 and 11 by last year. "It is very clear that the rise and fall in the figures has a correlation with the economic situation in Hong Kong," Ma said. "During bad economic times, more livelihood concern groups and organisations come out to express social discontent." As an example, he said, the number of protests in 2005 and 2006 was relatively low. Many protests by investors calling for compensation over losses after the collapse of Lehman Brothers investment bank during the 2008 economic crisis should be counted in last year's figures, he said. In Hong Kong, any person who wants to hold a public meeting attended by more than 50 people, or a public procession attended by more than 30 people, is required to notify police not less than seven days before the intended meeting or procession, according to the Public Order Ordinance. Police received 1,467 applications relating to public meetings or processions in 2009. They were not told about 73 notifiable public protests held during the year. Police accept shorter notice if organisers can provide good reason. Since the handover, only 26 public meetings or processions have been prohibited or been subject to police objections. The independent appeal board on public meetings and processions, chaired by a retired judge, has received eight appeals against police decisions to prohibit events in the past five years. Four hearings went ahead and the other four were withdrawn by applicants. Police decisions were upheld in two cases.

The Hong Kong Monetary Authority has denied advising banks not to offer services to some nationalities and says it will follow up complaints filed by ethnic minorities. "The HKMA has not, I repeat has not, issued any regulatory requirements that banks should not provide banking services to any customers of certain nationalities," Arthur Yuen Kwok-hang, the authority's deputy chief executive, said. The clarification followed media reports that two Pakistani women with Hong Kong identity cards said Hang Seng Bank (SEHK: 0011) had refused to let them open accounts because they were "from a country involved in terrorist attacks". Bank staff allegedly told them that the HKMA had advised the bank to be cautious. The banking regulator issued a circular to all banks yesterday. "We... remind banks once again that they should ensure that their operation is in full compliance with the racial discrimination ordinance and the relevant provision in the code of banking services," Yuen said. He said the HKMA had contacted an association that was helping at least 30 members of ethnic minorities, mainly Pakistanis, to provide information about their cases. The authority would take up the matter immediately with the banks and bring the cases to a satisfactory conclusion as quickly as possible, he said. Fermi Wong Wai-fun, the executive director of Hong Kong Unison, confirmed that the HKMA had approached it for information. Hang Seng Bank said yesterday that it did not have any guidelines about not allowing Pakistanis and other nationalities to open accounts at the bank. It said about 3,100 of its account holders were Pakistanis and that it had helped more than 10 Pakistanis a month to open accounts recently. Standard Chartered Bank said it did not look at a client's nationality when offering banking services. HSBC (SEHK: 0005) did not respond yesterday.

The global stock markets rally helped the Exchange Fund - which invests money for the government and helps to defend the Hong Kong dollar - return to profit, posting investment income of HK$106.7 billion last year. The result meant that the fund has recovered all of its HK$75 billion losses in 2008 when financial turmoil sent markets tumbling. Earnings in 2009 were the second-highest on record, behind 2007 when it earned HK$142.2 billion. However, fund managers and analysts said the strong performance only reflected stock markets' strong rebound from the 2008 crisis, and do not expect the fund to be able to repeat the performance this year. "The returns from both bond and equity markets this year are both expected to be lower than in 2009,'' said Mark Konyn, chief executive of fund company RCM Asia Pacific. The Exchange Fund return is a public interest issue because it is the city's reserve fund to support the Hong Kong dollar. The fund grew to HK$2.15 trillion as of the end of last year, up from HK$1.56 trillion a year earlier. It includes the government's money, which from 1976 has put its fiscal surplus in the fund which the Monetary Authority also wrapped with other assets - including monetary base, such as the assets used to back up note-issuance and the accumulative investment returns earned by the fund every year since its inception in 1935. Despite the fund's strong profit last year, it only paid HK$33.5 billion to the government, less than the HK$46.4 billion in 2008 when it suffered a loss. However, its payment was still ahead of the budget forecast of a HK$31.5 billion. This was because the return to government is based on its six-year average return up to the year in question, and the period from 2003 to 2008 inclusive was a bad time for the markets. As a result, the government's return last year was 6.8 per cent, down from 9.4 per cent in 2008. The HKMA invested about 76 per cent of the fund in bonds, mainly US dollar-denominated securities, and the rest was in other currencies, Hong Kong stocks and global equities. Last year's global stock market rally - in which the Hang Seng Index rose 52 per cent - helped the fund, which also gained from valuation gains of other currencies against the US dollar. The fund recorded a return of 5.9 per cent last year, similar to its 6.1 per cent average from 1994 to 2009. Several legislators, including Regina Ip Lau Suk-yee and Chim Pui-chung, criticised the fund on Wednesday, saying its return fell short of counterparts in Singapore and state funds elsewhere. They urged the government to put aside a portion of the fund to allow them to invest in the higher-return products and to shift from the depreciating US dollar holding to the yuan, which is appreciating. The authority only indirectly invests in yuan asset through the Asian Bond Fund because the yuan is not yet a freely traded currency. But authority chief Norman Chan Tak-lam said the fund investment should be cautious because its purpose was not to make money. "While there is a modest recovery in the global economy, its sustainability remains to be seen," he said. Chan said global banks faced pressure to meet capital and other financing needs in the coming years and the performance of the financial markets was clouded because many governments might need to unwind monetary easing policies. "In sum, I expect that the uncertainties surrounding the movements of interest rates, international fund flows and exchange rates may lead to considerable volatility in global asset markets in 2010," he said.

China*: Uncertainties loom large over exchange programs agreed by Beijing and Washington during US President Barack Obama's visit last year as the bilateral relationship hits a rough patch over issues ranging from internet freedom to arms sales to Taiwan. A case in point is the postponement of a visit to China by US military personnel after the arms sale, according to a veteran, Beijing-based observer of the Sino-US relationship. Recent disputes had also raised doubts about the likelihood of the next round of human rights dialogue between the two countries taking place as scheduled next month, Sun Zhe , director of the Sino-US Relations Research Centre at Tsinghua University, said. Sun said the exchange program for US air force personnel was planned after Central Military Commission vice-chairman General Xu Caihou's visit to the US in October. Xu and his US counterparts agreed to further enhance military exchanges during the first trip to the US by such a high-ranking People's Liberation Army officer in years. The pledge was renewed again when Obama held talks with President Hu Jintao during his state visit in November.

Petrol demand on the mainland this year is forecast to grow at half the rate at which people drive shiny new cars out of showrooms, but refineries will be more than able to keep pace and exports will mop up the excess fuel. Tax incentives are expected to fuel sales of a record 11.9 million new cars this year, after last year's jump of 53 per cent, but there will be few queues at petrol pumps because many models have small fuel-efficient engines, or do not use petrol. China's total fleet of cars has not yet reached the critical stage that will stop refiners from meeting new demand. The move last year to set retail fuel rates in line with global prices of crude triggered a surge in refinery runs that yielded so much petrol that exports rose despite the surge in sales of new cars that consume 90 per cent of the fuel. "So long as China raises crude runs, the configuration of its refineries will mean increasing supplies of petrol that will outpace, or at best, be on a par with petrol demand," Kang Wu, a senior fellow at the Hawaii-based East-West Centre, said. Net petrol exports rose to 4.9 million tonnes or 114,000 barrels per day (bpd) last year, from 46,618 tonnes or 1,000 bpd in 2008 left over from a stockpile built for the Olympic Games. The country exported almost one million tonnes of petrol last month, easily the biggest monthly volume ever, with refiners forecast to process 560,000 bpd more crude than the 7.5 million they did in 2009. Early last year, China began adjusting retail fuel prices on a 22-day moving average if global crude prices rose or fell more than 4 per cent, something that happened eight times last year and gave refineries guaranteed margins. With crude now below US$75 a barrel, petrol prices, at 7,900 yuan (HK$8,980) per tonne, are higher than at the time of peak global crude prices near US$137 in June 2008 when China's subsidy regime held prices at 6,980 yuan. Analysts said China's surplus situation was unlikely to change soon, despite robust car sales. "Petrol demand will grow at a faster pace than in 2009 but not in tandem with the nominal rate of car sales," Dai Jiaquan, a senior market researcher at China National Petroleum Corp, said. Total petrol demand would grow 7.8 per cent this year to 72.2 million tons, 2.2 percentage points faster than 2009 growth, Dai estimated. China's car sales are forecast to grow 15 per cent this year to 11.9 million units following a jump in sales above 10 million last year.

