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Editorial Editor Jamshed Ullah News Editors Summer Wong Ji Long Mike Lincoln Jenny Alvin Research & Analysis Wang Aiguo He Cheng Shi Chengwei leon Ludwig Uzma Zafar

Designing & Layout Asmat Ullah Khan Awais Shehzad Raja Pervaiz Technical Support Sultan Haroon Iqbal Bukhari Co-ordination Sobia Noreen Internet Edition John Nelson Rehmat Chughtai Contact Head office:

A Powerful financial indicator


ccording to a globally credible survey report, China has emerged as the most financially secure country in an index jointly launched by PICC Property and Casualty Co Ltd, the largest non-life insurance company in the Chinese mainland, and Genworth Financial Inc, a Fortune 500 insurance holding company. The report that surveyed 13,000 households in 14 European countries, and five Latin American countries and China. China scored 78 out of 100, the highest score of any country and the highest since the index was launched in 2007. Only 3 percent of Chinese households are financially vulnerable, whereas the same figure for Germany is 22 percent and 26 percent for France, according to the report. Of more than 1,000 households surveyed in Beijing, Guangzhou, Shanghai and Wuhan, only 1 percent said their financial situation will worsen over the next 12 months. Only 3 percent believed they were financially vulnerable, while 97 percent said that they have rarely experienced financial problems or had a positive outlook for the future. Digging deeper into the survey's underlying results, some 39 percent said they had seen their total household income fall due to several factors. Forty-eight percent reported it was due to a drop in level of income, 20 percent reported it was due to stopping work for health reasons, and 12 percent said it was due to job loss. The majority of Chinese household assets were in property. PICC and Genworth's report cautioned that Chinese households were too focused on property investments, and said their investment portfolio should be diversified. We believe that this report is a very powerful indicator with regard to future of China’s economy and foreign investments in this emerging financial capital of the world.

CASH Mass Media, 1102-1103 11th Floor, Longhang No 555, Nathan Road, Mongkok, Kowloon, Hong Kong

Islamabad Office: Shakeel Chambers 01 Khayban-e-Soharwardy, Islamabad Email:


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in this issue 26, 02 May 2013 04

Cover Story

Beijing to shut Coal-fired boilers to clean up air 06

Three Big cities slip as magnet for China Dream

Growth in Chinese investment in Germany will maintain momentum in the near future while experts call for more cooperation in the manufacturing sector.

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in this issue 09

'Blue Economy' key to Qingdao's future

Lenovo posts record results



Hong Kong's exports up by 9%

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Beijing to shut Coal-fired boilers to clean up air


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"You have to wear a mask every day while outdoors or you would be eating coal CED Monitoring BEIJING-Beijing has vowed to eliminate most coal-fired boilers in the city center by the end of 2015 to reduce pollution from fine particulate matter, especially during the heating season. After reducing coal use by 700,000 metric tons last year, the capital plans to cut another 1.4 million tons this year and use no more than 21.5 million tons, according to the 2013 coal consumption reduction plan released by the city's Environmental Protection Bureau and Commission of Development and Reform. The capital used 26.35 million tons of coal in 2010, the environmental bureau said. Beijing still has a large number of coal-fired central heating boilers that give off large amounts of coal dust, and noise during the heating season. Richard Saint Cyr, a family medicine doctor at United Family Health in Beijing, said he has noticed an uptick in discussions about the worsening air quality with many patients since winter. He said that air pollution in the past winter was unusually serious and he had never witnessed such collective anxiety in Beijing.

Fine particulate matter poses a serious threat to people's hearts and lungs, he said. Shang Wenchao, 28, a lifelong Beijing resident, said he used to clean his nostrils before going to sleep in winter because the air he breathed was filled with soot from burning coal. "You have to wear a mask every day while outdoors or you would be eating coal," he said. Shang said the situation is much better now, but the pollution is still worse in the winter because of the coal-fired boilers. In response, the city's Environmental Protection Bureau is taking action has said it will replace coalfired boilers within the Fourth Ring Road with clean energy by the end of 2015. All coal-fired boilers with a capacity of generating 20 tons of steam per hour and above will be replaced with clean energy by the end of 2015, it said. The last five coal-fired boilers at Shougang Machinery Co's heavy machinery branch in the Shijingshan district were shut down in March, making Shijingshan the third city district without coal-powered heating, after Xicheng district and Dongcheng district. 05

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Three Big cities slip as magnet for China Dream CED Monitoring SHANGHAI-Usually Beijing, Shanghai and Guangzhou, the three most developed Chinese cities, monopolize three of the first five places in any ranking of economic competitiveness. They are commonly known as Bei Shang Guang for short. For a long time Bei Shang Guang has been a magnet for students fresh out of university. Promising higher pay and a brighter future, the three cities are prime places to work and live for ambitious young people, who are often nicknamed bei piao or hai piao, meaning migrants living in Beijing and Shanghai. There is no corresponding term for Guangzhou.


