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

"Hawaii-China Guan Xi, We Get Things Done" - Trade Advocacy Organization

061101-donald tsang.jpg (11044 bytes)


USA Small Business Administration (SBA) Selected Johnson Choi/HKCHcc 2008 United States National Champion

Click on the Logo to Join HKCHcc on and follow us on



Seminar Material

Biz: China Hong Kong Hawaii

What people said about us 

China Earthquake Relief

Tax & Government

Hawaii Voter Registration


Hawaii's China Connection


Doing Business in Hong Kong & China

Hong Kong, China & Hawaii Biz*            

View HKCHcc and Hawaii Chinese Organizations Listing & Event Calendar
In Depth Look of Hong Kong - Past, Current & Future
In Depth Look of China - Past, Current & Future
To succeed in business in Hawaii, you must understand the islands
How to Do Business with China, through Hong Kong & Setting up Business in China?
Hawaii Failed Business Image and Continue Missed Opportunities

Skype - FREE Voice Over IP  View Hawaii's China Connection Video Trailer

Hong Kong, China & Hawaii News Archive for Year 2002  Archive Jan 1, 2003.........:>
January - April 2003  May - July  2003  Aug - Sept 2003  Oct - Dec  2003 January - Mar 2004  April - June 2004  July - Sept 2004
Oct - Dec 2004 Jan - Feb 2005  Mar - Apr 2005  May - Jun 2005 July - Aug 2005 Sept - Oct 2005 Nov - Dec 2005 Jan - Feb 2006 
Mar - Apr 2006 May - Jun 2006 Jul - Aug 2006 Sept - Oct 2006 Nov - Dec 2007 Jan - Feb 2007 Mar - Apr 2007 May 2007 June 2007
July 2007 Aug 2007 Sept 2007 Oct 2007 Nov 2007 Dec 2007 Jan 2008 Feb 2008 Mar 2008 May 2008 June 2008 July 2008
Beijing Olympics Aug 2008 Sept 2008 Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 June 2009
July 2009 Aug 2009 Sept 2009 Oct 2009 Nov 2009 Dec 2009 Jan 2010 Feb 2010
China Projects Bidding Information - update daily    Scholarship & Grants  News Archives in PDF Format

Do you know our dues paying members attend events sponsored by our collaboration partners worldwide at their membership rates - go to our event page to find out more! After attended a China/Hong Kong Business/Trade Seminar in Hawaii...still unsure what to do next, contact us, our Officers, Directors and Founding Members are actively engaged in China/Hong Kong/Asia trade - we can help!

Are you ready to export your product or service? You will find out in 3 minutes with resources to help you - enter to give it a try

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

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

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

View China 60th Anniversary Video and Photo online

Holidays Greeting from President Obama & Johnson Choi

Wine-Biz - Hong Kong Brand Hong Kong Video

March 31, 2010

Hong Kong*: Hong Kong on Monday announced plans to introduce laws that ensure listed firms disclose price-sensitive information, with those who fail to do so being fined up to US$1 million.

Lord Foster, who designed the HSBC headquarters in Central, says the arts hub has to be a magnet drawing people to the site. Lord Foster has pledged more surprises in his West Kowloon arts hub design, with open space better than that in Central Park, New York. He said his winning design involving a controversial giant canopy in 2001 was already "history". The globally acclaimed Foster, one of three architects competing in the West Kowloon Cultural District design competition, said of the canopy: "It was rooted in its time." He was speaking on the topic for the first time after the design was scrapped under public pressure four years ago. "Lots has happened in 10 years. Everybody has moved on. I think there is a need for much greater flexibility in terms of phasing and in terms of a multiplicity of possibilities," he said in an interview. Foster said that this time he would give Hong Kong something even more surprising. Apart from creating an open space "better than Central Park" in New York, he said he had already figured out a "cure" for the site, which is cut off from Canton Road and neighbouring districts. He flew into Hong Kong last week to meet his team of local and overseas experts advising him on the best way to handle the project again. This summer, his design will be rolled out for public comment along with plans by the other two selected architects - Dutchman Rem Koolhaas and Hongkonger Rocco Yim Sen-kee. The design of the 40-hectare arts hub went back to the drawing board in February 2006 after competition outcomes in 2001 and 2003 failed to gain support from lawmakers and the public. Having secured funding of HK$21.6 billion in July 2008, the government again invited designs from three selected architects. Foster said he was about to submit his third sketch. His first, the enormous canopy covering more than half of the arts hub areas and housing an avenue of shops and restaurants leading to a man-made lagoon, won the first competition but led to controversy. It was abandoned partly because the size of the canopy prompted the need for a single tendering process, which could lead to monopolisation of the site by a single developer. It was also ditched partly because of the high estimated maintenance cost. This time,he has brought together 25 brains from Hong Kong and overseas to ensure the design is what Hongkongers want. Of the 25 advisers, some are familiar faces, including Kevin Thompson, the director of the Academy of Performing Arts; Jane Cheung, associate professor in cultural and creative arts of the Institute of Education; and Johnson Chang, a respected curator on Chinese contemporary art and co-founder of the Asia Art Archive in Hong Kong. "We've been very good listeners. We will continue to be good listeners," Foster said. "We believe we have a fantastic basis for designing at this point. It's not about the design of an individual building. It's about really how you create a quarter. We will do justice to the design that it has to be the best of its kind in the world. We are totally dedicated to that course." In the interview, he repeatedly stressed his strength - his early presence in Hong Kong. "I came here in 1979. It's 31 years and we've been back ever since," he said, adding that his work, including the HSBC (SEHK: 0005) headquarters and the airport at Chek Lap Kok, had become symbols of the city. "The Hong Kong airport totally rewrote the rules about what an airport might be. Everybody has tried to copy it since, but there is only one original. In terms of our submission on this project, again it will have elements of surprise," he said. "It's a surprise of something totally different - not what you would expect." Acknowledging the isolated site in West Kowloon had posed a challenge to his design, he said he has sought out a solution. "The arts hub has to be a magnet drawing people there. But the first priority is for the community here in Hong Kong. In that sense, it will belong to them ... It [the arts hub] will be linked to the existing communities, and improve them." While aware that he cannot disclose design details due to rules of the competition, he said he would seize on the opportunity provided by the decision to build the Guangzhou-Shenzhen-Hong Kong express rail link station in West Kowloon. Foster said was aware of the recent controversy about the station being located next to the arts hub. Under the government's plan, Austin Road will be sunk below ground so that people visiting the hub can walk directly there from the station. Six bridges and two tunnels connecting the station to Jordan were also proposed by the MTR Corporation (SEHK: 0066) in its plan submitted to the Town Planning Board this month. Apart from taking advantage of the station, Foster said he was also mindful of other transport opportunities, incorporating design elements for pedestrians, cyclists and drivers. He said he knows what Hong Kong people want. "It has taken a long time. People would expect to see that time has been well spent. They want something fantastic. They deserve it and they will get it. "The opportunity to have a new start ... will be justified by the quality of the end result," he said while commenting on the open space. "It's not just about size. It's about quality. It's got to be better than Central Park." Foster said architecture for the 21st century was about needs of the people. "Their material needs, spiritual needs. It's about creating places which are warm, friendly, welcoming, which make you feel good and make you want to go back," he said. "It's also about something memorable. All the things you can measure and all the things you can't measure." Koolhaas, meanwhile, vowed to integrate the arts hub into the Pearl River Delta - his company has won the design competition for the express rail link's second station, in Futian. Yim's works are local landmarks, including the new government headquarters at Tamar named "The Door". How confident is Foster of winning the third competition? "That will be very presumptuous," he said with a laugh. "You cannot as an architect ever be complacent. What you can do is do your best and strive for excellence. That's the most important aspect of what we do."

As HSBC Holdings (0005) shifts its focus to the East, the lender believes its mainland business will make the most of its comprehensive international network to help Chinese enterprises expand overseas. HSBC (China) chairman Vincent Cheng Hoi- chuen told Sing Tao Daily, sister publication of The Standard, that the lender does not have any special advantage over mainland banks. Its well- funded mainland competitors have plenty of outlets, where service has improved, he noted. "But this doesn't mean we will stop expansion," Cheng said. "Instead, we will do more to suit the development of our customers." HSBC is to utilize its international network to help mainland companies expand or invest overseas. Staff at its branches in Australia, Malaysia and the Middle East can provide additional assistance. Cheng said the bank will keep cooperating with its strategic partners and increase its outlets, including rural banks. It will also expand the range of products and strive to have a larger share of the mortgage market. Cheng is confident of meeting all development targets set for this year. HSBC China turned in a US$1.63 billion (HK$12.71 billion) profit last year, mostly from jointly controlled companies. The lender's core business - which reflected organic growth - contributed only US$111 million. Cheng attributed the unsatisfactory results to a narrower net interest margin. "[HSBC] lends only 70 yuan out of 100 yuan, 30 yuan is spent on stable bonds for interest income." Cheng said the low-interest-rate environment encouraged many aggressive peers to lend and make easy profits in the interbank market. He noted this encourages banks to be shortsighted and highly leveraged, so the practice is not good for long-term financial development. As HSBC's loans are all backed by deposits, there is no pressure to change its short-term strategies in the mainland, Cheng said. He said interest rates will go only "one way - up," which will gradually improve the bank's operating environment.

The Department of Health would inspect about 500 manufacturers of Chinese medicine in Hong Kong, Director of Health Dr Lam Ping-yan said on Monday.

French cosmetics retailer L’Occitane en Provence has received approval from the listing committee of Hong Kong’s stock exchange for a US$400 million to US$600 million initial public share offering, a source close to the deal said. L’Occitane, which sells body care products and fragrances in more than 70 countries including Britain, China, France, Japan, South Korea and the United States, will become the first French company to list in Hong Kong. Founded in 1976 by Olivier Baussan, the company originally planned to launch its IPO in 2008, but postponed the plan because of the financial crisis. The company chose Hong Kong over Paris for its listing because Asia was its fastest-growing market, the source said, adding that the company planned to start pre-marketing for the offering in early April. CLSA, HSBC (SEHK: 0005) and UBS are underwriting L’Occitane’s deal. Bourse operator Hong Kong Exchanges and Clearing (SEHK: 0388) , which faces a slowing pipeline of IPOs from mainland, is looking to attract listings from overseas markets to diversify its listing sources. Russia’s Rusal, the world’s biggest aluminium producer, floated around 10 per cent of its stock amid great fanfare in late January, raising US$2.2 billion to pay down debt.

The Octopus card should also accept yuan to integrate the city's rail services with the mainland system, says MTR Corp chairman Raymond Chien Kuo- fung.

Personal loss puts student - in frontline of cancer fight - Student Clara Lee On-ki lost her grandmother to liver cancer about six years ago. Her loss motivated her to study the relationship between oolong tea and prostate cancer and for which she received a young scientist award yesterday. Lee, a student at the Shun Tak Fraternal Association Yung Yau College in Tin Shui Wai, discovered that oolong tea, if consumed at a certain concentration, is helpful in suppressing prostate cancer. For her work she was awarded the Individual Researcher Award, the Best Project Award and Intel ISEF The Society for In Vitro Biology Award in the Hong Kong Youth Science and Technology Invention Competition 2009-10. "My grandmother passed away when I was in primary four or five," said Secondary Four student Lee, tears welling in her eyes. "It was then I decided to develop a career in medical science to save others like her." Building on another research on tea's function as an antioxidant, Lee discovered that oolong has more uses than most types of tea. Joining a scheme organized by the Hong Kong New Generation Cultural Association, Lee conducted research on condensed oolong tea and the effect of a chemical contained in it on prostate cancer with assistance of a professor at City University. The research, which began last Christmas, found that a concentration of tea polyphenol in oolong tea at 0.25 milligram per milliliter can suppress prostrate cancer cell activity to below 10 percent. However, if the tea density is lower, it does not inhibit cell activity. On the other hand, tea polyphenol becomes less effective if the concentration is too low. "Currently, there is very little research on prostate cancer. The reason I chose this direction is because the cell division is relatively slower than other types of cancer," Lee said. Lee told The Standard her family members are tea lovers. "Drinking tea is a habit for many Chinese, and it is for my family," Lee said. "Luckily my dad is still healthy, but as a result of my research I have advised them to drink more oolong tea." Lee plans to continue her research on tea polyphenol.

Workers at Macau International Airport help Viva Macau passengers stranded by the budget airline's financial difficulties. Macau's government ended the operating contract of Viva Macau yesterday after the cash-strapped budget airline did not offer to help passengers whose flights were cancelled due to its failure to pay fuel bills. Travellers have been warned against buying any more tickets from Viva Macau - whose online ticketing service was still available yesterday. Officials said any further sales by the airline would amount to fraud. Hundreds of passengers who only knew their flights were cancelled upon arrival at Macau's airport vented their anger on police. Dozens of mainland tourists formed a human blockade to stop other passengers from boarding their planes in a bid to attract the authorities' attention. Meanwhile, hundreds of tourists in Hong Kong face disruption to their Easter holiday because travel agencies said tickets had sold out. Macau's Civil Aviation Authority ordered the city's franchised airline, Air Macau, to terminate Viva Macau's operating licence in a bid to protect the public interest and the city's image as a tourism hub. "[Viva Macau] has been most unhelpful," authority president Simon Chan Weng-hong said. "It failed even to provide us with a passenger list when the government tried to resolve the problem over the past two days. Its lack of co-operation has slowed down our efforts. We don't see that it has any sincerity in solving the problems."

Towngas – the largest energy supplier in Hong Kong – said on Monday it would not raise its tariffs again over the next two years following an announcement last week of an increase.

Jonathan Wong displays genuine organic vegetables. He said price was the main clue for consumers. Cheap organic veg is too good to be true, survey warns - More vendors say they are selling organic vegetables in wet markets but lack of certification means their quality is questionable. A survey by the Hong Kong Organic Resource Centre of Baptist University found that one in five vegetable vendors in wet markets claimed to be selling organic produce, double the number last year. But only 10 per cent of those vendors could show proof of certification. Centre director Jonathan Wong Woon-chung said it was bad news for consumers because it was difficult to distinguish organic produce. The survey, which covered 706 stalls in 74 wet markets, showed that almost two-thirds of what vendors claimed were organic vegetables were sold for less than HK$10 a catty (600 grams), while all certified organic vegetables were sold for more than HK$10, with those from local farms priced above HK$20. The difference called into question the authenticity of unaccredited organic vegetables, Wong said. "Organic vegetables should be more expensive. How some vendors can sell what they claim to be organic vegetables for such a cheap price is the question to ask," Wong said. "Shoppers should be alert when they see very cheap organic vegetables." Early this month, a vegetable stall owner was fined HK$2,500 for supplying vegetables falsely claimed to have been certified as organic by Baptist University. When asked the source of their produce, half of those selling organic vegetables without a certificate refused to answer. Eighty per cent of vendors selling what they claimed were organic vegetables also sell inorganic ones. Some 45 per cent would store organic and inorganic vegetables together, a practice that might contaminate organic vegetables. But this did not happen at stalls selling accredited products. Wong said at Tsuen Wan Market, most "organic" vegetables were likely to be inorganic. Isaac Ma, who spent HK$200 on organic vegetables in a bazaar in Central yesterday, said: "I have no way of telling whether they are really organic or not ... not many vendors can show their certificates in wet markets. So I prefer to buy them from supermarkets, which I think is more credible." He said organic vegetables from supermarkets usually cost double those from wet markets. Winnie Woo, a housewife, said: "I distinguish organic vegetables from others by seeing whether there are holes on the leaves." But that method was rejected by Wong, who said improvements in agricultural methods had solved the bug problem associated with organic vegetables. Wong said people were gaining confidence in organic produce from local farms. More than 70 per cent of certified organic vegetables sold in the market came from local farms and the rest from the mainland. "Organic vegetables from local farms are good for the environment because reduced transportation means less carbon dioxide is emitted," Wong said. According to the centre, organic foods are those that have been grown without the use of conventional pesticides, herbicides, artificial fertilisers, human waste or sewage sludge. They are processed without food additives and are not subjected to genetic engineering. All organic food certification in Hong Kong is developed by the private sector. The centre is one of two independent certification bodies for organic products in Hong Kong.

Visual arts centre proposed for old police station - Jockey Club due to unveil plan for monument's transformation. The Central Police Station compound is set to become a contemporary visual arts centre to show off collections owned by the city's residents. A person working on the project said the Jockey Club, which is responsible for the plan, would hand over management of the site to a third party, such as a non-governmental organisation. The club had previously considered managing the declared monument through a company formed under its charities trust. The shift towards visual arts means an auditorium and a black-box theatre for the performing arts in the club's original proposal would be scaled down or dropped. The person said many local artists and collectors lacked proper space to store or showcase their pieces. The compound on Hollywood Road was well situated to serve the purpose, given its proximity to the art galleries in SoHo. Some space, such as the courtyards, would provide for small and medium-sized performances to add vibrancy to the venue. The visual arts centre could include a range of forms including photography, installations, digital art, multimedia works in addition to painting and sculpture, another person familiar with the proposal said. Some shops and restaurants would be opened at affordable prices to generate revenue with the goal of making it self-financing. The latest proposal, being prepared by consultants including Asia Art Archive executive director Claire Hsu, who is stepdaughter of former Jockey Club chairman Ronald Arculli; and former director of Swire Properties Michael Moir, who runs a consultancy in property management and investment. The consultants came on board after the club's former executive director for charities William Yiu Yan-pui, who had steered it since 2007, departed in January. The Asia Art Archive was set up by Hsu, Arculli and curator Chang Tsong-zung in 2000 to promote contemporary Asian art by documentation and research. The person working on the project said it had yet to be decided which organisation would take over the operation. As for the design of a new structure, he said no significant new building would be added and that its height would be lower than the 77-metre restriction suggested by the Antiquities Advisory Board in 2004. But Hall F, a prison cell that is not designated as monument but which held a local poet, Dai Wangshu, as a political prisoner during the Japanese occupation, would either be kept or be "re-created" within the site, the person said, without giving details. "We need to keep the whole story of the police station, and Hall F is part of it," the person said. Historians and district councillors had lobbied for the hall's preservation. The Jockey Club has undertaken to finance the HK$1.8 billion renovation work of the compound. The club reached an agreement with the government in 2008 to revitalise the site as a cultural complex with commercial elements. It later scrapped the initial design of a 160-metre-high transparent tower, by Swiss architects Herzog and de Meuron, amid public unease over its height and bulk. A six-month public consultation for the design and the use was then launched and local architect Rocco Yim Sen-kee was invited to join the design team. The club is expected to release its latest design in the next few weeks before taking it to the Town Planning Board. Alexander Hui yat-chuen, director of the Heritage Hong Kong Foundation, questioned why contemporary visual arts were considered the best option for the monument, and whether other options on public programmes were evaluated. He said the club should make public the research questions and parameters given to the consultants. Benny Chia Chung-heng, director of the Fringe Club, said the shift towards visual arts was a natural outcome given the consultants' background, but he hoped the site would still stage some performing arts activities so that it would be eventful, especially at night.

The maker of Po Chai Pills has expanded its recall to parallel imports of the popular Chinese medicine. This comes as the Department of Health investigates whether the manufacturer, Li Chung Shing Tong, has broken any laws. The company also announced that, from today, consumers can now go to 22 pharmacies, instead of just four, to surrender the product - including parallel imports - and ask for refunds. No outdated pills will be accepted. This was an update to recall advice from earlier yesterday which had said parallel imports could only be accepted at its offices in North Point. The company said around 302,500 packs of the pills have been returned. Anyone with more than 20 packs will have to contact the North Point head office. The manufacturer apologized on Thursday after the department pointed out that it failed to report a product recall it initiated as early as January. The Po Chai Pills' capsule form, which the manufacturer said was sold in Singapore and not Hong Kong and Macau, was found to contain cancer-causing drugs and restricted substances. The pill form, which is widely circulated in the city, is also subject to the recall order. At a pharmacy located in Sha Kok Estate, Sha Tin, consumers flocked to seek refunds. But some were frustrated that they had been asked to travel to North Point to surrender parallel imports. An elderly woman said: "It would cost a lot if I travel to North Point." An elderly man who resides in the estate said: "I can't walk very well. There's no way I can make it to North Point so I have to throw the 10 packs away." Other consumers complained that pharmacies will only repay HK$13 a pack when the listed refund price is HK$15. Wong Wai-man, sales manager of Man Tak Pharmacy, said it can only offer a refund for HK$13 a pack as it is the price that retailers are charged. Deputy Director of Health Gloria Tam Lai-fan said the department has not ruled out taking legal action. "Li Chung Shing Tong (Holdings) is a holder of a manufacturer's licence. We have to further investigate to see if it had breached any ordinance," Tam said. The Chinese medicine was found to contain phenolphthalein, banned in 2001 for its cancer- causing effect, and sibutramine, a controlled substance that can raise blood pressure and heart rates.

China*: China risks growing social instability and even violence if the government does not take effective action to address anger about forced evictions and demolitions, a new report says.

Chinese Vice President Xi Jinping on Sunday visited an industry hub in southwest Sweden and met with Vastra Gotaland County Governor Lars Backstrom. In his meeting with Lars Backstrom and Swedish Deputy Prime Minister Maud Olofsson, Xi said that this year marks the 60th anniversary of the establishment of diplomatic relations between China and Sweden and that his on-going visit to Sweden is aimed at further promoting friendly cooperation between the two countries through celebrating the anniversary. Both the city of Gothenburg and Vastra Gotaland County with an important place in Sino-Swedish friendly exchanges and cooperation have played an irreplaceable role in the development of ties between the two countries, Xi said. A replica of the 18th century wooden merchant ship Gotheborg, which reached the southern Chinese city of Canton several times in the late 1730s and early 1740s, is an important symbol for the friendly exchanges between China and Sweden, said Xi. The 2006 return of the reconstructed Gotheborg to Canton and Shanghai has enhanced the friendship between the Chinese and Swedish peoples and thus helped a lot in promoting the growth of the bilateral relationship, Xi said.

Number of outbound tourists soaring - Two Beijingers study a New York travel offering at a travel agency office in Beijing. The latest outbound tourism report by the China Tourism Academy said China will the fourth largest source of outbound tourism in the world by 2020. According to statistics from travel search engine, top destinations for travelers departing from Beijing were Hong Kong, Tokyo, Seoul, Singapore, Bangkok, New York, Paris, Kuala Lumpur, London and Sydney. China Tourism Academy estimates as many as 54 million tourists will go abroad this year, up from 47 million in 2009, reports Yu Tianyu from Beijing.

Gold council predicts huge jump in mainland demand - Currently the world's second-largest gold consumer after India, mainland has seen its gold demand grow at an average rate of 13 per cent per year over the past five years. Mainland’s gold demand is expected to double over the next decade from current levels due to jewellery consumption and investment needs, the World Gold Council (WGC) said in report released on Monday. Currently the world’s second-largest gold consumer after India, mainland has seen its gold demand grow at an average rate of 13 per cent per year over the past five years. Demand from mainland’s two largest sectors – jewellery and investment – reached a combined total of 423 tonnes last year, with 314 tonnes supplied by domestic mines. “This shortfall creates a snowball effect as China’s gold industry may not be able to keep pace with the annual leap in domestic consumption despite rising to be the world’s largest gold producer since 2007,” WGC said in the report. The mainland per capita consumption of gold jewellery is one of the lowest, at 0.26 grams, compared with other major gold consuming countries. If gold were consumed at the same rate per capita as in India, Hong Kong or Saudi Arabia, annual mainland demand could increase by at least 100 tonnes or as much as 4,000 tonnes in the sector alone, it said. If the central bank boosts gold holdings to 2.2 per cent of forex reserves, a peak level seen in 2002, from the current 1.6 per cent, mainland’s total incremental demand would rise by 400 tonnes at the current gold price, the report added. Mainland’s share of global gold demand doubled from 5 per cent in 2002 to 11 per cent last year, and the council predicted that mainland’s domestic gold mines could be exhausted within six years. “The Chinese gold industry is simply not responding fast enough to bring in new supply,” it said.

Thousands of visitors crowd the Bund, which was renovated as part of Shanghai's preparations for the World Expo. New Bund wins good reviews from visitors - Shanghai happy with its 4b yuan (US$882 million) attraction. The curtains drew back on Shanghai's front window yesterday when the city's best-known landmark, the Bund, reopened after a refit costing billions of yuan. The iconic strip of colonial buildings has been a chaotic construction site for nearly three years as part of the city's immense development drive ahead of the World Expo, due to open on May 1, but yesterday it was mobbed by nostalgic locals and wide-eyed tourists. "It's awesome. This is an awesome city," one visitor from the US state of Nebraska said. "We're here on a business trip and we had just one day left for sightseeing, and I'm just amazed. I'd never even heard of this place before." Even the weather - a highly unpredictable factor in recent weeks - decided to co-operate, as the riverfront promenade was bathed in glorious spring sunshine. The riverfront promenade is now 40 per cent wider than before, and extended by almost a kilometre southwards to 2.6 kilometres in length. New fountains, floral displays and seating areas now line the stretch between the raised walkway and Zhongshan East Road, although the precinct's extensive shopping areas remain empty. The four billion yuan (HK$4.54 billion) project involved digging a 3.3 kilometre double-deck tunnel to divert most vehicle traffic underground. But not every hint of the past has been erased. The new-look Bund has kept at least one thing which earned it a fond place in locals' hearts - a section of low wall known as the lovers' wall. Speaking at a press conference last week, however, officials were keen to stress that this was an attempt to preserve the area's community memory, and was not intended to condone illicit behaviour. Along the widened riverfront walkway, visitors numbered in their tens of thousands. Officials claimed last week the new park would accommodate more than one million visitors per day, and it appeared to have been given a thorough test. Everywhere was packed with visitors, keen to have their photos taken against the grand row of colonial structures or the shining towers of glass and steel in the financial district across the river in Pudong. Feng Yuehong, a 70-year-old Shanghai pensioner, posed with his two-year-old granddaughter on one of the area's brand-new fleet of electric cleaning vehicles. "It's nice to see the place open at last," he said. "My wife and I used to come here every day after work so we felt we had to take a look on the first day it reopened. "I like the new look. It feels comfortable and very clean. It's much wider and there are a lot more open spaces for people to walk." The only obvious source of stress was around vans selling drinks at bargain-basement prices - just three yuan for a bottle of name-brand soft-drinks. Around lunchtime, they were so overwhelmed with thirsty tourists they were having trouble handling the demand. Vehicle traffic was noticeably reduced along the street after the opening of the road tunnel designed to handle the majority of medium-sized cars travelling along the important north-south corridor. But with the thoroughfare shrunk from 11 lanes to just six, the remaining traffic was only a little safer for pedestrians. "I'm generally happy with the park, but do think it would have been better with some pedestrian bridges or subways," Ma Jingming, a Shanghai retiree who was trying to get home after riding his unicycle on the waterfront, said. "They have really improved the promenade - I think it could easily accommodate twice as many people as today - but when you come back down to the road I think it is still a bit chaotic and dangerous. "There is a very long wait at the crossings, and I think that could be a problem when there are high numbers of visitors." The Bund's massive redevelopment project represents just a tiny fraction of the city's preparations for the six-month World Expo. The mainland's biggest international event since the Beijing Olympics in 2008 is expected to draw upwards of 70 million visitors, and the municipal government is pulling out all stops to show off the city as vibrant and modern. The expo's budget is already estimated to be twice that of the Olympics and has involved a massive drive to upgrade the city's transport network and other infrastructure. But Shanghai has rejected plans for a massive opening extravaganza featuring performances spanning the Huangpu River. As probably the city's most famous attraction, the Bund is playing its part in promoting the event. A large, temporary stage has also been erected for use in celebrations to mark the one-month countdown to the expo tomorrow night. But the view did not win over everybody who visited yesterday. "It's just a river," Liu Jinwei, a visitor from Suzhou , Jiangsu province, said. "I think it's nice, but nothing so amazing as I'd expected. There are too many people."

Mainland’s central bank, facing a tough job steering monetary policy, appointed three new academic members to its policy-making panel on Monday. The announcement by the People’s Bank of China, made on its website ( ), confirmed an earlier report in the China Business News. Three prominent economists will replace Fan Gang, the only academic member of the monetary policy committee, which plays a pivotal role in framing policy advice on issues such as interest rates and the currency. The new members include Zhou Qiren, head of the China Center for Economic Research at Peking University. His predecessor, Justin Lin, is now chief economist at the World Bank. The other new members are Xia Bin, head of the financial institute of the Development Research Centre, a think-tank under the State Council and Li Daokui at Tsinghua University. The China Business News said the trio would attend their first monetary policy committee meeting on Tuesday. An assistant to Zhou at Peking University said the economist would attend a central bank meeting on Tuesday but declined to give further details. The appointments mark a continued effort by the PBOC to shore up its policy-making process as it strives to strike a balance between sustaining growth and keeping inflation tame. The panel is chaired by Zhou and includes senior officials from the cabinet, the Finance Ministry, planning agency and financial regulatory agencies. Xia, a former central bank official, is considered an expert on monetary policy and financial reforms. Li is held in high regard as a macroeconomic analyst. Zhou, who has a PhD in economics from the University of California, has been focusing on economic restructuring. “This shows the central bank is more willing to listen to opinions from external experts and listen to different views,” said Qing Wang, China economist at Morgan Stanley in Hong Kong. “The central bank is well ahead of state agencies in promoting policy transparency and opening up to external experts’ views, which are more balanced and far-sighted,” he said. Mainland’s cabinet retains the final say on key policy changes, including interest rates and the exchange rate, but the central bank has been fighting for more decision-making authority. Previous academic members of the committee, which holds meetings on a quarterly basis, include Yu Yongding and Li Yang, both from the Chinese Academy of Social Sciences, another top government think-tank.

China Construction Bank (0939) said net profit last year rose 15.3 percent from the previous year to 106.8 billion yuan (HK$121.42 billion) on improved fee and commission income and lower impairment losses on assets.

March 30, 2010

Hong Kong*: The Lands Department has been asked to summon senior management of Henderson Land (SEHK: 0012) to explain in person why the sales of 24 flats in its luxury Mid-Levels development could not be completed five months after it claimed they were sold. At a special Finance Committee meeting yesterday, some legislators criticised the department for failing to press harder. Henderson said in October that 25 flats in the development at 39 Conduit Road had been sold, including one five-bedroom duplex for a world record of HK$439 million - or HK$88,000 a square foot. But Land Registry records show only one flat has been sold. This sparked criticism that the developer might have released misleading information to shore up market sentiment or prices. Henderson Group chairman Lee Shau-kee said last week that he was willing to bet that no transaction for apartments at the block was faked. He said some buyers had asked to delay payments, so the sale of some flats had yet to be completed. The department has written to the developer for information. In a reply earlier this week, Henderson said it had entered into a verbal agreement with the 24 buyers to extend the transaction date for two to four months, adding that this might be further extended. The department wrote to the developer again to request further information. Legislator Lee Wing-tat, of the Democratic Party, said: "The department does not seem to have been too afraid to act. Why must you write letters? Can you not summon the company management to explain to you in person?" Director of Lands Annie Tam Kam-lan argued she had followed the proper procedure. "After we receive the reply from the developer, we shall consult the [Development] Bureau and the Department of Justice on what to do next," Tam said. Lee said the department should initiate an investigation when it spotted an abnormality in a transaction. Sales at the 46-floor residential building in Mid-Levels West have been dogged by controversy after Henderson Land skipped 48 floor numbers so it could market the top two floors as the 68th and 88th floors. Unionist legislator Pan Pey-chyou yesterday urged the government to outlaw such practices. Pan said: "Some firemen told me that numbering of floors in such a manner could ... put them at risk." Secretary for Development Carrie Lam Cheng Yuet-ngor replied that the government was working on new guidelines to disallow such practice.

Ribbons on a dragon: the new Hong Kong city symbol - HK still 'Asia's World City' as HK$1.4m rebranding changes little - Three ribbons have been added to the flying dragon logo used to promote the city in a HK$1.4 million redesign - part of a review of Brand Hong Kong which left the "Asia's World City" slogan unchanged. Designer Alan Chan Yau-kin created the new logo with an "evolved" dragon, along with three ribbons. Chan said the blue and green ribbons symbolise blue sky and a sustainable environment, while Lion Rock, which represents the "can-do" spirit of Hongkongers, is silhouetted by the red ribbon. "The new dragon maintains the essence of the old flying dragon, but it has evolved," Chan said. The new and old dragons would co-exist for a time until the old logo was phased out, said Financial Secretary John Tsang Chun-wah, who helped unveiled the logo yesterday at the Cultural Centre in Tsim Sha Tsui. Designer Eric Cheung Kai-wa, who led the team that created the original flying dragon logo 10 years ago, said it was difficult to find the city's character in the new logo. "I'm shocked by the changes made to the original design," Cheung said. "The additional elements create confusion. From a distance, you can see only ribbons, not the dragon. And the 'East meets West' element is lost." Cheung said the "East meets West" element was embodied in the old design since parts of the dragon formed the Chinese character for Hong and the English initials for Hong Kong. But he said the element was lost in the new design with the Chinese character missing. There's another change, too. Hong Kong's core values will henceforth be these: free, enterprising, excellence, innovative and quality living. That's compared to the previous values adopted in 2004: stable, free, progressive, high quality and opportunity. Asked why democracy was left out of the "updated core values", Tsang said: "Democracy is in our hearts." The brand review began in May 2008 and ended in April. It involved surveys, workshops, creative contests and consultation sessions to gauge the public's perceptions of the city. In one of the surveys, people were asked to pick one of at least 56 pictures which they considered "most representative of my ideal Hong Kong in 2020" and give their reasons for the choice. They included a nest of three golden eggs, a row of coloured pencils, a dashing leopard, footprints on a beach and an open door. "Brand Hong Kong is the city brand of Hong Kong people and what they think about their own city is of prime importance," Tsang said. The "Asia's World City" slogan would remain unchanged after the surveys "revealed general support for Hong Kong to position itself as Asia's world city", he said. The Sunday Morning Post (SEHK: 0583) reported in September 2008 that the review was being carried out by civil servant Mary Leung Lai Yim-ming and branding consultant Rachel Chan. The government last December invited designers to create a new logo while preserving the essence of the original dragon. "The feedback from the review shows general backing for the dragon," Tsang said. "Members of the tourism sector are strong advocates on this point." Brand Hong Kong was launched in 2001 to promote the city after the East Asian financial crisis. The design of the old flying dragon logo took 11 months and cost HK$9 million, including research expenses. Chief Executive Donald Tsang Yam-kuen proposed the review in his policy address in October 2007. By September 2008, the Information Services Department had spent HK$1.3 million hiring multinational communications company Fleishman-Hillard to interview residents about how they believe the city should be branded. Asked how much the review had cost, the financial secretary yesterday said he did not have the amount to hand. The Information Services Department would not give the project's cost either. It said only that the design contract with Chan's agency was worth HK$1.4 million. "The contract sum of about HK$1.4 million with his design agency covers more than a logo design," a government spokesman said yesterday. "It includes a whole range of designs relevant to brand implementation." The spokesman said the public should not just focus on the brand logo. "Other brand elements - core values, attributes positioning and platform - are equally, if not more, important," he said. The government yesterday also unveiled a promotional video featuring actor Chow Yun-fat, pianist Li Yundi, business leaders Philip Chen Nan-lok and Allan Zeman and soccer player Chan Siu-ki.

Banker toasts a HK$2.5m (US$324,678) thirst for Chateau Lafite - Private banker Timothy Lo has splashed out a record HK$2.56 million for a collection of French wine dating back four centuries. Auctioneer Acker Merrall & Condit said the price was an auction world record for a single lot of 70 bottles of Chateau Lafite Rothschild, featuring vintages aged from 1799 to 2003. Lo said he had been a dedicated wine collector and drinker for more than 20 years and the Lafite was one of his favourites. "It was there, it was in my budget, so I bought it," he said. Lo said he was thrilled with his purchase and was looking forward to drinking them with friends - at least those bottled within the last 30 years. Yesterday's Lafite splurge was not the only purchase made by the managing director of French private bank CIC Investor Services; he and one of his mainland friends spent HK$6 million to HK$7 million between them at yesterday's auction, but who's counting? And anyway, he said, the wine was secondary to those you chose to drink it with. "Wine is just the companion. It's the friends that are important," he said. Lo said about 70 per cent of the buyers at the auction at the Island Shangri-La were from the mainland. "Lafite is the most famous wine in mainland China. From my friend's point of view, wine is reasonably priced in Hong Kong, because the tax is more than 70 per cent on the mainland," he said. "He can come here and take a few bottles back each time." Acker Merrall & Condit's auction director John Kapon said HK$57.6 million was spent during the two-day auction.

Samoa celebrates after winning the Hong Kong Sevens rugby tournament against New Zealand on Sunday. Samoa won 24-21. A tournament that began with fears about the air quality ended in Samoa taking the breath away with a wondrous come-from-behind performance to defeat New Zealand 24-21 in the Cup championship at the Cathay Pacific (SEHK: 0293)/Credit Suisse Hong Kong Sevens on Sunday. It was Samoa’s third IRB Sevens World Series title in a row and gave them the lead for the first time in the 11-year history of the competition. With two legs remaining in England and Scotland, Samoa are on top of the standings on 124 points with the Kiwis trailing by three points.

Charlene Choi Tsoek-jin yesterday announced she was divorcing singer-actor Ronald Cheng Chung-kei. It was the first confirmation they had been married. At a press conference Cheng said he and Choi, affectionately known as "Ah Sa", had secretly married in Los Angeles in 2006. At the time, Choi's co-star in the acting and singing duo Twins, Gillian Chung Yan-tung, was still seeing on-off boyfriend Edison Chen Koon-hei, whose sexually explicit photos of her were later to land on the internet and derail the duo. "We were happy about our decision and we had our parents' support," Cheng said. "Ah Sa and I always think that marriage is a private matter, and that there is no need to share this with other people." The pair called a press conference at Kowloon Bay's Hong Kong International Trade and Exhibition Centre after Chinese-language newspaper Apple Daily yesterday revealed the existence of a marriage certificate in their names. Cheng, 37, said his marriage with Choi, 10 years his junior, had been a happy one but that they had come to the conclusion they should go their separate ways. He is the son of music industry heavyweight Norman Cheng Tung-hon, the head of record company Gold Typhoon. "We realised that separation would be good for us," Cheng said. The separation had nothing to do with a third party, he said. "It was a rational decision." They were in the process of getting divorced, he said. "Although we cannot stay man and wife," a tearful Cheng said, "we will remain friends forever." While Cheng was emotional, Choi was expressionless as she spoke briefly. "From the time we began dating to the present day, we believed we did not have to explain our choices to people, because this is our private life," she said. "But artists cannot have any privacy." The couple did not take any questions. Rumours that Choi and Cheng were married began to spread following the recent announcement the Twins would stage a reunion concert in mid-April - their first appearance together on stage since the sex-photos scandal. Choi has enjoyed a successful solo career during Chung's hiatus. She has acted in movies and last year released a solo album whose title, Two Without One, is a reference to the duo's status. Cheng's early career suffered because of his bad-boy reputation. In 2001, he was sentenced to four months' jail, suspended for two years, by a Taipei court for going on a drunken rampage aboard an airliner. He was found guilty of violating aviation regulations and attacking cabin crew, the co-pilot and pilot on an Eva Air flight from Los Angeles to Taipei. The pilot knocked him out with a flashlight.

China*: A8 Digital Music Holdings, a leading provider of ring tones and other audio content to mainland mobile-phone users, aims to drive expansion by focusing its internet-enabled services to 3G subscribers and pursuing potential acquisitions. The plans came after the Shenzhen-based company announced record profit and revenue for last year. A8, which marks 10 years of operations in May, yesterday reported a 27.24 per cent increase in net profit to 102.01 million (HK$116 million) yuan, from 80.17 million yuan in 2008, on steady demand of its pay-to-download digital music service and tightened cost control. Revenue increased modestly to 707.15 million yuan, up from 706.08 million yuan. Excluding a 49 million yuan income from a one-off event with China Mobile (SEHK: 0941) during the Lunar New Year holiday in 2008, A8 estimated turnover grew about 8 per cent year on year. As of December 31 last year, A8 had no borrowings. Its cash, bank balances and liquid short-term assets amounted to 402 million yuan, up from 317.6 million yuan the previous year. Chairman Liu Xiaosong said A8 was striving to become "the biggest digital music services provider in China" through its "Music Cloud" strategy and greater adoption of its A8 Box jukebox mobile software, which directly target mainland users of internet-ready handheld wireless devices. "We have a well-defined long-term business-to-consumer strategy and have been exploring prospects for extending the group's [market] footprint through mergers and acquisitions," Liu said. Music Cloud is an internet-based digital audio service, with social networking features, that allows subscribers to directly download and search music through compatible mobile phones, home stereos, personal computers, MP3 players and car stereos. "This is a long-term strategy of the group," Liu said. A8 Box software is expected to be a big revenue earner, as it is being embedded in Taiwanese semiconductor firm MediaTek's chipsets for 3G mobile phones made on the mainland. The software enables mobile-phone users to easily access and buy content from A8's large online audio database and other providers.

Guangzhou has proposed launching a land sale system similar to the application list in Hong Kong as it seeks to cool home prices. But an analyst said the move was unlikely to work because it would only result in a fall in land supply, leading to further rises in home prices. In response to a central government campaign to control runaway property prices, the Guangzhou municipal government on Thursday announced seven measures to control land prices and increase the supply of government subsidised homes for low and middle-income groups. The measures included the adoption of Hong Kong's land sale application list system. The proposed application list system would let the market decide on the timing of land sales and the prices of land sites, the Guangzhou Daily quoted government officials as saying. Under Hong Kong's application list system, a developer can trigger an auction of a site on the land reserve list by making a guaranteed bid that is at least 80 per cent of a site's minimum price. "I do not know why it would help cool off land prices. I do not understand why officials think it is a good land sale system," said Sherman Lai, the chairman of Centaline Group. "This system is useful only in a property market downcycle, because it can ensure that the site on offer can be sold." In Hong Kong, the system was blamed for a massive shortfall in land supply. That led to record-low levels of new housing completions, resulting in steep price rises. Other Guangzhou measures included an investment of 4.5 billion yuan (HK$5.1 billion) to build three million square metres in gross floor area of subsidised housing, involving land supply of 1.05 square kilometres. The Guangzhou government's moves to cool the market also included increasing the supply of land to build "restricted price" flats for lower and middle-income groups. Ten thousand such flats, in which the government caps the selling price, will be launched this year. The government will provide subsidies for developers of restricted price homes by charging lower land prices. The government will also establish an alarm system for the land bidding system to better monitor whether the market is overheating. As part of the campaign to cool the market, Guangzhou will also investigate whether property developers are hoarding land or illegally building villas.

Photo taken on March 27, 2010 shows the night view of the renovated bund in Shanghai, east China. Shanghai's Bund reopened on Sunday after a thirty-three months' renovation project to welcome the 2010 World Expo.

Children fly the balloons during the completion ceremony of bund renovation project in Shanghai, east China, March 28, 2010. Shanghai's Bund reopened on Sunday after a thirty-three months' renovation project to welcome the 2010 World Expo.

The Ministry of Water Resources yesterday warned that the northern and southern regions may be battered by drought at the same time.

Guangxi farmer Chen Guihua and her parents-in-law, both in their 60s, need to walk nine kilometres and cross two mountains almost every day for two buckets of clean drinking water to survive the once-in-a-century drought that has struck the southwest of the mainland. They have not taken a shower or brushed their teeth for more than three months and their plight is only getting worse. They are now forced to stay indoors most of the time to reduce water usage and avoid the high temperatures that have accompanied the drought. Chen, 27, is now the only young woman living in the Zhuang ethnic minority village of Nongmei in Sanshi township, Donglan county, one of the eight worst-hit counties in Guangxi. Almost all young and middle-aged villagers have left since the devastating drought began last autumn, drying up water sources and preventing farmers from getting on with spring planting. Elderly villagers and children unable to walk such a long distance for safe drinking water are forced to survive on just two bowls of water a day. Many livestock have died of thirst. In Guangxi, the drought has left more than 2.2 million people and 1.1 million head of livestock short of water and 740,000 hectares of farmland too dry to plant. At least 77 cities or counties in the autonomous region have declared a state of emergency and weather forecasters do not predict an end to the drought any time soon.

The drought has left more than 2.2 million people and 1.1 million head of livestock short of water in Guangxi, while 740,000 hectares of farmland are too dry for planting. With 77 cities or counties declaring a state of emergency, there is no end in sight to the aridity.

March 29, 2010

Hong Kong*: Two Bank of China (Hong Kong) employees have been arrested on suspicion of fraudulently or recklessly inducing people to buy Lehman Brothers-related minibonds, in the first such arrests since the US investment bank collapsed in 2008. The two women, aged 38 and 51, were arrested in Tsuen Wan and Yau Ma Tei yesterday in a case the police said involved eight clients and HK$3.5 million. "The duo was believed to have separately misled and induced eight customers on various occasions to purchase structured products between 2005 and 2008" in contravention of the Securities and Futures Ordinance, police said. The two women, said to be frontline employees, were released on bail of HK$5,000 each. No charges were laid. They must report back to police.

Hong Kong, one of the world's freest economies, is making headway in its campaign to be part of the mainland's next five-year plan.

Co-founder and chief executive of the G.O.D. lifestyle brand Douglas Young (left) visits an antique shop in Central on the first cultural walk staged by the Tourism Board. It aims to spread awareness that the city has more to offer than shopping and dining.

Culture guide to show city offers more than just shopping - Hong Kong has more to offer than just shopping and dining and the Tourism Board is trying to get that message across through a new guide book to the local arts and culture scene. The guide is the first launched by the board and is aimed at spreading awareness of the city's cultural attractions ahead of the rise in cultural tourism once the West Kowloon Cultural District is completed in four to five years. It illustrates the must-see arts and cultural shops, sites, and attractions recommended by cultural personalities. The almost 100-page guide, which cost HK$600,000 to produce, is divided into nine chapters, six of which focus on attractions in lower Central, SoHo, Sheung Wan and Western District, Wan Chai, Tsim Sha Tsui and Yau Ma Tei. Each chapter features a simple map showing the locations of attractions, which include art spaces and heritage buildings. Shops and sites of distinctive local cultural characteristics, such as "beating the devil" under the flyover of Canal Road West in Causeway Bay, stalls selling collectibles on Cat Street in Central, and "Korean Food Street" in Tsim Sha Tsui are also listed. One chapter highlights artists' villages and creative clusters. The final two chapters give readers useful information, including a calendar of cultural events. Tourism board chairman James Tien Pei-chun said that with the rise of green tourism and cultural tourism, the board wanted to promote a wider variety of destinations for tourists. "Over 50 per cent of tourists are not first time visitors. When they do return, shopping and dining will not be the only things they look for. We should provide more options for them," Tien said. He said that with the recent appointment of the chief executive of the arts hub, it was necessary to start promoting cultural tourism to lay the foundation for when the arts hub was completed. Freeman Lau Siu-hong, a designer and consultant on the guide, said it would also be informative for Hongkongers. "There's information in it that even I did not know about," he said. The guide's first print run is 20,000 copies, with 10,000 copies in English, and the rest in traditional or simplified Chinese. The board said that the guide will initially be distributed at the Visitor Information Services at Star Ferry pier in Tsim Sha Tsui, and some of the board's overseas offices. The content will also be uploaded on to the internet.

Thousands of potential homebuyers queued up yesterday in the hope of acquiring a flat at Li Ka-shing's latest development - Festival City in Tai Wai near Sha Tin - where the cheapest was being offered at HK$8.32 million. The line started to form outside the Cheung Kong (Holdings) (SEHK: 0001) sales office in Hung Hom's Metropolis Mall around 4pm, an hour before the sale officially opened. "There are 5,000 to 6,000 people here. The shopping centre is packed with people and all the restaurants are full. There will be more on the way here after work," said Sammy Po Siu-ming, New Territories director for real estate agency Midland Realty. According to Cheung Kong, more than 300 flats were sold by 9.30pm last night for HK$3 billion. Some 7 per cent were sold to mainlanders. "The sales will go on overnight as Cheung Kong always releases as many flats as possible," Po said. To curb speculation at Festival City, Cheung Kong is the first developer to introduce a cap, with buyers limited to acquiring only two flats in their own name or that of a company. Po said from his observation only a few people were buying two flats. Amid growing concerns that speculators are making it difficult for the average person to obtain a flat, Sun Hung Kai Properties (SEHK: 0016) and Henderson Land Development (SEHK: 0012) will also impose restrictions to stop multiple properties in their new projects being scooped up by one person. Po said some mainland buyers had travelled to Hong Kong to buy flats in Festival City, but not many. "About 70 per cent of the buyers live in Tai Wai or Sha Tin and want to upgrade to bigger flats," he said. Cheung Kong released the first batch of 20 980 sqft flats at an average price of HK$8,692 per sqft for cash buyers. Prices ranged between HK$8.32 million and HK$8.75 million. The developer then released 80 flats, ranging from 1,000 sqft to 1,400 sqft at HK$9,000 to HK$10,000 per sqft, or between HK$12 million and HK$15 million per flat. Cheung Kong executive director Justin Chiu Kwok-hung said the developer would release all 1,360 Festival City phase-one flats, which are due to be completed in August, according to demand. The whole development comprises 4,328 flats. Eric Yuen Chi-fung, the head of research at Guoco Capital, said the total investment cost of the project was HK$5,000 per sqft. Based on the first batch being sold for HK$8,692 per sqft, this represents a profit margin of at least 74 per cent.

Businesswoman Dr Lily Chiang Lai-lei has lost the last battle in her year-long fight to have her company fraud case heard by a jury. The Court of Final Appeal yesterday refused to hear her appeals against two rulings that struck down her judicial reviews seeking a jury trial in the Court of First Instance. Chiang, 49, the former chairman of the General Chamber of Commerce, faces five charges in relation to an alleged share option fraud. A magistrate transferred the case to the District Court a year ago. Chiang has been seeking a transfer to the Court of First Instance, arguing that she would get a more sympathetic hearing from a jury. But Chief Justice Andrew Li Kwok-nang said yesterday the delay in the proceedings was highly undesirable and the highest court said her appeals had no grounds. Chiang was arrested by the Independent Commission Against Corruption in October 2007 and charges were laid against her the following January. In March that year the case was transferred to the District Court on the application of the prosecutor. For Chiang, Johnny Mok SC told the top court yesterday he accepted she would get a fair trial in the District Court. But she preferred a jury trial in the High Court because it would be easier for her to gain sympathy from the public for her character and charity work. "My chance before a jury must be much better," the barrister said, noting that a recent commercial case had attracted a maximum sentence of seven years in the District Court. In the first judicial review before Mr Justice Alan Wright in the Court of First Instance - while the case was still before the Magistrate's Court - Chiang said she should have a say in deciding the venue of her trial. This was turned down and the criminal proceedings resumed. In the second challenge, which was launched in May last year, she sought to review the magistrate's order transferring the case, contending it was unconstitutional. But on June 1 Wright refused her leave to lodge the review. Chiang was the first woman to chair the chamber in its 147-year history. She and Shah Tahir Hussain, 45, are accused of one count of conspiracy to defraud and two of making false statements over the granting of share options to employees of Pacific Challenge Holdings, a listed brokerage company she used to run. Chiang and Pau Kwok-ping, 54, former chief executive of Eco-Tek Holdings, also face two counts of fraud in relation to the listing of Eco-Tek - a company Chiang founded. Her cases will be brought to the District Court on May 18 for consolidation and a pre-trial review.

The city's most influential business chamber is considering suggesting workers be paid not less than around HK$25 an hour, a proposal that is likely to stoke the already divisive debate about what level the statutory minimum wage should be set at. According to insiders familiar with the situation, the Hong Kong General Chamber of Commerce is finalising a submission to the government in which it proposes a minimum wage of HK$24 to HK$25 an hour. This is below the hourly rate of HK$33 supported by labour unions. The insiders said the HK$25 level was derived as the midpoint between what domestic helpers earn - HK$23 to HK$24 an hour - and Comprehensive Social Security Assistance, which works out at HK$28 to HK29. At HK$25 an hour, the chamber estimates between 25,000 and 150,000 jobs could be lost, the insiders said. A preliminary internal survey of the chamber's members found that small companies might have to lay off between 20 per cent to 50 per cent of their staff as a result.

Taiwan is using its goal of a trade deal with the mainland to open talks with Japan, the United States and other powers on free-trade deals expected to boost the island's economy, officials say.

China*: The largest canal project since the establishment of the People's Republic of China in 1949 began yesterday, aiming to connect the Yangtze River with its biggest tributary, the Han. Work on the 6.1 billion yuan (HK$6.9 billion), 67.23 kilometre project in Hubei , starting in Jingzhou and ending in Qianjiang , is beginning as the country struggles with its most serious drought in decades. It is expected to be finished in 2014. The canal is also a part of the ambitious South-North Water Diversion Project, which is designed to channel about 50 billion cubic metres of water a year from the Yangtze River along three routes to quench the thirst of northern regions including Beijing, Tianjin , Hebei and Henan. The diversion project's 1,276 kilometre central link was originally designed to divert 10 billion cubic metres of water, as much as a third of the annual flow of the Han River, from Hubei's Danjiangkou dam to Beijing in time for 2008 Olympics. However, public concerns delayed its completion until this year. Environmentalists complained that the water quality of the Han would decline because its self-cleaning capacity would diminish after it lost a third of its flow. The Xiaoxiang Morning Paper, a newspaper under the Hunan provincial government, reported yesterday that another 1.5 billion cubic metres of water would be diverted from the upper reaches of the Han to Shaanxi's Wei River to help ease pollution. The canal connecting the Yangtze and the Han was compensation for the central link programme and would pour three billion cubic metres of water back to the Han. The Hubei government also expects the project to boost the local economy, with the 60 metre wide, six metre deep canal capable of carrying ships of up to 1,000 tonnes, China News Service reported. The canal will also cut more than 600 kilometres off the journey faced by passengers and goods from Jingzhou to Qianjiang, a route presently served by at least four highways and one railway line. The drought in the normally water resource rich southwest has raised fears that the South-North Water Diversion Project will further worsen such disasters or adversely affect water conservancy projects. Premier Wen Jiabao , inspecting one of the worst-hit provinces, Yunnan , this week, said that the backward state of water conservancy facilities should be blamed for the damage wrought by the worst drought in a century. "This disaster has exposed our weakness in infrastructure projects in irrigation," Wen said. "With farmers who suffer in the droughts all understanding the importance of water conservancy projects, local officials should learn from the lesson and take this good chance to help them perfect local irrigation facilities." Wen also pledged Beijing would put more resources into water conservancy projects to supply more drinking water for people and livestock as well as irrigation water for crops in drought-hit regions. Members of the State Council said the drought was a temporary phenomenon, which would not affect the long-term goal of the water diversion project. "First of all, the South-North Water Diversion Project hasn't been implemented yet," Xinhua quoted Zhang Ye , one of the senior officials overseeing the project, as saying. "We will divert only 5 per cent of the flow from the Yangtze River every year in the future, which we believe will not bring about any significant impact."

PLA Navy ships enter Gulf for the first time - Chinese warships are this weekend anchored in Abu Dhabi - the first time the People's Liberation Army Navy has entered the oil-rich Persian Gulf, a strategic US stronghold. The two ships, the frigate Maanshan and supply vessel Qiandaohu, sailed through the Strait of Hormuz this week on their way to the capital of the United Arab Emirates. The historic mission follows the end of their three-month rotation on anti-piracy patrols further south off the Horn of Africa and is being closely watched by foreign naval analysts observing China's growing naval presence in the Indian Ocean. With the PLA needing a network of friendly ports, if not full bases, to sustain long-range blue-water deployments, all new Chinese port visits are being scrutinised by regional powers. Gary Li, a researcher on the PLA at the London-based International Institute of Strategic Studies, said the visit was highly significant. "It fits perfectly with their strategy of using this anti-piracy work for broader goals of quietly building new strategic relationships," he said. "We can see a gradual but steady engagement at work, starting with trade and ending with the network of friendly places that they are certainly going to need if they are going to be able to realise their blue-water ambitions." The Abu Dhabi mission was marked by some formal military diplomacy, with the Chinese warships welcomed by the UAE's deputy chief of naval operations, Sheikh Saeed bin Hamdan Al Nahyan, who noted the "great historical significance" of the visit. Qiu Yanpeng, task group commander and deputy chief of the PLA Navy's East Sea Fleet, was quoted by Xinhua as saying the visit would help future military exchanges. "Ever since the establishment of diplomatic relations between China and the UAE, our bilateral ties have grown steadily and both sides favoured each other with valuable support and co-operation on international and regional affairs," he said. With the Gulf states of Saudi Arabia, Kuwait and Oman now the largest suppliers of crude oil to China, Beijing is also negotiating an agreement to buy oil from the UAE. Gao Yusheng, ambassador to the UAE, was quoted by Abu Dhabi newspapers as saying an oil deal was expected this year. "Maintaining security in the Gulf is vital to the area and the world, including China," he added. Iran and Iraq also border the Gulf - factors which, in part, will ensure a strong United States presence for some time to come. The visit comes as China attempts to broaden its anti-piracy work, in party by seeking to head international co-operation efforts and help European Union naval forces escort United Nations food aid shipments to the failed state of Somalia. The efforts are seeing PLA ships enter more ports, including Djibouti and Aden in the Gulf of Aden. The UN escorts will also see Chinese ships enter the port of Mombasa in Kenya and potentially dangerous Somali ports. The French, also increasingly active in the Indian Ocean, have recently established a base in Abu Dhabi in addition to their other regional holdings, while the US Fifth Fleet maintains a facility in Bahrain. Routine resupply logistics are seen as one of the biggest tests for the Chinese deployment, which started in January last year - the first time Chinese forces have entered potential combat zones beyond their home waters in centuries. As well as port calls, Chinese state-owned shipping has been used to ferry fuel, water and food to the task force, while PLA leaders have recently talked up the importance of state firms helping the military overseas. "The importance of basic logistics in these long-range deployments cannot be underestimated," said Sam Bateman, a maritime security scholar at Singapore's Institute of Defence and Strategic Studies. "While they may be building a network, I think it is still going to be many years before China is still able to operate fully independently at long range to meet a full range of military objectives."

The prolonged drought in the southwest is threatening regions responsible for over 80 per cent of the world's production of star anise, source of a key ingredient in the flu-fighting antiviral drug Tamiflu. Guangxi and Yunnan, two of the provinces hit hardest by the once-in-a-century drought, have forecast dramatic falls in star anise production and corresponding price increases. Star anise, called bat gok in Cantonese and ba jiao in Putonghua, is a common cooking spice in northern cuisine and also a key raw material used to produce Tamiflu, one of two antiviral drugs recommended by the World Health Organisation last year to treat patients infected with swine flu. Roche, the Swiss pharmaceutical giant that makes Tamiflu, buys huge amounts of star anise from China to extract shikimic acid, the active ingredient in the drug. Industry insiders say the two provinces account for more than 90 per cent of China's star anise production. In Guangxi, the nation's biggest star anise grower with 350,000 hectares of farmland devoted to the tree and an annual output of 80,000 tonnes, months of drought have disturbed the growing cycles, leaving many trees unable to produce flowers or fruits. Yang Wende, president of Guangxi's Star Anise Association, the province's biggest star anise farmers' union, said at least 30 per cent of trees had been affected by the drought. "We have had no rain for more than six months. Few trees have grown fruit and some bloomed but soon wilted because of the water shortage," he said. "They will be hard- pressed to survive until the harvest season." Yang, who farms 200 hectares of star anise himself, said more than 2,000 individual members of his association and 36 corporate members had poor harvest prospects this year. Star anise is usually harvested in March and October. "Last year was a small year and this year was supposed to be a big year," Yang said. "But who could have imagined such a severe drought? Some shoots we planted would not even grow." Yunnan, which accounts for around 5 per cent of the country's star anise production, seems to be faring even worse. Huang Yubo, deputy director of the Star Anise Research Institute in Funing county, where 80 per cent of the province's star anise is grown, said all 26,700 hectares of trees had been affected and losses of at least 31.16 million yuan (HK$35.43 million) were forecast. He said production was expected to fall by 30 per cent. A Xinhua report quoted a supplier of traditional Chinese medicines as saying that star anise fruits had fallen from half the trees in some parts of Yunnan. Swine flu had killed at least 16,455 people in 213 countries and regions by last month and the World Health Organisation says it is still too early to say the pandemic's peak has passed. The Ministry of Health says cluster outbreaks are still possible in some areas and the Centre for Disease Control and Prevention is remaining alert. Huang said star anise prices had fluctuated a bit this month but he expected them to soar when dealers began visiting production areas around June. The price climbed to more than 50 yuan per kilogram in 2000 after a severe drought. Dealers were able to buy dried star anise for only seven yuan per kilogram until last April, but the price had risen to around 24 yuan as the global swine flu outbreak prompted countries to store Tamiflu for prevention and treatment. Mainland pharmaceutical companies are also strong buyers. In Kunming markets, the dried fruit sells for almost 50 yuan per kilogram. Price rises were almost certain, Huang said, with farmers' stockpiles low because of the fierce demand last year due to the fears over swine flu. A spokesman for Roche China said the company had not received any reports about shortages of star anise that would affect the production of Tamiflu. In 2005, a temporary shortage of star anise led to worries about Tamiflu production. Late that year, a way was found to making shikimic acid artificially by deriving some of the raw material needed from fermenting E. coli bacteria, but most of the company's shikimic acid still comes from star anise produced in China.

The Little Mermaid's big adventure - Denmark's Little Mermaid statue has left her perch in the Copenhagen harbour and started a journey to the World Expo in Shanghai - the first trip abroad in her 96-year history.

A bank employee totes yuan banknotes in Suining, Sichuan province. The overall trade surplus was US$198.1 billion last year, down from US$297.4 billion the year before. Signs are emerging of conflicting views among China's leaders over whether to allow the yuan to rise against the US dollar. The conflict, which has broken into rare public view, seems to be mainly between the central bank and the Commerce Ministry. But how it is eventually resolved could decide the course of trade tensions between China and the United States. Many experts believe China undervalues its currency, making exports more competitive on global markets and creating jobs at the expense of employment elsewhere. The current drama began on March 6 when the governor of the central bank stunned analysts by saying that the bank's policy of keeping the yuan at a constant exchange rate against the dollar was a "special" response to the global financial crisis. The new description suggested to many economists that the current value of the yuan was temporary and that the central banker, Zhou Xiaochuan, was preparing the public for a stronger currency. But other officials, particularly at the Commerce Ministry, have fought back in the past two weeks, stoking nationalism and anti-American sentiment by loudly declaring that China would not be told what to do by the US. "It seems like they are talking from different perspectives," said Li Wei, the director of the American studies department at the Chinese Academy of International Trade and Economic Co-operation. He supported the government's overall stance of resisting US pressure. The debate is far from academic. In the coming weeks, the Obama administration faces a series of politically charged deadlines set by Congress to decide whether to continue negotiating with China over currency and trade issues or to take a more confrontational stance and name it a currency manipulator. If the administration labels China a currency manipulator, it would face further congressional pressure to impose punitive tariffs on many Chinese goods. So far, the mediawise Commerce Ministry is trouncing the normally secretive central bank. Every few days, senior ministry officials have spoken out, warning that pressure to let the yuan rise is "irrational". The ministry is close to exporters, who are still upset that shipments fell early last year for the first time since China began opening up trade in the late 1970s. The overall trade surplus was US$198.1 billion last year, down from US$297.4 billion the year before as global trade shrank during the financial crisis. The ministry has even taken its campaign to Washington, with deputy minister Zhong Shan giving a speech at the US Chamber of Commerce on Wednesday and saying at the embassy that American pressure for a stronger yuan "is unacceptable to China". These comments have raised a surge of anti-American sentiment in internet chat rooms and prompted daily headlines on the front pages of Chinese newspapers that China must not "back down". Some Chinese economists gingerly suggested in the past year that China could find better uses for the hundreds of billions of dollars it spends buying US treasuries and other foreign securities to keep the yuan from rising against the dollar. That investment in overseas bonds was equal to nearly a tenth of China's entire economic output last year, even though treasuries have a return of only 0.13 to 4.73 per cent. If the currency does appreciate eventually, the value of China's vast foreign reserves will plunge in yuan terms - a loss for which the central bank would likely be blamed. Maintaining the current level of the yuan also means the central bank cannot easily push up interest rates - a move that countries normally use to battle inflation. That may be necessary in China, where the economy is doing so well and the country's international competitiveness is so strong that inflation is appearing. Exporters have more orders than they can fill - although imports have been rising even faster as companies have stockpiled commodities as a hedge against inflation. These problems have made the central bank unenthusiastic about selling yuan and buying foreign bonds so as to hold down the value of the currency, people close to it said. But the bank has been reluctant to make its case in public, consistently rebuffing requests for interviews, and now may have missed its chance as the increasingly free Chinese business press has embraced the weak yuan as a nationalistic symbol of Chinese sovereignty. For decades, currency policy has been the purview of the central bank, but it is a politically weak institution. Commerce Ministry officials say that they are following a broader trend in the government of greater responsiveness to the public. "Our ministry is doing a good job to be more open and more transparent - there is even an office in our ministry responsible for publicising our policies," said Chen Rongkai, the ministry's division director for press.

Expo Park under preparations before trial operation.

China to issue 26 bln yuan 10-year T-bonds - The bonds would be traded on the interbank bond market and securities bond market from March 31. They have a fixed annual interest rate of 3.36 percent, with the interests to be paid every half year, on March 25 and Sept. 25, respectively.

State fund for homegrown jumbo jet urged - The chief designer of the country's first C919 jumbo jet has urged authorities to establish a multi-billion-yuan State fund to help boost the sales of homegrown airplanes. More financial support from the government will bolster the domestic aviation industry, which is facing strong competition from foreign players such as Boeing and Airbus, said Wu Guanghui, vice-president of the Commercial Aircraft Corporation of China Ltd (COMAC). China is forecast to need about 4,000 planes in the next 20 years. Major domestic airlines such as Air China, China Eastern and China Southern, as well as Sichuan Airlines and Hainan Airlines, have expressed strong interest and support in buying his company's jumbo jet, Wu said. The letter "C" in the title of the country's first homegrown jumbo jet is said to stand for "China" as well as "COMAC", while the first "9" implies "forever" in Chinese culture and the "19" stands for the jet's maximum 190 seats. The single-aisle jetliner is designed for short- to medium-haul flights of up to 5,555 km. The draft design of the country's first independently developed jumbo jet will be completed by this year and be put into production by next year, Wu had said earlier. The plane is slated to test fly in 2014 and be ready for deliveries after 2016. COMAC, which was founded in 2008 to take charge of the country's jumbo jet project, expects to sell 2,000 C919 planes at home and abroad in the next two decades, Wu said. "But what could harm the sales of the domestically made planes is that very few aircraft-leasing companies buy domestic airplanes and rent them to airlines," he said in an interview with China Daily. "Leasing is the major way for airlines to expand the fleet ... and the situation will especially hinder small airlines, which are short of funds, from buying the cheaper homemade jets." Wu suggested that the government establish a State fund of at least 30 billion yuan to help homegrown jet buyers with their financing. The government should also give interest subsidies or exemptions through policy banks to firms and airlines that lease or use homegrown planes and airlines. Firms and airlines from both home and abroad could enjoy the policy, he said. Currently, the government gives interest subsidies to MA60, a 50-seat turboprop manufactured by the Aviation Industry Corporation of China (AVIC). By last year, AVIC had acquired 186 orders for the planes and delivered 29 of them to users from home and abroad. The government should extend and strengthen subsidies in the next five years for the use, lease and export of all homegrown planes, which include the C919 and another self-developed regional plane, the ARJ21, which has 70 to 90 seats and is slated to be delivered this year, Wu said. "A team including COMAC and relative government departments is now studying the issue," he said. Among the 1,000-strong fleet of planes now flying commercial routes in China, only four are homemade MA60 regional planes. Most are Boeing and Airbus aircraft. As so few of the homegrown aircraft are used, it will take a long time for domestically developed commercial planes to form an effective brand, said Sun Cong, deputy chief engineer with AVIC. "In a market dominated by companies like Boeing, Airbus and Bombadier, government support is necessary," Sun said. All major commercial aircraft companies receive government subsidies, he said. For example, when Airbus first took off, it received government subsidies and won support from local carriers such as Air France and Germany-based Lufthansa, before gradually taking a firm place in the market. Boeing also received direct government subsidies on various projects, including the 787 project, media reported.

March 28, 2010

Hong Kong*: The government will allow schools to cut the number of secondary classes they run and offer cash incentives to keep teachers employed even as the number of pupils falls.

Chief Executive Donald Tsang Yam-kuen in January cancelled a private audience he had requested with Pope Benedict - a meeting that would have been an extremely rare top-level contact between China and the Vatican - because he wanted to remain in Hong Kong through a testing period in local politics, according to a Catholic Church official with knowledge of the arrangements. Tsang, a devout Catholic, was scheduled to meet Pope Benedict at the Vatican on January 27 for a dialogue and blessing, the official said.

The liquid arsenic developed by Professor Kwong Yok-lam's team at the University of Hong Kong is said to be more convenient, cheaper and safer than previous injected forms. A leukaemia drug made from arsenic and taken orally - the first of its kind in the world - has become the first fully Hong Kong-made medicine to be granted a patent in the United States. The liquid form of arsenic trioxide, developed after a decade at the University of Hong Kong, is more convenient, cheaper and safer than the injected form used previously as well as being more suitable for elderly patients, researchers say. The drug was developed in 2000 and has been under testing since. The researchers announced yesterday it had been awarded the US patent last year. Chair professor of the university's division of haematology, oncology and bone marrow transplantation, Kwong Yok-lam, said he first learnt of the drug - pi shuang in Chinese - in 1998, when mainland doctors were using an injected form to treat a rare type of leukaemia. "I just wanted to try to see if a conversion to an oral drug could benefit more patients. I never imagined that I would succeed," he said at a press conference yesterday. The drug is used to treat acute promyelocytic leukaemia (APL), which accounts for about 3 per cent of all blood cancer cases and affects 10 to 20 new patients in Hong Kong each year. But the researchers say it is also useful in treating lymphoma and myeloma and they are now applying for patents to treat more diseases, such as cervical cancer and non-cancer conditions. Since the liquid form was developed in 2000, it has been prescribed to more than 100 APL patients in the city. Of 56 who had had a previous relapse of APL, 55 did not have another relapse using the oral drug. Their five-year survival rate was 70 per cent, higher than that of a bone marrow transplant (50 per cent) and chemotherapy (25 to 30 per cent). Of a further 65 seeking to prevent a relapse, leukaemia returned in only five of whom three were eventually cured using the same drug. Some patients had been cancer-free for a decade. Queen Mary Hospital haematology consultant Dr Au Wing-yan, one of the few doctors using the new drug, said taking arsenic orally was much more convenient, safer and cheaper than having it injected or going through chemotherapy. He said patients could save thousands of dollars as they did not need to spend months in hospital. Unlike the injection, the oral drug would not pose dangers to the heart as its level of toxicity was lower, he said. The oral drug also gave hope for elderly patients, who were too old to go through bone marrow transplants or multiple chemotherapy. A treatment of arsenic injections would cost US$50,000 a month, whereas the oral drug is expected to be at least 50 per cent cheaper when it is sold worldwide. Currently, Hospital Authority patients do not need to pay for the drug. "I firmly believe that in 10 years our home-grown oral arsenic will become the world's first choice in treating APL," Au said. Kwong said their decade-long study had not received either government or private funding. "We were destitute and only managed to carry on with the study using funding we got from other studies," he said, adding that they did not apply for university research funding as that would mean publicising their exclusive idea to a panel of reviewers that included overseas experts. "Many people complain that their creativity does not get ample support. But I think with determination and hard work, it would eventually pay off," he said. S.C. Wong, now aged 42, was diagnosed with APL in 1999. He was given oral arsenic after he suffered two relapses of leukaemia despite chemotherapy. He stopped taking the drug in 2003 and has since been disease-free. "I had a hard time going through chemotherapy, and had to stay in the hospital for half a year," he said. "Oral arsenic makes me sleepy and tired, but it is much better and more convenient than chemotherapy." Arsenic has proven useful to treat leukaemia because it could attack and destroy the genes of malignant cells. The first use of arsenic dates back 2,000 years in China. In the 1940s and 50s, it was used in Queen Mary Hospital as an injection drug, but could cause chronic bleeding in the intestine. Kwong reminded cancer patients that they should not buy arsenic without doctors' advice, as the drug could be lethal when taken in the wrong dosage.

The Housing Authority on Friday approved a government proposal to sell its remaining 4,077 surplus Home Ownership Scheme (HOS) flats by June.

A single major local feature movie shot in Hong Kong can inject HK$40 million into the local economy, with daily spending of HK$250,000 during the main filming stage. If a foreign film is shot in Hong Kong, such as the Batman movie The Dark Knight, the average daily spending can be over HK$1 million. These figures are revealed in a survey commissioned by the International Federation Against Copyright Theft - Greater China, which represents the Motion Picture Association in the region. They show Hong Kong's film and television industries generated a gross output (total sales of goods and services) of HK$33.7 billion in 2008, with the highest per capita film and television production in Asia. Comprising 1,170 businesses employing 32,000 people, the industries generated HK$6.17 billion value added (output generated by labour and capital) to Hong Kong's economy. Nansun Shi, executive director of the Film Workshop, said such figures were important to the government as a film or a television show had the power to change the outlook of a country's economy by bringing in more visitors. She said Cape No 7 had prompted many Hongkongers to visit the south of Taiwan while the popular South Korean television drama Jewel in the Palace and the Lord of the Rings trilogy had encouraged people to travel to South Korea and New Zealand respectively. Television production and broadcasts generated the highest gross output among five sub-sectors, contributing more than HK$20 billion to the economy. The sector is so powerful that advertising revenue from television alone was HK$19.6 billion in 2007, equivalent to 34 per cent of total advertising spending in the same year. The film exhibition sector in 2008, comprising 48 cinemas, generated a gross output of HK$4.98 billion. The survey said some retailers and restaurants recorded a drop in revenue by 25 per cent when nearby cinemas were shut down for renovation. The film and television distribution sector provided HK$3.6 billion of total gross output but only HK$712 million came from the home entertainment sector, owing to rampant online piracy, the survey said. Between 1986 and 1992, Hong Kong had the largest film industry after India and the United States, with over 200 films produced in 1992, grossing a record HK$1.55 billion. By the end of the 1990s there were fewer than 50 films being produced each year. Now there are more co-productions between Hong Kong and the mainland. In 2008, six out of the top-10 grossing films in China were co-productions. Sam Ho, the federation's executive director and general manager, said while the survey would be useful for the industry and the government, the industry was also urging a response system to be included in amendments on digital contents in the Copyright Ordinance. Under the system, an internet user would be warned if found illegally downloading contents. The warnings would be stepped up if it continued.

A US think tank has accused Hong Kong of undervaluing its currency to maintain its competitive edge against the mainland, a statement immediately derided by the government. The Peterson Institute for International Economics on Wednesday told Congress that the Obama administration should also label Hong Kong, Malaysia, Singapore and Taiwan as territories deliberately keeping their currencies undervalued to maintain competitiveness against China. Fred Bergsten, head of the institute, told the House Ways and Means Committee that a successful campaign to pressure Asian nations on the currency issue could create as many as 1.2 million new American jobs. Financial Secretary John Tsang Chun-wah said in response that Bergsten's claim about an undervalued currency was "odd", given that the Hong Kong dollar has been pegged against the US dollar for the past two decades.

The financial arm of Cheung Kong (Holdings) is offering the city's lowest mortgage rate at 0.5 percentage point above the one-month Hong Kong interbank offered rate (Hibor).

Raw materials sourced from the mainland caused the contamination that led to the popular Po Chai Pills being pulled from the market, an investigation by the Department of Health has revealed. Po Chai Pills, a Chinese medicine, have been in use for about 100 years as a remedy for indigestion, heartburn, vomiting, diarrhoea and bloating. On Wednesday, health chiefs advised the manufacturers, Li Chung Shing Tong, to stop selling its pills and capsules following their recall in Singapore. The recall, described by the Department of Health, as precautionary, was ordered after Singapore found the capsules contained phenolphthalein and sibutramine, which can cause very serious side effects. Phenolphthalein was banned in 2001 for its cancer-causing effects. The side effects of sibutramine include increased blood pressure and heart rate. The Department of Health said last night that after a field investigation on Wednesday, findings so far suggest the source of contamination was likely to be a batch of powdered raw materials used to fill the capsules, which was bought for the first time from a mainland source in in May 2008. "We understand two batches of capsules were produced with these raw materials. One batch (No21217) was exported to Singapore, while the other batch (No21133) was supplied locally and in Macau," a department spokesman said. The department's laboratory tests on both batches detected the phenolphthalein and sibutramine. Both Po Chai Pills in capsule and pill forms have been recalled since Wednesday, according to Li Chung Sing Tong. Singapore's drug regulatory authority said phenolphthalein and sibutramine were found in the capsules, which the manufacturers say are only available in Singapore. Li Chung Sing Tong said yesterday that the capsules were manufactured via a third party. All the products involved are for export and are not on sale in Hong Kong or Macau. It added that pills sold in Hong Kong are manufactured in a separate production line from the one involved in the Singapore recall. A company spokesman said it will issue a statement in about two days. Iris Chang Yee-man, Practising Pharmacists Association of Hong Kong president, called for tightening of regulations on proprietary Chinese medicines.

China*: Mainland will launch trading in stock index futures on April 16, marking a long-awaited milestone in the development of the country’s capital markets.

A villager draws water for her cattle from a well near Kunming, capital of Yunnan province, in the southwest, where millions are battling the effects of a once-in-a-century drought. With hydropower dams drying up, Guangdong may turn to Hong Kong to beat an electricity shortage – though that could worsen the city's air pollution. Many small liquor makers in the home of China's top baijiu brand, Moutai, have been ordered to stop production so that bigger producers can get enough water, as the drought in southwest China drags on. Emergency cloud-seeding was carried out in 88 cities and counties in Guizhou this week, with 50 places seeing some rainfall on Tuesday morning. But it was too little, too late for the liquor industry in the town of Maotai, in Renhuai. Moutai, the most famous brand of the pungent baijiu drink, made from sorghum and grain and 53 per cent alcohol by volume, is favoured by leaders for state banquets. It is one of the most expensive liquors in the world, with a bottle of 50-year-old Moutai selling for more than 20,000 yuan (HK$22,700). The severe drought has seen the water level in the Chishui River, the main water source for local makers, sink to its lowest in more than a century. Liquor giants such as state-owned Kweichow Moutai Company, producer of Moutai, can no longer draw water directly from the river. Xiong Hongfei, a marketing manager at Gutan Aged Liquor, a mid-sized distiller, said: "We have had to rely on the redistribution of water resources arranged by the local government since the drought became worse early this year, with clean water drawn from the Chishui River being delivered only once every two or three days. "So far the drought has not had a significant impact on large-scale liquor producers because they are all equipped with water reservoirs." In order to reserve water for good quality liquor, Xiong said the township government had ordered many small liquor makers to stop production since late last year. Finding water resources and digging wells for villagers in the five drought-hit provinces and areas has become the top political mission for People's Liberation Army garrisons after President Hu Jintao, as head of the Central Military Commission, issued a joint order early this week along with the army headquarters' General Staff Department and General Political Department. But no immediate relief is in sight. More than 5,000 villagers of Yunnan's mountainous Nanhua county have been forced to leave home and camp near streams at the foot of a hill. The drought has affected about 61 million people and left more than 5.3 million hectares barren and 1.1 million hectares of crops dead in Guizhou, Yunnan, Sichuan, Chongqing and Guangxi, Xinhua said. Broomcorn, a type of sorghum that is the key ingredient for Maotai liquor, is usually planted around now, but farmers in Guizhou are holding off due to the drought, Chongqing Evening News said. "Liquor prices will rise if the drought continues and causes crop failure this year," it quoted a liquor maker as saying. Crop prices in the five drought-hit regions have risen in the past few months, raising fears that nationwide food prices could increase significantly. But experts from the State Council said unusual rises had been confined to drought-affected areas.