China vehicle manufacturers might not get regulatory approval for capacity expansion unless they first agree to take over a domestic rival, the Shanghai Securities News reported on Friday. Beijing has been encouraging acquisitions among the automobile industry’s more than 100 players, aiming to create a few national champions able to compete with global giants at home and overseas. Under the latest version of policy guidelines expected to come out before the end of March, the government will in principle prohibit new vehicle projects and green field capacity expansion unless automakers first take control of a domestic peer, the newspaper said, citing unnamed sources. Those that arrange merger deals, meanwhile, would be rewarded with tax, credit and other incentives, it said without elaborating. Combined sales of China’s top 10 automobile manufacturers came to 11.9 million units last year, equivalent to 87 per cent of total sales that year, official data showed. Remaining players’ annual sales amounted to fewer than 10,000 units each. SAIC Motor, China’s biggest automaker and a partner with General Motors and Volkswagen AG, sold 2.7 million vehicles last year, less than a third of Toyota Motor’s tally of 8.27 million units for that year. Beijing wants to cut the number of major Chinese auto groups to 10 or fewer from 14 now, and ultimately wants two or three mega-producers with annual output of more than 2 million vehicles each. With a push from the central government, several second-tier automakers, such as Guangzhou Automobile and Beijing Automotive Industry Holdings, have been seeking merger targets, hoping to squeeze into a select few national players.

Guangdong province expects around 9 per cent GDP growth this year, slightly lower than the 9.5 per cent it achieved last year during the financial crisis, its governor said on Friday. Speaking at the opening of Guangdong’s annual parliamentary session, Huang Huahua said the economic outlook this year remained cloudy for his province which encompasses the Pearl River Delta that churns out around a third of China’s exports. “While the Guangdong economy has stabilised, it hasn’t completely recovered. Our economic growth momentum remains insufficient while pressures on our economic development and structural adjustments have increased,” Huang said. Meanwhile, the total value of Guangdong’s imports and exports was expected to rise around five per cent for the year, despite China’s recent glowing trade figures and anecdotal evidence in that many Guangdong factories are facing a labour shortage as production lines crank up again on rising overseas orders. Growth in the mainland’s overall exports and imports last month blew past expectations, providing fresh evidence of the vigour of the economy and strengthening the case for Beijing to let the yuan start climbing again. Exports in December leapt 17.7 per cent from a year earlier, breaking a 13-month streak of year-on-year declines; imports surged 55.9 per cent. Huang emphasized the importance of bolstering economic ties with neighboring Hong Kong, with important infrastructure projects including the Hong Kong-Zhuhai-Macau bridge and high speed rail links to be completed in the coming years. After a wave of lay-offs of migrant workers in the Pearl River Delta’s factories last year amidst the financial crisis, Huang said he expected 1.25 million new jobs to be created this year to stabilize the labor market. He also called for better arbitration and labor inspections to improve workers’ rights.

US-born panda cub Tai Shan will next week leave the National Zoo in Washington and head in grand style for a new life in Sichuan – on board a Federal Express cargo plane, officials said on Thursday.

McDonald’s Corp, the world’s largest hamburger chain, said on Friday that it plans to aggressively expand drive-through outlets and increase franchise numbers in mainland. McDonald’s currently has three franchises in mainland and just opened its 100th drive-through in the southern city of Zhongshan. “We are not in a rush to expand this [franchise] programme,” Kenneth Chan, McDonald’s China CEO, said after officiating launch of a new marketing campaign, adding: ”Franchising is part of our expansion plan.” McDonald’s, which aimed to open 150-175 new stores in mainland this year, also planned to roll out McCafes in key mainland cities, he added. McDonald is launching a new brand concept called “Make Room for Happiness” to mark the 20th anniversary of the opening of its first restaurant in Shenzhen. “We expect to increase our capital investment by 25 percent over last year,” said Chan, during the launch of a new marketing campaign on Friday. “We continue to be extremely bullish about our business in China and will continue to invest in opening new restaurants,” he said, but declined to disclose any investment amount. McDonald’s, which competes with Yum Brands’ KFC and Ajisen (China), a noodle restaurant chain operator, in the mainland was planning to open 150 to 175 restaurants in mainland in 2010, which would lead to the creation of 10,000 new jobs, he added. The company said it had 1,135 stores in mainland as of the end of last year. Last week, McDonald’s posted a profit for the fourth-quarter of last year of US$1.22 billion, up from US$985.3 million a year earlier, helped by strength in Europe and a small rise in December sales in the US. It said same-store sales gained 1 per cent in December after two months of declines in the United States, where high unemployment and rampant discounting are straining results. December same-store sales in Europe topped forecasts with a 5.1 per cent gain, while the Asia-Pacific, Middle East and Africa region missed analyst calls and were up just 1 per cent. Globally, same-store sales rose 2.7 per cent for December and 2.3 per cent for the quarter, the company said.