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Despite the financial pressure and stress of life in these cities, as well as a risk of thwarted aspirations, young people continued to be drawn to them like pilgrims - until recently. Last year saw a series of news reports about youths fleeing the hustle and bustle of Bei Shang Guang they once called home. All of a sudden, it seems the former land of opportunity and hope has lost much appeal. Collective frustration with reality in big cities is given an outlet in "Beijing Beijing," a rock song wildly popular for its reflection of the distance between dream and reality in the Chinese capital. A recently released survey also lent credence to the view that Bei Shang Guang has slid a little in terms of attractiveness, or in the words of the survey, "harmony." The outgrowth of the survey, conducted by Chinese Academy of Social Sciences, is a bluebook issued on May 19, titled "2013 Bluebook on Chinese Cities' Competiveness New Criteria, Constructing Sustainable, Competitive, Ideal Cities." The rather lengthy title of the report belies its concise, unconventional findings. For the very first time, Bei Shang Guang 08

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wasn't short-listed among the first 10 results. Beijing ranked 14th, Guangzhou came in 19th while Shanghai fell even further behind, at 21st. The first and runner-up places went to Hong Kong and Macau. Only last year, the three cities still enjoyed the pride of place, with Beijing ranking 3rd, Shanghai 4th and Guangzhou 6th, respectively. The three poster children of Chinese economic vitality scored so badly this year mainly because, according to Yang Jie, a chief author of the Bluebook, they scored low in harmony, a studied topic. Yang named two reasons for the lapses. First, the hukou system, or household registration, is much more rigid in Bei Shang Guang than in secondand third-tier cities, resulting in less equal opportunity. Second, crime is higher in the "Big Three" cities than in others. The second reason is not hard to understand, as higher crime rate is a natural byproduct as cities grow in size. As for the first reason, lack of harmony, it is born of a quandary confronting the three megalopolises. On the one hand, they need migrants, not just young talent, but laborers as well, to keep them going. But the influx of migrants inevitably leads to social and fiscal tension, as the newcomers share a sliver of the social welfare 10

pie. This pits them against the locals, the vested interests, who oppose any new arrangements that dilute their benefits. A graphic instance is the schooling row that erupted in Shanghai last year. Due to hukou, the children of migrants cannot participate in local university and high school entrance exams. They have to travel back home to sit the grueling tests, a requirement that many perceive as unfair. Prompted by a migrant schoolgirl's online campaign for what she called "equal rights to education," many people last year attacked Bei Shang Guang for shutting the door on migrants and reserving their prestigious schools, arguably the nation's best, disproportion-

ately for the locals. It is a lot harder for a student from, say, Henan Province, to be admitted to Tsinghua and Peking universities, practically China's Harvard and MIT, than for his or her Beijing counterpart. While such arrangements do favor residents of Bei Shang Guang and are rigged against migrants, they are fiercely supported by the locals who refuse to yield ground to migrants. While there is some relaxing of hukou locally, its sweeping reform is highly complicated and thus a long way off. Drastic measures to waive it will open the floodgate for mass migration, to the chagrin of city managers concerned about stability and provision of public goods.

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But harmony is not the only category in which Bei Shang Guang did poorly. They also lagged behind in government openness, transparency and good governance. This was a surprising conclusion, as the country's most cosmopolitan cities, their officials are believed to be more open-minded and liberal. The fact that Bei Shang Guang was unseated from positions of glory by a few secondand third-tier cities in the bluebook has spawned controversy. After all, the latter's need for population to fuel their growth has naturally prompted schemes to relax hukou as part of their charm offensive to woo talents. But does that more equal treatment bring "harmony"? Not necessarily. Xinhua reported last year that after many fled Bei Shang Guang, only to find more nepotism back home, they return to the big cities where upward mobility entails greater efforts and less cronyism. The situation is reminiscent of acclaimed writer Qian Zhongshu's novel, "Wei Cheng,"("Besieged City") in which the writer famously says "people within the city want to leave it, while people from without want to get in." For all the partiality of its criteria, in general the bluebook is a progressive development, in that it assesses the achievements