High-profile dealmaker and Goldman Sachs top Asian executive Fred (Zuliu) Hu is likely to take up a senior post at China's central bank after formally stepping down from the Wall Street bank in April, people familiar with the matter said. The appointment is still under final review by top policymakers, and a formal decision will be made in the next few months, the sources said. Hu is seen as the right candidate for appointment as the vice-governor of the People's Bank of China (PBOC). His appointment is also part of the government's efforts to bring back the top 1,000 professionals working for Western firms to China to take up senior positions at State-owned enterprises and government departments, the sources said. Besides the PBOC job, policymakers are also evaluating Hu as a candidate for a crucial position at one of the country's State-run lenders. Though Hu was not immediately available for comments, the 47-year-old investment banker has been in the limelight in the past few weeks after Goldman Sachs said he was stepping down as partner. Given his rich financial expertise and international exposure, there were reports that Hu would establish his own private equity firm or join his alma mater Tsinghua University as a professor. Sources said Hu was still in talks with top government officials on his appointment. If it happens, Hu will be the first high-profile executive from a Western firm taking up a senior position with the government. During his 13 years in Goldman, Hu spearheaded the multi-billion dollar public offerings of several Chinese lenders. In 2006, he made a $3.78 billion investment for Goldman in the Industrial and Commercial Bank of China (ICBC), now the world's largest lender by market value. In 2004, Hu helped Bank of Communications, China's No 5 bank by assets, to sell a 20 percent stake to Europe's No 1 bank HSBC Holdings Plc. Analysts said the move indicates a groundbreaking reform in the nation's selection of senior government officials. It also signals a departure from the tradition that Chinese officials should climb the management ladder gradually. "Sending a paratrooper to a crucial post at a government financial department is indeed rare. It also indicates the government's determination to achieve breakthroughs in selecting officials and also promote the openness of the financial sector," said He Jun, a senior analyst at Anbound Consultancy. "Hu's credibility and past career achievements make him an eligible candidate, considering the country's need to attract more professionals to shore up its financial talent base," he said. The global financial crisis has also created several opportunities for China to woo back its overseas financial talent, as the economy has been on a robust growth track, while Western economies are floundering.
Apart from Hu, there are several other influential Chinese bankers working in Western financial institutions who may join the country's financial entities. Lee Zhang, head of Deutsche Bank AG's global banking for Asia-Pacific outside Japan, is also in discussions with government officials on joining ICBC as vice-president.

A new high-speed rail link between two mainland cities has cut travel times so dramatically that all competing air services on the route have been suspended, state media said. The suspension of flights between the gritty industrial city of Zhengzhou and Xian, home of the Terracotta Warriors, came just 48 days after the express railway began operations, the official Xinhua news agency said on Friday. The 505km railway, on which trains run at a top speed of 350 km/h, has cut the travel time between the two cities from more than six hours to less than two, the report said. By contrast, flying takes just over an hour. Xian’s airport is also located at least an hour away by road from downtown. Before the railway opened, Joy Air, one of the domestic airlines flying the route, managed to sell an average of more than 60 per cent of seats for the route, Xinhua said. Zhengzhou airport confirmed that all flights to and from Xian had now stopped, the report added. Mainland is spending billions of dollars on a network of high-speed railways, including one from Beijing to the country’s financial capital Shanghai, posing a challenge to airlines which had profited from mainland’s vast size and slow roads and trains. By 2012, the country would have more than 13,000 km of high-speed railway, Xinhua said. “By then, 60 per cent of China’s domestic air market will be affected by the high-speed railways,” Liu Chaoyong, general manager of China Eastern Airlines (SEHK: 0670), was quoted as saying. China Eastern last year agreed to sell 35 per cent of Joy Air, in which it held 40 per cent, to state-owned Aviation Industry Corp of China.

Denmark's famed Little Mermaid statue left her perch in the Copenhagen harbour on Thursday and started a journey to the World Expo in Shanghai – the first trip abroad in her 96-year life. The 1.5-metre-tall landmark, which honours the memory of Danish fairy tale writer Hans Christian Andersen, was lifted by a crane and lowered onto the back of a truck at a ceremony in the Danish capital. The exact travel itinerary is being kept secret for security reasons, but the statue is scheduled to be placed as the centrepiece of the Danish pavilion about a week before the World Expo opens on May 1. The temporary move is controversial in Denmark, where some consider it disrespectful to ship a cultural treasure halfway across the globe as a public relations exercise. Critics suggested the government should have sent a copy – an idea dismissed by Christopher Bo Bramsen, Danish commissioner-general for Expo this year. “Why send a copy when you can send the real thing?” he told reporters. Bramsen joined Copenhagen Mayor Frank Jensen and officials from the Danish government and the Chinese Embassy at the ceremony, which featured music and dance performances by Danish and Chinese artists. Hundreds of people who had gathered for the event watched as a large crane hoisted the statue about three metres and slowly moved it over to the truck. The mermaid and the rock she rests on had been cut loose from the boulders beneath them a day earlier. “I think they should keep her there. She doesn’t represent Danish life in the 21st century they should have sent something else,” said Sarah Ahmed, a 16-year-old student in the crowd. Anne-Marie Henning, 92, said she would miss the mermaid. “I have been coming here for years as I live in the neighbourhood. It will feel strange without her,” Henning said. A video installation by Chinese artist Ai Weiwei will replace the Little Mermaid until the statue returns in November. The multimedia artwork will include a live broadcast showing the statue in Shanghai. Created by Danish sculptor Edvard Eriksen, the fishtailed bronze figure is Denmark’s most popular tourist attraction. It was unveiled on the Copenhagen harbour front in August 1913 and has not been moved since, except to undergo repairs after a series of attacks by vandals. Her international fame grew after she was beheaded in 1964. No arrests were ever made. However, a Danish artist claimed he cut off the head and threw it into a Copenhagen lake. It was never found and a new one was cast from the original mold. Her right arm was cut off and she was decapitated again in 1998. She’s been doused in paint on numerous occasions and, in 2003, was blown off her stone base by vandals who used explosives. The following year she was draped in a burqa, apparently by critics of Turkey’s bid to join the European Union. In Andersen’s tale, the mermaid is a sea king’s daughter who falls in love with a prince and must wait 300 years to become human. It was turned into a Disney film in 1989.

Discount hotel chain China Lodging Group priced shares in its initial public offering at the top of the expected range on Thursday, according to an underwriter. The company sold 9 million American Depositary Shares for US$12.25 each, raising about US$110.25 million. It had planned to sell shares for between US$10.25 and US$12.25 each. China Lodging Group rents budget hotel rooms in mainland under three different brands for an average of 174 yuan (HK$197.50) per night. The main page of the company’s website shows three pictures of hotel rooms, including one room with bunkbeds. Most of China Lodging’s hotels are located in big cities in industrialised, eastern mainland and its website says it aims to serve value-conscious business and leisure travellers. The company, whose founder and executive chairman Qi Ji also co-founded online travel services provider and competing mainland discount hotelier Home Inns & Hotels Management, has posted rapid growth. The number of rooms the hotel chain had to rent increased 160 per cent in 2008 and another 35 per cent last year. China Lodging grew its business to 28,360 rooms last year. Its occupancy rate was 94 per cent, up from the mid- to high 80s the previous two years. Mainland’s hotel industry has posted speedy growth as foreign and domestic travel increase. business travellers, in particular, have helped grow the market for budget hotels as companies aim to control costs. But some fear the growth could be too much. The central government has taken steps to cool its explosive real estate growth and media reports say the hotel industry could be next. Underwriters on the China Lodging IPO were led by Goldman Sachs and Morgan Stanley. The shares are expected to begin trading on the Nasdaq on Friday under the symbol “HTHT.”

Chinese mobile-network investment, which rose to 371 billion yuan (HK$421.2 billion) in 2009, may drop below 300 billion yuan this year. Ericsson's Chinese boom may be running out of steam. The world's largest maker of wireless phone networks boosted sales in the country last year by 22 per cent - the biggest jump in at least seven years - to a record high, as China Unicom (SEHK: 0762) (Hong Kong) and rivals invested in 3G infrastructure. Now, those same companies are cutting back. Last week, China Mobile (SEHK: 0941), the country's biggest phone company, said it will trim capital spending, while China Telecom Corp (SEHK: 0728) said on Monday such expenditure will be flat. Chinese mobile-network investment, which rose to 371 billion yuan (HK$421.2 billion) in 2009, may drop below 300 billion yuan this year, according to Beijing-based consultants BDA China. "Since China was so strong last year with Unicom it's fairly safe to assume this will be a slower year," said Haakan Wranne, an analyst at Stockholm's Swedbank, who has a "reduce" rating on Ericsson. "That goes for the market and for Ericsson. And a bad year in China would have to be compensated with a good year elsewhere." Ericsson will need new growth drivers even as government spending to stimulate the economy and competition between carriers keeps investment flowing for some years. Orders could come from India, which may award 3G licences this year, or from the United States, where Ericsson added 2.7 billion Swedish kronor (HK$2.91 billion) in sales, or about 1 per cent of the total revenue of 206 billion kronor in the last six weeks of 2009 from its acquisition of some Nortel Networks assets.

Guangdong is seeking emergency help from Hong Kong's power plants as the province's electricity supplies are being hit by the continued drought in the southwest of the country. The electricity supply in Guangdong comes from power plants in a number of provinces, with plants in Guangxi and Yunnan dependent on water. Emergency wells are being drilled and cloud-seeding operations carried out in southern provinces where the worst drought in decades has left millions of people without water and caused more than 1,000 schools to close. Xinhua News Agency earlier reported that the China Southern Power Grid will cut 1.25 billion kilowatt-hours in electricity supplied from Yunnan province, meaning less energy will be supplied to Guangdong. Xinhua also cited information from the Development and Reform Commission of Guangdong Province indicating that authorities there are talking to Hong Kong about plans to buy electricity as a back-up. Guangdong used up 50.889 billion kilowatt-hours of electricity in the first two months of 2010, a year-on-year jump of 20.17 percent, the agency reported. The power company has about 20 million customers in the province. A spokesman for CLP Power Hong Kong said it has supplied electricity to Guangdong since 1979 and is now in talks with provincial authorities on adjusting the amount. "Given the severe drought in the southwestern provinces, we shall do whatever we can to help Guangdong, provided supply to local customers is not affected and our emissions performance is not compromised," CLP said. The spokesman declined to say how much more electricity Guangdong has asked for and the cost. CLP's local plants can produce nearly 9,000 megawatts of power at any one time while peak demand locally last year was just 6,500 megawatts, he said. The rest, which is back-up, can be exported. A Water Supplies Department spokesman said the drought will not affect levels of the Dongjiang, or East River, which supplies Hong Kong. Meanwhile, the government approved a HK$1.4 million grant to Amity Foundation to undertake drought relief projects in Guangxi and Yunnan. Amity executive director Anthony Tong Kai-hong said: "We are using this money to help people in dire need by first supplying people with water." In Guangxi, Amity will use the grant to distribute drinking water to more than 11,000 people for 30 days and provide 2,000 plastic buckets. In Yunnan, it will supply 55 water storage containers and drinking water to 5,000 people for 60 days. World Vision Hong Kong has raised nearly HK$50,000 to help the drought- stricken.

Industrial and Commercial Bank of China (1398) plans to sell 25 billion yuan (HK$28.42 billion) worth of convertible bonds to shore up capital, after posting a net profit of 128.6 billion yuan for last year.

Some tea specialists display various kinds of Chinese tea during the opening ceremony of the West Lake International Tea Culture Expo held in Hangzhou, east China's Zhejiang Province, March 26, 2010. The expo will last till April 23, 2010.

People perform tea frying skills during the opening ceremony of the West Lake International Tea Culture Expo held in Hangzhou, east China's Zhejiang Province, March 26, 2010. The expo will last till April 23, 2010.

Dancers perform during the opening ceremony of the West Lake International Tea Culture Expo held in Hangzhou, east China's Zhejiang Province, March 26, 2010. The expo will last till April 23, 2010.

Monks prepare bamboo baskets for tea collecting on the outskirts of Hangzhou, east China's Zhejiang province March 25, 2010.

March 27, 2010

Hong Kong*: More than 200 Cathay Pacific flight attendants staged a protest on Thursday at Hong Kong International Airport in Chek Lap Kok to express their dissatisfaction over their work conditions.

Graham Sheffield is unveiled as chief executive of the West Kowloon Cultural District Authority by chairman Henry Tang Ying-yen. The head of the largest performing-arts centre in Europe has been chosen to guide the HK$21 billion West Kowloon Cultural District in its formative years. Graham Sheffield, artistic director of the Barbican Centre in London since 1995, promised to put Hong Kong "firmly on the map" of the world's culture seekers. Speaking after his long-awaited appointment as chief executive of the arts hub was announced yesterday, he said he hoped to make the district the centre of an arts network stretching across greater China. More than 50 applications were received during an international search that lasted for months. The job is believed to pay more than HK$3 million a year, but the figure was not revealed yesterday. The appointment of the 58-year-old was generally welcomed by the arts community, although some critics expressed concern about his sensitivity to local cultural issues. Sheffield, who has also been creative economies adviser to the British Council since July, will be on a three-year contract with the West Kowloon Cultural District Authority. Asked why he would leave London for Hong Kong, he said the opportunity to be involved in a project of such scale did not come along very often. The arts hub, he said, would be built with local pride while creating global importance. "It will put Hong Kong firmly on the map of a must-see, must-experience destination for culture seekers across the world," he said. Sheffield believed his experience with the Barbican Centre was the main reason he was selected for the West Kowloon project as both were multi-arts, and would have commercial income from aspects like catering and retail. He said he was confident of being able to deal with politics and bureaucracy in the highly politicised project, which has seen a senior appointee resign a week after arriving. "You deal with politics in the arts, and it's important to have politicians on your side. I've done a lot of it in my career. I have my own tricks to bend the rules and get around them." Just before the search for a chief executive began, Angus Cheng Siu-chuen resigned as executive director on finding he was just one of many rather than second in command. Critics hoped Sheffield would communicate directly with the public without going through time-wasting consultation panels. "He should just go out and experience the culture and lifestyle, learning about people's habits and lifestyles," Jim Chim Sui-man, managing director and artistic director of PIP Cultural Industries, said. Art critic Oscar Ho Hing-kay was concerned about Sheffield's sensitivity to local culture and whether the authority's structure would provide him with professional support. Fellow critic John Batten said being unable to speak Cantonese was not an issue. "Chris Patten did it very well. He got his messages across." Jude Kelly, artistic director of London's Southbank Centre, where Sheffield previously worked, said she was thrilled. "He not only has tremendous experience but also the curiosity and stamina necessary to lead this incredible project." Barbican Centre managing director Sir Nicholas Kenyon said the appointment was "a sign of the respect with which he and the Barbican are held around the world". Sheffield said he had been actively involved in the appointment of six executive directors for museum policy, performing arts policy, project delivery, finance, human resources, as well as marketing, communication and programming, which have yet to be announced. Sin Chung-kai, who chairs the authority's remuneration committee, said the board might opt for local candidates as executive directors to compensate for Sheffield's foreign background.

MTR Corporation (SEHK: 0066) on Thursday announced its first fare rise in 13 years – a 2.05 per cent increase for each trip. The higher fares would start in June, the corporation said. The increase was based on a fare adjustment mechanism announced earlier by the government. The Transport Department also said it was receiving applications for fare increases from the operators of 38 franchised minibus routes. This includes 23 routes in Kowloon, eight in Hong Kong Island and seven in the New Territories. Chairman of the Coalition to Monitor Public Transport and Utilities Richard Tsoi Yiu-cheong said he opposed the MTR fare rise. “We do not think it’s an appropriate time to increase transport fares,” Tsoi told local radio.

The five legislators who have resigned distribute promotional material in Tsim Sha Tsui, featuring Premier Wen Jiabao. De facto referendum will have no legal effect, justice minister says - Secretary for Justice Wong Yan-lung, in his first public comments on the by-elections seen by pan-democrats as a de facto referendum on political reform, says political development must be initiated according to the Basic Law. The so-called referendum would have no legal effect, he said. Wong, who had been criticised by both pro-establishment and pan-democratic camps for not taking a stand, said he had not spoken out before because he felt other ministers had already clearly stated the government's legal position and that he would merely repeat it. "All along we have emphasised that constitutional development in Hong Kong must be done in compliance with the Basic Law as well as with the decision by the Standing Committee of the National People's Congress [in 2007 over what can be reformed in 2012] ... if anyone is to introduce a "referendum" to affect the development of constitutional reform, this will not be in line with the NPCSC decision and the Basic Law," Wong said. Two Civic Party lawmakers and three lawmakers from the League of Social Democrats resigned from the Legislative Council in January, sparking by-elections to be held on May 16 for each of the five geographical constituencies. By seeking election on a platform of demanding genuine universal suffrage through the abolition of functional constituencies, the two parties hope to use the by-elections as a de facto referendum as the government prepares a political reform proposal for the 2012 elections. However, the central authorities called this step a "blatant challenge" to their authority. Pro-establishment political groups plan to boycott the by-elections and have accused the movement of being akin to mobilising an uprising and calling for the independence of Hong Kong. Yesterday, at a Legco finance committee meeting to discuss the Department of Justice's annual spending, lawmaker Wong Kwok-hing noted that the HK$150 million needed for the by-elections was more than a tenth of the department's annual budget. He said that if the exercise was indeed "unconstitutional, unlawful", it would be absurd for the government to help organise the by-elections and send election material to registered voters. "What has the secretary for justice done about it?" the unionist asked. He suggested that the government could affix a warning onto election materials, like the health warnings on cigarette packets. However, the minister stressed that the government had to act according to the law in organising by-elections, and that he did not see how the laws requiring by-elections to be held upon the resignation of lawmakers could be violating the Basic Law. Civic Party leader Audrey Eu Yuet-mee yesterday released a statement expressing regret that the minister did not clarify the difference between an act not having legal effect, and acting unlawfully. She furthered criticised Wong for failing to take the opportunity to urge people to exercise their constitutional right to vote. "If the government took up the suggestion of a certain lawmaker [over affixing warnings], it would be doing the exact opposite of encouraging people to exercise their civic duty," she said. In an earlier meeting with the media, former chief secretary Anson Chan Fang On-sang said: "I believe the central government respects the wishes of the Hong Kong people" and would not ignore the result of the by-elections. She urged people to vote to send a clear message to Beijing.

Hong Kong pharmacies on Thursday began to remove popular Po Chai pills from their shelves – after health authorities warned they might be harmful to people's health.

Tourism board turns a corner - The Hong Kong Tourism Board's image of extravagance is fading, says newly reappointed chairman James Tien Pei-chun, who is planning to turn some popular projects into annual events. "My friends might be showing their support, but they said to me: 'James, you are doing quite well these days [and] the Tourism Board has improved a lot'," Tien said. He took up the chairmanship in April 2007 when the Tourism Board was under fire for its lavish spending in areas ranging from travel to salaries and benefits. That criticism came in a Director of Audit report. The Legislative Council's Public Accounts Committee was also critical of the board and offered some recommendations. "That was unforgettable," Tien said, saying that it was difficult for a new chairman to identify all the issues within an organisation. But the two reports helped him a lot. "The progress was quite challenging. And perhaps because we have taken [in] a lot of the suggestions, the public, legislators and the government can see the changes in us ... the public no longer has the impression that we are extravagant or a big spender. As the chairman, I am also very happy about it." Tien, who will start his second term next month, described his tenure of nearly three years as "very tough" and filled with a lot of ups and downs. He had to handle the damage to Hong Kong's reputation as a tourism destination after a CCTV report in 2007 alleged that a diamond pendant and a watch sold to mainland tourists were fake. He also needed to deal with the plunge in visitor arrivals after the global financial crisis in 2008 and the effect of the swine flu pandemic in May last year. Asked how he had felt facing such challenging times for Hong Kong tourism, Tien said: "I and the whole team will try our best ... in good times, I work and hope things will get better; when times are rough, I hope things will not get worse." Indeed, the Tourism Board, with Tien at its helm, has seen Hong Kong setting records. Arrivals surged from 25.3 million in 2006 to more than 29.5 million last year. Looking forward, Tien said the board was planning to turn some successful projects such as the wine and dine festival and the summer pop concert into regular annual events. He said the summer pop concert, which made its debut last year in a bid to woo tourists after the outbreak of swine flu, would be held at the Hong Kong Coliseum in the last weekend of August. The board will organise a dragon boat carnival in July, a month when there are fewer big festivals and events to attract tourists.

China*: Mainland’s loan growth is expected to drop further in March, the deputy governor of the People’s Bank of China said on Thursday, as Beijing tries to curb lending.

Afghan President Hamid Karzai talks to President Hu Jintao before a signing ceremony at the Great Hall of the People in Beijing on Wednesday. Facing criticism over corruption and electoral fraud, Afghan President Hamid Karzai found a receptive audience in Beijing on Wednesday, overseeing the signing of economic pacts and reaffirming warm traditional ties. The trip to Beijing comes as Karzai seeks to establish himself as a regional political figure with stature and independence, partly in response to new criticism of his leadership from the US, Britain and other foreign partners. Such issues aren’t likely to be raised in his talks with Chinese leaders. While China has no troops in Afghanistan – where Karzai relies on US and Nato forces to prop up his weak government against Taliban insurgents – its proximity and booming economy make it a valuable partner for the war-battered country. In their meeting on Wednesday at the Great Hall of the People, President Hu Jintao congratulated Karzai on his reelection in an August poll seen by the United Nations as deeply flawed. “Your visit will definitely help promote practical co-operation between China and Afghanistan, and take our comprehensive and cooperative partnership to a new level,” Hu said in opening remarks. After their talks, the presidents then presided over the signing of new agreements covering economic cooperation, technical training and preferential tariffs for some Afghan exports to China. Karzai’s visit comes as he looks to burnish his international standing. Since he first took power after the Taliban regime’s ouster in 2001, his government has been tainted by inefficiency and persistent allegations of corruption that Western officials say have only boosted support for the insurgency. Last year’s electoral fraud further hurt his profile. The Afghan leader now appears eager to strike a more independent stance on the foreign stage. Karzai has participated as an observer in summits of the Shanghai Co-operation Organisation, a grouping of Central Asian nations dominated by China and Russia that aims to challenge US dominance. He has also cemented ties with India to balance the influence of neighbouring Pakistan, with which Afghanistan has an acrimonious relationship.

Pang Qing and Tong Jian skate their way to a gold medal in the pairs competition at the World Figure Skating Championships in Turin on Wednesday.

Internet domain company said it planned to stop registering domain names in China, joining Google in protesting cyber attacks and censorship in that country.

A top mainland official has said the nation's online population, already the largest in the world, is expected to exceed 500 million in the next two to three years.

March 26, 2010

Hong Kong*: Bank of China (Hong Kong) (2388) said net profit tripled last year, while that of its parent Bank of China (3988) increased 26 percent as the lenders slashed provisions with the economy recovering. BOCHK's net profit jumped 310.6 percent to HK$13.7 billion from 2008, as its lending provision dropped 84.4 percent to HK$103 million. It also recorded HK$1.3 billion net write-back in provisions on securities investment and HK$1.554 billion on investment properties. A final dividend of 57 HK cents per share was declared. However, net interest income declined 11 percent to HK$17.93 billion, as the net interest margin narrowed by 31 basis points to 1.69 percent. Chief executive He Guangbei said pressure on interest margins will continue this year though "the speed of the decline has slowed since the second half." Net operating income gained 2.1 percent to HK$26.1 billion on the back of a 25.7 percent growth in net fees and commission income to HK$6.508 billion. This was aided by a 52.9 percent rise in brokerage commissions and a 79.7 percent growth in lending commissions. Total operating expenses increased 38.4 percent to HK$12.14 billion, mainly due to a HK$3.28 billion expense for the Lehman minibonds repurchase scheme. Its capital adequacy ratio rose by 0.68 percentage point to 16.85 percent at the end of the year, while the core capital ratio was 11.64 percent. Benefiting from the bank's significant profit last year, staff will get extra bonuses, according to He. Separately, Bank of China said its net profit grew 26 percent to 81.1 billion yuan (HK$92.21 billion), in line with market expectations, thanks to the rapid growth of loans and deposits at around 50 percent. A final dividend of 14 fen per share was declared. But net interest income slid 2.5 percent to 158.881 billion yuan, as the net interest margin fell 59 basis points to 2.04 percent in 2008. Non-interest income jumped 11.8 percent to 7.775 billion yuan, benefiting from a rapid increase in fee and commission income. The capital adequacy ratio decreased 2.29 percentage points to 11.14 percent last year, with the core capital adequacy ratio coming in at 9.07 percent. President Li Lihui said he expects the A- and H-share fundraising program to take place in the middle of this year but that it depends on the market situation. The lender is now studying the plans and they are still awaiting regulatory approvals, he added.

Graham Sheffield, a British-born arts adviser, was named as the new chief executive of the West Kowloon Cultural District Authority by Chief Secretary Henry Tang Ying-yen on Wednesday. Tang told reporters at a press conference at the Central Government Offices that he was confident Sheffield had the administrative ability and experience to manage the West Kowloon project. “He has a remarkable track record in arts education and audience building,” Tang said. “[He also] has the vision and passion to work with the local arts community, as well as the Hong Kong public to build a truly world-class cultural centre in West Kowloon that every Hong Kong citizens will be proud of.” “We are happy we have the right person for the job,’’ added the chief secretary, who also chairs the project. For the past 15 years, Sheffield has been artistic director for the Barbican Centre in London. The centre is the largest integrated performing arts centre in Europe. It hosts classical and contemporary concerts, theatre performances, film screenings and art exhibitions. Sheffield, who appeared with Tang at the press conference, said Hong Kong was positioned to become “the next great world arts city” and that he was confident he could make the project a success. “The Kowloon Cultural District Authority will work with the community, with the local arts groups to build local pride and engagement,” he said. The West Kowloon Cultural District is an ambitious HK$21 billion project to build an world-class arts hub in Hong Kong. It aims to bring world-class shows to the city and promote local arts and culture. However, critics of the project argue it will be too costly. Graham Sheffield beat out 50 overseas and local applicants for the position. He will take up the job in August for an initial term of three years.

A developer wants to build a spa resort, flats and a marina at Shek Pai Wan Beach on Lamma Island. A residential and marina project planned for southeast Lamma Island has failed to win the blessing of a government office that was set up last year to smooth the way for worthwhile private development. The Development Opportunities Office regards the residential part of the project as too dense, a government official said yesterday. The committee has taken the stance even though The Baroque on Lamma Limited, as the project is called, has the support of the Tourism Commission and the Home Affairs Bureau, which oversees sports policy. "Our advisers are concerned about the project's environmental impact on Lamma, which is an ecologically sensitive place," the official said. The office was set up under the Development Bureau to provide one-stop consultation and co-ordination services to private and community projects that carry economic and social benefits. Small-scale developer Bobby Li Kin-keung submitted the plan for Shek Pai Wan Beach last year. It includes a six-star hotel and a marina, which it proposes to use for international sailing races and as a training ground for local elite athletes. It was discussed by the Land and Development Advisory Committee that advises the office last week. "The company has been lowering the building density but it has not reached an acceptable level. Members were also concerned whether they should support a project that is predominantly residential," the official said. The site near the bays of Mo Tat Wan and Tung O Wan, includes several indigenous villages and agricultural land. It is owned partly by the company and partly by the government. "Members had reservations about whether the government should conduct a land exchange to facilitate the project," the official added. He said the company could revisit the office with an amended plan or go directly to the Town Planning Board to get approval, as the office was only a facilitator and did not replace any statutory procedures. Paul Lam Yuk-tak, a director of The Baroque on Lamma, said yesterday he had not received notification from the office.

Construction work on the long-awaited Sha Tin to Central Link will be delayed for at least a year, with the government being extra cautious in drafting the final route for the rail line to avoid further controversy. Construction of the section between Hin Keng in Sha Tin and Hung Hom was supposed to begin this year but transport minister Eva Cheng said yesterday that the final plan would not be released until next year. "We care about meeting the schedule but we also hope that [the final design] will not face too much opposition," she said. The delay will disappoint many residents but it has also triggered fears that the cost of the HK$37.4 billion rail link may escalate, like that of the HK$66.9 billion express rail line to Guangzhou. The Building Services Tender Price Index - a benchmark the government adopts in estimating project costs - rose to a record level in the second quarter of last year after a series of large government projects started rolling in. The Transport and Housing Bureau does not yet have a date as to when construction of the line can start but Cheng said it had to wait until officials completed a thorough consultation on the affected communities, which it hoped would be finished later this year. She said a longer public consultation was necessary to resolve disagreements. Issues to be sorted out included the route's alignment, whether the depot at Diamond Hill should be below ground level, or if the MTR Corporation (SEHK: 0066) could abandon plans to use several parks and playgrounds as worksites. The delay means the section between Sha Tin and Hung Hom is unlikely to be finished in 2015 as scheduled and the opening of the cross-harbour section that links Hung Hom to Central South may also fall behind a scheduled 2019 target.

Wynn Macau on Wednesday reported net profit of HK$1.16 billion for the six months ended December of last year, an 77.6 per cent jump from 2008. Wynn Macau just missed analysts’ expectations with its 77.6 per cent rise second-half earnings despite more gamblers placing their best in the Macau operations of Las Vegas casino operator Wynn Resorts. Analysts expect Wynn Macau’s market share to grow this year, as it is the only casino operator set to expand its presence in Macau. Wynn Macau, run by casino magnate Steve Wynn, operates one casino-resort in Macau and is slated to open an extension of the resort in April in the enclave. Gambling revenues in Macau have soared at a double-digit pace in the past six months of last year, boosted by the country’s soaring economy and signalling sustained growth in the world’s largest and fastest-growing gambling market.The casino operator, whose rivals include Sands China and Melco Crown Entertainment, reported net profit of HK$1.16 billion for the six months ended December, an 77.6 per cent jump from 2008, falling short of the HK$1.21 billion consensus forecast compiled by Thomson Reuters I/B/E/S. Its profit was at HK$653.03 million for second half of 2008. The results were widely expected as Wynn Macau had said in February it expected 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. In February, Wynn Macau reported a near doubling of fourth-quarter earnings before interest, taxes, depreciation and amortisation (EBITDA) to US$142 million. Sands China’s net profit for the October-December period also missed expectations.

Managing Director of Li & Fung Ltd. William Fung Kwok-lun, seen here in a file photo, said on Wednesday that company’s margins should 'keep going up' and its core operating margins could exceed 4 per cent in coming years. Consumer goods exporter Li & Fung (SEHK: 0494) on Wednesday posted a 67 per cent rise in profit for the second half of last year, lagging analyst forecasts, despite aggressively slashing expenses in a group-wide cost saving program. But the company said its core operating margins could exceed 4 per cent in coming years. The company’s margins should “keep going up”, group managing director William Fung told a news conference in Hong Kong on Wednesday. Li & Fung’s 2009 turnover was held back by “soft consumer markets world wide, tight inventory control by many of our customers as well as a number of customer insolvencies”, the company said in a statement, adding that cost control and other measures contributed to the rise in profits. Analysts generally expect to see a major transformation this year for Li & Fung, which manages supply chains for retailers including Wal-Mart Stores and Target, as its US customers start to refresh their inventories amid an improving retail environment. The Hong Kong company is also the global sourcing agent for Liz Claiborne. Analysts also said the company should also benefit from new outsourcing deals, including a recent one with Wal-Mart, and from contributions made by newly acquired assets, such as UK-based private-label supplier Visage Group. In its statement, Li & Fung reaffirmed its revenue target. “While the turnover target of US$20 billion and core operating profit target of US$1 billion seem challenging at present, we remain committed to them,” the company said. Despite the improvements, some analysts worried that the company may not be able to meet ambitious growth targets set in its 3-year plan. Li & Fung, which in February said it would buy Visage Group for £173 million (HK$1 billion) to expand its European presence, aims to post annual turnover of US$20 billion and a core operating profit of US$1 billion under its current three-year plan for 2008-2010. In January it announced a deal with Wal-Mart to sell the US retail giant goods valued at US$2 billion in the first year. Li & Fung posted a net profit of HK$1.97 billion for July-December period, against HK$1.18 billion for the same period in 2008. The net lagged a mean forecast of HK$2.31 billion for the second half year of last year polled by Thomson Reuters I/B/E/S. Shares of Li & Fung rose 55 per cent in the second half of last year, outperforming a 19 per cent rise in the broader market. The stocks were down 0.71 per cent on Wednesday. At market close Tuesday, shares were up 29.8 per cent so far this year, outpacing the broader market’s 3.6 per cent decline.

Rules loom in bid to curb property sales speculation - The government is not waiting for an imminent written explanation by Henderson Land of uncompleted property deals and is already considering the imposition of more stringent sales restrictions.

Little Sheep Group (0968) - the mainland hot pot chain - said net profit last year jumped 20.7 percent to 155.36 million yuan (HK$176.64 million) as more people ate at its restaurants. A final dividend of 6.9 HK cents per share was recommended. "We plan to open 45 self-owned restaurants this year, including one or two in Hong Kong if we can lease appropriate places," executive director and chief executive Lu Wenbing said. The firm now runs 157 self-owned outlets in the mainland and four in Hong Kong. It also operates 293 franchised restaurants, mainly in third-tier mainland cities. Lu said Little Sheep is aiming for 20 percent revenue growth this year. He said the same-store business in the first two months of this year rose by 2.5 percent while the number of customers jumped by 7 percent. The company's capital expenditure is expected to be 213 million yuan, up 29 percent from 2008. "Beside the investment in new stores, we also plan to increase production of our condiments by 75 percent to 14,000 tonnes," Lu said. Chief financial officer Wang Daizong said inflation this year should be moderate and Little Sheep will control costs to cope with higher prices. "We will be able to absorb price hikes, but we can feel the pressure on our gross profit margin," Wang said.

China*: Russia and China have quietly made clear to the Iranian government they want Tehran to change its approach to the nuclear issue and accept a UN atomic fuel offer, Western diplomats said on Tuesday. Russia’s and China’s co-ordinated diplomatic approaches took place in Tehran around the beginning of March, according to several Western UN Security Council diplomats. They said it was significant that two powers seen as blocking Western efforts to get tough on Tehran appeared to be using their influence behind the scenes to ratchet up the pressure on the Islamic Republic. “Russia and China had a demarche in Tehran to try and get them to shift their position on the nuclear issue, particularly with regard to the Tehran Research Reactor,” one diplomat told reporters on condition of anonymity. “The Russians and Chinese were saying that their position [on a new sanctions resolution] would depend on Iran’s response to the demarches.” Another Western diplomat confirmed the Russian and Chinese “demarche,” a formal diplomatic approach that can be anything from a gentle expression of displeasure to an angry protest.

Building stability in Afghanistan through investment and support from its neighbours will be key themes in talks beginning on Wednesday in Beijing between Afghan President Hamid Karzai and Chinese leaders. Highlighting the importance of strategic dialogue in Asia’s most volatile region, Karzai’s national security adviser met with China’s foreign minister earlier this week ahead of the president’s arrival on Tuesday, China’s Foreign Ministry said. The content of Rangin Dadfar Spanta’s three days of discussions wasn’t known, although Foreign Ministry spokesman Qin Gang said he met with Foreign Minister Yang Jiechi in preparation for Karzai’s arrival on Tuesday. Karzai was due to meet on Wednesday with President Hu Jintao on issues including regional security and Chinese investment in Afghan mineral resources. The countries share a narrow border high in the remote Pamir Mountains and China has pledged continuing aid to the Afghan reconstruction process. China, which professes to have a noninterventionist foreign policy, has limited its involvement in Afghanistan to diplomatic and humanitarian support, some trade, and investment in the minerals sector. However, Afghanistan’s woes incorporate issues that Beijing considers direct threats to its stability: Islamist extremism spreading to its Muslim region of Xinjiang; the long-term presence of US and Nato forces on its borders; cross-border drug smuggling; and the deepening involvement of India, with whom China shares a disputed border and a sharpening rivalry. Beijing alleges Xinjiang separatists have received training and shelter in Afghanistan and has demanded the return of Chinese nationals captured there. Despite that, Beijing is not known to have openly interposed itself between the United States, Afghanistan, and longtime ally Pakistan – some of whose officials are believed to covertly support some elements of the Taliban insurgency. A Chinese company pledged US$3 billion to tap one of the world’s largest unexploited copper reserves at Aynak, and is favoured to win the rights to iron deposits at Hajigak when bids are considered this year. Those projects have dragged on, however, amid continuing Taliban attacks. US officials familiar with intelligence reports have also claimed that Afghanistan’s then-minister of mines, Muhammad Ibrahim Adel, allegedly accepted a US$20 million bribe to award the Aynak contract in late 2007 to China Metallurgical Group Corporation. Both deposits offer a potential financial boon for an impoverished country mired in war, but require the construction of roads, railways, and processing plants in areas still roiled by the insurgency. Karzai’s delegation includes the foreign and defence ministers along with 20 leading business people. Talks will also be held with Chinese business leaders and three bilateral economic cooperation agreements will be signed, according to Afghanistan’s presidential palace.

Chanel designs for Shanghai Expo

China's Pang Qing and Tong Jian perform their pairs short programme at the World Figure Skating Championships in Turin, Italy, on Tuesday. Olympic silver medalists Pang Qing and Tong Jian skated a flawless and elegant short programme to take the lead in the pairs competition at the world figure skating championships on Tuesday. Pang and Tong earned a season-best 75.28 points for their short programme, the same The Pearl Fishers that they skated to in Vancouver. The 2006 world champions are two points ahead of Russia’s Yuko Kavaguti and Alexander Smirnov.

Google may be playing a dangerous game with its "compromise" move to redirect mainland netizens to its Hong Kong website, experts warned, as many questions remain unanswered. The US internet giant said yesterday it will no longer filter search results on China-based and is redirecting users to an uncensored site here, effectively closing down the mainland site. However, access to websites covering highly sensitive topics such as Tibet remains blocked in the mainland. Google chief legal officer David Drummond said on the firm's blog that Beijing "has been crystal clear throughout our discussions that self-censorship is a non-negotiable legal requirement." Google's move has angered the central government with an official in Beijing saying it is "totally wrong." Google co-founder Sergey Brin told The New York Times that shifting the service to Hong Kong was not given a clear-cut stamp of approval by Beijing but "there was a sense that Hong Kong was the right step." He said: "There's a lot of lack of clarity. Our hope is that the newly begun Hong Kong service will continue to be available in mainland China." However, Liu Ningrong, an associate professor of marketing communication and media management at the University of Hong Kong's School of Professional and Continuing Education, was dismissive of the US giant's move. "Google just made an empty show of strength but without any actual effect." He said it might only be "a matter of days" before Google quits its China market. "The Chinese government will never allow Google to avoid censorship. Sensitive links will surely be blocked by China's firewall." Sandy Shen, a mainland-based research director of information technology advisory firm Gartner, said: "This is a compromise by Google to keep its China business while not eating its words after the earlier announcement about considering stopping censorship." But in the long term, this will hurt its business, Shen said. "Local partners and users are already disappointed at its move and some resellers reported a 30 percent drop in revenues." Much uncertainty remains about the firm's operations in the massive mainland market, which has an estimated 350 million internet users. While the search engine was shifted to Hong Kong,'s map service and a free, advertising-supported music portal remain in China. Research and sales divisions also remain. Its Gmail e-mail service was still accessible from within the mainland, as was its news page, though attempts to call up specific articles on China were blocked. "Google is playing a very dangerous game," Rob Enderle, president of California business consultant Enderle Group told Bloomberg. "They could end up doing more damage than good." Visitors to are being redirected to its Chinese-language service based here, The Hong Kong page heralded the shift with the announcement: "Welcome to Google Search in China's new home." The site also began displaying search results in simplified Chinese. The SAR government said "there are no restrictions on access to websites, including Hong Kong-based websites, from China." An unnamed official from the State Council Information Office Network Bureau said: "Google has violated its written promise it made when entering the Chinese market by stopping filtering its searching service. "This is totally wrong. China is uncompromisingly opposed to the politicization of commercial issues, and express our discontent and indignation to Google for its unreasonable accusations and conduct." Local information technology sector lawmaker Samson Tam Wai-ho said: "I hope eventually in the future, China can align with international practice [where it concerns] the internet." In Beijing, a few passersby laid flowers or chocolates on a large Google sign outside the firm's office. Many mainland netizens, however, said they were ashamed of Google. "Listen Google! It is not the 1890s, the central government is no longer the Manchu government. If you want to get your share in China, you'd better follow China's law," one wrote.

Ecology lifeline of Hainan: Luo Baoming, governor of Hainan, says the island will become a top tourism center. No place in China has hogged more of the limelight than Hainan since the dawn of the year, when the central government unveiled a national strategy of developing the southernmost province into a world-class tourism destination in a decade. So much so that Luo Baoming, governor of China's only tropical island province, has found his days brimming with meetings to deal with "hot issues" arising from Hainan's new momentum and the visits of foreign dignitaries, business gurus and journalists. The core message he delivers to visitors is that ecological protection is the lifeline for expansion of the island's tourism, and Hainan is way off from the goal of becoming "a top international tourist destination", Luo told China Daily. Thousands of holiday-makers swarmed to Hainan, especially the resort town of Sanya, for the week-long Spring Festival last month. While taken in by the clean beaches and pollution-free air, some ended up complaining about poor service and unreasonably high hotel rates. "I have been following the many comments and criticisms about Hainan," Luo said. "We've stepped up supervision on the exorbitantly high hotel rates. The Spring Festival travel should never become 'the first and also the last deal' of the year, and we cannot count on revenues from the week-long holiday to sustain our business operations for the whole year. "While we are far, far away from meeting 'international' standards, visitors are measuring us by, and expecting, international standards. In fact, they are judging the present situation (service and infrastructure) by the standards that we're striving to meet in a decade or two." Burkhard Eiswaldt, general manger of International Culture and Art Co Berlin-Hainan, said: "If Hainan now writes the headline 'International Tourism Island' on its door, it also has to face the fact that other countries, tourists and business people will expect big things from Hainan - words are not enough." Luo said the island will fix the woes in the tourism market by borrowing experience and expertise from regions where tourism is more entrenched. He also said Hainan will draw in more high-caliber talents, and intensify training to upgrade service levels. Tourism in Hainan, already blessed with abundant natural resources, will be spiced up with lottery and gaming options, duty-free shopping and more visa-free procedures, according to guidelines the State Council, or China's Cabinet, issued on Jan 4. Above all, the guidelines stipulate that services, predominated by tourism, should contribute at least 60 percent to Hainan's wealth by 2020, a sign that the country is seeking to optimize its economic structure and shift to a development mode that spurs and caters to domestic demand and a "green economy". The central government also expects the island to set an example in ecological protection for the rest of the country. Luo said that for Hainan's dreams to come true, preserving its ecology is a paramount precondition. "Ecology is the lifeline of Hainan, all our advantages are built on Hainan's uniquely beautiful ecology and environment," he said. "The success of Hainan's endeavors largely hinges on how it preserves the ecology." With nearly 60 percent of its 34,000 sq km - roughly 1/350 of China's total land area - covered by forest, Hainan boasts the country's best environment, atmosphere and water quality in lakes and along the coastline, Luo said. But as an island, its ecological system is fragile and vulnerable to destruction from reckless development, he said. "Hainan belongs to its inhabitants, to people from other parts of China, and to people of the whole world, so every resident, traveler and investor alike should help preserve the ecology and environment in the island," the governor said. To protect Hainan's coastline of more than 1,500 km that contains numerous bays and natural harbors, the province planted strips of trees on 10,500 hectares between 2007 and 2009. This has helped fortify the protective coastal forests, according to Luo. He said the province has focused on clean solutions by developing solar power, windmills, bio-fuels and nuclear plants. As a result, clean energy constitutes one-third of its primary energy mix, among the highest in China. To fulfill its commitment to saving energy and reducing greenhouse gas emissions, Hainan will accelerate development of renewable energy resources so that the use of clean energy will steadily increase. It will also popularize "clean" coal solutions to reduce pollution, he said. "We will have a 'green pass' to facilitate investment projects with low-carbon technologies," he said. "We also welcome partners to join us in developing ocean industries." To illustrate how big the "green" market in Hainan is, Eiswaldt, a German executive who came to the island 20 years ago, said: "There is virtually not even one example of energy-efficient buildings on Hainan, which also will be a big market in the future. Also the recycling industry offers big profits, but it has not been developed." Luo said the local government will lift a ban on commercial land leasing and real estate development later this month, when a detailed program on how to turn Hainan into an international tourist resort is approved by the country's top planner. The ban was put in place on Jan 15, after the announcement of the international tourism destination concept pushed property prices skywards. "But even during this period of 'land freeze', we have not stopped development of affordable housing," Luo said. "It is a top priority for the government to ensure that the 8.6 million inhabitants of the island have adequate housing." Zhai Shengting, 69, who often dances at the Wanluyuan Park in downtown Haikou, capital of Hainan, seemed to have already realized his dream. A retired businessman from Datong of North China's Shanxi province, Zhai bought an apartment in Haikou in 2005, and since then has spent six months in Hainan each year. "All I want now is health and pleasure, both of which I've found in Hainan," he said.

Hostesses for 2010 Shanghai World Expo Shandong pavilion is trained in Jinan, capital of east China's Shandong province, March 23, 2010.

March 25, 2010

Hong Kong*: Google's decision to move its simplified-Chinese search service to an uncensored site in Hong Kong grabbed headlines around the world yesterday but it meant little to tens of millions of mainland internet users and failed to change the censorship regime it set out to challenge. Hours after the California-based internet giant made public its decision to end self-censorship in China, the famed image of the "Tiananmen tank man" did not pop up on screens nationwide - as some anticipated earlier. Nor were mainland internet users denied the Google service altogether - as others once feared. Visitors to are being automatically redirected to Google's Hong Kong site, which provides uncensored search results in English, traditional Chinese and simplified Chinese. Mainland users can use the search service as before, with sensitive results blocked by the central government instead of Google. For millions of mainland users, the subtle difference is negligible. In sharp contrast with the fanfare two months ago when Google dropped a bombshell by announcing it planned to "pull out" from the mainland to protest against excessive internet policing and hacking activities, its latest announcement generated little buzz. For those living inside the notorious "Great Firewall of China", "Google's new home in China" is not a promised land where information flows free. To get forbidden information, they have to do what they have always done - use proxy servers to bypass the government censorship, also known as "scaling the wall". "It creates a bit [more] inconvenience but it will not change my life at all," said Li Wei, a 25-year-old computer engineer. who was one of a few dozen onlookers gathering at Google China's headquarters in Beijing. Analysts are divided over how Google's decision will shape the mainland's internet development in the long run. Zhao Jing, an internet researcher, called it a slap in the face for Beijing, while Hu Yong, from Peking University, said its impact remained unclear. But the impact on Google's mainland business was more immediate and pronounced. Shortly after the US company's announcement, Tom Online, a mainland internet firm controlled by Hong Kong tycoon Li Ka-shing, said it had ended its affiliation with Google. Analysts said it was possible that Google's plans for other services in China, such as its Android smartphone software, could be endangered by the relocation of its search service. "We see this as increasing or ratcheting up tension between the two parties," Colin Gillis, an analyst at BGC Financial, said. "You sort of make China look like the bad guy and you think you're going to be selling Google phones? Good luck, we'll see how that goes." In the bigger scheme of Sino-US relations, experts said the Google incident would probably only play a marginal role.

Bank of China, the country’s No 4 lender by assets, on Tuesday posted a forecast-beating quadrupling in fourth-quarter net profit, boosted by a surge in lending under Beijing’s 4 trillion yuan (HK$4.5 trillion) stimulus program. The state-controlled lender also said it expected yuan lending to rise by about 17 per cent this year, pointing to a continued loose monetary policy that in recent months has led to fears of an asset price bubble. “The global economic depression has for the most part come to an end, while the domestic economy continues to recover,” bank President Li Lihui said in a statement. “It is expected that 2010 will see the continuation of an important period of strategic opportunity for the banking sector.” A record 9.6 trillion yuan in new loans by mainland banks last year is set to cement the positions of Industrial and Commercial Bank of China (SEHK: 1398) and China Construction Bank (SEHK: 0939) as the most profitable banks in the world. US powerhouse Goldman Sachs, by comparison, posted a US$13.4 billion profit for last year. The lending surge has, however, raised worries about growth in bad loans at the banks and set off a capital-raising spree among several mid-sized lenders. Bank of China, in which Royal Bank of Scotland has a 2.69 per cent stake, reported October-December earnings of 18.9 billion yuan, compared with 4.42 billion yuan a year earlier. Analysts had forecast on average a profit of 17.2 billion yuan, according to Thomson Reuters I/B/E/S. The fourth quarter of 2008 was impacted by impairment allowances the bank, the country’s top foreign exchange lender, booked against its exposure to US mortgage-related securities. The bank’s capital adequacy ratio fell to 11.14 per cent in the fourth quarter, down from over 12 per cent in the last three years following a lending spree in an attempt to keep the economy growing. While last year’s growth was driven by volumes, Beijing’s moves to rein in lending growth could boost bank net interest margins – the difference between deposit and lending rates and a key source of profit for mainland banks – and sustain growth this year, analysts said. Net interest margin clocked in at 2.04 per cent, up from 2.03 per cent in the first three quarters of last year, but down from 2.63 per cent in 2008. Bank of China is the first among major mainland banks to report earnings. ICBC, the world’s most valuable bank, is scheduled to report on Thursday and China Construction a day after that. Analysts said Bank of China’s profit growth would likely be the highest among major mainland lenders for both the last year and the fourth quarter alone, mainly because the bank lent the most last year with roughly 1 trillion yuan of new loans. Bank of China, which served as mainland’s central bank during the early part of the 20th century, is run by chairman Xiao Gang and president Li Lihui, who each made about 1.5 million yuan in 2008. As of the end of 2008, the bank operated 10,789 outlets at home and abroad. BOC (SEHK: 3988)’s Hong Kong shares ended up 1.76 per cent on Tuesday at HK$4.04, ahead of the results. The benchmark Hang Seng Index ended up 0.3 per cent. BOC shares in Shanghai closed down 0.24 per cent. The bank’s Hong Kong shares have fallen 4 per cent so far this year. Over the same period, larger rivals ICBC and China Construction’s shares are down 11 per cent and 7 per cent, respectively.

A fireman salutes the hearst of senior fireman Yeung Chun-kit as it passes near the Lai Cheong Factory Building on 479 Castle Peak Road in Cheung Sha Wan where he died fighting a No 4 fire on March 8. Veteran fireman Yeung Chun-kit - who died two weeks ago while battling a No 4 fire in the Lai Cheong Factory Building in Cheung Sha Wan - was buried on Tuesday with full honors. Yeung, 47, died after being trapped under rubble inside the building on March 8. The funeral service began at Hung Hom’s Universal Funeral Parlour on Tuesday at 9.30am. Yeung’s colleagues draped a Hong Kong-SAR flag and placed his helmet on top of his coffin. It was then escorted to Gallant Garden – a graveyard for public servants who have died in the line of duty. A pipe band played a final lament as Yeung was laid to rest at noon. Hundreds of mourners attended the service, including Yeung’s wife, his 20-year-old daughter, Secretary for Security Ambrose Lee Siu-kwong, Civil Service Secretary Denise Yu Chung-yee, Director of Fire Services Gregory Lo Chun-hung and various district leaders. Before arriving at Gallant Gardens, the funeral procession stopped at the scene of the fire and passed the Lai Chi Kok Fire Station, where Yeung had been based. Fireman saluted his coffin as it passed by. Hundreds of police officers, firemen and staff from the Lai Cheong Factory Building and members of the public turned out to honor Yeung. Yeung Chun-kit had been a senior fireman attached to Lai Chi Kok Fire Station. He had 26 years experience. He was also a member the Hong Kong Fire Services Department Staff General Association. Yeung died after he lost contact with colleagues for 85 minutes during the fire. A former colleague, who preferred not to be named, said Yeung had always been “righteous and brave”. The fire started about 8.19am on the fifth floor of the factory. The blaze was graded by the Fire Services Department as a No 3 alarm, according to its scale of severity, at 9.50am. It was then upgraded to No 4 around 11am. Three other firemen were also injured. Colleagues found Yeung’s legs trapped under rubble. They pulled him free, rushed him to hospital, but he was later declared dead. The cause of the fire is still being investigated a special team led by the Fire Services Department.

Mainland tourists are seen visiting The Venetian Macao Casino in Macau in this file photo. On Tuesday, sources said gambling revenue in Macau reached close to HK$13 billion for the first three weeks of March, on track for a monthly record. Gambling revenue in Macau reached close to HK$13 billion for the first three weeks of March, on track for a monthly record, underscoring sustained growth in the world’s largest and fastest-growing gambling market. “According to the average, it’s near HK$13 billion,” a source with direct knowledge of the situation said on Tuesday. “In February, it was around this amount.” Stanley Ho’s casino flagship SJM Holdings retained the biggest share of the market, at around 30 per cent, while Sands China, the Macau unit of Las Vegas Sands, was second with around 20 per cent, the source said. Macau casino revenue last hit a record in January, when revenue rose 63 per cent from a year earlier to 14 billion patacas (HK$13.35 billion).

TIC executive director Joseph Tung Yao-chung said on Tuesday all package tours to Bangkok – suspended because of political tensions there – would resume on Wednesday.

Pamela Pak Wan-kam collects a Legco by-election nomination form from the Electoral Office in Wan Chai on Tuesday. Her placard condemns former legislator Wong Yuk-man's performance. Hong Kong socialite Pamela Pak Wan-kam on Tuesday declared her interest in standing in the May by-elections as she collected an application form from the Registration and Electoral Office. Pak is well-known in Hong Kong for offering relationship advice on a late-night radio show. She is also the wife of tourism functional constituency member Paul Tse Wai-chun. The radio agony aunt said she would stand against “Mad Dog” Raymond Wong Yuk-man. Wong was the former pan-democratic lawmaker for Kowloon West. He is one of five lawmakers who resigned in protest from the Legislative Council to participate in the by-elections. Pak said she was upset by some of Wong’s behaviour – such as when he threw bananas inside the Legco chamber. She urged Wong to register his candidacy for the by-elections within 48 hours. Pak is currently being sued by Wong for libel after she called him “the most corrupt politician ever”. She said the lawsuit would not affect her running in the by-elections, local media reported. Colourful Hong Kong personality Roger Chan Yuet-tung - known as “Bus Uncle” - is also standing. A group of university students, known as “Tertiary 2012”, have also declared an interest. The by-elections will be held on Sunday, May 16. They were prompted by the resignations of five pan-democrat lawmakers. They view them as a “de facto referendum” on the lack of progress toward full democracy in Hong Kong.

Boost to film business seen in 3D views - The 14th Filmart exhibition opened yesterday with a strong focus on the development of 3D in Hong Kong. The trend was clear as the Film Development Council rolled out 3D initiatives and set up a booth to attract investors from overseas. But acclaimed director Alex Law Kai-yui (Echoes of the Rainbow) said he will wait for the technology to become more refined before using it. It's because he "hates to wear those stupid glasses," he said with a laugh at a Filmart presentation. The massive success of the blockbuster American film Avatar drew global attention to 3D technology. Riding on that, the council's focus on 3D is designed "for the industry to understand more about this trend" and to promote Hong Kong as a 3D movie production center in Asia, a spokesman said. The chairman of the Association of Motion Picture Post Production Professionals, Percy Fung Tze-cheung, said he was glad the government is putting resources into this area but hopes it will try to work closely with the industry. "The industry has to get involved in the 3D campaign for it to become a two- way street, and so the attitude of the government is more important than simply providing money," Fung said. "I hope it will communicate globally to introduce Hong Kong better to all the mainstream markets and let the world see we can do 3D, because we have experienced personnel and a longer track record in film production compared to other countries in Asia." Law said he was the first director in Hong Kong to add computer-generated effects and use a computer to edit his film The Soong Sisters. That was 15 years ago. "All the other editors were laughing at us back then, but we learned how to manage the new technology," he said. "So I do believe in new technology, but 3D is still at a very initial stage, and I won't use it until it's more developed." But "new technology is good only if you can use it without distracting the audience from the storyline." Filmart - the Hong Kong International Film and TV Market forum - is at the Convention and Exhibition Centre in Wan Chai until Thursday.

Chui Tien-you, Kit Hung and Fukazawa Hiroshi, the producer of Written in Red, prepare to meet potential investors. A hard sell from script to screen - Up-and-coming filmmakers have to work harder to win over investors - Investors wary of the rising costs of filmmaking are less willing to back first-time directors. And while some Hong Kong filmmakers are prepared to adapt their movies to suit targeted markets, often at the request of investors, others baulk at what they see as a compromise and choose to give up the chance of a wider audience. Young and first-time directors spoke of the problems facing them at a trade event yesterday that matches film projects with financiers from around the world. They urged the government to set aside part of its film funding to support new talent, saying that such a move would ensure new directors are not unfairly pitted against their more established colleagues in their application for funds. Koan Hui is helming one of the 25 projects being pitched at this year's Hong Kong-Asia Film Financing Forum (HAF), a three-day event at the annual Entertainment Expo, which opened yesterday at the Hong Kong Convention and Exhibition Centre. Hui has years of experience behind the camera, but still finds it difficult to convince investors to back his directorial debut, the 3D psychological thriller Written in Red. High production costs have made investors cautious, he says. "They are getting more calculative," says Hui, 38, a former assistant director in many of Tsui Hark's classics. "They need to see a track record, such as whether similar films were successful." In the past investors were more involved in the production and not as calculative, he said. Funding opportunities also became harder to come by in the bad economy, especially for mid-budget films of between HK$10 million and HK$30 million. Actor turned director Chui Tien-you, 26, says Hong Kong's film investment culture is too conservative. In comparison, funding for films in Malaysia comes from a variety of sources, not only traditional film companies. "The country has telecoms and internet companies investing in films. It even set up a department to take care of that and give promising projects a chance," says Chui, who is raising funds for his HK$4 million directorial debut Private Party of the Dead at the HAF. "But in Hong Kong, investors are extremely calculative." While many companies can afford to back film projects, they are afraid of making a bad choice that can hurt their reputation, Chui says. Government funding is also an option. The Film Development Council offers financial support for projects with a budget of up to HK$12 million, with a cap on government contribution of 30 per cent. The government has said it will raise the respective amounts to HK$15 million and 35 per cent. Filmmaker Kit Hung wants the government to set aside part of the Film Development Fund for less experienced directors. The 33-year-old Hung, whose debut feature Soundless Wind Chime was nominated for the Berlinale's Teddy Award, is back in the fund-raising circuit for his second project. This time, he is considering applying for government support for his HK$8 million film, Mama Eva, a light-hearted musical about a woman's tussle with changing social values. His new movie has great potential, Hung says, "but if you talk about commercial value, how can I compete with someone established like Mabel Cheung [Yuen-ting]?" Cheung was the producer of Crystal Bear-winning Echoes of the Rainbow, which was partly funding by the government. "The government should dedicate a section of the Fund to new directors. Many directors who have made one or two films are still struggling to find financing for their projects," he said. But some directors do not want funding from the government, which by August last year has given out HK$35.89 million. Chui, for one, prefers to go it alone. "It takes too long," he says. "I'm planning to start filming in September and I want to get everything done as quickly as possible." In this tough investment climate, filmmakers are likely to have to work harder to win over potential financiers. This may mean acceding to a backer's demand to make changes to the work. Some filmmakers acknowledge the pressures of the market and say such compromises are acceptable. Hung says it is important to ensure investors receive returns on their investment, as it is the only way to keep the industry alive. If he manages to win over an investor from, say, Europe for his project, he would be happy to change the film's story to boost its international appeal, as along as those changes are sensible, he says. Hui makes a similar point. A filmmaker has to understand his market. "At the end of the day, filmmaking is a business and a cultural project," he says, as he prepares himself for three days of meetings with about 20 potential investors to try to secure at least a third of his film's US$2.5 million budget. He adds: "But of course there is a bottom line [for the changes]." For Chui, the price is too high. He says he will stick to his vision for his thriller, some parts of which he expects won't get past mainland censors. Rather than cut out those parts, he will give the potentially lucrative mainland market a miss. This means he has to look for investment outside greater China. "We just have to work extra hard to prepare for our presentation in English," he says.

Internet giant Google has chosen Hong Kong to be a safe haven for its uncensored online search services after withdrawing its Chinese-language operations from the mainland.

An Italian prosecution team unlawfully searched four companies in Hong Kong to investigate fraud charges against Italy's Prime Minister Silvio Berlusconi, the High Court heard yesterday.

Expo cash windfall expected - Visitors stopping over in Hong Kong before going to and returning from the Shanghai World Expo in May are expected to spend HK$200 million to HK$300 million.

The passing of a sweeping bill overhauling the US medical system may put pressure on Hong Kong insurers to improve the transparency and coverage of their products, an expert said. The US House of Representatives passed the measure yesterday (HK time), and it is expected to be signed into law today by President Barack Obama. Hong Kong Polytechnic University Public Policy Research Institute professor Peter Yuen Pok-man said the law may provide some references for the SAR's long-awaited health-care reform proposal. "The legislative framework in the United States has set out a number of key elements, such as barring insurers from excluding those with pre-existing diseases and preventing them from arbitrarily dropping policyholders," Yuen said. "These are some of the most controversial areas faced in Hong Kong. If US insurers will be subject to these rules, I don't see why Hong Kong insurers cannot follow suit." Other main features of the bill will require insurers to spend at least 80 percent of revenues on medical care and cap the premium for the elderly to three times the amount younger people are charged. Yuen admitted there are differences with Hong Kong's health-care system heavily supported by public money while the US system is dominated by the private sector. So the United States has a stronger need for health-care reform than the SAR, he said. Hong Kong Federation of Insurers chief executive Peter Tam Chung-ho said the sector understands the community wants insurance coverage to be as generous as possible, but the package also has to be financially viable. "We are also eager to have a health-care financing reform in Hong Kong. But this cannot be achieved without the effort of the community, the sector and the government to come up with a consensus on the issue," Tam said. "Even so, the passing of the bill in the United States has brought a good message for Hong Kong considering that the bill has come across a lot of hurdles over the years before it was passed." The Food and Health Bureau said the government is working on a voluntary scheme that will enable more people to have sustained access to affordable private health-care services. It is also aiming to enhance transparency and consumer protection in the private health insurance and health-care services market, through a standardized medical insurance cum savings scheme.

Stars shine at Asian Film Awards (Director Zhang Yimou, Singer Lo Tayu, Actor Nicholas Tse, Director Lu Chuan and Actress Wai Ying-hung)

Hong Kong actor Nicholas Tse and actress Wai Ying-hung pose with their trophies after winning the Best Supporting Actor and the Best Supporting Actress awards at the Asian Film Awards in Hong Kong March 22, 2010.

China*: China will probably run a trade deficit of more than US$8 billion in March, state media said on Tuesday, citing Premier Wen Jiabao. It would be China’s first monthly deficit since April 2004, but is expected to be a one-time blip rather than the start of a new trend for the world’s largest goods-exporting nation. Nevertheless, many in the market think that Beijing will want to see several consecutive months of strong export growth before allowing the yuan to rise, so a deficit in March could put appreciation on hold for a while longer. “To be honest, I was happy when I learnt of the situation [of the expected deficit],” Wen told a gathering of foreign business executives in Beijing, according to the China Daily. “China is by no means seeking a trade surplus. On the contrary, we have left no stone unturned in expanding imports to achieve a trade balance,” he said. Mainland’s trade surplus has narrowed over the past four months as imports, stoked by surging domestic demand, have grown faster than exports, which have been weighed down by a sluggish global recovery. But Wensheng Peng and Jian Chang, economists with Barclays Capital in Hong Kong, said that mainland exhibited a seasonal pattern of smaller trade surpluses in the first quarter of the year. “It is too early to conclude that China’s trade balance will turn into a deficit on a sustained basis,” they wrote in a note to clients. “Indeed, in our view, that development is unlikely.” They forecast that mainland’s trade surplus this year would still reach US$186 billion, down a touch from last year’s US$196 billion. The market was little affected by Wen’s talk of a deficit. Mainland’s main stock index dipped 0.7 per cent, while the yuan forwards market remained broadly steady, pricing in 2.3 per cent appreciation over the next 12 months. Speaking to the same audience of foreign executives, Wen said that the country did not want “trade and currency wars”. Many members of the US Congress have urged stronger steps from President Barack Obama to press Beijing to let the yuan appreciate. Mainland has in effect re-pegged its currency to the US dollar since mid-2008 to cushion its exporters from the global financial crisis.

China has ordered 78 state companies whose core business is not property to submit plans to divest from the sector within 15 working days, state media reported on Tuesday. The order, from the State-owned Assets Supervision and Administration Commission (SASAC), is part of a broader government campaign to rein in fast-rising housing and land prices. State-owned enterprises (SOEs) from arms manufacturers to tobacco producers have expanded into property development in recent years, attracted by outsized profits but bidding up prices in the process. Last week, two state companies won land auctions in Beijing that smashed price records, generating a public outcry. SASAC chairman Li Rongrong had instructed state companies to formulate exit strategies within 15 working days from March 19, the Securities Times reported. Mainland would also conduct a national investigation from March to July to check whether property developers were hoarding land or illegally building villas, the newspaper quoted Yun Xiaosu, vice-minister of land and resources, as saying. Yun said at least 70 per cent of mainland’s land supply coming onto the market this year must be used to build affordable housing and small residential units. Property prices rose a nationwide average of 10.7 per cent in the year to February, although price inflation has been much more extreme in high-end housing. Beijing has tweaked taxes and stiffened mortgage rules in recent months to slow the market.

Royal Dutch Shell and China National Petroleum Corp plan to jointly develop natural gas deposits in Sichuan province under a 30-year production sharing agreement, Shell said in a statement on Tuesday. The two companies have submitted the PSA to the central government for approval. Shell said the tight gas reservoirs were located in a 4,000 sq km area in the Jinqiu block in Sichuan. Tight gas is contained in rock that must be fractured or broken before it can flow easily to production wells. “The agreement will strengthen our partnership with CNPC (SEHK: 0135) in developing cleaner energy to meet China’s growing needs.” Malcolm Brinded, Shell’s executive director of upstream international, said in the statement. CNPC is the parent of PetroChina (SEHK: 0857), which is jointly bidding with Shell to buy Australia’s Arrow Energy for US$3.1 billion. Shell and PetroChina are already operating Changbei, a tight gas field in the Ordos Basin in Shaanxi province, which began commercial production in March 2007 and now supplies 3 billion cubic metres per year to Beijing and eastern regions of mainland. In January, they began jointly assessing a shale gas field in Sichuan in the Fushun block that covers about 4,000 sq km, the statement said. Shell chief executive Peter Voser said last week that the company had the resource potential to more than double production from its North American tight gas fields to over 400,000 barrels of oil equivalent per day by 2020. “Economics are attractive in a $4 to $6 gas price range,” he told analysts on a strategy update conference call, while discussing the North American assets. “As we continue with the appraisal and development program in tight gas, we are seeing sharp improvements in drilling costs and reduced drilling time. This improves the economics of these developments, and I think there is more to come here.” Shell’s statement about the agreement with CNPC did not give any details of cost, investment or potential output from Jinqiu.

Beijing will have more scope to allow its currency to appreciate if the US government adopts a low-key stance on the issue, a Harvard University economist who also advises the US government on economic policy said. “If the US Congress and the Treasury don’t talk about the Chinese manipulating their currency, if the US can be quiet for two months, then I think the Chinese will be able to say that because of the great strength of the Chinese economy … they are unilaterally raising the value of the RMB,” said Martin Feldstein, a member of US President Barack Obama’s economic recovery board. Feldstein was speaking at the Credit Suisse Asian Investment Conference in Hong Kong on Tuesday. Tensions over mainland’s currency practices have grown increasingly acrimonious after US lawmakers threatened to impose trade tariffs unless Beijing allowed the yuan to rise. Mainland has kept the yuan on ice near 6.83 per US dollar since mid-2008 to help its exporters ride out the global credit crunch by making their goods cheaper abroad. “With the politicisation of the issue, it’s more difficult [for the Chinese government] to take economic decisions separate from politics,” said Laura D’Andrea Tyson, another Obama adviser speaking at the same event. Separately, Feldstein said the strength of the US dollar against the euro was only temporary, adding that the euro remained the only major alternative to the dollar. The euro hit a three-week low of US$1.3464 on Monday amid concerns about Greece’s debt problems, but rebounded to US$1.3554 on Tuesday. In addition to his role as an adviser to Obama, Feldstein is also president emeritus of the National Bureau of Economic Research.

China Telecom (0728) said net profit last year soared 1,531 percent to 14.42 billion yuan (HK$16.39 billion) from 884 million yuan in 2008 when the firm had one-off losses of 21.1 billion yuan and upfront connection fees were amortized.

Chinese Vice President Xi Jinping (L) meets with Chairman of Russia's State Duma Boris Gryzlov in Moscow, Russia, March 23, 2010. Visiting Chinese Vice-President Xi Jinping said here Tuesday that the Sino-Russian relations of strategic cooperation and partnership has played an important role in facilitating smooth interaction between the two countries as well as safeguarding international strategic balance and stability. Xi made the statement during a meeting with Boris Gryzlov, speaker of Russia's State Duma, the lower house of parliament. China and Russia celebrated the 60th anniversary of bilateral diplomatic ties last year, Xi said, noting that Sino-Russian ties had seen unprecedented development in the past six decades, especially since the Sino-Russian relations of strategic cooperation and partnership were established in 1996. Xi said the two countries were sincere and trustworthy strategic partners and Sino-Russian relations had become the most vigorous and richest relationship between two countries. China and Russia will jointly commemorate the 65th anniversary of their victory in World War II this year and the "Chinese Language Year" is to be launched in Russia, said the vice-president. China is willing to take this opportunity to exert concerted efforts with Russia to further enhance political mutual trust, broaden practical cooperation, including interregional cooperation, and make new contributions to world peace and stability, he said. Xi conveyed Chinese top legislator Wu Bangguo's greetings to Gryzlov and spoke highly of the fruitful cooperation between the national legislatures of China and Russia. The Chinese side is ready to deepen exchanges with the State Duma and lay a solid legal foundation for bilateral cooperation in various fields, Xi said. He called on both national legislatures to have an in-depth discussion of new measures to strengthen practical cooperation so as to improve the quality and level of cooperation.

Wu Yulu checks his Expo robots in his workshop in Mawu county, Tongzhou district, Beijing, March 23, 2010. Thirty-eight robots made by a Beijing countryman Wu Yulu will show up in the 2010 Shanghai World Expo this May. The inventor Wu, a farmer in Tongzhou district with only a primary education background, fiddled with the machines for two to three decades, making 38 robots with different functions including some that can walk, climb and pull.

March 24, 2010

Hong Kong*: Inflation edged up almost 2 per cent over the first two months of this year as the Lunar New Year holiday pushed up consumer prices 2.8 per cent year-on-year in February, the most in 13 months, according to government data. February's year-on-year price increase was up from January's 1 per cent rise, while the underlying inflation rate also jumped 1.6 per cent from almost zero in January, Census and Statistics Department figures show. The underlying inflation rate is compiled without the effects of various government one-off relief measures, like the electricity charge subsidy. In January and February, the combined inflation rate rose 1.9 per cent, or 0.8 per cent without the relief measures. Taking data from these two months together gives a more accurate reading of consumer prices as they are usually distorted by the different timing of the Lunar New Year holiday from year to year. The Lunar New Year was in February this year, but in January last year. Everything from package tour charges to the prices of poultry and fresh vegetables is usually raised to capitalise on the influx of mainland shoppers visiting Hong Kong during this popular holiday period. Last year, prices rose 3.1 per cent in January and 0.8 per cent in February. Last month, prices rose the most for utility charges rose the most, up 62.8 per cent, mainly because some households had used up the government’s electricity charge subsidy. Alcoholic drinks and tobacco jumped 19.2 per cent, food increased 4.7 per cent, clothing and footwear were up 2.6 per cent, while transport climbed slightly by 1.5 per cent.

Visibility dropped as record severe air pollution affected Hong Kong on Monday. Hong Kong's Air Pollution Index (API) hit high and unhealthy levels on Monday - particularly in Mong Kok and some parts of Hong Kong Island, a spokesman for the Environmental Protection Department (EPD) said. Roadside air pollution in Central, Causeway Bay and Mong Kok climbed to particularly high levels.At 5.41pm, the reading at a roadside station in Causeway Bay soared from 410 to 495, while readings in Central and Mong Kok, climbed to 376 and 458, respectively. The highest recorded on Monday afternoon at the general monitoring station in Tsuen Wan was 434, while other districts, such as in Eastern, Sha Tin, Tai Po and also recorded air pollution levels of around 400.

Wishes come true thanks to help of charity - Brothers Jacky Wong Hin-chi and Sam Wong Hin-kwong, who both suffer from muscular dystrophy, have had their wishes come true. Through Make-A-Wish Hong Kong, a foundation which grants wishes to severely ill children, Sam, 15, has already been to England while Jacky, 12, will fulfill his wish for a trip to Japan this summer. Muscular dystrophy is a hereditary condition that weakens the muscles. "They may only live up to 20 years old as their organ functions weaken upon reaching 13 or 14 years old, but I really don't want to think about it. The most important thing is for them to have a happy childhood," their mother Ha Pui-lam said. Yesterday, the Hong Kong Sanatorium & Hospital work group, Village Volunteers, raised more than HK$300,000 in a walkathon for the foundation. Make-A-Wish may then direct the funds to help children such as Jacky and Sam fulfill their wishes. Last year, Sam got his wish and went to visit England to see a bus factory - thanks to financial support from the foundation. According to executive manager Heidi Wong Kam-man, the foundation provided the itinerary for an eight-day trip and sponsored Sam as well as both parents. The family then paid for Jacky to go along as well. "I didn't really think the wish would come true so fast. Within three months of applying for Sam, our family got to visit England," Ha said. "I was really so happy that our whole family could go together for a holiday with the help of the foundation." Sam said he enjoyed his dream trip tremendously. "I've always wanted to go to England to see the buses there, and I was so happy when the foundation arranged for a special old bus to bring all of us on a tour," he said. This summer, Jacky's wish for a trip to Japan to see and ride on the famous bullet trains will come true. More than 200 Sanatorium & Hospital staff and families walked 11 kilometers yesterday. Celebrity ambassador for Make-A-Wish Niki Chow Lai-ki was at the awards ceremony to hand out prizes to those who clocked the fastest times.

China*: Three of the four Rio Tinto executives on trial in Shanghai pleaded guilty to taking bribes, including Australian national Stern Hu, a lawyer for one of the accused said on Monday. Hu and three Chinese employees of miner Rio faced prosecutors in the court in Shanghai, China’s financial hub, accused of taking bribes and violating commercial secrets. Tao Wuping, the lawyer for accused Liu Caikui, said: “Stern Hu definitely pleaded guilty [to bribery charges].” Tom Connor, the Australian Consul General in Shanghai, told reporters that Hu had been accused of taking bribes worth 1 million yuan (US$146,500) and US$790,000. “Mr Hu made some admissions concerning some of those bribery amounts, so he did acknowledge the truth of some of those bribery amounts,” Connor said.

Tourists and residents wear masks as walk past Tiananmen gate as spring sandstorms affect Beijing on Monday. Authorities warned residents across a huge swathe of the China's north, including the capital, to avoid going outside on Monday as a sandstorm blanketed the area in fine yellow dust. The meteorological administration said a sandstorm that swept down from the Gobi desert on Friday would continue to shroud parts of northern China stretching from the far-western region of Xinjiang to Beijing. “We advise friends in these areas to reduce their outdoor activities as much as possible,” the administration said on its website. “When you go out, please wear items to protect against the sand such as cotton cloths, masks and glasses to avoid the sand harming your eyes and respiratory system.” Sandstorms are an annual occurrence in arid northern China in the spring, when temperatures start to rise, stirring up clouds of dust that can travel across China to South Korea and Japan, and even as far as the United States. Scientists blame a combination of deforestation, prolonged drought and resulting increase in desertification in northern China. The sandstorm’s impact stretched all the way to Hong Kong, where the government said it contributed to record air pollution on Monday. On Saturday, South Korea warned residents of the capital Seoul as well as central and western regions to stay indoors due to the storm, Yonhap news agency reported. In Beijing on the same day, authorities issued a rare level-five pollution warning, signalling hazardous conditions. The respiratory department at Chaoyang Hospital, one of the city’s biggest, said it had seen more than 180 people come with health problems – 20 per cent more than on a usual day, state media reported. The capital was still cloaked in a mustard-yellow haze on Monday and residents complained of coughing and noses clogged with grit, though the administration said the sandstorm was weakening. The storm comes as a severe drought grips the country’s southwest, leaving an estimated 20 million people short of drinking water.

China's Yuan should be seen in global context, says IMF official - John Lipsky, the International Monetary Fund’s first deputy managing director, said on Monday that he also expected the Group of 20 economies to consider the issue of yuan policy in the run-up to its summit in Seoul in November. Mainland’s controversial currency policy is best considered in a broad, global context, and while policy changes are ultimately made at the national level they are never made in a vacuum, a senior IMF official said on Monday. Asked about yuan policy, John Lipsky, the International Monetary Fund’s first deputy managing director, said it was ”more appropriate” to see exchange rate policy as one element of monetary, fiscal and structural policies. Lipsky said he also expected the Group of 20 economies to consider the issue of yuan policy in the run-up to its summit in Seoul in November, and was sure it would be “viewed in a broad, global context, and that’s the right way to look at it”. The IMF has said the yuan, which has been effectively pegged at about 6.83 per US dollar since mid-2008 to help mainland’s exporters weather the global financial crisis, is undervalued. Political pressure is growing in Washington to declare mainland a currency manipulator, with some US senators threatening to push for duties on mainland products if Beijing does not allow the yuan to rise. Mainland has rebuffed the criticism, and Commerce Minister Chen Deming said on Sunday that Beijing would retaliate if the United States declared mainland a currency manipulator and imposed trade sanctions. He did not elaborate. In terms of broad economic performance, Lipsky said the IMF expected growth in Asia to be “quite vibrant”. The IMF was expecting growth in emerging Asia overall to be around 8.5 per cent this year, he said. He said an obvious risk was a possible slackening of growth in advanced countries, which would hit demand for exports from the region. “But there we are optimistic that the advanced economies in general will recover, albeit at a moderate pace, and as a result we expect to see external demand continue to grow, of course also at a moderate pace,” he said. Earlier on Sunday, Lipsky urged developed countries with big budget deficits to start now to prepare public opinion for the belt-tightening that will be needed starting next year. The scale of the adjustment required was so vast that it would have to come through less-generous health and pension benefits, spending cuts and increased tax revenues, he said. “Addressing this fiscal challenge is a key near-term priority, as concerns about fiscal sustainability could undermine confidence in the economic recovery,” Lipsky told the China Development Forum. “Already in several countries with particularly high debt and deficits, sovereign risk premia have risen sharply, imposing strains for the countries affected and raising risks of possible broader spillovers,” he said. For most advanced economies, maintaining fiscal stimulus in the current year remains appropriate, but consolidation should begin next year if the global economic recovery remains on track. First, policymakers should already be making it clear to their citizens why a return to prudent policies is a necessary condition for sustained economic health, Lipsky said. The IMF estimates that, by raising real interest rates, maintaining public debt at its post-crisis levels could reduce potential growth in advanced economies by as much as half a percentage point annually. Second, fiscal institutions must be strengthened to withstand adjustment fatigue. Options include reinforcing fiscal responsibility legislation and improving tax collection. Third, entitlement reforms such as increases in the retirement age would have favourable long-term fiscal effects but do little near-term damage to aggregate demand, Lipsky said.

Many shrug shoulders at Google pull-out - With speculation rife that Google will soon announce the closure of its mainland-based internet portal, the reaction from some Chinese has been hurry up and leave, or simply: so what? On Friday, the China Business News reported Google may make an announcement as early as Monday on whether it will pull out of China. Google has not formally unveiled any such plans. Two months since Google said it would no longer agree to abide by Beijing’s censorship rules even if that meant shutting down its site, some mainland internet users and state newspapers are baying for the company to pull out. The burst of angry comments suggested that, in spite of the widespread popularity of Google amongst educated Chinese, the government is steering state-run media and websites to lump the company together with other recent disputes with Washington that have stirred nationalist rancour in China. “Get the hell out,” wrote one user on the website of the nationalist tabloid the newspaper (, in remarks echoed by other readers. “I’m going to buy firecrackers to celebrate!” wrote another, in anticipation of the company confirming its departure from the online search market. Joseph Cheng, a City University of Hong Kong politics professor, said China’s ruling Communist Party was deploying nationalism to stifle debate about censorship. “The criticism of cultural exports, or cultural imperialism, is a kind of defence to justify the Chinese authorities’ censorship controls,” said Cheng. “In dealing with the American government, the Chinese authorities will try to emphasise that this is only a commercial dispute and has nothing to do with Sino-American relations,” he added. The Global Times in an editorial cited online surveys as showing 80 per cent of respondents said they could not care less if Google withdrew from China, the world’s largest internet market with an estimated 384 million users. The saga was a reminder of the country’s need to develop its own technology and not rely on foreigners, the editorial said. “This is a high-tech competition, and also a competition to uphold the state’s sovereignty,” the editorial said. Some bloggers went a step further and accused Google of being in cahoots with US intelligence. “It is understood that Google is very tight with the CIA,” wrote “Xiaogui” on the popular portal “Take this opportunity to leave now, you spies.” Though Google has remained mum on the progress of talks, the firm’s chief executive said earlier this month that an outcome is expected “soon”. The Google case has spread beyond censorship and hacking and has become a diplomatic knot in Sino-US relations, already being challenged by spats over Taiwan, Tibet and the value of the Chinese currency. The United States is studying whether it can legally challenge Chinese Internet restrictions, a top US trade official said recently. Over the weekend, a commentary by Xinhua news agency accused Google of pushing a political agenda by “groundlessly accusing the Chinese government” of supporting hacker attacks and by trying to export its own culture, values and ideas.

Australia’s Arrow Energy agreed to a fresh takeover offer from Royal Dutch Shell and PetroChina (SEHK: 0857), raised by six per cent to A$3.4 billion (HK$24 billion) for most of its Australian assets. The new bid, which would give mainland its first stake in Australia’s burgeoning coal-seam gas industry, followed two weeks of talks after Shell and PetroChina made an offer that investors considered too low. The takeover needs approval from Australia’s Foreign Investment Review Board, which is likely to study it closely after regulators said they wanted to cap state-owned companies’ stakes in Australia’s top resource firms to 15 per cent.