Li Keqiang, executive Vice-Premier, State Council of the People's Republic of China adjusts his headphones before addressing the World Economic Forum in Davos, Switzerland on Thursday. The World Economic Forum is turning toward earthquake-ravaged Haiti and steering Africa to prosperity as more world leaders arrive for the annual event in this Swiss Alpine resort. Laying out his strategy for long-term economic growth, Li Keqiang said that Beijing would seek to boost domestic consumer demand to drive forward its booming economy and move away from an over-reliance on export markets. Vice Premier Li Keqiang said the mainland’s market of more than 1 billion people would open up gradually in the coming years, with monopolies broken up and competition encouraged, benefiting the whole world. In a wide-ranging speech introducing him to many leading figures in business and politics, Li said China needed a new development model. “China’s domestic market has huge potential,” he said on Thursday at the World Economic Forum, the gathering of 2,500 business and political leaders in Davos, Switzerland. “As we stand at a new historical juncture, we must change the old way of inefficient growth and transform the current development model that is excessively reliant on investment and export.” On the forum’s second day of debates in the Swiss Alps, leaders also heard former US President Bill Clinton’s appeal for aid to Haiti but not from Brazilian President Luiz Inacio Lula da Silva, who cancelled his trip to Davos because of hypertension and was hospitalized in Brazil overnight. He left on Thursday morning. Meanwhile, British Conservative leader David Cameron endorsed the latest US proposals to make banks repay some of the costs of last year’s financial bailout, telling reporters in an interview that as prime minister he would go toe-to-toe with British bankers to bring them in line. Li said stronger Chinese demand would “provide huge opportunities for the whole world.” He said the government was stimulating growth through rural subsidies to enhance spending power, and noted that Beijing’s policies this year ensured “steady and fast growth” of 8.7 per cent while much of the world was sunk in recession. His speech in Davos announced no radical policy shifts from Beijing, which has already been focusing on diversifying its sources of economic growth. Export markets have rebounded for the mainland since the depths of the economic crisis a year ago, but the stronger emphasis on the domestic consumer reflects a realisation that Americans, Europeans and other wealthy foreigners cannot be counted on to increase their spending on goods manufactured in China forever. Economists say Beijing keeps its currency artificially low against the dollar to promote exports, and that the economic relationship between the US and China is marked by large and worrisome imbalances: the US imports and borrows too much, while China exports and saves too much. Li said all changes would be gradual. He didn’t address the sensitive issues of the currency and lending rates, but in a nod to Washington and Brussels acknowledged the need to enhance protection of intellectual property rights such as patents and trademarks. China recently surpassed Germany as the world’s top exporter, but its rapid export growth and tight domestic market controls have been a constant source of agitation with the US, Europe and other commercial powers. They argue that Beijing has competed unfairly in international trade, pumping up sales of cheap Chinese goods abroad while limiting the amount of foreign products entering China. “We will press ahead with reforms,” Li said through a translator, “and allow the market to better play a primary role in allocating resources.” He noted, however, that China’s imports topped US$1 trillion last year, making it the second biggest importer in the world behind the US. The government kept public debt below three per cent of GDP, expanded health care and launched new efficient-energy projects. “China’s contribution to world economic recovery is obvious,” Li said. But more needs to be done with the average Chinese making less money than people in about 100 other countries, he said. Li said “we should promote more open market,” but his explanation made it clear that he didn’t see free trade as a one-way commitment. He warned against protectionism, which Beijing has accused the rich world of practicing in its restrictions on products ranging from steel to footwear. “In the past year or so, countries have voiced opposition to trade protectionism. However, protectionist practices have kept emerging,” Li said. “It is high time for all parties to translate their solemn commitments into real actions.”

Property tax, an issue debated for almost seven years, suddenly became a reality on Tuesday when authorities revealed it could be imposed as early as the end of next year. An insider from the Beijing municipal taxation bureau revealed that a department chief from the State Administration of Taxation had mentioned property tax at a conference last year. Tax experts estimated the tax ratio would range from 0.5 to one percent, according to the Beijing Times. He predicted the quickest length of approval would be 15 months, because the State Administration of Taxation would need more than half a year to resolve the scheme with the Ministry of Finance. Following that, the scheme would be reported to the State Council. Finally, it needed approval from the National People's Congress, which could take at least eight to nine months. These factors combined mean that collection of property tax on commercial properties could not start until the end of next year, according to the insider. According to its equivalent system in western countries, property tax is imposed annually and adjusts its ratio depending on the housing market. Second-hand property prices in the capital's 320 residential complexes increased an average of 120 percent from 2007 to 2009. However, the biggest drop was 15 percent during the largest housing market depression at the end of 2008, according to Lianjia, a second-hand property agent tycoon. Liu Huan, assistant dean with the taxation college of the Central University of Finance and Economics, told METRO that now was the time for Beijing to put property tax into practice. "The procedure first needs to impose tax on commercial properties, and should then be extended to luxury residential real estate," he said. He added property tax would combine current tenure tax and construction tax. "Estimates for property tax in the city's most expensive land, such as that in the Wangfujing area, won't surpass one percent," Liu said. He added that property tax would largely lower speculation and finally let most people afford housing. Hong Yamin, vice chairman with the China Real Estate Values Association, said the introduction of property tax might result in a 50 to 70 percent discount in the housing market price, according to the Beijing Times. Pan Shiyi, a commercial property developer tycoon, said the tax would directly increase speculators' holding costs of housing, and suggested the first property for a family should be tax exempt, according to

An image showing the fossil bones of a newly discovered carnivorous dinosaur called "Haplocheirus sollers" is released by the Chinese Academy of Sciences on January 28, 2010. China has unearthed the fossil of a two-legged carnivorous dinosaur that lived 160 million years ago and which researchers have identified as the earliest known member of a long lineage that includes birds.

Local contractors set sail overseas - A Chinese employee and his Saudi Arabian colleagues work on an oil drilling project in Saudi Arabia. Chinese overseas contractors are expecting to report double-digit growth this year. China's overseas construction and engineering sector enjoyed 37 percent growth in 2009 and is expected to expand another 10 percent this year, according to China International Contractors Association yesterday. Emerging markets such as Latin America, Vietnam and Sri Lanka are expected to become driving forces for 2010 growth, while Africa and Asian nations like India will remain major markets, said Zhang Xiang, a spokeswoman for the association. "Emerging marketplaces have a strong basic need for infrastructure construction and they have been affected less by the financial crisis," said Zhang. Meanwhile, growing overseas investments by Chinese companies will play a proactive role in encouraging similar firms to venture abroad, Zhang said. "The Chinese government will continue its easing of financing policies to facilitate the process for companies to go overseas, so the sector will report steady growth in the coming years," she added. Chinese contractors have cost advantages compared with their counterparts in developed countries, and they maintain technical advantages over competitors from developing nations, analysts said. China's overseas projects rose for the 10th consecutive year in 2009. Turnover in the sector reached $77.7 billion last year, an increase of 37.3 percent from a year earlier. State-owned companies took the lead in foreign projects, as China Railway Group Ltd, Sinopec Engineering Inc and China State Construction Engineering Corp ranked as the top three overseas contractors last year. Iran and Venezuela were the two largest overseas markets for Chinese contractors in 2009, with the value of deals hitting $11.4 billion and $9.6 billion respectively. The top three markets in 2008 were India, Libyan and Angola.

China's ambition to build a rail network rivalling the United States' could run out of steam as Beijing tightens lending to cash-hungry infrastructure projects. There are now concerns that, having built enough rail lines last year to stretch from Beijing to Moscow, it will have to scale back the mammoth building effort. Weng Zhensong, a professor at the Economic and Planning Research Institute of the Ministry of Railways, warned that some railway projects were having financing problems as funds become scarcer. "There are some projects whose economic prospects are low," Weng said. "Rail lines to western China will find it hard to get bank loans." Despite being the centrepiece of Beijing's four trillion yuan (HK$4.55 trillion) stimulus package, funding for rail projects is falling victim to government efforts to put the brakes on lax lending, which has been blamed for creating asset bubbles. Under particular pressure will be operators of high-speed rail lines. Building a fast railway, on which trains can reach speeds of 350km/h, can cost three times more than a standard line of the same length. To cover the funding shortfall, operators of high-speed trains may have to set higher ticket prices. While some railway projects ran into financing problems last year, the situation would worsen this year with more funds needed, Weng said. That would put pressure on local government funding for lines in their regions. Work on the 30 billion yuan Shanghai-Hangzhou high-speed passenger railway was threatened with delays last year as its builders sought more capital. Last year, spending on railway construction soared 78 per cent to 600 billion yuan. Spending will rise a further 17 per cent to 700 billion yuan this year, according to the ministry. Macquarie Research Equities says spending on railway construction will peak at 750 billion yuan in 2011 and 2012. The scale of the new network being rolled out is impressive. A record 9,524 kilometres of railway was laid last year and 6,840 kilometres will be built this year. That would bring the national network to 90,000 kilometres by the end of this year, the ministry said. China has the world's second most extensive rail network behind the US. "The government is tightening liquidity and this has an impact on railway funding," said Evan Auyang, a former infrastructure consultant at McKinsey and currently deputy managing director of Kowloon Motor Bus. Beijing this month increased the amount of cash banks must keep in reserve to curb massive lending, which reached a record 9.6 trillion yuan last year. Debt financing of rail projects is capped at two-thirds of their cost; equity investment must make up the rest. "It isn't a surprise there is a funding problem, because the budget is so huge, arising from a much accelerated construction programme," Auyang said. "The combination of limited government funds and limited debt financing ability may explain the problem." With Beijing tightening lending, banks are getting more selective about the projects they lend to. Ironically, the lending spree was sparked by Beijing's stimulus package, launched in late 2008 to combat the financial crisis. The rail network was the focus, accounting for most of the 1.5 trillion yuan earmarked for infrastructure. "The stimulus package is far from adequate for China's railway projects and there is a limit to how much debt funding these projects can carry," said Auyang. According to Macquarie, 33,000 kilometres of lines are under construction, requiring a total investment of 2.1 trillion yuan. The ministry needs to allocate more funding to railway projects, That could take the form of debt, bond issuance and government and private investment, Auyang said. Geoffrey Cheng, director of Asian equity research at Daiwa Securities, said financing of high-speed rail services was becoming a problem. Fast trains began running in August 2008 on the Beijing-Tianjin line. "The government wants people to switch to high-speed trains, but there are lots of complaints that these trains are expensive," Cheng said. "Migrant workers still have to use the crowded, normal trains because that is all they can afford." Weng said there were problems with pricing high-speed rail services. "If the price is too high, nobody will take them. If the price is too low, there will be financing difficulties," he said. A second-class ticket for the new express service from Wuhan to Guangzhou costs 490 yuan.