of urban China from a brand new perspective, takes into account more human-interest factors like equal opportunity and interpersonal relationships, instead of the usual keywords of industrial output, GDP and growth rate. At the same time, the bluebook is a development in keeping with the buzzword "China Dream," a brainchild of President Xi Jinping. At a recent seminar, famed British scholar Martin Jacques, the author of "When China Rules the World," interpreted "China Dream" as representing a possibility of wide horizons and a broad vision, such as a better relationship at work or balance of life for average Chinese. When this possibility is encumbered and shattered by the rigidity of hukou, people's potential becomes trapped, a tragedy for the individual and the nation at large. Lately media reports have zeroed in on the difficulty of fresh college graduates in landing a job. So far this year, only 44 percent of them reportedly have received offers from employers. In Bei Shang Guang, where competition is more intense, the employment headache is acute. In a speech on May 4, a day when all of China commemorates the patriotism of youths protesting Western partitioning of Chinese sovereignty 94

years ago, President Xi said the nation must inspire hope in the youth, who in themselves embody hope for the future. Indeed, if a large majority of the nation's young people are unemployed, the consequences are unpleasant, both for social stability and for a country on its way up in the world. That's why the results of the bluebook are all the more worthwhile and important. More efforts are needed to dispel some young people's gloomy vision of their prospects. And this job can start with making cities like Bei Shang Guang more youthfriendly, and to a larger extent, migrant-friendly. Inclusive growth, a mandate of the new leadership, provides dynamics for the social harmony politicians crave. Although long-running obstacles to this new growth goal won't go away overnight, and any precipitous reform of hukou will likely escalate the conflict of interests between locals and migrants, we trust our politicians, wise as they are, to provide better public services for people earning their livelihoods in urban China. They have every right to dream about a better future, to realize their personal "China Dream," in full harmony with cities where they are treated more as residents than sojourners. 11

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'Blue Economy' key to Qingdao's future 12

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CED Monitoring BEIJING-Qingdao, a coastal city in Shandong province, will be at the forefront of the drive to develop a "blue economy" in China, said a senior local official. The blue economy is generally defined to include all marine industries, though it means much more, said Li Qun, Party chief of the city. The 18th Party Congress, which concluded in November last year, called for the country to become a "maritime power". The country has vowed to increase input to safeguard its maritime rights and interests, develop a marine economy and better protect oceanic ecology.

"Qingdao will seize this historic opportunity," Li said. "Blue economy will lead the city to adjust its development mode and upgrade its industrial structure." The city is home to 30 percent of the country's oceanic research institutions and about half of the top experts in marine science and technology. More than 70 percent of academicians in oceanic fields from the Chinese Academy of Sciences and Chinese Academy of Engineering have research teams and facilities in the city. "They have brought with them the leading marine science and technology research teams in the country to Qingdao," Li said.

Their research has laid the foundation for the city to become an international base for the biotechnology industry, shipping and oceanic engineering, he said. To boost its marine economy, the city government has mapped out three key zones Blue Silicon Valley, the West Coast New Economic Zone and the Hongdao Economic Zone. Qingdao has a land area of more than 11,000 square kilometers and a coastline of about 700 km. The vast area provides ample development space for these zones. Qingdao will make full use of its rich talent pool to build a "Blue Silicon Valley", a worldclass research and develop13

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ment center for marine science and technology. In February last year, the development plan of Qingdao Blue Silicon Valley was unveiled. With an area totaling 576 sq km, the zone is designed to host a large batch of high-tech research centers and companies specializing in marine science and technology. An obvious reference to the technology center in the United States, the name Blue Silicon Valley is a sign of the government's ambition for it to become the driving force of cutting-edge marine science 14

and technology development, Li said. The West Coast New Economic Zone features several industrial parks in different fields. With an area of more than 2,000 sq km, the zone is similar to Binhai New Area, Tianjin's large economic zone. The zone includes a Statelevel economic and technological development zone, a bonded port area and an export-processing zone. It also hosts the Sino-German Ecological Park and the China-Japan-ROK Innovation Industrial Demonstration Park. Located across the sea

from Japan and the Republic of Korea, Qingdao will benefit a lot from the potential development of a free trade area among the three countries. "We hope to make full use of the advantages of the West Coast New Economic Zone and build it into an economic zone with the highest level of openness, the most preferential policies and the most-convenient transportation," Li said. According to the government's strategy, by 2015, the GDP of the West Coast New Economic Zone is expected to reach 500 billion Yuan ($81 billion).