China Telecom said it returned to profit in the fourth quarter of last year, matching expectations as competition continued to intensify in the country’s mobile communications sector.

Air China will invest 682.1 million yuan (HK$774 million) in Shenzhen Airlines, increasing its stake in the airline to 51 per cent and firming its foothold in southern mainland.

China Poly Real Estate Group, the country’s second biggest property developer by market value, plans to raise up to 9.6 billion yuan (HK$10.9 billion) through a private placement of shares to fund expansion.

Bank of China (3988) is expected to record a 26 percent growth in 2009 net profit, according to the average forecast of five analysts polled by The Standard. They also say the bank will benefit from its bond and equity fund-raising plans.

Beijing will retaliate if the United States declares China a currency manipulator and imposes trade sanctions, Commerce Minister Chen Deming said yesterday, firing the latest salvo in a spat over the value of the yuan. Chen again accused Washington of politicizing the issue ahead of an April 15 deadline for the US Treasury to rule whether China is unfairly holding down its exchange rate to gain a competitive edge in global markets. "The currency is a sovereign issue and should not be an issue to be discussed between two countries," Chen told the China Development Forum in Beijing. "We think the renminbi is not undervalued," he added. Chen did not specify how Beijing might respond. Pressure is growing in Washington to declare China a currency manipulator, with some US senators threatening to slap duties on Chinese products if Beijing does not allow the yuan to rise. The head of the Asian Development Bank yesterday joined the chorus of calls for Beijing to abandon the peg of 6.83 yuan to the dollar imposed in mid-2008 to help China's exporters weather the global financial crisis. In the three years before that, Beijing had let the yuan climb 21 percent against the dollar. "Greater flexibility in the exchange rate of the yuan would be in the interests of the Chinese economy," ADB President Haruhiko Kuroda said. Chen accused Washington of overestimating the size of China's trade surplus with the United States, putting more pressure on the relationship between the world's biggest and third-biggest economies. "A country's currency appreciation is very limited in helping to rebalance global trade," Chen said. "I personally expect that China could possibly have a trade deficit in March." Chen called on all countries to oppose any form of trade protectionism.

Sharp revaluation of yuan would be "lose-lose" situation: Morgan Stanley Asia Chairman - The debate over China's currency policy is heating up among economists with Morgan Stanley Asia Chairman Stephen Roach saying that a sharp upward revaluation of the yuan would lead to a disastrous outcome for the United States and it would end up as a "lose-lose situation" for both Washington and Beijing. "I believe the currency adjustment that is being suggested by the West is the wrong way to go," Roach said in Beijing. If China were to adjust its currency sharply higher, the Chinese share of the US multilateral trade deficits would shift to another country, a higher cost producer, which would have the effect of imposing a tax on American workers that the politicians are in theory trying to protect, according to Roach. "This is a disastrous outcome for the United States and would certainly be a very bad outcome for Chinese exporters as well," he said. Roach spoke as a storm is brewing between Washington and Beijing over China's currency policy. The US Congress is to hold a hearing this week during which American lawmakers are expected to force the Obama administration to take tough action against China for its "manipulation of currency". He said he was very worried about the outcome of the mounting trade friction between the US and China that he believed could lead to a series of escalating events between the two countries. "The renminbi is the lightning rod in the post-crisis period. It is important for all of us to address this brewing storm before the clouds become too dark and there is actually lightning," he said. In a debate with Nobel-winning economist Paul Krugman last week, Roach blasted Krugman's stance on tougher American action toward China, calling his advice "very bad" and "completely wrong". "We should take out the baseball bat on Paul Krugman. I mean I think that the advice is completely wrong," Roach said. "We're lashing out at China rather than tending to our own business", which should be raising US savings, he said. Krugman in a recent column accused China of keeping the yuan's value artificially low to benefit its exports and said the US may need to get more aggressive in its talks with China by treating the exchange rate as a countervailing duty or other export subsidy.

A senior official with the United Nations World Tourism Organization (UNWTO) said Sunday China is expected to become the world's largest tourist destination by 2015. "China, as we predict, is going to become the world's No. 1 tourist destination by the year 2015," said Taleb Rifai, secretary general of the UNWTO. "China is almost there. It is now the world's fourth largest destination when it comes to incoming tourists, and the rates of growth are moving so quickly that we think this is a realistic target," Rifai said. France is currently the country receiving the most international tourists, at 80 million per year, followed by the United States and Spain, both at 60 million a year, while China has about 48 million, he said. "China's tourism economy has moved incredibly in the last ten years. The number of incoming tourists rose from 8 million to 48 million. The potential of the growth is still big because of the size of China," Rifai said. Rifai said the global tourism industry is improving but challenges remain due to the weak economy. "The tourism industry has to follow and is very much affected by the general economic situation, and for sure the general economic situation has started to turn around. But we cannot call it a full recovery at the moment," he said.

Huangguoshu Waterfall, also known as Yellow Fruit Waterfall, the largest waterfall in China and all of Asia is seen in this picture taken in Anshun, Guizhou province, on March 21, 2010. The waterfall is facing the worst water scarcity in its history as the city is hit by a severe drought that has made over 90 percent of the river and reservoir dry up. To balance the water use at the scenic spot and to fight the drought, Huangguoshu reservoir stores the water at night and releases it during the day.

March 23, 2010

Hong Kong*: Four out of 10 women who give birth in Hong Kong now have Caesarean sections - a rate that is double the average for the developed world.

The growing presence of mainlanders in the shopping malls and university campuses of Hong Kong suggests they must find the city highly attractive. But the latest figures from the Immigration Department paint a different picture. Since the quality migrant admission scheme was launched in 2006, more than 40 per cent of mainland participants have not applied to extend their stay after an initial year living here. After graduation in Hong Kong, mainland students also seem to leave in droves. More than half the mainland graduates in an employment scheme launched by the government in 2008 did not apply to extend their stay after a year here. Former mainland professionals who have worked in Hong Kong say the stressful work environment, limited career prospects and bad treatment by Hong Kong employers prompt them to head back home. Immigration and human resources consultants attribute the exodus to a culture clash, a dismal economy amid the global downturn, local employers' preference for local graduates and better prospects on the mainland. Among those who have packed up and left is 28-year-old Qiu Chen. After graduating from Chinese University with a master's degree in media studies in 2007, Qiu found work at Wen Wei Po and then Asia Weekly, where she stayed until January. But the vast and growing mainland media market saw her quit her HK$16,000-a-month editing job at Asia Weekly to become design director at a Hangzhou business magazine. "Several new magazines have recently launched in Hangzhou. At a time when the media industry is shrinking around the world, I think China is the only place where you can roll out new publications." The Hunan native said she loved Hong Kong's vibrant and cosmopolitan lifestyle but better prospects on the mainland won out. "The only thing I dislike about Hong Kong is the high living costs," she said. "Other things like the legal system are much better than those on the mainland but the magazine market is just too small compared with the mainland's." Local employers' preference for local graduates also makes job-seeking difficult for mainlanders. Baptist University sociology professor Chan Kwok-bun, who surveyed 30 mainland professionals in Hong Kong two years ago, agreed the local job market did not favour mainland graduates. Chan interviewed 10 mainland graduates in the 2008 employment scheme, which does not insist that applicants have a job in Hong Kong when they apply. But they must have a job after 12 months here when they apply for extensions of stay. Immigration Department figures show that less than half, or 1,369 of 2,758 participants in the scheme, applied for extensions of stay in 2009. Chan said many local companies were reluctant to employ mainland graduates for administrative reasons. "Companies must provide a lot of documents to immigration officials to help with applications for extensions of stay. They also have to explain the reasons for employing a mainlander in a particular post instead of a local. Many bosses baulk at the extra administrative work and hassles," he said.

Nicon Lam had less than HK$3 in his pocket when he returned to Hong Kong from a failed business on the mainland in February last year. The following month he was sleeping in parks. The 55-year-old Hong Kong businessman left the city 13 years ago for opportunities on the mainland. At his peak, Lam owned three restaurants and was worth tens of millions of dollars. Yet all that had vanished during the financial meltdown. A return home was his last option. Lam, however, was not alone. A growing number of people have been forced to sleep on the city's streets. A survey by the Society for Community Organisation between October and December last year found that 37 homeless people, out of 116 interviewed, said they had been working on the mainland. Another four worked in Macau. The society's Ng Wai-tung, who has been helping homeless people since 1999, said many Hongkongers lost their jobs on the mainland during the meltdown and ended up homeless when they returned. "These people did not fall into the safety net even though they are permanent Hong Kong residents," he said. Most of them would find their applications for Comprehensive Social Security Assistance rejected, Ng said, because applicants are required to have been in the city for at least a year. Lam, who has now been granted the assistance on discretion, said the welfare system was unfair. "I also paid tax for years before I left for the mainland but the government is reluctant to help when I am in need." The survey also found an alarming trend of "recurrent street-sleepers". Half of the interviewees said they had been forced onto the street at least once before when they lost jobs during downturns. About 70 per cent of the homeless said they had received secondary education or above, and the average age for those interviewed was 43.5 years old. The number of homeless people the Social Welfare Department registered fell slightly from a record 440 last August to less than 400 in recent months, but Ng estimated the real figure could exceed 1,000 because many were unwilling to register. A department spokesman said the government was concerned about the needs of homeless people and it would increase the number of short-term accommodation placements by at least 5 per cent by next month. It provides subsidies for 192 homeless people in six centres.

Tommy So (left) and Li Kwok-cheung, at their Levain Bakery shop in Jordan, have gathered a growing pool of loyal customers. When the going gets tough, the tough go baking. Hong Kong's year-long recession from mid-2008 to mid-2009 saw cupcakeries and frozen yogurt shops proliferating around Hong Kong as budding entrepreneurs left high-flying jobs to start their own small businesses. For one new bakery owner, however, the decision to move into the baking business had less to do with pragmatism in the face of a sluggish economy than a long-standing love-affair with loaves. His partner jumped at the chance to join in running his own business. A physics graduate with a master's degree from the Chinese University of Hong Kong, Li Kwok-cheung, or "KC", started taking an interest in baking bread during his freshman years. In space-scarce Hong Kong, Li was fortunate to have an oven at home, and even more fortunately, a father who shared and encouraged his interest. After graduating, Li said he thought about joining the Observatory or the civil service, but instead followed his passion and took a part-time job as a trainee baker at Japanese chain A-1 Bakery. He worked in the company's central production facility in Siu Lik Yuen, Sha Tin, eventually becoming a full-time employee. Even on his day off, he said he was at home experimenting with the oven. "I felt that the people at A-1 weren't taking baking seriously enough, so in the end I decided to find a business partner and start my own bakery," Li said. Li ended up contacting his secondary school friend, Tommy So Hiu-sang, who was working as a radiographer at St Teresa's Hospital, but who had long harboured ambitions of being his own boss. "It was a little risky - radiography is probably the safest job around. There's almost a 100 per cent employment rate for graduates," So said. "At the same time, if you don't take risks like this when you're young, you're not going to do it when you're 40." The two pooled together some HK$1 million of their savings as an initial investment, settling on a shop space just off Austin Road in Jordan for what they said was a "reasonable" rent of HK$50,000 per month. On top of renovation costs, which they said are particularly high for food outlets, Li's dedication to quality meant he tried as far as possible to avoid cutting corners by buying cheap machines. Some HK$200,000 was spent on machinery alone. Levain, which opened just three weeks ago, initially focused on selling high-end "artisanal" sourdough and rye bread, or loaves made largely by using traditional techniques. But very quickly the two could see that this did not sit well with all their customers. "Hong Kongers like to eat on the go. So we started bringing out more individual rolls rather than just sticking to larger loaves, or baguettes. We also noticed some were put off by the dark colours of our rye bread, so we had to tone that down even if it meant weakening the flavour of the rye," Li explained. A crucial difference between "Hong Kong-style bread" to be found in chain bakeries around the city and traditional European bread is the fermentation process. The former tend to use an industrially processed yeast, as opposed to natural yeast, which lends itself more to complex flavours and chewiness, Li said. Having sampled the market and gathered a growing pool of loyal customers, the pair say they are now roughly two-thirds of the way to breaking even, cushioned by a two-month rent free agreement. Sales' revenues are some HK$2000 per day on average. "We're heavily reliant on loyalty, because foot traffic at this location isn't particularly heavy," So said. Rising food prices are also putting pressure on profit margins, with the price of walnuts in particular "through the roof" at HK$130 per kilogram, matching hazelnut prices. But Li steadfastly refuses to substitute with inferior ingredients. Meanwhile he also still hopes to win Hong Kongers over to the dark, crusty-looking loaves favoured in European markets. "We've had complaints from some that our bread is hard to chew. But on the other hand, a French customer comes here everyday to buy our baguettes." "Vive la difference ..."

Hong Kong should build a traditional Chinese medicine hospital - run privately or by the government - that supplemented its care with Western medicine, a think tank has proposed. The Hong Kong Ideas Centre said the hospital could be built on one of the four sites earmarked for the development of private hospitals. The hospital would provide only long-term care and could also serve as a teaching facility, the report, released yesterday, suggested. Western medicine could be used to treat acute diseases and traditional medicine used during rehabilitation, researchers said. It could be operated by the government or by private enterprises. Centre consultant Dr Ko Wing-man, a former Hospital Authority human resources director, said Hongkongers tendency to separately consult Chinese herbalists and doctors practising Western medicine could be dangerous. "Each side would not know what the other had prescribed to a patient. That could pose a certain risk to them [patients]," Ko said. An approach that combined Chinese and Western medicine would be especially helpful to cancer patients, he said. It might also prove beneficial when people got regular check-ups, with Western technology used for tests and examinations and Chinese medicine used to maintain overall health. The report also called for the recruitment of top Chinese herbalists from the mainland who could act as visiting professors and researchers. The centre said the government should set up a steering committee to oversee the development of Chinese medicine - it is currently regulated by two bureaus and three departments. It said the government should more actively advocate the use of Chinese medicine, as only a fifth of HK$500 million, given by the Jockey Club, earmarked for research into traditional medicine had been used as of last year.

There are fewer screenings at the Hong Kong International Film Festival this year, but advance ticket sales have been brisker than last year with more than 100 shows sold out. Organisers said more than 68,000 tickets, over 61 per cent of the total, were sold before the official opening at the Convention and Exhibition Centre last night, up from last year's 55 per cent.

Chief executive Ken Yeung says Tom Group wants be known as an applications and services provider for the mobile internet sector. Tom Group (SEHK: 2383), the Chinese-language media arm of Li Ka-shing's Hutchison Whampoa (SEHK: 0013) Group, is betting on the mainland's rapidly developing mobile broadband market to help forge its identity and drive growth. Chief executive Ken Yeung Kwok-mung said the market may have had some difficulty grasping Tom's vision as it made strategic acquisitions, secured key alliances and fine-tuned operations over the past 10 years, but that is about to change. Founded in October 1999, Tom has four core business units: internet, publishing, outdoor media, and television and entertainment. "We want to be known as the applications and services provider for the mobile internet sector," said Yeung, noting that Tom's strategy and mix of resources bring tremendous value in a world that is going more mobile. "We're focused on integrating our online and wireless resources with traditional media to create unique 3G mobile-internet services and products that work with different devices and operators," Yeung said. On the mainland, where there are more than 700 million mobile phone users, Tom has seen its work with the country's three major telecommunications network operators, 120 handset manufacturers and about 300 content providers steadily ramp up as the country's high-speed 3G infrastructure gets built and deployed. "We've always been in the middle and able to see things in so many angles just like an investment bank would," Yeung said. "But our role has deepened with the opportunities presented by 3G mobile broadband adoption on the mainland," he added. "Like, say, a JP Morgan, maybe we started doing IPOs in the market and now we're offering swaps, options and other new services." For example, Tom's Huanjiansheng website ( last year introduced an e-book reader application for Apple's iPhone. This application allows readers to access books and best-selling novels from a stock of more than 35,000. Yeung said Tom is open to providing e-books to new mobile internet devices, including Apple's iPad, which is set to launch in the US and other selected markets next month. Tom also introduced last year its Sharkwave online fantasy games through the recently launched official websites of the National Basketball Association, the United States-based professional basketball league. This has enabled Tom to attract major advertisers to these sites, including Hewlett-Packard, Nike, adidas and AsusTek Computer. Cite, Tom's publishing unit, is the largest book and magazine publisher in Taiwan. Its Gurubear e-book site ( is extremely popular. Tom's China Entertainment Television, a leading 24-hour Putonghua general entertainment channel, will further extend its range of services this year with the launch of a mobile platform (, offering access to video clips and the channel's programme highlights. According to market research firm Gartner, there is much "opportunity to create branded dot-cn portals and mobile services that can directly distribute on-demand media products, such as music and video, to satisfy the growing demand in China". Yeung said Tom, which has 3,261 full-time employees, also sees increased opportunity this year to develop more mobile applications for various handset makers to rival the programmes on Apple's Application Store used on the iPhone. Even with the encouraging start this year and the recovery in Greater China, "the outlook for a sustainable global recovery remains fragile", Tom chairman Frank Sixt said. Tom pared its losses by 96 per cent to HK$61 million last year from HK$1.39 billion in 2008, helped by cost-control measures.

JP Morgan sends top private banker to HK - Douglas Wurth aims to double JP Morgan's Asia private banking business in three years. JP Morgan International Private Bank is the latest in a string of giant lenders to relocate its chief executive to Hong Kong - in JP Morgan's case, with the goal of doubling the US company's Asia business in the next three years. Douglas Wurth, who is in charge of JP Morgan's private banking business outside the US, moved to Hong Kong from New York last month. He is responsible for US$150 billion worth of assets under management for wealthy clients. Wurth said his relocation was a strategic move in relation to the US lender's expansion in Asia, particularly China and India. "We aim to double our Asian private banking business in all aspects in the next three years," he said. "China, India and other parts of Asia will be the fastest growing area around the world. "This is why I am here in Hong Kong, which will be a window to the future of growth." Wurth said the bank would hire more people in Asia, while the bank would also invest US$100 million to establish a global technology platform to serve the private banking clients' investment needs. His relocation came the same month as HSBC (SEHK: 0005) global chief executive Michael Geoghegan moved to Hong Kong from London. RBS and Thomson Reuters also moved their top executives here recently to get closer to the growing economies in China and Asia. In the past five years, China has contributed 25 per cent of GDP growth worldwide, Wurth said. That growth had created more wealthy clients leading to an increase in demand for private banking services. In general, clients had liquid assets of US$25 million each. Wurth said the company set up a private banking arm in Hong Kong 30 years ago and now had operations in 15 countries in Asia. "Although many Asians like to invest in the stock market directly themselves, they gradually learn the benefit of using private bank services to diversify their investment portfolio in different asset classes around the world," he said. He said the private bank could also offer additional services such as helping clients organise their assets to pass them on to the next generation, or prepare for their children's education, or help them donate to charity. Wurth said unlike some banks, JP Morgan had not been seriously affected by the financial crisis and had a solid balance sheet. "While some of our rivals are busy sorting out their internal problems, we can focus on serving our customers," he said. JP Morgan aims to serve mainland clients through the Hong Kong and Singapore offices, although the bank would like to operate on the mainland in future if it could obtain regulatory approval, he said.

Forget those immigration queues, says airline boss - Hong Kong travelers flying to Indonesia may soon have the luxury of giving long immigration queues a miss. The national carrier, Garuda Indonesia, is the first airline to introduce immigration officers on board to conduct passport checks and issue visas in-flight. "We launched the new service on our Tokyo-Denpasar-Jakarta route last month," said Garuda president and chief executive Emirsyah Satar. "We plan to extend the service to China but are still negotiating with the [central] government at the moment." During the flight, passengers can apply for visas on arrival and immigration clearance. Two immigration officers will swipe passports and give travelers a special card, which must be handed over to ground officers on arrival. Tourists can then bypass the queue at immigration counters. "The practice exists on trains in Europe. We want to do it on our planes for the convenience of our travelers," Satar said. The CEO has been credited with turning around the struggling airline from a loss of 688 billion rupiah (HK$586.7 million) in 2005 to a net profit of 1 trillion rupiah last year. The service is part of Garuda's expansion plans. In June, two new routes - Hong Kong to Denpasar and Surabaya - will start alongside a daily flight to Jakarta. The fleet of Boeing 737-800s and Airbus A330-300s is equipped with individual touch-screen LCD screens in economy and business class for in-flight entertainment. "Hong Kong is quite promising. We're actually sending our best aircraft there," Satar said. "We might make Hong Kong the transit hub for our planes to Europe in the future." Also in June, Garuda will introduce a daily service from Jakarta to Amsterdam via Dubai. That follows the carrier's removal from the European Union's aviation blacklist last June. The ban was imposed on Indonesia's civil aviation authorities after a series of fatal accidents in July 2007. Garuda and three other firms are now off the list as "significant improvements" have been made. The flag carrier is also expecting to raise US$300 million (HK$2.34 billion) in an initial share offer in Jakarta in the third quarter of this year.

Billions of dollars are being wagered illegally in Hong Kong on American basketball and on golf. Up to HK$9 billion a year is being bet with illegal bookmakers on these sports, which are gaining increasing exposure in the city, gaming analysts who have investigated the trend say. Punters are believed to have developed an intererst in these sports while living overseas. The Jockey Club has alerted the government to the problem of illegal gambling on sports it does not offer. "The best solution is for one operator channelling the sports," club CEO Winfried Engelbrecht-Bresges said. "It will be beneficial to the community but it is up to the government. We should be able to offer all forms of sports betting to prevent illegal gambling." He added: "This was a general conversation and we didn't think it was appropriate to press the issue, but we think it will become more of an issue going forward." The club's head of public affairs, June Teng, said it had to combat illegal and offshore bookmakers to keep betting dollars in the community for tax and charitable purposes. Bookmakers were increasingly offering betting on basketball, golf, boxing, tennis and even the Winter Olympics, she said. People who have assessed the trend estimate Hongkongers are illegally betting HK$4 billion to HK$7 billion a year on basketball and HK$1 billion to HK$2 billion on golf. They believe those figures will rise. While this pales in comparison to the estimated HK$60 billion spent on illegal soccer gambling, it is enough to attract the Jockey Club's attention. A gaming analyst said the trend was predictable. "The younger demographic is beginning to get a bit bored watching horses at Happy Valley trundle around," former solicitor and independent gaming consultant Murray Burton said. "I can understand how the NBA or any other sport would be an attraction, especially for Chinese educated in the US." The only legal form of sports gambling was horse racing until soccer gambling was legalised in 2003 to try and curb rampant illegal betting on the game. The Legislative Council would have to approve the legalisation of betting on any other sports, and anti-gambling groups would be bound to object strongly. For now, the club is the only place where Hongkongers can legally gamble. But punters can easily place a bet with underground bookies or with gambling websites overseas. Some, such as and, even offer services in traditional Chinese characters - used in Hong Kong, Taiwan and Macau. The sites offer bets not only on basketball and golf, but also baseball, boxing and American football. Mett Ng, who likes to bet on soccer through the Jockey Club, said some of his friends bet on the NBA. "It's getting more popular," he said. "I know that many people do this. Many people like the NBA in Hong Kong, but you can only bet on it through the websites. Many youth like to play basketball and some of them are involved in betting." Other sports, such as baseball or American football, were not as popular. "The NFL, not many people know the rules," he said. Former Hong Kong police detective David Fernyhough, who heads the local office of corporate-risk investigation firm Hill & Associates, said the rise of gambling on the NBA and to a lesser extent golf was not surprising. The emergence of Chinese stars such as Yao Ming and Yi Jianlian in the NBA, and the frequent games on TV had made the sport more popular, and that would spur gambling on games. Illegal gambling has been a major problem for the Jockey Club for years. Illegal bookies offer better odds and spreads, and extend credit, and the club cannot match these incentives.

TVB (SEHK: 0511) may consider taking legal action against Chinese publications over reports after general manager Stephen Chan Chi-wan's arrest that other members of the station's top management had accepted advantages. "If the reports are outrageous, TVB may take legal action," Virginia Lok Yee-ling, controller of TVB's production resources division, said. Since Chan was arrested, there have been many media reports about top management at the TV station allegedly accepting advantages. Chinese language publications have reported that performers gave expensive gifts to a manager so they would be hired to perform. Lok declined to comment on the reports, but said that Mona Fong Yat-wah, wife of Sir Run Run Shaw and TVB deputy chairwoman, had held talks with management about issues related to Chan's arrest. The TV station had also been supportive of staffers facing allegations. When asked about Chan's three-minute press conference on Thursday and his talk with University of Hong Kong students on Friday, Lok said that she and other colleagues at TVB had been keeping an eye on the news. "But we did not discuss Chan's activities [during TVB meetings] because that is his personal life," Lok said. She also said that more than 10 staff members from her department have been interviewed by the Independent Commission Against Corruption. But investigators had not been to TVB's headquarters since last weekend. Lok said that with Chan suspended from duty, she now reported to Mark Lee Po-on, TVB's group general manager. She said TVB operations had not been affected by Chan's suspension. On March 11, the ICAC arrested Chan, along with TVB business development head Wilson Chan Wing-suen, for allegedly having accepted advantages from Edthancy Tseng Pei-kun, Chan's former assistant and a director of an advertising company, for helping the ad company secure service contracts related to various entertainment shows produced by the broadcaster. TVB performer Leung Chi-cheong, whose stage name is Ning Jin, and Tseng, and Wilson Chin Kwok-wai, an executive producer of variety shows, were also arrested. They have all been released on bail but no charges have been laid. After his arrest, Chan said he could not comment on the case as it was under investigation. He did not mention TVB during the three-minute briefing and did not take questions. "I can't deny the changes happening in my life lately," he said. "At the end of the day, who has not experienced change in their lives?"

With help of Oxfam HK, Filipinos rebuild free from clutches of money lenders - More than five months after back-to-back storms and floods killed more than 900 people in the northern Philippines and left thousands homeless, lives are being rebuilt with help from Hong Kong. Oxfam Hong Kong has been working in the Philippines since 1986 with Oxfam Great Britain. Over the past five years the charities have spent HK$24,821,000, supported 78 projects in the country and are now helping the people of Pangasinan. "We had two emergency response projects supported by the Hong Kong government's Disaster Relief Fund (DRF)," Keith Wong Tsz-wai, Oxfam Hong Kong's communications officer, says. "These two projects reached 8,081 families in Pangasinan, providing them with an emergency food supply. The total amount supported by the DRF was HK$2.8 million. "The Oxfam-DRF supply enabled people to have enough food for at least 10 to 14 days, and allowed them the time and energy to focus on the necessary work ahead." To help those who need it most, they partner two other organisations - the Pampanga Disaster Response Network, which was a network of volunteers set up in 1991 to respond to the massive eruption of Mount Pinatubo in the Philippines, and the local Urbiztondo, Mangatarem and Aguilar disaster response co-ordinating centre. An Oxfam Hong Kong recovery programme, spanning five months, was carried out in Pangasinan to restore the livelihoods of farming and fishing families, vegetable vendors and bamboo craftsmen. The programme also offers everyone a chance to obtain loans at a low interest rate so that they can rebuild their livelihoods. The money raised from the interest is ploughed back into the community. For corn farmer Nida Matabang, who lives in the village of Dorongan in Mangatarem municipality, it makes a huge difference as money lenders in the province charge exorbitant interest rates. In the past when her one hectare of crops was destroyed by floods, she had to rely on a money lender for funds to restart her business. "I had to pay the money lender after four months when I harvested my crops and at an interest rate of 33 per cent," she says. "If I missed the payment because something happened to my crops, the interest would go up. Now I don't need to do that." Matabang says it is a vicious circle where money lenders would not only charge high interest rates, but also force the farmers to buy the seeds and fertiliser they need at high prices and to sell their crops at lower prices as they are also in league with these businessmen. The fertiliser and crop traders were usually relations of the money lenders, so it worked like a dysfunctional family business.

China*: Commerce Minister Chen Deming warned yesterday China may retaliate if the United States imposes trade sanctions and other penalties over its exchange rate policy.

China key to global tourism growth in 2010: UNWTO official - A senior official with the United Nations World Tourism Organization (UNWTO) said here Saturday that China was expected to contribute a lot to global tourism recovery in 2010. Taleb Rifai, the secretary general of the UNWTO, said global tourism experienced the most difficult year in 2009 with the global tourism revenue dropped by 4 percent. The UNWTO forecast the global tourism revenue in 2010 was expected to grow by 2-3 percent and China would contribute a lot to the growth, he said. He made the remarks at the opening ceremony of the 2010 Boao International Tourism Forum. Global tourism was at a crucial recovery phase and it was necessary to pool wisdom worldwide and information to boost tourism growth, said Shao Qiwei, chairman of the National Tourism Administration of China. The forum provided a rare chance for Hainan to learn from advanced experiences in its drive to grow into an international tourism island, said Wei Liucheng, secretary of the Hainan Provincial Committee of the Communist Party of China (CPC). The forum held in Sanya has attracted about 2,000 people from worldwide tourist sectors to exchange their experiences in boosting tourism amid the global financial downturn. Sponsors of the forum included Hainan Provincial government, the National Tourism Administration and the United Nations World Tourism Organization.

A vessel sits stranded in a branch of the Yangtze River in Chongqing. A severe drought across a large swathe of southwest China is now affecting more than 50 million people. Prices of several agricultural commodities are skyrocketing on the mainland as a once-in-a-century drought scorches southwest China. Commodities the region is known for - including cane sugar, flowers, tea, fruit, rubber and coffee - have taken a beating as unusually high temperatures, dry conditions and up to 80 per cent less rainfall than last year, reduced output by as much as 50 per cent, state broadcaster CCTV reported yesterday. Yunnan, Guizhou, Guangxi, Sichuan and Chongqing have been hit by drought since September. Cane sugar prices have risen nearly 25 per cent since November, while export prices for flowers have jumped by about 50 per cent compared with the same period last year, according to industry insiders. Wei Guojian, secretary general of the Guangxi Sugarcane Association, said yesterday that the wholesale price of a tonne of white sugar had increased by 23.8 per cent, from 4,200 yuan (HK$4,774) in November to 5,200 yuan. "This rare price surge is mainly due to a significant reduction in the sugar production resulting from the drought in Yunnan," Wei said. "As far as I know, sugar produced by the province has dropped from 2.25 million tonnes last year to 1.6 million tonnes this year."

China steals a march on US, Russia - Beijing woos Central Asia with trade deals - The United States wants to win supremacy to support troops for a prolonged conflict in nearby Afghanistan. Russia sees the region as its own backyard where its right for influence dates back centuries. But in the modern-day "great game" battle for influence in the strategic region of Central Asia, it is China who is stealing a march on the two cold war-era superpowers with its vast chequebook. China has been using the twin distractions of the Afghan war and Russia's financial woes to secure its own position in Central Asia, Alexander Cooley, a political scientist at Columbia University, said. In 2009, for the first time, China's net trade with Central Asia exceeded that of Russia and the trend is likely to persist in the future, he said. "Russia was traditionally the dominant power in the region but the financial crisis has undermined its economic power and influence while it has precipitated a wave of new China-Central Asia business deals," he said. Former Soviet Central Asia, a vast resource-rich region bordering Russia, China, Iran and Afghanistan, has long found itself at the centre of power struggles between the world's leading powers. In the 19th century, then-Tsarist Russia and the British empire held an epic century-long struggle for influence there known as the "great game", their troops and spies facing off along the dusty plains of the legendary Silk Road. But if the "great game" was defined by two roughly-equal opponents fighting over an established idea - the Russian empire's thrust towards British India - the new contest is more complicated. The United States is interested in only one thing in Central Asia, said Paul Quinn-Judge, a Bishkek-based analyst with the International Crisis Group. "One word: Afghanistan," he said. "As a result they are throwing their lot in with some of the most corrupt and authoritarian regimes in the world today, doing incalculable damage to their own long-term standing," he said.

Beijingers woke up to find the Chinese capital blanketed in yellow dust, as a sandstorm caused by a severe drought in the north and in Mongolia swept into the city.

Top Chinese tourist cities form alliance for marketing - Representatives of 46 cities that boast the best sceneries in China gathered here Saturday to launch an alliance to boost exchanges and cooperate more on promotion and marketing. As a non-profit organization, the alliance will integrate resources of its members on management, human resources, marketing, among others, to serve the interests of all the 46 cities, said Wang Yong, mayor of south China's seaside resort city Sanya and president of the alliance. Members of the China Alliance for Cities with 5A-Class Scenic Spots include Beijing, Shanghai, Huangshan in the eastern Anhui Province, Guilin in the southern Guangxi Zhuang Autonomous Region and Lijiang in the southwestern Yunnan Province. It will have liaison offices in Beijing and Sanya. The alliance will promote the idea among both domestic and foreign tourists that cities with the 5A-Class sceneries are the most beautiful places in China, said Prof. Wang Xingbin, a tourism expert with the Beijing International Studies University. "The alliance shall be more market-oriented and we want to see more promotion activities through this new platform," said He Xianzhong, a representative from Lijiang. A total of 68 tourist attractions in 55 cities across China have been granted the title of National 5A-Class Scenic Spots, the highest rating in China's tourism industry, by the National Tourism Administration since the administration began the rating in 2007.

Chinese Premier Wen Jiabao (C) adds soil to the plastic bags to rear corn seedlings in the field in Luliang County, southwest China's Yunnan Province, March 20, 2010. During a three-day inspection trip in the drought-plagued Yunnan Province ending on Sunday, Premier Wen visited Qujing City, one of the regions that suffered the most from the severe drought ravaging since last October, to comfort the affected locals and direct relief work.

China not to sit back on possible sanction after currency manipulator claim: commerce minister - China will not sit back if there is any sanction after the United States names China as a currency manipulator, Minister of Commerce Chen Deming said in Beijing Sunday. Chen made the remarks at the ongoing China Development Forum 2010 when commenting on the the U.S. Treasury's possible naming of China as a currency manipulator next month.

March 22, 2010

Hong Kong*: Taxpayers will have to fork out an extra 4.8 per cent in the next financial year to fund fringe benefits for a few tens of thousands of civil servants and their children.

Hong Kong's vast income gap means it cannot apply a simple formula commonly used elsewhere when setting its first minimum wage, an academic says. The debate on pegging the minimum wage to a certain level of the median wage has intensified after a Census and Statistics Department survey found that the median hourly wage of local workers is HK$58.50. In Britain, which the Provisional Minimum Wage Commission visited in a study tour in October, the minimum hourly wage is £5.80 (HK$68) - 47 per cent of the median salary. The ratio of minimum wage to median earnings in Japan is 33.3 per cent. University of Hong Kong demographer Dr Paul Yip Siu-fai said it would be wrong to apply these ratios to Hong Kong, adding that the minimum hourly wage should be set between HK$19.50 and HK$27.50. "The earning distribution is different in various places. The same ratio will have a very different effect on the labour market in different places. And we should note that the city's rich-poor gap is so huge," he said. Hong Kong'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. "The gap between the rich and the poor in the city is one of the highest in the world. If we simply set the minimum rate at about 40 per cent like other places, such a gap will be widened," Yip said. His comments came as many business groups have been pushing for a minimum rate of HK$24 - about 40 per cent of the median wage. Dr David Wong Yau-kar, president of the Chinese Manufacturers' Association, said the group would need more time to study the latest figures before proposing a minimum wage level, but noted that in many developed countries it was 40 to 45 per cent of the median wage. If these ratios were applied to Hong Kong, the minimum wage would be HK$23.40 to HK$26.30 per hour. Unionist legislator Lee Cheuk-yan, who called for the rate to be set at HK$33, said the commission should consider the city's high cost of living. "We should also think of the many low-paid workers trying to feed their families," he said. The census found 469,400, or 16.9 per cent, of the city's 2.78 million workers were paid less than HK$33 an hour. Some 130,200 earn less than the HK$24 that many business groups are demanding. The Provisional Minimum Wage Commission reiterated yesterday it would consider a wide range of factors - including economic and labour market conditions, standards of living and competitiveness, unemployment and inflation and social harmony - before setting the statutory minimum wage in July. Lawmakers meanwhile debated the calculation of work hours and commission arrangements during a committee meeting on the minimum wage bill yesterday. Tourism legislator Paul Tse Wai-chun said it was difficult to calculate the working hours of tour guides conducting organised tours overseas. "Should the stand-by hours also be counted? Should the time spent on waiting for transport also be included as work hours? There are so many unclear areas," he said. Audrey Eu Yuet-mee said she was concerned that workers on low basic monthly salaries relied on irregularly paid sales commission. She said employers might cut commission to subsidise any pay rise required to meet the minimum wage. Assistant commissioner of labour Fong Ngai said wages included all remuneration and allowances, including commission, overtime pay and tips under the existing Employment Ordinance.

A tenement building in Mong Kok with grade-three historic status and The Boathouse in Stanley will be redeveloped into hotels. Two iconic buildings in Mong Kok and Stanley will be turned into hotels after owners secured approval from the Town Planning Board yesterday. The board gave a green light to the projects as they will address increasing demand from tourists and will not significantly add to traffic flow to the areas. One of the premises, No.179 Prince Edward Road, is a newly graded historic tenement building. Planning consultant Kim Chan Kim-on said the developer originally wanted to demolish it but changed the plan after the Antiquities Advisory Board recommended this month that the government give it grade-three historic status. Under the plan, the building's exterior, common staircases and a flagpole on the roof will be preserved. But the redevelopment, into a 17-storey hotel with 50 guestrooms, will involve demolishing part of the building. A public display area of about 78.6 square metres will be set up on the second floor to showcase the history and architectural merits of the building. The hotel tower will feature a Chinese concertina lantern design. Commissioner for Heritage Jack Chan Jick-chi said the Development Bureau provided strong policy support on conservation-cum-development proposals and the project would set a very good example of a heritage initiative from the private sector, in particular having due regard to public accessibility and promotion of architectural heritage. Meanwhile, a popular restaurant in Stanley Main Street could be demolished to make way for a hotel. The Boathouse restaurant, featuring a hatched blue exterior and balconies with a sea view, is a popular attraction for tourists and visitors to Stanley. But the owner has received approval to redevelop one of the two buildings on the site into a 10-storey hotel. The owner had promised to keep the first three floors of the hotel as restaurants. The board had received only two objections from nearby residents worried about the noise nuisance generated by the construction activities. Southern District councillor Chan Lee Pui-ying said she had received no complaints about the redevelopment plan.

A veteran film producer has been named to the top job at CreateHK which has a mandate to promote the city's creative industries. Jerry Liu Wing-leung, 51, will start work on Monday. Liu was selected from 150 candidates for the post. A co-founder of the Media Asia Group, one of the city's leading producers and distributors of Chinese-language films, Liu served in various senior positions and was the chief executive of Media Asia Entertainment Group from 2001 to 2005, focusing on business development. He also oversaw the production, marketing, distribution and sales of popular films including the Infernal Affairs trilogy and Initial D. In a career than has spanned 25 years, Liu was the planning manager responsible for developing a financial model for the programming of channels at Hong Kong Cable Communication in 1989. He graduated from Vassar College in New York with an honours degree in drama in 1980. The government said Liu was chosen for his proven management abilities in film, television and related sectors. Peter Lam Yuk-wah, the vice-president of the Hong Kong Motion Picture Industry Association, said Liu was an ideal choice. "He has a passion for movies and is a very versatile man with experience in scriptwriting and administration," said Lam. The two had worked together at the same company for a number of years, he said.

Container shipping company Orient Overseas (International) Ltd (OOIL) reported its first loss in 11 years and warned that an initial recovery in freight rates could be easily undone.

A government delegation from Fuzhou was in Hong Kong yesterday to persuade local businesses to attend the annual cross-strait trade fair to be held in the capital of Fujian province in May. Gao Qiping, a deputy publicity director of Fuzhou and head of the delegation, said more than 300 exhibitors mainly from the mainland, Taiwan and Hong Kong had already shown interest in taking part in the 12th Cross-Straits Fair for Economy and Trade, the largest of its kind in the country. The event will be held at the newly built Fuzhou Strait International Exhibition Centre from May 18 to 22. Gao, who did not disclose any further details about the Hong Kong exhibitors, confirmed that the city was the most important source of foreign investment for Fuzhou, accounting for 60 per cent of the total overseas investors in the area. The five-day exhibition will focus on consumer electronics, biological technology, jewellery, cars, environmental construction materials, wedding goods and food products. Investment project presentations, symposiums, summit forums and cultural exchange activities will be held in conjunction with the fair. Fuzhou, known as "the hometown to overseas Chinese people", has been identified as a core city in the central government's blueprint to develop the economic zones to the western coast of Taiwan. Under the development plan, Pingtan Island of Fuzhou, the nearest island county to Taiwan from the mainland, has been turned into an experimental zone to court investors from Taiwan and elsewhere. Meanwhile, the municipal government has also started a series of large-scale infrastructure, agricultural and industrial projects to boost cross-strait links. Gao said Hong Kong played an important role in enhancing links between the mainland and Taiwan. "Hong Kong is a unique platform with which we can explore more opportunities to work with Taiwan and other overseas places," he said.

Severn 8 on The Peak, developed by SHKP and comprising 22 houses, has consistently been the most expensive project in the city since it was launched in 2007. A listed electronic components manufacturer yesterday bought a house on The Peak for HK$60,215 per square foot, making it the most expensive home in Hong Kong in terms of price per square foot. Sino-Tech International Holdings said they had agreed to buy house No 8 at Sun Hung Kai Properties (SEHK: 0016)' Severn 8 in Severn Road on The Peak for HK$280 million for investment purposes. The three-storey house has a gross area of 4,650 square feet and offers Victoria Harbour views. The price exceeded the previous record set by house No2 in the same development, which sold for HK$56,200 per square foot in 2007. But the purchase comes at a difficult time for Sino-Tech. The firm issued a profit warning last Friday, saying it expects to record a loss for the 2009 financial year, compared with a profit in the previous year. It is the first major property acquisition for the company. It said in the announcement that the acquisition is a good investment opportunity and it will benefit from diversifying into the property market. However, investors in the stock market did not share the view. Shares in Sino-Tech dropped 9.38 per cent to close at 58 HK cents after it announced the acquisition. "It is questionable whether the buyer can generate a profit. There is a risk in the prospects of the property market," said Koh Keng-shing, managing director at Landscope Surveyors, a luxury property agency. Prices of high-end residential properties in prime locations surged 50 per cent last year, with values rising 10 per cent in the first two months of this year. "If the government does not release new measures to cool the property market and the economy continues to improve, prices of luxury properties will rise a further 10 per cent by the end of the year," he said. However, the luxury residential sector would be hit if the stock market dropped sharply or interest rates rose quickly. With the growth in housing rentals lagging behind price growth, property agents expect the three-storey house to be leased for about HK$370,000 a month or HK$80 per square foot. Sino-Tech could enjoy a rental yield of 1.6 per cent if the property is leased. To realise a profit, the company will have to look for another buyer who is willing to pay a record unit price of more than HK$60,215 per square foot. Severn 8 comprises 22 houses ranging in floor area from 3,300 to 5,147 sqft and it has consistently been the most expensive project in the city since it was launched in 2007. The luxury residential market was active last month, despite a rise in stamp duty on high-end properties. Centaline Property Agency's research shows 106 houses worth HK$1.3 billion were sold last month. The transaction number was 12.8 per cent higher than that of January.

China*: The highest bidder in a Beijing land auction is no longer guaranteed to win the site, under a new policy announced by the municipality. It is the second official move in two days to cool down the mainland's booming property market. The Beijing Municipal Bureau of Land and Resources said yesterday sites would now go to the bidder offering not the highest but the most reasonable price, China Central Television reported. It also said a winning bidder must be able to afford to develop housing for lower-income groups and to provide amenities such as clinics, schools and parks. The bureau said it would suspend the sale of sites in prime locations, where prices have been setting records. It said it would make available sites with a total area of 1,250 hectares for lower-income housing this year. That could provide a total gross floor area of 16 million square metres, 60 per cent more than last year. In 2007, Guangzhou and Beijing said properties would not automatically go to the highest bidder, but they suspended that rule in 2008. While it was in effect, Hong Kong-listed Beijing North Star won a residential site in Beijing's Changying district in August 2007 for 1.15 billion yuan (HK$1.31 billion), the second-highest bid. Alan Chiang Sheung-lai, DTZ's head of residential property in China, said that even if the government resumed the 2007 policy, it would have a limited impact on the market. "Guangzhou adopted the same policy three years ago," he said yesterday. "They set up a committee to decide which developers should win the sites. They would take the company background, concept plans and offer submitted by the developers into consideration. However, the outcome of the bidding has always been criticised as unfair." Chiang did not expect Beijing's move to cause land prices to fall sharply. He said developers would just reduce their offers by 10 per cent. The government's plan to stop selling sites in prime locations would be much more effective in cooling down the land market, he said. On Thursday, the State-owned Assets Supervision and Administration Commission ordered state-owned enterprises to get out of the property market and focus on their core businesses.

Beijing is sending a top-level envoy to Washington in an attempt to mend frayed trade ties with the world's biggest economy and fend off calls for a stronger yuan. The Ministry of Commerce said yesterday that Vice-Minister Zhong Shan will lead a delegation next week to meet representatives of the US Department of Commerce, Treasury and Congress to ease trade frictions and resolve trade-related issues. The move, backed by conciliatory comments by a senior official of the Ministry of Commerce, aimed to take the heat out of the currency issue after five US senators floated legislation earlier this week that would make it easier for the US to declare currency misalignments and take corrective action. The legislation may lead to the imposition of heavy import tariffs on consumer goods produced in China, economists warned. Premier Wen Jiabao has rebuked repeated calls for a strong yuan and does not think the currency is undervalued. The battle over yuan appreciation is the latest sticking point between the two countries and comes after disputes over steel products, poultry, tyres and raw materials in the past few months. Yesterday, the Ministry of Commerce's Director-General for American and Oceanic Affairs, He Ning, said Sino-US trade relations should be "mutually beneficial". "Based on the principle of a level playing field and by avoiding taking trade issues politically and emotionally, many trade problems can be resolved properly," he said. "Some US politicians' proposal will complicate the trade situation and disrupt Sino-US communication." He did not elaborate on this. The yuan gained 0.1 per cent last year against the greenback to 6.82 after rising 16 per cent in the three years to 2008. Economists widely expect the yuan to rise about 3 to 5 per cent by the end of this year. Nomura International chief China economist Sun Mingchun said next week's meeting between Beijing and Washington officials signalled the mainland's desire for reconciliation. "They are making efforts to resolve the dispute nicely," Sun said. "But some people are making it a political issue, which delays the appreciation rather than hastening it." He said Beijing may allow the yuan to rise as soon as next month. Federation of Hong Kong Industries chairman Cliff Sun Kai-lit said a more expensive yuan against the US dollar would be "fatal" to tens of thousands of Hong Kong exporters across the border. "The chain reactions are far-flung," he said. "We have no choice but prepare for the worst." Cliff Sun said for every 5 per cent rise in yuan against the greenback, exporters' overall cost will jump by 2 per cent and will eat directly into their already thin profit margins. "When profit margins are depressed to a level that makes business unviable, many factories will be forced out of business, jobs will be cut and consumers will have to pay more for the same or even lower quality of goods," he said. "This is not good for the US consumers." China is the largest supplier of goods in the US. Zhang Yujing, the president of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, said "companies are under pressure over cost increases", and a stronger yuan would force many of them to go under. The US is the second-largest export destination for Chinese goods. China shipped US$35.12 billion worth of goods, or 17.2 per cent of its total exports of US$204.08 billion, to the US in the first two months of this year.

China environmentalists have warned of more cases of deadly heavy-metal poisoning in the coming years in the wake of a recent flurry of lead and cadmium pollution scandals. Heavy-metal pollution problems in the country's hinterland provinces, which repeatedly hit the headlines last year, have taken a turn for the worse in the past few weeks. More people are dying of cancer-causing cadmium poisoning in a small town near the capital of Hunan province , while at least 250 children under the age of 14 near the industrial hub of Chenzhou have been found with excessive concentrations of lead in their blood. "All the signs we have seen in 2009 and in the past weeks show China has entered an era marked by growing outbreaks of public health scandals resulting from pollution," said Yang Dongping , director of Friends of Nature, a leading mainland environmental group. He made the remarks yesterday at the launch of the 2010 Green Book on the country's environment, a collection of reports by dozens of mainland academics and journalists covering a range of green issues in the past year. Apart from a flurry of heavy-metal poisoning scandals, the book also touches on controversies surrounding rubbish treatment, dam building in the southwest and the ambitious South-North Water Diversion Project designed to quench the capital's thirst. Citing the book's conclusion, Yang, its chief editor, said the country was paying a high environmental price for decades of rapid economic growth. "We have already seen the looming adverse impact of pollution on public health and it looks very likely that pollution-induced health incidents will erupt frequently in the next few years," the book says. Li Dun , a main writer of the book and a former professor at Tsinghua University , warned that the heavy-metal pollution problems that have emerged so far were just "the tip of the iceberg". "Environmental risks have accumulated to a dangerous level and the crisis looms large without effective efforts by the authorities that can make a real difference," he said. Environmentalists also voiced concerns about the country's worsening pollution despite progress in cutting energy waste and controlling two major pollutants reported by Premier Wen Jiabao during the annual legislative session early this month. Citing the often contradictory statistics put out by various government departments, Li questioned the effectiveness of Beijing's pollution control polices and spending. "Top leaders have been talking about getting pollution under control since the 1980s but what happened? Pollution simply turns from bad to worse due to the lack of checks and balances that restrict powerful interests groups. We need to constantly remind our leaders about their commitments," he said. Environmental lawyer Zhang Jingjing said most victims of heavy-metal poisoning and other pollution disasters had great difficulty taking unscrupulous polluters to court despite the authorities' pledges about the rule of law. "It remains a sad truth, after seeing so many pollution scandals in the past year, that local officials abuse their power to deprive victims of their lawful rights to health," she said. Villagers in Jiahe county in the south of Hunan were detained when they wanted to have health check-ups last year and some remain in police custody. Local authorities said the move was necessary to maintain stability. Although 50,000 environmental protests erupted in 2005, Zhang said few were resolved by courts.

The price of Puer tea, one of the most famous products of Yunnan , could double this year due to drought in the province. The drought has damaged at least 200,000 hectares of tea plantations in the province, and more than 3,300 hectares of bushes have died already, the provincial tea industry office said. The peak tea-plucking season was to start this weekend but has been postponed and the amount of tea harvested will drop if the drought does not end. Many vendors said the price of Puer tea would rise by at least 30 per cent this year and some brands would see increases of up to 100 per cent. The amount of tea in Lincang , one of the most seriously affected cities, has decreased by about two-thirds this year. The drought started eight months ago. "We bought 30 tonnes of tea in 2008, but this year we have bought less than 10 tonnes," a tea company manager told China News Service. Another firm had to cut its production of Puer tea to a third of that in previous years because of high primary tea prices. "The price of primary tea is 60 to 80 yuan (HK$68 to HK$91) per kilogram now - that is double last year," he said. "I have to raise the price of our tea products by 50 to 100 per cent."

People visit China's Shanghai Expo stand during the 2010 International Tourism Show in Paris, capital of France, March 18, 2010. The four-day show opened on Thursday, presenting a colorful showcase of hundreds of tourism professionals from countries and regions in the world. A workshop of tourism products related to the Shanghai Expo 2010 and its emblematic Chinese Pavilion put the upcoming event in the spotlight of the 2010 International Tourism Show, which opened here Thursday. The China National Tourism Bureau (CNTB), an exhibitor at the show, decorated the workshop with photos and posters featuring the Shanghai Expo, while the red Chinese Pavilion, the largest among the Asian representatives, stood out prominently in the 1,700-square-meter exhibition area. The CNTB hosted 13 French travel agencies that sell special products related to the Shanghai Expo, which will take place from May 1 to Oct. 31. "By inviting a dozen of French tour agencies, we are organizing the workshop to provide information exchange for international professionals attending this tourism show," Paris Office Director of the CNTB, Xue Guifeng, told Xinhua. Many French agencies have already developed special products for the Shanghai Expo, Xue said. Guillaume, a seasoned traveler, has visited China twice, and he certainly won't miss the World Expo this year.

A wedding dress worth around 10 million yuan ($1.5 million) is displayed in Nanjing International Exhibition Center in east China's Jiangsu province, March 19, 2010. A three-day wedding fair started at the center March 19, featuring businesses that provide wedding dresses, camera services, dinning and other wedding-related services.

China's President Hu Jintao shakes hands with Bangladesh's Prime Minister Sheikh Hasina inside the Great Hall of the People in Beijing March 19, 2010. Hasina is on a five-day visit to China, her first trip there since taking office in January 2009, to promote cooperation and regional links, officials said.

A performer performs at the oilseed rape field during the opening ceremony of the 3rd Oilseed Rape Flower Festival in Taizhou, East China's Zhejiang province, March 19, 2010. The festival aims to attract visitors and promote the agricultural development.

A captain controls a yacht on Friday during the Haikou Yachting Industry Forum. Yachting, a synonym of luxury for flamboyant wealthy people, may become an increasingly viable option for Chinese people's leisure life, industrial regulators and officials said on Friday. "In the coming few years, yachting will become a thriving recreational activity in China," said Haikou Mayor Xu Tangxian. "Governments of coastal cities should work out development plans for yachting tourism in time." He was citing an industrial manifesto the China Communications and Transportation Association (CCTA) and the country's yachting organizations released during the Haikou Yachting Industry Forum that opened in the provincial capital of Hainan on Friday. Industrial analysts have predicted China's yacht market may grow as fast as its automobile market. Various luxury brands, including yachts, are enjoying huge growth in China. But compared to the highly prosperous automobile market, yachts are still a young industry and its target customers remain small in number. Therefore, it promises a huge potential, Fairtheworld, a professional 3D virtual expo and expo media provider, said in a report last July. "China has entered a post-auto era With an increasing number of middle-class families, the yachting industry will experience rapid expansion," said the 2009-2010 China Yachting Industry Report, which was jointly released by CCTA's Cruise & Yacht Industry Sub-association and the Yacht Industry magazine on Friday. The report proposed the government to reduce the taxes on imported yachts, which currently account for 40 percent of the total cost. CCTA President Qian Yongchang said that now is the time for China to develop the yachting industry, even though at the beginning, the high-end recreational boats may be accessible only to high earners. Industrial insiders said that during the beginning stage, it is unrealistic to expect the Chinese to purchase yachts with the same passion as they pursue cars or houses. Yacht renting will therefore be a major way that people can enjoy the luxury. Last December, for the first time, the State Council, China's Cabinet, asked governments at various levels to foster yachting when developing tourism. In January, the State Council asked Hainan Island to work out yacht management regulations and prepare to serve foreign yachts. Chen Ci, Party chief of Haikou, said on Friday that the port city will take the lead in applying international practices when formulating regulations on yachting, exit-entry management and marketing of the recreational boats. Haikou will build 1,000 wharves for the pleasure vessels in the next 10 years, with 400 expected to be complete by the end of this year, he said.

A Shanghai Zhenhua Heavy Industry Co employee supervises the loading of containers at Shanghai port. The company has a 70 percent share of the global port equipment market. Shanghai Zhenhua Heavy Industry Co (ZPMC), the world's largest port equipment maker, is planning to expand into the nation's high-speed railway and wind power sectors, making them its new growth engines, company President Kang Xuezeng said on Friday. "Our next step is to apply our home-grown electric control systems and gearboxes to the two rapidly growing industries," said Kang. Representatives of China South Locomotive and Rolling Stock Industry (Group) Co (CSR) attended a promotion conference on ZPMC's gearboxes, spreaders and drives in Nantong, Jiangsu province, on Friday. CSR, the country's largest trainmaker, is the manufacturer of "China Star" and "Central China Star" high-speed trains. "The market demand for high-speed rail is huge, and we are very interested in participating in this sector," said Kang. "It's no surprise that ZPMC's has ambitions in this sector, as most of its products used in ports are compatible with high-speed trains," said Zhang Zhongjie, an industry analyst at Essence Securities. China plans to build 16,000 km of high-speed rail lines by 2020, according to the Ministry of Railways. Forty-two high-speed rail lines totaling 13,000 km will be completed by 2012. Kang also said ZPMC is currently in talks with several firms to develop gearboxes that can be used in the wind power sector. ZPMC's key businesses, including yard and quay cranes, were hit hard last year as port operators and shipping firms cut capacity due to the global financial crisis. ZPMC has a 70 percent share of the global port equipment market, according to Kang. ZPMC forecast in its annual report to the Shanghai Stock Exchange that its net profit would decline by up to 70 percent in 2009. The barge crane manufacturer posted a net profit of 2.55 billion yuan ($374 million) a year earlier. The market value of the port-related sector declined 60 percent during the financial crisis, Kang said. The company said that sales of its Global Positioning System products used in yard cranes dropped to 44 units in 2009 from 127 in 2008. "We received more contracts during the first months of 2010 compared with the previous year, but difficulties will continue (therefore), we have to adjust our product structure this year, aiming to speed up the promotion of home-grown components with cutting-edge technologies and high added value," Kang said. Essence's Zhang pointed out that the profit margin of components is about 20 percent, compared with 8 percent for yard cranes and 15 percent for quayside cranes. According to Kang, components, most of which are currently made by foreign firms, account for half of the costs of integrated port equipment. "We will make more efforts in developing components to cut the overall costs and in turn, improve our competitive edge," he said. But the components market will take time to grow, and may not see a profit in the short term, Kang said.

March 21, 2010

Hong Kong*: Actress Nancy Kwan said on Friday she was shocked at the wholesale destruction of the colonial Hong Kong that formed the charming backdrop to her classic 1960 film The World of Suzie Wong. The former screen siren said her hometown used to be a “laid-back sea port” with junks plying their trade in Victoria Harbour – a rare sight these days in the bustling financial hub of seven million people. Kwan, 70, visits the city every few years, but said she still cannot believe its metamorphosis. “Hong Kong was really very charming in those days,” she told reporters in an interview ahead of the screening of a documentary about her life at the Hong Kong International Film and TV Market forum on Monday. “I can’t believe it – every time I come back it’s like going to a new city... I loved the old colonial buildings in Hong Kong, but now they’ve torn them down. It’s terrible.” Among those buildings was the since-rebuilt Luk Kwok Hotel in Wan Chai, where late actor William Holden’s character meets and falls in love with the charming Suzie Wong, a prostitute played by Kwan. The iconic film catapulted Kwan – born to a Chinese father and Scottish mother – into the spotlight as the first Asian woman to star in a Hollywood film. Kwan, who now lives in the United States and has appeared in dozens of films and television shows, chalks up her discovery by a Hollywood producer as a matter of fate. “I was very lucky. Everything in life is about timing and if it’s not meant to happen, I don’t care what you do it’s not going to happen.” The documentary, entitled To Whom it May Concern: Ka Shen’s Journey, a reference to Kwan’s Chinese name, traces the ups and downs of her career and life, including the death of her only son in 1996 at age 33.

A TVB artiste poses at the Fairy Tales of Flowers photo competition at Victoria Park, Causeway Bay on Friday. The 2010 Hong Kong Flower Show opened at Victoria Park on Friday - with more than 350,000 flowers on display. The show, an annual event organised by the Leisure and Cultural Services, is expected to attract thousands of enthusiasts from Hong Kong and overseas. “It provides an opportunity for local people and horticulture lovers from around the world to appreciate the beauty of flowers and share their experience about growing flowers,” the department said in a statement. About 200 organizations from 21 countries are participating. They include the mainland, Australia, Canada, Estonia, France, Germany, Indonesia, Italy, Japan, Korea, Malaysia, the Netherlands, the United Kingdom and the United States. The show will also feature some educational activities, including drawing and photo competitions. The show’s theme flower is the Cineraria and its theme is “Fairy Tales of Flowers”. The 10-day show runs until March 28.

The Town Planning Board on Friday formally rejected the Urban Renewal Authority (URA)'s 2008 plan to demolish most of the buildings on Wing Lee Street in Sheung Wan.

The Planning Department has given the thumbs-down to the MTR Corporation's design plan for office towers above the future high-speed rail terminus in West Kowloon and wants it to present new designs.

Fung shui master Tony Chan Chun-chuen on Friday filed an appeal against the rejection of his claim to the multibillion-dollar estate of late Chinachem chairwoman Nina Wang Kung Yu-sum.

Nearly one in six workers in the city earns less than HK$33 (US$4.23) an hour, the Census and Statistics Department revealed in a detailed survey that will be a major reference in determining the statutory minimum wage. Despite the release of the wage and employment data, officials are still a long way from deciding what the city's first statutory minimum wage will be and determining its impact on the labour market. The department found that 469,400, or 16.9 per cent, of the city's 2.78 million workers, were paid less than HK$33 an hour, the rate unionists are fighting for. The number of employees excludes maids, civil servants and the self-employed. Some 130,200 get less than the HK$24 that many business groups are demanding. The median hourly wage of city workers is HK$58.50 and the median working hours a month is 192. Among all industries, the lowest median hourly wage is seen in estate management, security and cleaning services at HK$27.60. Restaurant workers earned HK$32.70 and HK$33.70 per hour was paid for miscellaneous activities, which covered couriers, homes for the elderly, laundry and food production workers. The survey was different to the usual labour earnings survey the department does quarterly. "This survey offers more detailed and accurate figures since it interviewed more than 10,000 companies and organisations while the labour earnings survey polled only 2,000," an official in charge of the survey said. "Also this survey covers part-time workers and more industries. Companies with less than 50 workers are also included." The figures will be part of a wide range of information to be considered by the Provisional Minimum Wage Commission in setting the city's first statutory minimum wage, which could be announced as early as July. The statutory minimum wage would be implemented as soon as the beginning of next year. "We can't say now what the rate will be based simply on the survey findings," the census official said. The survey was conducted in the second quarter of last year when the city was still severely affected by the financial meltdown and had a jobless rate of 5.4 per cent. The latest jobless figure is 4.6 per cent. The official said he did not believe the survey's findings would be outdated when the wage was being determined. "The survey is only one of the factors for the commission in determining the rate," the official said. "The commission will also take more recent information like the standard of living, labour market conditions, economic growth and inflation into account." The official also said the figures in the survey could not be used to estimate the number of workers likely to be sacked when a rate was set. "It only tells you the number of workers getting a certain wage, but it would be wrong to estimate how many workers will be out of a job when a rate is set. Employers may decide to cut into their profits to give more to the workers. They may ask workers to work fewer hours or they might raise the price for their products or services." Secretary for Labour and Welfare Matthew Cheung Kin-chung said he was concerned about the figures being outdated, but said: "I believe the commission will consider many factors when setting the rate so that it will be a reasonable and fair one. We have to ensure that the minimum wage can't be too low." Many jobs would be lost if the rate was not reasonable, he said. Key business groups said it was impossible to suggest a minimum wage based on the data available, saying more studies were needed. Stanley Lau Chin-ho, deputy chairman of the Federation of Hong Kong Industries, said the provisional commission should consider factors such as the economic environment and the impact on enterprises when setting the minimum wage. And Federation of Restaurants and Related Trades' president Simon Wong Ka-wo said the industry had not yet reached a consensus. But he said most frontline staff in the industry earned between HK$20 and HK$25 per hour. He was worried that less competent people would lose their jobs if the minimum wage was set at HK$33 an hour.

Finally making an appearance in public after being arrested by graftbusters last Thursday, an apparently unfazed TVB general manager Stephen Chan Chi-wan, talked about the "ups and downs" of life. Chan, right, displaying the flair for which he is famous, told a packed media briefing that he would only read a prepared statement and would take no questions. The normally high-profile host of Be My Guest - who appears to have lost weight - also denied suggestions he had been holed up at home for the past six days. But while stressing he would not comment directly on the ICAC's graft allegations, Chan, who was accompanied by his lawyer Ivan Tang Yiu- wing, alluded to his innocence by describing what happened as "puzzling." He said: "I am living well at this moment though there must be some changes to my life. Everyone must experience some ups and downs in their life. If one day you come across any puzzling situation, don't panic ... because the truth must stand while the lies must fall." With more than 100 journalists present in a function room of the Regal Hotel in Tsim Sha Tsui yesterday, the top TV personality displayed his sense of humor when explaining why he wore a mask last Friday night after he was released from the headquarters of the Independent Commission Against Corruption. "I knew the media were waiting outside, so I tried to tidy up myself. But I accidentally cut my cheek while shaving. To avoid the public misunderstanding that the wound was related to the ICAC, I decided to wear a mask," he said. Chan, standing in the center of the room with tables placed between him and the media, also refuted newspaper reports that he had become a recluse in his Ho Man Tin home since his release, claiming he had been in and out of his flat several times to meet friends, dine and visit a public hospital for a medical checkup. Explaining why he did not speak to the media earlier, Chan said: "I was concerned with the personal safety of my media friends and the public. If I held an impromptu briefing, it would create chaos and bring inconvenience to passersby. "So, I decided to [hold this press briefing] in a prearranged setting and orderly manner to satisfy the media friends who then will no longer need to wait outside my home." Chan thanked the people who texted him messages of support. Chan, TVB's head of business development Wilson Chan Wing-suen, variety department executive producer Wilson Chin Kwok-wai and actor Ning Jin have been suspended from TVB since their arrest by the ICAC last Thursday. The Standard reported last week that Chan and others were accused of running a shell company, which allegedly forced some top Television Broadcasts artistes to perform for free or at very low pay in major shows and functions. Since last week, the ICAC has interviewed more than 100 artistes and senior staff in connection with the graft allegations.

The call operator who deleted an urgent message from a frontline commander requesting an alarm upgrade at a fatal fire in Cheung Sha Wan has been taken off the job, it was revealed yesterday.

China*: China is sending an envoy to the United States to try to ease trade frictions as its currency policy comes under fire, but cautioned that political pressure would complicate talks.

A recent survey shows nearly 40 percent of white-collar workers regularly buy luxury goods. As a sign of growing affluence following the economic crisis, a survey by MSN China showed luxury products are regular purchases among a third of the white-collar workers it surveyed in Beijing. The research conducted by IResearch Consulting Group among 17,644 respondents from Dec 29 to Feb 5, showed 60 percent of them are defined as white-collar workers, aged between 20 to 40 and with an average income of more than 3,000 yuan ($439.4) in cities like Beijing, Shanghai and Guangzhou. The MSN China survey showed more than 30 percent of the surveyed white-collar workers in the capital buy premium-brand cosmetics and 20 percent own at least one Louis Vuitton bag. Liu Shu, chief editor and executive producer of MSN China Portal, said 38 percent of Beijingers are regular customers of luxury products, higher than 37.3 percent in Shanghai and 33 percent in Guangzhou. She revealed that almost 63 percent of Beijing white-collar workers buy luxury cosmetics, 48 percent purchase luxury bags, 45 percent wear luxury watches, and 40 percent have premium-brand clothing. Fu Lei, a 26-year-old woman working in Beijing and earning more than 10,000 yuan per month, recently went on a shopping trip to Hong Kong to buy cosmetics. "I go to Hong Kong to buy cosmetics almost every year, because they are cheaper there," said Fu. The survey also showed that large numbers of people now regard luxurious products as a sign of lifestyle quality. In Beijing, 44.6 percent of white-collars surveyed agreed with the concept, slightly more than 44 percent surveyed in Shanghai. "I still remember my first LV bag. In 2008 I bought a red LV purse to bring me good luck," said a 28-year-old woman surnamed Wang. Wang said she has several LV and Gucci bags but no longer buys them because they are too common. According to the Hurun China Rich List, compiled by British Rupert Hoogewerf, Beijing is home to 143,000 people with wealth of more than 10 million yuan and 8,800 people with more than 100 million, the highest in the Chinese mainland.

Beijing has banned 78 state-owned enterprises from dealing in the property market in a determined move to curb home prices. The directive from the State-owned Assets Supervision and Administration Commission yesterday said only 16 state-owned companies whose primary business is real estate will be allowed to participate in the sector. Analysts say the move will have a negative impact on the stock market and create correction pressure on mainland developers across the board. "The recent steps and comments from Beijing and state-run media show the central government is not happy with the SOEs' recent high-profile participation in land auctions, which have drawn heavy criticism," Quam Securities sales director Andrew Wong Wai- hong said. "The recent bidding of record prices for Beijing sites by SOEs was a slap in the face for Premier Wen Jiabao who has reiterated in the national legislative meetings that curbing property prices is one of his main tasks this year." Wong said the SASAC's message is clear - Beijing is firm in its intention to cool the overheated real estate sector. "The bullish sentiment [on mainland property] will turn sour after the SASAC announcement," Wong said. On Monday, state-backed Sino- Ocean Land made a 4.08 billion yuan (HK$4.64 billion) winning bid for a site in Beijing's Chaoyang district, while China South Industries Group bid 1.76 billion yuan for a Haidian district site. That was followed by Poly Group's 5 billion yuan winning bid on Wednesday for another Chaoyang site. The back-to-back biddings triggered a lot of public criticism. State-run media, including the People's Daily and China Central Television, criticized the SOEs for not fulfilling their social duties and pushing home prices higher instead. "SOEs should follow Beijing's lead in curbing the heated property market," a People's Daily editorial said. SASAC said the 16 companies still in the property fray include China State Construction (3311), China National Real Estate Development, China Poly Group, China Railway Construction (1186) and Sinochem Corporation. The list also includes China Travel Services Holdings, China Merchants Group, China Resources (Holdings) and Nam Kwong Group Limited. "Subsidiaries of state-owned companies that are currently in an adjustment phase should accelerate their pace and make an orderly withdrawal from the market after completing current projects," SASAC spokesman Du Yuanquan said. Wong at Quam Securities said even though no cut-off date has been set and the 78 firms concerned allowed to continue till the completion of current projects, it is understood each developer will not be able to hoard land for more than two years. So it will still act as a firm cooling measure. Last month, People's Bank of China and the Banking Regulatory Commission banned financial institutions from lending money to developers who hoard land in a bid to push up prices.

US internet giant Google will close its business in China next month and may announce its plans next week, mainland media reported on Friday, after rows over censorship and hacking.

Cooking oil on sale in a market in Shenyang, Liaoning province. Nationwide inspections of cooking oil were ordered as reports on Friday said illegally made oil contained cancer-causing agents. China's food safety watchdog has ordered inspections of cooking oil nationwide as reports Friday said up to one-tenth of Chinese supplies were illegally made and contained cancer-causing agents. The State Food and Drug Administration on Thursday ordered stepped-up inspections of all food service providers and vowed to punish manufacturers producing “drainage oil”, cooking oil refined from discarded kitchen waste. “If food service providers are found to be using cooking oil from an unclear source, or if they have bought ‘drainage oil’, their operations will be immediately halted and they will be dealt with in accordance with the law,” said the order posted on the administration’s website. The China Daily said as much as one-tenth of cooking oil used in the mainland could be made from recycled kitchen or restaurant waste oil, which contains a highly toxic, carcinogenic substance called “aflatoxin.” “People in China consume about two to three million tons of illegal cooking oil every year,” the China Youth Daily cited He Dongping, a food science expert at the Wuhan Polytechnic University, as saying. The mainland annually consumes about 22.5 million tons of cooking oil, he added. According to He, the illegal cooking oil business is extremely profitable because the cost of buying food waste and refining it is low, while edible oil prices were rising. China’s food industry is notoriously prone to food safety scares. On Friday, the administration issued a this year plan to ensure food safety, calling on all levels of government to step up inspections at every link in the food production chain, including the edible oil and dairy industries. Beijing has launched high-profile crackdowns in the past, but product-quality scandals continue to emerge. In 2008, the nation’s dairy sector was rocked by a tainted milk scandal that the government said resulted in the deaths of six babies and sickened 300,000 others. Reports have said recently that some of the tainted dairy products, which were contaminated with the industrial chemical melamine, had re-emerged on the market. The government has said the problem has been contained. In 2007, the former head of the nation’s food and drug administration Zheng Xiaoyu was executed after being convicted of taking bribes to approve untested medicines.

A resident collects water after digging in a dried-up pond at a village in Guangnan county in Yunnan. A lack of investment in basic drinking water and irrigation infrastructure has made the worst drought in decades in western China more deadly than it should be, mainland agricultural experts say. The once-in-a-century drought that has hit Yunnan , Guizhou , Sichuan , Guangxi and Chongqing since autumn last year has left more than 20 million people without enough drinking water and has affected almost 6.5 million hectares of farmland. The National Meteorological Centre expects the drought to continue for at least two more months. Zheng Fengtian , a vice-dean of the school of agricultural economics and rural development at Renmin University, attributed the prolonged drought to short-sighted regional governments seeking financial gains from large-scale flood control and hydro-electric power generation projects at the expense of unprofitable rural drinking water projects and irrigation facilities. He said that for tens of thousands of farmers living in mountainous areas in Yunnan and Guizhou, water tanks and artificial ponds provided lifesaving water, not huge reservoirs. But the government had not invested in such projects in 30 years. "The drought isn't a natural disaster but a man-made calamity," Zheng wrote in his blog yesterday. "A lack of investment on drinking water and irrigation systems puts farmers in a plight whenever drought hits the area. "The country invests heavily on hydro-electric power in major rivers and builds huge reservoirs, but the distant water can't quench the thirst in mountainous areas." Zheng criticised profit-oriented regional governments for ignoring the livelihood of farmers, saying they ignored the fact that farmers would go hungry when drought hit. Tang Jian , the deputy chief of the water resource bureau in Weining county, Guizhou, said a 30 cubic metre water tank would enable a household to have enough drinking water during a drought lasting from October to May. He said the central government paid a subsidy of about 2,000 yuan (HK$2,274) for each water tank and farmers were eager to have them. "In mountainous areas, a household needs at least two small water tanks to store drinking and irrigation water," yesterday's edition of Economic Information Daily quoted Tang as saying. The newspaper said more than 60 per cent of the country's small and medium-sized irrigation systems were out of order because of insufficient investment and maintenance, meaning that more than half the farmlands lacked protection from drought. Mainland media have reported that regional governments have been forced to tap underground water sources and use cloud seeding to produce rain for agricultural production. According to the Ministry of Agriculture, the drought-hit areas account for 16 per cent of the country's annual grain output.

China’s steel mills have been asked to accept a doubling of iron ore prices this year by their top supplier, Brazil’s Vale, and are also facing excessive output, a top official said.

China Mobile (0941) posted a 2.3 percent increase in net profit for last year to 115.2 billion yuan (HK$131 billion), beating market consensus.

Mainland sportswear retailer Li Ning (2331) is aiming for a 10 percent growth in same-store sales this year, after posting a 2.3 percent decline in 2009.

Beijing is conducting stress tests to gauge the effect of yuan appreciation on companies in a sign the government may be preparing for policy change even as it rebuffs foreign criticism of its 20-month US dollar peg.

Pressing China on yuan will hurt U.S. economy: U.S. media - The China-made clothes are sold at a Marshalls store in New York, the United States, March 18, 2010. The Americans may find that the appreciation of China's RMB will increase their living cost, as many goods they have been consuming are made in China. The efforts by U.S. legislators to pressure China to reform its currency is to make China a scapegoat of the U.S. domestic politics, and may actually hurt the U.S. economy, according to articles published by U.S. well known media in recent two days. The Wall Street Journal said Thursday that U.S. lawmakers "want to make the yuan a scapegoat and risk a trade war with China," referring to the U.S. Senators' bill proposed Tuesday to call for China to appreciate its currency yuan. Under the pressure of the election year and high unemployment, U.S. Senator Chuck Schumer and four other senators unveiled a legislation to threaten China for punitive duties on goods from China if it does not let yuan appreciate against the U.S. dollar. "China is right to resist these calls, not least because a large revaluation could damage China's growth," the Wall Street Journal said in its Review and Outlook column. "China has helped to lead the global economy out of this recession, and the world needs that to continue."

Jon Huntsman, US ambassador to China, is surrounded by journalists after delivering his speech at Tsinghua University in Beijing. Beijing needs to take seriously American concerns about the value of the yuan, but bilateral disputes should not impede co-operation on global issues such as climate change and Iran's nuclear programme, the US ambassador to Beijing said yesterday. Washington and other trading partners are pressing China to ease currency controls that have kept its yuan steady against the dollar to help their companies compete amid weak global demand. China faced important negotiations over the yuan in coming weeks, US ambassador Jon Huntsman said. Washington was not alone in wanting Beijing to unshackle its currency from a 20-month-old peg against the dollar, he said. "We hope to see more flexibility on the exchange rate," Huntsman told students at Tsinghua University in Beijing. "I would be misleading you if I left you with the impression that this wasn't a very, very important issue in the United States, and will continue to be. We'll see how the next few weeks play out." The currency debate has turned acrimonious, with 130 US lawmakers demanding sanctions unless China gives up what they see as an unfair competitive advantage by allowing the yuan to rise. A US Treasury report due in mid-April could label China a "currency manipulator", adding to pressure on Beijing and threatening a deepening rift between the world's biggest and third-biggest economies. "I suspect there will be many important negotiations in the weeks ahead. This is of real concern to people in my country," Huntsman said. "Many see the trading relationship with China as a little out of balance, partially because of the currency issue." He declined to elaborate on the nature of the talks. China has kept the currency on ice near 6.83 per dollar since mid-2008 to help its exporters ride out the global credit crunch. "My Chinese friends like to pitch this as just an American issue. I like to say that there are many countries that feel the same way," he said. While the two nations argue over trade and currency, they still need to co-operate with each other on a wide range of global issues, such as climate change and Iran. Huntsman said he was "optimistic" President Hu Jintao would attend a global nuclear security summit in Washington next month. "I don't even want to speculate on President Hu not being there. I think they recognize what an important issue this is not only to the US-China relationship but also the people of the world," he said. "We look to China to support strong sanctions should Iran continue to stall on the dialogue track," he said. "The recent turbulence we have experienced is part of a natural cycle .... but our relationship is mature and stable enough to weather our differences," he said. "I am convinced blue skies are already on the horizon."

China’s steel mills have been asked to accept a doubling of iron ore prices this year by their top supplier, Brazil’s Vale, and are also facing excessive output, a top official said.

Applied Materials sets up its research labs in Xian after estimating that China will soon be producing two-thirds of the world's solar panels. China's edge draws US hi-tech players - Researchers see huge potential in Chinese market. For years, many of China's best and brightest left for the United States, where the hi-tech industry was more cutting edge. But Mark Pinto is moving in the opposite direction. Pinto is the first chief technology officer of a major US technology firm to move to China. The company, Applied Materials, is one of Silicon Valley's most prominent companies. It supplied equipment used to perfect the first computer chips. Today, it is the world's biggest supplier of the equipment used to make semiconductors, solar panels and flat-panel displays. In addition to moving Pinto and his family to Beijing in January, Applied Materials, whose headquarters are in Santa Clara, California, has just built its newest and largest research laboratories here. Last week, it even held its annual shareholders' meeting in Xian. It is hardly alone. Companies - and their engineers - are being drawn here increasingly as China develops a hi-tech economy that increasingly competes directly with the United States. A few American firms are even making deals with Chinese companies to license Chinese technology. The Chinese market for everything from electricity to fashion is surging, and companies are concluding that their researchers need to be close to factories and consumers alike. Applied Materials set up its latest solar research labs here after estimating that China would soon be producing two-thirds of the world's solar panels. "We're obviously not giving up on the US," Pinto said. "China needs more electricity, it's as simple as that." China has become the world's largest car market, and General Motors has a large and growing car research centre in Shanghai to work with its Chinese assembly plants. The country is also the biggest market for desktop computers and has the most internet users, so Intel has opened a semiconductor research lab in Beijing along with a research centre to make internet servers work better. Not just drawn by China's markets, Western companies are also attracted to the country's huge reservoirs of cheap, highly skilled engineers - and the subsidies offered by many Chinese cities and regions, particularly for green energy firms. Now, Pinto said, researchers from the United States and Europe have to be ready to move to China if they want to do cutting-edge work on solar manufacturing because the Applied Materials complex here is the only research centre that can fit an entire solar panel assembly line. "If you really want to have an impact on this field, this is just such a tremendous laboratory," he said. Xian, about 970 kilometres southwest of Beijing, has 47 universities and other institutions of higher learning, churning out engineers with master's degrees who can be hired for US$730 a month. On the other side of Xian from Applied Materials sits Thermal Power Research Institute, China's world-leading laboratory on cleaner coal. The firm has just licensed its latest design to Future Fuels in the United States. The American company plans to pay about US$100 million to buy a 130-foot long maze of equipment that turns coal into a gas before burning it. This method reduces toxic pollution and makes it easier to capture and sequester gases like carbon dioxide under ground. Future Fuels will ship the equipment to Pennsylvania and have Chinese engineers teach US workers how to assemble and operate it. Small clean-energy firms are headed to China, too. NatCore Technology of New Jersey recently discovered a way to make solar panels much thinner, reducing the energy and toxic materials required to manufacture them. Unable to find partners in the United States to commercialize the technology, NatCore reached an agreement with a consortium of Chinese companies to finish developing its invention and begin mass-producing it in Changsha. "These other countries - China, Taiwan, Brazil - were all over us," said Chuck Provini, the company's chief executive. President Barack Obama has often spoken about creating clean-energy jobs in the United States. But China has shown the political will to do so, said Pinto, 49, who is also Applied Materials' executive vice-president for solar systems and flat-panel displays. Locally, the Xian city government sold a 75-year land lease to Applied Materials at a deep discount and is reimbursing the company for roughly a quarter of the lab complex's operating costs for five years, said Gang Zou, the site's general manager. The two labs, the first of their kind anywhere in the world, are each bigger than two American football fields. Applied Materials continues to develop the electronic guts of its complex machines at laboratories in the United States and Europe. But putting all the machines together and figuring out processes to make them work in unison will be done in Xian. The two labs, one on top of the other, will become operational once they are fully outfitted late this year. Applied Materials has built a 360-employee operation here in Xian after announcing an 18-month programme last year to reduce employment by 10 to 12 per cent, including lay-offs in the United States and Europe. Pinto said the company was readjusting its workforce as manufacturing shifts to Asia, but that the Xian facility involved a new approach to researching the design of an entire assembly line and was not replacing laboratories elsewhere. Pinto is a well-known figure in Silicon Valley in his own right. While still a doctoral student at Stanford in the early 1980s, he wrote the first widely used two-dimensional computer simulation of how semiconductors work. This allowed engineers to test each one on a computer before building prototypes, shortening the semiconductor development process. Later, he became one of the most celebrated researchers at Bell Labs. With China's economy gaining strength, Pinto and his wife, then living in Santa Clara, began insisting in 2005 that their sons study Putonghua once a week. Now 10 and 11, the boys are improving their Putonghua and trying to master the art of eating with chopsticks. Applied Materials has greater challenges, including fighting technological theft, a chronic problem in China. The company has taken measures, including sealing its computers' ports here, to prevent the easy use of thumb drives to record data. Employees are not allowed to take computers from the building without special permission, and an elaborate system of computer passwords and electronic door keys limits access to certain technological secrets. However, none of that changes the sense that tectonic shifts are under way. When Xei Lina, a 26-year-old Applied Materials engineer here, was asked recently whether China would play a big role in clean energy in the future, she was surprised by the question. "Most of the graduate students in China are chasing this area," she said. "Of course, China will lead everything."