Shanghai's mayor wants to build affordable housing on some of the valuable land around the city's planned Disney theme park, state media reported yesterday.

Iraq plans to boost daily oil output capacity in seven years to 12 million barrels as it tries to become one of the world's three biggest oil producers. PetroChina (SEHK: 0857) has signed a final agreement on a tender it won to help develop the Halfaya oilfield in Iraq, the second major oil deal it has secured in the Middle Eastern nation in the last six months. The firm signed a 20-year service contract for the field's development and production on Wednesday. PetroChina has a 37.5 per cent interest in the project, while Iraq's state-owned South Oil has 25 per cent and France's Total and Malaysia's Petronas each hold 18.75 per cent. South Oil was absent from the preliminary contract signed late last month, with PetroChina holding a 50 per cent interest and Total and Petronas each with 25 per cent. The field, located in southeast Iraq, is estimated to have recoverable oil reserves of 4.1 billion barrels. The investors have undertaken to raise its output to 535,000 barrels a day from 3,100 barrels a day, PetroChina said, without giving a time frame. A company spokesman declined to disclose further financial details or to explain what services PetroChina and the other investors would provide. Reuters quoted Iraq's oil ministry as saying that PetroChina and its partners will be paid US$1.40 for each barrel of output, and will have to pay a non-recoverable signature bonus of US$150 million. Mirae Asset Securities head of energy research Gordon Kwan believes the deal will have limited earnings impact for PetroChina, since the US$1.40 per barrel service fee is "razor thin", given the political risks of operating in Iraq. PetroChina makes a profit of more than US$30 a barrel from its existing oil projects. The deal is expected to provide up to US$100 million of additional pre-tax profit for PetroChina annually, which is less than 1 per cent of its estimated net profit of US$17 billion for last year, Kwan added. "But then, this deal could be a strategic stepping stone project for PetroChina to fast track [its] access to other exploration prospects in Iraq, one of the last frontiers for oil companies to boost their production and reserves in the longer term," he said. PetroChina last June won a tender with Britain's BP for the 20-year development of the Rumaila oilfield in Iraq. It was part of the first round of bidding for Iraqi fields, while Halfaya is part of the second, involving 10 fields. Iraq is seeking to become one of the world's three biggest oil producers, with a goal to increase daily output capacity in seven years to 12 million barrels from the current 2.5 million barrels per day. Separately, the chairman of PetroChina's subsidiary, CNPC (SEHK: 0135) (HK), Li Hualin, said after a special shareholders' meeting that the company plans to spend 10 billion yuan (HK$11.38 billion) to develop its natural gas distribution business. It also plans to spend four billion yuan to build two factories in Wuhai, Inner Mongolia, to turn waste gas generated from coke production into liquefied natural gas and pipe it to users. Coke is used in steel production. Li estimated the project will generate a return rate of 12 per cent. CNPC (HK), which owns stakes in various mainland and overseas oilfields, also plans to buy its parent's new energy and gas distribution assets, he said.

Jan 30 - 31, 2010

Hong Kong*: The head of Hong Kong’s de facto central bank said on Thursday that a rebound in world stock markets last year pushed the city’s exchange fund back to profitability. Norman Chan Tak-lam, chief executive of the Hong Kong Monetary Authority, said the fund, which manages the city’s foreign-exchange reserves and backs its currency, posted net investment income of HK$103.2 billion last year, reversing an HK$81.2 billion loss the previous year. That is the Fund’s second-highest annual income figure on record, he added. The Fund – which posted a 5.9 per cent investment return last year – gained about 48.9 billion from its Hong Kong stock holdings, Chan said, as the benchmark Hang Seng Index rose more than 50 per cent last year. But Chan, who took over as the HKMA chief in October, warned that Hong Kong remains at the mercy of the world economy and “considerable volatility in global asset markets”. “The investment environment last year remained extremely uncertain and volatile,” he said in a statement. “While there is a modest recovery in the global economy, its sustainability remains to be seen.” The HKMA would “continue to be vigilant and manage the Exchange Fund prudently,” Chan said, adding that “2010 will not be a year for high ambitions.”

In a ruling yesterday that could have far-reaching consequences for thousands of charitable institutions in the city, the Court of First Instance upheld an Inland Revenue review board decision that the Anglican Church is liable for profits tax on a luxury housing project. The church – the Hong Kong Sheng Kung Hui and its foundation – had appealed to the court to overturn a HK$180 million tax bill on HK$1.119 billion in profit it made from the luxury development at Deerhill Bay. Mr Justice Anselmo Reyes upheld the board’s decision requiring the church to pay tax on profits for the years between 1998 and 2005. In its appeal, the church argued that the money generated from the Deerhill Bay project was used solely for charitable purposes, and therefore profits tax should be waived. It also argued the project should be thought of as a preservation of its assets instead of a business deal. Reyes held that the church had failed to show evidence the funds had been used for charity claim. He found there was a change of intention to use the land for trading or business when the church began to contemplate development on the land in Tai Po in the 1990s. The site had been occupied by an orphanage, the Sheng Kung Hui St Christopher's Home. In 1990, the church obtained a permit to build housing on the land, for which payment of a change-of-use premium of HK$704 million was required. Deerhill Bay was developed by a joint venture formed by the church and Cheung Kong (Holdings) (SEHK: 0001) in 1993, under which the developer would pay the premium, and the church would get HK$300 million up front. The development provided 381 high-end homes, including 22 houses, five low-rise apartment blocks and five high-rise blocks. In March 1998, the church and the developer agreed that one-third of the units – 129 apartments – and 94 parking spaces would be allocated to the Sheng Kung Hui for its use. By 2006, the church had made a profit of HK$1.119 billion from the sale of the properties. Anthony Neoh SC, for the church, told the court all its receipts from the project had been put to charitable use. The church, as a charity, was holding the land as a charitable trust and was not allowed to use it for commercial purposes. But Reyes found no evidence to prove the money had been applied to charitable activities. The church said it was studying the judgment and had no comment. The Inland Revenue Department welcomed the judgment. It would not say whether similar cases were being investigated, citing confidentiality rules. The Hong Kong Catholic diocese said profit obtained by charity groups should be taxed. Dominic Yung Yuk-yu, director of its social communications office, said: "When we sold part of the property rights of Our Lady of Mount Carmel Church in Wan Chai, we paid tax for the profit we earned." The church, on Star Street, was redeveloped into a residential building in 2001 and has remained on the site.Recently, several churches and charity groups have applied to develop housing on land for welfare use. For instance, a developer has proposed that Drug Addict Counselling and Rehabilitation Services (Dacars) build 38 three-storey houses on its Sheung Shui property while conserving a historic building on the site. Taxation Institute vice-president Ng Kwok-yin said the Sheng Kung Hui case was rare. About 5,000 registered charity groups are exempt from taxation under the Inland Revenue Ordinance, which states that their money should be spent on charitable purposes. "The problem in this case is that Sheng Kung Hui cannot prove that the profit it made was or would be spent on charity. It does not matter how the money was made," Ng said. The Hong Kong Council of Social Service says the case is a reminder to welfare groups that accountability is important. "Welfare groups must handle and record their accounts neatly," a spokesman said. "All government-subsidised non-governmental organisations have to hand in audit reports to the Social Welfare Department each year." The council said many welfare groups were involved in business activities, such as social enterprises. But to qualify for the tax exemption, the profit must be used for charity.