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And by 2020, the GDP is to exceed 1 trillion Yuan . "Our task is to make the zone grow bigger and stronger," Li said. "Our goal is to double the economic aggregate of Qingdao in five years through the development of the zone." The third zone, the Hongdao Economic Zone, is designed to be a center for high-tech companies. Though the city already leads the nation in the development of the blue economy, more breakthroughs are expected in many fields, Li said. Innovation is the key to

achieving breakthroughs, he said. The major difference between the blue economy and the marine economy is science and innovation. The Qingdao government will adopt a series of policies to boost the development of the marine economy. Preferential policies in terms of mortgages and bank loans have been implemented to help entrepreneurs to expand their businesses. The government will also lead efforts to set up funds to finance promising startups. Meanwhile, the city has taken steps to attract high-end

talent. More than 10,000 top professionals from overseas have been attracted to the city so far. In terms of infrastructure, Qingdao is making rapid progress in the construction of the Port of Dongjiakou and a high-speed railway linking Jinan and Qingdao. The city will also give priority to environmental protection, Li said, adding that the government will improve local marine laws and strengthen their enforcement to protect the seas. "We will leave the best sustainable resources to our offspring," Li said 15

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CED Monitoring BEIJING-China's securities watchdog announced on Friday that a memorandum of understanding has been signed with the United States on the sharing of audit details on Chinese companies listed in the US, in a move aimed at cracking down on illegal listing and trading activities. China Securities Regulatory Commission said the MOU was signed by the commission, Ministry of Finance and the US audit regulator, the Public Company Accounting Oversight Board. The Chinese will offer audit details of Chinese companies listed on US markets to their US counterparts, based on Chinese law and regulations, said a CSRC spokesman. The China affiliates of five accounting firms Deloitte, KPMG, Pricewaterhouse-Coopers, and Ernst & Young - were charged by US market regulators in December with violating securities laws for refusing to provide audit data related

to investigations into some China-based, but US-listed companies. But some of the firms said that despite assisting with the probes they were caught in legal differences between the world's two largest economies and that turning over the papers would put them in violation of Chinese laws. The CSRC spokesman said the audit cooperation would help Chinese companies clarify facts, and raise future funds on overseas markets more smoothly. The CSRC and the Ministry of Finance said they remained to be committed to cracking down on illegal activities and maintaining the integrity of the market, while positively seeking cooperation with overseas regulators on the healthy development of the global capital market. Under the agreement, the PCAOB will be able to share documents with the US Securities and Exchange Commission, but only if they were obtained through a PCAOB enforcement action.

China has previously expressed concern over exposing nationally sensitive corporate information, raising fears that China-based auditors would be deregistered by the PCAOB. Nie Lei, a partner at PwC China, told China Daily that offering audit details will make US investors realize that Chinese companies are confident about going abroad to get listed. "Quality companies are not afraid of offering their core information, and it is a good way to screen companies against financial fraud," said Nie. Zhang Yifan, a hedge fund analyst who requested his company name be withheld, added: "This cooperation between China and the US is a good thing, and a compromise for both sides." Zhang said most companies listing in the US through IPO are solid, and any with problems are normally those who seek a listing through the back-door, using small accounting firms. 17

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Samsung breaks record of Smartphone sales in China 18

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CED Monitoring SHANGHAI-Samsung topped China’s smartphone sales for the first time last year, and the Korean firm has taken that momentum into this year, after selling a record 12.5 million smartphones in China during Q1 2013, according to Strategy Analytics. The research firm’s latest figures are reported by the Korea Herald (via Sammy Hub) and are particularly impressive given that Samsung sold a total of 30.06 million smartphones last year. That 2012 figure was a record annual sales haul for the firm — and tripled its sales from 2011 — but, given its early progress this year, Samsung looks set to smash that record once again in 2013. Strategy Analytics’s Q1 2013 data put Huawei behind