Glimpses of 2010 World Expo Center

A yacht is anchored at the seaside in Haikou, where the 2010 Haikou Yachting Industry Forum was held in the capital of Hainan, the country's southernmost province, on Friday. In January, the State Council asked Hainan province to work out yacht management regulations and prepare to serve foreign yachts. Chen Ci, Party chief of Haikou, said on Friday that the port city will take the lead in applying international practices when formulating regulations on yachting, exit-entry management and marketing of the recreational boats.

March 20, 2010

Hong Kong*: In a further indication Hong Kong's economy was improving, the unemployment rate fell to 4.6 per cent in the December-February quarter – down from 4.9 per cent in the November-January, new statistics released on Thursday showed. The Census and Statistics Department figures also revealed that the underemployment rate – which measures those people who only work a few hours each week – fell from 2.2 per cent to 2.1 per cent during this time. The department said the 4.6 per cent figure was the lowest since November 2008-January 2009 quarter. It noted that the jobless rate of the 15-24 age group had improved significantly, falling 1.2 percentage points to 9.9 per cent. This was mainly due to a fall in the number of unemployed school leavers and graduates. The unemployment rate in the construction sector fell to 7.3 per cent, the figures showed. Secretary for Labor and Welfare Matthew Cheung Kin-chung said the lower jobless rate was mainly due to an increase of 7,900 new jobs on the back of an improving economy. New government statistics released on Thursday also showed the “median-hourly wage” in Hong Kong in the second quarter of 2009 was HK$58.5. Excluding domestic helpers, government employees, employers and self-employed people, the survey found that there were 2,776,600 employees in Hong Kong, in the second quarter of last year. The median-hourly wage was less than HK$50 in a number of industries. These included estate management, security and cleaning services (HK$27.6); and people working in restaurants (HK$32.7). The median-hourly wage was highest in the education and public administration – at HK$129 per hour, the survey found.

Controversial legal changes that make it easier to redevelop old buildings got the nod from lawmakers last night, allowing development chief Carrie Lam Cheng Yuet-ngor to breathe a huge sigh of relief.

Fire investigators are focusing on a critical 18-minute delay - dubbed a "rare human error" - in upgrading a deadly blaze at a Cheung Sha Wan knitting factory that claimed the life of a firefighter.

Ambiguous clauses in insurance policies have been blamed for the steady rise in the number of complaints from policyholders over the past five years. More than 500 complaints were made against insurance companies last year, a 22 percent increase from 2008. The Insurance Claims Bureau helped resolve 17 percent of the disputes, deciding that the rest were either outside its terms of reference or there was not enough evidence to pursue them. The insurance companies paid HK$3 million in compensation after the cases were settled, with the highest award amounting to HK$600,000. Michael Tsui Fuk-sun, chairman of the bureau's complaints panel, said more than 100 cases involved the interpretation of clauses in medical policies. Tsui admitted that disputes over the interpretation of policy clauses arise because the "the policy terms are difficult to define." He said: "Many policyholders usually mistakenly think their interpretation of the terms are correct." Tsui advises the public to read clauses carefully and seek the help of consultants when they take out insurance. The bureau handled 575 complaints in 2009, of which 177 were dismissed because they did not fall within its terms of reference. Of the remaining 398, 338 were investigated while 60 were carried forward to this year. Of those investigated, 181 did not have prima facie evidence and 51 were withdrawn by the claimants. Forty-nine cases were mutually settled. Many of the complaints - 159 in all - involved medical insurance. "Medical clauses contain many terminologies. Policyholders should think twice before they receive diagnoses which they plan to claim for insurance," Tsui said. Patients often think all treatments their doctors suggest are necessary, but this is not always the case, he said. Most of the disputes concern whether diagnostic tests may be done on an outpatient or inpatient basis, and whether policyholder admissions may be classified as an emergency. A spokesman of the Consumer Council said insurance companies should make their policy terms comprehensible. "Ambiguous writing will surely cause different interpretations," he said. "Not everyone is an expert and it is unfair to the policy holders."

MGM Mirage’s plan to exit the mature Atlantic City market in favour of booming Macau removes a year of overhang from the company and should clear the way for a share offering in Hong Kong by June. MGM Mirage said it planned to give up its New Jersey gambling licence by selling its 50 per cent stake in Borgata, its lone Atlantic city casino, after New Jersey gambling regulators said the company’s Macau partner had links to mainland’s organised crime. In a previously confidential report released on Wednesday, the New Jersey Division of Gaming Enforcement said that “from the beginning of its efforts to enter Macau, MGM (Mirage) pursued partnerships with persons that it knew were associated with those aspects of gaming in Macau most heavily penetrated by organised crime”. The enforcement division had previously labelled as “unsuitable” MGM Mirage’s Macau partner, Pansy Ho, daughter of Macau gambling tycoon Stanley Ho, whom the report said had links with mainland triad members, citing documents from a US Senate hearing in 1992. Analysts have said MGM Mirage’s decision to quit New Jersey should help prospects for a planned Hong Kong IPO for its Macau unit, whose main asset is a 50-50 joint venture casino with Pansy Ho. “It comes as no surprise that they will focus on Macau, which is growing year on year, whereas they are seeing significant declines in the US,” said Aaron Fischer, head of CLSA’s Asia gaming research. “The news clears the way for MGM to be more serious about its business in Macau. The operating performance has not been as good as expected. Hopefully, this paves the way for a Hong Kong IPO.” MGM Mirage hopes to raise up to US$500 million as early as the second quarter of this year, sources told Reuters in January. If the initial public offering goes ahead, MGM Mirage, whose largest shareholder is billionaire Kirk Kerkorian, would be the third US casino marquee name since November to float its Macau operations on the Hong Kong stock exchange after Wynn Macau and Sands China. MGM Mirage’s plan to sell its stake in Borgata and give up its New Jersey gambling licence, first proposed in February, was approved on Wednesday by state regulators. MGM Mirage chief executive Jim Murren said in a statement: “The DGE’s (Division of Gaming Enforcement) report acknowledges there is no evidence that Pansy Ho has engaged in any wrongdoing or been accused of any illegal activity.” Macau’s transformation from a seedy gambling haven into a Las Vegas-style entertainment paradise since 2002 has meant stiff competition for the elder Ho, although he still controls one of six gambling licences in the former Portuguese colony. Sometimes known as the godfather of gambling, Stanley Ho, a patriarch of mixed European and Chinese parentage, heads an extended clan of 17 children born to his four wives. The report from the New Jersey enforcement division cites documents such as 1992 testimony at a US Senate Subcommittee hearing stating that Ho had direct associations with known members of mainland triads. Ho denies these allegations and hasn’t ever been charged with a crime. The report concluded that Pansy Ho’s relationship and financial ties to her father, as well as “her associations with persons alleged to be associated with organised crime render her susceptible to influence by unsuitable persons.” In choosing to put its Borgata stake on the block, MGM Mirage is going where the money is. Atlantic City, once the gaming capital of the US eastern seaboard, has been hammered by the recession as consumers cut spending. Revenue from its 11 casinos dived almost 16 percent in February to US$261.6 million, hurt also by snowstorms that blanketed the northeastern United States. In contrast, Macau gambling revenue in February was 70 per cent higher than a year earlier at about US$1.8 billion. The report also said Las Vegas-based MGM Mirage’s conduct in pursuing and consummating the Macau joint venture “raises concerns about its commitment to corporate regulatory integrity”. The gaming enforcement division said MGM Mirage’s due diligence and compliance efforts were deficient. But even as New Jersey’s verdict removes the overhang on MGM Mirage, it is unlikely to remove challenges that still face the company in Macau – weak market share and lack of a growth story. MGM Mirage, which has come close to defaulting on its debt, has only one casino in Macau, the MGM Grand Macau, and has not shed light on its expansion plans. MGM Mirage once had plans to build a multi-tower project on 55 acres of land it owns adjacent to the Borgata, but those plans were put on hold several years ago. The company owns the Borgata through a 50-50 joint venture with Boyd Gaming Corp. MGM said it would place its interest in the Borgata and related leased land in a divestiture trust. The settlement mandates the sale of the trust property within a 30-month period. If the company has not found a buyer within 18 months, the trustee would then take over the sales process, having another 12 months to conclude a deal.

TVB’s general manager Stephen Chan Chi-wan appears at a press conference at Regal Kowloon Hotel on Thursday. It was Chan’s first public appearance since he was arrested for an alleged corruption case by the ICAC last week. Former TVB (SEHK: 0511) general manager Stephen Chan Chi-wan told reporters on Thursday afternoon he was unperturbed about his arrest by the ICAC officers last week. “Who hasn’t faced some charges in their lives at some time,” said Chan. The 51-year-old was making his first public appearance since his release on bail after his arrest by the Independent Commission Against Corruption last Thursday. “If you too face some unexpected changes in your life, then don’t be afraid, or give up,” he told more than 60 journalists and photographers gathered at a hotel in Tsim Sha Tsui. Chan was arrested along with Edthancy Tseng Pei-kun, his former assistant and currently an advertising and production company director; Wilson Chan, TVB’s head of business development; Wilson Chin Kwok-wai, a TVB executive producer; and Ning Jin, a TVB actor as part of a corruption investigation. Chan’s lawyer said the suspected corruption case was still under investigation by the ICAC and it had advised Chan not to discuss it. Chan said he had not made an earlier public appearance because he thought it might “cause chaos”. He also explained that he wore a face mask when he was arrested because he cut himself shaving. “I did not want people to think the cut came from ICAC,” he added. Chan, who was wearing a light suit and shirt at the press conference, joked and smiled, saying he was trying to live as normally as possible. “I have been going out with friends a lot since I was released.” He also said some news reports about him were untrue, but did not elaborate. Chan did not answer any questions at the press conference. Stephen Chan is a well-known in Hong Kong as a manager and a television host for TVB. He hosted the popular talk show Be My Guest, which began in 2006. Chan and others have not been charged yet by the ICAC.

Fung shui master Tony Chan Chun-chuen arrives at Western police station on Thursday. Fung shui master Tony Chan Chun-chuen, who was arrested last month on suspicion of forging a will that he claimed left him Nina Wang Yu-sum’s entire fortune, reported back to police on Thursday afternoon. Chan was arrest on February 3 after a judge ruled in the Court of First Instance that the will he said was written by the late tycoon was forged. Chan was released on bail on February 4 after 30 hours of questioning by police. His bail was set at HK$5 million and he must report back to police periodically. Chan was at Western Police Station for less than 10 minutes before leaving the station shortly before 3pm. He left in his own car and did not talk to journalists waiting outside the station. A police spokeswoman said Chan must report back to police in early June.

Twenty people were arrested on Wednesday for either working illegally in Hong Kong or employing illegal workers, an Immigration Department spokesman said on Thursday.

The government may consider scrapping an almost 40-year-old policy that restricts development in Mid-Levels after the MTR's West Island Line opens in 2014. The move could bring bigger developments that increase housing density and make the area's traffic jams worse. Removing the so-called Mid-Levels moratorium, introduced in 1972 to limit traffic flow to the hilly area - which nevertheless has become highly congested - would allow bigger blocks to be built on 28 sites coming up for redevelopment. According to a document submitted by the Transport and Housing Bureau to the Central and Western District Council for discussion today, removing the moratorium would only add 250 flats to the 32,080 projected for the area by 2021. This suggests the impact of the move on traffic flows would be limited. Officials predict that morning peak-hour traffic will grow by 11 per cent by 2021 with the projected home construction, and by 11.74 per cent if the moratorium is lifted. But a district councillor and a lawmaker believe its assumption that the number of flats in the area will only grow by 2,080 - or 7 per cent - in the next 11 years is unrealistic. The area has 30,000 flats now. Officials expect the opening of the MTR line to take one in 12 vehicles off the roads around Sai Ying Pun, the University of Hong Kong and Kennedy Town. They also point to road improvement works and plans to build two more escalators - one connecting East Conduit Road to the Sheung Wan MTR station via Seymour Road and Ladder Street, the other between West Conduit Road and the new Sai Ying Pun MTR station via Lyttelton and Bonham roads. Like the existing Mid-Levels escalator, they would carry people downhill in the morning and uphill the rest of the day. Officials believe the escalators would encourage people who now drive to work to take the escalators. The findings are contained in a review the government commissioned on the Mid-Levels Moratorium two years ago after the Ombudsman criticised the policy as ill-conceived and poorly planned. The study was meant to show whether the policy was useful in easing Mid-Levels' traffic problems and whether it should be supplemented, strengthened or replaced.

Drivers suspected to be "high" behind the wheel could face police drug tests under a proposal to be put out for public consultation later this year. Secretary for Transport and Housing Eva Cheng Yu-wah says her department is studying overseas models to find out how to check on drivers under the influence of drugs. "We are studying how to empower the police to collect evidence to check whether drivers have taken drugs. "Under the current ordinance, police do not have the authority to ask for a sample from drivers," Cheng said. She added that because of the number of different drugs is available, and individual reactions to them, it is difficult to ascertain the effects on driving behavior. "The task of formulating guidelines on the drugs that a driver must not take while driving, or before driving, and setting the relevant standards is highly complex," Cheng said. But she said the administration could come up with a proposal for public consultation in mid-2010 after studying the examples in Britain and Australia. She said Australian drivers undergo a saliva test when necessary, but the problem is its failure to detect ketamine, which is common in Hong Kong. British motorists are asked to submit to a behavioral test, such as walking a straight line, and they would be required to provide blood samples if they failed that test. According to the SAR's Road Traffic Ordinance, it is an offense for a person to drive, attempt to drive, or be in charge of a motor vehicle on the road under the influence of alcohol or drugs, to an extent that the driver is incapable of having proper control of the motor vehicle. As for the problem of sick people having an attack when driving, Cheng said the cases of traffic accidents involving professional drivers suffering from illness while driving saw no noticeable rise in the past five years. Earlier this month, one person was killed and another five seriously injured in Ma On Sha when a minibus whose driver was believed to have suffered an epileptic fit ploughed into a queue at a bus stop.

China*: Beijing hits back at British rights report - China on Thursday defended itself against Britain's newly released annual report on human rights, calling its accusations "a political show." Foreign Ministry spokesman Qin Gang told a regular news conference that China is making progress on human rights, and “any country or person without prejudice will recognise this progress.” British Foreign Secretary David Miliband issued the annual human rights report just after his visit to China this week. The report released on Wednesday names China as one of 22 countries of concern. “A worrying number of people were imprisoned last year for attempting to exercise their right to freedom of expression,” the report said. Miliband also raised human rights concerns during his visit to China, including the issue of missing lawyer Gao Zhisheng, who disappeared more than a year ago. Mainland authorities have given no clear answer on Gao’s whereabouts, despite repeated questions from diplomats and the media. The United States released its own human rights report on China earlier this month with similar concerns. Both countries are trying to smooth out relations with China after recent events, including a planned US arms sale to Taiwan and the visit of Tibetan spiritual leader the Dalai Lama with President Barack Obama. Relations between Britain and China have been tense as well over the failure of December’s Copenhagen climate change talks to forge a binding accord on cutting emissions and the execution in China of a British drug smuggler thought to be mentally ill. “What we oppose are wilful pressuring and double standards,” Qin told reporters. “Why doesn’t Britain talk about itself or some Western countries that violate human rights in their own countries? It’s simply a political show.”

The Time magazine has shown special interest in covering China since it's first issue published on March 3, 1923. One of Time's initiators, Henry Robinson Luce, was born and grew up in east China's Shandong Province. During his administration, he exerted great influence on its focus on China. This tendency lasts till today with the magazine's Asian edition in particular taking closer looks at the diverse facets of Chinese culture and frontpaging more than one showbiz stars.

China Mobile reported its best quarterly profit in a year, beating expectations for little growth, as customers began spending more on value-added services.

US ambassador to China Jon Huntsman talks to reporters during a meeting with students at Tsinghua University in Beijing on Thursday. China faces important negotiations over its exchange rate in coming weeks, the US ambassador to China said on Thursday, adding that it was not just the United States that wanted action on the yuan. The currency debate has become increasingly acrimonious, with US lawmakers and quite a few economists saying Beijing holds the yuan so low that Chinese goods enjoy an artificial competitive edge that is distorting the global economy. A semiannual US treasury report due in mid-April could label China a “currency manipulator”, triggering greater pressure on Beijing. “We need to show real progress this year in creating new jobs and rebalancing our relationship,” Huntsman told an audience of students at Tsinghua University, an elite school in Beijing. “We hope to see more flexibility on the exchange rate,” Huntsman said, adding that Washington also hoped to see China lean more on domestic consumption to drive its growth. “I suspect there will be many important negotiations in the weeks ahead,” he said in response to a question from a student on the exchange rate issue. “The negotiations ahead will be very, very important.” “This isn’t just an American issue,” he added. “There are many countries that feel the same way.” A bipartisan bill introduced in the US Senate on Tuesday aims to press Beijing to let the yuan rise, threatening a deepening rift between the world’s biggest and third biggest economies. Mainland officials have given no ground, saying they will not waver in sticking to a stable exchange rate while asserting that their nation is being made a “scapegoat” for the United States’ own economic woes ahead of Congressional mid-term elections. Beijing says its stable yuan has been a boon to global economic recovery. The rising currency friction has come after two months of quarrels between Beijing and Washington over human rights, China’s restrictions on the internet, US arms sales to Taiwan, and President Barack Obama’s meeting with the Dalai Lama. Huntsman said he was confident that Beijing and Washington could overcome those bilateral strains to focus on solving broader global worries, including the economy, climate change and Iran’s disputed nuclear program. “This year we’re putting the relationship to the test in trying to take it to a new level”, he said. “Differences on Taiwan and Tibet cannot prevent us from working together.”

Wal-Mart looking to sell China's yuan bonds - Wal-Mart Stores is mulling selling yuan bonds in Hong Kong, the world’s largest retailer’s Asia Chief Executive Scott Price told Bloomberg. The retailer is looking at options and such a move would underscore the company’s commitment to support local communities and mainland’s financial system, Price told the agency in an interview. Wal-Mart could be the first foreign non-financial company to issue yuan debt in Hong Kong, according to the agency. The Hong Kong Monetary Authority has announced measures that broaden the kind of yuan business that is possible to do in Hong Kong, according to IFR Asia, a Thomson Reuters publication. Non-Chinese non-financial entities are now allowed to issue yuan bonds and tap yuan loans from domestic banks in Hong Kong so long as the funds raised do not flow back to the mainland and provided proceeds do not fund investments in shares, IFR said in its February 20 issue. So far, 38 billion yuan (HK$43 billion) worth of bonds have been issued in Hong Kong, including transactions from the central Ministry of Finance and from locally incorporated foreign banks, Bank of East Asia (SEHK: 0023) and HSBC (SEHK: 0005, announcements, news) , IFR said. As the US economy improves, more of the shoppers who flocked to Wal-Mart to save money during the recession are moving back to the stores they frequented before, according to a survey by America’s Research Group. Wal-Mart could not be immediately reached for comment.

Millions of people face drinking water shortages in the southwest as the worst drought in a century dries up rivers and threatens vast farmlands.

Two residents in Guangzhou, Guangdong province, walk beside an advertisement promoting sorting waste on Sunday. Wuxi, a city in Jiangsu province, has vowed to continue its efforts to clean up Taihu Lake and become China's first ecologically sound city this year.

China's first home-made large civil helicopter makes test flight

March 19, 2010

Hong Kong*: The Department of Justice says it has applied to the High Court for access to the will Tony Chan Chun-chuen claimed Nina Wang Kung Yu-sum signed in 2006 leaving her fortune to him.

Alex Law (left), director of Echoes of the Rainbow, producer Mabel Cheung Yuen-ting, and stars Sandra Ng Kwan-yu and Simon Yam Tat-wah visit Wing Lee Street yesterday. The film, which was set in the street, stirred great public interest in the neglected corner of Sheung Wan. The decision to save all 12 tenement buildings in Wing Lee Street from demolition won applause from conservationists yesterday but upset tenants who want public flats and owners seeking more compensation. Under the original plan submitted for Town Planning Board approval on Friday, only three of the 12 tenements would be preserved. Public opposition to the plan intensified after a film shot on the street won an award at the Berlin Film Festival last month. The board received more than 500 objections from members of the public. If board members do not support the original plan on Friday, the board will be asked to consider the alternative proposal announced yesterday. The alternative proposal excludes Wing Lee Street from the redevelopment boundary that originally covered three sites, including Staunton Street and Shing Wong Street. The street will be zoned as a conservation area to prevent redevelopment. The authority, having acquired half of the 24 property interests in Wing Lee Street, will stop approaching owners for acquisition if the alternative plan is adopted. Owners will be asked to preserve and refurbish all 12 tenements, of which three are now owned by the authority. Under an existing voluntary restoration scheme for tenements, owners who cannot afford the renovation costs will be subsidised to refurbish the building's exterior, and they can borrow up to HK$300,000 to maintain common areas. The renovation cost is estimated at HK$500 to HK$3,000 per sq ft, depending on the condition of the building.

The Legislative Council on Wednesday is debating a controversial bill aimed at making it easier for property developers to re-develop old buildings in Hong Kong.

Ten taxi drivers, who had received jail sentences for causing for blocking airport road access in 2008, won an appeal on Wednesday in the High Court to have their sentences reduced.

Wan Chai primary school Raimondi College Primary Section will suspend classes for seven days from Wednesday to stop the spread of influenza, a spokesman for the school said.

Taiwanese snack tycoon Tsai Eng-meng has filed an injunction to prevent major ATV shareholder Payson Cha Mou-sing and others from conducting a transaction involving the station's shares and a "substantial" amount of money. The transaction, details of which are unclear, was alluded to in the Court of First Instance, where San Want Media Holdings, wholly owned by Tsai, has filed a lawsuit against Cha, his brother, Johnson Cha Mou-daid, the station's director Peter Brown, and Antenna Investment, which has a stake in the station. Godfrey Lam Wan-ho, SC, representing the defendants, said yesterday that the potential loss his clients would incur should the court allow the injunction was much higher than Tsai's lawyers had described. Mr Justice Aarif Barma agreed that the combined value involved in the transaction was substantial. He ordered Tsai to pay HK$25 million in fortification for the potential loss that Cha could suffer from the injunction. Fortification refers to the amount that must be committed to pay damages to a party should they suffer a loss as the result of an injunction, if it turns out the injunction should not have been ordered. The court has yet to decide whether to grant it. Barma raised the fortification amount by HK$20 million from an initial HK$5 million that he had ordered previously, after assessing additional information about the transaction that Cha's lawyers handed to the court. San Want has until tomorrow to hand over the HK$5 million and a week from yesterday to hand over the HK$20 million. San Want filed a statement of claim in the court two weeks ago alleging the Cha brothers had breached their fiduciary duty by backing the issue of convertible bonds that could be exchanged for ATV shares priced below the minimum that a shareholders' agreement allowed. The writ named the brothers, Brown, and Antenna Investment as defendants. Yesterday's session was a preliminary hearing on San Want's application for the injunction against the transaction. The court will hear arguments on whether to grant the injunction on April 8. Meanwhile, Shenzhen property tycoon Wang Zheng, to whom Cha has agreed to sell his ATV stake, continued his role as a special volunteer yesterday by attending meetings at the broadcaster's headquarters in Tai Po. He met staff handling various productions, including the Hong Kong Top 10 Loving Hearts Selection Campaign, which was his idea, Mr Asia Contest and Miss Asia Pageant, ATV's special projects and public relations vice-president Ip Ka-po said. Ip said Wang had been trying to get advertising clients for these events. "He's still working as a volunteer and he's very enthusiastic." However, Tsai's camp was not impressed by Wang, who has vowed to turn ATV into Asia's CNN. A person from Tsai's camp challenged Wang's role. "He doesn't have a position, he's not a director of the board and he's not even an investor. He doesn't own even one share of ATV."

The name China Public Procurement (CPP) may not ring a bell in Hong Kong or on the mainland. But when it announced in February it had signed a 300 billion yuan (HK$340.47 billion) three-year contract with Hua Tie, a subsidiary of China Railway Construction (SEHK: 1186) Materials Group, it caught the eye of investors. The company's shares a year ago traded between 70 HK cents and 80 HK cents. That was when it was a footwear manufacturer that had been making losses since its listing in 2002. But the shares have almost doubled since the beginning of this year, reaching a record high of HK$1.14 following news of the contract. Still, questions have been raised about CPP's credibility and potential profitability as an e-procurement provider, which it now says is its core business.

Analysts are divided over whether a mismatch between soaring property prices and stuttering economic growth should be ringing alarm bells for homebuyers in Hong Kong. While Hong Kong property prices have soared to the second highest in the world, growth in the city's gross domestic product has fallen to the second lowest of 13 countries in the region over the last decade. "A slow GDP growth represents a mild growth in our underlying economy and personal income. How can it support a sharp increase in property prices?" David Ng, head of regional property research at The Royal Bank of Scotland, said. But some investors and property analyst Eric Wong Chun-yu of UBS disagree. "Historic GDP growth may have been low. But that is history," Wong, joint head of Asia property research at UBS, said. Fuelled by a strong GDP growth forecast this year, growth in wages, and sustained high liquidity, he expects property prices will surge by 35 per cent by the end of 2011. Research by the Royal Bank of Scotland and CEIC Data Company shows that Hong Kong's GDP grew at a compound annual rate of 2.6 per cent between 1999 and 2009, joint second last in the region with Taiwan. Japan was ranked last with a negative annual growth in GDP of 0.5 per cent. Beijing and Shanghai recorded compound annual growth rates in their economies of 16.1 and 14 per cent respectively over the 10 years ended 2009, to be ranked the second and fourth fastest-growing economies. Fastest was Indonesia at 16.5 per cent. But even though Hong Kong's economic growth was poorer than the other Asian cities, growth in domestic property prices has outstripped all the other cities. Data from online property research house, Global Property Guide, show that the current price of a 120 square metre apartment was US$15,424 per square metre in Hong Kong. Singapore was ranked the fifth most expensive at US$10,723 per square metre - but unlike Hong Kong that ranking was supported by compound annual growth in the city's economy over the decade of 6.3 per cent. And despite ongoing modest economic growth in Hong Kong (2.6 per cent in the fourth quarter of 2009 and forecast to grow between 4 and 5 per cent in 2010), the Centa-City leading index of mass residential prices was up 6.6 per cent in the first two months of this year, following an increase of 35 per cent in 2009. The growth in property prices has been fuelled by an influx of liquidity and resulting low interest rates, as well as strong mainland buyer demand and has exceeded the best expectations of analysts such as Ng. Middle-class upgraders were key demand drivers in the market, he said. But they had not enjoyed substantial growth in income over the past few years, which put most 1,000 sq ft units in Hong Kong Island out of their budgets. "If they are not bullish on their income growth, how can they be bullish on the property market?" Ng asked. Ng owns a single flat in West Kowloon's Olympic Station area, which he bought in 2007. "The price of my flat has jumped 40 per cent already. Much higher than the wage growth. I may not have been able to afford it if I had tried to buy it now. "Our economy is still relying on the financial and property sectors and lacks a new driver. It will not be easy to find a solution in the short-term," Ng said. But veteran investor Lai Ni-jan holds a more optimistic view of the outlook. Lai bought three units at Henderson Land (SEHK: 0012)'s Hill Paramount in Sha Tin last week at a total investment cost of HK$60 million. The developer offered a 5 per cent discount and will pay Lai's stamp duty. Explaining his confidence about making a capital gain from his investments, Lai said developer Cheung Kong (SEHK: 0001) would soon be launching its Festival City in the area at a price of HK$10,000 per sq ft. "That will boost the capital value of my flats at Hill Paramount," he said. He expected property prices to rise by 15 to 20 per cent this year. "Property prices will still be affordable even if the mortgage rate rises to 5 per cent from the existing 3.5 per cent. The mortgage rate was more than 10 per cent in 1997," Lai said. The biggest risk to this outlook, he said, was if there was a sharp rise in mortgage rates. The risk of such an event was low, however, according to Wong. "The global economic outlook remains uncertain. Interest rates will not rise as much as some in the market expect this year," said Wong, who remains bullish on the property market. Fuelled by a strong GDP growth forecast this year, growth in wages, and sustained high liquidity, he expects property prices to surge 35 per cent by the end of 2011. Last month, Financial Secretary John Tsang Chun-wah forecast Hong Kong's GDP growth would reach 4 to 5 per cent this year. The city's GDP was negative at 2.7 per cent in 2009.

Hong Kong property agents have extended their competitive battlefield to Macau, lured by a recovery in the property market on the island.

China*: The World Bank raised its mainland growth forecast for this year to 9.5 per cent from 9 per cent but says Beijing needs to cool inflation and possible bubbles in real estate prices.

The trial of four Rio Tinto staff charged with commercial spying in China will begin on March 22 in a Shanghai court, Australia’s foreign affairs department said on Wednesday.

Senator Sherrod Brown (second from right), speaks during a news conference on Capitol Hill in Washington overnight on Tuesday to discuss new legislation calling to penalise China for 'currency manipulation'. From left are, Senators Charles Schumer, Sam Brownback, Debbie Stabenow and Lindsey Graham. Members of the US Congress overnight on Tuesday threatened Beijing with duties on some of its exports if it fails to revalue its currency, putting pressure on the Obama administration to label mainland a currency manipulator. A bipartisan bill introduced in the US Senate merges previous legislative efforts to press mainland to change policies that critics say keep its yuan currency cheap, effectively subsidising exports and taxing competing imports. “When there’s a 20 per cent or 30 per cent undervaluation that reduces the price of a product coming in, that’s not fair. That’s cheating,” Democratic Senator Debbie Stabenow, a co-sponsor of the legislation, told a news conference. “If they’re not going to do it, we’re going to force them,” Republican Senator Sam Brownback added. The bill, a rare show of bipartisan accord, reflects widespread concern about high US unemployment. It follows two days after Premier Wen Jiabao dismissed US complaints about mainland’s exchange-rate policy as protectionist. It also is likely to weigh on the Obama administration’s deliberations whether to label mainland a currency manipulator in a semiannual Treasury Department report due on April 15. In the background is the realisation that mainland is a major holder of US debt. Many US lawmakers, with strong backing from economists, believe the yuan is undervalued by 25 per cent to 50 per cent, giving mainland companies an unfair price advantage in trade – a situation seen as more acute now that the US economy is struggling to recover from the worst downturn since the 1930s. US Treasury Secretary Timothy Geithner, asked on Fox Business Television about the legislation, said it illustrated “how strong people feel about this, and it’s understandable and it’s true in countries around the world. “I think ultimately they’re going to decide over time it’s in their interest to move to a more flexible exchange rate,” Geithner added. White House Spokesman Robert Gibbs said Obama “wished and hoped that China approached the currency using a more market-based interpretation”. A US Treasury official added: “The rebound of China’s economic growth and exports and their continued large-scale reserve accumulation indicate clearly that China should resume appreciation of the RMB.” However, Dan Ikenson, a trade policy analyst at the Cato Institute, said he feared the legislation could inflame relations with mainland without accomplishing the lawmakers’ goal of reducing US imports from that country. He noted that when the yuan rose 21 per cent in value between July 2005 and July 2008, the US trade deficit with mainland actually increased from US$202 billion to US$268 billion. Nick Bennenbroek, head of forex strategy at Wells Fargo in New York, called the lawmakers’ move counterproductive. “When China gets international pressure to adjust its currency policy, it seems to resist that pressure. It doesn’t like to be pushed around,” he said. Intervention proposed - The legislation was crafted by Senators Charles Schumer, a Democrat, and Lindsey Graham, a Republican. The two got 67 Senate votes in 2005 for a bill threatening to put a 27.5 per cent tariff on all mainland goods. “This is a good coalition to make something happen in the Senate, and I hope our colleagues in the House will follow,” said Graham. Senate Majority Leader Harry Reid said the bill was “something that committees with jurisdiction should take a look at”. The bill would require the US Treasury Department to identify countries with fundamentally misaligned currencies each September and March. The proposed legislation would authorise the Commerce Department to include currency misalignment in its calculation of anti-dumping duties on specific products if a targeted country has not begun steps within 90 days to realign its currency. It also requires the Department to investigate if currency manipulation is a subsidy that warrants additional “countervailing duties”. It ratchets up pressure by instructing the US Trade Representative to initiate action at the World Trade Organisation against any country that has not taken steps within 360 days to realign its currency. The bill also would require the Treasury Department to consult with the Federal Reserve and other central banks to consider remedial intervention in currency markets if a targeted country has not acted after a year.

Firms selling advertising space on Google's search pages have demanded clarity about the internet company’s plans in China, warning they will demand compensation if it shuts its portal.

Chongqing's police chief yesterday confirmed a major shake-up of the municipality's scandal-ridden police force. All mid-level management positions will be declared vacant and the posts filled through open recruitment. In another sign of the widespread corruption plaguing the force, the decorated deputy captain of Chongqing's police narcotics team, Luo Li, has been revealed to be a corrupt drug lord, China Broadcasting Net reported yesterday. Insiders said the storm stirred up by the municipality's controversial anti-triad crackdown, launched in June, appeared far from over, despite signs to the contrary last month when a party meeting announced that 3,348 people had been arrested for "connections with underground activities" and handed out People's Hero awards to individuals who contributed to the crackdown. The major management shake-up in the municipality's police force was first leaked by China Broadcasting Net yesterday. It quoted a confidential, internal document as decreeing that all police cadres in leadership roles, from vice-section heads to vice-bureau heads, were required to "step down from their positions and reapply through open recruitment". Police chief Wang Lijun - a triad-buster parachuted in from Liaoning in July 2008 - disputed the report in a radio interview later in the day, saying the changes were not as widespread as reported and only applied to cadres in leadership roles up to department head (one administrative level below bureau), all of whom had been in their positions for more than six years. Requiring cadres who reach the end of their term of office to re-apply through open recruitment is becoming a trend in mainland government departments but such a massive change of blood is rare. Wang said applications would be vetted more strictly than before, with assessments no longer based on capability alone, but also considering "political quality".

President Hu Jintao is very likely to attend next month's nuclear summit in the US despite renewed friction with Washington over its criticism of Beijing's currency settings. Beijing has been tight-lipped amid speculation about whether Chinese leaders will attend the two-day summit, called by US President Barack Obama. But analysts say Beijing will not miss such an important meeting and information released by state media shows that Hu is the person most likely to represent the country at the talks. A Brazilian diplomat said that his government expected Hu to attend the second BRIC summit in Brasilia on April 15 or 16. "President Hu is also expected to be paying a state visit to Brazil, probably before the BRIC summit." The summit in Brazil - between the four emerging powers, China, Brazil, Russia and India - will take place immediately after the April 12 to 13 nuclear security summit in the United States, adding to the likelihood of Hu's attendance. Media reports have also suggested that other Chinese leaders will be occupied by official visits elsewhere late this month and early next month. Indonesian Foreign Ministry spokesman Teuku Faizasyah said last week that Premier Wen Jiabao would make his first trip to the Southeast Asian country around the third week of April. Xinhua reported yesterday that Vice-President Xi Jinping would be visiting Russia and four European countries between March 20 and 30. This would reduce the chances of Xi going to Washington because it is rare for state leaders to make two major trips in the space of just two weeks. Despite recent tensions in Sino-US relations, mainland analysts said China was likely to attend the nuclear summit, where world leaders will discuss steps to prevent nuclear expansion and terrorism. However, some said it would undermine China's self-esteem if a leader went to Washington after the US administration sold arms to Taiwan and hosted Tibetan spiritual leader the Dalai Lama at the White House. Niu Jun , a professor of international relations at Peking University, said the nuclear summit was a multilateral meeting and should not be considered a Sino-US affair. "It's such a big event, it will do China no good if it does not attend," Niu said. "China will have to get its voice heard at the summit." Hu agreed to pay a state visit to the US during Obama's visit to China in November. But Sun Zhe , from Tsinghua University, said that even if Hu did attend the nuclear summit, a state visit to the US would not take place in the first half of the year. China is under increasing pressure to help pass a fresh round of sanctions on Iran. But officials have repeatedly said that sanctions would not settle the nuclear issue in Iran fundamentally, and suggested diplomatic negotiation. The timing of the nuclear summit is tricky for China because Hu would be likely to leave Washington with renewed criticism of currency policy. The US Treasury Department will release its semi-annual report to Congress on international currency policies on April 15. A group of 130 American lawmakers sent a letter to Treasury Secretary Timothy Geithner and Commerce Secretary Gary Locke on Monday, urging the US government to single out the Chinese currency issue in the report. Commerce ministry spokesman Yao Jian said yesterday the valuation of the yuan was not the reason for China's trade surplus. "It would be unfounded and meaningless for some people in the US to back their calls [for China to be labelled a currency manipulator] by citing China's trade surplus and the US deficit and US recovery needs," Yao said. "The United States ... cannot ask others to [revalue] their currency for the sake of its own export expansion - that would be an egotistical practice."

March 18, 2010

Hong Kong*: The Urban Renewal Authority said on Tuesday it had abandoned its controversial re-development plans for Wing Lee Street in Central. URA chairman Barry Cheung Chun-yuen told reporters that Wing Lee Street would be excluded from the government’s re-development plans and old buildings in the street would be preserved. The plan had angered many people – who believed the buildings should be preserved for historic reasons. Under the original plan to re-develop Staunton Street, Wing Lee Street and Aberdeen Street, the government would retain three tenement buildings in Wing Lee Street and recreate new low-rise buildings at 4-9 Wing Lee Street. The buildings in Wing Lee Street were all built in the 1960s. “To conserve the street, the URA suggests the Town Planning Board develop Wing Lee Street as a special conservation district,” Cheung said. “So, Wing Lee Street’s buildings would not be demolished,” he said. But tenement buildings in poor condition, such as those at 11-17 Shing Wong Street and 1-9 Wing Lee Street, would be rebuilt. Cheung said as the government has already acquired 50 per cent of the property interests in Wing Lee Street. The Town Planning Board would be responsible for renovating these buildings and revitalising the nearby Bridges Street market. Cheung denied the decision was due to growing pressure from conservation groups and the public, who want the government to retain the street. “Even in the plan dating back to 2008, the URA decided to adopt a conservation-based re-development plan for Wing Lee Street,” he said. “We are just suggesting an alternative approach to the Town Planning Board to keep more buildings,” Cheung said. The fate of the 12 old buildings – also known as “Tong Lau” – sparked further public concern after the film Echoes of the Rainbow won a Crystal Bear at the Berlin International Film Festival in February. The Hong Kong film is set against the backdrop of Wing Lee Street in the 1960s. The film’s producer, Mabel Cheung Yuen-ting, has also urged the government not to demolish Wing Lee Street. Cheung said it is the only street in Hong Kong which still retains 1960s characteristics. Cheung said on Tuesday she was delighted the street would be retained. “If producing this film has helped to preserve the street, I feel it’s the biggest achievement of the film,” Cheung told reporters.

The Urban Renewal Authority announced on Tuesday it would scrap its plans to redevelop Wing Lee Street in Sheung Wan and preserve the street in its existing form instead.

Macau Chief Executive Fernando Chui Sai-on on Tuesday announced a three-billion-pataca (HK$2.9 billion) scheme of cash bonuses for residents in his first policy address.

The government has to shoulder bad debts of at least HK$59 million run up so far under the special loan guarantee scheme, an amount that is expected to increase. The initiative to help enterprises - introduced in December 2008 as banks tightened lending amid the global financial crisis - has a default rate of about 0.1 per cent, or HK$59 million, according to figures from the Trade and Industry Department. The department said it had approved at least 28,967 applications for loans of more than HK$70 billion. Business groups described the default rate as extremely low. They urged the government to extend the program by six months, to December, saying the global economic environment was still uncertain.

Shenzhen entrepreneur Wang Zheng says ATV should represent the spirit and values of Hong Kong. His acquisition of the majority stake in the broadcaster is yet to be completed. Struggling ATV aims to be not just Asia's CNN but the conscience of Hong Kong, as a terrestrial broadcaster with a Putonghua channel carried nationwide, according to a master plan announced yesterday. Shenzhen property tycoon Wang Zheng unveiled the plan in his first appearance at ATV's headquarters in Tai Po since its major shareholder, Payson Cha Mou-sing, confirmed he had agreed to sell his stake to Wang earlier this month. Wang also said four new directors - all of them his relatives - had been added to the ATV board, but he would not say who they replaced. He was at ATV for the media briefing of a new event which he masterminded, the Hong Kong Top 10 Loving Hearts Selection Campaign. Wang said the transaction for his stake purchase had yet to be completed but he was working as a "volunteer" at ATV, without a proper office, and had mapped out the firm's long- and mid-term goals. He said the ultimate aim was to turn ATV into Asia's CNN, so that those interested in Asia worldwide would watch ATV every day. But in the medium term, Wang pitched ATV as the voice of Hong Kong, representing the spirit and values of the city. He recalled the kindness of strangers when he came to Hong Kong 19 years ago on a monthly salary of HK$5,000. At that time he met Lim Por-yen, whose family was ATV's biggest investor in the 1990s. "Whenever Lim talked about ATV, he always said 'ai ya'. He lost HK$700 million from running ATV. He said he had never lost so much money," Wang said. Wang admired Lim's work ethic, noting that he would jog and read the newspaper at the same time. "Perhaps this could be the Hong Kong spirit," he said. But Lim's losses did not dampen Wang's enthusiasm for the television industry. Money was widely thought to be ATV's problem, but Wang said there was more to the broadcaster's troubles. "ATV needs to find its new direction. It's the development direction and method that matter," Wang said. "And also talent." He said ATV should launch a Putonghua channel, noting that TV stations in Hong Kong and Macau were allowed to make one channel available nationwide via the cable network and that TVB (SEHK: 0511), Phoenix and Star all had nationwide channels. "What about ATV? Why don't we have such channels?" he said. "ATV's only problem is that we still do not have a Putonghua channel - years after the handover. Now, at least one-third of the population can speak or understand Putonghua. It is a must to have a Putonghua channel." Wang also insisted the strategic deals signed by ATV in Beijing last week with five mainland firms - China Life (SEHK: 2628, announcements, news) Insurance, China Merchants, China Overseas Group, Bank of Beijing and GDH - did not have political implications. "They are all my friends, mentors and teachers," he said. "At the beginning they were really worried [about the ATV investment], but later on they began to understand and felt they should show some support." But Wang declined to comment on when his stake purchase would go through, or the war of words between shareholders Cha and Tsai Eng-meng. He would not comment on today's hearing of Tsai's application for an interim injunction against Cha and other parties. Ip Ka-po, ATV's special projects and public relations vice-president, said ATV would put out guidelines to prevent corruption after TVB general manager Stephen Chan Chi-wan and others were arrested by graftbusters.

The University of Hong Kong has pledged to make a raft of improvements to its new pharmacy degree after it was accused of being lax in arranging professional recognition for the program. Its Li Ka Shing Faculty of Medicine will employ more pharmacy specialists, including one full professor in the subject, with two new specialist academics due to take up their posts shortly, a spokeswoman said yesterday. It will speed up the submission of documents to the Pharmacy and Poisons Board, which is assessing the university's application for recognition of the programme as meeting the requirements of the Registered Pharmacist exam that the board administers. It will also build a suite of new laboratories at the medical faculty's Sassoon Road campus so that pharmacy students have their own facilities rather than sharing them with medical and nursing students. "The accreditation is an ongoing process," she said. "The faculty of medicine has close contact with the Department of Health and we have submitted some of the documents already. But we will speed it up. We are very confident that we will get the accreditation before our first batch of students graduate in 2012." Faculty dean Professor Lee Sum-ping and Professor Paul Vanhoutte, head of the Department of Pharmacology and Pharmacy, met yesterday with the 25 students on the program, which began last year, to reassure them and outline the progress of the recognition application. To become a registered pharmacist in Hong Kong, candidates must complete a pharmacy degree of at least three years and one year of professional training as well as pass the registration exam run by the Pharmacy and Poisons Board. Graduates of Chinese University's pharmacy degree are exempted from taking the registration exam after the university won recognition from the board that their program was of equal standard and covered the same material. HKU is applying for the same recognition for the new degree but it has been criticized for placing the first group of students at risk by starting the process after the program began. Dr Kwok Ka-ki, practicing surgeon and convenor of the Action Group on Medical Policy, said: "I am very surprised that HKU has set up a program without gaining professional recognition before it started."

A controversial law that facilitates redevelopment of old buildings by private developers is likely to be passed tomorrow with the majority of lawmakers indicating support, although others are making an attempt to defer the measure's effective date by a year. Lawmakers from the pan-democratic camp and independent Regina Ip Lau Suk-yee have indicated they would propose amendments to the government proposal, which would allow developers to seek compulsory sale of a building after acquiring 80 per cent of the property interests in it, down from the present 90 per cent. Among the several amendment items, Secretary for Development Carrie Lam Cheng Yuet-ngor said only deferral of the law's effective date by a year would be acceptable. Speaking on a radio programme, the minister rejected criticism that the proposed law would rob people of their property: "It's a situation of the majority versus the minority, instead of a developer acting against the minority owners," she said. If the law failed to pass, it would not be tabled again in the remainder of her term, she added. Democrat legislator James To Kun-sun said the government should hold off on the measure until a mediation mechanism to settle disputes over acquisition prices - which the government had agreed to explore - was in place. His party would also propose restricting the measure to industrial blocks, confining affected buildings to those with a repair order, and mandatory mediation between property owners and developers before a compulsory sale was considered. The measure, to be introduced under the existing Land (Compulsory Sale for Redevelopment) Ordinance, would in its present format be confined to three types of buildings: those with all units but one acquired; any blocks older than 50 years; and industrial blocks outside industrial zones that are older than 30 years. In the past few months, several homeowners forced to sell their flats under the existing law have come out in protest, saying they were not happy with the sale price determined by the Lands Tribunal. Hong Kong Institute of Surveyors spokesman Dr Lawrence Poon Wing-cheung said auction prices determined by the tribunal in past cases were reasonable as owners received compensation equivalent to about 2.5 times the value of their property, on average. "I don't think the majority owners would sell their flats to the developer if the price was too low," Poon said, adding that an independent surveyor looked at each case. He said a lower threshold would affect the interests of investors as their bargaining power would be weakened. A total of 21 compulsory sale orders were issued and one case has been dismissed since the ordinance came into effect in 1999. Most owners were paid at least double their property's value, except those in Tai Yuen Street and McGregor Street during the financial crisis in early 2009. The highest compensation went to owners of Chun Fai Terrace on Tai Hang Road, who were paid six times their property values in 2007. The law will take effect on April 1 if the proposed amendments fail to win majority support in Legco. The Democratic Alliance for the Betterment and Progress of Hong Kong, Liberal Party, Professional Forum and Economic Synergy support the government proposal. The Federation of Trade Unions and non-affiliated legislators such as Samson Tam Wai-ho and Paul Tse Wai-chun said they had not decided whether to support the move for a one-year deferral.

China*: Google should obey government rules even if it decides to retreat from the mainland over hacking and censorship complaints, a government spokesman said on Tuesday.

Chinese Premier Wen Jiabao (R) meets with British Foreign Secretary David Miliband in Beijing, capital of China, March 16, 2010. China and Britain Tuesday pledged to make joint efforts to promote free trade and oppose protectionism. "China and Britain should keep alert to trade protectionism and work together to oppose it," said Premier Wen Jiabao in a meeting with British Foreign Secretary David Miliband, according to a press release from China's Foreign Ministry. "Britain upholds free trade, and believes pressure should not be put on China regarding its currency," the press release quoted Miliband as saying. Western countries have accused China of manipulating its currency. Wen pledged to keep the yuan stable at an appropriate and balanced level after the conclusion of the annual parliamentary session on Sunday. Wen told Miliband China was firmly committed to reciprocal opening-up, and imports and foreign investment were increasing, according to the press release. "We welcome British and other enterprises investing in China, and will offer favorable conditions for them," Wen said.

United Nation body backs China's yuan policy - A UN think-tank on Tuesday backed Beijing’s controls on the yuan despite US and EU pressure, saying that exposing the currency to the money markets would pose greater global risks. “Expecting that China will leave its exchange rate to the mercy of totally unreliable markets and risk a Japan-like appreciation shock ignores the importance of its domestic and external stability for the region and for the globe,” said the UN Conference on Trade and Development. Mainland has been under intense pressure from the United States and the European Union, to allow its currency to appreciate. Washington and Brussels claim that the Beijing has intentionally kept the currency low to boost its exports, particularly in a bid to exit from the global economic crisis. UNCTAD noted however, that mainland has “done more than any other emerging economy to stimulate domestic demand” in order to mitigate the crisis. As a result, domestic private consumption rose about 9 per cent last year, said UNCTAD, “backed by salary increases in the two-digit range”. Labour costs are therefore rising at a faster pace than elsewhere, “resulting in a continuous loss in competitive power even with a fixed exchange rate”, said UNCTAD. The think-tank also warned that speculation has returned to the markets and that emerging economies could fall victim. “The global casino, nearly empty a year ago, is crowded again, and many new bets are on the table,” it said. “The effects of the new exuberance on financial markets are adverse for countries with once-fragile currencies, such as Brazil, Hungary and Turkey,” it said. “An appreciation of the Brazilian real and the Hungarian forint has forestalled urgently needed gains in competitiveness and could again lead to severe overvaluation, a dramatic distortion of trade patterns and new imbalances,” it said. It also backed Brazil’s move to tax equities and fixed income investment inflows by foreigners, which was widely criticised by the stock market and analysts. Earlier on Tuesday, mainland again turned a deaf ear to US demands for a stronger yuan, saying the currency is not the cause of its trade surplus and pledging to keep the exchange rate stable to help its exporters. Beijing and Washington appear to be locked in a dialogue of the deaf in the run-up to a determination by the US Treasury Department due on April 15 as to whether mainland is manipulating its exchange rate. “If the exchange rate issue is politicised, then in coping with the global financial crisis this will be of no help in co-ordination between the parties involved,” Commerce Ministry spokesman Yao Jian told a regular news conference. He described two-way trade ties as very important and said Beijing was willing to enhance co-operation with Washington. But he rejected the argument that mainland’s hefty trade surplus with the United States was due to the yuan, which some US economists judge to be 25 per cent or more undervalued. “The trade surplus is not caused by the renminbi exchange rate. The trade surplus is an outcome and phenomenon of globalisation. It will exist for a time,” he said. Yao was speaking a day after 130 US lawmakers demanded that President Barack Obama get tough with mainland over its currency practices. “The impact of China’s currency manipulation on the US economy cannot be overstated. Maintaining its currency at a devalued exchange rate provides a subsidy to Chinese companies and unfairly disadvantages foreign competitors,” the legislators said in a letter. Yao asked rhetorically whether mainland, which has a trade deficit with Japan, South Korea and some developing countries, should emulate the United States and pass a law to deal with those countries. “So we hope that in surmounting the crisis and reviving its economy, the United States should be a promoter of free trade, not an obstacle to it,” he said. If the Treasury does rule that mainland is manipulating its exchange rate, the US government would be required in principle to start “expedited negotiations” on the issue.

China cut back its treasury bond holdings to the lowest level in eight months, the US Treasury said amid rising tensions over claims Beijing was undervaluing yuan for trade gains.

China's trade surplus with US misread - China's large trade surplus is often used by the United States to argue why China should allow its currency to rise. Yet most US officials ignore a very important fact: a majority of China's exports to the US are produced by US-funded companies and huge profits go back into American pockets. China's surplus, foreign companies benefit - Chinese Premier Wen Jiabao said at Sunday's news conference that half of China's exports came from the processing trade -- where imported components were assembled at factories in China and 60 percent were made by foreign-funded companies or joint ventures with foreign partners. "Therefore, to restrict trade with China is tantamount to causing difficulty for the businesses of your own countries," he said. According to statistics provided by the Ministry of Commerce, 55.9 percent of China's exports were produced by foreign companies last year. The proportions were 83 percent and 75 percent respectively for high-tech products and electronic products. And, over 90 percent of high-tech products exported to the US were made by foreign enterprises. Big surplus, small profit - Researchers at the University of California at Irvine conducted a case study of Apple's iPod to examine which countries captured the most economic value from iPod production. The conclusion showed that only four dollars was retained in China, with the bulk going to the designers, retailers and component suppliers. It seems unfair therefore that the full price of an iPod, roughly $300, instead of four dollars, was counted as part of China's exports to US. "China's cheap labor helps foreign companies cut wage costs and increase their profits. Ironically, the rising profits go into foreign bosses' pockets and China is left to take the blame for the trade imbalance," said Tan Yaling, an expert at the China Institute for Financial Derivatives at Peking University. Hi-tech export controls - Premier Wen said the country's trade imbalance would be much smaller if the US would approve more high-tech exports to China.

Passengers and airport workers walk through the boarding hall at Hongqiao Airport's new second terminal in Shanghai on Tuesday. Shanghai inaugurated a massive new airport terminal and transport hub on Tuesday meant to help the city handle the 70 million or more visitors it expects to attend the upcoming World Expo. The new Hongqiao terminal is part of a sweeping upgrade of the transport system for Shanghai, a city of about 20 million people. Hongqiao Airport’s new second terminal, located west of the current terminal building, will handle almost all domestic flights from the airport, though some charter and international flights will still use the older facility. Last year, Hongqiao handled 25 million passengers. The 15.3 billion yuan (US$2.2 billion) expansion will raise its capacity to 40 million passengers. The hub, which will connect directly to the country’s railway and subway systems, will have a daily capacity of 1.1 million, the government says. Shanghai’s larger, newer international airport in Pudong, on the opposite side of the city, handles most of the city’s international flights as well as many domestic routes. The Expo, which begins May 1 and will run for six months, may attract as many as 800,000 visitors a day at peak times, stretching even the new transport systems to their limits. Almost all are expected to be mainland tourists, many of them travelling from the densely populated Yangtze River Delta region that surrounds Shanghai. The smaller, older terminal operated at about three times its intended capacity, but was managed very efficiently. A passenger could often arrive, check in and be on a plane in a half an hour or less. The new, bigger terminal will require walks of nearly 20 minutes from security for some of its most distant gates, but will have 80 check-in counters and 47 security gates for fast service, officials say.

Sprinklers and water pumps in a building owned by China Central Television malfunctioned during a blaze caused by fireworks last year, mainland media reported on Tuesday.

The US pavilion will handle up to 2,500 people an hour. For millions of Chinese, the US pavilion at the Shanghai World Expo will be the closest they will ever come to an getting experience of America. What they will get - apart from long waits - is a warm welcome and a dose of Hollywood-style entertainment. The expo, which begins on May 1 and is expected to draw up to 80 million visitors, offers a chance for cultural diplomacy at a time when relations are fraying over broader trade and geopolitical issues. It's "the single biggest opportunity to nation-brand that's ever come along", says Greg Lombardo, director at BRC Imagination Arts, the Californian firm designing and producing the US pavilion programme at the expo. "When was the last time the United States got to talk directly and intimately to millions of Chinese? We look at this as a chance to convey the story of the US in a way that's going to be very memorable and very positive." A taste of Hollywood and theme park razzle-dazzle would probably not hurt at a time when US-China ties are strained over US arms sales to Taiwan, President Barack Obama's meeting with the Dalai Lama, trade issues and China's handling of the Iran nuclear issue. Never mind all that. At Shanghai's big party, the emphasis will be on goodwill, those involved say. "This is a bright spot in US-China relations. We have a shared goal. We both want a successful expo and a successful US pavilion," Beatrice Camp, US consul general in Shanghai, said. For Shanghai, the expo offers the opportunity for a massive facelift that will help the city showcase China's dramatic progress - much as Beijing did for the 2008 Olympics. Less than a year ago, it was uncertain whether there would even be a US pavilion, as the non-profit group authorised by the State Department to handle the national exhibit struggled to woo recession-stricken corporate sponsors. With practically every other country and international organisation planning some kind of expo pavilion or exhibit, Chinese officials were emphatic that America's absence would be taken poorly. As deadlines came and went, they went ahead and did ground work on the site to ensure it would be usable, come what may. Now, efforts in Shanghai are focused just on ensuring the pavilion will open on time, said Jose Villarreal, who is serving as the US commissioner general of the US pavilion. All but US$8 million of the US$61 million needed to build and run the 60,000 square foot US pavilion is secured, Villarreal said. With US Secretary of State Hillary Rodham Clinton's support, a raft of major sponsors have come on board: Wal-Mart, PepsiCo, Microsoft, Johnson & Johnson, General Electric - several dozen big-name multinational companies whose backing wins them space on the pavilion's "honour wall", use of its VIP visitors centre and an exhibit in the hall visitors will walk through as they leave the pavilion. For the sponsors, the expo offers one of the biggest mass marketing opportunities ever in China - and one of the biggest challenges. With up to 800,000 people expected at the expo each day, exhibits like the China and US pavilions will only be able to accommodate some of the total number of visitors. China's pavilion, expected to be the top draw, will allow in about 50,000 visitors a day. The US pavilion - a mammoth grey steel structure meant to resemble an eagle stretching its wings in welcome - is designed to handle up to 2,500 people an hour. Even so, waits of up to five hours are expected at some of the most popular pavilions. The pavilion's 45-minute show begins with the Spirit of America, a video montage of classic American landscapes, greetings in Chinese by Americans and celebrities and messages from Clinton and Obama. Guests next move to a theatre where, seated on benches, they will see The Garden - the story of a 10-year-old girl who envisages turning a vacant city lot into an urban oasis and, overcoming hardships, works with her neighbours to make that happen. With relations as strained as they are now, it is a good thing the US will at least be there, says Ding Xinghao, director of the Shanghai Institute of American Studies. "The expo will be a good way for the US to sell goods and advanced technology or designs to the world, but it's not a short-cut for resolving other issues."

A co-founder of micro networking website Twitter said on Tuesday that the site is working on a way to allow Chinese users to sign up to the network in their own language. Twitter is working on a way to allow Chinese users to sign up to the social networking site in their own language, a co-founder of the site said overnight on Monday, but access to the popular site remains blocked in mainland. Jack Dorsey said at a panel that Twitter is “hard at work” on allowing Chinese users to register in their own language. Dorsey was responding to a question from mainland avant-garde artist Ai Weiwei. Ai has been an outspoken critic of Beijing authorities and their continuing efforts to impose censorship. He said he spends about eight hours a day on Twitter. “I need a clear answer, yes or no?” he said to Dorsey, who joined the conversation via satellite. “Yes, it’s just a matter of time,” Dorsey responded, citing limited staff and technical constraints as challenges for setting up such a registration page. Dorsey, Ai and Richard MacManus, founder of technology blog ReadWriteWeb, were part of a discussion on digital activism at the Paley Centre for Media. People from all over the world also participated via Twitter, with their tweets displayed on a large screen behind the panelists. The conversation came only a couple of days after it was reported that Google was “99.9 per cent sure” to close its search engine in mainland because of stalled negotiations over censorship. Google has about 35 per cent of the mainland search market. The panelists praised the decision, calling it courageous and inspiring. Ai said he wants Putonghua translation on Twitter so users who are able to get past the firewall can read tweets. Since it was founded in 2006, Twitter has emerged as a tool for digital activism in messages of no more than 140 characters. Ai has used it to demand answers about the number of young children who were killed in the Sichuan earthquake. Last April, protesters in Moldova used Twitter when mobile phones and news television stations went down, rallying as many as 10,000 people to one demonstration. And tech-savvy Iranians turned to Twitter to protest the disputed presidential election. Dorsey said he has no idea how Twitter would get around the firewall. He admitted he didn’t know the site was blocked in the country until three weeks ago when he was prepping for the event. When asked whether he would give user information to the mainland government, he said he hoped the company could work with the US government to make sure that doesn’t happen. “Step one is translation, getting the site accessible in a Chinese version,” said Dorsey. “That’s something the company is really pushing to do.” But moving into the country is something “that’s very difficult to do”, he said., the world's largest business-to-business e-commerce service provider, has established a unique fund to cover fraud disputes between mainland suppliers and their buyers.

Celebrity actress Zhang Ziyi admits she lacked experience in handling charity donations during an exclusive interview with China Daily over the weekend in an undisclosed place in Liaoning province where she was shooting a movie. Zhang Ziyi has vehemently denied accusations that she committed fraud in the name of charity, but admitted to inexperience when organizing a donation drive for the relief of the 2008 Sichuan earthquake victims. In an exclusive interview with China Daily, the internationally-celebrated Chinese actress - for the first time - answered some 100 questions, most of which involve details about the money she gave to charity or collected for her own foundation. Ever since an advertisement featuring her was defaced with paint in December, Zhang has been embroiled in a series of allegations. The most serious of the accusations - mostly from netizens - are about discrepancies in the sums that surfaced in various reports. Shortly after the earthquake struck Sichuan on May 12, 2008, killing some 80,000 and dislocating millions, she decided to donate 1 million yuan ($147,000) to the China Red Cross. As she was in the United States at the time, she asked her representative in China to transfer the money. But due to what she claimed to be a "communication glitch", only 840,000 yuan was sent. She said she took "primary responsibility" for it and had already made up for the shortfall. The other contentious figure was $1 million, which she said she had "hoped" to raise, but had never claimed to have "already" raised. The actual amount pledged for the Zhang Ziyi Foundation is slightly less than $500,000, most of which has not been paid. The event in the eye of the storm was a fund-raising drive on May 21, 2008, at the Cannes Film Festival. During the one-hour "hastily arranged" initiative, only $1,392 in cash was collected, far less than the previously reported $50,000. The rest were informal pledges. The total adds up to about $500,000, which is the amount she said she had always referred to when answering the media. Since then, she said she had been making efforts to pressure the donors to honor their pledges, but her efforts have not been very successful. So far, only $15,050 has been collected. Zhang said she would personally make up for the shortfall but would not reveal the people's names against their will. Zhang also mentioned her foundation was registered in California two days before her fund-raising effort in Cannes. The foundation, a non-profit organization, is of good standing and there have been no financial irregularities, she said. Tears welled in her eyes when she talked about the incident's impact on her and her family, and again when she recounted the solace and support she got from friends. She said she wants to give back to society because she had got so much from it, using her heavily-subsidized tuition in the drama academy and the dance school as an example.

A worker walks past the facial sculptures, the centerpiece of the African Pavilion of the 2010 Shanghai World Expo on March 15.

March 17, 2010

Hong Kong*: Hong Kong's top bureaucrat insists lower starting pay for university graduates entering the civil service will not make the job less attractive. Secretary for Civil Service Denise Yue Chung-yee also told a Legislative Council panel meeting yesterday that such a move would not affect salaries in the private sector. The Standing Commission on Civil Service Salaries and Conditions of Service has suggested lowering the starting salaries of civil servants with degrees by about HK$2,045 to HK$19,835 a month. Education lawmaker Cheung Man-kwong said the move would mean three salary levels for teachers with degrees doing the same jobs in government and subsidized schools. "It will only create chaos and division," said Cheung, adding Premier Wen Jiabao has suggested that one of the solutions for the SAE's "deep-rooted conflicts" is to develop education. Yue said the government will make a decision after a month's consultation with departmental management, staff and universities. It will also look into reviews and feedback from online discussion forums and the wider society.

The Hongkong and Shanghai Banking Corp has taken the lead and standardized its lending rate for yuan loans to finance trade at 3.88 percent. The rate is set with reference to market conditions and the lending rates of the central bank. There is a preferential loan rate of 2.88 percent for borrowers before the end of August, HSBC said. "We have seen growing interest from our commercial customers in using yuan cross- border trade settlements to reduce transaction costs," head of commercial banking for Hong Kong, Albert Chan, said. The bank recently completed its first yuan trade finance deal worth more than one million yuan (HK$1.14 million) with an electronics manufacturer. Beijing last month authorized non- mainland companies to issue yuan bonds and borrow yuan funds. It also gave the green light for non-trading companies to do business in yuan in Hong Kong. Alex Cheung Kin-sang, a DBS (Hong Kong) managing director, said while there are more yuan business opportunities now, loans have been hurt by fears the currency will appreciate. "The demand for yuan loans is still small," he said. Once demand increases, DBS will raise its rates to attract savings. Market rates are currently around 0.7 to 0.8 percent. They cannot be higher than what clearing institution Bank of China (Hong Kong) (2388) offers other banks. Cheung said 7,000 yuan trade accounts were opened locally since August. He expects the number to rise dramatically in coming months as Beijing further lifts restrictions. Separately, HSBC denied media reports that it has devised a new policy for mortgages and refinancing. The bank was reported to have cut the early repayment penalty period from three years to two. That would have meant no legal fees from clients for refinancing while the commission for brokers would double to 0.3 percent.

Almost 50 types of instant noodles in the market contain too much salt, often associated with high blood pressure, the Consumer Council warned yesterday. It said 13 samples exceeded the suggested maximum daily intake recommended by the World Health Organization while one sample was double the limit. In addition, some samples had either excessive total fat or saturated fat. According to the council, 13 of the 48 samples tested in conjunction with the Centre for Food Safety showed sodium levels above the WHO and Food and Agriculture Organization daily maximum intake. The council warned that consuming excessive amounts of sodium increased the risk of developing high blood pressure. The daily intake of sodium should not exceed 2,000 milligrams, or about one level teaspoon, according to the WHO/ FAO. The council said the instant noodles with the highest salt content were Supreme Noodle with Soup Base (wonton soup flavor), which had 4,350 milligrams of sodium in a cup containing 75 grams of noodles, the equivalent of 5,800 milligrams for every 100 grams of noodles. The second highest was Jin Mai Lang Bone Soup (spare rib flavor) with 3,023 milligrams in 128 grams of noodles. Next on the list was Mama Instant Noodles (shrimp creamy tom yum flavor, 90 grams), which contained 2,820 milligrams of sodium. In addition to too much salt, three types of cup noodles contained excessive amounts of fat while nine samples contained high amounts of saturated fat, both of which have been associated with various health problems including heart attacks. The council said nine samples claiming to be "non-fried" or with similar wordings on their packages also claimed to have low amounts of total and saturated fat. But of these, three samples contained an excessive amount of sodium. "Consumers should be aware that eating too much sodium increases the risk of developing high blood pressure while too much total fat is linked to obesity and saturated fat to heart disease," the council's publicity and community relations committee chairman Ambrose Ho Pui-him said. CFS Food and Environment Hygiene Department principal medical officer Anne Fung said oil fried noodles and the seasoning powder included in the package contain the highest amounts of sodium and fat. Fung said macaroni and Shanghai noodles were useful alternatives for a more healthy lifestyle. Fung said consumers would be able to make better choices when the new nutrition labeling scheme comes into force on July 1. She said it was also the responsibility of the manufacturers to ensure the data on the labels is correct. The distributor of Supreme Noodle with Soup Base (wonton soup flavor) said it will be renewing the packaging before the law comes into force. The distributor of Doll Bowl Noodle - which contains high amounts of sodium and total fat - has also promised to change its labeling to reflect the true contents of its products.

With mounting public concerns over an overheating property market, the government yesterday said it may launch more than 4,300 affordable homes. All 4,000 remaining Home Ownership Scheme flats may be put on the market at one time by the Housing Authority as early as June, Secretary for Transport and Housing Eva Cheng Yu-wah said. The Housing Society also announced its decision to immediately sell the remaining 374 sandwich-class homes it holds. Experts, however, are skeptical that there will be any material effects from the sales. Cheng said: "We will advise the [authority's] Subsidised Housing Committee to sell all these [HOS homes] in one go to increase the supply of small and medium-sized units on the market." She reiterated the government is investigating ways to revitalize the secondary HOS market. In the next two months, it wants to look into measures for homeowners to pay land premium more flexibly. It seeks also to further simplify home transactions and offer different terms to prospective homebuyers under the existing mortgage default guarantee scheme. The remaining sandwich-class homes are at Highland Park in Kwai Chung, Cascades in Ho Man Tin and The Pinnacle in Po Lam. Average prices for the three developments are HK$3,100 per square foot, HK$3,700 psf and HK$3,000 psf, respectively, while the entry fee is HK$1.58 million. The Housing Society said it has given a 23 percent discount, after taking into consideration secondary market prices in the district and prospective buyers' means. One-third of the remaining HOS flats are in Tin Shui Wai, while the rest are in Yau Tong and Ma On Shan. Centaline Property Agency senior sales director Fred Chau said the government's decision to sell affordable flats may affect similar private homes, but the new supply - being very dispersed - will not affect prices as a whole. Chau noted that recently launched projects such as Larvotto in Ap Lei Chau provide mainly large homes. Transactions for luxury homes, especially on Hong Kong Island, remain strong this month. He said the government may put more plots on the market and stipulate that more smaller homes should be built. A developer, who asked not to be named, said the government's move is a political one aimed at improving its popularity. He said these homes are insufficient and can only have short-term effects. As long as interest rates remain low and the economy is vibrant, prices will continue to surge, he said. The government should make it clear whether it is launching these homes to curb speculation or subsidize housing, he added. Cheng said the government does not aim to curb prices, but help people in need buy flats.

A prestigious school is to begin testing its students for drugs as early as this week. Tsung Tsin Christian Academy in Cheung Sha Wan will become the city's first school under the direct subsidy scheme to launch testing, according to Sing Tao Daily, the sister newspaper of The Standard. The move comes as a 15-year-old youth was sent to detention center after he admitted trafficking ketamine in return for HK$200. Under the Tsung Tsin Christian Academy's voluntary testing program, to be paid for by the Cheung Sha Wan school, students will be selected randomly to provide urine samples that will be tested by the University of Hong Kong laboratory. The test results will be sent back to the school for parents to collect. School principal Joshua Yau Chung- wan said HKU would only disclose the general test results without disclosing the students' identities. This means it will be up to the parents to approach the school to seek help if their children test positive. Twenty-three schools in Tai Po are currently conducting a pilot scheme to test students. The scheme will be reviewed in June. In the latest case involving a young drug offender, the Secondary 1 student last month pleaded guilty to one count of trafficking in a dangerous drug. In sentencing, District Court Judge Douglas Yau Tak-hong said he hoped that intensive physical training in the center would help the teenager develop a sense of discipline. The judge said he believed the youth had probably been influenced by his peers. He said he believed the youngster was truly remorseful for committing the offense. The judge said he deserved another chance, but stressed that the court was not condoning the use of young people as drug couriers. Judge Yau warned the 15-year-old that if he did not make up his mind to kick the habit and correct his curiosity about dangerous drugs, he would suffer more pain for the rest of his life. He would also be hurting his mother. The judge said he understood the teenager had difficulty growing up in a single-parent family. He warned the teenager that he would be brought back before the court if he failed to comply with rules at the detention center. In July last year, the teen was arrested during a police anti-drug operation outside a restaurant in Tai Kok Tsui. More than 21 grams of ketamine were seized from him.

Mainland’s US$300 billion sovereign wealth fund is looking at directly investing in funds that could benefit from falling equity prices, a top manager at Pyramis Global Advisors said.

Justin Lin Yifu, chief economist and senior vice-president of the World Bank, still hopes he will be allowed to visit Taiwan, the island he defected from three decades ago and which bans his return, his wife said yesterday. Lin defected to the mainland in 1979. At the time, the island was under martial law and ruled by the Kuomintang. Lin's father died almost eight years ago and the Taiwanese government refused to let him return for the funeral. But his wife, Chen Yunying, who later joined him and is now a member of the National People's Congress, said she was optimistic that warming cross-strait ties meant Taiwan would finally let him return. "Last year was the 30th anniversary [of his defection] and everyone thought that he would be able to go back then. We all know that road has yet to open," she said in Beijing on the sidelines of the annual meeting of the parliament. "Following the peaceful progress in cross-strait relations, we hope that the day will come when I can accompany him back." Chen has been allowed to visit Taiwan. The two sides have signed trade and tourism deals since Taiwan's election of the Beijing-friendly President Ma Ying-jeou in 2008, although there have been no direct political talks and military suspicions remain deep on both sides. The reasons for Lin's defection have never been clear. At that time, most defectors fled the mainland for the relative freedom of Taiwan. Lin is also an NPC delegate but was unable to attend this year because his workload kept him in the United States, the official China Daily said. Chen said Lin desperately wanted to pay his respects to his dead father. "Him not going back is unfilial behavior ... It's very painful for him," she said.

Wharf Group subsidiary i-Cable Communications (SEHK: 1097), which touts the two most coveted football programmes in Hong Kong, is gearing up for growth at its flagship pay-television business after significantly narrowing its losses last year. Pay-TV revenue is expected to strongly rebound this year ahead of the 19th FIFA World Cup in June and the new Barclay's Premier League season, the company said in a statement to the Hong Kong stock exchange yesterday. Another Wharf Group unit, the privately held telecommunications firm Wharf T&T, said it is also primed to expand its operations after posting a 52 per cent rise in net profit in the 12 months to December. Stringent cost-control measures and exit from non-core businesses helped i-Cable, which also offers internet broadband services to the consumer market, reduce its net loss 63 per cent to HK$40.9 million from HK$110.3 million in 2008. Revenue fell 15.7 per cent to HK$1.75 billion, affected by slowing business in the first half and losses from its recently discontinued Horizon Channel and print ventures on the mainland. "Our priority will be to grow revenue this year," i-Cable chairman Stephen Ng Tin-hoi said. "The next three months will be crucial for us." The company aims to grow its more than one million pay-TV users ahead of the start of the World Cup and the new Premier League season. It is estimated that 80 per cent of local soccer fans have been paying to watch the Premiership. To accelerate that plan, i-Cable has started wiring up selected residential buildings with an estimated 2.2 million households to have access to its blockbuster football programming. "We want to pre-install rather than wait for orders," Ng said. The cost of the three-year deal to broadcast the Premiership, which is estimated to be more than US$200 million, will be booked across each year of its broadcast. PCCW (SEHK: 0008) group managing director Alex Arena, however, said this week that the Premiership's broadcast rights had become too expensive. He said PCCW's internet broadcast unit Now TV has found more cost-effective and equally popular football offerings in the Italian Serie A and Spanish La Liga broadcasts. Another potential growth driver for the company, in terms of advertising revenue, will be its foray in the free-to-air TV market, which has long been the duopoly of terrestrial broadcast network operators TVB (SEHK: 0511) and ATV. In January, i-Cable submitted its application to the government and has so far replied to 80 per cent of the regulator's follow-up inquiries. Wharf T&T, meanwhile, saw its net profit rise to HK$213 million last year, from HK$139 million in 2008, as it expanded its coverage of business users. Revenue grew modestly to HK$1.65 billion from HK$1.641 billion a year ago. The company plans to spend HK$1 billion in the next three years to boost its optical fibre network coverage to more than 5,000 commercial buildings across the city.

China*: China reduced its Treasury bond holdings in January for the third straight month but remained the top owner of US government debt, the US Treasury Department said yesterday. The string of declines is likely to underscore worries that Washington could face much higher interest rates to finance soaring budget deficits. China's holdings dipped by US$5.8 billion (HK$45.24 billion) to US$889 billion. Japan - the second-largest foreign holder of US government debt - also trimmed its holdings but by a much smaller US$300 million to US$765.4 billion. Separately, Australia's Arrow Energy is set to reject as too low a US$3 billion joint takeover offer from Royal Dutch Shell and PetroChina (0857), a move that could prompt the bidders to return with a higher, hostile bid. A stream of analysts' comments suggesting the offer is too low, coupled with how long it has taken Arrow to assess the offer, have triggered speculation the proposal will be rejected, the Australian Financial Review said. "A rejection by Arrow could precipitate a formal bid by Shell and PetroChina, which will allow shareholders to make a decision," said energy analyst John Young. Australia, meanwhile, urged China to stay out of difficult iron ore price negotiations with global mining giants. Trade Minister Simon Crean said Australia will also keep away from the fraught process in which steelmakers aim to strike annual contracts with Anglo-Australian firms BHP Billiton and Rio Tinto, and Brazil's Vale. Crean's comments follow a report that more than 10 top mainland steel mills had asked Premier Wen Jiabao to make the iron ore benchmark price talks "a matter of national importance."

Google said it remained in talks with the central government about censorship of its Chinese-language search portal, despite mounting signs the company could soon shut the site.

Car and battery maker BYD Co could set up sales headquarters and a production plant in the United States, its chairman said, as it embarks on an aggressive expansion plan.

Wen offers his personal account of Copenhagen climate summit snub - Premier Wen Jiabao yesterday fended off criticism that Beijing acted arrogantly at last year's climate summit in Copenhagen and was a main culprit for its limited success, saying he had been the target of a diplomatic snub at the outset. Offering his first account of the chaotic situation four months after the widely ridiculed conference, the premier - who was criticised for skipping a key meeting of world leaders at the summit - said he had not received an invitation to a similar meeting the previous night. Wen's counter-snub was seen not only as part of his efforts to straighten out what he perceived as false allegations in the West, but also showed China's increasing assertiveness in handling global issues such as climate change, analysts said. His remarks came after the country's top climate negotiator, Xie Zhenhua , said last week that the world should learn from procedural problems that plagued the Copenhagen talks. The final accord was produced by only a small number of countries. Analysts say Wen's remarks indicate Beijing is unlikely to make any major concessions before or during the next UN climate talks in Mexico this year. When pressed by foreign media at yesterday's news conference, Wen appeared well prepared, saying he was glad to have the chance to clear up what happened in the final hours in Copenhagen. "It baffles me why some people still try to take issue with China," he said. "As the Chinese proverb goes, my conscience is untainted despite rumours and slanders from outside." But his well-scripted response failed to address the question of why he boycotted the summit meeting on December 18 attended by US President Barack Obama and 19 other heads of state, instead sending Vice-Minister of Foreign Affairs He Yafei on his behalf. The move was read by many, the most vocal being French President Nicolas Sarkozy, as a breach of diplomatic protocol and indicative of China's "go-it-alone approach". Instead of giving a straightforward explanation for this, Wen gave a long account of why he boycotted another meeting which was scheduled on December 17, the eve of Obama's arrival. He said he was not even invited to it in the first place. "I heard about the late-night meeting of only a selected number of nations, including China, at a dinner of world leaders. I felt shocked that I had not received any notification of China being invited," he said. After checking with his delegation, he sent He to the meeting to register China's protest. "Why was China not notified of this meeting? So far no one has given us any explanation about this, and it is still a mystery to me," he said. This episode was read as a conspiracy theory against Beijing among the Chinese delegation, which left Wen infuriated, according to several climate negotiators. Analysts said those sentiments could also partly explain Wen's boycotting of the summit with Obama the next day. Wen also vigorously defended the Copenhagen Accord, a non-binding, face-saving political deal that was widely seen as a failure, saying it was "the best possible outcome that could be achieved on an issue that concerns the major interests of all countries". Despite the prolonged blame game following the Copenhagen talks, Wen reiterated China's commitment on pushing ahead with stalled international climate negotiations.

Authorities have impounded shipments of imported designer clothing from famous labels such as Hermes and Versace after finding they contained potentially hazardous chemicals.

JPMorgan and Beijing-based Hopu Investments, run by influential dealmaker Fang Fenglei, have been hired as advisers for the energy joint venture between CNOOC and Argentina’s Bridas.

China's central bank chief suggested Beijing has no immediate plans to raise interest rates despite inflation data last month that was "a little bit higher" than expected.