Hong Kong Disneyland is cutting paid sick leave for employees to control operating costs after the company revealed a net loss of HK$4.4 billion in the three years to October. Paid sick leave per year will be reduced to four days from 12 days under agreements the management yesterday asked employees to sign. "The new policy is part of Hong Kong Disneyland's ongoing cost containment measure to control operating costs and retain jobs for existing cast members," a company spokesman said. Under the policy, a worker who has had four days of sick leave is entitled to 80 per cent of daily wage for each extra day of sick leave taken. Ng Koon-kwan, a director of the Hong Kong Disneyland Cast Members' Union, said frontline workers often had to work outdoors under stress and many of them were prone to illnesses. "The 12 days of paid sick leave are very important to these workers," he said. "There should be better ways to cut costs." Ng added that the management had not consulted the workers before pressing ahead with the policy. But the company spokesman said the management had sought the opinion of staff members regarding the policy. The spokesman said the policy still meant "four more days of paid sick leave than required by Hong Kong labour laws". Under local laws, a worker on sick leave of at least four consecutive days is entitled to 80 per cent of his or her normal wage. Sick leave of less than four days may result in no pay for the leave period, depending on company rules. On January 19, the company revealed a net loss of HK$4.4 billion in the three years to October. It said it may not break even until after 2014.

The public garden on the fourth floor at Metro Harbor View. The housing estate's owners' corporation wants to make it private. Owners of apartments at Metro Harbor View in Tai Kok Tsui have urged the government to disclose how much they would have to pay if they "privatize" the public garden on the podium level of their estate. The owners' corporation of the estate is to consult residents on whether to close the garden to the public. The move was sparked by the announcement by the Development Bureau to lawmakers this week, that in special circumstances the bureau would consider allowing owners to privatise public open spaces. The garden, of about 100,000 square feet, is on the fourth floor of the estate, which was completed in 2003. Some owners said they were not aware the garden was open to the public until the bureau disclosed the locations of all public open space in the city in 2008. They blamed the developer and estate agents for misleading them into believing the garden was private, and said the developer should pay for the "privatization". "We are paying more to maintain the public garden. The estate might have to bear a huge insurance claim if a third party gets injured in the garden. We are very worried," corporation chairwoman Sarah Wong Kah-ying said. The corporation had installed about 30 CCTVs at its public space and stationed two security guards in the garden to ensure safety. Apart from paying a waiver fee, the owners are required to gain support from the district council, area committee, and the Town Planning Board and to ensure open space sufficiency will not be affected by the omission of the public garden. The bureau said the waiver fee reflects the enhanced value of the estate after privatizing the public garden. But it has not disclosed the exact amount involved. Henry Chan Man-yu, a Yau Tsim Mong District councillor said the area committee had a meeting with the owners, but no consensus was reached. "While some members hope the owners could add more greenery and recreational facilities at the public space on the estate's first and second floors as compensation, other members were reluctant to make such a political decision," Chan said. District Council chairman Chung Kong-mo said the council will discuss the issue after the area committee has endorsed the owners' proposal. "We are concerned at the implication of losing an open space in the district," he said. A Development Bureau spokeswoman said the Lands Department had not received the owners' application. A spokeswoman for Henderson Land (SEHK: 0012), the developer of Metro Harbor View, said the company as an owner of the estate's shopping mall will study the feasibility of privatising the garden after the district council and the Town Planning Board endorse the owners' proposal. The sales brochures had stated the garden was open to public, she added.

HSBC chief executive Michael Geoghegan's first task at the bank was to pose before the iconic bronze lions outside its headquarters. The last time a HSBC Holdings chief executive was based in Hong Kong the Union Jack still fluttered proudly over Government House. Michael Geoghegan, the first head of the global bank to live in Hong Kong since its headquarters shifted to London in 1993, arrived back in the city like a prodigal son yesterday but seemed well aware of who was now in charge. "I want to have a cup of Chinese tea not take the English, which was yesterday," Geoghegan quipped on arriving for his first day of work in Hong Kong. HSBC was founded in the city 144 years ago and the return of its top boss has been taken as a sign the bank sees its future in China, now the world's third-biggest economy. Geoghegan is the first global chief of the bank to be based here since William Purves moved to London in 1993. "I'm a new man in town and I enjoyed very much my first day in Hong Kong," Geoghegan told the South China Morning Post (SEHK: 0583, announcements, news) by telephone. Geoghegan certainly received a movie star welcome when he arrived at HSBC headquarters in Central at 9am sharp. Wearing a HSBC tie, the banker was greeted by several hundred bank staff and more than 100 reporters. His first job in the city: to pose in front of the iconic bronze lions for a photo opportunity. "It is just like returning home," Geoghegan said. "It was the same 27 years ago when I first arrived in Hong Kong. It was February 9, the same date my son was born," he said. Geoghegan's move symbolises a return to HSBC's roots, which was founded in Hong Kong in 1865. It also partially reverses the pre-handover relocation of the group's headquarters to Britain. Group chairman Stephen Green will remain at the bank's Docklands headquarters in London. The renewed focus on the region marks a strategic about-turn for HSBC after it made huge provisions for its business in the United States. The bank in 2003 spent US$16 billion to acquire US subprime lender Household International. The purchase proved disastrous. Since the US housing bubble burst, HSBC has been forced to set aside US$32 billion against losses on its US portfolio, and in April last year went cap in hand to shareholders to raise US$17.7 billion of new capital in a rights issue. "With hindsight, it's an investment we wish we hadn't made," Geoghegan said. "The relocation is a symbolic move that shows the commitment and the focus of the bank is on Asia and China," he said. The pressure started almost immediately for the HSBC veteran, when he was asked whether he plans to follow Chinese tradition by giving laisee to his more than 10,000 staff in the Lunar New Year. "I need to think carefully about that. I may not easily answer this question as I may become a poor guy," he said. The banker will eventually move into Tai Pan House, the house at Middle Gap Road occupied by Vincent Cheng Hoi-chuen, the chairman of Hongkong and Shanghai Banking (SEHK: 0005) Corp. Until then, he will live in a hotel until renovations are completed. On business, he said he would focus on the new Basel capital requirements as well as how to ensure his bank would help small and medium enterprise trying to cope with the crisis. He hoped HSBC could list in Shanghai later this year but no details could be confirmed. Geoghegan, 56, joined HSBC in 1973. He has spent 12 years in North and South America, eight years in Asia, seven years in the Middle East and three years in Europe. He is married with two sons.