Samsung in second place on 8.1 million units sold, having overtaken Lenovo — which has announced its intention to launch devices in the US this year — which sold 7.9 million smartphones. Chinese phone makers Coolpad (7 million smartphones sold) and ZTE (6.4 million) rounded out the top five, with Apple coming in sixth with an estimated 6.1 million iPhones sold during the threemonth period. Nokia was ranked first on Chinese smartphone sales back in 2011, but its slide continues and it was not even noted in the Korea Times report. LG, another struggler, recorded its worst ever quarter of business in China to date, shifting just 100,000 smartphones to give it a meager 0.1 percent of the market. All in all, 67.4 million smart-

phones were sold in China during Q1 2013, Strategy Analytics estimates. That accounts for 32 percent of all global shipments during the period. Note: The data provided cited by Korea Herald appears (once again) to be from private, client-facing Strategy Analytics reports. We’ve touched based with the research firm to try to get our hands on further details. S a ms ung’ s i nd us try d omi nance is developing into a global norm, and the Korea electronics giant is undoubted l y the d ri v i ng force b ehi nd Android. The Google-owned platform was responsible for 43 percent of smartphone profits in 2012, according to S tra tegy Ana l y ti cs , w hi ch d etermined that Samsung accounted for a dominant 95 percent share of all Android rev enue i ts el f. 19

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Lenovo posts record results CED Monitoring BEIJING-Lenovo Group Ltd reported record sales and earnings results for the past fiscal year amid a global recession in the personal computer market. Company executives said mobile devices and corporate business are set to fuel the company's transition in post-PC era. "We are the fastest growing PC vendor globally. Consumer mobile devices and enterprise hardware markets will be our new focus," said Yang Yuanqing, chairman and CEO of Lenovo. 20

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The world's secondlargest PC maker in terms of shipment said its full-year sales climbed to $34 billion, a year-on-year increase of 15 percent. Its annual net income reached $635 million, up by 34 percent. Both figures were the highest in the company's history. Lenovo's fiscal year ended on March 31. In the past quarter, the company paid increasing attention to its smartphone business in hopes the unit will be strong enough to challenge Apple Inc and Samsung Electronics Co Ltd. Yang said earlier this year that Lenovo's major rivals are consumer mobile device giants rather than traditional PC makers such as HewlettPackard Co and Dell Inc. Fueled by strong smartphone sales, Lenovo said its net income reached $127 million in the fourth quarter, a jump of 90 percent year-onyear. "The biggest advantage for Lenovo is the company's brand, channel and production capability in China," said Nicole Peng, research director of Canalys China. Yang said Lenovo is looking for more markets in which to launch its smartphones. The company has a presence in five developing markets and is ready to enter developed markets, where it will face direct challenges from Apple and Samsung.

But analysts said Chinese hardware makers may need more time before taking on the global electronics giants. "Apple and Samsung invested heavily in software and services to build an integrated user experience, and it is in this area that Lenovo and most other domestic companies still have a long way to go," said Peng. Out of China — especially in emerging markets — Lenovo will have to demonstrate its ability to bring out innovative features, and integrate the latest technologies and industrial design, she added. Lenovo had 12 percent of China's smartphone market in the first three months of this year, second only to Samsung, according to industry consultancy iiMedia Research. "The crucial part of Lenovo's business this year lies in the tablet and smartphone businesses," said Peng. "The smartphone business will depend on Lenovo's performance in the Chinese market, which drives the majority of volume." In addition, Yang said Lenovo will continue to support its corporate business arm in the new fiscal year because of its high profit margins. In late April, reports said Lenovo was in talks with IBM to acquire the US company's

x86 server business. The two companies did not ink the deal due to price variance. IBM was seeking $5 billion to $6 billion for its server business, industry website reported. IBM was the world's top server vendor in terms of revenue by the end of 2012. "Servers are the pillar for Lenovo's corporate business unit, we will build this arm through mergers and acquisitions when the price is reasonable," said Wong Wai Ming, the company's chief financial officer. Last year, Lenovo joined hands with EMC after the US company ended a decadelong reseller relationship with Dell, the world's third-biggest PC manufacturer. Lenovo's idea of entering the consumer and corporate markets came after the global PC market suffered its biggest recession in history. US research company IDC warned earlier this year that international PC shipments are poised to see a double-digit slump in the second quarter of this year. Lenovo was the only major PC maker that saw its PC sales increase thanks to the continued demand in Chinese rural areas. Stock in Lenovo, listed in Hong Kong, closed at HK$7.38 (95 US cents) on Thursday, up 2.79 percent from the previous trading day. 21

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Hong Kong's exports up by 9% 22