CNOOC Ltd, China's biggest offshore oil explorer, agreed to buy a 50 percent stake in Argentine producer Bridas Corp for $3.1 billion to meet demand in the world's fastest-growing major economy. Bridas, controlled by Argentine businessman Carlos Bulgheroni, owns a 40 percent stake in Pan American Energy LLC, the country's largest crude oil exporter, and also has oil and gas assets in Chile and Bolivia, CNOOC said yesterday in a statement to Hong Kong's stock exchange. BP Plc, Europe's largest oil company, owns the remainder of Pan American. China's oil and gas companies spent at least $13 billion on acquisitions since 2008 as the nation scours the globe for resources. The offer values Bridas's proven reserves around $10 a barrel, about half of what BP Plc paid Devon Energy Corp last week for assets in Brazil, the Gulf of Mexico and Azerbaijan, according to Sanford C Bernstein & Co analyst Neil Beveridge. "This seems like a relatively attractive valuation and the acquisition is entirely in keeping with the Chinese government's policy of increasing oil reserves," Beveridge said by telephone from Hong Kong today. "It raises CNOOC's reserves by about 12 percent and also gives it an entry into Latin America." China is the world's second-biggest energy consumer, after the US, and CNOOC estimates the Bridas investment will add 318 million barrels of reserves and also boost its average daily production by 46,000 barrels. Devon's assets may add 40,000 barrels a day for BP starting next year, based on current production, with "huge potential" for exploration, BP spokesman David Nicholas said March 11.

China must learn from Toyota's mistakes - The Toyota logo on a car covered in snow in Beijing. This winter is really cold for the Japanese automaker who saw one disaster after another in its product quality and after-sales services. Japanese automakers' recent product recalls were not only a warning to Chinese homegrown brands not to expand too fast and ignore management and quality control, but also sounded an alarm to China's automobile recall system. "Although we seldom witness Chinese automakers' recall initiatives, it does not mean that their products are high quality," said Tan Kunyuan, an auto industry analyst with Changjiang Securities. "Quality defects often emerge a long time after the vehicle has been in use, but Chinese-branded vehicles have only been in the market for a short time. Moreover, as recalls have a serious impact on brands, the still-young domestic automakers deal with quality problems through their after-sales service, rather than recalling them," said Tan. However, Luo Lei, vice-secretary of China Automobile Dealers Association, attributed the rare occasions of recall from domestic automakers to an imperfect automobile quality supervision system in China. "Whether it's the US, European countries or Japan, faulty vehicles are under strict supervision and restrictions from the governments by related laws but, in China, we only have a recall regulation, rather than a law, with which to deal with auto manufacturers," said Luo. "Without authoritative legislation, no enterprises are willing to initiate recalls." In 1966, the US government legislated for the recall of defective vehicles. Japan began to implement a vehicle recall system in 1969 and included it in its auto industry laws in 1994. However, China only started to pay attention to vehicle quality issues in October, 2004, by launching a vehicle recall regulation. According to statistics from the national quality watchdog - the General Administration of Quality Supervision, Inspection and Quarantine - over the past five years it received 212 active recall applications from almost 60 automakers, involving 3.21 million defective vehicles in total. Only seven among the 212 recalls were from Chinese automakers. This compares with the recall of 3.29 million vehicles in Japan in 2001 alone. The US has recalled more than 200 million vehicles since 1966. "Without a complete law to regulate vehicle quality, the domestic automakers will have no awareness to voluntarily recall their defective cars," said Luo. China overtook the US to become the world's largest auto market last year, with 13.6 million vehicles sold within 12 months. China now has more than 180 million vehicles on the road, including 26.1 million cars owned by individuals. The number increased 33.8 percent from a year earlier. In 2009, China experienced 238,351 traffic accidents, with 67,759 people being killed, 275,125 injured. This is said to have cost 910 million yuan ($133 million). Analysts said that although vehicles are not the major killer in accidents, some of the tragedies are caused by vehicle defects. As China has more vehicles and the number of traffic accidents grows, quality and safety of vehicles has become more and more important. Another deficiency of China's recall system is that the government's punishment for faulty vehicle producers is considered to be too light. According to the regulation, maximum penalties for automakers that try to hide product defects are a fine of 30,000 yuan, without compulsory compensation to purchasers. That compares with Toyota's possible penalty of $16.4 million required by the US government for the current recalls, and more expensive compensation to consumers. "Japan also added compulsory compensation to consumers to its recall system in 1995," said Jia Xinguang, an independent auto analyst based in Beijing. He also suggested that China should establish an information collection and management system with a database to support the recall system. "Moreover, China should extend the range of recall in the automobile industry to some automobile parts and accessories," said Jia. "By the end of 2007, Japan had conducted seven recalls on 130,000 automobile accessories after it included automobile parts and accessories such as tires and children's car seats into its recall range in 2004."

March 16, 2010

Hong Kong*: The Independent Commission Against Corruption will interview more than 100 top artists and singers as it probes allegations of corruption against TVB general manager Stephen Chan Chi-wan.

Democracy in Hong Kong should develop in accordance with the Basic Law in a gradual and orderly manner, says Premier Wen Jiabao. Wen acknowledged there are deep-rooted conflicts in Hong Kong, which are related to the city's economy. Speaking at a press conference to mark the end of the National People's Congress annual session, Wen said there are several ways for Hong Kong to develop. These are: Hong Kong should enhance its existing advantages to further strengthen and develop its status as a financial, shipping and trade center. It should combine and develop the city's strengths to promote industries, especially the service sector. It should make full use of its geographical advantage, that is, its proximity to the mainland, to further strengthen its ties with the Pearl River Delta. "The mainland at large, and the huge domestic demand in the mainland market and rapid economic development will be a strong source of potential for Hong Kong's development," Wen said. People should be more inclusive, strive for a consensus and stay united to maintain prosperity and stability of Hong Kong. "Hong Kong will not only make great strides in economic development, but its democracy will also develop in accordance with the Basic Law in a gradual and orderly manner," he said, calling for improvements in education and people's livelihood. He added: "As to the 12th five-year plan, it's based on the planning of nationwide development. Of course, we will take into consideration the economic ties between the mainland and Hong Kong, especially Hong Kong's ties to the Pearl River Delta." In Hong Kong, Civic Party lawmaker Ronny Tong Ka-wah said the pan-democrats shared the "anguish and impatience" of all Hongkongers trying one last time to get Beijing to listen to their views on constitutional reform. "If even Taiwan can establish a working relationship with Beijing, why can't the pan-democrats?" Tong asked in RTHK's Letter to Hong Kong. He added: "Beijing either is not listening or can't hear." Tong is worried that if the city's constitutional reform will fail once again, and that will make Beijing and Hongkongers heavy losers. "The so-called deep-rooted conflicts in Hong Kong will be no nearer to any solution; the long-term stability and prosperity of Hong Kong will not only continue to be threatened but will, more likely than not, go from bad to worse," he said. Tong warned that the younger generation will be forced to move towards more radical political parties like the League of Social Democrats and Beijing will find it more difficult to deal with them.

In a sign the government is getting street smart, a top official has revealed she is considering halting the controversial acquisition of a street with "star power." Because of the changing views of the community, Development Secretary Carrie Lam Cheng Yuet-ngor says she may halt the acquisition of Central's Wing Lee Street - which featured in the recent award-winning movie Echoes of the Rainbow. In an interview with The Standard's sister newspaper Sing Tao Daily, Lam also hinted at further discussions with senior management of the Urban Renewal Authority on the need to demolish old buildings on the street while taking into consideration the requirements of landlords and tenants. Lam is the most senior government official to hint that changes may be made to the street's development plan and the possibility that - for the first time - an acquisition project may be halted. The authority had been adamant it would press ahead with redevelopment despite an earlier plea from Echoes of the Rainbow director Alex Law Kai-yui that the whole street be preserved. The quaint street, comprising 12 tong-laus, or traditional Chinese tenement buildings, was used as the location for the 1960s-era movie, which won the Crystal Bear award for best feature film at the Berlin Film Festival last month. Lam said that when the authority released a revised proposal to keep three tong-laus and redevelop the rest in late 2008, the feedback was positive. "But surprisingly, society has changed its views and people are now insisting on conserving all 12 tong-laus," Lam said. Lam urged the public to be less aggressive and emotional as Wing Lee Street is only a part of the redevelopment project, which comprises three sites. The authority has so far secured 40 percent of the ownership of premises in the area but as the deadline for owners to reply has not expired, there may be legal implications should the resumption be halted ahead of time, Lam said. The authority's plan for the Staunton Street-Wing Lee Street area is still pending approval from the Town Planning Board. It also does not have any partner from the private sector as yet. In November 2008, the authority suggested that a proposed 24-story building behind Bridges Street Market at the corner of Shing Wong and Wing Lee streets be shrunk to six stories. It also proposed lowering the plot ratio. The revised project was expected to result in losses of HK$170 million because of the drastic drop in the number of flats from 216 to 130. Since Lam took over as development secretary, she has responded quickly to the public's conservation needs. In September 2007, she moved to quell public outrage when demolition work began at King Yin Lei, a traditional Chinese-style mansion at 45 Stubbs Road, Wan Chai. The government later exchanged a plot of land with the owner to preserve the 1937 mansion. Meanwhile, about 10 conservationists gathered at Wing Lee Street yesterday calling for its preservation. "The tong-laus are very precious and all 12 should be preserved. Keeping the last few units on the street would just be a token consolation," Central and Western Concern Group convener Katty Law Ngar-ning said.

More than 100 people took to the streets yesterday to demand a minimum wage of HK$33 an hour and eight working hours a day.

Forget about investing in Hong Kong property. Prices for top-quality antique Chinese furniture have increased fourfold in five years, bid up by newly rich mainlanders. Prices are rising steeply not only because mainlanders are paying more but because sellers are withholding supply in the hope of even higher prices. In the process of inflating the market - and transforming it with their enthusiasm for "imperial" furniture - mainlanders are also ensuring that Hong Kong's role as an antiques market is likely to grow. At Sotheby's auction in the city in October last year, an unidentified Shanghai businessman - understood to be mainland stock investor Liu Yiqian - paid an astonishing HK$85.7 million for a rare Qianlong-period zitan dragon throne. It was a record auction price for a piece of Chinese furniture. The throne was made for the 18th century emperor - the fifth during the Qing dynasty - out of zitan, purple sandalwood. To many industry insiders, last year's auction was a landmark event, a record sale that showcased the rise of mainland collectors with an extravagant taste for rare imperial pieces. It also broke a record set by the April 2008 sale of a zitan three-railing bed, also from the Qianlong period, which fetched 32.48 million yuan (HK$36.89 million) at Beijing's China Guardian Auctions. Ma Weidu, founder of the Guanfu Museum in Beijing, the mainland's first private, non-profit antiques museum, who is also a well-known collector of antique Chinese furniture, said prices for top pieces had increased too much, too fast. Ma said he had planned to bid for the imperial throne and set himself a bidding limit of about HK$40 million.

LED testing at Intertek's new LED testing laboratory, the first of its kind in Asia, in Lai Chi Kok. The testing and certification business is targeting a number of areas to bolster the industry in coming years, with testing on food, Chinese medicine, jewellery and green products tipped to be among the frontrunners. The Council for Testing and Certification is set to make a list of recommendations on a three-year development plan for the industry by the end of the month. A government task force last year identified testing and certification as one of the six industries that had a competitive edge to boost the city's economy. The Census and Statistics Department reported last month that the industry generated HK$78 billion of revenue in 2008, of which HK$52 billion, or 66 per cent, came from testing services. Product tests on textiles and toys, together with medical tests, accounted for 73 per cent of the HK$52 billion revenue. Testing on food, Chinese medicine and precious materials accounted for less than 4 per cent. One of the market leaders in the testing industry, Intertek, today unveils its HK$2 million LED testing laboratory in Lai Chi Kok, which will be the first of its kind in Asia. LED - light emitting diode - is an emerging technology that is up to 10 times more energy efficient than conventional lighting, although it will cost more. Samson Leong Chun-chi, the company's manager for luminaires and energy efficiency, predicted that LED could prevail in local households within two years, but they are not only focusing on local markets. He said the East Asian region was a pioneer in technological development of LED lighting, while North America and the European Union had already established safety and efficiency standards for LED products. "Hong Kong, given its geographic location, could serve as a window to support LED research and hence offer assurances to product quality in exports," he said. Kevin Tsang Ho-yin, the company's regional marketing manager, said they would also help in the testing of LED lighting used by several government departments and local enterprises. CMA Testing and Certification Laboratories general manager of operations Lam Chun-hong said green products were emerging opportunities for the industry. But he also noted that it would need government support to get into the mainland market, in addition to manpower support in the long run. Lam said the industry would need talent for chemical testing and green audits, such as carbon emission controls, which had been growing in popularity in recent years. Dr Lo Wai-kwok, deputy chairman of the Hong Kong Quality Assurance Agency, said the government should also take the role of transferring the testing technology for new products to the private sector.

Artist Kevin Cheng (centre, in white) poses in West Kowloon with other artists during promotions for a TVB drama series. TVB (SEHK: 0511), the broadcaster embroiled in a bribery scandal, has decided not to rerun two drama series jointly produced with Hong Kong's graft-buster to educate the public about anti-corruption measures and will replace them with ghost stories. The decision was made as the broadcaster yesterday said it was prepared to launch a review into its declaration and procurement systems when the bribery case was completed. The 10 episodes featuring Independent Commission Against Corruption investigations in 2004 and 2009 were to be rerun from Thursday this week at 11am on TVB Jade. They will be now replaced with Dark Tales II, also produced by the broadcaster, a collection of ancient Chinese tales focused on the struggle between good and evil. TVB said it was not good time to re-screen the dramas given the current graft investigation involving station executives. "It is not an appropriate timing and we have decided to switch to Dark Tales II," said Tsang Sing-ming, TVB external affairs deputy controller, who said screenings of the anti-graft dramas would be embarrassing. The ICAC last Thursday arrested TVB manager Stephen Chan Chi-wan and Edthancy Tseng Pei-kun, Chan's former assistant and a director of Idea Empire Advertising and Production Company. The graft-buster suspects Chan accepted advantages from Tseng to help the firm secure service contracts for programs produced by the broadcaster. Also arrested by the ICAC were business development chief Wilson Chan, TVB artists Ning Jin as well as variety show executive producer Wilson Chin Kwok-wai. The program change was announced yesterday as the broadcaster's artists voiced support for greater transparency over their wages for appearing in shows - though many said they had no idea how much they were paid. Their pay is under close scrutiny by anti-corruption officers who have been interviewing artists with ties to TVB. One focus of the investigation is whether their pay was intentionally decreased to suit the budgets of others in the bribery scandal. Actress Shirley Yeung Sze-ki, who was interviewed by ICAC investigators last Friday, said she believed her employer TVB would look after her interests. "I'm not in a good position to say anything about it," she said. "I think the company will fight for the best for me." Actor Kevin Cheng Ka-wing said artists normally would not know how much they were paid and who produced the events at which they performed because TVB management would represent them in pay negotiations. On Saturday, ICAC chief Timothy Tong Hin-ming advised TVB to set out clear guidelines for subcontracting jobs, establish a mechanism to select subcontractors and increase transparency of the process. The suggestion was backed by actor Bowie Lam Po-yee who said: "Hong Kong needs more such systems. It is the right thing to do to make Hong Kong fair and just." In response to Tong's call, TVB external affairs deputy controller Tsang said the company had intended to review its systems. "We have had the intention of doing this but it is now not a good time to do it," he said. "We might do it after the case comes to an end."

The recovery under way in global economic growth has encouraged logistics firm DHL to launch an investment plan that earmarks Hong Kong as a key distribution centre for the region, says Paul Graham, the chief executive of DHL Supply Chain Asia Pacific. "The market in the fourth quarter of last year and the first two months of this year has made us quite positive," Graham said. The firm will continue to increase its investment in the Asia-Pacific after it committed earlier this month to invest HK$360 million in building a multipurpose distribution warehouse in Tsing Yi. DHL last year announced it would open 10 new transport hubs on the mainland. The company had noted an improvement in shipment demand and turnover over the past few months, Graham said in an interview with the South China Morning Post (SEHK: 0583). But while customers are expressing greater confidence about the outlook for their businesses, a full recovery in the global economy is still some time off and DHL is therefore cautiously optimistic about the signs. Graham said the firm's supply chain business in the Asia-Pacific was "ahead of the curve" since half of its revenues in the region came from domestic transport and many Asian countries, led by the mainland and India, were registering economic growth. DHL believes that investing in talent is as important as investing in infrastructure, he said, particularly in the Asia-Pacific where few people regard the logistics industry as a natural career path. Growth was curbed due to the resulting shortage in talent, he said. "We must compete for young university graduates and this is very challenging as the industry is not a favoured career path for Asians, unlike in Europe or in the [United States]," he said. "We have to change this mindset. We have to tell them we are not just a labour-intensive and a low-technology industry." DHL sponsored a number of tertiary courses in logistics on the mainland and in India as well as setting up booths at university open days. In addition to skilled labour shortages, rising rental costs have also affected DHL's expansion, said Graham, but he said the opening of the Interlink building in Hong Kong in 2012, in which DHL has a long-term rental commitment to take 25 per cent of the floor area, could mitigate the problem of rental costs. Since warehouse rental rates in Hong Kong are volatile the investment will provide DHL with a more predictable cost base and secure enough space for it to grow, he said. Predictions that the recall of Toyota cars sold in the US may boost demand for the shipment services provided by companies such as DHL has not materialised, Graham said. More than six million vehicles sold in the US were recalled by Toyota. However, it turned out that software issues were behind the problems and there was little demand for shipping parts or components, Graham said.

A model displays underwear by Triumph during a fashion show featuring Triumph Spring/Summer underwear in Hong Kong, south China, March 14, 2010.

A model displays underwear by Triumph during a fashion show featuring Triumph Spring/Summer underwear in Hong Kong, south China, March 14, 2010.

The amount of cash the Macau government will hand out is the talk of the town ahead of the first policy address to be delivered by Dr Fernando Chui Sai-on, who became chief executive on December 20.

China*: CNOOC (0883) plans to splurge US$3.1 billion (HK$24.18 billion) to buy half of Bridas Corporation - Argentina's largest oil exporter. The deal enables the mainland's biggest offshore oil producer to expand its international footprint into Latin America and other countries, the company announced yesterday. When the deal is completed - probably in the first half - CNOOC International and Bridas Energy Holdings will jointly make management decisions. The transaction is expected to boost CNOOC's reserves and average daily production by 318 million barrels of oil equivalent and 46,000 barrels of oil equivalent, respectively. "Bridas is one of the foremost companies in Argentina and a pioneer in the oil and gas industry," said CNOOC chairman Fu Chengyu. Fu said the move benefits shareholders in both the short and long terms. Bridas Corp, which owns a 40 percent interest in Pan American Energy, is engaged in exploration and production in Argentina, Bolivia and Chile. It had proven reserves of 636 million barrels of oil equivalent and an average daily production of 92 thousand barrels of oil equivalent, by the end of the year. CNOOC also plans to buy one third of Tullow Oil's Uganda assets with French giant Total also taking up a third. In another expansion move, CNOOC signed an initial agreement to develop the 2.5 billion barrel Missan oil-field complex in southern Iraq with Sinochem International Corporation. CNOOC is aiming to maintain double-digit production growth this year, and targets a compound annual growth of 6 to 10 percent for the next five years, according to president Yang Hua.

Hong Kong's stock market is widely respected for its regulatory regime and that will be its winning edge in attracting more foreign firms seeking to raise funds, Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung told Sing Tao Daily, sister publication of The Standard, yesterday.

The yuan is not undervalued, according to Premier Wen Jiabao. Wen said calls from the United States and other large economies for China to boost the yuan are unhelpful, even protectionist, and vowed that Beijing will fashion currency reforms in its own way in an uncertain economic landscape. His hard-hitting speech after the National People's Congress yesterday is believed to be in response to US senator Charles Schumer's demand for legislation to stop Beijing from "manipulating" the yuan and a call by US President Barack Obama for "a more market-oriented exchange rate." China's real effective exchange rate appreciated 14.5 percent between July 2008 and February 2009 - the worst time for the world economy - while in that period exports fell 16 percent and imports 11 percent, narrowing the trade surplus by US$102 billion (HK$796 billion). Wen said keeping the yuan exchange rate basically stable has played a vital role in facilitating the recovery of the global economy. Beijing, which will further improve the exchange rate mechanism, is against mutual accusations between countries and using coercion to force a country to raise its exchange rate as it is "no help to reforming the yuan exchange rate." "A country's exchange rate policy and its exchange rates should depend on its national economy and economic situation," Wen said. He sees a potential risk of a "double- dip" in the global economy because the world is still facing major challenges. Despite a domestic economic rebound, "a lot of [Chinese] enterprises have not witnessed improvement in performance and are operating with government support." Beijing will work hard to avert a possible economic "double-dip" by striking a balance that maintains relatively fast and stable economic growth, adjusts economic structure and manages inflation. "Inflation with unfair income distribution and corruption will affect social and political stability," said Wen, adding Beijing will continue to implement a proactive fiscal policy and a moderate monetary policy this year. Wen insists China has always adhered to a path of peaceful development and the country's growth will not adversely affect others. "We have never sought hegemony in the past and would never do so as a developed country in the future," he said.

Shanghai will unveil a brand new airport terminal tomorrow - the latest mega infrastructure project to be completed as the city prepares to welcome tens of millions of visitors to Expo 2010. The city has spent US$2.2 billion (HK$17.16 billion) on the makeover of Hongqiao airport and made it part of a futuristic travel hub linking metro, high-speed rail and a proposed maglev train line. The new terminal is four times as big as the old one, which was designed for 9.6 million passengers a year but handled more than 25 million last year. It will handle 90 percent of the flights out of Hongqiao. "The old airport was bursting at the seams," said Shanghai Airport Authority vice president Li Derun. "The new terminal can effectively reduce delays and alleviate pressure on Pudong Airport during the Expo." International flights mainly land at Pudong Airport, while Hongqiao is used chiefly by domestic airlines. The vast majority of the likely 70 to 100 million Expo visitors are expected to be from the mainland. In contrast to British architect Norman Foster's dragon-like new Beijing Airport terminal built for the 2008 Olympics, the designers of the Hongqiao facility said they did not set out to create an architectural landmark. "We weren't looking for an extravagant or gigantic building. Instead we were looking for a user-friendly and customer-oriented design," said chief architect Guo Jianxiang, who also designed Pudong's seagull-like second terminal. "Hongqiao in Chinese means rainbow bridge, so we incorporated the image of the bridge and the rainbow's seven colours into the terminal." Hongqiao is expected to handle 40 million passengers a year by 2015, with three-quarters of them using the new four-level terminal. A direct metro line into the building also opens tomorrow, linking the airport to the city by subway for the first time. High-speed trains are due to start arriving at the airport from Nanjing on July 1, with trains from Beijing scheduled for next year.

Premier Wen Jiabao told Taiwan's small businesses and farmers they have nothing to fear about a cross-strait free trade deal currently being discussed by Beijing and Taipei.

China WindPower chairman Liu Shunxing says the cost of making wind power production equipment has fallen and is expected to drop further. The profitability of wind farm energy producers on the mainland is set to increase as a result of tumbling costs of wind power generation equipment, China WindPower Group chairman Liu Shunxing says. "I see the price of a 1,500-kilowatt production unit falling from 5,000 yuan (HK$5,683) to 4,000 yuan per kilowatt - the current price of lower-end 750 kW units," Liu told the South China Morning Post (SEHK: 0583, announcements, news) in an interview after the company reported its financial results for the nine months to December last year. The mainland could now make completed wind power production units domestically, and the cost of such units could fall a further 20 per cent after tumbling 15 per cent in the past year, he said. The price fall follows an investment boom in wind power turbine factories on the mainland over the past few years. No longer hindered by the high equipment costs and small-scale operations, most wind power project developers had seen their profits rising. The delivery lead-time for equipment had also shortened, from 12 months a few years ago to two to three months, Liu said. He would not set a timeframe for his prediction of further price falls, but said his company had adopted a policy of procuring equipment only when it was necessary in order to maximise savings and benefit from falling prices. Most wind farms are currently making a return on equity of less than 10 per cent, according to a research report by Pierre Lau, the head of Asia-Pacific utilities research at Citigroup. An exception is China WindPower's rival, China Longyuan Power Group, the nation's largest and the world's fifth-largest wind farm operator, whose return on equity was 19.8 per cent based on annualised profit from its results in last year's first half. Lau attributed its superior return to the better location and wind resource of its projects. China WindPower's return on equity was 7.6 per cent, based on annualised profit from its results for the first nine months of this financial year. However, it derived only 18 per cent of its profit from operating self-invested wind farms, while the rest came from project design, engineering and parts production for both its own and third-party projects. The company last week posted a net profit of HK$181.24 million for the nine months to December. For the past financial year to March, net profit was HK$116.77 million. Besides lower equipment prices, wind farm operators are benefiting from guaranteed power tariffs which vary between 51 and 61 fen per kilowatt-hour depending on where the project is located, Lau said. There are four designated regions for a project. With the tariff policy, which took effect in August last year, developers are driven to find projects with the best wind resources to maximise their returns in a fixed-tariff operating environment. Rising project returns had not reached a level that might trigger a cut in tariffs by the government, said Lau, who expected the present tariffs to remain in force for at least the next two years. Future tariff adjustments would depend on whether developed and developing nations could come to an agreement on a mechanism to encourage clean energy projects in developing nations, he said. Currently, mainland wind farm operators enjoy subsidies from a United Nations-run scheme.

The Oil Pavilion of the 2010 Shanghai World Expo is illuminated in a test run in Shanghai, east China. The Oil Pavilion, with the theme "Oil-extending city dreams", is built by China's three oil industrial giants, China National Petroleum Corporation, China Petrochemical Corporation and China National Offshore Oil Corporation.

March 15, 2010

Hong Kong*: In a blow to moderate pan-democrats seeking dialogue with Beijing on electoral reform, the central government said yesterday it could not meet their request for pledges about the road map to universal suffrage in Hong Kong. The message was delivered by the head of the central government's liaison office in the city, who said no such pledges could be made until Hong Kong's lawmakers and the chief executive reached a deal on the electoral methods for 2012. Peng Qinghua was quoted by local deputies to the National People's Congress as giving his "personal opinion" at a closed-door meeting with the deputies in Beijing yesterday. Peter Wong Man-kong, one of the deputies, said Peng told them amendments to electoral methods must follow a five-step procedure laid down in the NPC Standing Committee's interpretation of the Basic Law in 2004. "The most important point in his speech was that the ... demands made by the pan-democrat camp could not be met ... You can't force others to promise what they can't promise," Wong said. Another deputy, Sophie Leung Lau Yau-fun, who is also a lawmaker, quoted Peng as saying that he was only giving his personal view. But a third deputy, who preferred not to be named, did not believe the remarks were only Peng's personal opinion. Deputies said Peng did not mention whether or not the central government would hold talks with pan-democrats. One Beijing loyalist said there were communication channels between the pan-democrat camp and the central government, but he believed that the chance for formal talks between the two sides was slim before Legco by-elections on May 16. Last month Rita Fan Hsu Lai-tai, a member of the NPC Standing Committee, said she had conveyed a request by the Alliance for Universal Suffrage for talks to central government officials but did not receive a response. The alliance is made up of 11 groups, including the Democratic Party, that is seen as representing moderate elements in the pan-democratic camp. It has chosen a different path to the League of Social Democrats and the Civic Party, five of whose lawmakers resigned to trigger the May by-elections, which they see as a de facto referendum on the pace and scope of democratisation. Beijing has condemned the exercise. Democratic Party chairman Albert Ho Chun-yan said they would not shun dialogue with Beijing because of Peng's remarks. "The central government can meet our demands if it has the political will," Ho said. Peng's remarks did not suggest Beijing had slammed the door to dialogue, said Fung Wai-wah, convenor of the alliance. But Andrew To Kwan-hang, chairman of the league, said the alliance should not have any illusions about a dialogue with Beijing. "The precondition for dialogue is that you must have strength. In the context of political reform, our strength comes from the people's mandate we are going to get in the forthcoming de facto referendum," he said.

New management and tighter internal auditing were the key changes at broadcaster TVB (SEHK: 0511) which lead to the arrest of the station's flamboyant general manager and prominent host on corruption charges, insiders say. Stephen Chan Chi-wan and four others were arrested last week over allegations they were outsourcing productions and making TV stars take jobs at cut-price rates. People familiar with the broadcaster's operations said new managers - such as Mark Lee Po-on - had been keeping a far closer eye on the station's budget over the last two years. This included a new stringent internal auditing system and careful reviews of production budgets. The internal audits had uncovered some odd accounting and a report was subsequently submitted to the TV station's management. It led to an internal investigation of Chan's dealings.

Global financial markets are yet to bottom and investors should hold cash, investment-grade debt or defensive stocks to ride out a coming "general correction", according to HSBC Holdings (SEHK: 0005). A sputtering US recovery, the winding back of stimulus in Asia and the likelihood that Europe will begin to "normalise" interest rates mean markets have not fallen far enough, says Dilip Shahani, HSBC's head of global research, Asia-Pacific. Greece's woes have shaken global markets, and a survey shows confidence in the world economy fell for a second month in March. "Equity and credit markets, and foreign exchange and interest rates, have probably discounted about 60per cent of what's happening," he said. "But there's probably one or two things that are going to come and create the final surprise that will trigger the final push down on all the markets together." HSBC predicts the extra yield investors demand to hold investment-grade Asian dollar bonds rather than US treasuries will increase less than the premium commanded by the region's high-yield notes. The spread on HSBC's Asian Dollar Bond Index, which tracks investment-grade issues, will widen to 350 basis points by the end of June from around 283 now, while that for the bank's Asian High-Yield Corporate Bond Index will move to 750 basis points from 594, says a report. Investors should buy once the correction materialises because spreads will narrow again by the end of the year, the lender advises. "The arguments against a general correction are getting harder and harder to ignore," Shahani said. "Hold cash or high-quality bonds. Even if you have to be in equity, hold defensives or utilities. They will still go down but it won't be by as much." Shahani's team in a December report forecast investors would realise by this month the US recovery was "of poor quality, of less intensity, and most disturbingly, still requiring heavy fiscal and monetary stimulus". Federal Reserve chairman Ben Bernanke told Congress on February 25 that the US economic recovery was still "nascent" and likely to require "exceptionally low" interest rates for an extended time. The case is building for an interest rate increase on the mainland. Inflation accelerated to a 16-month high of 2.7 per cent in February and real estate prices in 70 cities climbed at the fastest pace in almost two years. Inflation was also gathering pace in Europe's largest economies, increasing the likelihood that the European Central Bank will raise interest rates, HSBC said. "All these things have come earlier than expected so people have been caught out being overweight," Shahani said. "What is telling is that volumes are starting to drop off in the equity markets and also in the credit markets. There are more and more people standing on the sidelines and that makes the market more susceptible to shocks." Rising volatility amid declining volumes and continued macroeconomic risks undermine current market levels, heightening the chance that long positions will be "taken out", Shahani said. "You just need a few people to decide to get out and then it drops to a new level," Shahani said. "And then the real money, the wall of money that everyone talks about will come in and lift it back up. But clearly this is not that level."

China*: China's yuan bonds will return as much as 6 per cent this year as a crackdown on lending forces banks to "park" money in fixed-income assets, the nation's best-performing primary-market debt fund said. Government and corporate bonds have gained 1.5 per cent this year, following a 0.3 per cent loss in 2009, according to Chinabond, the nation's largest debt-clearing house. It rose 12 per cent in 2008. "Banks and insurers are flooded with cash," said Zeng Gang, of Harfor Fund Management. "Bond funds may be a good place for people to park their cash." Bank of China chairman Xiao Gang said on Thursday his lender's one trillion yuan (HK$1.13 trillion) holdings of local-currency debt will increase by "several hundreds of billions of yuan" this year because loan growth will be limited. People's Bank of China governor Zhou Xiaochuan, has twice raised lenders' reserve requirements this year. Zeng's fund delivered investors an 11.9 per cent return last year, the best among those focused on new issues, according to a ranking by Galaxy Securities. CCB (SEHK: 0939, announcements, news) Stable Growth Bond Fund was the second-best performer. The yield on the 3.43 per cent bond due in February 2020 was 3.46 per cent, compared with 3.66 per cent for the benchmark 10-year debt at the start of the year.

The West's thirst for fine wine may be entering a period of moderation, but China's cup runneth over, to the relief of vintners in Bordeaux. China became the top importer of the world's most famous red outside of Europe, taking over from the US for the first time this year. With overall wine exports down 23 per cent in 2009, producers are looking East to empty their cellars. Alain Vironneau, president of Bordeaux's wine trade body, said China was its first client outside the European Union. China's buying power comes at a particularly opportune moment as France's leading wine region struggles to survive the economic crisis. "The crisis that the wine sector is going through is tied directly to the economic crisis," Vironneau said. "Several hundred vineyards are in peril due to insufficient cash," Despite a slight increase in export sales over the past three months, Vironneau said 2009 had been "catastrophic" for the region, and any recent sales activity fell short of making up for a year of losses. Bordeaux exported 206 million bottles last year, generating €1.29 billion (HK$13.76 billion). This was a 14 per cent drop in volume, and a 23 per cent decrease in value. The hardest hit markets were some of Bordeaux's most trusted - the US, Britain and Belgium, which dropped by 44 per cent, 33 per cent and 16 per cent, respectively. Nicholas Pegna, managing director of Berry Bros & Rudd's Hong Kong operations, said north Asian markets were very much in the driving seat. Five or six years ago, the company allocated about 25 per cent of its en primeur offering of Bordeaux, or wine futures, to Hong Kong and greater China. This has risen to more than 50 per cent this year. Pegna said Bordeaux had been the starting point for fine wine drinkers for a long time. "While people first come to Bordeaux, and go farther out to Burgundy and others, it's not a lily pad where they hop off to the next one and never come back. Many people go through that journey without losing their love for Bordeaux." While the US still outpaces China in terms of value, at €139 million, it slipped to No 5 position in volume, surpassed by China. Last year sales to China increased by 40 per cent to €74 million, with volume increasing by 97 per cent. Sales to Hong Kong, helped by the elimination of import duties in 2008, increased by 46 per cent to €109 million, with a 24 per cent increase in volume. Wine specialists in Hong Kong attribute Bordeaux's success in the region to a blend of cachet and having the volume of production to take advantage of an emerging market. "Bordeauxs are like the LVs, the Guccis of wine," said Charlene Dawes of Tastings, a wine bar in Central. "A lot of people give Bordeaux as a gift. It's about face. If you're going to give a bottle of wine, if you want people to know that it's is expensive, then people will choose a Bordeaux."

Not content with criss-crossing the mainland and much of Asia with high-speed rail lines, Beijing plans an even more eye-popping route - under the sea to Taiwan. But the plan, confirmed by a senior railways official, faces formidable challenges. They are both technical - the shortest tunnel under the Taiwan Strait would be 126 kilometres long, more than twice the length of the world's longest undersea rail tunnel - and political: asked about the idea, a Taiwanese government official said it was not even worth talking about. That's not surprising. Wang Mengshu, a top mainland rail expert and a member of the Chinese Academy of Engineering, makes no bones about the impact such a line would have. Once the tunnel is built, the historical issue of Taiwan's independence will be gone forever," he said. Wang predicts the island's green camp of pro-independence parties "will definitely try to block it". Still, he said mainland and Taiwanese researchers would meet on the mainland in the coming months to discuss the technical issues of the tunnel. And he is confident the mainland has the technical know-how to build the railway if political hurdles can be overcome. The extensive and rapid construction of the mainland's high-speed rail network had equipped the country's engineers with the knowledge, skills and experience needed to dig the undersea tunnel, he said. Wang was a key figure in the drafting of the mainland's railway development plan. "The tunnel will be more than 100 kilometres long. Some of the high-speed rail tunnels under construction in the mountainous areas of central and western China have exceeded 40 kilometres. Technically, they are the same," he said. "Earthquakes won't be a problem, either. They can only destroy surface structures. They have no effect on a tunnel." The plan was laid out in an agreement signed two years ago between the Ministry of Railways and coastal Fujian province, which faces Taiwan, to build a high-speed network linking Fujian with other parts of the mainland. But few took notice of the idea of a cross-strait high-speed rail line until the recent boom in mainland high-speed railway construction began.

A senior Chinese official warned that Google would have to bear the responsibility for having violated the "solemn commitment" the internet giant made when it negotiated its entry into the mainland market. "They made a solemn commitment, as they understood Chinese laws very well," said Zhao Qizheng, a spokesman for the Chinese People's Political Consultative Conference, the central government's top advisory body. "If it violates the contract, it will have to bear the responsibility," Zhao told the South China Morning Post (SEHK: 0583, announcements, news) , at the sidelines of National People's Congress. Zhao, formerly minister of the State Council Information Office, said he was well aware of the whole process of the negotiation between the government and Google when the US internet giant sought its presence in the mainland market. The cabinet office also helps liaise with foreign media companies. Google made an extraordinary public reproach of mainland China on January 12 by announcing it intended to stop following government requirements that it filter the results of its mainland search engine,, and said it could leave the world's biggest market of internet users. The United States company cited the mainland's tightening limits on free expression as well as a series of sophisticated cyber attacks that Google said originated from China. Since then, Google has been in talks with Chinese agencies about whether it can operate an unfiltered The remarks by Zhao and another top official suggested there was little room for compromise in the high-profile showdown over censorship. On Friday, Minister of Industry and Information Technology Li Yizhong warned that Beijing was not prepared to compromise on internet censorship to stop Google leaving. The hardening of the Chinese position comes amid reports that Google will leave the mainland market. The London-based Financial Times yesterday reported that Google had drawn up detailed plans for the closure of its mainland search engine and was now "99.9 per cent" certain to go ahead, as talks over censorship with the authorities had reached an impasse, citing a person familiar with the company's thinking. Zhao said Google should have chosen to consult with the Chinese authorities before it made such an extraordinary public statement. "We have maintained regular communication and met every year," Zhao said. "But Google chose not to discuss the issue through the official channels, but made this sudden announcement. This violated the practices between us." The officials' remarks were the sharpest words yet in an unusual duel that could set a precedent for international business in the country and could escalate tensions between the US and Chinese governments. US officials said on Friday they were closely watching Google's negotiations over the issue, as the outcome could have a "significant" impact on Sino-US relations. Since Google's statement in January, officials had only reiterated the government's official stance that Google and other foreign companies operating on the mainland must follow the country's rules.

March 14, 2010

Hong Kong*: Beijing municipal authorities on Friday suspended permission for Pacific Century Regional Developments Ltd, chaired by Hong Kong tycoon Richard Li Tzar-kai, to buy and sell land in China’s capital. The Beijing Municipal Bureau of Land and Resources also imposed fines of around 5.1 million yuan (HK$5.7 million) on the company. The moves are part of a policy by the bureau to prevent large developers from driving up property prices by hoarding land. Pacific Century Regional Developments, a subsidiary of Li’s company Pacific Century Group purchased land at No 4 Gongtibei Road, Chaoyang District, Beijing in 2006. The contract stated that construction should start promptly, but the site remained vacant. A Pacific Century spokesman, surnamed Siu, told the company was now trying to settle the issue in Beijing. Siu said the company had sold the land to Shui On Construction (SEHK: 0983) last September. Shui On Group chairman Vincent Lo Hong-sui confirmed to local media that his company had acquired the plot in September 2009. Lo said Shui On began construction after it bought the land and would fully co-operate with mainland laws, local media reported. Richard Li is chairman and chief executive of Pacific Century Holdings.

Four TVB executives - including the station’s general manager - are still in custody on Friday afternoon after their arrest on Thursday by officers from ICAC. Four TVB (SEHK: 0511) executives - including the station’s general manager - are still in custody on Friday afternoon after their arrest on Thursday by officers from the Independent Commission Against Corruption (ICAC). The four arrested were Stephen Chan, TVB general manager; Wilson Chan, TVB’s head of business development and a well-known executive producer of variety shows; Wilson Chin Kwok-wai, a TVB executive producer; and Ning Jin, a TVB celebrity. Edthancy Tseng Pei-kun, an advertising and production company director and Stephen Chan’s former assistant, was also arrested as part of the investigation. They are all suspected of working for an advertising and production company that arranged jobs for TVB stars, and of receiving advantages without the authority of TVB. On Friday afternoon, ICAC officers returned to TVB City in Tseung Kwan O to collect evidence. They did not comment further on the investigation. TVB external affairs division assistant controller Tsang Sing-ming said TVB had immediately suspended the arrested executives from their duties. He also said the investigation would not affect the normal operations of the television station. Stephen Chan is a well-known host for TVB. He became famous as host of the talk show Be My Guest, which began in 2006. His fame reached a pinnacle in 2008 when he was selected to carry the Olympic torch in Hong Kong in a ceremony marking the Beijing Olympics. Chan was said to have lost the trust of TVB’s management recently and had intended to resign from the television station this year, local media reported.

Suspended TVB general manager Stephen Chan leaves ICAC headquarters in North Point. More people were questioned yesterday. Investigations of alleged corruption involving TVB (SEHK: 0511) general manager Stephen Chan Chi-wan, his former assistant and three other TVB employees have been widened to include TV stars and production staff. Meanwhile the five arrested were freed on bail last night. Chan and performer Ning Jin were released from the Independent Commission Against Corruption headquarters in North Point at around 10 o'clock and the three others followed soon afterwards. Chan and Ning left the headquarters separately. Ning was the first to leave, in a taxi. Chan, wearing a baseball cap and a surgical face mask, and looking tired, with his eyes baggy, followed. But his vehicle was mobbed by reporters at the headquarters entrance for more than 10 minutes before he was able to begin the journey to his home in Ho Man Tin. TVB external affairs assistant controller Tsang Sing-ming confirmed that the ICAC's investigation was continuing, with more than 10 graft busters turning up at the TV station's Tseung Kwan O headquarters to interview other employees. He said they included staff from the performers and production departments. The performers interviewed included some of the most recognisable faces in town. Talent managers and executives of the artiste department, as well as producers, were also interviewed by ICAC investigators. ICAC officers arrested the five on Thursday after receiving a report alleging graft. The commission said that Chan, TVB general manager and marketing and sales manager, and Wilson Chan, the broadcaster's head of business development, were arrested during an operation codenamed Valiant. They were alleged to have accepted advantages from a director of an advertising company for helping the company secure service contracts related to various entertainment shows produced by the broadcaster. The ICAC said the general manager and TVB variety show executive producer Wilson Chin Kwok-wai were alleged to have provided corrupt assistance so that TVB performers appeared in variety shows produced by the advertising company at for a lower fee - half that charged for other similar shows. The advertising company director is Edthancy Tseng Pei-kun, 28, Stephen Chan's former assistant and a former police tactical unit officer. Tseng and Chan are reportedly close friends and have often been in the media spotlight. Tseng is a director of six companies, including Idea Empire Advertising and Production Company. One of the other companies' registered addresses was allegedly Stephen Chan's home address. Tseng was yesterday escorted by ICAC investigators to an apartment in Ho Man Tin. Ning Jin, the TVB performer whose real name is Leung Chi-cheong, worked onstage on Chan's talk show Be My Guest on TVB's Pay Vision Lifestyle Channel. The ICAC confirmed that he was a shareholder in the advertising company allegedly involved in the case. According to the company registry, Leung is the sole shareholder of Idea Empire Advertising and Production Company. Tsang said no other TVB employees were arrested yesterday. He declined to comment on the investigation or say whether the initial allegation of graft came from TVB. He said the arrests would have no effect on TVB's daily operations. TVB group general manager Mark Lee Po-on has taken over Stephen Chan's duties. Chan and the other arrested employees have been suspended. Tsang said TVB was concerned about the well-being of the five, had been in touch with their families and was ready to provide assistance, such as hiring lawyers. Asked about the reaction of Mona Fong Yat-wah, wife of Sir Run Run Shaw and TVB deputy chairwoman, Tsang said Fong knew about the case and trusted TVB staff to handle it. Stephen Chan is said to be among Fong's favourite employees. Former TVB performer and veteran show host Vinci Wong Yin-chi said that although performers were usually paid the market rate to attend events and perform, fees still fluctuated. He said that one factor would be the performer's relationship with the client. If a performer were on good terms with the client, Wong said, he or she might offer a big fee discount. "He or she might even do it for free," Wong said, and this was not uncommon. But a big discount on fees did not necessarily mean the performer got no benefit, Wong said. A job could be done for advantages that could not be measured in monetary terms. "There are lots of grey areas in showbiz but they have never been exposed before," he said. A veteran TV industry insider said Stephen Chan had had too high a profile as a top manager at Hong Kong's largest TV station and as a celebrity in TV shows. "He is a great manager, and a talented show host ..." the insider said. TVB shares rose 1.37 per cent to HK$37.1 yesterday.

The Peak Tower on Google Maps Street View. People's faces and vehicle licence plates are blurred so computer users cannot identify them. Armchair explorers can now see the streets of Hong Kong and Macau and feel like they are there in person with the launch of Google Maps' Street View feature for the city. The feature, an add-on to Google Maps that is also accessible from Google Earth, covers Hong Kong and displays 360-degree ground-level images. Users can zoom or expand pictures and even move forwards and backwards as if they were out on the streets, simply by moving their computer mouse. Street View was launched in the United States in May 2007. It has since been introduced in other countries but only reached Hong Kong and Macau on Thursday. The images used in the feature were captured by a car equipped with nine digital cameras mounted on a pole on top of it. Since December 2008, the Street View Car has driven 7,912 kilometres up and down the streets of Hong Kong - the equivalent of crossing the Tsing Ma Bridge 3,663 times or the future cross-Pearl River Delta bridge 150 times. "We covered all the places accessible by vehicles on public roads," Ben Luk, technical lead manager for the Hong Kong Street View project, said at its official launch yesterday. Product manager Vince Wu said the team had faced numerous challenges in Hong Kong, including double decker buses that blocked views, air pollution and cloudy weather. The Street View Car continues to patrol the streets to update the photos. Views of popular areas are updated more frequently than the rest. The new feature, though admired by many computer users, has raised privacy concerns around the world even though blurring technology is used to ensure that faces of passers-by in the photographs cannot be identified. Vehicle licence plate are also blurred and the images are not real-time. Still, the feature continues to attract controversy. This week, an image of a naked woman with her face blurred was seen on Street View in Taiwan. It was soon removed and Google search engine users will not be able to find the image again. Caroline Hsu, a spokeswoman for Google, said: "We try our best to avoid things like that. We have a system that lets users report offensive content." Hsu said the user reporting system was by far the most effective way of monitoring and screening content in the new feature because of the vast amount of images involved and the number of users of the Street View facility. The Privacy Commissioner's Office said Google had approached it last year seeking information about precautions it should take regarding the security and use of personal data in Hong Kong. The commissioner's office said Google had declared that the project only featured photographs taken on public property and the imagery was no different from what a person could readily see or photograph walking down the street. It will continue monitoring the situation.

James Tien Pei-chun has been re-appointed as chairman of the Hong Kong Tourism Board (HKTB) for a second three-year term, a government spokesman said on Friday. Secretary for Commerce and Economic Development Rita Lau Ng Wai-lan, referring to the reappointment, praised Tien, whose first term as chairman began on April 1, 2007, for his leadership of the HKTB. “The HKTB has helped sustain tourism development for Hong Kong and worked to overcome the challenges brought about by the financial tsunami and the outbreak of human swine flu,” she said. Tien’s new term of appointment starts from April 1 of this year and lasts until March 31, 2013. Tien is the former chairman of the Liberal Party. Besides serving as the chairman of the HKTB, he is also a member of the National Committee of the Chinese People’s Political Consultative Conference, Hong Kong. Tien’s reappointment means that, if he completes his second term, senior members of the Liberal Party will have been in charge of the Tourism Board for 12 consecutive years. Tien’s predecessor was Selina Chow Liang Shuk-yee. She was the board chairman for six years and was deputy chairwoman of the Liberal Party at the time. Tien was party chairman for 10 years until 2008 when he lost his Legco seat and the Liberal Party suffered its biggest defeat in the Legislative Council elections.

The top US diplomat in Hong Kong on Friday praised the territory for respecting individual freedoms, a day after the US State Department slammed Beijing for human rights abuses. The comments from Stephen Young, the new US consul general, came as Beijing and Hong Kong democracy activists are locked in a battle over the pace of political reform in Hong Kong. “Hong Kong’s economic success based on the rule of law and respect for individual freedoms positions it at the forefront of a dynamic, modern China,” Young said in a statement announcing his appointment. “I feel particularly fortunate to work here as Hong Kong maps out the next phase of its democratic development, which will help define the future of [Hong Kong] under ‘one country, two systems,’” he added. Beijing is committed to allow Hong Kong to keep its market economy and British-style legal system until at least 2047, under a policy known as ‘one country, two systems.’ Hong Kong’s chief executive is currently appointed by a Beijing-friendly election committee, while half of its 60-member legislature is chosen by interest groups allied to the mainland. The remainder are elected by Hong Kong voters. Direct elections have been promised within the next decade. In January, five lawmakers quit to force by-elections that they said would highlight the city’s desire for direct elections by 2012. The move angered mainland officials, who have labelled it illegal and a threat to stability in the city of seven million. Pro-China parties in Hong Kong have said they will boycott the May by-elections. 

Shenzhen property tycoon Wang Zheng made a failed attempt to acquire a stake in TVB (SEHK: 0511) before negotiating with its rival ATV, it was disclosed yesterday. The news came as ATV signed agreements with five mainland-based enterprises to establish strategic partnerships. Wang, a delegate to the Chinese People's Political Consultative Conference who has lived in Hong Kong for about 20 years, had offered to invest HK$4 billion in TVB after the global financial meltdown. This was revealed by Sun Wenjie, chairman of the China Overseas Group - one of the strategic partners, at the agreement signing ceremony. Confirming the news, Wang admitted that he had talks with TVB but failed to reach a deal. He declined to give details. "The other side was not interested in me. There are different options in investments and one has to consider his own ability and other circumstances," he said. Wang said he did not approach ATV because its shareholders had no intention of selling stakes at that time, as it was not long after Taiwanese snack tycoon Tsai Eng-meng had invested in the television station. Tsai, chairman of rice-cracker maker Want Want China, became an ATV shareholder through his company San Want Media last February. Prospects of a deal with ATV emerged later after major shareholder Payson Cha Mou-sing and other shareholders - except Tsai - agreed to sell their stakes to Wang. After the transaction, Wang will hold more than 50 per cent of ATV's shares. The property tycoon said he hoped to formally take over the stakes in a few months. However, the Broadcasting Authority said it had not yet received the company's application for a change in shareholding structure, adding that it would closely monitor developments at ATV. Speaking at the signing ceremony in Beijing yesterday, Wang said he had earned more than HK$6 billion by cashing out his shares in the Bank of Beijing. Asked if he would inject HK$4 billion into ATV - as he had been prepared to do for TVB - the tycoon replied: "Perhaps not. [How much I inject] would depend on needs."

Sun Hung Kai Properties' (0016) interim net profit soared nearly 20 times to HK$14.3 billion from a year earlier, thanks to a HK$8.6 billion revaluation surplus on investment properties.

Taiwan's justice minister Wang Ching-feng has resigned, the premier said on Friday, just days after she attracted criticism over a vow not to order any executions during her term.

Flamboyant Television Broadcasts general manager and talk-show host Stephen Chan Chi-wan is under arrest for allegedly milking at least HK$10 million from his employer. The high-profile host of TVB's Be My Guest was yesterday taken into custody by the Independent Commission Against Corruption in relation to the activities of a shell company said to be under his control. Also arrested on corruption charges were four others: TVB's head of business development Wilson Chan Wing- suen; variety department executive producer Wilson Chin Kwok-wai; actor Ning Jin; and Idea Empire Advertising and Production Company director Edthancy Tseng Pei-kun. Stephen Chan, 51, allegedly controlled the shell company which accepted production contracts from TVB and then outsourced the work to other production houses, according to a source. This allegedly allowed the shell company to accumulate as much as HK$10 million over the years. Some of TVB's top artists such as Bernice Liu, Moses Chan Ho, Raymond Lam Fung, Bosco Wong Chung-Chak, Tavia Yeung Yi and Charmaine Sheh Sze- man had been forced to perform in major shows and other functions, and even ribbon-cutting ceremonies, for free or at very low pay. Each time the shell company would allegedly receive payments on their behalf and pocket the difference. The scam involved some of TVB's biggest shows such as Jade Singers Celebrate TVB Anniversary in October and last year's Jade Solid Gold, the source alleged. The outsourcing was unnecessary as TVB had the resources to handle these productions, including arrangements for venues, transport, costumes, make- up, lighting and music, the source said. All it did was allegedly allow the shell company to pocket hundreds of thousands of dollars for each show. The ICAC is said to have launched the investigation two months ago following complaints. Chan was arrested at his Argyle Street home at 6am yesterday. There was another man inside his flat at the time who was not arrested. Ning Jin was escorted by ICAC officers to Metro Harbour View in Tai Kok Tsui while Wilson Chan and Wilson Chin were taken to ICAC headquarters in North Point. The graftbusters yesterday refused to give details of the case. They only confirmed that five people - four from TVB and a director from an advertising and production company - had been "arrested in relation to corruption allegations." But TVB identified the four staff involved, saying they had all be suspended from duty with immediate effect "pending further development." The production of Stephen Chan's weekly show Be My Guest has been suspended but a prerecorded episode will be broadcast as scheduled. Shooting for it was completed on Wednesday with former TVB and i-Cable executive May Fung as Chan's special guest. His duties will be temporarily handled by group general manager Mark Lee Po-on. The arrests came to light after TVB issued a statement at noon saying three of its staff had been involved in an ICAC investigation. Around 4.30pm, ICAC officers escorted Stephen Chan from its North Point headquarters to TVB headquarters in Tseung Kwan O to conduct further searches. Chan, dressed casually in a gray jacket, did not answer questions from the media throng at the TVB office. All the five arrested were held overnight at ICAC headquarters.

China*: The top internet regulator on the mainland insisted on Friday that Google must obey its laws or "pay the consequences," giving no sign of a possible compromise in their dispute.

Hong Kong's Kwok Ka-ming is training coaches. Hundreds of mainland soccer officials, referees and coaches were sent to "anti-corruption rectification education camps" in Beijing and Guangdong yesterday as the authorities seek to clean up the sport. More than 200 top referees were told a three-day boot camp that started in Beijing was their last chance to turn themselves in in return for more lenient treatment. "We are giving those in trouble a chance of self-redemption," Xinhua quoted the new chief of the China Football Association, Wei Di, as saying on Thursday. Wei urged officials, referees and others caught up in match-fixing and corruption to "come clean and confess" in exchange for leniency and warned that those caught after the grace period would be punished. Head coaches of most of the national soccer teams began a similar three-day camp in Sanshui, Guangdong. The coaches received skills training earlier in the week from prominent coaches including Kwok Ka-ming, Hong Kong's head coach from 1982 to 1990. Kwok guided his team to a famous victory over China in 1985, knocking them out of contention for the World Cup finals - an event that sparked rioting in Beijing. The mainland coaches began by focusing on anti-corruption and rectification education yesterday, the Guangzhou-based Yangcheng Evening News reported. Soccer has been under the microscope since the second half of last year, when President Hu Jintao and Vice-President Xi Jinping ordered sports authorities to clean up corruption and match-fixing. Xi also vowed to improve the competitiveness of national teams. Hong Kong is also looking to improve the standard of soccer, with a government consultancy study released this week outlining a HK$75 million to HK$100 million plan for the Hong Kong team to climb into the world's top 100 in the next five years. It is currently ranked 143rd. According to a training schedule published by mainland media, the referees in Beijing met leaders of the China Football Association yesterday, then broke up into small groups to discuss the problems they are facing. They will have a test today and will be asked to sign a letter of commitment tomorrow, pledging to oppose corruption. The 210 male and female referees at the camp will also have individual talks with CFA leaders. Wei described the camps as a chance for all CFA officials, referees, and others involved in match-fixing and corruption to come clean. "Party policy is always 'to confess is to be punished leniently'," he said. The association and anti-graft officials from the State General Administration of Sport had evidence suggesting that some mid-level CFA officials could have been involved in corrupt activities, Wei said. He confirmed that three referees - Lu Jun, who refereed at the World Cup finals in 2002, Huang Junjie and Zhou Weixin - had been taken away by police for investigation. Lu has twice been recognised as Asia's top male referee, in 1998 and 2004. The crackdown on graft in the game has brought down some big names. Nan Yong and Yang Yimin, former vice-chairmen of the association, and Zhang Jianqiang, former director of its referees' committee, were arrested for match-fixing and bribery this month.

A worker in a distribution centre in Shenzhen carries out tests for pesticides on vegetables that are bound for Hong Kong. Shenzhen authorities have set up two electronic systems to monitor the safety of vegetables being exported to Hong Kong. The two systems costing more than a million yuan (HK$1.13 million) were installed after the mainland passed its first food safety law in September. One is a closed-circuit television network that scrutinises all vegetable processing companies in Shenzhen. Video cameras record how vegetables arrive at processing plants, how staff test pesticide levels, how they process vegetables and how vehicles take the products to the border. All footage is monitored by officers of the Shenzhen Entry-Exit Inspection and Quarantine Bureau at the Man Kam To border post. The other system records each processing company's information, including the quarantine results of their vegetables, certificates approving their supply and details of vehicles carrying the products to the city. It makes sure all monitoring procedures are completed before the vegetables are driven across the border, director of plant inspection and quarantine Wang Jun said. For example, trucks would be stopped if records showed the vegetables they carried had not passed quarantine or if they were not registered in the system. While the new systems were expected to speed up checks, Wang did not say how many more trucks could be inspected. Last year the bureau checked about 2,700 trucks at the border, or seven a day - a fraction of the 260 vegetable trucks that cross the border daily. Wang said no smuggled cigarettes or chickens were detected and 99 per cent of vegetables met safety requirements. Vegetable wholesalers in Hong Kong have alleged that vegetables from unregistered farms are sent to the city under the disguise of proper origin labels. But Wang said that was not the case. Meanwhile, Hong Kong's Customs and Excise Department reminded retailers to make sure that organic vegetables they offered for sale were truly organically grown. A vegetable stall owner was fined HK$2,500 after pleading guilty at Fanling Court on Thursday to a charge of supplying vegetables falsely claimed to have organic authentication by the Hong Kong Baptist University.

China is gearing up to spend hundreds of billions of yuan in the next few years to upgrade its extensive power distribution network. The investment is intended to improve energy efficiency and cut greenhouse gas emissions. Zhao Yuejin , a senior engineer at the National Institute of Standardisation, said in Beijing yesterday the power grid's efficiency would increase by 20 per cent when the upgrade was finished. "We can save 70 billion kilowatt-hours in two decades, and that's equivalent to saving 32 million tonnes of coal, or scrapping 69 million tonnes of carbon dioxide and 3.9 million tonnes of sulphur dioxide from the air," he said. "The government will subsidise it." Zhao is a key author of a new standard for the mainland's transformers, to be launched in July. A transformer is a device that transfers electric energy from one circuit to another with a change in voltage, current, or other electrical characteristic. Zhao said more than 3 per cent of the electricity generated on the mainland was "burned" in transformers, accounting for 30 per cent to 40 per cent of the power grid's total energy losses. The new standard requires efficiency increases of up to 66 per cent from present levels. Zhou Sheng , China and Southeast Asia director of the International Copper Association, estimated that implementation of the standard would create a 450 billion yuan (HK$512 billion) market for efficient transformers on the mainland. "It is difficult to estimate how much the final investment will be, because of the fluctuating prices of raw materials, such as copper, in recent years," he said. "But the Chinese government's determination to upgrade its power grid is certain." Zhou said the State Grid would spend more than 500 billion yuan in a couple of years to improve network efficiency and the central government was subsidising the purchase of better transformers and generators by more than 160 energy-intensive factories. The China Southern Power Grid has announced plans to complete the upgrade of transformers in urban areas this year. "State-owned companies such as the State Grid are eager to upgrade," Zhou said. "They have the money and technology. I am optimistic about the implementation of the new standard." Tian Qiang , first deputy general manager of Tebian Electric Apparatus Hengyang Transformer, the largest domestic maker of transformers on the mainland, said the new standard offered domestic suppliers an opportunity to beat overseas competitors. The mainland is the world's largest market for power transition and transformation equipment, and global players such as ABB, Siemens and Areva T&D have set up huge plants there. With superior technology and product quality, they dominate the mainland market. But Tian said domestic companies were catching up and would exploit the opportunity to enlarge their market share. "After years of intensive research and development and continuous support from the government, domestic transformer manufacturers have acquired the technology and expertise to produce electric power equipment that is globally competitive," he said. "But our biggest advantage over those global giants is that we move faster and are more flexible [in response] to the rapidly changing market conditions in China. "To us, the new standard is more of an opportunity than a challenge." While large state-owned companies welcome the change, some small and medium-sized companies may not be ready. "Not all companies are willing to adopt new transformers," Zhou said. "They need not only money but also hardware and software for the change." The European Union and the International Copper Association launched a six million yuan project yesterday to help small and medium-sized companies on the mainland make the transition.

The mainland plans to revamp its university admissions system, allowing students to take subject-specific tests and introducing other measures to ease students' stress.

China's coastal waters are increasingly polluted by everything from oil to pesticides, contaminating the nation's marine life including the shellfish supply, state press reported.

Saudi Arabia and the United Arab Emirates (UAE) have signalled a willingness to press Beijing to support tough new sanctions on Iran, US Defence Secretary Robert Gates said on Thursday.

Chongqing Communist Party chief Bo Xilai has appeared triumphant in Beijing this past week, easily stealing the limelight at the otherwise dull and ritualistic annual parliamentary session. Basking in the international media spotlight, Bo has made little attempt to conceal his zeal for his maverick crusade against organised crime gangs in the southwestern metropolis and his ambition for higher office. His brand of ease and charm is on full display at the National People's Congress, in sharp contrast to the rigid and faceless demeanour of the army of bureaucrats. Several overseas media organisations even lavished him with the title, "China's most charismatic politician", fuelling speculation about his chance for a promotion in the run-up to the 18th Communist Party congress in 2012. In late 2007, when Bo, then commerce minister, was appointed Chongqing's party chief at the height of his career, many thought he had lost his chance to contend for higher positions because he had left the political centre stage at a crucial time. But now, Bo, 60, a Politburo member with a populist touch and a member of a faction of the party known as the "princelings", has bounced back with the latest success of the anti- triad drive and has become one of the top contenders for a seat in the so-called fifth generation leadership. Other leading candidates include his predecessor in Chongqing, Wang Yang , now the Guangdong party chief. Wang, 55, also a Politburo member, served as Chongqing party boss from 2005 to 2007. Although both Bo and Wang are believed to have all the right credentials for elevation with solid portfolios at both central and local governments, their rivalry is seen by analysts as an indicator leadership succession and attracts much attention. There is little doubt that Bo, son of Bo Yibo , once one of the party's most influential elders, has reaped most of the political gains from the relentless war on triads that he kicked off in June and the extensive media coverage of it. Not surprisingly, his crackdown has won applause among ordinary people in Chongqing, who had complained about gang-related crimes for years. Many people outside Chongqing even expressed wishes that their local leaders would follow Bo's example to take similar action against organised crime. "Bo is helping his chances for elevation because senior leaders realise the party needs greater popular support," said Professor Gordon Chang, a US-based China expert and author of The Coming Collapse of China. He said Bo's showmanship has shown the future of Communist politics, in which "most candidates for senior leadership will have to demonstrate some populist base. "Although many will grumble about `Mr Popularity', they will have to give in and give him a promotion." But many have questioned the timing of the crackdown, launched shortly before a gathering of the party's top echelon - the Central Committee in September - saying it was Bo's calculated move to seek as much media exposure as possible amid intense political jockeying for power before the 2012 meeting. Media-savvy Bo was clearly aware of such criticism. Asked if he had a personal agenda behind his crackdown, he was clearly annoyed and refused to give a direct response. Intriguingly, although he insisted he was not the first local leader to crack down on gangs, Chongqing Mayor Huang Qifan has openly compared the anti-triad campaign led by Bo and those of his predecessors. "As we all have seen, this latest campaign is clearly the most efficient one," Huang said at a press conference last week. Without directly criticising his predecessors, especially Wang, Bo described the crime problems in Chongqing when he arrived as appalling. But his high-handed work style and his enthusiasm in promoting revolutionary culture that harkens to Maoist days has earned him as much praise as criticism. Dai Qing , a writer, questioned Bo's anti-triad drive, which, according to critics, had proceeded at the expense of the rule of law. "He may have snared many corrupt officials, but he has failed to eradicate the political basis for deep-rooted corruption," she said. Trained as a journalist at the Chinese Academy of Social Sciences in the early 1980s, Bo became mayor of the booming northeastern port city of Dalian in the 1990s and governor of Liaoning in 2001. "There is no doubt that Bo wants to use his political wisdom and charisma to climb up the leadership ladder, but we all know it's just his wishful thinking," Dai said.

Shares in Air China tumbled on Friday after the nation's flag carrier said it plans to raise US$950 million through a private share placement to boost capital and lower financing costs.

Tighter credit controls are prompting mainland banks to rein in lending and are encouraging domestic companies to borrow abroad via syndicated loans, banking sources said on Friday.

Shanghai-based chipmaker Advanced Semiconductor Manufacturing Corp (ASMC) is confident of reversing three years of losses by turning its focus to the car industry.

The mainland's top judge has expressed concerns about training and ethical standards within the judiciary, as the courts are stretched to the limit. "Some legal officials have an incorrect understanding of legal concepts," Supreme People's Court president Wang Shengjun told the National People's Congress in Beijing. "A small number do not have high morals. Some cases drag on for a long time without resolution, and people complain a lot." In January, a court gave a life sentence to the most senior judge ever convicted of corruption. The Communist Party has warned that its rule may be threatened if public anger is not nipped in the bud by stifling official graft. Yu Jianrong, an expert on social unrest, wrote in the China Daily that the law is failing to protect legal rights and thereby fanning public anger, especially at the grassroots level. "Instead of directly confronting local governments, people who feel unprotected are choosing to spread rumors," Yu wrote. "At times when an individual's complaint or issue is mishandled, the situation will turn awry and extreme actions, even violence, result." The legal system is also struggling to tackle a rising workload amid booming economic growth. Wang said the number of cases courts handled last year rose more than 16 percent on 2008, with more labor disputes, child kidnappings and internet obscenity cases. "The contradiction between having many cases and few people becomes more prominent by the day," Wang told the 3,000-odd NPC delegates. The body of judicial officials has stayed at about 190,000 since 2005, while cases per year have risen to 10.5 million from 8.3 million in that time.

A total of 64 people from the Chinese mainland made the Forbes magazine list of the world's richest billionaires, moving up to take second place for the first time.

China's CPI within normal range despite February surge: expert - China's February consumer price index (CPI), a main gauge of inflation, is still within normal range, although the figure surged higher than expected last month.

There are now more billionaires in China than any other country besides the United States, according to Forbes magazine. According to the latest list of rich people put out by the magazine, the US continues to top the list with 403 billionaires. But what has really been surprising has been the strong ascendancy of China. The country increased its number of billionaires on the list to 64 in 2009 from 28 in 2008. The richest man in China is Zong Qinghou, who runs the multi-billion-dollar soft drink firm Wahaha Group. Zong is ranked 103rd on the list with an estimated wealth of around $7 billion. Not only has he nearly tripled his wealth from $1.9 billion in 2008, he has also improved his standing from 376th earlier. Plain-suited Zong, who is also a deputy to the National People's Congress (NPC), told China Daily on the sidelines of the ongoing session that he was not surprised at his ranking considering that his company has been extremely profitable in recent times. Rupert Hoogewerf, the British founder of Hurun rich report, said Zong's ranking does not come as a surprise. "Wahaha means 'laughing children' in Chinese and is one of the most valuable brands in the country. The self-made billionaire has always been focused on being the leader in the beverage segment ever since he started his firm in 1987," he said. The magazine said the number of Asian billionaires went up substantially as the rich in the region expanded their fortunes at a quick pace last year. Lending more credence to the increasing number of Chinese billionaires on the list is also the fact that the nation is likely to overtake Japan as the world's second-biggest economy this year. Hoogewerf expects Chinese entrepreneurs to figure among the leaders soon and could even bag the top slot in the next 15 years as the economy continues to boom. He expects that it most probably could be someone from the IT industry. Hoogewerf likens Zong to an army general who is not too keen on surrounding himself with luxurious trappings. Luo Laijun, an expert at the international economics department of Renmin University of China said improvements in market mechanisms over the past decades have helped create more wealth opportunities for Chinese people. "Zong is one of the first set of Chinese entrepreneurs from the 1980s and they are now enjoying an upsurge in fortunes," he said, adding that government has also chipped in with supportive policies for financing and taxes. Zong's company resolved its long-standing row with Groupe Danone last year when Wahaha acquired the French food giant's 51 percent stake in their joint venture. The two sides had locked horns over Danone's complaint that Wahaha Group was running separate businesses like Wahaha-branded drinks.

Tourists enjoy the spectacular scenery as a massive wall of water pours down near Hukou waterfall in Yan’an, in northwest China’s Shaanxi province, on March 11, 2010. Hukou waterfall, in the Yellow River, began thawing as the weather turned warmer, and is attracting many tourists to come and admire its marvelous natural beauty.

Shanghai Expo giant pandas enjoy fresh bamboo shoots in Shanghai, east China, on March 10, 2010. Fresh bamboo shoots are offered for Shanghai Expo giant pandas from Wednesday.

Shanghai Expo giant pandas enjoy fresh bamboo shoots in Shanghai, east China, on March 10, 2010. Fresh bamboo shoots are offered for Shanghai Expo giant pandas from Wednesday.

Colorful pavilions for World Expo

The photo taken on March 12, 2010 shows the Sunshine Valley, bringing natural light and fresh air into Word Expo Axis in 2010 World Expo Site, east China's Shanghai Municipality. A series of pavilions of 2010 World Expo are designed and constructed with the idea of "Low-carbon World Expo".

The photo taken on March 12, 2010 shows the China Aviation Pavilion with double-layer walls bringing in fresh air in 2010 World Expo Site, east China's Shanghai Municipality. A series of pavilions of 2010 World Expo are designed and constructed with the idea of "Low-carbon World Expo".

The photo taken on March 12, 2010 shows the Private Enterprise Pavilion, which gives a "rainbow exterior" under the sunshine, in 2010 World Expo Site, east China's Shanghai Municipality. A series of pavilions of 2010 World Expo are designed and constructed with the idea of "Low-carbon World Expo".

Photo taken on March 11, 2010 shows the Romania Pavilion for the 2010 World Expo in Shanghai, east China. The preparation of 2010 World Expo has entered into the final phase of decoration and exhibition installation at present.

Photo taken on March 11, 2010 shows the Britain Pavilion for the 2010 World Expo in Shanghai, east China. The preparation of 2010 World Expo has entered into the final phase of decoration and exhibition installation at present.

Photo taken on March 11, 2010 shows the Italy Pavilion for the 2010 World Expo in Shanghai, east China. The preparation of 2010 World Expo has entered into the final phase of decoration and exhibition installation at present.

Photo taken on March 11, 2010 shows the Russia Pavilion for the 2010 World Expo in Shanghai, east China. The preparation of 2010 World Expo has entered into the final phase of decoration and exhibition installation at present.

Photo taken on March 11, 2010 shows the Austria Pavilion for the 2010 World Expo in Shanghai, east China. The preparation of 2010 World Expo has entered into the final phase of decoration and exhibition installation at present.

Photo taken on March 11, 2010 shows the Netherlands Pavilion for the 2010 World Expo in Shanghai, east China. The preparation of 2010 World Expo has entered into the final phase of decoration and exhibition installation at present.

Photo taken on March 11, 2010 shows the Switzerland Pavilion for the 2010 World Expo in Shanghai, east China. The preparation of 2010 World Expo has entered into the final phase of decoration and exhibition installation at present.

Photo taken on March 11, 2010 shows the Spain Pavilion for the 2010 World Expo in Shanghai, east China. The preparation of 2010 World Expo has entered into the final phase of decoration and exhibition installation at present.

Photo taken on March 11, 2010 shows the Poland Pavilion for the 2010 World Expo in Shanghai, east China. The preparation of 2010 World Expo has entered into the final phase of decoration and exhibition installation at present.

March 13, 2010

Hong Kong*: Fresh questions are being asked about sales practices at a luxury Tsim Sha Tsui tower. Days after being quoted as saying several of the first flats put on the market were sold to relatives of a director of the firm that co-developed it, a lawmaker said yesterday that the Urban Renewal Authority had allowed its co-developer to sell 39 flats to its business partners before public sales began. These "business associates and business partners", who acquired more than 11 per cent of the 345 flats in The Masterpiece, were on a "VIP list" approved by the authority and the board of developer New World Development, Lee Wing-tat said, quoting an e-mail from the authority. Lee, of the Democratic Party, said he had asked the authority to inquire about the "VIP sale" after learning about it from an informant. The 39 flats, between the 38th and 57th floors, were sold for between HK$16 million and HK$48 million before the public sale in August. The fresh finding adds to Lee's earlier accusation that New World Development was trying to manipulate sales by selling at least seven of the first batch of flats in the public sale to managing director Henry Cheng Kar-shun's relatives. It was reported that Cheng's son, cousin and uncle had bought the seven flats in the name of several firms, including offshore companies. The Masterpiece, a 67-storey tower containing a hotel, apartments and a mall, made headlines in September for the record-setting sale of a one-bedroom flat that fetched HK$24.5 million. "The VIP sale is even more serious than Cheng's relatives buying in the public sale. Is the developer trying to benefit its friends and asking them to help create an impression that the property is very marketable?" Lee asked. He also criticised the authority for not disclosing these internal sales, which would mislead the public on the market situation. "The authority, as a public organisation, should keep sale practices as transparent as possible. It should inform the public if there is any internal sale," he said. The authority, in a written statement, admitted 39 units were sold to New World's business partners before the public sale, at prices approved by both parties. Each partner was restricted to at most two units. New World's staff and directors were not involved in the internal sale, it said. A spokesman for the firm said last night the internal sale was done according to procedures approved by the Urban Renewal Authority. "Internal sales are a widely accepted practice in the real estate industry," he said. Secretary for Development Carrie Lam Cheng Yuet-ngor, said in a Legislative Council meeting that although there was no breach of rules, the government would require the authority to consider whether it should in future exercise control over purchases in a project by its co-developer's staff and directors. At present, authority staff must get approval before buying flats, but staff of a co-developer need not. "My view is that market information is not just about prices but also about market response - whether the market is really keen about the project. This has to be reflected in a transparent manner," Lam said. In response to lawmakers who asked why The Masterpiece was zoned commercial - allowing for a taller building - while most of the development is clearly residential, Lam said the site was zoned "comprehensive development area", allowing a plot ratio of 12. No residential zoning was involved in the project, she said.

A senior mainland official yesterday said holding a referendum in Hong Kong is illegal. Li Fei, vice chairman of the Legislative Affairs Commission of the National People's Congress, said people would be mistaken to think such a move is legal. The Basic Law makes no mention of referendum. "Under public law, if there is no authorization to do something then it is forbidden," Li told reporters in Beijing. NPC Standing Committee deputy secretary general Qiao Xiaoyang said he has been monitoring the SAR's political development, and is prepared to discuss the issue with others depending on opportunity and time. Five pan-democrats resigned from the Legislative Council to force a May by-election, which they hope will be seen as a "de facto referendum" on full democracy. Legal scholar Lian Xisheng, at the China University of Politics and Law, said the suggestion of a de facto referendum is tantamount to "challenging the Basic Law blatantly," as it violates China's authority to decide on constitutional development in Hong Kong. But he said since the Basic Law does not have a section on referendum, those who vote will not be punished. He also said there is no need to ask the central authorities to re-interpret the Basic Law on this issue. But former secretary for justice Elsie Leung Oi-sie said Hong Kong could submit a proposal to the NPC Standing Committee for interpretation if it is confused, but added now is not the right time to do so. Civic Party chairwoman Audrey Eu Yuet-mee, who is spokeswoman for the so-called "five-district referendum movement," said the legality of an action should not be determined by what some people are saying. "Something that may not be legally binding doesn't mean it is illegal," said Eu, a barrister. Democratic Party chairman Albert Ho Chun-yan said Hongkongers know the pan-democrats want to trigger a "de facto referendum," and that even though the result has no law-binding effect, Beijing should treat it as a referendum.

Tourism officials are scrambling to help 24 Filipino tourists abandoned on the group's arrival in Hong Kong, giving the visitors free city tours while urging Manila to investigate the travel scam. The tourists, who are civil servants from the southern Philippine province of Surigao, were stranded at the airport for six hours on Tuesday night after their supposed tour operator, Travel Connection-HK, failed to show up. The group realized the firm had given out a fake address and phone number. Each individual had paid HK$4,000 for the five-day, four-night tour. The Travel Industry Council of Hong Kong, which is assisting the tourists, believes their travel agent in the Philippines might have defrauded them. Lawmaker Paul Tse Wai-chun assisted the visitors, settling them at a To Kwa Wan hostel on Tuesday. They have since moved to a Tsuen Wan hotel for the rest of their stay. One tourist, called Lucia, said she has no money with her, and thanked Hong Kong tourism officials for their support. "We don't have any more money to spend in Hong Kong," she said. TIC chairman Michael Wu Siu-ieng named three Philippine agencies involved in arranging the trip: Nickel Travel and Tour Agency, MMP Travels and Tour, and San Pedro Travel Service. MMP Travel's Melissa Plabon said she transferred some 158,000 Philippine pesos (HK$26,723) to a "Johnny Liu" as payment for hotel accommodation. A San Pedro Travel spokeswoman said she was asked by Plabon on March 5 to book the hotel for the group, but she canceled after Plabon failed to pay. After the tourists' plight came to light, they were given free Macau ferry tickets and Disneyland admission tickets, and were asked to pay US$70 (HK$546) for their tour and accommodation, instead of the usual US$200. The Tourism Board sponsored their lunch at The Peak yesterday as part of a city tour. They are are set to go to Macau today and Disneyland tomorrow, before returning to the Philippines on Saturday. "To show Hong Kong's hospitality, we have to [help] the tourists first," Wu said. "But we must charge them because we don't want to set a bad precedent for receiving stranded tours." TIC executive director Joseph Tung Yao-chung called on the Philippine government to investigate the incident. Philippine Vice Consul Val Roque said: "If this is indeed a case involving a tour operator, or an individual back home, then our investigators will be informed by the consulate to take action." Tourism Board chairman James Tien said there should be better communications between the police and the board to help stranded tourists. The Tourism Commission said it is highly concerned, and promises to improve its 24-hour report mechanism so that it can respond to similar incidents.

Tom Group (SEHK: 2383), a media arm of conglomerate Hutchison Whampoa (SEHK: 0013), will focus on making more of its core businesses available for 3G wireless devices and applications after significantly narrowing its losses last year. "Despite the slow economic recovery, the group continued to optimise its business platform and has reduced its operating costs by 20 per cent," chief executive Ken Yeung Kwok-mung said yesterday. Tom pared down its losses by 96 per cent to HK$61 million from HK$1.39 billion in 2008, helped by cost-control measures and the steadier performance of its core internet, publishing, outdoor media and television interests. Its operating profit - calculated from marketing, selling and administrative expenses - reached HK$25 million, which included a one-off gain of HK$91 million from the acquisition of shares it did not own in Tom Outdoor Media Group. This compared favourably with an operating loss of HK$1.37 billion in 2008, which included a provision for the impairment of goodwill and other assets of HK$1.25 billion. Last year's revenue was down 11 per cent to HK$2.44 billion from HK$2.73 billion, as its publishing, outdoor media and television businesses still posted losses. Yeung said the mainland's adoption of high-speed 3G systems and the rapid construction of infrastructure provided Tom with an opportunity to develop more innovative mobile internet services with strategic partners, including network operators and handset manufacturers. "Tom is becoming the brand of choice for users on the mainland and in Taiwan who are looking for unique content," he said. The firm's Huanjianshumeng website ( introduced an e-book reader application for Apple's iPhone to extend its reach to various reader groups. The Tomdeveloped application allows readers to access books and best-selling novels from a stock of more than 35,000. Yeung said Tom was also working closely with authorities across the mainland to bring high-margin interactive outdoor media, including wireless internet-linked flat-screen displays, to more cities. Tom, which was founded in 1999, also promotes its e-commerce business Eachnet, in which eBay has a 49 per cent stake, for new mobile broadband devices.

About a year after a controversial bid to take the company private failed, telecommunications giant PCCW has moved on and sharpened its focus on new opportunities this year.