Wu Zhengmei (left) and Andy Lee say Hong Kong exporters must learn to develop the mainland market and promote their brands. A group of beleaguered Hong Kong exporters who tried to tap into the mainland's buoyant consumer market five months ago have found the experiment tough going. Most of the 30 exporters who banded together under the umbrella of Ziti, a showcase label for promoting Hong Kong brands and products, are on the verge of pulling the plug on their involvement with the Sogo department store in Wuhan as sales have slowed to a trickle. Andy Lee Chi-hung, the president of the Hong Kong Brand for China Market Association that operates Ziti, says the exporters are negotiating a settlement with the store and about 80 per cent of them are likely to leave. Lee, a Hong Kong entrepreneur who has spent the last 20 years building from scratch the teenage fashion chain Cocolulu that now operates in 27 mainland cities, said the root of the problem was the exporters' lack of patience in developing the market and promoting their brands and products. "Some wanted and expected to make money as soon as they got into the market and this has turned out to be a disappointment," Lee said. "It is a long march that needs trials, time and patience." Lee said Ziti would reshuffle its brands, which means losing some and introducing new ones. Ziti's first mainland venture involved retailing trendy fashion items - shoes, handbags and accessories - in Wuhan in August last year and later expanding to other shopping centres such as Aqua City in Nanjing, Tianyi Plaza in Ningbo, M Square in Shanghai and Peace Plaza in Dalian. The brand mix varied from city to city. The exporters, who are still suffering from the global trade slump, are banking on the central government's policy of spurring domestic consumption for sustainable growth. Despite the rapid penetration, many of them have had a hard time enticing customers. Vincent Chan, the general manager of Role Model Handbag and Accessories, will decide the fate of his shop at Sogo in the next few weeks. "Sales were so slow that it took several days to sell one handbag," he said. "It will take some time to generate some meaningful sales, but the situation here is very difficult." The sluggish sales were disheartening compared with the strong debut Role Model had five months ago. The retailer sold two clutch bags at 800 yuan (HK$911) each within 15 minutes of the shop opening. "The debut was a big bang, but it died down after 10 days," Chan said. "Business is better when there are discounts, but we can't give discounts all the time." Role Model has had a better experience at Peace Plaza in Dalian, which opened in December. "Many shoppers at Dalian don't mind paying a bit more for quality products, but those in Wuhan will compromise quality for prices," Chan said. "Dalian is a totally different market." He added that Dalian shoppers are more open to new products and new styles, for example, a nanny in her 60s bought a Role Model handbag designed for younger women. Wu Zhengmei, the general manager of Nanjing Aqua City Management, which owns one of the most popular and trendy shopping, entertainment and office complexes in the city, said Hong Kong exporters must spend time and resources developing and learning the consumer market there if they want to operate a sustainable retailing business. "Shoppers generally love Hong Kong brands and products for their quality and modern design," Wu said. "However, brand owners have to be more patient." There are about 23 Hong Kong brands operating under Ziti at Aqua City and they compete with roughly 200 mainland brands. Wu said China is so huge that from east to west and south to north, weather, styles, spending power and culture can be poles apart. A prime example is a jacket she bought from a Ziti retailer, who only kept one piece for each size while some of the jackets were too thin to withstand a severe winter in Nanjing, she said. "More can be done in improving logistics and managing inventory," Wu said, adding that Aqua City has drawn about 10 million visitors a year since its opening in August 2008. "We worry about the marketing of Hong Kong brands owned by small and medium-sized enterprises that may not have sufficient resources to promote their products." To boost traffic, Aqua City spent 10 million yuan a year on promotions and marketing. It made sales of at least 600 million yuan a year, Wu said.

Hongkongers should boycott the pan-democrats' attempt to trigger a de facto referendum, and the government-friendly camp should not take part in by-elections triggered by the resignation of five pan-democratic lawmakers, a mainland drafter of the Basic Law said yesterday. Professor Xu Chongde said the five legislators from the Civic Party and the League of Social Democrats were wasting taxpayers' money trying to fulfil their "selfish" plan. "The Basic Law has an established procedure to change Hong Kong's political system," he said. "Their attempt to trigger a de facto referendum violates the Basic Law." Xu said the lawmakers who resigned on Tuesday should not attempt to regain their seats through by-elections. "Legco is not an amusement park where people can come and go as they like," he said. Xu, a law professor at Renmin University in Beijing, said the pan-democrats had not done anything for Hong Kong's prosperity (SEHK: 0803, announcements, news) and stability. "What they have been doing over the years are attempts to stir up trouble," he said. Two weeks ago, the State Council's Hong Kong and Macau Affairs Office said that any "so-called referendum" would be inconsistent with the city's legal status and a blatant challenge to the Basic Law and the central government's authority. Xu said responsible political groups should not take part in the by-elections. The Liberal Party decided on Saturday not to contest the polls. The Democratic Alliance for the Betterment and Progress of Hong Kong did not make a decision at a meeting of its central committee on Tuesday. DAB lawmaker Ip Kwok-him said the party would not make a decision this week. "We haven't made a decision so far because we would like to observe how things unfold in the near future," he said. He said there was no need to make an irreversible decision at the moment, but admitted the chance of a candidate from his party standing in a by-election was slim. Lau Nai-keung, a member of the Basic Law Committee, said Beijing had reacted strongly to the pan-democrats' attempt to trigger a de facto referendum because it touched upon a crucial principle, and there was no room for compromise. "Only sovereign states are empowered to conduct referendums," he said "If a de facto referendum is allowed in Hong Kong, what happens if people in Tibet and Xinjiang call for a referendum on whether they should declare independence?" Lau said Beijing was worried that the pan-democrats would attempt to trigger such referendums whenever they were unhappy with other issues. "Today they want a de facto referendum on universal suffrage; tomorrow they may demand another one on amendments to the Control of Obscene and Indecent Articles Ordinance. If these kind of sagas keep on happening, we might have by-elections on 180 out of 365 days."

China*: China's yuan is facing increasing pressure to rise, and expectations of appreciation could hurt exports, a Commerce Ministry official said. “International pressure for the yuan to rise is growing; there are strong expectations for yuan appreciation,” Vice-Minister for Commerce Zhong Shan said in a statement on the ministry’s website on Thursday. Zhong said expectations for a stronger yuan were one of the factors that could weigh on China’s exports this year, in addition to uncertainties about global economic recovery and trade disputes. The Commerce Ministry has previously said a stable yuan is beneficial for China and for the global economy. Zhong said it would be “increasingly difficult” for Beijing to maintain policy consistency and stability this year because the government would have to adjust its stimulus policies, but did not elaborate. The government has repeatedly vowed consistency and stability in applying its “appropriately loose monetary and active fiscal policies”, but has begun to gradually tighten monetary conditions with the economy growing at a near double-digit pace. Zhong said the Commerce Ministry was targeting modest growth in exports and imports this year, and a 16 per cent rise in domestic retail sales. He said outbound foreign direct investment target for this year was US$46 billion, up 6.2 per cent from US$43.3 billion last year.