Cathay Pacific Airways (SEHK: 0293) bounced back from its worst loss in history, posting a HK$4.69 billion net annual profit, following an HK$8.7 billion loss in 2008. "We have seen a much better fundamental change in the demand over the past year," said Christopher Pratt, chairman of Cathay. Passenger traffic and prices for business class and first class, two major profit drivers for Cathay, had been trending upwards over the past four to five months. But passenger yields, or revenue per passenger per mile, had yet to return to the level in 2007, he said. Disregarding the substantial rebound in premium traffic, Cathay management is contemplating a plan to insert an intermediate product between economy and business class, the so-called premium economy class, in the cabins across its network. Pratt said the airline was trying to identify changes in passenger demand over the longer term. Demand had returned but had fundamentally changed, he said, adding that Cathay wanted to install premium economy seats as early as 2012. Rival carriers Singapore Airlines, British Airways and Qantas Airways also have four class configurations. The move to premium economy seats to capture demand between economy class and business class is part of a global trend, said Karen Chan, transport analyst at RCM. "It could lure a passenger in economy to trade up his ticket as well as capture the demand for a trade-down from the business class," Chan said. The ticket price for business class is usually four times economy class while premium economy is just twice the price of economy. The better-than-expected profit result from Cathay not only reflected a HK$1.25 billion one-off gain from selling down part of its stake in Hong Kong Aircraft Engineering Co and the write-back of fuel hedging losses which amounted to HK$2.76 billion, but also a solid recovery in its core business, mainly in the fourth quarter. Cathay's operating profit before fuel hedging and non-recurring items stood at HK$285 million, as opposed to HK$1.44 billion operating losses in 2008. In response to the most severe economic downturn since the Great Depression of the 1930s, the carrier cut passenger capacity by 3.7 per cent and cargo capacity by 13 per cent, instituted an unpaid-leave plan for staff and delayed aircraft delivery. After an unexpected upswing in demand in the fourth quarter, the airline decided to halve the unpaid-leave period to two weeks. Senior management, including Pratt, chief executive Tony Tyler and chief operating officer John Slosar may also resume receiving bonuses in the 2009 financial year after the decision to suspend it in 2008 as long as shareholders give their approval in the annual meeting.

China*: Cisco says new router can link entire China by video conference - Cisco Systems introduced its first major new routers in six years and said they could be configured to handle internet traffic up to 12 times faster than rival products.

China Mobile to buy stake in bank - China Mobile has agreed to buy a 20 per cent stake in Shanghai Pudong Development Bank for 39.8 billion yuan (HK$45.25 billion) in cash.

The luxury apartment buildings Yang Xuhua passes on her way to work are a daily reminder of her own frustrated efforts to buy a home. Prices for even modest apartments in Shanghai have soared, putting home purchases out of reach for white-collar workers and professionals. Yang and many other young Chinese are finding their aspirations thwarted by an overheated property market that is enriching already wealthy speculators, local officials and other Communist Party allies. It is a hard reality for a generation that views home ownership as a given after reforms more than a decade ago created a housing market open to the masses. It is also a challenge for leaders whose reliance on rising property values and land sales to developers risks letting the market spiral out of control. "I sigh at every fancy apartment building I see on the way to work every day, but that won't change anything," says Yang, whose train ride to work at a trading company takes her past legions of high-rise apartments. "My salary increases, but it can't catch up with rising house prices." The issue is getting top billing at China's annual legislative session, the party's main forum for explaining its policies and responding to public complaints. "We will resolutely curb the precipitous rise of housing prices in some cities and satisfy people's basic need for housing," Premier Wen Jiabao pledged in his annual address to lawmakers. The government has raised taxes and required down payments - now a minimum 30 per cent, even for first-time homebuyers - and warned big state companies and banks against speculative, risky investments.

Yesterday's trade figures intensified the debate over when China will allow the yuan to appreciate. The continued improvement in trade since late last year reinforced the views of those economists who expect yuan appreciation to begin soon. Meanwhile, others believe there will be no yuan strengthening in the near term because the latest figures come off a low base and the trade surplus has been narrowing since November last year. To further confuse matters, both groups attribute weekend comments by central bank governor Zhou Xiaochuan as evidence to support their arguments. Zhou cited the policy adopted in mid-2008 of holding the yuan pegged to the US dollar as being part of the package to deal with the global financial crisis, adding that the problem of how to exit from these policies will arise sooner or later. Under the foreign exchange reform of 2005, China revalued the yuan in a one-off appreciation of 2.1 per cent, de-pegging it from the dollar and linking it to a basket of currencies with a limited trading band. It had gained about 20 per cent against the greenback before being the re-pegging. However, Zhou also said: "We must be extremely prudent about our choice of timing" because the economic recovery is not yet on a solid footing. Like many economists in international investment banks, Wang Tao of UBS called the remarks "probably the clearest signal yet that resuming yuan appreciation is a matter of timing". She expects it to resume in the second quarter of this year, trading at 6.40 to 6.50 to the dollar by the end of the year. Goldman Sachs forecast a 5 per cent rise in the next 12 months from the current 6.83, although it suggested the yuan was "no longer strongly undervalued". It said factors including recent strengthening of the dollar, the strength of the Chinese economy, struggles within the Group of Seven and the risk of growing protectionist measures towards China, will force Beijing to allow the yuan to trade in a wider band. But other economists have different interpretations. Callum Henderson, the head of FX Research at Standard Chartered Bank said, yuan appreciation "might come later rather than sooner", as Zhou suggested the de-pegging would be part of the key economies' overall exit strategy from their extraordinary and unconventional monetary policies. Yi Gang, a vice-governor of the central bank and head of the State Administration of Foreign Exchange, admitted on Tuesday that even inside China there were different views about the yuan exchange rate. On Monday, Minister of Commerce Chen Deming said the country would continue to reform its exchange rate policy in a "gradual and controlled" manner.

The mainland's top print media censor is to introduce a new qualification exam for aspiring journalists this year in a push to tighten up on control of media outlets.

Xie Zhenhua, Wang Guangtao and Zhang Lijun, vice-minister of environmental protection. China's top climate negotiator said the world must learn a lesson from the Copenhagen talks last year to ensure a meaningful deal is produced at the UN climate meeting in Mexico later this year. Although the Copenhagen meeting, which ended in a non-binding, face-saving political accord China helped hammer out, was widely seen as a failure, it was rare for Beijing officials to criticise it in such a way. The remarks yesterday by Xie Zhenhua, deputy director of the National Development and Reform Commission, came a day after Beijing formally announced its support of the Copenhagen deal. "On top of the many topics to be tabled at the Mexico meeting, first and foremost, we must learn some lessons from the Copenhagen talks and ensure all parties have fair, open, transparent and broad participation," he said. China has been fiercely criticised by both rich countries and many poor allies for its leading role in secretly producing the controversial final document along with the US and three other emerging economies - India, Brazil and South Africa. "We should be aware of the lessons from the Copenhagen talks, which ended with dismay for some countries," Xie said at a briefing on the sidelines of the National People's Congress. "What they were not satisfied with was not the content of the deal, but the procedure that produced it." He said China had high hopes for the talks in Mexico in December but offered little detail about what China, the world's biggest emitter of greenhouse gases, was prepared to do to make the meeting a success. Analysts say Beijing is unlikely to make any substantial concessions, such as accepting mandatory caps on carbon emissions or allowing an independent verification of its domestic emissions-cutting campaign. Although China made a conciliatory gesture in the Copenhagen Accord, which pledged to provide more transparency in reporting and monitoring carbon reductions in developing countries, Xie and other mainland officials said yesterday that it was unfair to ask China to do more before rich nations honoured their commitments. "China is using its own money to control emissions ... and it is a sovereignty issue that we should not accept the `measurable, reportable and verifiable' mechanism demanded by rich nations," Xie said. Wang Guangtao , chairman of an NPC subcommittee on environmental issues, said industrial nations that failed to hit the binding emission targets under the Kyoto Protocol should stop pointing fingers. "Those countries, which should pledge to take binding targets or have already done so, have continued to increase their emissions, and they should be subject to such a monitoring mechanism first," he said. Xie also urged the US to play a more constructive role in leading the global talks on climate change. "So we hope the United States will do more ... and we hope the US will not shift the responsibility for taking more active action to other countries because of its rifts and difficulties at home," he said.

The first two women astronauts to serve on a team that will undertake future missions have been selected. The women were part of a "second batch" of seven people who will take over manned space-flight duties from the first generation of astronauts, Xinhua News Agency reported. The two, who were not named, were both pilots in the People's Liberation Army Air Force, said Zhang Jianqi, former deputy commander of the manned space program. China became the third nation to put a man in space in 2003, when astronaut Yang Liwei piloted the one-man Shenzhou-5 space mission. In September 2008, it launched a mission that conducted the country's first space walk. Zhang said the women astronauts were required to be married "as we believe married women are more physically and psychologically mature." Women astronauts "theoretically enjoy advantages over their male counterparts in terms of endurance and circumspection."

March 12, 2010

Hong Kong*: Cathay Pacific Airways reported its best half-year earnings in two years, beating analysts forecasts, but is cautious about this year on premium passenger demand and oil prices.

Filipino tourists, who were cheated by their travel agent and stranded at HK airport, are taken sightseeing around Hong Kong by the Travel Industry Council on Wednesday. The Travel Industry Council of Hong Kong (TIC) said on Wednesday it was helping 24 Filipino tourists left stranded in Hong Kong, who claimed they were victims of a scam by tour operators in the Philippines. The tourists, who are mostly civil servants working for the Philippine government’s statistics department, joined a five-day tour to Hong Kong, Macau and Shenzhen. They were told in the Philippines the tour would be organised by a Hong Kong travel agency and they would be met by a travel agent from a company named Travel Connection Hong Kong. Each of the tourists paid 20,000 Philippine pesos (about HK$3,400) to join the tour. When they arrived at Hong Kong International Airport on Monday evening, however, they were not met by a travel agent. When the Filipinos went to their hotel in Boundary Street in Prince Edward, staff told them their reservations had been cancelled. The tourists reported the case to the police. Paul Tse Wai-chun, a lawmaker representing the tourism sector, said he had helped the tour group find accommodation at a hostel in To Kwa Wan. Tse said the incident was “unfortunate”. “A tour agent in Hong Kong will try to arrange sightseeing trips for them,” he added. “We have a responsibility to help them and give them a good impression of Hong Kong,” he told local media. On Tuesday afternoon, the TIC – an organisation that regulates Hong Kong travel agents – said it would also treat them to a meal at a restaurant on The Peak. The TIC said they would also try to liaise with local travel agents to arrange a visit to Shenzhen. Tse stressed that this was an unusual case and hoped it would not happen again. “Because the suspected deception happened in the Philippines, there’s not much we can do to help legally,” he explained. TIC executive director Joseph Tung Yao-chung said initial investigations revealed the case did not involve Hong Kong travel operators. Tung said Travel Connection Hong Kong was not registered in the territory. He said the name was probably made up by the tour operator in the Philippines to cheat the tourists. “In Hong Kong, operators who wish to provide sightseeing services must be a licensed travel agent and a member of the TIC,” Tung said. “If this is confirmed as a travel agent scam, then the Philippine government should handle it,” he added. Philippine vice-consul in Hong Kong Val Simon T. Roque said the incident might be a case of deception by a Philippine tour operator. “If the tourists wish to file a complaint against the travel operator in the Philippines, then we would help them,” he said.

Citic Pacific climbed back into the black last year, after the scandal-plagued investment firm suffered massive losses from unauthorised currency trading bets in 2008.

The industrial building in Cheung Sha Wan – the scene of Monday's No 4 fire that killed veteran fireman Yeung Chun-kit and injured three of his colleagues – re-opened on Wednesday.

The government is planning to develop the rural town of Lau Fau Shan into an "eco-cultural park", with a direct access road from the Wetland Park in nearby Tin Shui Wai. In a study that is under way, the Planning Department has drawn up four zones in the 565 hectares of the northwestern New Territories, which covers the existing fish market, the wetland area in Tsim Bei Tsui, a green belt west of Tin Shui Wai New Town, and a coastal area with mangrove and oyster shell deposits near the entrance to the Hong Kong-Shenzhen Western Corridor. The blueprint is an outcome of a public consultation conducted last year. It will be discussed by the Town Planning Board on Friday. The existing fish market would be revamped, with a roundabout reconfigured as a gateway plaza. At the waterfront, a piazza would be created as an extension of the market and provide space for shops and restaurants. A former police station would become a restaurant and gallery to showcase the history of oyster farming. Along the coastal mangrove groves near the western corridor, two boardwalks would be added so visitors could see the area upclose. To connect tourist spots in the area, the department suggests widening a road between the wetland park and Lau Fau Shan and building a car park for coaches. The road would shorten the journey between Tin Shui Wai and Lau Fau Shan to eight minutes, saving five minutes and relieving traffic congestion on weekends, Yuen Long District Council chairman Leung Che-cheung said. Lau Fau Shan Chamber of Commerce vice-chairman Chan Choi-hing said businessmen in the area welcomed the plan, but the government was unable to tell them when the makeover would occur. He said the plan was necessary, as the existing fish market was small and got too crowded on weekends. Traffic jams were also a problem. A green group, however, has reservations about the plan for one of the four study areas - a green belt west of Tin Shui Wai. The green belt, privately owned and planned for tourism and private residential development, had seen illegal dumping over the past few years, said Alan Leung Sze-lun, WWF senior conservation officer. "It is not very appropriate for the government to initiate a change of land use for development in these areas, which would amount to encouraging the illegal activities," he said. Leung also had reservations about adding walking trails in Tsim Bei Tsui, which would disturb birdlife in the area.

Round-the-clock border posts for Hong Kong-Zhuhai-Macau Bridge - Border posts at the three ends of a multibillion-dollar highway across the Pearl River Delta will be open around the clock, although that might not be possible immediately after the bridge's opening in 2016. An agreement signed by authorities from Guangdong, Hong Kong and Macau released yesterday said the three governments would determine the best date for 24-hour operation to start. The move is seen as another measure to boost use of the bridge, which after a 20-year delay in construction, is facing competition from other road networks and infrastructure - including a soon-to-be-built link that connects Shenzhen and Zhongshan. It has been promised that the toll will be kept at the minimum needed to repay a 22 billion yuan (HK$25 billion) bank loan, interest, and the bridge's repair and maintenance expenses. The governments are not supposed to make a profit from the toll, which means it may eventually be reduced. The agreement also specifies the rights and responsibilities of the three governments concerning the construction, operation, maintenance and management of the Hong Kong-Zhuhai-Macau Bridge's main structure. As reported by the Post, Guangdong will replace Hong Kong as the chair of a committee that will make major decisions on the 37.73 billion yuan main bridge, which is over mainland waters. The province will also nominate the head of a bureau under the committee to oversee daily operations. The committee will comprise nine members - three from each government. Each team will nominate its own leader, and the leader or an appointed substitute must attend committee meetings to ensure no parties are left out of major decisions. In the event of a split in opinion, the governments will seek consensus through negotiation. The agreement bans the parties from resolving differences via legal action. If disagreements on matters such as the setting of tolls and the number of permitted vehicles cannot be resolved, each government will report the matter to a high-level body comprising Beijing representatives. One billion yuan will be set aside from the project's capital fund for the setting up of the bureau that oversees daily operations. It will also be responsible for raising loans to cover any shortfall in capital. The three governments will each pick a deputy chief to the bureau. The tendering of the main construction work will be regulated by mainland laws, which means firms without a permit from mainland authorities cannot bid. However, the contracts worth more than 400 billion yuan may fall under the scrutiny of the World Trade Organisation and should be opened to all international bidders. Local engineers said they suspected most major contracts would go to mainland firms.

An influential advisory body on civil service pay has recommended cutting the starting salaries of civil servants with university degrees by about HK$2,000.

About a year after a controversial bid to take the company private failed, telecommunications giant PCCW has moved on and sharpened its focus on new opportunities this year.

China*: China's exports and imports grew faster than expected in February, underlining the momentum behind mainland economy and reinforcing the case for a rise in the yuan.

China will step up food safety efforts in the wake of a massive dairy scandal, expanding supervision to reach more of the country’s countless small farms, an agriculture official said on Wednesday. Beijing has been struggling for several years to overcome a series of food safety problems, including one that started two years ago when at least six children died and nearly 300,000 fell ill after consuming a tainted milk formula. Vice Minister of Agriculture Wei Chao’an told a news conference that agricultural officials at all levels are working this year “to prevent any large-scale food safety crises.” The difficulty the government faces can be seen by the fact the tainted milk problem has lingered on, with new cases appearing last year because old batches of the product were not destroyed after the scandal. Wei said the ministry was working to bring more farms under better supervision, a challenge in a vast country where some rural areas are still very poor. “Our agricultural products overall are safe and of high quality, but we must also recognise that while we transition from traditional to modern farming, many of our operations remain scattered, production methods are still backward and our supervision lags behind,” Wei said. A statement from the ministry handed out at the news conference said the government promises to “implement quality and safety monitoring programs targeting raw and fresh milk, and strengthen supervision of purchase stations for raw and fresh milk.” The tainted formula was made from milk that had been deliberately contaminated with the industrial chemical melamine in order to fool inspectors testing for protein content. Melamine, which can cause kidney stones and kidney failure and is used to make plastics and fertilisers, has also been found added to pet food and animal feed. Despite tightened regulations and increased inspections on producers, melamine-tainted milk products have recently shown up repackaged in several places around the country, exposing weaknesses in previous promises to better police the food chain.

The US is studying whether it can legally challenge internet restrictions on the mainland but talks with Beijing might yield faster results, the top US trade official said on Tuesday.

Political reform with Chinese characteristics is intriguing talk - It has become routine that top mainland leaders renew pledges to push ahead with political reform during the parliamentary plenary sessions. This year is no exception. Although the promises still lack specific details as they did in previous years, the officials seem to have changed their tone this year. There is a greater sense of urgency that has rarely been seen for years. And the change of wording has left many China watchers puzzled, with some overseas media even speculating on the possibility of substantial reform. But other analysts have cautioned against such a rosy prediction, citing the leaders' poor track record in honouring their commitment to greater democracy and political reform. The latest case in point is some intriguing remarks yesterday by parliamentary chief Wu Bangguo , the second most powerful man in the Communist Party. In his annual report to the National People's Congress, Wu talked about the lessons of the Cultural Revolution as he elaborated on the importance of political reform. "At the third plenary session of the 11th Central Committee [in 1978], the party reviewed the lessons since the founding of the People's Republic, particularly those of the Cultural Revolution," he said. Although that tumultuous 1966-76 era ended more than three decades ago, it largely remains a taboo subject on the mainland. Analysts noted leaders have tried in the past to avoid mentioning the Cultural Revolution because of its sensitivity about the reappraisal of Mao Zedong and reopening bitter political wounds. Beijing-based political observer Hu Xingdou said authorities apparently felt the heat from a group of leftists who were nostalgic for Maoist days and critical of the reform and opening-up. "By mentioning the 1978 meeting that gave a comprehensive review of the Cultural Revolution and ushered in a new era, the leadership wants to reiterate its determination to continue with the reform and opening-up," he said. Analysts noted that Wu's remarks also echoed those of Premier Wen Jiabao , who stressed the importance of political reform in his annual work report just a few days ago. It was the first time Wen said economic reform and the modernization drive would not be a complete success without political reform. But the concept of political reform that Chinese leaders often talk about is vastly different from what the people anticipated and the authorities have no intention to review the Cultural Revolution, according to analysts. Another Beijing-based analyst, Liu Junning , said the public should not read too much into the words of leaders. "They always talk about political reform, but they are talking nonsense because they don't mean it at all," he said.

Authorities in California wooing China BYD automaker - Chinese automaker BYD has made headlines in California as it is considering locating its U.S. office and assembly line in the state, local media reported on Tuesday.

China's exports rose more than forecast in February and posted a third straight gain, a rebound that adds to pressure on policy makers to pare back stimulus measures adopted during the global recession. Shipments abroad gained 46 percent in February from a year before after a 21 percent advance in January, the customs bureau reported on its website today. Year-ago figures were depressed by a contraction in world trade resulting from the crisis. The trade surplus hit a one-year low of $7.6 billion, affected in part by the Lunar New Year holiday. The strengthening in exports may reduce excess capacity in manufacturing and contribute to price increases. Premier Wen Jiabao has cited price pressures, along with property speculation and loan quality at banks, among his top concerns for this year. Imports rose 45 percent after an 86 percent jump in January, today's figures showed. The advance underscores China's rising role as a driver of global growth. The export gain in February was more than the 38.3 percent median estimate in a Bloomberg News survey of 28 economists. Imports topped a 38 percent estimate and the trade surplus was in line with forecasts. Central bank Governor Zhou Xiaochuan said on March 6 that policy makers must be "very cautious" in timing an exit as a world recovery isn't yet solid. Commerce Minister Chen Deming said the same day that it was too early to say that exports had recovered from the global financial crisis, and that the trade surplus for the past two months combined had contracted by 50 percent. At the same time, Chinese authorities are also concerned at the toll that yuan appreciation may take on exporters. A stronger yuan could help to restrain inflation. Inflows of speculative capital have also added pressure for the yuan to gain, the nation's currency regulator said yesterday. "The yuan's appreciation should be limited to no more than 1 percent this year as costs rise," Pan Liyun, a sales executive at Zhejiang Daishan Xingfa Toys Factory, said at a trade fair in Shanghai this month. Pan said manufacturers already face pressure to pay workers higher wages. China's gross domestic product grew 10.7 percent in the fourth quarter from a year earlier, the fastest pace in two years. After last year overtaking the US as the biggest auto market and Germany as the largest exporter, China is poised to surpass Japan this year as the second-largest economy. The nation will contribute more than a third of global growth in 2010, according to Nomura Holdings Inc. 

China's auto sales maintained steady growth in the first two months of 2010, buoyed by the nation's car purchase incentives and strong demand brought by the week-long Spring Festival holidays. The combined auto sales in January and February surged 84 percent from a year earlier to 2.9 million units, with February's figures alone reaching 1.2 million units, up 46 percent year-on-year, according to the China Association of Auto Manufactures (CAAM) Tuesday.

China Gezhouba Group Co Ltd (CGGC), one of the largest engineering and construction companies involved in the Three Gorges Dam project, said overseas contracts are likely to take up half of its business in the future, according to its president Yang Jixue. "Overseas markets will account for 50 percent of our business in the next three years, from the current 36 percent, boosted by massive projects in Africa, the Middle East and Central Asia regions," Yang said. The group now has 44 overseas projects - mostly hydroelectric-power related - in 17 countries or regions, according to Yang. The State-owned infrastructure company, based in Central China's Hubei province, last month signed a 4.97 billion yuan ($727.78 million) contract with a Kazakhstan company to set up a hydroelectric-power plant in that country. The contract with Kazakhstan Natural Gas Technology Co Ltd would allow it to construct a 254-megawatt hydroelectric-power station on the banks of the Chilik River in Alma-Ata, Kazakhstan. The volume of Gezhouba's overseas business ventures is much higher than its larger rivals - the average of which is 20 percent - mainly because as a leading builder of hydroelectric projects, Gezhouba has a limited market at home compared with its larger rivals which are more experienced in other infrastructure construction, industry analysts said. "As the main contractor for China's Three Gorges Dam, Gezhouba is very experienced and advanced in hydroelectric projects, which afforded the builder many opportunities in the market, said Li Zhirui, an industry analyst with First Capital Securities. "China's construction contractors, as a whole, have big advantages because of their low labor costs in the global construction market." However, they have a smaller market share in more mature markets including the US and Europe, Li said. Yang estimated that the group would secure 50 billion yuan in new orders in 2010, with 20 billion yuan from foreign markets and 30 billion yuan from the domestic market. 

March 11, 2010

Hong Kong*: Shareholders cheered China Southern Airlines' 10.75 billion yuan (US$1.58 billion) fundraising plan, lifting the airline's shares to a 21-month high in Hong Kong on expectations the move could speed up the airline's debt repayments, cutting its gearing by half. HSBC (SEHK: 0005) upgraded the stock to overweight from underweight and raised its price target by 42 per cent to HK$4.20 soon after China Southern’s announcement. The country’s top carrier by fleet size plans to issue new shares to raise up to 10.75 billion yuan (US$1.58 billion) to repay debt. “We estimate China Southern’s end-last year net debt-to-equity ratio will drop from 900 per cent to 480 per cent and this year estimated EPS (earnings per share) will increase 145 per cent, primarily on interest cost savings,” HSBC said in a research note on Tuesday. Analysts said the market was surprised by the size of the capital raising, which includes 1.5 billion yuan from its parent and about 9.25 billion yuan from other subscribers. China’s airlines have faced strong headwinds since 2008 as the global financial crisis curbed demand for air travel. The Chinese government has handed out cash to the sector and encouraged it to scrap or delay aircraft orders after the country’s air travel growth fell to single-digit levels in 2008 for the first time in five years. China Southern’s Hong Kong-listed shares rose as much as 11 per cent to a 21-month high of HK$3.31 before easing to HK$3.18, up 6.7 per cent at 10.19am, outperforming the broader market which was largely flat. “The book value will increase after the share sale and its gearing will also come down. That makes it particularly attractive in terms of valuation,” said Patrick Yiu, a director at CASH Asset Management. The stock was up 5.4 per cent in Shanghai at 10.21am after an early gain of 7.3 per cent. The benchmark Shanghai Composite Index was down 0.3 per cent. Trading in the airline’s shares was suspended for two weeks on February 23 in Hong Kong and Shanghai pending the announcement of a 1.5 billion yuan cash injection from its parent. Under the plan, which is subject to shareholder approval, the state-owned parent will subscribe to 1.5 billion new shares while its stake will fall to about 51.5 per cent from 59.3 per cent after the completion of the deal.

Tsai Eng-meng takes centre stage at a press conference yesterday in Tsim Sha Tsui to hit back at Payson Cha in the ongoing ATV dispute. The share drama at Asia Television (ATV) took a new twist yesterday as media and tobacco tycoon Charles Ho Tsu-kwok made an unscheduled appearance. Sing Tao chairman Ho, who is not a shareholder in ATV, weighed into the war of words between shareholders Payson Cha Mou-sing and Tsai Eng-meng, saying he had "similar experience" to Tsai's in dealing with Cha some 10 years ago. Ho made his remarks at a Tsim Sha Tsui hotel where Tsai had earlier held a press conference to hit back at Cha, who, Tsai said, had gone too far in accusations against him. Cha last week said Tsai was being unreasonable and unjust, in a Court of First Instance action in which he has accused Cha and his brother and fellow shareholder Johnson Cha Mou-daid of breaching their fiduciary duty. "Mr Cha said I am unreasonable and unjust. Today I want to say Mr Cha ... has gone too far," Tsai said yesterday, "The reason is simple. You do not honor the promise, and do not follow the spirit of the contract ... We respond by taking the case to the court. Then you say we were unreasonable and unjust. Is that not going too far?" Appearing after Tsai had left the scene Ho said he had called the Taiwanese billionaire earlier in the day to comfort him. "I rang Mr Tsai, telling him there is no need to get too angry. I told him I also had similar experience before," said Ho, who did not elaborate, only hinting it had been "some small" disputes with Cha more than 10 years ago over the acquisition of Sing Tao News Corporation.

A senior fireman died and three colleagues were overcome by smoke while battling a six-hour blaze at a knitting factory in Cheung Sha Wan yesterday. One of the injured firemen was last night in a serious condition and another in stable condition at Caritas Medical Centre, while the third was allowed to leave at 10.30pm. The fire broke out at 8.19am in the 800-square-meter Wing Ngo Knitting Company on the fifth floor of the 49-year-old nine-story Lai Cheong Factory Building on Castle Peak Road. It was put out at 2.24pm. The blaze, which was upgraded to third alarm at 9.50am and to fourth alarm at 10.58am, spread beyond the premises to engulf around 2,400 sqm. Four breathing apparatus teams were sent to the scene. Holding back tears and visibly upset, Director of Fire Services Lo Chun-hung said the dead senior fireman, Yeung Chun-kit, 47, was part of the Lai Chi Kok fire station breathing apparatus team. Yeung was reported missing at 10.45am, about 20 minutes after he entered the building. He was found buried under a pile of goods and furniture about nine meters from the entrance around 12.10pm and was taken out about 45 minutes later. Lo said a team, chaired by a deputy chief fire officer, will be set up to look into the cause of the fire. Police said the Kowloon West regional crime unit will also investigate. Fire Services Department Staff's General Association chairman Chiu Sin- chung said Yeung's partner, who was also reported missing, is being treated at hospital after being found. The industrial block, built in 1961, does not have an automatic sprinkler system as it was not a requirement in buildings built before 1973, the fire chief said. He said it is possible that as a result of the latest tragedy, regulations controlling fire service equipment in old buildings may be tightened. Acting Chief Executive Henry Tang Ying-yen, Secretary for Security Ambrose Lee Siu-kwong and Secretary for the Civil Service Denise Yue Chung- yee all expressed their condolences to Yeung's family. Tang also praised the bravery of the firemen. Lo said the loss of life comes just as firefighters are undergoing training with the new breathing apparatus equipment. He said new digital radio communications equipment will be put in place next year and fire resistant tunics will arrive in the next financial year.

The Housing Authority will study whether to release for sale existing housing stock under the Home Ownership Scheme. This comes as property tycoons and bankers are urging an increase in the supply of HOS flats amid an overheated property market.

Patients with diabetes and high blood pressure from Sha Tin and Tai Po will be offered subsidies of up to HK$1,400 a year under a new scheme aimed at persuading more people to go to private doctors.

Beijing is considering whether to let all Hong Kong legislators attend the Shanghai World Expo in May. Central Government Liaison Office director Peng Qinghua said in Beijing yesterday that communication "has been made" about the matter and that it is under consideration. He did not say when a decision will be made. "It would be best if we can join the opening ceremony," said Legislative Councillor Jeffrey Lam Kin-fung in Beijing. "However, [the central government] allowing a visit to the Expo opening is another matter." Meanwhile, former chief secretary and former legislator Anson Chan Fang On-sang said she disagreed with Vice President Xi Jinping's statement that Hong Kong people do not understand the Basic Law. She said Hong Kong people know it very well. "Calling for real universal suffrage is absolutely not in breach of the Basic Law or against the decision by the Standing Committee of the National People's Congress in 2007," said Chan. "We are just calling for the promise to be fulfilled." Chan also described as "inexplicable" Peng's earlier remarks that certain slogans used in the "de facto referendum" were a challenge to the Basic Law. But she agreed that some words in the slogans might be too radical. Last Saturday Peng said such words as "uprising" and "liberate Hong Kong" were intimidating.

The photo taken on March 9, 2010 shows an imperially inscribed Taishanghuangdi white jade seal made during the Qing dynasty (1644-1911), with an estimated value over 50 million HK dollars, in Hong Kong, south China. Sotheby's is going to hold the Chinese Ceramics and Works of Art 2010 Spring Sale at the Hong Kong Convention and Exhibition Center on April 8, 2010. Comprising over 330 lots, the estimated total value is about 430 million HK dollars.

Actors of the movie "Fire of Conscience" Leon Lai (R) and Richie Jen pose during the press conference of the 34th Hong Kong International Film Festival (HKIFF) in Hong Kong, south China, March 9, 2010. The 34th Hong Kong International Film Festival.

Hong Kong actress Miriam Yeung poses during the press conference of the 34th Hong Kong International Film Festival (HKIFF) in Hong Kong, south China, March 9, 2010. Miriam Yeung is the actress of the HKIFF gala premiere movie "Love in a Puff." The 34th Hong Kong International Film Festival (HKIFF) will run from March 21 to April 6.

China*: Rural representation is to be increased in parliament, according to draft legislation unveiled yesterday. The move appears to be a response to growing calls for the government to address a worsening rural-urban wealth divide. This has seen the vast countryside largely left behind in the economic boom, fueling fears of social upheaval and unrest. The amendment to the election law of the National People's Congress would foster "equality" among China's constituencies, Wang Zhaoguo, a top legislative official, said. Wang said rural delegates now represent four times as many citizens as their urban counterparts, which effectively gives urban areas greater representation. The amendment would equalize those ratios, he said. "The number of deputies to the National People's Congress shall be allocated in accordance with the principle that each deputy represents the same number of urban and rural people," Wang said. It was unclear what sort of actual political impact the shift could have. The NPC is widely viewed as a mere rubber- stamp for the ruling party's directives. However, some observers say dissenting voices do get heard - behind closed doors - in shaping legislation. Wang gave no other figures on the current composition of the NPC. According to Wang, it would be the first change to the rules since 1995. NPC delegates are elected by provincial assemblies. Government figures showed the urban-rural income ratio grew to 3.33 to 1 in 2009. State media reports described this as the widest since the nation launched its capitalist economic transformation three decades ago. The government has indicated mounting concern over the possibility of widespread unrest involving marginalized citizens. In a state of the nation address last week, Premier Wen Jiabao vowed to widen the social safety net and take other measures to spread wealth more evenly.

Shanghai mayor Han Zheng is to visit Taiwan early next month as relations across the Taiwan Strait continue to warm. Han, who has been invited by his counterpart in Taipei, will be there to promote World Expo, which kicks off in Shanghai in May. Han will lead a delegation that includes the Shanghai Symphony Orchestra. The visit, starting on April 6, is expected to serve as another boost to cross-strait ties after Liang Baohua, the head of the Communist Party in Jiangsu province, led a delegation to Taiwan last November. Relations have improved markedly since May 2008 when China-friendly Ma Ying-jeou was elected president.

China may boost representation for its vast rural population, a move expected to grant rural residents more say in deciding their own fate and the development of the country. The National People's Congress (NPC) on Monday started discussion on a draft amendment to the Electoral Law, which, if passed, will grant equal electoral rights to urban and rural citizens. Currently, there are about 3,000 NPC deputies, but each urban deputy represents only a quarter the number of constituents compared to a rural deputy. Before 1995, the ratio was even wider at one to eight. It was originally intended to protect the interests of what had been a smaller urban population surrounded by hundreds of millions of farmers and ensure the leading role of the country's working class. According to the national census in 1953, when the first version of the Electoral Law was passed, the urban population made up only about 13 percent of the country's total, and an equal ratio of rural and urban representation would have meant an excessive number of rural deputies in the top legislature. However, with rapid urbanization and rural economic development, official figures show about 47 percent of people lived in urban areas last year and parity is expected by 2015. "The time is right for equal representation, which is conducive to expanding democracy," Wang Zhaoguo, vice-chairman of the NPC Standing Committee, said on Monday while explaining the draft to lawmakers. The draft amendment does not include details of how many people a NPC deputy will represent. If passed, the NPC Standing Committee is expected to decide on the specifics before the next elections take place in 2012. Lawmakers and experts said the revision, referred to as major progress in the development of democracy, would help increase the number of farmer NPC deputies. Farmer deputies are more familiar with the situation in the countryside and the change will help the top legislature better understand rural areas and make more scientific decisions, said Xu Anbiao, a member of the NPC Standing Committee's legislative affairs commission. Yang Shengchuan, a NPC deputy from a village of Ziyuan county in South China's Guangxi Zhuang autonomous region, said the change is the most exciting news he has heard since the country abolished the agricultural tax. "I'll tell my villagers about the change and ask them to cherish their rights," he said. Chen Sixi, a NPC Standing Committee member, said the change may increase the number of farmer deputies, but it would not necessarily result in parity. He said as the election of people's congress deputies is based on household registered population, it is possible for a rural election district to elect a non-farmer deputy, as the candidates could be business people or workers who still have their household registered in the rural areas, or even local villagers or town leaders. "But this could be further improved in the future with the reform of China's household registration system," Chen said. The draft amendment also stipulates that the number of grassroots deputies of farmers, workers and intellectuals should be guaranteed. Currently, a large number of NPC deputies are government officials and entrepreneurs, leaving few seats for farmers and workers. It also added stipulations such as "organizing more face-to-face contact between candidates and electors to allow candidates to introduce themselves and answer voters' questions".

China, the world's biggest holder of foreign exchange reserves, renewed its commitment to the US Treasury market on Tuesday but said it would be wary of adding to its gold holdings.

Members of Miss Etiquettes for the 2010 Shanghai World Expo attend a ceremony that marks the beginning of a 2-month training course in Hangzhou, East China's Zhejiang province, March 8, 2010. Nearly 300 Miss Etiquettes began a 2-month training course Monday in east China's Zhejiang Province, preparing them for the 2010 Shanghai World Expo. After the World Expo opens on May 1, the Miss Etiquettes will welcome visitors from around the world in east China's Shanghai Municipality, said Sun Weimin with the Bureau of Shanghai World Expo Coordination. The 2-month training includes three stages, namely military training, etiquette training and real time practices, with the first and the third practices held in Hangzhou, capital of Zhejiang, and the second held in Shanghai, Sun said. "The purpose of the training is to prepare the Miss Etiquettes in knowledge, etiquette and ability so that they can properly and fully represent China," Sun said. The women, most of them college students, were selected from over 10,000 contestants in a nationwide competition over a span of eight months. More than 30 million people voted for the contestants over the Internet. The training will be broadcasted on TV. At the end of the training, the top ten Miss Etiquettes will be awarded, and assigned major tasks during the Expo. Shanghai Expo will be the biggest ever of its kind with 192 countries and 50 international organizations participating. The 184-day Expo is expected to have 70 million visitors. So far, over 60 heads of state are scheduled to come.

March 10, 2010

Hong Kong*: British insurer Prudential wants to list its shares in Hong Kong, in a convoluted plan to bolster take-up of the US$20 billion rights issue it has launched to fund takeover of Asia's biggest life insurer, AIA. "The Pru" unveiled its intention to buy AIA for US$35.5 billion from its stricken American owner, AIG, on March 1, in a move that stunned its shareholders and hammered its share price. The blue-chip British firm, which would become Hong Kong's biggest life insurer if it buys AIA, will not raise any new money by listing here. Instead, it aims to create a new shareholder base in Hong Kong then to tempt local fund managers into taking up the rights offer, Marcus Barnard, an insurance analyst at London stockbroker Oriel Securities, said. "The rights issue might be difficult for the Pru if they carry it out only in the UK," Barnard added. Rights issues are fund-raisings where companies tap their existing shareholders for cash, offering them new shares at bargain prices. Prudential's shares plunged 14per cent last week as shareholders took fright at the massive size of its AIA purchase and the prospect of a cash call that will dilute the value of their existing holdings in the company. The British firm has not priced its rights offer shares yet. AIA's price tag is 1.8 times its British suitor's market capitalisation, as of lunchtime in London yesterday. Prudential shareholders took an apathetic stance towards the news of the Hong Kong introduction yesterday. The stock inched up 2 pence to 522 pence in London mid-afternoon trade. Prudential aims to complete its rights issue in May, and the Hong Kong listing will happen before then. Ashok Shah, the chief investment officer at British fund manager London & Capital, said there was a good chance Hong Kong investors would buy Prudential's locally listed shares and the rights issue shares. "On a long-term view, Asia will be a very fast-growing region for insurers," he said. "If people think Prudential's shares are cheap and the rights offer is also cheap, and they assume the AIA deal will go well, this could work for Prudential." There are 33 banks underwriting Prudential's rights issue - in other words promising to buy unsold stock in return for a fee - meaning analysts do not expect it to fail. The British insurer also has some top-notch sovereign wealth fund investors, including the Qatari government and Singapore's GIC. Both heavyweight shareholders have agreed to participate in the cash call. A Prudential insider said the purchase of AIA would be "transformational". Combining with AIA would give Prudential, which has being doing business in Asia since 1919, the largest share of several countries' insurance markets in the region. It would take the number one spot in Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. And it would become the biggest foreign insurer in mainland China. A Hong Kong hedge fund manager, who said he would not invest in Prudential following its Hong Kong introduction, said: "I get very frightened when companies start using words such as `transformational' to describe very large and expensive deals that could go very wrong." In a note published yesterday, credit ratings agency Moody's said there were "significant execution and integration risks" attached to the takeover, particularly because the AIA and Prudential's insurance sales-forces had been fierce rivals for decades.

The Fire Services Department is investigating why it took more than two hours to find and pull out a veteran fireman who died after being trapped in the wreckage of a factory gutted in a blaze yesterday.

Senior fireman Yeung Chun-kit, 47, died in hospital after being pulled from the rubble of the Cheung Sha Wan building. His colleague on a two-man team, Ng Wai-lam, 33 - who went missing at the same time but was found earlier - was in a serious condition last night. Two other firemen, Wu Kam-hung and Chiu Wing-fai, were overcome by smoke and taken to hospital. Wu was discharged last night and Chiu was listed in a stable condition. The department has set up a task force to investigate the cause of the fire and the death of the fireman. Detectives from Kowloon West regional crime unit have launched a separate inquiry. Yeung and Ng, from the Lai Chi Kok fire station, were among four two-member teams with breathing equipment sent into the blazing fifth-floor knitwear factory in the nine-storey Lai Cheong Factory Building shortly before 10.30am. They were ordered to withdraw when the blaze became more intense but the control officer lost contact with Yeung and Ng at 10.45am. Ng was found unconscious on the floor at 10.58am, but Yeung was not found until more than an hour later at 12.10pm - lying with his legs trapped under rubble 10 metres from the entrance and about three metres from where Ng was found. It took a further 45 minutes to remove him, fire officers said. The blaze, which broke out at the building at 479 Castle Peak Road at 8.19am, was upgraded to a third-alarm fire at 9.50am. Fires are rated on a scale of one to five, according to their seriousness. An office worker said she heard the sound of the fire alarm at about 8.20am before she ran out of her seventh-floor office. "There was dense smoke in the stairwell while I ran downstairs," she said. Chief fire officer (Kowloon) Li Hung-sum said the firefighting had gone well until windows of the unit facing Castle Peak Road broke in the severe heat. "Fresh air poured into the fire through the windows and the fire then became more intense," he said. After the four teams were ordered to withdraw, firefighters were sent in to find the missing firemen. They found Ng unconscious on the floor shortly before the blaze was upgraded to a fourth-alarm fire at 10.58am. "There was intense heat in the unit and a lot of furniture and goods collapsed, scattering on the floor. And the intense heat caused the ceiling fixtures such as electrical wires to hang down ... the unit was filled with dense smoke. Our colleagues were unable to see the situation in front and behind them," Li said. He said this made it difficult for firefighters to move forward and search for Yeung. When Yeung was found, "the lower part of the body was trapped under collapsed furniture and cartons of goods", Li said. Firemen took another 45 minutes to remove the items on top of Yeung and they brought him out at about 12.55pm. He was taken unconscious to Princess Margaret Hospital, where he was declared dead. Director of Fire Services Gregory Lo Chun-hung has set up a task force to conduct a full investigation. "[It] will investigate the causes of the fire and death of the fireman," he said. A fleet of 33 fire engines and five ambulances with about 200 firemen were sent to fight the fire, which was extinguished at 2.24pm. The building, in use since 1961, is one of 650 industrial buildings built before 1973, which mostly lack sprinkler systems.

A fireman walks from the scene of a blaze in a Cheung Sha Wan factory building in which a colleague died after being trapped under debris. A delay in rescuing the man is the subject of an inquiry.

Women have come a long way since breaching the gender barrier as Hong Kong bus drivers in 1989 and today KMB's 450 female "bus captains" will celebrate International Women's Day with pride.

Former doctors should come out of retirement to look after poor and chronically-ill senior citizens on a charitable basis, a Hong Kong Academy of Medicine think-tank says. An academy survey polled 1,000 elderly people aged 65 last year and found more than two-thirds suffer from at least one chronic disease. The survey revealed nearly 70 percent of Hong Kong's elderly who suffer from chronic conditions paid their own medical fees, while more than 40 percent said medical expenses influenced their spending on normal daily living. Think tank chairman John Leong Chi-yan said retired doctors should return to practice to provide medical service for the elderly. "We observed more than 60 percent of respondents belong to the low income group, which explains why public clinics are crowded and causing an imbalance between the public and private medical sectors." He said the expansion of medical services and low charges under the Hospital Authority will only increase demand for public medical treatment. "Using charitable treatment by the retired doctors, we hope to relieve the pressure on public treatment in response to the continuous demand from the elderly. The present subsidy scheme of providing five HK$50 vouchers per year for private medical treatment should be continued," Leong said, adding that an increase to HK$100 per voucher may direct some elderly to private doctors. Academy president Raymond Liang Hin- suen said the proposal will be submitted to the Hospital Authority and the Department of Health. "We have interviewed 112 medical doctors aged 60 and above and more than 66 percent said that they are willing to join the scheme after their retirement," Liang said. "This shows the possibility of our proposal, regardless of the small sample size. We are going to establish a register so any [academy] fellows or doctors who are interested can apply to be included in the register."

A Hong Kong woman has sought the help of a national lawmaker after being told that she was not allowed to marry a Shenzhen police officer in his city because of a dated regulation that banned civil servants from marrying "foreigners". In a letter to Hong Kong National People's Congress deputy Choy So-yuk, the woman complained that the Shenzhen Public Security Bureau had based its decision on legislation that predated Hong Kong's 1997 handover. "Hong Kong has now returned to the mainland for 13 years, and nobody would dare say that Hong Kong people are not Chinese," the woman, who identified herself only by her surname, Ng, wrote. State security laws preventing public officials from marrying non-Chinese citizens came into force in 1984, while Hong Kong was still under British rule and a year before the Joint Declaration was signed. As a result, the Shenzhen authorities said Hong Kong citizens were considered "foreigners", and the marriage would not be approved. In her letter, Ng said she had checked with other cities in Guangdong and discovered they did not have similar restrictions barring police from marrying Hongkongers. She urged Choy to take up her case with authorities in Beijing to preserve her "freedom to love and freedom to marry". "I feel really helpless," Ng wrote. "We have no other demands; we just want a legal marriage." Choy, who is attending the NPC annual plenary session in Beijing, said she would raise the issue at a meeting with officials from the Ministry of Public Security today. "Hong Kong has returned to the motherland for more than 10 years," Choy said. "Why should Hongkongers still be considered foreigners and therefore be barred from marrying mainland police officers?" Legal experts are divided over whether the rule applies and how easily it could be overturned. Hong Kong-based Chinese law professor Ong Yew-kim said there appeared to be no legal basis for barring the marriage. "There was never a law or legal document which said that Hong Kong residents were considered foreigners, so this is a matter of interpretation," Ong said. "The Ministry of Public Security should amend this internal practice." But Guangdong-based marriage law expert Liu Weimin said the matter lay in higher hands, as the definition of Hong Kong citizens as "non-mainland citizens" was political rather than legal. "There must be special rules governing the marriage for certain positions in the civil service, so this is not a matter of just abolishing the concerned regulation," he said. Only the central government or the Supreme People's Court can redefine the status of Hong Kong citizens, he said.

China*: It is only a matter of time before China launches an international board in Shanghai because more firms want to list in the mainland, Fang Fang, vice chairman of Asia investment banking at JPMorgan, said in Beijing yesterday.

The mainland's ambitious high-speed railway program will deal a "devastating blow" to its airlines and could even kill off short- to medium-haul routes, the chairman of China Eastern Airlines (SEHK: 0670) warned yesterday. "For trips under 500 kilometres, the impact is fatal," Liu Shaoyang said. "For trips between 800 and 1,200 kilometers, the impact will range from significant to marginal." He said the government should better define the roles of express railway services and airlines because high-speed trains were siphoning off airlines' customers, leaving them weakened in a competitive market. "Just like the airline fever we saw a few years ago, now it's high-speed railway fever," Liu, 51, said. "The government should work out a reasonable division of labour between the two to prevent overlapping and a waste of land and other resources." Liu is well placed to comment. Before joining China Eastern, the mainland's second-biggest airline, he was president of China Southern Airlines - its biggest - from 2004 to 2008. He was also among the country's first airline pilots, in the 1980s. Liu said the central government could also help airlines by opening up the skies for commercial flights. "We should speed up air traffic control reform as soon as possible because we all know that it is the key reason for so many flight delays," he said. "In our country, airlines just have 20 per cent of air traffic control rights; others are controlled for non-airline purposes. But in the United States, the aviation industry's share is more than 80 per cent." Nearly 80 per cent of air traffic control rights on the mainland are in the hands of the People's Liberation Army and state security departments. Hong Kong's Airport Authority says 6,568 flights from Hong Kong to mainland cities were delayed by mainland air traffic control problems over the past three years. Fears have also been expressed that the high-speed railway program may affect China's ambitious plan to develop a new generation of regional jets - the ARJ21 Xiangfeng. The 5 billion yuan (HK$5.68 billion) program - which began in March 2002 - is a key project of the 10th five-year plan. The 70-seat, twin-engined jet, with a range of more than 2,200 kilometers and costing US$20 million each, is designed for domestic routes. The Civil Aviation Administration of China still sees increasing demand for airlines. Xinhua said yesterday that Beijing planned to buy 218 aircraft this year, including jumbo jets and aircraft for regional routes. The report cited administration director Li Jiaxiang as saying that the government would spend 90 billion yuan expanding 25 airports this year. The administration expected 700 million passenger trips a year by 2020, with the number likely to double by 2030. Xinhua has reported that 3.7 trillion yuan will be spent on the high-speed railway network in the next six years. "It seems like the Ministry of Railways and the civil aviation authorities are competing with each other for their own interests," Hu Xingdou, a Beijing-based economist, said. "But I think it will be a good chance for the aviation industry to implement reforms."

North Korea has agreed to lease a port on its northeastern coast to Jilin province for 10 years, giving China a directly controlled foothold on the Sea of Japan for the first time in more than a century. Li Longxi, a National People's Congress deputy and head of the Yanbian Korean Minority Autonomous Prefecture, told China News Service that the deal, for exclusive use of a port in Rajin in the "special city" of Rason, would boost the regional economy and give landlocked Jilin valuable access to trade routes. China has worked to acquire a foothold in Rajin for several years, after North Korea designated Rason a free-trade zone. A Chinese company secured the right to use Rajin's No 1 port two years ago and it has since been used to transport coal to southeastern China and Japan. However, the new deal will give China much more freedom, because it will be able to choose what facilities to build at Rajin's No 1 port and how to use them. "With the lease, China can develop the port and build infrastructure there as it desires," said Liu Ming, director of Korean Peninsula studies at the Shanghai Academy of Social Science.

Wan Qingliang (left) is favoured to take over from Zhang Guangning. The Guangdong deputy governor in charge of Hong Kong and Macau affairs has emerged as the leading candidate to be the next mayor of Guangzhou, according to various officials. Wan Qingliang, 46, the youngest of the province's eight deputy governors, is widely regarded as a rising star after being promoted to his current position in 2008. He has been closely involved in cross-border issues and represented the province in the Guangdong-Hong Kong Co-operation Joint Conference last month. Current Guangzhou mayor Zhang Guangning is tipped to be promoted as the city's party secretary, while incumbent party boss Zhu Xiaodan, who was appointed a deputy governor late last month, will become permanent deputy governor, a more influential post, according to officials from several Guangzhou and Guangdong government departments.

Beijing blamed Washington for causing "serious disturbances" in their relationship but also called for the two powers to work together to get ties back on track. Foreign Minister Yang Jiechi reiterated criticism of US arms sales to Taiwan and President Barack Obama's meeting last month with the Dalai Lama but appeared to leave the door open for the two sides to mend fences. "The United States should properly handle the relevant sensitive issues and work with the Chinese side to return the China-US relationship to a track of stable development," Yang said. Stressing that a harmonious relationship is vital to both sides and to the world, he added: "We hope the United States will work with us in a joint effort toward this end." He was speaking in his annual press briefing held on the sidelines of National People's Congress. Yang repeated China's assertion that the troubles were the United States' fault and called for "credible steps" by Washington to mend ties. However, he did not give any specifics and unveiled no new retaliatory steps against the United States. He said the world needed policy coordination on stimulus exit strategies and the Group of 20 forum of major economies should play a bigger role in world economic affairs, adding that meetings this year should focus on economic rebalancing. Yang also strongly signaled reluctance to back sanctions on Iran over its nuclear program, but did not shut the door completely to the possibility. Beijing has long said sanctions are not an effective tool for resolving international disputes, including over Iran, which is also a major source of crude oil for China.

Although it is facing the biggest challenge worldwide in its century old history, General Motors has found the Chinese market is giving it a glimpse of hope for business survival. Last year, the US auto firm harvested record profits in China, benefiting from the robust economic growth in the country. The US automaker reported 1.83 million units sold across the country, an increase of 67 percent from the previous year. It compared with a 46 percent year-on-year increase for China's total automobile sales in 2009, spurred by the Chinese government's prompt stimulus package for the automobile industry amid global stagnation. The stimulus included halving taxes on smaller cars with an engine capacity of or less than 1.6-liters and subsidies for trading in old vehicles. GM's high hopes for bumper year in China market"The year of 2009 was very successful for GM in the China market. We forecast further growth in 2010 as we are confident in the Chinese government's active moves to support the local economy in such a global slowdown," said Tim Lee, president of Shanghai-based GM International Operations, which operates in all GM's markets outside North America. "The biggest concern for a promising future here is that the Chinese government is increasing money supply," said Lee. He told China Daily that he believed China's investment climate was "still very good this year". He continued: "GM will continue to invest business here, not only bringing more products but also adding capacity for every joint venture." In addition to expanding its capacity through adding production shifts and developing its existing assembly lines to meet robust market demand, Lee said that GM was still considering building a new plant in China in the near future to accommodate strong growth in the world's largest auto market. "We have enough capacity to build the cars we need to sell this year and we need to continue to look for ways of increasing our capacity. That will mean we will have to add a new plant some time in the near future," said Kevin Wale, president and managing director of GM China. For the first two months of 2010, GM's sales in China rose 73.6 percent from a year earlier to a record 393,498 units. "Our February sales numbers, with year-on-year growth rate of 51 percent, exceeded our expectations despite the Spring Festival holiday," said Wale. "The continued strong market demand portends another record year for both the industry and GM in China in 2010." Wale also said the company expects to sell more than two million vehicles in China in 2010, up at least 13 percent from last year.

Retailer embarks on strategic expansion on the back of high sales - It's 1 am one day during this year's Spring Festival and hundreds of consumers are on a shopping spree, waiting in long queues, trolleys piled high with goods, at Carrefour's Tiantongyuan outlet in the Changping district of northern Beijing. The night time craze was symbolic of the retail giant's strong performance in China. Claudio Gouveia, vice-president of Carrefour China and also general manager of the North Territory of Carrefour China, said the country has become one of the most significant and also fastest-growing markets for the retailer. Carrefour last year pulled out of Russia and southern Italy amid the economic meltdown following decisions to quit Japanese, South Korean and Mexican markets in 2005 and 2006, because of "unsmooth operations". It sold its stores to local enterprises. However, the retailer maintained steady expansion in China. Gouveia said that Carrefour opened 22 new stores in 2009, boosting the total number of outlets to 157 across the country. It plans to open 20 to 25 new outlets this year. He added that the company was satisfied and very optimistic about its business in China because the country's household consumption rates have been high. In the past year, Carrefour benefited a lot from the stimulus measures, introduced by the Chinese government. For example, the authorities subsidized energy-saving household appliances in an effort to encourage their purchase. Gouveia said Carrefour had a very clear strategic plan for the Chinese market and would be focusing on constructing hypermarkets with an average size from 6,000 sq m to 11,000 sq m. The company was making great efforts to balance its presence in big cities and also second and third tier cities. It has been operating its retail business in 45 cities across China. "Currently, Carrefour has a good presence in big cities while more new stores will be in second and third tier cities," said Gouveia. The French company will be the first international retailer to enter the Inner Mongolia autonomous region, where it plans to build a new outlet in 2011. The retailer plans to develop its China-based outlets alongside the construction of local infrastructure and arrival of new businesses. "For instance, there will be a new airport in the Daxing district of Beijing's southern suburb and there may be a new outlet nearby. I believe we have many opportunities in this area," said Gouveia. In response to its rival Wal-Mart, which is planning to build about 50 new stores each year, adding to its current total of 160 outlets, Gouveia said the focus of Carrefour was to keep a good balance between the rhythm of expansion and the quality of the stores. "Each new store will have energy-saving programs which are expected to save 20 to 25 percent of energy compared with traditional stores," he said.

China's $300 billion sovereign wealth fund, made an unaudited return of more than $10 billion last year on its foreign investments, the China Business News said on Monday.

A joint project between China's largest refiner Sinopec and German chemical company BASF is undergoing a new round of expansion. A total of $1.4 billion has been budgeted for the expansion, making it the leading chemical production site in China.

March 9, 2010

Hong Kong*: Brokers and listed companies have reacted positively to a three-year plan by Hong Kong Exchanges and Clearing (SEHK: 0388) (HKEx) to form alliances with overseas bourses and entice more international firms to list in the city. There was also support for a plan by the owner and operator of Hong Kong's stock exchange to introduce new yuan products, although several observers said that could be difficult to achieve since the currency is not yet freely convertible. HKEx chief executive Charles Li Xiaojia unveiled the exchange's three-year strategic plan last week. Objectives include creating alliances with mainland and overseas exchanges in the next three years that would benefit its mainland focus. It also plans to introduce yuan investment products, such as index funds or derivatives for the currency, and measures to attract more international firms to list in the city. "HKEx will position itself as a market of choice for mainland investors to invest in and for mainland issuers to raise funds," Li said. "We will also attract more new listings from the mainland and from international firms in Hong Kong." Rex Auyeung Pak-kuen, the chief executive of Principal International (Asia), supported the plan. "I think it is a good idea to form alliances with the mainland bourse. Hong Kong is becoming an important component of the Chinese financial services sector and stronger ties can only add more value," Auyeung said. Edward Chow Kwong-fai, the chairman of Growth Enterprise Market-listed CIG Yangtze Ports Capital, said he would prefer the exchange formed alliances with overseas rather than mainland bourses. "By building alliances with international exchanges, Hong Kong can attract more listings of foreign companies and bring more Russian, Asian and South American companies here," Chow said. "Hong Kong and mainland investors would be very interested in investing in big global companies from any of the major economies. They may also have an interest in investing in companies that do business with China, such as mineral and international trading or retailing companies. "The Hong Kong market should be a market where investor choice and preferences can be satisfied and with ease," he said. Joseph Tong Tang, chief executive of Sun Hung Kai Financial, said establishing ties with other exchanges would do no harm. "However, this will only be an ancillary plan and shouldn't become a mainstream of business activities of the HKEx because I haven't seen any successful examples in other exchanges so far for similar ideas," he said. Tong said it would be better to focus on drawing more listings by international companies. "The HKEx has so far been very successful in becoming a leading fund-raising centre for Chinese enterprises. We should expand our exchange platform to allow different types of companies to get access," he said, adding the exchange should bring in new rules for resources companies seeking listings and change the rules to make it easier for international firms to list in the city. "Hong Kong investors are receptive to foreign investments but, in the end, whether they will invest will depend on valuations," he said. Principal's Auyeung said enticing more foreign firms to list in Hong Kong would reinforce the city's status as an international financial centre. "I support any move to get more international firms to list here. But we can't compromise on quality. When we can offer more quality choices to investors, the market will grow steadily," Auyeung said. Mike Wong Ming-wai, chief executive of the Chamber of Hong Kong Listed Companies, said it would welcome more international firms to list in the city, and said they would could also join the chamber. "The more international firm listings we attract, the greater Hong Kong's attraction as an international financial centre - and also, the greater the choice for investors," Wong said. Brokers said it was natural for the exchange to nominate the development of yuan products as a focus. But it could be difficult. Wong said Hong Kong needed to have more yuan in circulation to create a successful yuan market. At present, only 62 billion yuan (HK$70.50 billion) is in circulation in the city - not enough for a mega yuan bond or yuan initial public offerings. China still has capital controls, which means an individual can only exchange 20,000 yuan a day in Hong Kong - not enough to buy one board lot of HSBC (SEHK: 0005) shares, brokers noted. In addition, there are restrictions on who can open yuan accounts, while many brokers cannot open yuan bank accounts and would be unable to handle clients trading in yuan products. Tong said the key challenge for Hong Kong in developing yuan products would be the fact that the currency is not freely convertible. As such, he urged the exchange not to focus on yuan products at this point. "Professional investors who are interested in yuan shares or bonds can do so through the QFII [qualified foreign institutional investor] system. So I really don't see a huge unsatisfied demand for yuan products traded in Hong Kong. "Instead, the HKEx's priority should be to upgrade and expand its platform to make it the top fund-raising centre in the world," Tong said. But Chan supported the bid to develop yuan products and said Hong Kong should be used as a test bed for yuan-denominated products. Principal's Auyeung said: "It is trendy to have yuan products, but we need to have greater access to the yuan. I do understand the reasons for control of the currency, but hopefully HK can be given a break."

News apparently travels fast and loose in Hong Kong's business community, especially when it concerns public companies. Share prices often rise or fall sharply days before any public announcement, despite the fact no one is supposed to trade on information that hasn't been released yet. The share prices of 20 companies listed on the main board of the Hong Kong stock exchange that announced major transactions between November and January moved much more sharply than the benchmark Hang Seng Index in the two days before they suspended trading ahead of making an official statement. Not every stock rose or fell, but the ones that rose jumped an average 7.7 per cent in the two days before suspension compared with a corresponding 1.9 per cent gain in the Hang Seng Index. Those that declined dropped 3.2 per cent compared with a 1.2 per cent decline in the index. Overall, the shares of the 20 companies rose 3.2 per cent on average in the two days, almost 13 times the average gain in share prices of 0.25 per cent during those periods. It's a phenomenon that makes investors cynical and challenges efforts by regulators to keep a lid on insider dealing. "That's quite normal in the Hong Kong stock market, especially for third-line or fourth-line stocks," said Ricky Tam Siu-hing, chairman of the Hong Kong Institute of Investors. "A lot of people in the market seem to know the news before the company [announcement] or the general public, so they buy ahead of it." Shares in one of the companies concerned, Continental Holdings, rose 17.3 per cent over four days. Shares in another, Pearl Oriental Innovation, rose 61 per cent in a week. Shares in Jackin International rose 13.6 per cent in a day. In each case the sharp movements were followed by a suspension of trading and an announcement. Insider dealing is generally defined as an act of trading that leverages privileged information not available to the general market. It has been punishable as a civil breach of the law for many years in Hong Kong but was only classified as a criminal offence in 2003. It is sometimes described as a victimless crime, but a trader with inside knowledge who buys shares from someone who doesn't is taking advantage of the seller; and a perception that insider trading is rife undermines the integrity of the market, making serious investors less likely to want to participate. Hong Kong's vibrant trading culture is still strongly influenced by word of mouth; deals can be done during dim sum and tips shared over tea. It does not take long for rumours to gain momentum given the city's small size. Inadvertent insider dealing may also stem from a lack of legal backing for local listing rules. It is up to companies themselves to decide which information is price-sensitive and when to report it to the market.

Thomson Reuters, a provider of financial and professional information, has joined a string of global companies that have relocated senior executives in Asia, transferring Eric Frank, president of its investment and advisory group, to Hong Kong from New York. In other high-profile moves, HSBC Holdings (SEHK: 0005) chief executive Michael Geoghegan started working in Hong Kong last month and RBS Coutts, the international private banking arm of the Royal Bank of Scotland Group, announced last week the relocation of global co-chief investment officer Nick Cringle to Hong Kong from London. Thomson Reuters employs more than 50,000 staff in 100 countries. Although Frank is the first of the group's senior executives to be located in Hong Kong, more may follow. The relocation of top executives to the city shows international firms have shifted their focus to the East, as Asia has been less affected by the financial crisis than the United States or Europe, analysts say. In an interview with the South China Morning Post (SEHK: 0583) , Frank said his relocation was aimed at enabling him to get closer to customers in Asia, where the company wanted to focus its attention. "Asia is the region that promises the fastest growth, not just at the moment but also for the future. My relocation will strengthen Thomson Reuters' commitment to the Asia-Pacific, which is the highest-growth region for this company," Frank said. "China and India will also have a lot of mergers and acquisitions and initial public offerings. They will be a future growth story." He said a typical business trip to Asia required visiting five markets in one week. After paying the price of long flights and jet lag, there was not much time left to meet customers and local staff. "Living in Hong Kong means we can meet with Asian clients, particularly those in China, regularly and frequently. This is how we can build relationships and offer the right products for them," Frank said. The investment and advisory division of Thomson Reuters reported US$2.2 billion in revenues last year. Globally that was 2 per cent less than a year earlier, but Asia enjoyed 8 per cent growth, with China reporting strong growth of 20 per cent. The division forms a major part of the business of Thomson Reuters, providing data and workflow tools to help corporate and investment bankers as well as fund managers to make decisions on mergers and acquisitions. Subscription fees range from a few thousand US dollars to millions of dollars per year, depending on the scale of data and services. Frank said many investment banks in Britain and the United States were hit hard by the global financial crisis and had to cut back on his company's services. "When bankers needed to tighten their belts, they cut down on subscriptions at the end of 2008. But we saw things turn better at the end of last year," he said. Now he was based in Hong Kong, Frank said, he planned to meet customers and develop local products. "We would like to produce more products in local languages and fit the need of the domestic markets," he said. Besides the mainland, Hong Kong, India, and Japan were growing fast, and he said he would like to build up a big business in the region. Frank, a father of three, has nearly 20 years of experience in the financial services sector. He joined Thomson Financial in 2000 and worked in various senior positions before being appointed to his current job in July 2008. Frank said he and his family were looking forward to settling in Hong Kong. His wife, Michelle, a former lawyer, arrived two weeks earlier and has already arranged a home and the children's education and adopted a local dog. "It feels like I am starting a new job," Frank said. "Hong Kong is a great city."

Stanley Ho leaves the Hong Kong Sanatorium and Hospital, where he had spent seven months. The 88-year-old billionaire was then driven to his home in Repulse Bay. For as casino king Stanley Ho Hung-sun left hospital after a seven-month stay - apparently fully recovered - his horse came home a 109-1 winner. The billionaire, 88, slowly waved as he was wheeled out of the Hong Kong Sanatorium and Hospital in Happy Valley yesterday afternoon after seven months of care. His daughter Pansy Ho Chiu-king said the tycoon was in good health and excited about going home. "His health has fully recovered," she said, "He has been gaining weight in the past two to three months and his weight has returned to the level before the accident." The tycoon was admitted to the intensive care unit last August after surgery to remove a blood clot on the brain. He reportedly fell at home and injured his head in July. Ho appeared numb and unable to smile as he was wheeled out of the front door of the hospital towards a car. After a word in his ear from daughter Pansy, he gave his wave to the media pack. Two doctors were accompanying the tycoon, who had to be carried from his wheelchair into the car. Ho has been exercising daily and undergoing physiotherapy, according to Pansy Ho, managing director of Shun Tak Holdings (SEHK: 0242, announcements, news) , a property developer and shipping operator of which her father is chairman. "He does routine exercises everyday," she said, "In the past few days, he has been very excited." The tycoon returned to his luxury house in Repulse Bay. Viva Pronto, a horse owned by the tycoon, collected HK$1.3 million as winner of the Group Three Hong Kong Macau Trophy at 109-1. The annual event, in its seventh year, offers total prize money of HK$2.3 million. Ho, as owner, will pocket 56 per cent of the winnings. Hong Kong-listed casino operator SJM Holdings, of which Stanley Ho is chairman, controls about 30 per cent of Macau's gaming market. Its market share is the highest among the six operators in the city, the world's biggest gambling hub. The tycoon held Macau's gambling monopoly for four decades until 2004, when billionaire Sheldon Adelson opened the Sands Macao, leading the charge of US casino giants to the only place in China where casinos are legal. But Ho still controls 19 casinos, the two tallest buildings in Macau, horse and dog-racing tracks, a large jetfoil fleet, a helicopter service, five hotels, department stores, and residential and commercial property. He has four wives, one of whom has died, and 17 children. Ho has not been entirely confined to hospital. On December 20 he was allowed out to attend the 10th anniversary of Macau's handover and even enjoyed a brief chat with President Hu Jintao. He had to leave Hong Kong at around 6am on a wheelchair to attend the Macau event. When Hu praised him for his contribution to Macau and wished him good health, the tycoon surprisingly responded in English. Ho had undergone speech therapy, according to someone close to his family. It was unclear whether the therapist rejuvenating his speech was an English speaker.

Hong Kong property tycoon Henry Cheng Kar-shun has called for the relaunch of a government-subsidised flat sale scheme that he and fellow private developers had once pressed hard to have abolished. Cheng, a member of China's top political advisory body, now says the resumption of the home ownership scheme (HOS) could help ease public discontent in Hong Kong amid a heated property market. The subsidised housing scheme, under which lower-priced flats are built for sale to the less well-off, was scrapped in 2002 by the government amid pressure from private developers, who criticised the scheme as an intervention in the free market. Cheng's remark yesterday also contrasted sharply with the position of the Hong Kong government. Just last month, Financial Secretary John Tsang Chun-wah said the government "would not lightly return to the market", when asked if he would consider relaunching HOS. Cheng, managing director of New World Development, said: "From the perspective of a developer, certainly I would not agree [with relaunching HOS]." "But from the perspective of the whole society, I think the government should resume building HOS flats. These flats take care of the needs of middle-income families who may not afford to own their own homes. "While low-income families can rent public housing, middle-income families should also be taken care of. This group of people now have big discontent with the society." Cheng, a member of the Chinese People's Political Consultative Conference Standing Committee, said: "Why are there so many protests? Why are so many people unhappy with the government? It is because many people cannot enjoy a good living environment and they find many hardships in making a living." Cheng was speaking on the sidelines of the plenary session of the consultative conference in Beijing. Cheng appreciated the possible adverse impact of his proposal on the property market in Hong Kong but said this could be minimised by imposing tighter regulations on the resale of HOS units. At present, HOS flat owners are subject to a set of restrictions when they want to resell their units. In general, they can resell the units to public estate tenants after the first three years, with no need to pay premium to the government. Cheng also dismissed as "just a show" a government proposal to cool the property market by means of a moderate increase of stamp duty on transactions of luxury properties, hinting it would have no effect. Meanwhile in Hong Kong, some speakers at the RTHK City Forum yesterday remained cautious about relaunching HOS. Wong Leung-sing, an associate director of research at Centaline Property Agency, said: "The heated market is partly due to the low bank rate ... People look for investment opportunities but do not want to try again in the financial markets ... many investors turn to buying flats. Building more HOS flats may not be addressing the right question."

China*: China's chief economic planner yesterday dismissed allegations that part of the mainland's massive stimulus funds had been used to speculate in the country's red-hot property market. It was the central government's strongest defence yet of its management of the huge pile of public funds. More than a year ago, Beijing embarked on an unprecedented 4 trillion yuan (HK$4.54 trillion) spending spree to keep the economy growing amid the global downturn. Some worry part of the stimulus money has been used to invest in the property market, pushing up asset prices and raising fears of the kind of asset bubbles that sank many economies during the 1997-98 Asian financial crisis and the current global one. "Not a cent" in the programme had entered the property market or been used for land purchases, Zhang Ping , minister in charge of the powerful National Development and Reform Commission, said on the sidelines of the annual meeting of the National People's Congress.

Taiyuan, the capital of coal-producing Shanxi, is a huge source of business for DAC Management. Taiyuan is only a few hundred kilometres south of bustling, modern Beijing, but could be a world away. Decaying grey and brown buildings and yellow-brown wheat fields dominate the Shanxi capital's landscape. From the air, the city resembles a mouthful of rotting teeth. Because Shanxi produces most of China's coal, Taiyuan is also the mainland's most polluted city. Coal plants belch out giant, cauliflower-shaped soot clouds. The wide grey roads melt seamlessly into the bleak grey sky. Miners in Mao caps and drab, grey clothing bicycle slowly to work and home, seemingly unexcited about reaching either destination. This is the place Matthew Nelson, a manager at hedge fund DAC Management, left Wall Street for. The tall, affable Iowa native, an alumnus of Merrill Lynch and JP Morgan, now specialises in buying non-performing loans - debts Chinese firms have racked up but cannot repay. His employer, founded by American former Arthur Andersen accountant Phil Groves, is Hong Kong-based. Still, Nelson spends most of his working days in Taiyuan. While DAC owns loans attached to failed firms throughout China, Shanxi is a huge source of business. Despite the coal bosses zooming around in 4X4s with blacked out windows, the province has had its fair share of economic woes. It was one of several northern and western regions that became blighted with bad debts in the early 1990s, when scores of state-owned enterprises failed. As unpaid staff rioted en masse, their employers sometimes scored easy cash by halting bank loan payments. In 2003, Shanxi was ravaged by Sars. Shivering in the sub-zero cold and standing a clear foot taller than most of Taiyuan's inhabitants, Nelson pulls his baseball cap closer over his blond hair as he trudges through the snow in Taiyuan's lacklustre city centre. He is viewing assets owned by DAC's debtors that the fund wants to seize and sell off. These include a lavish, upscale karaoke bar, frequented by local coal tycoons who must spend at least 1,500 yuan (HK$1,705) a night on alcohol and girls to book a room, the lobby of a four-star hotel, a shopping mall, an apartment block and a car park. "Let's hang back a bit," the hedge fund manager says as he approaches the car park. It is clearly not good for him to be seen snooping around. Nelson is something of an upmarket bailiff. His fund buys its bad debts from China's four asset management companies - China Orient, Cinda, Great Wall and Huarong. The government created these in the late 1990s to hoover soured loans off its biggest banks' books in time for their Hong Kong and Shanghai listings. And even though the state is wealthy, most of DAC's debtors are state-owned enterprises. DAC owns 254 bad loans in Shanxi, Nelson says. Half of these debts are over 10 years old. The rest are at least six years old. So companies who have got away without repaying loans for years are not happy when the foreign hedge fund turns up on their doorsteps demanding repayment.

Li Xinyang, an employee of a Shenzhen telecommunications company, dresses like a sports star on a budget. The 22-year-old wears a Li Ning (SEHK: 2331) T-shirt and a pair of 361 Degrees sports shoes on his weekend shopping trips. He is part of a growing band of loyal customers of the mainland's rapidly expanding sportswear brands. Foreign brands like Nike and Adidas are far too expensive for the young office worker. Earning slightly more than 2,000 yuan (HK$2,270) a month, Li spends about 200 yuan on clothes and shoes each month. "It's much better to buy clothes with a brand name than something totally unknown," said Li, who came from Yunnan to work in Shenzhen two years ago. "At least people can tell from the logo that you are not wearing something too cheap. "I know some foreign brands may be of better quality but local brands are often half the price of the foreign ones and they are also not too bad." Sportswear is one of the fastest-growing consumer sectors as more and more Chinese like Li choose sports apparel as a fashionable and comfortable casual wear option for daily life. While Nike and Adidas hold the lion's share of the market, a batch of home-grown brands has elbowed their way in. They have aggressive expansion strategies, backed by reasonable quality products and cheaper prices. Nike and Adidas are the top two sportswear retailers on the mainland, with a combined 33.7 per cent market share in 2008. Li Ning holds 11.1 per cent, followed by Anta Sports Products with 8.6 per cent, according to marketing firm Frost & Sullivan. The home-grown sportswear retailers are making up ground quickly. Li Ning, Anta, Xtep International (SEHK: 1368, announcements, news) Holdings and 361 Degrees International all achieved 20 per cent to 40 per cent growth in both turnover and net profit in the first half of last year.

Xie Meng appears to have led a charmed life - given a Western education, he has been groomed to take over his well-connected father's mainland property empire. But the young Xie was not so keen to take up the family mantle when he returned from his overseas studies. As the only child of Xie Tieniu, owner of China's biggest shopping centre, he was expected to rough it with the workers as he learnt the ropes of the family business. Educated in Singapore and the United States from the age of 15, Xie felt uneasy in his new working environment that required him to deal with mainland construction workers as they built the family's mega Grandview Mall in Guangzhou. "I put on helmet and boots and headed for the construction site in Guangzhou's Tianhe district every day during this time," recalled Xie, now the vice-chairman of the Guangzhou Grandview Enterprise. Being immersed in the mud and dirt of a major building site meant the young manager soon grew up. The 30-year-old's first job was with the company's planning department. His job was to develop a good relationship with the construction workers, and make sure they could complete the mega shopping mall before 2005. That was the year the government ordered an end to new construction of shopping malls as part of austerity measures to regulate the property market. With a total gross floor area of 420,000 square metres, the development includes a 30-storey office tower and a 48-storey apartment-hotel tower. It also has a mega shopping mall with 300,000 sq metres of leasable area - the biggest in the country. The project was initially taken on by Thailand agribusiness Charoen Pokphand Group, which owns the Superbrand Mall in Shanghai. But the group walked away from the project in 2000, leaving a big hole in the city's central business district. Xie's father - a Beijing-based retired army officer - took up the challenge to fast-track development of the four billion yuan (HK$4.54 billion) project. Things were far from trouble free, with obstacles ranging from tight deadlines and financial difficulties to finding tenants. At one time, there was speculation that the company's loans had been called in by mainland banks, which planned to foreclose on its Da Peng International Plaza. Now called Heyin Plaza it is located next to Garden Hotel in Guangzhou. His father's strong military background reportedly kept the company together. Thanks to Premier Wen Jiabao's four trillion yuan stimulus package improving liquidity and speeding up the property market recovery, the company has passed the worst time. The shopping centre and the office tower have been completed and construction work on the residential-hotel tower will be completed by the end of this year. With that project out of the way, the young man groomed for the top is preparing to take on further challenges. One of them is going up against Swire's soon-to-be completed shopping centre across the road in Tianhe district.

China is negotiating to extend its high-speed railway network to up to 17 countries, a mainland rail expert who has taken part in every major express line project said yesterday. Wang Mengshu, professor at Beijing Jiaotong University and a member of the Chinese Academy of Engineering, said most of these countries were in southeast and central Asia. Most are inadequately developed but rich in mineral and energy resources, and the talks involve a trade of resources for technology. Wang said China had proposed three high-speed railway projects to these countries, with negotiations already at the technical stage. One possible network involves Southeast Asia, connecting Kunming , Yunnan, with Singapore, with service through Vietnam, Thailand, Myanmar and Malaysia, though the exact routing is unclear. Another network would start from Urumqi, capital of the Xinjiang Uygur Autonomous Region. It would go through Central Asian countries such as Kazakhstan, Uzbekistan and Turkmenistan, and then possibly extend to Germany. The third network would originate in Heilongjiang in the northeast and go north, cross Russia and aim for Western Europe. These lines would be built using China's high-speed railway standard. The maximum speed would be 350 kilometers per hour, with the most economical operating speed 200km/h.

A new terminal building will open at Hongqiao Airport in Shanghai this month, which will open the way for flights to and from downtown Taipei, Shanghai's mayor says.

March 8, 2010

Hong Kong*: Wellcome and ParknShop are under growing pressure to restrict the sale of barbecue charcoal as international experts call on them to act on research indicating that doing so can save lives.

A pair of shoes lie on the stage as (from left) Secretary for Home Affairs Tsang Tak-sing, acting chief executive Henry Tang and youth commission chairman Bunny Chan open the summit. It was another day for the so-called "Post-80s" protesters - those disenchanted youth born in the 1980s - to make their latest statement against the government. This time the venue was the Youth Summit, co-organised by the Home Affairs Bureau and the Commission on Youth, where government officials and the public were supposed to come together to share opinions and discuss government policy. However, the biggest stir was caused by a man who threw a pair of sports shoes at acting Chief Executive Henry Tang Ying-yen, Secretary for Home Affairs Tsang Tak-sing and Commission on Youth chairman Bunny Chan Chung-bun, who were opening the event in Chai Wan. The incident reminded the audience of the Iraqi reporter who threw his shoes at former US president George Bush in December 2008. While yesterday's shoe-thrower was being dragged away, he shouted for the government to support a minimum wage. Police would not reveal his identity as he was not charged. The man later said he was jobless for nine months and angered by the government's inaction in helping youths find jobs. The former computer repairman added he chose to act in this manner because he believed using foul language in public was inappropriate.

The central government liaison office director Peng Qinghua (pictured) has made his most strongly worded criticism yet of the "de facto referendum" movement, saying the use of the word "uprising" in its campaign slogan was intimidating. Five lawmakers from the League of Social Democrats and the Civic Party quit the Legislative Council to trigger by-elections which they want to be seen as a de facto referendum on the pace and scope of democratisation. Peng made his remark as he elaborated on Premier Wen Jiabao's message to Hong Kong in the State Council's work report. He said Wen's comment was specific. In the central government's annual work report delivered on Friday, the premier urged the special administrative region government and its people to "work together", and to "accommodate and help each other". At a meeting in Beijing with local deputies to the National People's Congress (NPC) yesterday, Peng said Wen's call carried specific and profound meaning. "Hong Kong people treasure the rights to democracy and freedom, and disdain endless political disputes," said Peng, the central government's top representative in Hong Kong. "Recently, some political groups have launched a so-called referendum in five constituencies. "They even chant some intimidating and extreme slogans such as a `general uprising' and `liberate Hong Kong'. This is a blatant challenge to the Basic Law and violation of mainstream public opinion to seek stability and harmony. The general public will not recognise it." It was the first time a central government official has openly referred to the terms "uprising" and "liberate Hong Kong", which have stirred controversy since they were used by members of the League of Social Democrats and the Civic Party during public appearances as they campaigned for their movement. Peng's comments came as Chief Executive Donald Tsang Yam-kuen met Vice-President Xi Jinping last night to report on the latest developments in Hong Kong's political reform. The Hong Kong government is also preparing a by-election for the five Legislative Council seats vacated by the resignation of the five lawmakers from the two parties. Nominations begin on March 22. Local NPC members said the remarks were in line with a statement issued by the State Council's Hong Kong and Macau Affairs Office in January, which said any referendum would be a blatant challenge to the Basic Law. Cheng Yiu-tong, a Hong Kong NPC deputy and executive councillor, said Peng's remarks reflected concern in Beijing over political developments in Hong Kong. Xi will meet Hong Kong deputies to the NPC today, as the annual plenary session of the state legislature proceeds. In response to Peng's remark, Civic Party leader Audrey Eu Yuet-mee said people should not be cowed by the mounting pressure from the central government. "The Legislative Council's by-elections are an opportunity to allow Hong Kong people to speak their mind on the demand for universal suffrage," Eu said, adding that the central government should not be afraid of the people's voice if it truly wanted to see democracy in the city. League of Social Democrats chairman Andrew To Kwan-hang rejected suggestions that their use of the "popular uprising" slogan was only a publicity gimmick. "Under the one country, two system principle, freedom of speech should be protected. "Members of the public should know that the central government has dragged on the issue of universal suffrage for a long time [and] that people should use this opportunity to express their views," he said.