China has set up a government agency headed by Premier Wen Jiabao to better co-ordinate energy policy, as the world's second-largest power consumer faces growing domestic demand and struggles with shortages. The establishment of the National Energy Commission reflects the high priority that energy issues have taken in China and the frustrations leaders have had coordinating powerful bureaucracies and state-owned companies. Leaders see growing reliance on imported energy as a potential strategic weakness. Heavy use of fossil fuels is also creating severe environmental damage, while rapid economic growth and poor policies have led to occasional fuel shortages. The commission will draft energy development strategy, review energy security and coordinate international co-operation, according to a notice late Wednesday by the general office of the State Council. Vice Premier Li Keqiang will be the commission’s deputy head. Its 21 other members include the head of the National Development and Reform Commission, China’s powerful economic planning agency, and the ministers of finance, environmental protection, land and resources, and foreign affairs. It is the second time in two years that the government has tried to create a high-level body for energy. The National Development and Reform Commission resisted an attempt to set up an independent authority and kept control of the National Energy Administration in 2008. The need for Premier Wen, ranked No 3 in the Communist Party, to take charge of the new body underscores the depths of bureaucratic infighting. Such interagency competition has thwarted cooperation on various initiatives, including reduction of carbon emissions and raising energy efficiency to help combat global warming, experts said. “It has been very hard to coordinate the different energy industries without an independent office at a higher level,” said Qiu Xiaofeng, a petroleum analyst at China Merchant Securities. “Now the new office will definitely help to make some good changes.” To feed the demands of the rapidly growing economy, mainland energy companies have signed a string of multibillion-dollar deals to import oil and gas from the Gulf, Africa, Central Asia and elsewhere. “In the energy space, China is doing a large variety of things both domestically and globally. Its activities encompass both political and economic objectives, so to have a single ministry coordinating all these activities and forming a unified strategy seems long overdue,” said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. China is the world’s second-largest energy consumer after the United States. It faces widespread difficulties in ensuring smooth supplies of fuel, coal and natural gas, partly due to conflicts over pricing policies that have caused widespread losses for refiners and utility companies. Earlier this month, authorities ordered rotating shutdowns of hundreds of factories in central China to ensure sufficient power to heat homes amid bitter winter cold. Power demand spiked after temperatures plunged and weekend storms dumped snow on northern China. Many homes, especially in the south, lack central heating and residents rely on electric space heaters. The surge in energy consumption due to the cold snap is typical of the challenges the country is facing as it struggles to meet demand from consumers whose growing earning power enables them to adopt more modern lifestyles. The potential weaknesses of the nation's energy planning were also highlighted in October 2007 when diesel supplies ran low, causing lines at filling stations and disrupting trucking services. Shortages cropped up after oil companies, barred by government controls from passing on record-high crude costs to consumers, responded by failing to expand refining to meet growing demand. China supplied its own energy needs for decades from domestic oil fields. But it became a net importer in the 1990s as its economy boomed, and imports now supply nearly half of demand.

People walks past gold plated figurines at a jewellery store in Beijing in this file photo. On Thursday, China Gold Association said the country has become the world’s largest producer of the yellow metal. China gold output jumped 11.34 per cent to a record of 313.98 tons last year, the China Gold Association said on Thursday, securing the country’s position as the world’s largest producer of the yellow metal. Mainland has dramatically opened bullion markets to active trade in the past decade, including allowing gold to be traded freely on the Shanghai Gold Exchange. Gold hoarding was initially outlawed in 1949 when the Communists took power. “Gold output reached above 300 tons for the first time,” the association said on its website, adding that mainland maintained its position as the world’s top gold producer for the third straight year in 2009. Nearly 60 per cent of mainland’s gold output last year came from the top five producing provinces – Shandong, Henan, Jiangxi, Fujian and Yunnan. Mainland had more than 700 gold producers last year, down from more than 1,200 firms in 2002 as the industry consolidated. Mainland produced a mere 4.07 tonnes of gold in 1949. The China Gold Association gave no figures for last year’s consumption, but the country consumed 395.6 tons of gold in 2008. Mainland said last April its official gold holdings had risen to 1,054 tons from 600 tons in 2003, with the increase attributed to purchases of domestically produced gold to help soak up unsold output. Metals consultancy GFMS said last month that mainland would overtake India as the world’s largest gold consumer last year. Total demand is forecast at 432 tonnes as wealthy investors defy record bullion prices. Gold inched up to US$1,092 an ounce on Thursday, well below a lifetime high around US$1,226 an ounce struck in early December.

Bank of Communications (SEHK: 3328) (BoCom), mainland’s fifth-largest lender, launched its mainland insurance business on Thursday in a step toward its ambition of becoming a full-service financial conglomerate. As other banks also gear up to enter the insurance business, BoCom plans to more than double capital investment in the newly acquired venture with Commonwealth Bank of Australia, aiming to expand the business beyond Shanghai to other cities. “By sharing the bank’s resources, including its networks, client base, sales channels and IT systems, there will be great growth potential for us,” Guan Huanfei, general manager of BoCommLife Insurance Co, said at an opening ceremony in Shanghai. “We will become part of BoCom’s wealth management strategy.” BoCom obtained government approval last September to buy a 51 per cent stake in China Life (SEHK: 2628) -CMG Life Assurance Co from China Life Insurance Co, becoming the country’s first lender to control an insurer following a nearly two-decade-old ban. Life-CMG was then renamed into BoCommLife. Bank of China and Bank of Beijing have also obtained regulatory approval to invest in insurers, while Industrial and Commercial Bank of China (SEHK: 1398) and China Construction Bank (SEHK: 0939, announcements, news) are seeking such opportunities. “The insurance business won’t have any big impact on banks’ bottom lines in the short term,” said Jin Lin, analyst at Orient Securities Co. “But it’s a significant step that is likely to change the competitive landscape in the long term.” BoCommLife, which is still losing money, plans to grow into a nationwide brand with a significant market share, by leveraging BoCom’s vast banking network and client base, general manager Guan said. BoCom, which aims to become a financial conglomerate, already owns a leasing unit, a trust subsidiary and a fund venture with British asset manager Schroders.

As part of a government supported effort to introduce more fuel-efficient vehicles onto the nation's roadways, plans are in the works to establish plug-in recharging stations. State Grid Corp of China (SGCC), the nation's biggest electricity distributor, plans to construct 75 electric car recharging stations across 27 cities this year, as part of its plan to support fuel-efficient transportation, a company executive said yesterday. The plan includes the construction of 6,209 recharging towers, according to the executive who requested anonymity. The specific number of recharging towers planned per station was not revealed. "The plan, which is a pilot project, is part of our strategy to build a smart grid," he added, without elaborating. A smart grid delivers electricity from suppliers to consumers using two-way digital technology to save energy, reduce costs, increase reliability and transparency. Earlier media reports said China is planning a multi-billion yuan investment in smart-grid construction to increase the capacity of the nation's power grids. SGCC, which manages power transmission and distribution in 26 provinces, autonomous regions and municipalities, completed its first electric car charging station in November. The station, covering 400 sq m, cost 5.08 million yuan, the company said on its website. "It is certainly good news for us," said Wang Bin, president of Beijing Lithium Energy Investment Co, an electric-car producer. "The improvement in infrastructure will certainly boost the development of the whole industry." Cars made by Beijing Lithium have already been put into use in the public transportation system in Tangshan, Hebei province, he said. The company has also worked with the local government to build several pilot recharging stations, he added. The main challenge for industry planners is selecting a standard. "In my opinion we need to develop a national standard for recharging vehicles." China's electric car industry has undergone accelerated development in recent years, with both domestic producers and foreign companies eyeing the sector. Thomas Weber, a board member with German carmaker Daimler and responsible for Mercedes-Benz car development, said the company would enter China's electric car market as soon as charging stations become available. "We have advanced technologies and reliable products in the electric car segment. Once China has settled the charging issue we will consider introducing our electric cars to the China market," he said. He also told China Daily that Daimler is seeking to cooperate with domestic industry players in the development of electric car parts. Over the next decade, between 5 and 10 percent of the German carmaker's new offerings will be alternative-energy vehicles.