One of the devil-beaters under the flyover of Canal Road West uses a shoe to beat a paper effigy, hoping to improve people's luck. The thick smoke may have almost suffocated them and made their eyes teary. The fierce flames may have pushed the unseasonably hot temperatures even higher, making them sweat like pigs. The deafening sound of shoe heels smashing bricks saw them all nearly lose their hearing. But none of these discomforts stopped hundreds of Hongkongers from queuing under the flyover of Canal Road West in Causeway Bay yesterday to curse their bad times away. For yesterday was Chingche or the Feast of Excited Insects according to the Lunar calendar, the day which marked the end of winter and the beginning of spring. Chingche is believed to be the best day to "beat the devil", which involves beating a paper devil with shoes while swearing and cursing the image. Most were in their 20s and 30s and said they had had a tough year because of the bad economy and they did not mind paying HK$50 to "beat the devil" away, or to put a curse on someone - mainly their bosses. A 27-year-old clerk said he went to beat the devil because he had had a rough year. "I've had lots of pressure from my boss, and I'm really stressed. I don't intend to put a curse on anyone but I just want to pray for a more peaceful year. This is just a stress-relief exercise." Another person queuing was a 27-year-old woman who works in the media. She said that when she went to draw a fortune stick at a temple last week, the fortune-teller told her to come beat the devil to ward off those who might be bad for her. "This is my first time here," she said. "I don't really firmly believe in this but I just want to have some peace of mind." The ritual has its origins in rural life. Women would carry paper images of the white tiger into the home to scare away rats and snakes. It was also believed that performing such rituals prevented quarrels. Chan Siu-mei, in her 40s, sat under the flyover looking for business. She said she had been performing the ritual for people for nearly 10 years. Yesterday she worked from 11am to 11pm. "The most important thing is to pray for good health, a good spirit and peace," she said. Chan began the ritual by offering a worshipper incense and instructing the person to pray and say their name to inform the gods of their existence. Then she recited spells while hitting a paper devil on a brick hard with a high-heel shoe. "It makes no difference whether you hit it with flats or heels," she joked. After the paper devil was thrashed, she burned it. Then she wiped red and green paper over the worshipper, and burned that too. Though one of the aims of the ritual was to seek peace, things weren't all peaceful under the flyover. A 60-year-old devil-beater said women doing business were fighting over territory. A policeman said around 35 stalls offered the service. He said the crowd hovered at about 200 all day and into the night.

China*: China will have to face the withdrawal of its special stimulus policies at some point, the central bank chief said yesterday, and that included ending its "special exchange rate mechanism". Foreign governments say the currency's value has been held down. The bank chief said the "timing of the exit must be treated with great caution". Speaking during the annual session of China's parliament, Zhou Xiaochuan, governor of the People's Bank of China, said: "We don't rule out adopting special policies, including a special exchange rate mechanism, during some special periods - such as the Asian financial crisis and the global financial crisis this time. Sooner or later, we will exit the policies." He gave no indication when the economic stimulus measures would be wound down, but said: "If we are to exit from these irregular policies and return to ordinary economic policies, we must be extremely prudent about our choice of timing. This also includes the renminbi exchange rate policy." Zhou twice mentioned that a "special yuan" policy was part of Beijing's measures to fight the financial crisis. His comments are the most explicit yet by a Chinese official suggesting that the yuan's current de facto peg to the US dollar may not be maintained indefinitely. Previously, government officials have stressed currency stability, without such elaborate qualification, and rejected foreign pressure to allow the yuan to strengthen. Zhou was speaking after the central bank issued a statement reaffirming Premier Wen Jiabao's pledge a day earlier to keep the yuan "basically stable" this year. Beijing embarked on a 4 trillion yuan (HK$4.54 trillion) stimulus programme in late 2008 to help the economy ride out the global slowdown. It saw the government shift its monetary policy stance from "tight" to "moderately easy". Last year banks pumped 9.6 trillion yuan of new loans into the economy, nearly double the 2008 total. Practice had shown that these policies had been positive, contributing to the recovery of both China's and the world's economy, Zhou said. Still, he said that although there had been signs of recovery, the impact of the financial crisis was still very keenly felt. China has effectively pegged the yuan to the US dollar since mid-2008 at an exchange rate of 6.83 to the greenback to preserve the competitiveness of its exporters. Beijing is under intense pressure from the United States and Europe to abandon this peg and allow the currency to strengthen - which would mean Chinese goods costing more in the West and Western goods less in China. Zhou's remarks suggest that the yuan's peg to the dollar is not seen as normal and that the policy will, of necessity, change. But Lu Zhengwei, chief economist with Fujian-based Industrial Bank, cautioned that exiting the special yuan exchange rate policy should be part of a strategic exit from the stimulus policy as a whole. It was unrealistic to expect an immediate exit and return to normality, he said. Zhou indicated a willingness to discuss currency issues in the context of the Group of 20 leading developed and developing nations. China's trading partners say it is keeping the yuan undervalued and that this has swelled its trade surplus. US President Barack Obama says he will press for an end to currency systems that he says depress export prices and hurt American companies. Beijing fears a tide of capital will flow into China if speculators sense the yuan is strengthening. Senior Chinese officials have repeatedly spoken of "maintaining the yuan's stability". Zhou held out the possibility of further changes to the yuan exchange rate mechanism in future, saying: "The yuan exchange rate mechanism and yuan prices are in a dynamic process of continuous change ... so they will differ in different periods." The bank chief repeated Beijing's concerns about whether China's extensive holdings of US assets would retain their value, but said the US dollar was still the currency that played the key role in global trade and investment flows. China would closely monitor the trend of the US dollar against other currencies, he said. He and Commerce Minister Chen Deming both said at yesterday's news conference that China objected to the US politicising exchange rates. Delivering his government work report on Friday, Wen said China would adjust monetary policy in accordance with changes in economic indicators and the results of government policy. Zhou reiterated that. "We are going to continue with a moderately easy monetary policy but at the same time closely follow inflation and changes in other economic indicators," he said, and noted that controlling inflation would be very complicated this year. On Friday Wen said the government was aiming to hold consumer price inflation down to 3 per cent this year. Last year consumer prices fell 0.7 per cent. Zhou said Beijing would strike a balance between managing inflation expectations and maintaining sound economic growth, he said. Wen announced a gross domestic product growth target of 8 per cent.

Whether he likes it or not, Chongqing party boss Bo Xilai is in the spotlight during the parliamentary session in Beijing. Thanks to his crackdown on triads, Bo, as the son of one of the party "immortals", Bo Yibo, got great attention on the sidelines of the National People's Congress. Some 200 reporters flocked to the Great Hall of the People for the rare chance to get a close look at the rising political star. Well-prepared, if 40 minutes late, Bo was all smiles answering questions on topics ranging from snaring gang bosses and corrupt officials to his campaign to promote revolutionary culture, to lifting the impoverished Three Gorges areas, and even one about his private life. But the media-savvy Politburo member, who had promised to take every possible question, was obviously annoyed when it was suggested he had an ulterior motive behind the blitz on triads, which has generated intense speculation in Beijing. "Are you paving your way to the Politburo Standing Committee with the anti-triad crackdown?" asked a Taiwanese reporter. "Are you not worried about stealing the show and outshining your bosses?" That question was on many people's minds, and breaths were held. But after an unusual pause, he was straight-faced and appeared offended. "We are here to discuss the government work report delivered by Premier Wen Jiabao yesterday, and our question and answer session is broadcast live on the People's Daily website," he said. "Let's not change the topic. I try to treat the media nicely and I hope the media can kindly return the favour." His outburst apparently disappointed many, with Taiwanese reporters leaving minutes later. Organisers and Bo's staff were embarrassed by the question, arguing in private who should be responsible for it. They described it as humiliating. The question did not make it into the transcript of the event on the website of the Communist Party mouthpiece. Bo also made a vigorous defence of the crackdown, which many analysts believe was part of a calculated move to seek media exposure and gain political capital for promotion at the expense of the rule of law. He insisted the crackdown was being carried out strictly according to law and said the anti-triad movement had boosted the image of the government and created a more favourable environment for economic development and the rule of law. More than 3,300 people have been arrested for gang-related crimes and 63 criminal syndicates have been hit. Many senior law enforcement officials accused of providing protection for triads are among the detainees. "Cracking down on triads is aimed at building a safe Chongqing and pushing ahead with the rule of law," Bo said. "What we have done is seek justice for those killed in over 500 murder cases in the past decade." The crackdown was inevitable because people had so many complaints and grievances. "Frankly, I was surprised by the extent of the problems, which went far beyond my expectations," he said. Bo vowed the crackdown would continue as long as the other 500 to 600 people suspected of gang-related crimes were still at large. For the first time, he rejected criticism of the sentence passed on Beijing-based lawyer Li Zhuang , widely believed by fellow lawyers to have been wronged in being convicted of fabricating evidence in the trial of a Chongqing gangster. Li was given an 18-month jail sentence. Bo said the verdict was beyond argument. "We have been welcoming lawyers from across the country, but it does not mean we should sit idle when lawyers are doing wrong things," he said angrily. "If so, are we to allow anarchism?" He described those critical of the case as "only a handful of people", with "ulterior motives". Many reporters were also keen to ask about his relations with his predecessor in Chongqing, Wang Yang , now the Guangdong party chief, who is seen as one of Bo's key rivals in the next reshuffle. But Bo dodged the question, saying he wanted to learn from Guangdong in boosting the economy. Bo also spoke fondly of his second wife, Gu Kailai , who was a renowned lawyer in the 1990s. "My wife has helped me a lot," he said.

Visitors attend the 20th East China Fair in Shanghai last week. China's exports rebounded in December. It will take two to three years for China's exports to return to pre-financial crisis levels despite the recent robust rebounds, Minister of Commerce Chen Deming said yesterday. The mainland's trade improvement has been "very fragile" considering the uncertainties faced by the world economy, Chen said at a press conference on the second day of the National People's Conference. In 2009, exports fell 16 per cent from the previous year, dragging down gross domestic product growth by 3.9 percentage points and putting more than 10 million people out of work. However, exports have been improving since late last year and have grown 17.7 per cent in December and 21 per cent in January. "Taking account of the high unemployment rate and low savings in some countries which were hit hard by the financial crisis, a solid recovery in world consumption and China's exports will require time," Chen said. The minister said the trade surplus dropped 50.2 per cent in the first two months from the same period a year ago - proof that China was contributing to balanced world trade instead of emphasising exports. In the work report delivered by Premier Wen Jiabao on Friday, the government said China still faced tough times this year, including the prospect of trade protectionism. The combined surplus for the first two months was generally in line with economists' expectations. Lu Zhengwei , an economist with Fujian-based Industrial Bank, said the 2010 surplus would not be more than the US$196 billion recorded last year which was 34 per cent lower than 2008. "It was very upbeat for the minister to say that it will need three years for exports to recover. I think it is unlikely to recover to pre-crisis levels ever," Lu said. The Ministry of Commerce late last year had forecast that exports would take two to three years to recover. Meanwhile, changes in the labour market could have an impact on exports. Guangdong Communist Party boss Wang Yang said on Friday that the province - the nation's export stronghold - was experiencing labour shortages that could result in higher wages. Higher wages could translate into higher export prices, curbing exporters' competitiveness. However, economists with China International Capital Corp were more optimistic. They wrote in a research note on March 3 that China had taken the lead in recovering from the financial crisis with exports showing double-digit growth, which again highlighted the need for yuan appreciation. They forecast a US$21 billion trade surplus for the first two months, down 52 per cent year on year compared to the 50.2 per cent announced by the minister. The surplus was calculated based on a forecast 40 per cent growth in both exports and imports for February.

March 7, 2010

Hong Kong*: Hong Kong has Asia's most innovative economy, thanks to its high level of creativity and well developed financial markets, a study said. The Chinese territory beat regional rival Singapore, which was in second place in the Asian rankings, said the joint study by international business school INSEAD and the Confederation of Indian Industry released late on Thursday. Worldwide, Hong Kong ranked third in the Global Innovation Index while Singapore placed seventh, the study showed. Among the criteria used by the survey, economies were ranked by patents filed, publication of scientific journals, research and development spending and how innovation supported social welfare, competitiveness and growth. Hong Kong, Singapore and New Zealand were the only Asia-Pacific economies to make it to the top 10 in the global rankings. Iceland topped the global innovation list despite its deep economic woes followed by Sweden, while Switzerland placed fourth after Hong Kong. Rounding up the global top 10 list was Denmark in fifth spot, followed by Finland, Singapore, Netherlands, New Zealand and Norway. The US, which took the top spot last year, slid down to 11th place amid growing challenges from other countries which are putting increasing emphasis on education, science and technology, the study said. The study stressed innovation as a key driver of growth, playing “a critical role not only in facilitating countries’ recovery but also in sustaining national competitiveness,” it said. “National and business leaders are struggling to balance the near-term needs of survival with the long-term demand to find new sources of growth.” This year’s Global Innovation Index Report covered 132 economies that account for 96 per cent of the world’s gross domestic product. Japan, Asia's largest economy, ranked 13th in the index and South Korea was seven notches below at 20th spot. Australia was in 18th place. Taiwan placed 25th and the mainland, widely expected to overtake Japan as the world’s second biggest economy, placed 43rd on the global index. The study said the mainland scored high marks when it came to scientific output as the government supported various moves to boost research and development, but the country was weak in creativity and market sophistication.

Donald Tsang attends the NPC meeting along with predecessor Tung Chee-hwa (front, right). Tsang discussed Hong Kong affairs with state leaders on the sidelines of the meeting. Compromise was needed for progress to be made on electoral reform, Chief Executive Donald Tsang Yam-kuen said yesterday. His government was looking for "middle ground" acceptable to all sides, he said. Tsang's comments came as Premier Wen Jiabao, in his annual government work report, urged the Hong Kong government and its people to "work together" and "accommodate and help each other". Speaking on the sidelines of the national legislature's annual session in Beijing, Tsang said: "I am sure we will be putting all our best efforts into seeing whether there is a middle ground for us to put across a package acceptable to both the Hong Kong people and the legislature. "This requires compromise. It requires reasonable, rational steps." The government would have to negotiate with political parties, he said. Tsang said he had discussed the latest political and economic situation in Hong Kong in meetings with state leaders including Wen and President Hu Jintao. The Democratic Party and fellow members of the moderate Alliance for Universal Suffrage are prepared to support government proposals for electoral changes in 2012 in return for assurances by the government and Beijing that genuine universal suffrage will be introduced for the chief executive election in 2017 and Legco election in 2020. Three months of public consultation recently ended on the government's proposal to expand by half the election committee that chooses the chief executive and add 10 seats to the Legislative Council, half of them directly elected and the rest chosen by district councillors. Lawmakers are to vote on a final proposal before the summer. Political scientist Ma Ngok, of Chinese University, said the apparently conciliatory line taken by Tsang did not indicate that Beijing had agreed on certain concessions in exchange for pan-democrats' support. Asked about a call by Peter Wong Man-kong, a Hong Kong deputy to the National People's Congress, for the government to dust off shelved national security legislation to enact Article 23 of the Basic Law, Tsang said it was not his priority. "My attention is on how to fix the 2012 proposal as soon as possible. For Article 23, I have said that legislation is not my priority now," the chief executive said. Wen used the paragraph in the government work report devoted to Hong Kong and Macau to call for unity between citizens and the city's governments. "As long as the governments of the Hong Kong and Macau special administrative regions and their people from all walks of life work together, accommodate and help each other, and jointly safeguard overall prosperity (SEHK: 0803), stability, and development, Hong Kong and Macau will enjoy a brighter future," he said. Wong Kwok-kin, another local deputy to the National People's Congress and a legislative councillor, said it was rare for the premier to make such an appeal in the work report. "Does the central government think [Hong Kong's] governance and social atmosphere should be improved?" Wong said in a reference to recent political controversies. Rita Fan Hsu Lai-tai, another Hong Kong delegate to the NPC and a member of its Standing Committee, said Wen's remarks were not necessarily meant as a criticism of the Hong Kong government. Tsang will today meet Guangdong party secretary Wang Yang to discuss co-operation between Hong Kong and the Pearl River Delta region.

Some of the most eminent judges and lawyers in the common law world paid tribute to the legacy of outgoing Chief Justice Andrew Li Kwok-nang yesterday, for having succeeded in building a judiciary internationally recognised for its quality of law. In the opening address for the University of Hong Kong conference entitled, Hong Kong's Court of Final Appeal: The Andrew Li Court 1997-2010, which was attended by Li, Sir Anthony Mason, a former Australian chief justice, said he wanted to pay tribute to Li and remark on two aspects of his "many qualities". "He has been an outstanding chief justice," Mason said. "Hong Kong has been singularly fortunate to find somebody of his capacity to rise to the challenge of heading a common law court system in a unique and unusual environment." Other appeal court judges, Roberto Ribeiro, Kemal Bokhary, and Patrick Chan Siu-oi were also present, as were non-permanent judges of the Court of Final Appeal, local judges and senior lawyers. Mason, a non-permanent judge in the Hong Kong Court of Final Appeal who presided over most constitutional cases since 1997, revealed some of Li's work in shaping the success of the court behind the scenes. In particular, he praised "his sense of strategic vision and his capacity to take the long view - qualities which are generally associated with great chief justices". He described Li as a true leader in achieving consensus within the court. "He instituted a system of judicial conferencing that has been a prominent feature of the court's work. He has led discussion and ensured that all relevant questions had been fully considered and resolved by members of the court. In those respects, his performance has borne remarkable fruit." Last year, Li announced his early retirement and plans to step down at the end of August this year after 13 years in the role to achieve "orderly succession planning". A Judicial Officers Recommendation Commission, headed by the chief justice, is assessing candidates for Li's role, and is expected to make a recommendation to the chief executive this month. Mason also noted that it was the Hong Kong Court that pioneered new thinking on free expression, defamation and fair comment. Mason's presence in the city and his contribution to Hong Kong law is often cited as another of Li's "greatest achievements". A major concern over the dawn of the new court as the resumption of Chinese sovereignty loomed was whether Hong Kong would be able to maintain its links with other common law jurisdictions. But under Li, the list of foreign non-permanent judges now includes respected former law lords and former chief justices like Mason himself. Dean of the University of Hong Kong law faculty, Johannes Chan Man-mun, said one of the major challenges of the court at first was to build a reputation to earn recognition and credibility within the common law jurisdiction. Under Li, "we have met that challenge successfully", he said.

Ship crew install concertina razor wire on a vessel side to show how it can effectively protect ships from pirate attacks at a lower cost than arming crewmen. When it comes to fending off Somali pirates off the Horn of Africa, a small investment in razor wire can thwart attacks and save ships millions of dollars in ransoms, according to an executive of a Hong Kong ship-management company. Pirates, just like home invaders, were on the lookout for easy targets, said Vijay Gupta, the joint managing director of Anglo-Eastern Ship Management, one of the world's largest ship-management companies. So, to "harden the target", the company is protecting vessels by ringing them with concertina wire or razor wire, supplying the crew with night-vision goggles and high-pressure water hoses, and deploying a variety of other pirate-boat deterrents. The total cost of deploying razor wire is about US$15,000 per vessel and is a simple but effective solution, Gupta said. None of the 330 vessels managed by the company has come under attack, so Gupta cannot say how effective the measures are. But he believes the formidable defence has had a deterrent effect. The frequency of pirate attacks across the Gulf of Aden and along the coast of Somalia nearly doubled to 214 last year from 111 in 2008. Forty-seven of the attacks resulted in successful hijackings of the vessels. "However, not all shipowners are willing to pay an extra US$15,000 to safeguard their ships, even if it will hugely reduce the risk of pirate attacks," Gupta said. He blames that reluctance partly on the low profit margins in shipping because of overcapacity in the industry. Initial figures suggest that total worldwide container shipping capacity is up 15 per cent to 20 per cent year on year while global trade is down 10 per cent. Another reason shipowners had not equipped their vessels with protection was the low attack rate, leading them to take chances, Gupta said. On the average, there are about four pirate attack attempts for every 300 transits through the Gulf of Aden per week, translating into a 1.2 per cent chance of being attacked. And the risk of actual hijacking is even lower as the success rate is less than 22 per cent, figures released in January by the Piracy Reporting Centre of the International Maritime Bureau show.

Summer has not arrived yet but ice-cream hawkers are already feeling the heat, with some saying they have been harassed so often by hygiene officers they are quitting the trade. The government received 3,700 applications for itinerant hawker licences last year, but issued just 61 licences for hawkers to sell ice cream and cold drinks. They were the first such licences to be issued since 1993. But licence-holders say the Food and Environmental Hygiene Department is constantly moving them on, accusing them of blocking thoroughfares. Because of uncertainties and high start-up costs, only 25 people have claimed their licences and joined the trade. Now, four of them have decided to quit after frequent harassment by the department's officers. The Dairy Products Beverage and Food Industries Employees' Union, hawkers and lawmaker Wong Kwok-hing met the department's assistant director of operations, Rhonda Lo Yuet-yee, yesterday to air their concerns. Although the department does not encourage ice-cream hawkers to ply their trade at busy thoroughfares, where they may disrupt traffic or pedestrians, hawkers say it is impossible to survive if they do not work in busy areas. Frontline staff also have misconceptions about the definition of "itinerant", hawkers say. Some have been told they are breaking the law if they stop at a certain spot instead of being on the move all day. By law, the hawkers can operate anywhere as long as they are not causing an obstruction. Panda Szeto Tsz-chung, 23, joined the trade in January. He said his licence had been checked by officers as many as 10 times a day. His earnings fell by half to just HK$100 a day after he was ordered to move from a spot opposite Exchange Square in Central to a corner under a bridge fewer pedestrians passed. "I can cover my costs but I can't make a living," Szeto said. Nevertheless, he said he would continue in the trade for another three months. He spent more than HK$10,000 starting up the business, including the cost of a special bicycle for carrying frozen goods, and had left a job in the catering industry. "If I give up before the summer, I won't be able to face myself," he said. He wants the government to clarify the rules, including where they can do business and what constitutes an offence. Hawker Chu Chung-wah was prosecuted for obstructing the pedestrian area by the Tsim Sha Tsui Star Ferry pier, and is due to appear in court on Thursday. Cheung Chee-hung, director of the dairy products union, hopes frontline hygiene officers can be reasonable when deciding if hawkers are causing an obstruction. "They should not prosecute them based on unsound complaints received." The department's spokeswoman said frontline officers prosecute hawkers without first issuing a warning if they obstructed thoroughfares on a list agreed upon by hawkers' associations, itinerant hawker licence-holders and district councils in 2007. In other areas, warnings were given first before action was taken, she said. But the department was now considering issuing warnings to all ice-cream hawkers first.

Catering and fitness groups have launched an unprecedented petition campaign to fight the city’s worsening air pollution. Starting this month, more than 200 leading restaurants, cafes and gyms in the city will invite their customers to sign “The Petition for Clean Air.” The organizers also ran campaign ads in the International Herald Tribune and several local newspapers this week, reminding readers that Hong Kong’s air pollution “kills three people a day” and its air is “three times dirtier than New York City’s.” “It was the first time for Hong Kong to have a clean air campaign mounted by a large group of businesses,” Kwong Sum-yin, campaign manager of Clean Air Network, the NGO which co-ordinated the petition drive, said on Friday. “We have often tried to engage members of the public in our previous campaigns. But we believe the involvement of business groups is equally important if we want to send the message across all sectors of the society.” Businesses involved include Starbucks, Pacific Coffee, Ben & Jerry’s, and Pure Fitness. Kwong said their original plan was to run the campaign for six weeks. But she said it may be extended as other restaurants have also asked to join. The petitions collected will be presented to the government later this year. Hong Kong’s air pollution continues to worsen, with the city wrapped in a thick blanket of haze for most days in recent months. Statistics from the Hong Kong Observatory show that the annual number of hours of “reduced visibility”, which refers to visibility of less than eight kilometers in the absence of fog, mist or rain, jumped from 295 in 1988 to 1,139 last year. Critics said the problem has caused a huge economic and public health impact on society and driven talented people away from the international financial hub, with an increasing number of families – especially expatriates with children – relocating elsewhere. Authorities often blamed the deteriorating air quality on emissions from the southern Chinese factory belt over Hong Kong’s northern border. But a study conducted by the Civic Exchange think-tank last year showed that Hong Kong’s own road emissions were the dominant source of air pollution.

The nomination period for candidates in the upcoming Legislative Council by-elections would run from March 22 until April 8, the Electoral Affairs Commission said on Friday.

A TVB (SEHK: 0511) host, charged with one count of assault occasioning actual bodily harm last December, pleaded not guilty on Friday, local media reported. Accompanied by colleagues from TVB, Chinese-Korean television presenter Amigo Choi Kin-bong, 30, appeared in Kwun Tong Court. During the court hearing, it was alleged that Choi assaulted his 20-year-old girlfriend, Chinese-Brazilian model Elizabeth Kwong Wai-man, during a dispute in his home in Kowloon Tong on December 22 last year, Kwong later reported the case to Wan Chai police and went to Ruttonjee Hospital to have her injuries checked. She complained that Choi had struck her head and grabbed her neck and body in a bid to seize her phone and to delete photos, which they had taken together, local media reported. Choi denied he had assaulted Choi. He told the court it was an accident and said Kwong’s allegations of assault were false. Acting-Principal Magistrate Abu Bakar bin Wahab adjourned the case until May 18 and granted Choi HK$1,000 bail. A day after Kwong reported the case to the police, the incident was widely reported by local media. TVB general manager Stephen Chan Chi-wan said the company would temporarily suspend Choi from his job.

Payson Cha Mou-sing – one of ATV’s major shareholders – confirmed on Fridaythat he would sell his Asia Television stake to mainland property tycoon Huang Jing.

You can tell the speculators are dominating the market for luxury flats by looking up at some of the city's priciest blocks after nightfall. The lights are mostly off. At Celestial Heights in Ho Man Tin, the windows of all but 20 of the 500 flats are dark, says Patrick Chow Moon-kit, the head of research at estate agency Ricacorp Properties. The scene is similar at The Arch, The Cullinan and Sorrento above Kowloon station, he says. "Normally, with a building occupied by end users you will see 80 per cent of flats with lights on at night. But you hardly see any in those housing projects which are popular among investors," he said. "Luxury-flat sales are dominated by speculators." Most are from the mainland, Chow and other property agents say. Average vacancy rates for luxury flats issued yesterday by the government bear out the phenomenon. More than one in 10 were unoccupied last year, the figures, from the Ratings and Valuation Department, show. That adds up to more than 8,500 empty flats. The rate of 10.5 per cent is the highest since 2004. A combination of record-low interest rates, tight supply and a torrent of hot money pouring into Hong Kong saw speculators bid up prices in the luxury sector last year. The rising power of speculators at the top end of the market is bad news for the government, which is desperate to stem a rapid increase in prices that threatens to put home ownership beyond the reach of the average family. Last week's budget included an increase in stamp duty on property sales in excess of HK$20 million and heralded a tax crackdown on speculators. Chow said it was not uncommon to see wealthy investors snap up several flats in a development and leave them unoccupied for four or five years. That was because they could sell them for more empty than if tenants were occupying them, he said. Leung Wai-ming, assistant sales director at Midland Realty's Kowloon station branch, estimates one in five flats at the developments there - a favourite among mainland buyers - are empty. He says about 20 per cent of thebuyers are from the mainland. "Some of these rich mainlanders just stay in their flats for one or two months a year," he said. Prices at one of the developments, The Cullinan, have jumped 50 per cent, to HK$22,000 per square foot, since the first flats went on sale last year. Prices next door at The Arch rose 30 per cent last year, Leung said. In contrast to the luxury residential sector, vacancy rates in the mass residential market dropped to 3.8 per cent last year, the lowest since 1998 and the same level as when the market peaked in 1997. Paul Louie, regional head of property research at Nomura International, said rents were likely to rise very strongly if the vacancy rate fell below 5 per cent. "For the next two years, it will be a landlord's market," he said. He forecast prices and rents would rise 20 per cent by the end of next year compared with the end of 2009. In the first two months this year, overall home prices rose 6 per cent, according to Centaline's Centa-City Index. This increase comes on top of a 30 per cent rise last year. The government forecasts developers will complete 14,260 flats this year - almost twice the total for last year. Just over 10 per cent will be luxury flats. That compares with an annual average of 15,000 completions in the past five years. And next year only 10,960 will be completed, it forecasts. The government will sell some development sites on its list of available plots if developers don't lodge bids high enough to trigger auctions for them. Louie said: "The government's attempt to alleviate the land shortage is the right action to take, but it will take three to four years before these sites are developed into housing projects and put on the market."

China*: China winning green race, says US venture capitalist - Mainland is leapfrogging ahead in the development of green technology, and the United States is “barely in the race”, a prominent Silicon Valley venture capitalist said overnight on Thursday. “China’s growth in renewables is astounding,” said John Doerr, partner at Kleiner Perkins, one of the most prolific and successful venture capital firms in the United States. “The results of their policies are really staggering.” Kleiner Perkins, which typically invests in early-stage start-up companies, is best known for its investment in Netscape, Amazon, Google and Genentech. “My conclusion is China is winning,” Doerr said. “My conclusion is that we are barely in the race today.” As an example, Doerr said, mainland grew its market share in the solar industry to nearly 50 per cent in the fourth quarter of last year from just 2 per cent three years earlier. The United States, on the other hand, went from 43 per cent to 16 per cent in the same period. Mainland has also pushed ahead fast in developing wind power. It overtook the United States in new installations and in manufacturing of wind turbines last year, nearly doubling its wind generation capacity from 12,100 megawatts in 2008 to 25,100 megawatts at the end of last year. Mainland still lags behind the United States in total wind generation, but experts say it may grab the No 1 spot this year. The mainland government has aggressively encouraged green projects and new technologies through funding and regulation, while the US industry, struggling from a lack of financing because of the credit crisis, is hoping for more action from Washington on federal renewable-energy policies.

Pledge to narrow gap welcomed - Premier Wen Jiabao's latest pledge to narrow the income gap comes at the most appropriate time, top legislators and advisors said. The emphasis on fighting income disparity as well as raising social welfare and rural services is a direct response to the most pressing issues facing the country today, they said. "We will not only make the social wealth pie bigger by developing the economy but also distribute it well on the basis of a rational income distribution system," Wen said in his government work report at the opening of the annual full session of the country's top legislature on Friday. Wen's report mentioned the word "income" a record 28 times, the Legal Daily said. The country's rural-urban wealth gap last year was also the widest since the start of the economic reform in 1978, according to the National Bureau of Statistics. Urban per capita income in 2009, which stood at 17,175 yuan ($2,500), was more than three times the figure in the rural areas. Apart from the rural-urban divide, the gap is also widening among different social strata within cities, said Zhao Xijun, deputy dean of the school of finance at Renmin University of China. Zheng Gongcheng, a member of the 11th National People's Congress (NPC) Standing Committee, said the need to adjust the current distribution of interests is "an extremely grave task" in the next five years to bridge wealth gaps and sustain social justice. Specifically, quantifiable indicators of a narrower wealth gap must be included in the nation's 12th Five-Year Plan (2011-15), to be completed by the end of this year, said Chi Fulin, president of the China Institute for Reform and Development. The hefty income of monopoly industries, which widens the income gap and worsens social equality, has also been under fire for months. In response, Wen on Friday said the government will deepen the reform of the income distribution system of these corporations and set strict standards for the income of their executives. The premier also vowed to boost basic social security networks to include all members of society, especially those at its bottom, to "free them from worries". Hukou reform - The government has also promised to reform its longstanding household residency system and ease restrictions on permanent residence registration, or hukou, in towns as well as in small- and medium-sized cities. Hukou has long been blamed for systematically widening the gap between urban and rural residents. The system, which restricts people's residency to their hometown, also makes it difficult for migrant workers to enjoy welfare benefits in cities, Xinhua News Agency reported. "Our ultimate goal should be to realize the free migration of all residents," Zheng Gongcheng said, adding that decision-makers have reached a consensus in reforming the hukou system and rapidly urbanizing China. The government hopes that the hukou reform is able to expand the social safety net to include the country's 230 million rural migrant workers, amid growing debate over the need to integrate the laborers into urban areas. Hu Xiaoyan, the first migrant worker to be selected as an NPC deputy and now an urban resident in Guangdong province, has proposed building communities for people like herself in each city. Rural migrants who have just acquired urban hukou after years of hard work in the city should be offered affordable housing similar to those provided for low-income urban families, Hu said. The migrants and their children should enjoy equal rights to public transport, schools and hospitals, she said. Acting on his earlier vow to promote "greater dignity" among the population, Wen on Friday also announced plans to allocate 43.3 billion yuan ($6.3 billion) to boost employment this year.

Wen vows bigger pie, fairer split, as wealth gap grows - Premier Wen Jiabao has pledged to boost social spending and redistribute wealth this year, as a widening wealth gap threatens the country's stability. In his government work report to the annual session of the National People's Congress (NPC) yesterday, Wen laid out a series of plans to tackle the growing social divide, promising more investment in the agricultural sector, improved education and medical care in rural areas, and the building of a social security network that covered both the urban and rural populations. "We should not only make our social wealth pie bigger, we should also divide the pie more reasonably through a better wealth-redistribution system," Wen told NPC deputies. To achieve that, China will raise basic salaries, tighten regulations on salaries in monopolised industries and clamp down on grey income. The pledge comes amid louder calls for social equality, as the relatively few urban rich are acquiring even more wealth while the many millions of rural poor have yet to benefit from the country's economic boom. Latest figures from the Ministry of Agriculture show that last year saw the widest urban-rural income gap since China began its reform and opening-up in 1978. In his speech yesterday, the premier called rural problems the top priority on the government's agenda and promised to invest 818.3 billion yuan (HK$930 billion) in rural development. That is about 13 per cent more than last year, and accounts for 17.5 per cent of the government's 2010 budget. Wen promised to let children in remote rural areas share high-quality education from cities by equipping their classrooms with distance learning multimedia. The 2010 budget released by the Ministry of Finance after Wen's speech says that half of the 216-billion-yuan government budget for education this year will go to rural areas, to cover students' school fees for their nine years of compulsory education, to introduce merit pay for teachers, to rebuild unsafe school buildings and to subsidise college students majoring in agriculture and vocational school students with financial difficulties. In health care, Wen said this year would see the trial launch of medical insurance for rural children suffering from leukaemia and congenital heart disease. The high medical costs for such illnesses have long been a main cause of poverty for some rural families. Huang Jun , former director of the Jiangsu Provincial Hospital, said: "I am so happy that this is written into the report. As a Chinese People's Political Consultative Conference delegate I have been proposing this for seven years." He said an operation for congenital heart disease cost at least 30,000 to 50,000 yuan. "But for a rural family, their yearly income may only be several hundred or several thousand yuan." Wen said the government would increase subsidies for rural medical insurance by 50 per cent this year, to 120 yuan per person. Four in five government-funded grass-roots health institutions would introduce the essential-medicine system, which includes 307 essential drugs sold at prices deemed affordable for the public. In August, the Ministry of Health released the list of essential drugs required to be available to the public at all times, in adequate amounts, and at prices the public can afford, in an effort to reduce people's costs. Wen said that 23 per cent of counties would trial a social pension system for rural residents this year, with government investment of 7 billion yuan.

Editors at The Economic Observer, the newspaper which initiated a joint editorial published on Monday criticising the mainland's hukou (household registration) system, have been punished for their bold action as other participating media confirmed a government order to remove the editorial from their websites. Published on the eve of the annual meetings of the National People's Congress and the Chinese People's Political Consultative Conference, the strongly worded joint editorial by 13 metropolitan newspapers stirred excitement as it called on the nation's legislators to abolish the hukou system, calling it "obsolete", "unconstitutional" and "a violation of human rights". Collaborators included well-known titles such as the Chongqing Times and Guangdong's Southern Metropolis News. However, the excitement was short-lived and Premier Wen Jiabao's passing mention of hukou reform in his government work report yesterday further shot down hopes that it would be abolished any time soon. Two editorial staff who work at The Economic Observer confirmed that top editors at the paper received disciplinary warnings from government officials, but said they were "not aware" of reports that a deputy editor had been sacked. Meanwhile, all the publications involved and most major internet news portals have removed the editorial or reports of it from their websites. According to an editor of another media outlet that ran the editorial, the verdict from the Central Publicity Department was brief: "This act was inappropriate". The publication of the editorial has itself become a censored topic for mainland media in the latest list of banned items issued by the department. The hukou system, a resident-registration mechanism set up in 1958 to curb migration from rural areas to the cities, has increasingly come under fire in recent years as many see it as the root cause of a glaring rural-urban wealth gap and social disharmony. Advocates of its abolition say it subjects rural migrants to second-class treatment, barring them from equal access to education and jobs in cities they have worked and lived in for years. Wen said yesterday: "We will carry out reform of the household registration system and relax requirements for household registration in towns and small and medium-sized cities," suggesting that any reform would only involve relaxation of restrictions, and not abolition of the system. Some analysts said it was more the publishing of the editorial than the topic itself that prompted the punishment, since it was probably viewed by the authorities as unwelcome pressure ahead of the most important meetings in the country. "Hukou reform has been a hot topic for public discussion for several years now," said Hong Kong Baptist University media professor Huang Yu. "However, it is unprecedented that 13 media [organs] joined hands to publish an editorial to advocate a social cause, especially when it's dressed up in such strong and sensational wording." NPC deputy Bai Shangcheng, the mayor of Guyuan , a small city of 1.5 million in Ningxia , said on the sidelines of the NPC meeting yesterday that it was critical that the hukou system be abolished as soon as possible. Some 260,000 people in Guyuan were currently seeking work outside the city, the mayor said. "Maybe not in the big cities like Beijing and Shanghai, but this regional barrier must be abolished for mid-sized cities soon," Bai said.

China's mutual fund sector has suffered a huge brain drain as nearly 200 fund managers left their posts last year, dimming the outlook for the industry despite its breakneck growth in the past few years. According to a report by Haitong Securities, 199 investment professionals working for 545 mutual funds on the mainland quit their jobs in 2009, and more are likely to resign this year as they are headhunted or go searching for lavish perks offered by hedge funds. "The brain drain is having a very bad impact on the mutual fund industry," said Wu Xianxing, a Haitong analyst who compiled the report. "The industry has lost a batch of experienced talent due to a lack of attractive remuneration packages." Wu could not give an exact number of how many had jumped ship to join hedge funds, but he did say that a majority were attracted to rivals by well-padded pay packages. China's mutual funds have experienced impressive growth over the past few years as the regulator encouraged retail investors to buy into funds, letting investment professionals manage their assets in a move to avoid volatility in the market. By the end of last year, 408 stock-focused mutual funds had a total value of 2.2 trillion yuan (HK$2.49 trillion), accounting for 15 per cent of the total capitalisation of the tradable equities on the Shanghai and Shenzhen stock exchanges. The benchmark Shanghai Composite Index jumped 80 per cent last year, bringing a windfall to mutual funds. However, analysts said the rosy performances were not reflected in the pay for mutual fund managers, who were already among the country's highest-paid individuals. According to a Beijing-based fund manager, he could earn a maximum 3 million yuan annually at a mutual fund company, while the income from a hedge fund could be more than double that if the performance lived up to investors' expectations. Hedge funds normally pay managers performance-linked salaries and bonuses. "After a strong rally last year, the market is expected to be volatile," said West China Securities' trader Wei Wei. "Therefore, fund managers' investment expertise will make a big difference this year." Wu said most of the managers who left mutual funds were experienced and had better track records than their peers. Among them, Sun Jiandong, a renowned fund manager at China Asset Management, resigned recently and was reported to have joined a hedge fund. The Renaissance Fund, managed by Sun since 2008, has generated a handsome return of 21.4 per cent, one of the best-performing equity-based funds on the mainland. Beijing set up the mainland's first mutual fund in 1998, hoping they could become a stabilising force in the volatile market. Between 2006 and 2007, the industry benefited from a bull run on the market as the China Securities Regulatory Commission fast-tracked approvals for new funds. However, a Galaxy Securities report in early 2008 found that nearly a third of asset managers running the funds had less than a year's experience. In December 2008, another Galaxy Securities report found that the performance of mutual funds on the mainland had almost nothing to do with those who managed them. The report, based on the track records of funds over five years, said different investment strategies basically made little difference to performance, while only a few experienced managers did an outstanding job.

The central government pushed ahead on Friday with plans to dampen social tensions, introducing a budget aimed at narrowing the wealth gap and bring growth to ethnic areas. China will steer a steady policy course this year but will change tack if needed to counter the lingering impact of the international credit crunch, Premier Wen Jiabao said on Friday.

Microsoft said on Friday it will stick to its development strategy for the mainland internet search market regardless of the outcome of Google’s high-profile spat with Beijing.

Taiwan said on Friday it has given the go-ahead for China Mobile (SEHK: 0941) to open a subsidiary on the island, making it the first mainland telecom firm to establish a foothold there. China Mobile, the world’s largest mobile phone operator by users, plans to sell electronics materials wholesale, according to its application filed late last year. However, the Taipei-based Commercial Times said the mainland firm was aiming to use the subsidiary to take a stake in Far Eastone Telecommunications, one of Taiwan’s leading cell phone operators. No mainland capital has previously been allowed for investment in local fixed line, cell phone and satellite operators. China Mobile said in April last year it hoped to invest in Far Eastone, aiming to buy a 12 per cent stake for about US$560 million. Far Eastone was not immediately available to comment. The economics ministry said on Friday the rules would have to change before China Mobile would be able to buy into Far Eastone.

Rampant official graft remains a problem in China despite years of efforts to stamp it out, Premier Wen Jiabao acknowledged on Friday, admitting the issue threatened the Communist Party’s ability to rule. The party has long pushed to eradicate corruption from its ranks, amid mounting public anger over regular reports of larcenous officials and stories of excess and debauchery among top bureaucrats. “We will give high priority to fighting corruption and encouraging integrity,” Wen said in his “state of the nation” address at the opening of China’s annual session of parliament. “This has a direct bearing on the firmness of our grip on political power.” He called on high-level officials to diligently report details on their personal income, housing and investments, along with information about where their spouses and children work. The premier said the investigation and prosecution of “major violations” of the law would be an “important task”, pledging stronger internal oversight. “We will run the government diligently and frugally, oppose extravagance and waste, and constantly reduce administrative costs,” he told some 3,000 National People’s Congress delegates gathered in the Great Hall of the People. Wen vowed to slash the number of official trips abroad, as well as cut down the number of lavish celebrations and meetings that are “long on form and short on content”. The party last month issued an ethics code that spells out 52 banned practices for officials, including accepting cash or other financial rewards as gifts and using public funds for personal interests. 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, state media said last month. About 4,000 corrupt officials fled the country with a total of US$50 billion between 1978 and 2003 after first sending their spouses and children abroad, the report said.

Mainland authorities are in talks with Google to resolve its dispute with the company, which has threatened to abandon the China market over hacking and censorship concerns.

A Long March 4C carrier rocket carrying a remote-sensing satellite, "Yaogan IX", blasts off from the Jiuquan Satellite Launch Center in northwest China's Gansu Province,March 5, 2010. China has successfully put into orbit another remote-sensing satellite, "Yaogan IX" at 12:55 p.m.(Beijing Time) from the Jiuquan Satellite Launch Center in northwestern Gansu Province, according to a statement from the center Friday. The satellite was sent into space aboard a Long March 4C carrier rocket and would be used to conduct scientific experiment, carry out surveys on land resources, forecast grain output and help with natural disaster-reduction and prevention endeavor, it said. Its predecessor, "Yaogan VIII," was launched from Taiyuan Satellite Launch Center in northern Shanxi Province last December.

2,000 women soldiers of the People’s Armed Police Corps of Shanghai sign their names on a banner on March 4, 2010 pledging to make contributions in their post and to ensure the security of the upcoming World Expo at a training base in Shanghai.

Women soldiers of the People’s Armed Police Corps of Shanghai wave during a drill on March 4 in which they stand in the shape of the Expo emblem to mark their work in the upcoming Expo and to celebrate the 100th anniversary of the International Working Women’s Day in advance.

March 6, 2010

Hong Kong*: Taiwanese snack food tycoon Tsai Eng-meng has taken his quest for control of Asia Television to the courts after accusing Payson Cha Mou-sing and other shareholders of favouring an investment deal that would hurt Tsai's stake in the struggling broadcaster. The latest twist in the saga over ATV's fate stems from a statement of claim filed with the Court of First Instance yesterday. In the document, San Want Media Holdings, wholly owned by Tsai, alleges ATV directors Cha and his brother, Johnson Cha Mou-daid, breached their fiduciary duty by backing the issue of new convertible bonds that can be exchanged for ATV shares priced below the minimum allowed under the shareholders' agreement.

People in Hong Kong who talk of "uprising" and "liberation" have hidden agendas, an outspoken local tycoon said at a meeting with a top state leader. Hopewell Holdings chairman Gordon Wu Ying-shueng made the comments in Beijing at a gathering of 200 Hong Kong and Macau delegates of the Chinese People's Political Consultative Conference. Vice President Xi Jinping attended the meeting. It is believed Wu was referring to slogans from the five pan-democrat legislators who resigned in January to trigger by-elections that they see as a de facto "referendum" on democracy. Xi was seen taking notes as Wu, a delegate to the advisory body, said: "A small number of people ... are against everything the SAR government wants to do and against everything that's from the central government. "They are also using such slogans as 'uprising' and 'liberation.' These show they have hidden purposes." Without directly addressing Wu's remarks, Xi told the delegates the central government hopes all members will "continue rational communication and practical discussion to reach a consensus to push forward the democratic procedures of the SAR government." Wu was the only delegate to speak with the media present though several others spoke during the two-and-a-half- hour meeting, hosted by former chief executive Tung Chee-hwa as vice chairman of the CPPCC National Committee. Meanwhile, local National People's Congress deputy Peter Wong Man- kong called on the government to resume discussions on Article 23 of the Basic Law and to enact laws against subversion. The veteran deputy said he will table a motion to this effect during the annual plenary session for local deputies. "Any delay will only encourage more calls for uprising and liberation, which can be considered attacks on national security." However, NPC Standing Committee member Rita Fan Hsu Lai-tai said it is for the Hong Kong government to decide when such talks should restart and remarks from individual deputies mean nothing. "The SAR government has to find a suitable time for the legislation," the former Legco president said. Political commentator Johnny Lau Yui-siu said Wu's speech was not intended to push forward Article 23 legislation. "There's nothing new about Wu's remarks. He said what the central government would like NPC and CPPCC members to say to create an atmosphere of concern, like boiling frogs in warm water," Lau said. "It's not the right time for such legislation and Beijing knows it. It will only stir up chaos and controversy." City University political analyst James Sung Lap-kung said Wu wanted to tell Xi he will need to adopt a stronger policy toward Hong Kong should the vice president become leader in 2012 after Hu Jintao.

The Hong Kong pavilion at the Shanghai World Expo will be completed by the end of this month and will be able to accommodate up to 7,000 visitors a day when it opens, a government official said. Patrick Chan Chi-king, director of the Hong Kong Economic Trade Office in Shanghai, yesterday said finishing touches were being put on the HK$145 million pavilion and it would open, along with the rest of the Shanghai expo, for a trial run on April 20 before the official May 1 opening. Chan said it would take about 20 minutes to complete a tour of the three-storey pavilion. With an exhibition area of 800 square metres, it accommodates 700 people an hour, or 7,000 per day, or more than 1.28 million visitors throughout the 184-day expo. "We will showcase many things within a small space," Chan said, adding that the exhibition would show off Hong Kong's modernity, infinite imagination and creativity. The middle of the pavilion incorporates a large transparent and mirrored exhibition area. Henry Choi Wan-kit, project director at the Architectural Services Department, said the reflections signified the unlimited potential and creativity of Hong Kong. The mirrored exhibition area was enclosed in frameless glass to further emphasise the boundless opportunities open to Hongkongers, Choi said. Metallic parts on the exterior represented the myriad dense skyscrapers in Hong Kong. The pavilion concept was developed by two Hong Kong architects, Billy Chan Wai-ching and Ida Sze Ki-shan, who were among 80 design professionals who entered a government competition in early 2008. The Shanghai expo runs till October 31. Hong Kong will stage five days of parades, and cultural entertainment at the expo from October 18 to October 22.

Managing director Kam Hing-lam says Cheung Kong Infrastructure is in serious negotiations for possible acquisitions in Asia and Australia, Europe and North America. Li Ka-shing, Asia's richest man, plans to bid more than £4 billion (HK$46.8 billion) for Britain's largest electricity supplier, EDF Energy, through his firms Cheung Kong Infrastructure Holdings (SEHK: 1038) and Hongkong Electric (SEHK: 0006) Holdings, the companies confirmed yesterday. Cheung Kong Infrastructure and Hongkong Electric will participate in the first round of bidding for EDF Energy, said Andrew Hunter, the chief operating officer and executive director, respectively, of the two companies and the chief financial officer of Cheung Kong (Holdings) (SEHK: 0001). EDF Energy generates 20 per cent of Britain's electricity from nuclear, gas, coal and wind power stations. Cheung Kong Infrastructure, an energy and infrastructure firm, and Hongkong Electric, the city's oldest power utility, are listed subsidiaries of Cheung Kong, in which Li has a 41.7 per cent stake. EDF Energy, which has 20,000 employees in Britain, is owned by EDF Group, a French state conglomerate. It is one of the three largest European energy firms and the world's biggest nuclear power generator. Noting that EDF Energy's regulated asset value is £4 billion, Hunter said, "In all likelihood, [the bid price] will be a little more than that. EDF Energy has 65 per cent of its regulated asset value as debt, so we don't have to write a cheque for £4 billion." The deadline for the first round of bidding is March 15, after which shortlisted bidders will enter the second round, which is expected to complete the sale by the middle of this year. Hunter said the shareholding split between Cheung Kong Infrastructure and Hongkong Electric in EDF Energy had not yet been determined. "The electricity distribution businesses of EDF are poised to provide very stable returns, which are part of the attraction for Cheung Kong Infrastructure," Natalie Palmer, a spokeswoman for the Hong Kong company. A consortium that includes Australian infrastructure investor Macquarie Group, the Canadian Pension Plan and Abu Dhabi's sovereign wealth fund ADIA is a possible bidder for EDF Energy, according to British press reports. Another possible bidder is a consortium that includes Scottish and Southern Energy along with Canadian pension investor Borealis Infrastructure. Cheung Kong Infrastructure is also in serious negotiations for other possible deals in Europe, North America, Australia and Asia, group managing director Kam Hing-lam said. "With the company's strong cash position of over HK$10 billion, we are well placed to consider large acquisitions that add value to Cheung Kong Infrastructure's portfolio," chairman Victor Li Tzar-kuoi said. "Currently, we are working on a number of international acquisition opportunities in different sectors." Cheung Kong Infrastructure, with (nearly) HK$11 billion cash, would like to buy regulated electricity, gas and water distribution assets in developed countries such as Australia, New Zealand and Britain, Citigroup analysts Pierre Lau and Maggie Mok wrote in a research report. In 2009, Cheung Kong Infrastructure's turnover fell 10.7 per cent to HK$2.18 billion, while its net profit expanded 25.9 per cent to HK$5.57 billion, below Citi's forecast of HK$5.62 billion. The company's profit growth was driven by a 29 per cent increase in earnings from its mainland project portfolio to HK$1.72 billion, a 12 per cent rise in profits from its British operations to HK$616 million, and a 116 per cent jump in its income from Canada. Cheung Kong Infrastructure's total dividend for 2009 is HK$1.20 per share, up 5.8 per cent from 2008. The company's share price closed 1 per cent higher at HK$29.65 yesterday.

A pair of shoes only 7cm long that collector David Ko believes are the world's smallest adult shoes. They are part of an exhibition being held in Plaza Hollywood, Diamond Hill. For centuries, Chinese officials placed restrictions on the colour and style of civilian clothes. But one thing escaped such limitations - women's shoes. Dr David Ko Chi-sheng, a collector of ancient shoes and head of Taiwan's Foot-Binding Culture Museum, said: "One pair of shoes does not have significant meaning, but the whole collection reflects history. Women's shoes changed dramatically over hundreds of years, reflecting not only fashion but also culture and relations between the sexes. Such freedom does not mean much nowadays, but the significance then cannot be underestimated, Ko said. The 54-year-old is exhibiting a selection of 70 shoes and accessories in Hong Kong that reveal the history of Chinese women's shoes, in celebration of International Women's Day on Monday. Among the collection on display is a tiny pair of shoes from Taiwan just 7cm long. Ko said the 100-year-old pair were possibly the smallest adult shoes in the world. The public will also get the chance to see 900-year-old silk stockings and shoes from the Ming dynasty that are more than 500 years old. Ko estimated that 3.5 trillion Chinese women had had their feet bound, which was considered beautiful in the past. Men found them so attractive that drinking glasses were made in the shape of tiny shoes, some of which are also on display. Ko, a medical doctor, studied how binding affects the foot's anatomy. Although the tiny high heels do not look comfortable to modern eyes, they fit women with bound feet better than flat shoes. This is because the front part of their feet is bent, and their heels do not touch the ground. "Many people criticise the wearing of [ancient] high heels, but people would not have worn them for over 1,000 years if they offered no advantages," he said. Ko first became enamoured with shoes when he was only 10 years old. He became a collector when he was 18 and has published three books on the subject. In 44 years, his collection has grown to 6,000 pairs of shoes and 4,000 accessories, which include pieces of lace used to decorate the shoes and heels, and a small iron the size of pen that was used to iron cloth-made shoes. Although he does not know the value of his collection, he estimated each pair to be worth in excess of 10,000 yuan (HK$11,350). The shoes are very fragile, even compared with ancient paper. He keeps half of his collection in vacuum-sealed containers, which cost him NT$1 million (HK$242,540) annually. The exhibition is being held at Plaza Hollywood, Diamond Hill, until March 13.

Major traffic disruption is feared in the Yau Tsim Mong district of West Kowloon when at least six roads are affected by closures to allow construction of a section of the high-speed rail link to Guangzhou. And a district councillor has criticised authorities for failing to submit a traffic impact assessment report for the construction period. The work, in the latter half of this year, will also mean changes to more than 30 franchised bus and green minibus routes. Road diversions will add to travel times on the routes. In a document discussed by the Yau Tsim Mong District Council yesterday, it was revealed that busy roads, including a section of Austin Road West between Canton Road and Lin Cheung Road, will be closed for four years from the third or fourth quarter of this year. A new road may be built adjacent to this section. A large part of Lin Cheung Road will also be closed or involve a diversion before the end of this year. "Not only is there no assessment on traffic impact, there is also no risk assessment on the project's impact to nearby housing," district councillor Chan Wai-keung said. He proposed that construction of the rail link be delayed, but this was rejected by other councillors. The Transport Department did not say how much longer journeys would become, but stressed that road closures would be implemented in five different stages, and a new substitute road would be built before an old one was closed. Transport officials said the area's traffic would be greatly improved after completion of a road improvement scheme. Many new roads - including an extra road that will provide direct access to the northwestern part of the New Territories, and an underpass in Canton Road to separate traffic going in and out of the West Kowloon district - will be built to rationalise the area's traffic. Lin Cheung Road will be widened, while there will be fewer lights to smooth traffic flow. Officials said more details and the impact on traffic during the construction period would be submitted to the council before the commencement of work. Apart from road changes, a new underpass will be built for pedestrians to improve the connection between West Kowloon and the Jordan MTR station. The government recommended that the tunnel be built along Po Ning Road. In January, the Legislative Council approved HK$66.9 billion in funding for construction of the high-speed rail link.

Despite unveiling a second successive fall in annual profit, Hong Kong Exchanges and Clearing gave staff a pay rise and left its dividend policy unchanged.

Hongkong Land Holdings, the biggest landlord in Central, yesterday announced a 107.2 per cent jump in its underlying earnings for 2009 and sounded a cautiously optimistic note for this year.

Hong Kong home prices recorded the strongest inflation-adjusted gains in a survey of 34 property markets last year, followed by Taiwan. The Global Property Guide's 2009 survey of residential property prices showed Hong Kong housing prices ended the year up 20.8 per cent in real terms against 2008 year-end prices, after a 15 per cent decline in last year's first quarter triggered by the global financial crisis. Taiwan was ranked second after its recovery from the global property slump in the first quarter of 2009, with home prices up 18.3 per cent. The online property research firm said that in the last quarter of 2009, home prices rose in 22 of the 34 countries for which quarterly statistics were available, and fell in the remaining 12 countries. The worst performer was Latvia. Home prices in the capital, Riga, ended 2009 down 50.2 per cent, after declining 36.9 per cent in 2008. Dubai prices fell 43.3 per cent last year after surging 42.7 per cent in 2008. The recovery in Hong Kong took property prices comfortably back above pre-crisis levels. In Singapore they took a roller-coaster ride in 2009 after a decline in inflation-adjusted terms of 9.6 per cent in 2008. After extending price falls into the first half of 2009, home prices rose 14.3 per cent in the second half to end the year up 2.1 per cent. The survey showed that, compared with other Asian countries, Japan's recovery is slow. The average price of existing condominium sales in the country was up by a meagre 0.8 per cent in inflation-adjusted terms during the year to the end of 2009, according to the research house. The return to positive territory for the year-end data was the result of a 3.5 per cent increase in prices during the final quarter of the year. In Australia and New Zealand, home prices increased by 11.3 per cent and 4.9 per cent, respectively. But in Thailand, housing prices ended the year down by 15.6 per cent compared with the end of 2008, after a 1.9 per cent recovery in the last quarter. Global Property Guide's survey data used price changes after inflation, which provide a more realistic picture than the nominal figures that are usually preferred by real estate agents. Although the survey pointed to a general recovery in worldwide property markets in the third or fourth quarter last year, it has been uneven, according to a commentary attached to the data. While some countries in Asia rapidly recovered, housing markets in some of the world's worst-hit countries continued to decline. In the United States, home prices fell by 0.3 per cent in inflation-adjusted terms in the fourth quarter, or by minus 2.6 per cent over the full year of 2009, according to the Federal Housing Finance Agency's purchase-only index, the most authoritative US index. In Canada, housing prices declined 2.2 per cent to the end of 2009. But the home price index stopped falling in September, suggesting a recovery was under way as the year drew to a close.

The Elderly Commission has backed a call to let people spell out what health treatment they want before they reach the stage of being unable to make a decision due to illness or incapacity.

China*: Central government spending is poised to grow more slowly this year - at just half the rate it did last year - as Beijing seeks to wean the economy off the massive stimulus introduced to tackle the effects of the global financial crisis, calculations based on figures released yesterday show. National People's Congress parliamentary spokesman Li Zhaoxing told a news conference yesterday that China's military budget for 2010 would be 532.1 billion yuan (HK$604.2 billion), accounting for 6.3 per cent of planned government spending.

China has offered to relieve the European Union's naval escorts of UN food shipments to Somalia - an expansion of the People's Liberation Army Navy's historic Indian Ocean deployment that is likely to see it face greater risks. In an unprecedented act, PLA Navy officers offered to ease the EU's escort burden during a monthly meeting in Bahrain this week of international navies involved in fighting pirates plaguing vital Asia-Europe shipping lanes off the Horn of Africa. The EU had not formally requested assistance but had made clear internationally that its naval force was struggling to cope with increasing escort demands and a worsening piracy crisis. Somali pirates now deploy mother ships to range far out into the Indian Ocean. Such raids are expected to become more frequent during monsoonal calms in April and May. The World Food Programme, meanwhile, has warned of a worsening humanitarian crisis across the failed state, with more than 3.6 million people - half its population - needing outside help. "China has been very forward leaning on this," said one envoy involved in the meetings. "They made the offer out of the blue without being asked, but it is exactly what is needed - it is a very welcome offer given the strain now being felt by EU naval forces." It is understood both Nato and the US-led Combined Maritime Forces flotillas had made clear they were already stretched with broadening commitments and would not be able to help the EU, which has committed to running escort patrols until the end of this year. It is expected to continue the effort for at least another two years. If successful, the offer will require the PLA to co-operate even more closely with EU counterparts as well as international commercial shipping. It will also mean PLA naval ships must sail much closer to the lawless Somali coast.

China's military spending for this year will rise by 7.5 per cent, the smallest defence budget increase in nearly two decades.

Egypt, which touts itself as the "gateway to Africa", aims to get more Chinese firms involved in its information technology and telecommunications development as China's investments in the country continue to rise. "We are now looking East after years of being focused on the United States and Europe," said Tarek Mohamed Kamel, the Egyptian minister of communications and information technology who was in Hong Kong yesterday as part of a business delegation to drum up investment from Asia. Telecoms equipment manufacturers Huawei Technologies and ZTE Corp (SEHK: 0763) were the two leading hi-tech firms from China investing in Egypt, Kamel said. The delegation's visit comes after Prime Minister Wen Jiabao pledged at a forum on China-Africa co-operation in Egypt last November to give African countries US$10 billion in concessional loans. That assistance highlighted Beijing's growing economic influence in the continent. China is now Egypt's 22nd largest source of foreign direct investment. "We expect investments from China to continue expanding, building on the strong levels recorded over the past five years," Mahmoud Mohieldin, Egypt's minister of investment, said. "Chinese companies have increasingly turned to Egypt for opportunities in our well-developed local market as a launch pad into Africa and as a strategic location for the rest of the Middle East as well as for Europe." There were 1,022 Chinese companies doing business in Egypt, representing total investments to date worth US$307 million, the vast majority in the past five years, the Arab country's General Authority for Investment said. "The information and communications technologies sector represents about 3.8 per cent of our annual gross domestic product of 1.1 trillion Egyptian pounds [US$1.54 trillion]," Kamel said. "Chinese companies like Huawei and ZTE are benefiting from the sector's 12 to 13 per cent average annual growth rate over the past five years. "We're encouraging Chinese firms in this sector to grow their operations in the country and make use of Egyptian talents to tackle other markets in the Arab region, Africa and Europe." Huawei, China's largest telecoms and networking equipment maker, last November opened a regional training centre, with US$20 million worth of equipment, at Smart Village Cairo, Egypt's prime technology and business park. Kamel said that since 2004, ZTE had cemented its position as the largest provider of CDMA-standard equipment for Telecom Egypt.

Women judges show their robes on the red carpet to mark the International Women's Day, which falls on March 8, in Jinan, capital city of east China's Shandong province, March 4, 2010.

Women judges in evening dresses walk on the red carpet to celebrate the upcoming International Women's Day in Jinan, capital city of east China's Shandong province, March 4, 2010.

Picturesque scenery in Baise’s Jiuzhou township. This city in the Guangxi Zhuang autonomous region is noted as a place of history - from both a very long time ago and modern China. Discovery of a Paleolithic Age hand ax in some 800,000 years ago in Baise in 1970s surprised anthropologists and rewrote the history of human civilization in Asia.

March 5, 2010

Hong Kong*: Standard Chartered met expectations with a 13 per cent jump in last year’s profit, as strong investment banking growth in its core Asian markets offset bad debts in the Middle East.

Life at the United Services Recreation Club, an enclave of relaxation within a military barracks, goes on pretty much as it has for the better part of a century, but with one big difference: none of the service personnel from the barracks use it. Established in 1911 in the Gun Club Hill barracks in Tsim Sha Tsui, primarily for the use of the colonial British garrison, it was also opened to the public and by the handover in 1997 had few service members. It was handed over intact to the People's Liberation Army, together with the barracks, at the request of the Chinese side and is now run as a private club for members of the public able to afford a HK$100,000 joining fee and HK$1,100 a month. According to the security chief, the PLA has nothing to do with its management, although pre-handover documents said the garrison chief should be responsible for its management. Now, lawmakers are questioning why the prime site in Gascoigne Road, with its tennis and squash courts, lawn bowls green and restaurant, should remain in military hands if it isn't being used for military purposes. At a Legislative Council meeting yesterday, unionist Lee Cheuk-yan suggested the site be used for other purposes. He noted that Article 13 of Garrison Law provided that, with the approval of the central government, the Hong Kong government could acquire any military site not used for military purposes without payment. Cyd Ho Sau-lan, of Civic Act-up, said the club was being used for purposes unrelated to defence and suggested the government seek Beijing's approval to acquire the site for community use. Secretary for Security Ambrose Lee Siu-kwong said according to the Exchange of Notes in 1994 between the Chinese and British governments on the future use of military sites in Hong Kong, "from July 1, 1997, the United Services Recreation Club will continue to enjoy the use of all facilities on the same terms as at present". The notes also stated that "the commanding officer of the Chinese garrison or his representative will assume the responsibilities for the direction and control of the club", Lee said. But the security bureau understood that the PLA neither took part in the daily management of the club, nor shared any of the club's income. "The PLA and their families in Hong Kong have not been using this club," Lee said, adding that the Hong Kong government did not have the right to ask the PLA how it directed and controlled the club. "I don't want to speculate on the reasons that the PLA and their families are not using this club, and I don't know when they will use it in future," Lee said. But he said the club's revenue - HK$28 million in 2008, according to its annual report - was used for membership and facilities upkeep and did not involve any violation of the Garrison Law that prohibited it from engaging in profit-making activities. "Certainly, the Hong Kong government would be happy if we could acquire military sites from the central government without any consideration," Lee said. But he said the government saw no need to invoke the Garrison Law to acquire any military sites for public use. A garrison spokesman said the PLA did not participate in the management and daily operation of the club and did not receive any rent or income from it. He said army members' families - including parents, spouses and children - could visit officers in Hong Kong and officers could return to the mainland on their annual holidays for recreation. The PLA refused to disclose the number of officers based in Hong Kong, saying it was an internal issue and it ensured there were enough officers in the city for security needs.

A row over the television coverage of the 2010 World Cup soccer matches showed little sign of ending yesterday after rights holder i-Cable (SEHK: 1097) said it had no obligation to sub-license the event to the two free-to-air stations. Less than 100 days before the kick-off in South Africa, the pay-TV operator said it would speed up connecting its Cable TV Channel 1 - offered at HK$10 for a life subscription - to households. The channel will carry four matches, including the semi-finals and final, and daily highlights. Since the channel is virtually free, this meets the Fifa requirement to show a minimum number of games to a wide audience, the operator says. Talks between i-Cable and the two broadcasters were scrapped last week after TVB (SEHK: 0511) and ATV rejected the cable company's contract terms. According to that proposal, the two stations would be allowed to relay the signals carried by Cable TV Channel 1, but would have to carry associated programming, advertising and promotional material. This was in sharp contrast to arrangements for the two previous World Cups - for which i-Cable also had exclusive rights - when some matches were sub-licensed to the free broadcasters and they were allowed to repackage it with their own programs. TVB's general manager for broadcasting, Cheong Shin-keong, had said the new arrangement was against the company's principles and TVB would not accept such terms even if it did not have to pay. The government has pleaded with the companies to settle the issue in the public interest. Samuel Tsang, i-Cable's World Cup project manager, insisted yesterday the company was in full compliance with its agreement with Fifa, football's governing body. He said i-Cable had no obligation to sub-license to TVB or ATV, and that its proposed sub-licensing arrangements were in line with its agreement. "World Cup broadcasting rights were open for bidding by all Hong Kong TV operators, including the two free-to-air stations," he said. "The fact we are the successful bidder speaks much about the importance [TVB and ATV] had given to 'viewers' interests' they are talking about." A member of senior management said Cable TV's decision was based on past experience. "We were not able to make profits as the audiences and the adverts were seized by the free broadcasters," he said. Both TVB and ATV said they still hoped to strike a deal with i-Cable. "Different stations can present the World Cup matches in different ways and it has always been the case in the past," a TVB spokeswoman said. "It is the only way to offer the public a choice." ATV and TVB have written to Fifa, but the World Cup organisers have yet to reply. A person familiar with TVB and ATV's position conceded they could do nothing if i-Cable insisted on sticking to its proposal. "It is an event that attracts the attention of everybody in the city and the public should be able to view it for free."

Hongkong Electric (SEHK: 0006) Holdings expects an even larger contribution from its overseas portfolio this year after it provided a much-needed cushion to tumbling profitability on its home turf last year. The utility, ultimately held by Li Ka-shing, said yesterday net profit fell 17 per cent to HK$6.69 billion last year, or HK$3.14 per share, on turnover of HK$10.39 billion, which was down 18.63 per cent. However, the decline was less severe than analysts' forecasts. The combined electricity generation and distribution assets on the mainland, in Australia, Britain, Canada and New Zealand doubled earnings to HK$2.05 billion last year from HK$1.02 billion previously, driven by strong economic recovery in Guangdong in the second half of the year. This helped offset a 31 per cent drop in profit to HK$4.61 billion from its core electricity supply on Hong Kong and Lamma islands when the new scheme of control agreement took effect and pared the return on the fixed net assets of the city's two power utilities to 9.99 per cent from 13.5-15 per cent. Hongkong Electric, which has its core earnings tied to expenditure on power assets, spent HK$2.75 billion last year - 32 per cent more than in 2008 - largely on installing desulphurisation facilities at its Lamma plant. A company spokeswoman said China and Australia were the biggest overseas contributors, each accounting for 30 per cent of the group's HK$2.05 billion offshore earnings. She said three newly acquired power plants performed better than expected due to a rebound in manufacturing activities in Guangdong and stable coal prices. A year ago, Hongkong Electric bought from its parent, Cheung Kong Infrastructure Holdings (SEHK: 1038), a 45 per cent stake in each of the plants - a 1,400 megawatt power station and a neighboring 1,200 MW Jinwan plant in Zhuhai, and a 200 MW plant in Siping in Jilin province - for HK$5.68 billion. An analyst with an American brokerage said mainland coal prices would jump 10 per cent this year, which would be a challenge for Hongkong Electric's China portfolio. "The question is whether Hongkong Electric can sustain the growth this year," he said. "If demand and tariff don't grow fast enough, its profitability will be eroded by higher coal costs." Uncertainty also surrounds ETSA Utilities, the sole electricity distributor in South Australia and a key asset of the group, whose tariff proposal for the five years to 2015 is under consideration by Australian Energy Regulator. The regulator is due to make a decision next month on a plan that seeks a 3 per cent increase in electricity tariffs in each of the next five years. Hongkong Electric's final dividend is HK$1.49 per share, meaning the full-year payout will be HK$2.11, the same as in the previous year. The company's shares fell HK$1.10 or 2.44 per cent to HK$43.95 yesterday after the results announcement.

Hong Kong's banking watchdog has acted to head off a damaging mortgage price war by setting guidance floors on mortgage rates, and warning lenders of default risks in a property market correction. The move came after banking giant HSBC last month launched the city's lowest mortgage rate - a 0.65 percentage point premium to the one-month Hong Kong interbank offered rate (Hibor). HSBC's offer, the lowest in 20 years, was soon matched by its rivals. The Hong Kong Monetary Authority fears that the intense price competition in mortgages is not sustainable and puts smaller banks at risk in the event property prices slide and global interest rates rise. With Hibor at about 0.08 per cent yesterday, HSBC's effective offered rate was 0.73 per cent. It was the first time HSBC had launched a Hibor-linked mortgage product and came after it lost market share to other banks offering such products. The authority said it had held meetings with banks about their lending practices and was concerned about "whether banks' pricing decisions ignored the potential adverse impact of future increases in funding costs or delinquency levels on their financial soundness". It told banks their pricing framework needs to include a "reference level" that takes into account their capital, credit costs, expenses, incentives for customers and delinquency assumptions. ICBC (Asia) (SEHK: 0349) deputy general manager Stanley Wong Yuen-fai told Bloomberg the authority had set the level at 0.7 percentage point above the one-month Hibor and 3.1 percentage points below the banks' prime mortgage rate. The authority's spokesman would not comment on the reference levels but said "if a bank's existing mortgage rate is lower than what we consider to be sustainable, we will discuss with the bank to see how it can justify its rate on risk management grounds and ensure the sustainability of its mortgage rates through an economic cycle". While the authority does not impose interest rates on banks, it has the power to require banks to rectify lending practices it deems may endanger the banking system. Fuelled by ultra-low interest rates and a flood of liquidity from global economic stimulus measures, Hong Kong mass-market property prices rose 30 per cent last year while those of luxury homes surged 40 per cent. Speaking on the sidelines of the China People's Political Consultative Conference in Beijing, Hongkong and Shanghai Banking (SEHK: 0005) Corp chairman Vincent Cheng Hoi-chuen denied that the lender was leading the price war. He said even without floors on rates, mortgage lending would not spin out of control, given banks exist to make profits, and that local mortgage delinquencies were low even during the Asian financial crisis. But the HKMA said banks should avoid placing "undue reliance" on historical data when doing their risk management. In particular, it warned that unlike the 1997-98 Asian financial crisis, when declining interest rates reduced default risks, this "might not repeat itself when the next decline in the property market takes place". Nomura Securities analyst Grace Wu said as the suggested floor prices were not far off the most aggressive offers in the market, they would not have a big impact on mortgage rates. But they will favour large banks over small ones as the big lenders' funding cost is close to zero, while the small players have to borrow from the interbank market to finance their loans. Smaller banks will have a hard time justifying further aggressive pricing moves to the authority, Core Pacific-Yamaichi Securities analyst Lee Yuk-kei said.

Levy plan fails to dampen demand - Policy measures introduced last week to raise the cost of buying homes in Hong Kong's booming luxury market have so far had little impact on buying demand, agents say.

New World Development and Wheelock Properties (SEHK: 0049) have agreed to pay more than HK$9,100 per square foot for MTR Corp's HK$18 billion Austin Station project in West Kowloon, signalling that they expect prices in the area to continue to soar. MTR Corp announced yesterday that the New World-Wheelock consortium won the tender for the luxury residential project above Austin Station. The Lands Department has imposed a land premium levy of about HK$11.71 billion, or HK$9,130 per sq ft, for the site, its most expensive land premium levy ever. "They [developers] are obviously expecting property prices for the project to hit a record or they wouldn't have bid for the site," said Wong Leung-sing, an associate director of research at Centaline Property Agency. "The area will be the new city centre for Hong Kong. Every developer has to get a development project in the area. That's why developers were willing to bid aggressively for the site." Nelson Chan Cheong-kit, a director at Lanbase Surveyors, predicted that property prices for the project may reach HK$20,000 to HK$30,000 per square foot when it launches. Stewart Leung Chi-kin, an executive director at New World Development, said the consortium had submitted two profit-sharing proposals for the site based on two scenarios. One assumed the MTR Corp would pay one third of the premium, and the second scenario assumed that New World and Wheelock would have to pay the premium between them. In the end, MTR Corp chose to pay one-third of the premium. Including construction costs, interest expenses and profit sharing with the railway operator, the average land price for the site in terms of the gross floor area is higher than the current prices of the estates above Kowloon Station. Property prices above Kowloon Station jumped 50 per cent last year, the steepest jump in the area. It is the first project that New World Development has acquired in a public tender since it won the tender for MTR Corp's HK$6 billion Che Kung Temple Station in Sha Tin in April last year. The luxury residential project will be built on 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.

Hong Kong delegates will likely touch upon local political reform when they meet a state leader in Beijing during the National People's Congress and the Chinese People's Political Consultative Conference this week.

Logistics firm DHL plans to invest HK$360 million to expand its Hong Kong operations into a one-stop facility to cater for growth in the region. Seven new transportation hubs will also be established in the mainland taking the total there to 67, said DHL Supply Chain Asia Pacific chief executive Paul Graham. "We are going to develop Hong Kong as the distribution center in Asia Pacific for our key industries because of its strategic importance as a market and a major gateway to Greater China," said Victor Mok, DHL Supply Chain executive vice president in Greater China. Graham added:" Although the logistics market here is not mature enough, we will continue to expand in Greater China as it is the fastest growing region of our business." The company is looking to develop its business further in second- and third- tier mainland cities, he added. DHL, the leading logistics provider globally, has developed its Hong Kong base as a hub for many leading retail brands, offering warehousing and distribution service. It also arranges for manufactured goods from the mainland to be brought to Hong Kong for distribution elsewhere. The logistics provider's one-stop unit on Tsing Yi will have a total gross floor area of 2.39 million square feet when it is completed in January 2012. It will employ more than 300 people. Mok predicts the facility will allow DHL to grow faster in the region. He said it wants to help keep Hong Kong as an international logistics center.

Chinese President Hu Jintao (L), who is also General Secretary of the Central Committee of the Communist Party of China, talks with Tung Chee-hwa, vice chairman of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), before the opening meeting of the Third Session of the 11th CPPCC National Committee at the Great Hall of the People in Beijing, capital of China, March 3, 2010.

China*: A push for economic growth and improved living standards in the coming years will top the agenda at the National People's Congress from Friday.

Top Communist Party of China (CPC) and state leaders Hu Jintao (C, Front), Wu Bangguo (2nd R, Front), Wen Jiabao (2nd L, Front), Jia Qinglin (1st R, Front), Li Changchun (1st L, Front), Xi Jinping (2nd L, Back), Li Keqiang (2nd R, Back), He Guoqiang (1st L, Back) and Zhou Yongkang (1st R, Back) walk to attend the opening meeting of the Third Session of the 11th National Committee of the Chinese People's Political Consultative Conference (CPPCC) at the Great Hall of the People in Beijing, capital of China, March 3, 2010.

Former Olympic 110-metres hurdles champion Liu Xiang arrives as a delegate for the opening session of the Chinese People's Political Consultative Conference in the Great Hall of the People in Beijing yesterday. Liu will submit a proposal calling for better working conditions and social security benefits for the nation's sports coaches.

China Merchants Bank (SEHK: 3968) said on Wednesday it had applied to open an office in Taiwan, as mainland banks rush to build up a presence on the island after the signing of a cross-strait financial services agreement last year. The bank, the sixth largest in mainland, is aiming to initially open a representative office in Taiwan, a former political rival that all but banned such investments before a recent thawing in ties across the Taiwan Strait. “We have many Taiwanese clients on the mainland,” China Merchants Bank president Ma Weihua said on the sidelines of the opening Chinese People’s Political Consultative Conference in Beijing. “We’ll be able to know our clients better through a representative office in Taiwan.” Business ties have flourished across the Taiwan Strait in the last 20 years, but financial firms in mainland and Taiwan were largely prevented from investing in each others’ markets as tensions lingered between the former rivals. That has changed under the administration of Beijing-friendly Taiwan President Ma Ying-jeou, who has eased many restrictions on travel and investment between Taiwan and mainland in the nearly two years since he took office. A number of banks on both sides of the strait have expressed interest in opening branches or taking stakes in cross-strait peers since Taiwan and Beijing signed a memorandum of understanding late last year paving the way for such investments. Bank of China, mainland’s biggest foreign exchange lender, said earlier this year it would apply to set up outlets in Taiwan. Sources also previously had told that ICBC, mainland’s largest bank, was interested in buying a stake in Cathay Financial, Taiwan’s largest financial holding company. ICBC later denied it had any such plans.

China Mobile (SEHK: 0941) said it is in preliminary talks to take a stake in Shanghai Pudong Development Bank, forming an alliance that could speed up its move into mobile financial services. The world’s largest mobile carrier, which has more than 500 million subscribers, would take the stake via a potential subscription of new shares from Pudong Bank, China Mobile said in a statement on Wednesday. China Mobile said it was also in talks about a potential strategic co-operation with the bank, but could not give a timeframe for the subscription – if and when it proceeds. Shanghai Pudong Development Bank, part-owned by Citigroup, planned to raise about 40 billion yuan (HK$45 billion) by selling a roughly 20 per cent stake to China Mobile, two brokerages said last week. Listed companies in mainland sometimes brief analysts about major developments ahead of official announcements, but after share trading suspensions. Analysts say the strategic investment would help boost Pudong Bank’s profitability and may expedite the adoption of China Mobile’s nascent mobile payment system nationwide ahead of its rivals at home. Mid-sized Pudong Bank is joining other major mainland lenders, including Bank of Communications (SEHK: 3328) (BoCom) and China Merchants Bank (SEHK: 3968), to raise cash to replenish capital bases that were weakened by last year’s lending spree and in order to meet tighter capital rules. The fundraising would boost Pudong Bank’s core capital adequacy ratio by about four percentage points to above 10 per cent, while boosting its capital adequacy ratio to nearly 14 per cent, Guotai Junan analyst Wu Yonggang said in a research report. Mainland banks lent nearly 10 trillion yuan last year to support government stimulus, weakening their balance sheets. Several banks have announced fundraising plans in recent months. This week, BoCom, mainland’s fifth-biggest lender by assets, said it planned to raise as much as US$6.1 billion via a rights issue in Shanghai and Hong Kong to bolster capital.

Beijing has yet to confirm whether President Hu Jintao will attend a nuclear security summit in Washington next month as two senior American diplomats prepare to leave China today after a fence-mending visit. The decision will send out a strong signal about the direction the bilateral relationship is heading. Persuading Hu to attend the summit - to be chaired by US President Barack Obama - has been at the top of the agenda for US Deputy Secretary of State James Steinberg and the National Security Council's Asian affairs director, Jeffrey Bader, since they arrived in Beijing on Tuesday.