NEW TRIAL: Passengers queue at the Guangzhou Railway Station ticket lobby on January 14, 2010. In an attempt to control scalping, Chinese officials have implemented an identity verification system for train ticket purchasers

China banks extended more than one trillion yuan (HK$1.14 trillion) in loans in the first 20 days of this month, an astonishingly high figure that has sent regulators scrambling to tighten their grip on credit and prompted the country's two largest banks to temporarily halt new lending. Industrial and Commercial Bank of China (SEHK: 1398) and Bank of China, among others, have temporarily stopped extending new credit lines under the directives of the regulator, according to banking officials with direct knowledge of the matter. The temporary suspension will probably last until the end of the month. The China Banking Regulatory Commission is determined to rein in easy credit because officials are worried about asset bubbles and soaring inflation. A banking analyst who obtained the official loan data said the Big Four lenders granted about 550 billion yuan of loans as of January 20, adding that total lending nationwide has exceeded one trillion yuan. The three-week loan growth is at a pace well above the 7.5 trillion loan target for this year. The CBRC has intensified window guidance - a method the authorities use to instruct company executives to operate in line with government directions - requiring commercial banks to control the pace of lending. A press officer with the regulator said yesterday the window guidance did work in curbing loans. "The window guidance does exist," he said. "But the regulator wouldn't directly order the banks to stop lending. What some of the banks are doing is they adjust operations and strategies to comply with the official lines set by the regulator. Indeed, they must slow down the lending pace to meet a series of requirements such as capital adequacy ratio and liquidity." A few banks are doubling efforts to punctually retrieve overdue loans to maintain a strong cash position. Bank officials denied reports that they were ordered to call back some new loans extended this month. ICBC said in a statement yesterday that it had made efforts to retrieve a large sum of overdue loans since January 20. "It's nothing unusual," the statement said. "The bank won't recklessly extend credits, nor will it stop lending once and for all." Beijing set a full-year lending target of 7.5 trillion yuan for banks this year, following a record 9.6 trillion yuan of loans granted last year. "One trillion yuan per month is obviously a bad sign that the lending spree is overdone in terms of the 7.5 trillion yuan target," Haitong Securities analyst She Minhua said. "The regulator is telling banks that they should extend loans in an orderly pace in the remaining year." The 21st Century Business Herald reported that banks extended 1.45 trillion yuan of new loans in the first 19 days of this month. Su Ning, a deputy governor of the central bank, said on Monday the country would still implement an "appropriately loose" monetary policy this year. On Tuesday, several select banks including ICBC were told by the central bank to set aside an additional 0.5 per cent of total deposits as reserves, a move to limit their lending. Beijing increased the reserve requirement ratio by 50 basis points on January 18, and the rule applied to all mainland-based banks. "All the measures the government is taking may not take effect," said Yi Xianrong, a researcher at the Chinese Academy of Social Sciences. "What they should really do is to make sure the loans are used to fund industrial projects rather than bet on property and stock markets."

China has won approval to lead the co-ordination of international anti-piracy patrols off Somalia - an unprecedented expansion of its historic deployment of warships to the Indian Ocean. The effort will also see China send its warships to permanently patrol a sector of the special transit corridor through the most dangerous part of the Gulf of Aden. The pledge means that China needs to send more than the three ships it keeps deployed off the Horn of Africa to protect vital trade routes linking Asia to Europe. PLA Navy officials reached agreement last week over its expanded role with major international navies at a meeting of the so-called Shade grouping in Bahrain, officials at the meeting said. Shade, or Shared Awareness and Deconfliction, has been jointly headed by European Union forces and the US-led Combined Maritime Forces. More than two years old, Shade meets monthly to maximise co-ordination and communication among the 40-odd navies now protecting shipping off the Horn of Africa. While some nations operate as part of international flotillas under the banner of Nato, the EU or the CMF, some operate independently, including China, India, Russia, Malaysia and Iran. Currently only Nato, EU and CMF ships patrol inside the corridor. By committing to provide an "enduring" presence in the corridor, China will be eligible to lead as part of a new rotating chairmanship, which will switch every three to four months. It is expected to take charge by the middle of the year. The move is expected to force India and Russia to seek a greater role, as they try to match a growing Chinese presence in the Indian Ocean. Captain Chris Chambers, director of operations for the CMF, confirmed China's new role yesterday at a shipping conference in Singapore. "There has been major progress in communication and co-operation with navies that once didn't really speak to each other," Chambers, a US naval officer, said. "China will get a chance to chair the Shade ... it is a very positive development. "It will open the door for other independent nations to come in." Other officials at last week's Bahrain meeting said the PLA was reporting back to Beijing for political approval before a formal announcement could be made. Both Western and Asian naval officials are backing the move, knowing they are struggling to deal with a worsening piracy situation off Somalia, a failed state where pirates operate with no fear of law enforcement or other government intervention. While the Gulf of Aden situation has eased under naval pressure, pirates are now attacking ships off Somalia's east coast, travelling more than 1,000 nautical miles into the Indian Ocean to seize ships, putting a wider range of shipping at risk. "It is getting desperate and there is no solution in sight," one foreign naval official said. "Anything China can do to offer more practical help will be taken up at this point. This deal is a straight win-win." While helping to tackle a worsening international crisis, fighting piracy allows China to quietly develop an Indian Ocean presence - something military analysts believe could be highly strategic to its ambitions to create a navy with wide global reach. Typically, hijacked ships are taken to pirate lairs on Somalia's east coast. The ship and crew are kept under armed guard but are generally unharmed until the owners can arrange a ransom, which now range between US$2 million and US$7 million. China began pushing for a broader role after the hijacking in October of mainland bulk carrier the De Xin Hai. The ship, steaming to India with a load of South African coal when it was captured northeast of the Seychelles islands, was released late last month after the payment of US$3.5 million in cash. The De Xin Hai was the first mainland ship to be captured since Beijing's historic deployment of warships to the area in December 2008. That deployment marked the first time the Chinese navy had ventured into potential conflict beyond its home waters in centuries. The PLA warships never attempted to attack or intercept the pirates, with PLA officials later insisting they were too far away at the time. The warships - two destroyers and an armed supply ship - run regular escorts from convoys of ships registered in Hong Kong, Taiwan and on the mainland. Ships of other nations can join the Chinese convoys. When not involved with convoys, the Chinese vessels have also assisted other international efforts. China's convoys sail near the transit corridor, keep in contact with it but have not been part of it. Now it has agreed to keep a single ship in the corridor for a month at a time, China will be assigned a 60 nautical mile stretch of ocean to permanently patrol. Chinese officials have repeatedly suggested that individual countries should be given set areas of ocean to take responsibility for - a concept already in operation inside the corridor.

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

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