China replaced the United States as the world's largest commercial real estate investment market last year and is likely to retain that position as global money flows improve as the country's economy grows, according to a report by property consultancy Cushman & Wakefield. But some analysts warned that proposed regulatory changes concerning offshore transactions may limit foreign investment on the mainland, which is now dominated by local players. In its newly released summary report on global investment market trends, Cushman & Wakefield said real estate investment in China grew 143 per cent to US$156.2 billion last year, while falling in the US by 64 per cent to US$38.3 billion. Excluding residential investments, the US ranked third after China and the UK. The US, which topped the rankings in 2008, saw its property market hurt by high levels of unpaid debt and reluctance among banks to lend as they cleaned up their balance sheets, Cushman & Wakefield said. "We strongly believe that 2010 will be the year of unprecedented real estate investment activity in China," said Richard Middleton, executive managing director of Cushman & Wakefield's Greater China operations. However, there was concern that proposed regulatory changes on the mainland regarding offshore transactions might limit foreign investment, Jones Lang LaSalle said in its latest research report, although it did not make specific reference to any. China is also taking measures to cool off skyrocketing home prices, including a re-imposed sales tax on homes sold within five years of their purchase, and the People's Bank of China raised the proportion of deposits banks must set aside as reserves, to reduce lending. "China will continue to see vibrant investment activity despite recent government measures to cool down the property markets," Donald Han, Cushman & Wakefield's managing director for Asia-Pacific capital markets, said in the report. China's real gross domestic product growth accelerated to 10.7 per cent year on year in the fourth quarter last year, and the full-year growth of 8.7 per cent exceeded the government's 8 per cent target. Cushman & Wakefied said eight of the world's 20 largest property investment markets last year were located in the Asia-Pacific region, with Hong Kong, Taiwan and New Zealand registering gains in investment. Looking ahead, Jones Lang LaSalle anticipates a 30 to 40 per cent increase in direct commercial real estate investment volumes globally this year as the economic recovery continues. The US real estate investment market, as it is coming from a low base, may be poised to see the fastest rate of growth, a projected 50 to 60 per cent. Expected volume growth in the Asia-Pacific is 30 to 50 per cent, and in Europe, 20 to 30 per cent.

The US pavilion is "guaranteed" to be ready for the Shanghai World Expo's opening ceremony despite concerns about national buildings running late, the project's head official vowed yesterday. "I guarantee it. We're going to be open on May 1," US expo pavilion commissioner-general Jose Villarreal said. "Everybody knows that not opening on May 1 is not an option. The reason for my visit is to reinforce that point." Expo officials recently suggested that as many as a fifth of self-built national pavilions may not be finished in time for the opening ceremony, due in part to the complexities of having such a large number of building projects next to one another. Villarreal said the US - one of the largest and most highly anticipated attractions on the 5.3-square-kilometre site - was not being given any leeway in the timetable. "I think we are held to a little bit of a different standard, and we are certainly holding ourselves to a little bit of a different standard," he said. Villarreal conceded there had been some delays but they were due to the "very compressed period of time that we have been dealing with". "You just cannot underestimate the difficulty associated with a late start," he said. "You just don't have a lot of margin for error." The US was one of the last countries to sign up for the expo due to funding worries, and the question mark hanging over the country's attendance until the middle of last year was a source of embarrassment for Shanghai officials. The US pavilion is one of a few representing nations at the Expo that are not paid for by public money. The budget for the US$61 million project had to come entirely from private donations. Villarreal said members of the organising committee had likened the fund-raising process to "building a bicycle while you're riding it", but they were now nearing their target. "We are probably about US$8 million shy of our goal," he said, adding he had no concerns about raising the remaining money. "Obviously over the six months of the expo we can continue raising funds for our operational costs," he said. "I hope I don't have to do that." Villarreal reports directly to Secretary of State Hillary Rodham Clinton, who has a "deep personal interest" in the project. Villarreal said he was a little bit concerned about the pavilion's capacity to cope with the number of visitors expected. It is estimated to be able to handle about six million visitors over the course of the expo. That's an average of 33,000 per day, a fraction of the expected 400,000 daily visitors to the overall expo site. "The surveys all seem to indicate that the US pavilion, after the China pavilion, is the pavilion that most Chinese people want to visit," Villarreal said. "We have ranked at the top of that list every time that somebody has done a survey. I don't want to see a bunch of disappointed people."

China plans to launch an unmanned space module, Tiangong-1, in 2011, which is expected to accomplish the country's first space docking and regarded as an essential step toward building a space station, an expert said Wednesday.

The People's Liberation Army (PLA) navy is all set to dispatch two ships to the Gulf of Aden on Thursday to aid international efforts to combat piracy off the waters near Somalia, a senior naval commander told reporters here on Wednesday. Destroyer Guangzhou and supply ship Weishanhu will set sail from the port of Sanya in Hainan province and will be joined by frigate Chaohu, which had been dispatched to the region in December to complement the fourth batch of ships, Zhang Wendan, senior colonel and deputy chief of staff of China's South Sea Fleet said. More ships are also likely to be deployed in future, as the threat posed by Somali pirates has not abated.

March 4, 2010

Hong Kong*: The government is inviting tenders in 2011 to transform the 40-year-old Murray Building in Garden Road in Central into a luxury hotel, the Development Bureau announced on Tuesday. Bureau deputy secretary Gracie Foo Siu-wai told reporters the site would be leased for 50 years. Applicants are required to come up with detailed plans to show how the building could be preserved. “The government-owned building is not graded as a historic building, but we would like the developer to preserve some old features, the exterior design and greenery,” she told reporters. Foo said over 20 per cent of the area must be covered in greenery – including the roof and the body of the building. “At least 370 square metres of public open space must be provided upon completion,” she added. Foo said that the hotel would provide 300 hotel rooms when finished. The 27-storey Murray Building in Central measures about 42,650 square metres. It was built in 1969 and is currently being used as government offices. The offices are to be moved to the new government complex on the Tamar site in late 2011. In 1994, the building won a building award for energy efficiency because its windows were oriented to reduce exposure to sunlight. Chief Executive Donald Tsang Yam-kuen, announcing conservation initiatives last year in his policy address, said the site would be developed into a hotel. The building has a prime location close to the Peak Tram and Hong Kong Park.

HSBC Holdings (0005) posted a disappointing 2 percent rise in annual net profit - missing market estimates - after a decrease in the value of debt. Net profit for the 12 months to December rose to just US$5.83 billion (HK$45.47 billion), from a dire US$5.72 billion the previous year at the height of the financial crisis. Profit in 2007 was US$19.13 billion. The number fell short of analysts' expectations of between US$6.649 billion and US$11.72 billion. Following the announcement, London-listed shares fell as much as 5.4 percent to 680.9 pence as at 4pm London time, down 9.1 percent from the Hong Kong close. In New York, ADRs were trading at the equivalent of HK$78.65. Investor guru Tony Measor, a long- time shareholder of HSBC, said he was disappointed by the results. "I went along with the majority and was expecting the lender to have a profit of about US$10 billion but finally it only reported US$6 billion," he said. Loan impairment charges and other credit risk provisions rose to US$26.5 billion last year from US$24.9 billion in 2008. This was despite a significant improvement in US loan impairment charges to US$13.5 billion, from US$15.3 billion. HSBC now expects broader impairment charges to decline in 2010. But excluding a one-off revaluation loss of US$6.5 billion, the bank's underlying pretax profit was up 56 percent to US$13.3 billion from a year ago. Group chief executive Michael Geoghegan insisted the performance was " no slouch." HSBC's Global Banking and Markets investment banking arm saw pretax profit for the year rise to US$10.5 billion from US$3 billion a year earlier thanks to improved market conditions. Earnings per share dropped 17 percent to US$0.34, which was fully paid out as final dividends. A final dividend of 10 US cents was declared. But the payout ratio was still down a whopping 226.8 percent from 2008. Excluding fair-value changes of own debt due to credit spread, return on shareholders' equity was 9.2 percent. While the group's medium-term target is between 15 and 19 percent, Geoghegan said ROE is likely to be at the low end of the target, given current market conditions and proposed capital requirements. Geoghegan said HSBC had a stronger-than-expected performance in January. Ten major investment banks had estimated HSBC's profit to grow by between 16.1 percent and 107 percent. Morgan Stanley had forecast a 35 percent decline. Geoghegan said market expectations were higher since many analysts had ignored fair value changes. UBS, for example, had estimated the bank would post a 107 percent profit growth to US$11.7 billion. Meanwhile, City University associate professor Chan Yan-chong said he was not disappointed, given a 56 percent increase in core profit. "It's only the fair values of bad debts that people have got wrong. They're complicated and difficult to forecast." Its Hong Kong shares closed up 0.93 percent, at HK$86.85, before the results were announced.

Hang Seng Bank (0011) said net profit declined 6.2 percent to HK$13.22 billion last year, which was in line with market estimates. But analysts were surprised that the total dividend decreased 17.46 percent to HK$5.20 per share from HK$6.30 in the previous two years, while the fourth interim dividend was HK$1.90 per share. The lender plans to subscribe to a rights issue of [Fujian-based] Industrial Bank and to prepare for the potential tightening of capital requirement by global regulators, said chief executive Margaret Leung Ko May-yee. "We are going to spend 2.3 billion yuan, which equals to HK$2.6 billion, on Industrial Bank," said Leung. "Interest rates are expected to stay low this year and no doubt our net interest margin will be under pressure." Leung also said it is hard to say if governments will exit from their loose monetary policies this year. She believes there is more room for development in the mainland but the bank currently has no plans to open more branches there. Mainland outlets contributed 13.3 percent to last year's profit compared with 11.9 percent in 2008. Non-interest income fell by 15.4 percent. But the figure grew 13.5 percent in the the second half over the first. Leung said sales of wealth management products will lead to growth of non-interest income services. Turning to staff matters, she said only those who performed well are eligible for a pay rise. Hong Kong employees will get a raise of between 1 and 4.5 percent or a bonus of up to five months' pay. Mainland staff will have an increment of 4.75 to 8 percent or a bonus of up to 3 months' salary. The bank plans to hire 500 more staff in Hong Kong and 100 to 200 in the mainland, Leung said. Vice chairman and chief executive for Hang Seng China Dorothy Sit said the bank aims to reduce its loan-deposit ratio to 75 percent by the end of next year. Hang Seng Bank shares rose 1.23 percent to HK$114.90 yesterday.

Does the financial secretary see eye to eye with his boss, Chief Executive Donald Tsang Yam-kuen, over government policies? Under the doctrine of collective responsibility, which requires officials to promote policies whether they agree with them or not, we would never know. But John Tsang Chun-wah offered students some insight on the matter yesterday. "We have too many [disputes]," he told them during a discussion about his budget speech delivered last week. "Is Donald a good boss? He should be counted as one, but that doesn't mean we don't have differences," Tsang told one questioner. "During the policymaking process, we always argue until our faces turn red." Still, he characterised these arguments as rational discussions. Tsang faced a range of questions at a forum yesterday organised by the Federation of Youth Groups. Students asked about the lack of measures in the budget to rein in fastrising property prices, and questioned whether steps announced to help the needy were adequate. The financial secretary reiterated that the HK$20.4 billion in relief measures for households he announced in the budget - including salaries tax and rates rebates and a partial waiver of public housing rent - were in addition to considerable regular spending on public services. He said that while his budget was not perfect, he had followed policy directions laid down by the chief executive in his policy address last year. Tsang is seen by some as a dark-horse candidate for chief executive. While none of the students asked him directly whether he had any ambition to fill Donald Tsang's shoes, some were interested to know what he considered his noteworthy personal qualities to be. "The most important thing is that I have always tried to fulfil my duties with all my heart," Tsang said. "This is what I have achieved." Meanwhile, fewer than three in 10 people polled by Chinese University said they were satisfied with the budget and 43.4 per cent thought it only "so-so". Nearly one in six of the 752 respondents were dissatisfied with it. Forty-four per cent of those polled said the budget had not done enough for the middle class, and 31 per cent said it had done too little for the poor. Overall, respondents gave the budget a score of 58.1 per cent out of 100. Still, the survey found Tsang's popularity rose 2.1 points to 56.8 out of 100 after be delivered his budget. It also found dissatisfaction with the government had dropped 6.5 percentage points in a month, to 28.1 per cent. The survey had a margin for error of plus or minus 3.57 per cent.

A record high of almost 5.5 million people visited Hong Kong in the first eight weeks of the year, up 18.2 per cent from a year ago, Tourism Board chairman James Tien Pei-chun said yesterday. Visitors from long-haul markets, which have been hit hard by the credit crunch and global downturn, were up more than 9.7 per cent year on year, Tien said. "The outlook in general is healthy," he said as he gave the board's annual tourism overview. The relatively strong turnaround should be put in perspective, however; the base of comparison is a low one, since visitor numbers from nearly all markets dropped last year. The board has set a target of 31.1 million visitors this year, up 5.2 per cent from last year, and estimates overnight visitors' average spending will grow by 2.5 per cent, to HK$5,790 each per trip. However, the average length of stay per visitor is expected to remain unchanged at 3.2 nights. Despite the initial healthy growth in visitor numbers, the fact that the recovery in the economies of major markets such as the United States and Europe is only just beginning means the mainland is expected to continue accounting for the lion's share of arrivals to Hong Kong. In recent years, mainland visitors have accounted for close to two-thirds of the total. Anthony Lau Chun-hon, the board's executive director, said it hoped to exploit the World Expo in Shanghai, which opens in May, and November's Asian Games in Guangdong to attract visitors. The board is spending HK$62 million to promote Hong Kong to mainlanders this year, up from HK$55 million last year. Close to 70 per cent of the budget will be used in cities outside of Guangdong. The board will work on tourism promotion in Shanghai, Beijing, Hainan, Guangxi, Yunnan and Xian. Other efforts include an arts and culture guide to be launched this month.

Sands China on Tuesday said it annual net profit for last year rose 22 per cent to US$213.8 million from US$175.7 million a year earlier driven by a surge in gambling revenue in Macau.

China Merchants Bank set a very generous A-share rights issue price of 8.85 yuan per share for its previously announced A- and H-share rights issue this week to raise 22 billion yuan.

Hong Kong’s securities watchdog said on Tuesday it will require higher transparency in local short selling activities by introducing a short-position reporting regime.

China*: Daimler plans to develop electric cars for mainland with battery maker BYD, underscoring the German auto maker’s dependence on outside companies to gain share in the market for zero-emission vehicles. Daimler’s alliance continues a trend among European auto makers, which have scrambled to strike alliances with battery makers as a way to expand into electric and zero emission cars. Early movers such as Toyota, Nissan and Mitsubishi have set up joint ventures to produce batteries with Panasonic, NEC and GS Yuasa Corp, respectively. Hong-Kong listed BYD is backed by US billionaire Warren Buffett and has its roots as a battery maker for Nokia and Motorola. It will provide expertise in battery technology, while Daimler will provide experience in electric vehicle architecture, Daimler said. “We will be able to participate in the potential growth of electric mobility in China, currently the largest auto market of the world,” Daimler chief executive Dieter Zetsche said in a statement. “Electric vehicles are especially well suited for urban driving. With its many metropolitan areas, China has the potential to be among the world’s largest markets for zero-emission vehicles,” Zetsche said. Daimler and BYD will establish a new brand for the mainland market, and will build a technology centre in the country to develop and test the vehicle, Daimler said. BYD is one of the fastest growing mainland auto makers with plans for aggressive expansion in to Europe. Wang Chuanfu, chairman and president of BYD said, “This technology partnership creates a win-win business model with complimentary competences. We are very excited about this opportunity to work together with Daimler, the inventor of the automobile.” Daimler follows in the footsteps of Europe’s largest auto maker, Volkswagen, which last year said it had plans to explore a partnership with BYD Co in the area of hybrids and electric vehicles powered by lithium-ion batteries. As a way to boost its competence in battery technology, Daimler bought a stake in Tesla Motors, a California start-up that has used its battery technology to create high-performance sports cars under its own brand.

China's rural-urban wealth gap was the widest last year since the nation launched its economic transformation three decades ago, state media said on Tuesday, amid concerns the disparity could spark unrest. Urban per capita income stood at 17,175 yuan (HK$19,500) last year, compared to 5,153 yuan in the countryside, a ratio of 3.33 to 1, according to data released by the National Bureau of Statistics. The agency did not compare that to previous years, but the China Daily newspaper said it was the widest gap since Beijing launched reforms in 1978 that set it on a capitalist path. The disparity, arising from rapid economic development in coastal areas and cities, while the vast interior has lagged behind, has become a key concern of China’s leaders as they seek to maintain social stability and prevent unrest. The government has announced several new policies recently aimed at addressing the problem by spurring economic development in rural areas which are home to about 900 million people and stitching up holes in social safety nets. There has also been a swelling chorus for reform of a household registration system that prevents China’s roughly 230 million poor migrant workers from gaining residency in areas other than their hometown. This denies them access to public services such as unemployment and health insurance, and free public schooling for their children, forcing many to use precious savings to pay for them. On Monday, 13 major state-controlled newspapers around the country ran a rare joint editorial calling for abolition of the system, which it said “shackles the people’s rights.” The system of registered permanent residence, known in China as the “hukou”, is blamed for turning holders into virtual second-class citizens in areas where they have relocated in search of work and perpetuating the wealth divide. It is rare for the mainland’s media to challenge a government policy. However, the government itself vowed recently to reform it. The urban-rural divide is expected to figure prominently during the annual session of the rubber-stamp National People’s Congress, which opens on Friday. Premier Wen Jiabao singled out the wealth gap and hukou issue as pressing tasks for the government in a rare webcast at the weekend during which he fielded questions from online users. “It is unfair if a society’s wealth is only in the hands of a few people. In that case, the society is doomed to instability,” Wen said. The hukou system was used in the 1950s to curb destabilizing population movements in a nation recovering from civil war, but was eased under China’s economic reforms to allow cheap labor to migrate to manufacturing hubs.

Police have received approval from state prosecutors to arrest the former head of the Chinese Football Association, Nan Yong, on bribery charges, state media reported. The move, which follows his questioning in January and formal detention last month, means Nan is now certain to undergo criminal trial on the charges, which arise from an investigation into match-fixing in Chinese soccer. Nan's former deputy Yang Yimin and the former director of the CFA's referees' committee Zhang Jianqiang will face similar charges, Xinhua reported. The three men are among more than 20 officials arrested or detained in the last three months on suspicion of match- fixing, bribery and gambling. Two top-flight clubs, Guangzhou and Chengdu, have already been relegated for their involvement in the scandal while a second-division club, Qingdao, has been banished from professional soccer altogether. If found guilty, the officials face a sentence ranging from an administrative sanction to the death penalty, depending on the amount of money involved. The only referee prosecuted in an earlier "black whistles" bribery scandal, Gong Jianping, was sentenced to 10 years in prison in 2003 after admitting a charge of match-fixing. He died just 18 months later.

Restaurants and office buildings in Shanghai are scrambling to set up nonsmoking areas as the city bans lighting up in indoor public spaces ahead of the World Expo. There is rising awareness of the health risks of smoking in the mainland, by far the world’s biggest tobacco-consuming country, and this modern city of 20 million is cleaning up its act as it prepares to host the Expo, which begins May 1. That six-month event, which will showcase the theme “Better City, Better Life,” is expected to attract 70 million people, with exhibits from 192 countries. Most of the visitors will be Chinese from other cities where tobacco use is less strictly controlled. Getting people to comply with the rules is likely to prove difficult, many feel. “The regulations are not going to work. China is at least 50 years behind advanced countries, and people here lack self-discipline,” said Xu Baofeng, a manager at a mobile phone service outlet, who was standing inside the shop with his head sticking outdoor as he smoked. “You can see the No Smoking sign on our wall, but many people just ignore it,” Xu said, saying that some male customers fight back or complain to higher managers if staff try to stop them. Even before the ban took effect on Monday, most major public facilities in Shanghai, including many shopping malls and all subways and subway stations, banned smoking. Now authorities have penalties to apply, and have signed up thousands of volunteers to help enforce the ban. First-time offenders will get a warning. If they resist, they face fines of 50 yuan to 200 yuan. In response, downtown office buildings are now distributing notices about new indoor smoking areas. Workers routinely smoke in hallways and elevator lobbies. Most restaurants are only offering token moves, such as designating areas for nonsmokers that are not truly smoke free. At one downtown Internet cafe Tuesday, video game players were puffing away freely. A manager said he wouldn’t encourage people to smoke but felt he had no right to stop them. People are still free to light up on sidewalks and streets.

China’s four-biggest banks made net new loans in February of about 294 billion yuan, down about 39 per cent from January, banking sources said on Tuesday.

Peru's President Alan Garcia (C), China's Ambassador to Peru Zhao Wuyi (R2) attend the ceremony announcing the China-Peru Free Trade Agreement taking effect in Lima, capital of Peru, March 1, 2010.

March 3, 2010

Hong Kong*: Health Secretary York Chow Yat-ngok said on Monday it was important the human swine influenza (HSI) vaccination program continued in Hong Kong.

Tsoi Yuen Tsuen residents celebrate the Lantern Festival yesterday, their last in the village. All Tsoi Yuen Tsuen villagers were believed to have completed registering for the government's compensation package yesterday as the offer expired, including 90 households that had been implacably opposed to the village's demolition for the express rail link to Guangzhou. However, their acceptance of the compensation - up to HK$600,000 in cash and the chance to get subsidised housing without being means-tested - does not necessarily ensure smooth resumption of the village in October. Ko Chun-heung, who has led a campaign against the HK$66.9 billion railway since late 2008, said they would not leave unless the government helped rebuild the village elsewhere before the deadline to vacate. The 90 holdout households said on Monday last week they would leave if the government helped them to recreate their village through a farming reinstatement policy. Secretary for Transport and Housing Eva Cheng said yesterday this was possible, and that several early applicants who wanted to stay together and continue farming elsewhere had already passed an assessment and even found a suitable plot. Under existing land policy, a non-indigenous village like Tsoi Yuen Tsuen cannot be moved. But the government has a policy to reinstate the houses and land of farmers affected by infrastructure development. Villagers who practise farming can continue agriculture elsewhere and build a two-storey house of about 400 sq ft per floor. The government received 200 applications by yesterday, more than its original estimation of 150 households, although the number of residents was short of the estimate of 500. "Our initial estimation was pretty rough," Cheng said. Some of the last-minute applicants had registered repeatedly, she said. Heung Yee Kuk member Tsang Hin-keung, who has been helping the villagers find a new site, said easily accessible locations might cost about HK$200 a square foot and could exceed their budget. "If they want a garden or farmland, a single household may take up to 3,000 square feet of land, and that may use up most of their compensation," he said. Ko demanded the government offer villagers interest-free loans if compensation fell short. Cheng said this was possible under the farming reinstatement scheme.

Some 31 million people were expected to visit Hong Kong this year – about 5.2 per cent more than in 2009 – Hong Kong Tourism Board (HKTB) chairman James Tien Pei-chun said on Monday. Tien told reporters he was optimistic about prospects for the local tourism industry this year. "The per capita spending by overnight arrivals is likely to be around HK$5,790 per person, and tourism spending is projected to be HK$174 billion – up 7 per cent from last year," Tien said. But Tien said he was still concerned that the effects of the global financial crisis on the economies of Europe, Australia and the United States would reduce the number of long-haul visitors to Hong Kong. A HKTB spokeswoman told the Shanghai World Expo, which starts on May 1, was expected to attract long-haul tourists to Hong Kong. "Tourists who attend the World Expo normally travel to other places before returning home," she said. She said the board would co-operate with local travel agencies to introduce tour packages for visitors to the World Expo. They would also liaise with local tour groups to offer more discounts. "Tour products, such as a five-day Hong Kong-Shanghai flight and accommodation package, will be attractive to them," the spokeswoman said. She said the opening of Singapore's new theme park, Universal Studios, later this year might divert some tourists away from Hong Kong. "To maintain Hong Kong's attractiveness this year, the board will spend 20 per cent more on resources promoting Hong Kong in neighbouring countries such as Malaysia and the Philippines," she said.

HSBC missed expectations with a US$7.1 billion annual pretax profit as accounting losses masked record investment bank earnings and improvement in bad debts at its troubled US business.

Organisers are planning to increase the entry quota of the Hong Kong Marathon by 5 per cent to a record 63,000 following the overwhelming response this year.

Beijing heavyweight Rita Fan Hsu Lai-tai yesterday dampened hopes of a breakthrough in deadlocked political reform, saying it would be difficult for Beijing to fulfil the democrats' wish list, including assurances on genuine universal suffrage. Fan, who returned yesterday from the National People's Congress Standing Committee meeting in Beijing, said she had channelled the views for the Alliance for Universal Suffrage to mainland officials as promised. "As a messenger I could not speak for the central government and I could not predict the results," she said. "But I would not underestimate the difficulties for both sides." Fan, the former Legislative Council president, had appeared to be a bridge between Beijing and the moderate pan-democrats following a meeting last month. While she also met Democratic Party leaders yesterday, she said she was not assigned by the central government as a delegate to channel its views. The alliance, comprising 11 pro-democracy groups, has called for Beijing's assurances on full democracy when officials table resolutions for amending the methods for the 2012 elections. They also demanded an abolition of functional constituencies by 2020 and a road map to universal suffrage. Fan said the mainland officials did not respond to the alliance's views, but she foresaw "great difficulties". "The NPC's decision in 2007 only suggested that Hong Kong 'may implement' universal suffrage for electing the chief executive in 2017. We have to go through several steps to reach consensus in public [in the mean time]. "If a mainland official now jumps out to make a pledge about genuine universal suffrage in 2017 [for chief executive] or 2020 [for the Legislative Council], it will be like ignoring the NPC's decision," she said. "It will also be disrespectful to Hong Kong people [if such a promise was made without consensus]." Fan said both Beijing and the alliance might need to tweak their views. Fung Wai-wah, convenor of the Alliance for Universal Suffrage, believed there was still room for discussion but reiterated that their demands were basic. "An assurance on genuine universal suffrage will help to enhance public confidence ... I believe the public are not going to be satisfied with a discussion that only sticks with the arrangements in 2012." Lawmaker Albert Ho Chun-yan, who leads the Democratic Party, agreed there could be difficulties in the process towards democracy, and stressed his desire for dialogue. Ho had said last month that if full democracy was to be realised in 2017 to 2020, a transition period of increased public participation would be necessary between 2012 and 2016, such as allowing the public to vote in the proposed new functional constituencies in which district council members can nominate candidates. The administration has proposed creating 10 extra seats in the legislature - five directly elected and five voted on by district councillors - in 2012. It also proposes the Election Committee selecting the chief executive be expanded to 1,200 members.

Movie actor-cum-director and comedian Stephen Chow Sing-chi is aiming to build a Chinese version of Time Warner in the mainland after being appointed executive director of Emcom International (8220), reports Sing Tao Daily, sister publication of The Standard. "My dream is to build a company to become another Time Warner, to make movies, animated series and merchandise that belong to the Chinese film world," he said yesterday. "A market as big as China needs a large entertainment company like Time Warner." He denied reports that he invested in Emcom to speculate in shares of the firm, which is listed on the Growth Enterprise Market. "Speculation is not my aim, it cannot satisfy me." Chow expects to use the resources to produce more films every year, but he declined to reveal an annual target. "The company will focus on producing movies that can derive other products like animated versions, related merchandise and online games, for instance CJ7." Chow said the animated version of CJ7 - which he made and starred in - is set to be completed this summer. "Chinese kids should have cartoons that are made in their homeland," Chow said, noting that mainland animations have the advantage of government support for the industry. "It is inevitable to consider the China market as a whole, though we also want to cater to Hong Kong people's taste," he said, revealing that he started targeting the mainland market since the production of Shaolin Soccer. Emcom is proposing to change its name to Bingo Group, which Chow says he likes because he loves hitting the jackpot. The movie legend, who is the largest single shareholder of Emcom with a 14.59 percent stake, sold the image rights for CJ7 characters to Emcom to develop them into peripheral products. The company will issue HK$45 million worth of convertible bonds to Chow with an option to subscribe for 250 million new shares that can boost his stake to 35.64 percent. It will also have investment priority for Chow's future films.

More than 43,000 people went to Yonghegong, or the Lama Temple, to burn incense on Sunday, the last day of the Spring Festival and the 15th day of the lunar calendar. That figure was 8,000 more than on the same lunar day last year, although well below the 60,000 that passed through the temple's gates on the first day of this year's Spring Festival. Yonghegong stopped ticket sales at 4:30 pm and the precise figure given did not include complimentary tickets given out to lay Buddhists, said Wang Jinhua, chief of the administrative department at the temple. The first and 15th day of every lunar month are typically the busiest days for temples in terms of guests because tradition dictates these are the days when Buddha is on duty. And the first month is particularly special because followers of the faith come to make wishes for the entire year. "I came here to burn incense with a friend because I was in my hometown in Liaoning province on the first day of the Lunar New Year," said a woman surnamed Guo. Guo said she returned to Beijing for work on Feb 20. She came to the temple following advice from a friend who suggested she pass her wishes directly to Buddha. She told METRO she asked the spiritual teacher to ensure her family remained healthy in the following year. The temple saw such a heavy turnout Sunday that it took visitors more than three minutes to climb the six steps into the temple hall. Incense filled the temple and venders selling the goods were plentiful. "Our busiest period was the first hour of ticket sales," said Wang. He said more than 7,000 people entered the temple between 8 and 9 am, and it had reached 20,000 by 11 am. The temple started selling tickets at 7:40 am - 20 minutes ahead of schedule - because of a large queue outside the gate, Wang said, which he estimated was longer than 500m. He added that his staff did not have time to answer questions on the day, and that more ticket windows were opened to cope with the demand.

Three runners were critically ill last night after the toughest-ever Hong Kong Standard Chartered Marathon took its toll in the heat and humidity. They were among 55 people taken to hospitals after being overcome by heat stroke or dehydration in trying running conditions. The three men in critical condition - two locals and a Filipino aged between 38 and 46 - are in the intensive care unit at Ruttonjee Hospital in Wan Chai. Of those taken to hospital, 43 were men. Another 1,149 runners experienced cramps while 227 others suffered from minor injuries. Last year only 16 runners required hospital treatment. With humidity at over 90 percent and temperatures around 25 degrees Celsius, many of the record 52,370 runners found either the full marathon, half marathon or 10-kilometer race hard going. Men's marathon winner and defending champion Kiogora Mwobi from Kenya finished the 42.2 kilometers about five minutes slower than his winning time in 2009. He took two hours, 20 minutes and 12 seconds this year. "It was very hot this year, very very hot. The course was not very difficult but the weather was the biggest problem. When I compare this year and last year, this [year] was the toughest." Ethiopia's John Chirchir Tubei came second in two hours, 23 minutes and 30 seconds. Behind him was Mongolia's Ser-od Bat-Ochir in two hours, 25 minutes and two seconds. The women's marathon was won by Indonesia's Triyaningsih in two hours, 47 minutes and 35 seconds. China's Jin Linlin came second a minute behind. The main race, with about 7,700 entrants, started off from Nathan Road, Tsim Sha Tsui, at 7.15am. The route included the West Kowloon Expressway, Stonecutters Bridge, Tsing Ma Bridge, Ting Kau Bridge and Western Harbour Tunnel. The finish line was at Victoria Park in Causeway Bay. The recently opened Stonecutters Bridge was new to the course this year and the slope proved to be tough for many runners. "I felt a sense of freshness about the route, but it was tough with the uphill slope [on Stonecutters Bridge] ... I was able to handle it at the beginning but once I ran up the bridge, it became very difficult for me," a secondary school teacher runner, surnamed Lai, said. Another local runner said she found it hard to breathe because of the heat. However, organizing committee chairman William Ko Wai-lam said some foreign runners told him they liked the challenging course this year. Blind Kenyan athlete Henry Wanyoike, together with his running partner Joseph Kibunja, joined 12,600 others in the half marathon. The pair were participating for the seventh year in a row. "The run was enjoyable and not very hard, because we are not running to win but for charity," Wanyoike said. The 10km race, routed along the Island Eastern Corridor and also finishing in Victoria Park, attracted 32,000 runners.

British insurer Prudential confirmed on Monday it will buy the Asian unit of US insurance company AIG in a deal worth US$35.5 billion.

Stephen Bird says Citi has strengthened its risk management, raised capital and is now one of the best-capitalised banks in the world. Stephen Bird, the Scottish banker in charge of Citi in Asia, received a frantic e-mail from a worried depositor at the peak of the global financial crisis. Following the collapse of Lehman Brothers in September 2008, the man was worried about the fate of Citi, where he and his mother had their life savings. You could hardly blame the customer for being concerned. Citi was among the United States lenders hardest hit by the financial crisis and had to be bailed out by the government. To try to allay his fears, the 43-year-old chief executive decided to call the client directly. "I introduced myself and told him not to worry as all my money was in the same place as his," Bird recalled. "We were in the same boat, I told him, and with the support of the US government, Citi was probably the most secure place for your deposits." The financial crisis has passed, and Citi has fully repaid the US$20 billion received during the bailout. It is still 27 per cent owned by Washington, but could be free from US government restrictions later this year. That means the bank will regain control over what it pays top bankers. "We are aligned with the principle of moving to long-term compensation packages," Bird said, a response to the public anger over the huge bonuses paid on Wall Street. Bird is a relative newcomer to banking. After graduating from University College Cardiff with an MBA in economics and finance, he joined British Steel, where he was responsible for a US$750 million car manufacturing complex. Bird was able to achieve preferred supplier status from highly demanding Japanese carmakers based in Europe. The young executive then moved to GE Capital and became director of British operations. He joined Citi in 1998 as its Asia Pacific head for operations and technology and was promoted to his current post in the middle of last year. Citi has a long history in Asia. In Hong Kong, the bank recently celebrated its 108th anniversary, and some clients, such as trading firm Li & Fung, have been customers for more than a century. Asia will play an important role in the recovery process for the lender. The group suffered a loss of US$1.6 billion last year but did report three quarters of profit in 2009; the fourth quarter was affected by the payback of US$20 billion to the government bailout program. Asia was the largest contributor to Citi's net income globally in 2008 and again in 2009, generating close to US$14 billion in revenues last year and US$4.5 billion of net income, or 30 per cent of its global business. With its 3.8 billion population and strong economic growth, Asia represents the future of the group, according to Bird. The group has operations in 18 Asian markets, serving 35 million consumer customers.

China*: More than a dozen mainland newspapers have published a rare joint appeal for reform of China's household registration system, which limits rural migrant workers' access to services in China's more prosperous cities. Hundreds of millions of workers from the countryside have flooded to cities and coastal areas over the last 30 years, toiling on the construction sites and factories that drive the country’s economic growth. But the household registration, or “hukou” system, which dates from the famines of the late 1950s, prevents the migrants obtaining residency status to give them access to healthcare, education or legal protection in the cities where they settle. “Born of the planned economy, bad policies unsuitable to these times enrage the people,” said an editorial in the Metropolis Times of Kunming, one of the 13 regional papers to carry similar editorials on Monday. It’s high time to reform to appease the people, it’s high time to reform to catch up with the times.” The editorials called on delegates to China’s legislature and an advisory body to abolish the system. The two bodies will hold their annual meetings this week. Ahead of the meetings, debate over the mainland’s economic, political and strategic direction has intensified. Although Beijing has recently introduced some local flexibility in the system, workers are still unable to tap into national health insurance or education, spurring many to leave their young children at home in villages while they seek work. They also have little recourse in cases of unpaid wages or unsafe work conditions, although a number of legal aid centres have sprung up in cities to help them press complaints. The system also inconveniences urban residents, by limiting their ability to work, pay taxes and get insurance and pensions in provinces other than the one where they were born, the editorials noted. “The hukou system also breeds corruption,” the editorial said, because people try to buy their way into more desirable cities. Reform would accelerate and smooth China’s transition from an overwhelmingly rural nation to an urban one, the editorials said.

China hailed its best ever Winter Olympics on Monday, crediting technology, foreign coaches and even improved language skills for the haul of five gold, two silver and four bronze medals in Vancouver. Only eight years after skater Yang Yang won the country’s first Winter gold at Salt Lake City, a sweep of the women’s short track speed skating and a first figure skating title helped China to joint seventh place in the medals table. “Gold Standard” read the banner headline on the front page of the English Language China Daily, while the Communist Party mouthpiece People’s Daily led its sports page with “Vancouver historical breakthrough”. “We have made important breakthrough at these games,” Xiao Tian, deputy chef de mission of China’s largest ever Winter Games delegation, told the Xinhua news agency. “Actually the five-gold finish was within my expectation before we set off for the games, but I couldn’t say that at that time because I would not want to put any pressure on the athletes. Now I can speak out.” Xiao was quick to revert to pessimistic type, however, when discussing the future, emphasising the huge task the Winter Sports administration faced to close the gap on their summer counterparts, who topped the table at the 2008 Beijing Olympics. “Despite the good results at these games, we still have a long way to go in the development of China’s winter sports,” he said. “It’s impossible for us to reach the same level as we have done in summer sports, but we will try to minimize the gap as much as we can.” Xiao said that progress would come not through a vast expansion of the winter sports programme but by using the best coaches, wherever they came from, and technology.

China will donate US$1 million to quake-ravaged Chile to help with emergency humanitarian efforts following a devastating earthquake, the government said on Monday.

Frugal-minded Shanghai has ruled out an "Olympics-grade" opening ceremony for the launch of the World Expo, due to take place two months from today. The city has rejected plans for a massive opening extravaganza featuring performances spanning the Huangpu River, which had the potential to be "possibly no less spectacular than the Beijing Olympics" ceremony, the Shanghai Morning Post reported yesterday. The move is partly to keep the budget under control but also due to a directive from Yu Zhengsheng , the city's Communist Party chief, not to run any "unnecessary projects" to ensure the six-month event goes off without a hitch. The newspaper said plans for the opening were being kept under wraps but were understood to be based on the principles of "simple and passionate". The Expo's budget is already estimated to be twice that of the Olympics and has involved a massive drive to upgrade the city's transport network and other infrastructure. Work is going on all over Shanghai in a frantic last-minute push to get everything finished in time, but progress has not been as swift as expected, and a number of major projects have fallen behind schedule. Expo director Hong Hao admitted to the city's official English-language paper, the Shanghai Daily, in late January that almost one in five of the 100-odd self-built national pavilions would not be ready in time for the opening. Elsewhere in the city, other projects are also dragging on longer than originally planned, and cracks are beginning to show in some efforts related to the city's facelift. On the Bund, the iconic strip of colonial buildings running along the riverfront, tourists are greeted with a chaotic panorama of construction work blocking the view of the water. The huge renovation project - which includes a 3.3-kilometre tunnel to take most of the traffic underground and a complete revamp of the promenade walkway - was originally intended to be finished by the end of last year. City officials now hope to have it completed by the end of this month, but no firm opening date has been announced. Even some of the projects that have been completed are showing premature wear-and-tear. Red-brick pavements laid throughout the city's French Concession last year are starting to crumble and come apart. There are also signs of Expo fatigue among residents. On Wulumuqi Road, someone has put stickers of cartoon yellow sunglasses over the eyes of every Expo logo and Haibao - the event's misshapen blue mascot - along a 100-metre stretch of hoarding concealing a huge plot of demolished buildings. Such hoardings - and the urban destruction they are meant to conceal - are a common sight in the city, but the defacing of Haibao is not.

James Steinberg, US deputy secretary of state and one of the Obama administration's leading voices on China, will leave for China and Japan on Monday.

Shanda Interactive Entertainment, mainland’s No 2 online game company, said its fourth-quarter profit rose 13 per cent, still its weakest in three quarters.

Toyota president Akio Toyoda's testimony before the US Congress last week. On Monday, Toyoda flew directly from the United States to China to meet with government officials and local reporters. Toyota president Akio Toyoda sought to ease quality concerns during a low-key visit to mainland on Monday, fresh from a gruelling hearing in the US Congress over his company’s biggest safety crisis. Toyoda flew directly from the United States to mainland to meet government officials and local reporters, according to media reports, underscoring the importance of an auto market that surpassed the United States last year to become the world’s largest. “He’s making this trip because China has become the biggest auto market, in which Toyota underperformed last year, from low-end products to high-end ones, such as Lexus,” said IHS Global Insight analyst John Zeng. “If Toyota loses China, its global position would be challenged.” Even as auto sales contracted in most major global markets last year during the recession, mainland’s vehicle sales jumped 53 per cent to 13.6 million units, as consumers purchased cars under a raft of government incentives as part of Beijing’s 4 trillion yuan (HK$4.5 trillion) economic stimulus package. Toyota, which produces cars in mainland in tie-ups with FAW Group and Guangzhou Automobile, sold 709,000 cars in the country last year, up 21 per cent from the previous year. But that accounted for a relatively modest 5 per cent of the market. Japanese automakers such as Toyota and Honda have been relative bit players in mainland to date, with US and European giants including General Motors, Volkswagen and Ford moving much more aggressively. Toyoda was planning to meet with officials from mainland’s quality control bureau, according to the reports, and was set to attend a briefing for local and international media in Beijing at 6pm. A Toyota spokesman in Tokyo said Toyoda was in mainland to discuss quality issues, but would not elaborate. He confirmed that senior managing director Akira Sasaki, the head of quality, and managing officer Masahiro Kato were travelling with Toyoda. The low-key visit to mainland, with little advance notice and limited public appearances, contrasted sharply with Toyoda’s high-profile showing last week before the US Congress. Toyoda was grilled by US lawmakers for a series of recalls that have tarnished the carmaker’s brand and reputation for quality, particularly in the United States, its largest market. Toyoda also met with US safety officials as well as workers and dealers while in Washington. Toyota has recalled more than 8.5 million cars globally for unintended acceleration and braking problems, in a widening safety crisis that broke about a month ago. The bulk of the recalls are in the United States. By comparison, Toyota’s woes in mainland have been relatively limited so far, with the company recalling 75,552 RAV4 vehicles there due to faulty accelerators. Toyota said in November it was aiming to sell 800,000 cars in mainland this year, up about 13 per cent or roughly in line with gains of about 10 per cent that most analysts are expecting for mainland this year. The company’s January car sales in mainland surged 53 per cent to 72,000 units.

Tourists and local villagers of Taishun county in Zhejiang province enjoy a potluck dinner together for the Lantern Festival on Feb 28, 2010. Staffers from the headquarters of the Great World DSJJNS in Shanghai announced the potluck’s entry into the company’s record. The annual potluck is said to originate in Zhangzhai village of Sankui county, where people who moved from Heibei province in north China to avoid the scourge of war more than 1,000 years ago kept the tradition of holding a feast together on the Lantern Festival. It then evolved into a grand banquet, which the public was invited to, and today it plays an important role in boosting tourism as well as fellowship among the people. This year’s potluck attracted more than 70,000 people with 5,400 dinner tables in counties such as Sankui, Yayang and Xiyang.

March 2, 2010

Hong Kong*: Cyprian Kiogara Mwobi became the first man to successfully defend his crown when he won the Standard Chartered Hong Kong Marathon for the second successive year on Sunday.

Supermarket chains Wellcome and ParknShop have refused appeals to restrict barbecue charcoal sales in stores across Hong Kong despite scientific research indicating that doing so can save lives. Deaths by charcoal burning fell by more than half when compared with the previous year - the equivalent of 11 lives - in the Tuen Mun area when supermarkets there agreed to take part in a one-year project during which charcoal bags were kept in locked store rooms and only brought out on request by customers. By contrast, suicide by charcoal burning in Yuen Long increased year on year by nearly half, from 16 cases to 23, during the same period. Yuen Long was used as a control region in the study by the University of Hong Kong Centre for Suicide Research and Prevention. The study, to be published in an international science journal this week, appears to confirm the researchers' belief that suicide by charcoal-burning - which claims the lives of 130 to 140 people a year in Hong Kong - can be reduced significantly if access to charcoal is restricted. Despite being given the study in full in June and asked by researchers to act upon it, neither Wellcome nor ParknShop would extend the scheme to other stores, citing operational reasons and saying they do not have enough storage space in urban stores. ParknShop has maintained the lock-up system for charcoal in the Tuen Mun area but will not extend it to other areas, while Wellcome put charcoal back on supermarket shelves in the district within months of the project ending. Sixteen Wellcome stores and 12 ParknShop stores, as well as other shops and supermarkets, were involved in the project. Dr Paul Yip Siu-fai, who headed it, said he was grateful to the supermarkets for participating in the project but disappointed at their reluctance to extend restrictions on charcoal sales to all Hong Kong stores. "When we had the results, we were very excited and we told the two supermarket chains," he said. "Essentially, they acknowledged the results but they have not committed to continue the project or to extend it to other districts." Yip said the two supermarket chains had been "very quiet" since receiving the results eight months ago. "We have tried to organise a meeting with them but they say they are very busy," he said. "One of their major considerations is that Hong Kong supermarkets are already very small. If they have to provide this extra storage it will be quite difficult and it will cause inconvenience. "I can understand that it will create some inconvenience - but if that inconvenience can help desperate people and stop them from killing themselves, that is a price we ought to be prepared to pay." The study was done between July 2006 and June 2007 before being analysed and submitted as a paper to the British Journal of Psychiatry. "We have waited a very long time to publish these results because we are very cautious about the reaction to this and we wanted to have our findings endorsed by the international scientific community first," Yip said. "This report is something that will benefit not just Hong Kong but places elsewhere in the world, so I don't understand why we are being so passive. "Charcoal burning [as a method of suicide] originated in Hong Kong. Other countries learned it from us. Now we have a good method for dealing with it and this should be seen as a blessing to other people." Asked why Wellcome stores were not prepared to extend the restrictions on charcoal sales, Annie Sin, communications director for the chain's owner, Dairy Farm, said the initial study was carried out when rates of suicide by charcoal-burning were higher than now. "The economic situation is different now. There are not so many people committing suicide by charcoal burning. It has decreased a lot from the peak," she said. "We are certainly happy to have been involved in the project and pleased to see the numbers come down." Apart from helping with the research project, she said, Wellcome put stickers on bags of charcoal bearing helpline numbers for people who might be contemplating suicide. Teresa Pang, public relations manager for ParknShop, said: "Packs of charcoal are quite big and occupy quite a lot of space ... We have to take logistics into account. Space is very limited in urban stores. If there is anything we can do for a good cause for the community and for society, we will try our best to help. But we also need to consider operational issues." Pang said the phenomenon of suicide was "a very complex issue", of which charcoal burning was only a part. "People take many, many different ways to kill themselves. They use charcoal. They use other methods."

Patrons of bars in Tsim Sha Tsui can ignore the smoking ban as long as no one complains to the Tobacco Control Office - a loophole some bar owners say costs them business. Popular bars on Hong Kong Island are sick of abiding by the smoking ban while competitors in other parts of the city ignore it, and are demanding the government step in. The owners claim that because they follow the law they are losing customers - while most others ignore the ban and are escaping with their profits intact. Smoking legislation in Hong Kong, unlike jurisdictions elsewhere in the world, punishes smokers, not bars, for breaches. Rather than bar-owners facing losing their licenses for failing to stop patrons from smoking, it is the individual smoker who faces prosecution. This means hundreds of bars are allowing smoking to continue as normal. The ban was first imposed at the start of 2007 for statutory no-smoking areas. A blanket ban on smoking in all indoor public places was introduced on July 1 last year. "The government has seen fit to pass a smoking ban, yet do not maintain a level playing field, with only random enforcement," J. R. Robertson, managing director of El Grande Holdings, said. The company has a number of bars and restaurants in the city, including the East End Brewery bars in Causeway Bay and Quarry Bay, which have been badly affected by the smoking ban. The bar in Causeway Bay has been the worst hit, with a 35 per cent drop in profit. Robertson said the legislation had to change - which he thought was unlikely - or the law must be enforced across the board. "Bars here have experienced a huge downturn in business, directly related to the loss of the smoking exemption, but other bars have benefited as they completely ignore the smoking ban. It's the honest law-abiding people that are getting the brunt of it." Kevin McBarron, owner of the Canny Man in Wan Chai, said he would have kept his customers if they knew that they couldn't go around the corner to another bar to smoke.

The memories are still fresh for Nancy Kwan Ka-shen, even though it's 50 years since she stepped into Suzie Wong's shoes. "How time flies," says the 70-year-old actress, speaking from her home in Los Angeles. "I still remember walking onto the set and those wonderful dresses we wore. "But after 50 years I can't believe people still watch or remember the film. At the time I had no idea it would have any impact at all." "The film", of course, is The World of Suzie Wong. To celebrate its anniversary, Kwan is coming back to Hong Kong, her hometown, in March for the screening of a documentary called To Whom It May Concern: Ka Shen's Journey, which charts a young girl's journey from the playground of the Maryknoll Convent School in Kowloon Tong, all the way to Hollywood. "It's great that I'm still here," says Kwan. "I have certainly changed and Hong Kong has certainly changed over those years - and thank God for that. I am all for changes. Of course I love Hong Kong so much and it is always a thrill for me to go back." Kwan was studying at London's Royal Ballet School when Paramount Pictures raised a then-massive budget of US$3 million to make a film about the tale of a struggling Western artist who falls for a Wan Chai prostitute. The World of Suzie Wong first appeared in 1957 as a novel by English author Richard Mason, and then on stage in John Patrick's Broadway adaptation of the book. Kwan was in Hong Kong on holiday - her father was noted architect Kwan Wing Hong - when Paramount and local film company Salon Films held a casting call for the film and, curious to see some of her idols in action, she decided to take a look for herself.

For many of the photographers who flocked to Wing Lee Street yesterday, it was their first, and quite probably last, visit. The street came to their attention because it was where the low-budget Echoes of the Rainbow was filmed. The film won a Crystal Bear last weekend at the Berlin International Film Festival. "I came here because I saw it in the news that the movie was filmed here," said Christy Chan, who was among the 50 people taking photos yesterday afternoon. Despite being one of the oldest streets in Sheung Wan, the whole area has been targeted for redevelopment by the Urban Renewal Authority. Echoes, directed by Alex Law Kai-yui and produced by Mabel Cheung Yuen-ting, tells the story of a shoemaker's family through the eyes of a child. Law said it was largely based on his childhood. Both Law and Cheung have called for the government to save the street, but the Urban Renewal Authority is pressing ahead with redevelopment plans. Chan said more effort should be put into preserving old streets that told the story of Hong Kong. Demolition was not always the only way to go when buildings were rundown. Designer Pal Wong, who was snapping shots with a Rolleiflex, said he did not know about the movie until it won the award but was looking forward to seeing it when it was released in the city on March 11. "I have always taken photos around this area and this street used to be quiet. But since the news of the movie came out, more people have been coming here," he said. Wong said Hong Kong should follow Macau and save old streets and buildings from redevelopment. But he does not believe the city's preservation efforts will succeed since there is so much money to be made from redevelopment. Daniel Patzold, who lives in nearby Bridges Street, said the area was popular among production crews, wedding photographers and amateur photographers. "Different production crews come here to shoot twice a week," he said, adding that Shing Wong Street and Ladder Street were particularly popular. Patzold, an architect, said it was sad the street had to go because such streets elsewhere in the city had already been demolished. But not everyone snapping away on Wing Lee Street was against redevelopment. Siu Sai Wan physics teacher Jacky Tong Man-chung said there needed to be a balance between preservation and redevelopment. Just because the streets and buildings were old did not necessarily mean they were worth saving. "Changes to the city brought about by business development cannot be avoided," he said. "Among the people who are against redevelopment, it is difficult to distinguish between those who just don't want that many skyscrapers in the city and those who want to save a particular street." But Tong said redevelopment should give way to the conservation of unique buildings, such as the clock tower in Tsim Sha Tsui. He plans to bring his students to take one last look at the area before it is gone.

The Chief Judge of the High Court, Geoffrey Ma Tao-li, is expected to be Hong Kong's next chief justice, only the second since the handover. The Judicial Officers Recommendation Commission is expected to present its choice to succeed Andrew Li Kwok-nang to the chief executive within weeks. If the chief executive agrees, the appointment will go to the Legislative Council and the process completed by the middle of the year. The chairwoman of Legco's legal panel, Margaret Ng Ngoi-yee, believes the process is "on course" and that a recommendation will be made next month. The commission's deliberations are strictly confidential and a spokesman for the judiciary said it had "nothing to add" to the information already provided to Legco by the administration.

For many British expats, the solids have just hit the air conditioning. A recent tax case has made it clear that if you are a British national living in Hong Kong but have maintained connections with Britain, you are at risk from the British taxman, who will be happy to charge you 50 per cent tax on your world income. So Kung Hei Fat Choi from me but not from him. The Court of Appeal has just rejected a British national's claim that he did not owe British taxes because he lived in the Seychelles and handed him a £30 million (HK$359 million) tax bill for the years 1993 to 2004. This decision could affect thousands of British expats who have lived in Hong Kong for many years but who spend time in Britain. All may be at risk from an increasingly aggressive Revenue service (HMRC) whipped into a frenzy by a government desperate for more tax to cut an increasing national deficit. Ignore this at your peril. This case in question involved British businessman Robert Gaines-Cooper, who had argued he did not owe taxes in Britain because he has been a resident of the Seychelles since 1976. He pointed to the rule in HMRC's own leaflet IR20 that defines a non-resident as one who spends less than 91 days per year in Britain. The court said a taxpayer must show a "distinct break" from social and family ties to Britain and that spending all but 91 days outside the country is not sufficient to establish non-resident status. This is not a change in stance, just a reinforcement of the existing rules. Those rules have been widely misinterpreted. There never has been a rule which says that the number of days spent in Britain is the absolute test of residency. Most countries operate similar systems. If you spend a certain number of days there, you must necessarily be resident - even if already tax resident elsewhere as well. If you don't spend the requisite number of days, you may still be resident because that country is the centre of your economic or social life, or place of closest connection. It's this latter point which has often been missed. The court confirmed that HMRC were bound by the terms of IR20 but there was an implied condition that to be treated as non-resident, there must be a distinct break with Britain and a severing of all social and family ties. Gaines-Cooper had a house in Henley where his wife and son lived and where he kept a valuable collection of art and guns. His son was at school in Britain. He had an British mobile phone, his will was drawn up under English law and he regularly attended Ascot racecourse. Therefore he could be treated as a British resident even after his ostensible departure in 1976. Apart from the Ascot bit, many British nationals living in Hong Kong are in the same boat, which may now reveal itself to be sailing in a cesspit and holed below the waterline. The court deemed that the correct interpretation of tax residency status turned on whether England had remained the taxpayer's "centre of gravity of his life and interests" and that the 91-day rule could not establish non-residency status on its own, rather it was "important only to establish whether non-resident status, once acquired, has been lost". In other words, if you spend more than 91 days in Britain, you are definitely resident. If you spend less than 91 days, you may not be resident but must look at other factors, too. The court agreed. Gaines-Cooper plans to appeal the case to the Supreme Court. His counsel told the BBC that HMRC was "playing games" and mischievously reinterpreting its own guidance, turning it "from a sensible, practical, guide into something meaningless and, which is worse, a devious trap". HMRC may now look to crack down on more expats. It has launched a sustained attack on people who have used residence and domicile rules to reduce their tax bills. Last year a HMRC team was established to investigate some of Britain's richest individuals, including expats. It follows the enactment of the £30,000 non-domicile levy, introduction of the 50 per cent top income tax rate and the super-tax on the City of London bonus pool. HMRC has said it is "looking at residency and domicile more carefully" and is "committed to ensuring all those resident in Britain pay the tax due and this judgment will aid that effort". The IR20 guidance on residency was replaced last year with a new booklet called HMRC6. This emphasises the importance of pattern of lifestyle in determining UK residency and states that just because you leave the UK to live or work abroad, you are not necessarily non-UK-resident for tax purposes. So what to do? You can change your lifestyle to remove the tax danger but for many, that will neither be desirable or feasible. Selling the British home and taking your children out of school in Britain may be a very unattractive option. The alternative is to plan so that if you are caught out, your exposure to British tax will be limited. Without proper planning, you may have to pay British tax at up to 50 per cent on each and every source of worldwide income. So review your arrangements. They have probably been made on the assumption that you are not a British tax resident. That assumption may be incorrect. Or at least HMRC may not agree.

China*: Premier Wen Jiabao said 2010 would be the most complex year yet this century for the mainland economy, and pledged to prevent inflation and rein in skyrocketing property prices, in an online chat yesterday with internet users. He also addressed concerns over trade frictions with the US, and called for efforts to ease tensions. Wen's internet question-and-answer session came in the run-up to the annual session of the National People's Congress, where he will deliver the annual government work report. Xinhua said some 65,000 questions on subjects ranging from home prices to the homework burden for students, flooded into the central government's website and that of the news agency, the joint organisers of the session. The questions Wen answered were apparently picked to cover the major topics in his government report. "If last year was the most difficult for China's economy in the new century, this one is the most complicated," Wen said. He was determined to bring property prices under control during his tenure as premier, he said, but he admitted the government may not be able to "rein in this wild horse" this year despite a series of measures. Wen is expected to step down in 2013. He said the government would focus on building more affordable housing for low-income groups and rein in property prices through land, financial and tax policies. Soaring property prices have become a major source of grievance for the public, especially the growing urban population. Xinhua said home prices rose by 9.5 per cent in January from a year earlier. Wen reiterated the government would adopt an "appropriately loose monetary policy" to ensure stable economic development. Agricultural production would be boosted to ensure food supplies. He identified corruption and inflation as major threats. On the trade front, Wen hoped tension would ease and this year would not be an "unpeaceful year" for Sino-US trade ties. "The friction ought to be solved through negotiation on an equal basis, and not through quickly imposed sanctions," he said. "We expect both countries to open markets to each other. In particular, the Unites States should acknowledge China's market economy status and open the exports of hi-tech products to China." The government would step up reform of the household registration system to ensure equal benefits for rural migrants in small cities and towns, he reiterated. He warned that the job market remained grim. A record 6.3 million university students will graduate this year. Wen said he was aware of the importance of a fair distribution of social wealth for maintaining stability, and said public supervision was the most effective way to curb misappropriation of public funds. He also elaborated on an earlier remark that he wanted Chinese people to live with dignity, saying the government had the responsibility to "protect every individual's freedom and rights". It should also ensure the creation of favorable conditions for individuals to have freedom and the benefits of all-round development.

The report quoted the new government data as saying that China held 894.8 billion dollars in Treasury securities at the end of December, more than which had been previously estimated.

Beijing says US Deputy Secretary of State James Steinberg will visit the country next week, amid strained bilateral relations. Steinberg will arrive on Tuesday for a two-day trip to "exchange views with China on relevant issues", the foreign ministry said yesterday on its website. Details were not provided. Ties between Beijing and Washington have been strained for months over a series of issues, from trade and currency disputes to the future of Google on the mainland after the internet giant fell victim to cyber-attacks it says originated there.

Job seekers crowd to visit booths of companies at a job fair in Shenyang, Liaoning province February 27, 2010. China is still facing serious challenges in employment, though labor shortage has been found in booming cities in China's coastal areas recently, said Premier Wen Jiabao on Saturday during an online chat with netizens.

A strategic investment by China Mobile (SEHK: 0941, announcements, news) in a mainland bank may spur faster adoption of its nascent mobile payment system nationwide ahead of its mainland rivals, analysts say. The world's largest wireless network operator, with 522.28 million subscribers as of December, is reportedly in a deal to buy a significant shareholding in Shanghai Pudong Development Bank. The mid-sized bank, which is part-owned by Citigroup, expected to raise about 40 billion yuan (HK$45.42 billion) by selling a roughly 20 per cent strategic stake to China Mobile, two brokerages said. The deal may speed the adoption of China Mobile's mobile payment system, which is based on a local standard called RF-SIM, among bank customers. A Hong Kong-based spokeswoman for the company declined to comment. Pudong Bank also did not comment. In a report yesterday, Guotai Junan Securities said Pudong Bank would sell about 2.2 billion shares to China Mobile at no less than 17.82 yuan each. It did not specify whether the stake was being sold to Hong Kong-listed China Mobile or to its parent company in Beijing. It is common for Chinese non-financial firms to invest in banks. Another brokerage, China International Capital Corp, also said in an e-mail to clients on Thursday that China Mobile would buy up to a 20 per cent strategic stake in Pudong Bank for as much as 40 billion yuan. Listed companies on the mainland sometimes brief analysts about major developments ahead of official announcements, but after share trading suspensions. Shares in Shanghai-listed Pudong Bank were suspended on Thursday pending what the bank said was an announcement of plans to introduce strategic investors. Its shares remained suspended yesterday. "China Mobile may be trying to buy some legitimacy for its mobile payment system," said Michael Clendenin, managing director at research and consultancy firm RedTech Advisors (China). "I've heard that banks in China aren't happy with the RF-SIM mobile payment technology that China Mobile is championing, so the operator may need this type of investment in Shanghai Pudong Development Bank and smooth the way to spreading its mobile payment system throughout the country." Subscribers can start using the payment system by changing their SIM cards, not the phone. "It rivals the global Near Field Communication standard that China Unicom (SEHK: 0762) is using and that just about all banks have standardised on," he said. Consumers use mobile payment systems to remotely access and securely pay for information and services with their cellphones. "Mobile payment is slowly gaining traction on the mainland, with systems already in place in the top-tier cities for subways, supermarkets, convenience stores and cafes," Clendenin said. "But few technology roll-outs come without a hitch, and China is no exception as network operators are using different technologies."

Chinese Premier Wen Jiabao arrives at the Xinhua News Agency after finishing online talks with netizens jonitly held by the portals: of the central government and of Xinhua News Agency, in Beijing, China, Feb. 27, 2010.

Lantern Festival celebrated home and abroad.

Colorful lanterns are seen in Xining, west China's Qinghai Province, Feb. 26, 2010, two days before the Chinese Lantern Festival which marks the end of the Spring Festivals.

March 1, 2010

Hong Kong*: Hong Kong stands to cash in on the latest thaw in cross-strait relations after the Taiwanese regulator said that it would lift some restrictions on investments in the city's market. The Financial Supervisory Commission announced on Thursday that it will allow Taiwan's securities companies to invest in Hong Kong red-chips and exchange-traded funds (ETFs) with exposure to China. "For investors in Taiwan, having more choices to invest in should be better," said Tetsuo Yoshikoshi, a senior economist at Sumitomo Mitsui Bank in Singapore. "Some active investors will try to make the best of this opportunity and may do some investments in Hong Kong [which] would give some positive impact to the Hong Kong market." Taiwanese investors have had to open accounts with local trading firms or use alternative channels in order to tap into Hong Kong's mainland related stocks. The removal of restrictions could trigger an increase in fund flows to the market. The Hang Seng Index outpaced the rest of the region on the news, climbing 209.13 points, or 1 per cent, to 20,608.7. A measurement of 34 red-chips - mainland companies incorporated and listed in Hong Kong - increased 0.86 per cent and snapped a two-day decline. Hong Kong Exchanges and Clearing (SEHK: 0388), the operator of the local stock market, gained as much as 1.6 per cent before finishing up 0.54 per cent. The new measures adopted by Taiwan's FSC will take effect following "administrative formalities", said Wu Guei-mao, chief secretary of the FSC's Securities and Futures Bureau, according to Taiwanese media reports. Wu added that securities firms would still not be allowed to trade in H shares - mainland companies listed in Hong Kong. The once-frosty relationship between Taiwan and the mainland has thawed following the election of Ma Ying-jeou as the island's president in 2008. The two sides have since struck a range of deals. Hong Kong has also benefited from the increasing ties with Taiwan and has agreed to allow ETF's to cross-list in the two markets. The Polaris Taiwan Top 50 Tracker Fund (HK) listed locally in August. It may take some time, however, before improving cross-strait relations have a major impact on Taiwan's financial sector, Nomura analysts including Sean Darby wrote earlier this month. "To date [they] are short of market expectations and limited QDII Investment quotas reinforce our view that the market has been overly excited over the scope of relaxation," the Nomura report said. Taiwan announced a lower-than-expected initial capacity of US$500 million last month for the qualified domestic institutional investor scheme allowing mainland funds to invest in the island's stocks. The island's Weighted Index zoomed up 78.3 per cent in 2009 as investors bet that the island's growing ties with the mainland would translate into immediate dividends. The index has been the worst-performer in the region so far this year, however, and is down 9.2 per cent.

Hong Kong may be on the verge of importing labor for the first time in more than a decade to bolster the ageing construction workforce, industry figures believe. They point to a string of multibillion-dollar projects about to take off. The possibility emerged yesterday as the government outlined a package of measures aimed at attracting new blood to the industry with subsidies and higher pay. A government minister did not rule out importing labor if they did not succeed. Presenting the measures, Secretary for Development Carrie Lam Cheng Yuet-ngor acknowledged the government faced an uphill battle to attract young workers to the industry. "More than a third of the workers are over 50 whilst only six per cent are under 25," she said. The minister said there was no immediate need to consider importing labor but the situation might change. "We are spending so much money on these infrastructure projects we do not want to see one day that we need to import labor." Lam said that, as a politically accountable official, she knew the issue was highly contentious. "I really hope ... we do not have to contemplate [it] at all," she said. When Hong Kong imported foreign labor for a number of industries, including garment factories, hotels and construction in the late 1980s and early 1990s, it was hotly contested even though the overall unemployment rate was below 2 per cent at the time. It is now 4.9 per cent. The construction workers' union said importing labor was not an option. "There is no room for any negotiation on that issue at all. We are totally against it," the president of the Construction Industry Employees General Union, Chow Luen-kiu, said. But a member of the Hong Kong Construction Association who did not want to be named said even though the sector did not want to import labor it might be forced to do so to build the government's 10 planned infrastructure projects, including the Hong Kong-Zhuhai-Macau Bridge, the cross-border express railway and the Kai Tak cruise terminal. "We really find difficulty in attracting new people to the trade. And we will face furious competition on labor if projects in Macau resume," the member said, referring to big casino and resort works that were stalled by the financial crisis, leading to thousands of lay-offs. Key industry players agreed. Colin Jesse, Hong Kong and China managing director of infrastructure consultancy Evans & Peck, said that if the 10 infrastructure projects went ahead as planned, "it is going to lead to a requirement for foreign labor". "The average age of a carpenter in Hong Kong is 55," Jesse said. "There has been little or no new blood in the industry in the past 15 years. When this incredible new demand starts, there is simply not going to be sufficient experienced human resources available." "Every construction company in Hong Kong will face a shortage of labor in bidding for the 10 major infrastructure projects. There is a problem in getting skilled labor for them," said Yam Kong, general manager of HCCG China Holdings, a subsidiary of Hong Kong-listed Hsin Chong Construction Group. In the next financial year alone, the government has set aside nearly HK$50 billion for projects it says will employ 62,500 people. Lam said the shortage might not be an overall one but perhaps a shortage of skills in certain areas and the government was trying to fill that gap. "What we are now doing is trying to anticipate that, as a result of a surge in public works as well as private sector projects, there may be a shortfall," she said. In Wednesday's budget, HK$100 million was earmarked to support Construction Industry Council incentives to attract young people to the industry and to improve the practices of the trade. At present, trainees taking the council's short courses are entitled to a daily training allowance of HK$90, equivalent to about HK$2,000 a month, during their 12 to 13 weeks of training. "We will increase the training allowance to an average of HK$5,000 per month," Mak Chai-kwong, permanent secretary for development, said yesterday. Details have yet to be confirmed but Mak said the allowance would be given over three years to 3,000 trainees in occupations where recruitment was difficult, including bar-benders and fixers, shot firers, plumbers and metal workers. The government would encourage employers to hire graduates from the trainee program and pay them a starting salary of at least HK$8,000 per month, rising to at least HK$10,000 after six months, he said. Conrad Wong Tin-cheung, president of the Hong Kong Construction Association, said employers supported the incentives. "We really face a problem attracting new blood," he said.

Former TVB actress Katie Chan outside the Family Court yesterday. She has been married to Michael Hotung, nephew of tycoon Stanley Ho, for about 20 years. Former TVB (SEHK: 0511) actress Katie Chan Fok-sang was mobbed by photographers and journalists yesterday when she turned up for the first hearing at the Family Court since she and her estranged husband, Michael Ho-tung, announced in December that they were seeking a divorce.

The government may hand Wan Chai Police Station to the private sector for 50 years for conversion into a hotel, but critics say the lease should be carefully drafted so the public will still have some access to the site. The Development Bureau announced on Thursday that the grade-two historic site in Gloucester Road will be preserved and rezoned for hotel use and sold through an open tender later this year. A person familiar with the project said yesterday the bureau was considering tendering out the site for 50 years, the same as the Murray Building, a government office block in Central, which will also be converted into a hotel through tender. The person said the bureau opted for a commercial tender instead of leasing the 1,950 square meter site to non-profit organizations to reduce the cost to taxpayers. The police station site will be tied in with police quarters behind it in Jaffe Road, which will be demolished to allow for developments to make the project commercially viable. The police station, built in 1932, was on the edge of the harbor until reclamation in 1976. Now the only historic structure remaining along the Wan Chai coastline, the four-storey building features a facade with verandahs on every floor. A gun room, a dormitory for Chinese detectives, chimney stacks, fireplaces, arch doorways and detention cells have remained intact. The hotel operator would be required to preserve some old features, set up an exhibition hall and organize guided tours for the public. The lease period for this project would be the same as the former marine police quarters in Tsim Sha Tsui. The government has been criticised for having loose control over this monument site, which was leased to a subsidiary of Cheung Kong (Holdings) (SEHK: 0001) for 50 years in 2003 to run a hotel and mall. The hotel operator was recently found to have stopped a member of the Antiquities Advisory Board from taking photographs on the site, saying the area was private. Officials say they have "learnt a lesson" and would avoid handing over a public heritage site to a private company for such a long period. But the person familiar with the project said it should not be compared with the former marine police quarters, also known as 1881 Heritage. "It's not fair because 1881 Heritage was conceived, planned and implemented as a tourism project." Susanna Chiu Lai-kuen, the member who was barred from taking photos, said the terms of the lease for the Wan Chai site should be clearly drawn. "The operator has to make clear what areas are accessible to the public and that historic features are clearly marked rather than hidden." She suggested a lease of 10 to 20 years to guarantee cost recovery. After that it would be subject to renewal depending on performance. Eric Lee Chung-ming, a conservation architect, said the new building on the police quarters site should be designed so as not to steal the limelight from the heritage architecture.

While a more expensive yuan would eat into the profits of Hong Kong exporters in the Pearl River Delta, it would please politicians and importers in the United States and Europe. A study of how the mainland's export sector would be affected by an appreciation of the yuan has revealed that Hong Kong exporters fear that a stronger currency will jeopardize their recovery. The Ministry of Commerce and Ministry of Industry and Information Technology recently conducted a so-called stress test. It asked labor-intensive exporters in the textile, garment, toy and shoe industries how a stronger yuan would affect their profits, according to the 21st Century Business Herald, an official newspaper. Exporters were also asked about their ability to pass on the financial impact to their customers. Some economists said the study would give Beijing a benchmark for currency policies, but they did not think it marked the resumption of yuan appreciation. "The test is not a surprise," said Tao Dong, Credit Suisse chief regional economist, excluding Japan. "However, I doubt whether it can reveal the true damage of a stronger yuan on the export sector and the labor market." Tao said the mainland government would have to tighten monetary policies slightly and allow the yuan to appreciate to prevent the economy from overheating. But it risked flirting with currency speculators, he said. Tao expected the value of the yuan would strengthen by as much as 5 per cent against the US dollar in the second half. Beijing allowed the yuan to climb only 0.1 per cent to 6.82 last year at a time when mainland exports were hit hardest by the global downturn. However, the currency rose 16 per cent in the three years to 2008. A more expensive yuan would harm Hong Kong exporters in the Pearl River Delta, shaving off profits, but it would please politicians and importers in the US and Europe. International pressure on Beijing to lift the yuan intensified yesterday. Fifteen senators in Washington criticised mainland officials for undervaluing the currency to give exporters an unfair edge and for failing to honor a promise to allow it to appreciate. The commerce ministry said it would keep the exchange rate stable. Hong Kong Small and Medium Enterprises Association chairman Danny Lau Tat-pong said a stable yuan regime would offer certainty for business and financial planning. Lau, whose factory in Dongguan produces curtain walls for Hong Kong buildings, said he would have to charge customers an extra 7 per cent for every 1 per cent rise in the yuan against the US dollar, to offset the impact. But he said customers would not readily accept higher prices and he would likely have to absorb the impact. "Yuan appreciation is extremely damaging to the export sector and directly eats into exporters' bottom lines," he said. "Smaller firms operating on narrow margins are particularly vulnerable to the damaging impact." Lau noted that yuan appreciation would aggravate what had already become a difficult operating environment, beset by chronic labor shortages, soaring raw material prices and smaller overseas orders from importers demanding quicker turnarounds. Iris Lam, business promotion director for shoe exporter Onlen Fairyland (Hong Kong), said manufacturers could no longer rely on overseas orders and should spread currency risk by selling products in the domestic market. "As the yuan is going to appreciate anyway and the US economy is still shaky, why not take the chance to expand into the mainland consumer market?" she said.

China*: Around half of Americans believe the US will play a smaller role in global affairs in coming decades, with many predicting a "Chinese century", a poll said on Thursday. The Washington Post-ABC News survey comes at a time of uncertainty in relations between the US and China, which is flexing its muscles on political and trade issues. The survey found that 46 per cent of Americans believed their country would play a smaller role in the 21st century than in the 20th. Thirty-two per cent predicted a larger US role. The rest said it would stay the same. When asked only about economic clout, 53 per cent expected a smaller US role this century. Forty-three per cent believed the 21st century would be more of a "Chinese century", while 38 per cent thought it would be another "American century". Many Americans were alarmed by the trend. Thirty-nine per cent said it would be bad for the US to play a smaller global role; 19 per cent said it was a good thing and 40 per cent said it was neither good nor bad. The poll randomly surveyed 1,004 adults by telephone. The margin of error was five percentage points. China's economy has been growing at a breakneck pace, fuelled by a manufacturing industry that has led the "Made in China" label to become omnipresent in US stores. China has bought more than US$750 billion worth of the US' ballooning debt, although it cut back its holdings last year. Despite concerns in some American circles about its rise, China remains a much poorer nation than the US. The billion-plus nation's per capita annual income was US$2,940 in 2008, compared with US$47,580 for the United States, according to the World Bank. The poll said the findings mirrored US concerns about Japan two decades ago. A 1991 survey by ABC News and Japan's public broadcaster NHK found that 60 per cent of Americans saw Japan's economic strength as a threat. But Japan was just entering its "lost decade" of zero growth.

A study of how the mainland's export sector would be affected by an appreciation of the yuan has revealed that Hong Kong exporters fear that a stronger currency will jeopardize their recovery.

Chinese high-rollers throw Las Vegas lifeline - What happens in Vegas may indeed stay in Vegas, but the fortunes of America's Sin City are becoming increasingly dependent on what happens in mainland China. The Las Vegas Strip finally showed signs of a turnaround late last year, snapping an unprecedented 22-month losing streak that saw casino revenues decline to their 2004 levels despite the addition of tens of thousands of new hotel rooms in the US gaming capital. But a closer look at the numbers shows that the tentative recovery has so far been one-dimensional, and it appears to be coming from an unexpected source: China. High-rolling baccarat players flown in from the mainland, which is awash in cash, appear to have single-handedly driven the recent turnaround in Vegas. Las Vegas Strip baccarat revenue - considered by analysts to be a proxy measure for high-stakes Chinese play - rose 26.5 per cent last year and 100 per cent in the fourth quarter. By contrast, revenue from Americans' beloved slot machines and all other casino games contracted 14.6 per cent last year and 11 per cent in the December quarter. That non-baccarat downtrend continues, as the strip's usual core clientele of domestic holidaymakers and corporate conventioneers are still reeling from the effects of the financial crisis. US unemployment remains high, many business travel budgets are still tight and consumer spending is unlikely to return ton its credit-fuelled binge levels any time soon. "Baccarat gains are likely a function of inbound play from China, where high-rollers have enjoyed the benefit of material real estate and stock market gains in 2009," says Bill Lerner, a Las Vegas-based analyst at Union Gaming Group. He said several major high-end strip casinos were prompted to increase betting limits by 30 per cent, to US$300,000 per hand, during this month's Lunar New Year holiday. Vegas has been courting high-rollers from Asia for at least the past three decades, particularly during Lunar New Year, but since the opening of Macau's casino market to US operators such as Wynn Resorts, Las Vegas Sands and MGM Mirage, the competition for China's gambling dollars on both sides of the Pacific Ocean has increased greatly. Earlier this month, holiday visitors driving down the Las Vegas Strip were greeted by streetside LED marquee signs in front of resorts that flashed Chinese language greetings for the Year of the Tiger. Interiors of major strip resorts like the Bellagio, Venetian and Caesars Palace were bedecked with elaborate gardens, citrus trees and bamboo groves, according to the Las Vegas Sun. Red and gold lanterns abounded, while a statue of the God of Fortune as well as Chinese language scrolls wished New Year's blessings on punters. Lion dances were almost as common as showgirls, restaurants offered special holiday menus at their Asian restaurants and Hong Kong Cantopop star Sam Hui gave a concert at one of MGM's casinos. MGM, the largest private employer in Las Vegas and owner of 12 casino resorts in the city, had its "best year ever last year" in terms of business from international high-rollers, according to chairman and chief executive Jim Murren. "That was driven mostly by our customers in Asia," Murren told investors last week on a conference call. "We know we've been outperforming the strip here in the baccarat numbers, and we think we can continue to do that." But if Vegas appears to have been riding on the dragon's back out of its economic doldrums, it may be time to check that bet. Analysts are beginning to worry that Beijing's recent moves to sop up liquidity on the mainland could throw a wet blanket on the strip's baccarat boom. "Without the benefit of baccarat, Las Vegas Strip gaming revenues would have been notably weaker and we're concerned about the strength of the source," Lerner wrote this week in a research note. "We are concerned about the impact that monetary policy changes in China will indirectly have on this Las Vegas play, especially if there is a lag in recovery for Vegas' other segments." Twice in a month, the mainland's central bank has raised the ratio of cash to deposits that lenders must keep on reserve in an attempt to cool lending. Analysts are divided over when Beijing will begin hiking broader interest rates, but most expect increases to begin some time within the next nine months. There are growing concerns that there will be knock-on effects for the ability of Chinese VIP junket agents and the high-rollers they solicit to gain access to casino credit and repay gambling debts. Mainland VIP players often rely on credit to fuel overseas gambling sessions. However, others remain unfazed. Sands China, the Hong Kong-listed Macau unit of Las Vegas Sands, has been working to reposition itself away from the credit-dependent VIP segment and focus instead on the mass market, which tends to consist of relative low-rollers who gamble with their own cash. "There is a lot of discussion going on right now in terms of the liquidity and the excess thereof in the China marketplace and the impact on Macau when and if they start to really restrict the additional credit," Sands China president and chief executive Steve Jacobs said last week. "That will have a far more pronounced impact on the VIP business and I think on the junket business than it will for us, primarily because the majority of our business is mass oriented."

China trade boon for Australia - Australian business investment rebounded in the fourth quarter, a sign the economy is strengthening enough for the central bank to raise interest rates next week for the fourth time in six months. Capital spending advanced 5.5 percent from the previous quarter, when it fell a revised 5.2 percent, the Bureau of Statistics said in Sydney Thursday. The median estimate of 19 economists surveyed by Bloomberg News was for a 2 percent gain. Rising Chinese demand for Australia's iron ore, coal and gas is fueling what central bank Deputy Governor Ric Battellino this week described as a record boom in mining investment that will fuel economic growth. Falling unemployment and a jump in consumer confidence, helped by Prime Minister Kevin Rudd's A$42 billion ($38 billion) stimulus package, were among reasons policymakers boosted borrowing costs three times last quarter. "These are good signs that businesses are certainly looking at the economic recovery confidently and dusting off those mothballed investment projects," said Savanth Sebastian, an economist at Commonwealth Bank of Australia in Sydney. Investment plans of businesses are at the highest level in five years, "and there are very good signs they'll follow through on those plans, which is heartening for the Reserve Bank", said Sebastian, who predicts a quarter-point increase in the benchmark interest rate to 4 percent next week. The Australian dollar traded at 89.35 cents at noon in Sydney from 89.36 cents just before the report was released. The two-year government bond yield fell 1 basis point to 4.66 percent. A basis point is 0.01 percentage point. Companies forecast investment of A$110.6 billion in the year ending June 30, which is 6.7 percent more than they estimated three months earlier. They plan A$101.4 billion of new investment in the year ending June 30, 2011. BHP Billiton Ltd, the world's largest mining company, said this month that it will increase capital spending on iron-ore mines and oil fields by 63 percent next year to $20.8 billion from $12.8 billion this year.

China has passed a new law formally granting the military the power to control banking, energy and foreign-invested factories on the mainland in times of war or major disaster.

Visitors light paper lanterns forming the shape of heart in Window of World Park, Changsha of central China's Hunan province February 26, 2010. China's Lantern Festival falls on Sunday.

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.

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

pon.jpg (13583 bytes)    Powered by - "Connecting the Building Industry"        BEST Airline & Hotel Offers - enter to save $


Honolulu USA

Hong Kong

Shanghai PRC

Taipei ROC

San Francisco

New York

London England