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HONG KONG - The value of Hong Kong's total goods exports and imports rose 9 percent and 7.7 percent year-onyear in April, respectively, the city's Census & Statistics Department announces. The department said the value of total goods exports rose 9 percent over a year earlier to HK$290.3 billion ($37.39 billion). Within this total, re-exports' value grew 9.3 percent to HK$285.8 billion, while the value of domestic exports fell 4.7 percent to HK$4. 5 billion. Concurrently, the value of goods imports increased 7.7 percent year-on-year to HK$333 billion. A visible trade deficit of HK$42.7 billion, equiv-

alent to 12.8 percent of the value of goods imports, was recorded in the month. For the first four months as a whole, the value of total goods exports rose 5.3 percent over the same period in 2012. Within this total, the value of reexports increased 5.4 percent, while the value of domestic exports fell 1.9 percent. In the four months, the value of goods imports increased 5.6 percent. A visible trade deficit of HK$152.9 billion, equivalent to 12.2 percent of the value of goods imports, was recorded. A government spokesman noted that the value of merchandise exports saw some ap-

preciable year-on-year growth in April, though slightly decelerated from that in March. Exports to many Asian economies grew further by varying extents, yet those to the major advanced economies in the US, Europe and Japan were still distinctly weak. The spokesman commented further that the sustained tepid performance of the major advanced economy markets underlines a still rather unsteady external environment, which might weigh on regional export activities going forward. Hong Kong's export performance will in turn be affected.(XINHUA)


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Chinese investment in Germany to keep its fast growth 24

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Chinese investment in Germany, whether it's greenfield investment to start new businesses or M&As, will help domestic companies learn advanced management from Germany CED Monitoring BEIJING-Growth in Chinese investment in Germany will maintain momentum in the near future while experts call for more cooperation in the manufacturing sector. "Chinese investment in Germany began to pick up in recent years, but the potential has not yet been fully realized," said Feng Zhongping, Vice President of the China Institutes of Contemporary International Relations. "The investment can be expected to expand into sectors of urbanization, ecological protection, new energy and innovation." Meng Hong, a researcher at Renmin University of China, agreed that growth in Chinese investment in Germany will maintain a strong momentum. "The two governments have established favorable policies and measures for boosting mutual investment. Germany has been troubled by slow economic growth in recent years, which provides a good chance for Chinese companies to advance mergers and acquisitions as well as develop new investment cooperation models," Meng said. In 2012, China became

the third-largest foreign investor in Germany in terms of the number of projects, trailing only the United States and Switzerland. Germany attracted 854 foreign investment projects in 2012 and 98 were from China, said Germany Trade & Invest, the nation's foreign trade and inward investment agency. Auto parts and machinery manufacturing accounted for 29 percent of Chinese investment, and energy, mineral and metals for 22 percent, while electronics made up 8 percent. A Bertelsmann Stiftung report said China's investment in Germany rose by about 22 percent year-on-year to $626 million in 2012, and the figure is expected to increase to $2 billion in 2020. "The increasing Chinese investment cooperation in Germany is a very good direction as China is advancing industrial upgrades in manufacturing and restructuring the economic growth model while Germany is very developed in manufacturing," said Xiong Wei, an associate professor at China Foreign Affairs University. Meng said: "Energy and environmental protection will be key issues in the future, as Ger-

many has very advanced technology in these areas. "Chinese investment in Germany, whether it's greenfield investment to start new businesses or M&As, will help domestic companies learn advanced management from Germany, " Meng said. Responding to concerns and complaints about China's increasing investment in Germany, Meng said that "it is understandable in view of China's fast economic growth in the past decades and the Western media's overstating of China's insufficient intellectual property protection". "Chinese enterprises must be well prepared before investing in Germany, and cross-cultural differences could be the greatest challenge as Germany has a very strict and sound legal system in enterprise management, taxation and employment in addition to powerful labor unions. It's better to follow the local business rules and get local services," Meng said. Chinese investment in Germany, on the whole, is very small compared with German investment in China, which increased by 28.5 percent yearon-year to $1.45 billion in 2012. 25

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Valeo's expansion in China shifts to higher gear CED Monitoring SHANGHAI-Valeo Group, the French automobile components and system supplier, aims to make China its largest market in terms of sales in the next two to three years, its president has said. The company, which already has 22 plants in China, plans to add four new factories in the country and expand three existing ones in Foshan, Wuhan and Nanjing this year, according to Edouard de Pirey, the president of Valeo China. In the meantime, Valeo will also hire 1,500 managers and engineers this year in China,

which will eventually become the largest country for the company in terms of the number of employees in 2014. The company currently employs 12,000 people in China. "Our long-term strategy is to make our business in China equal our European business," Pirey said. China represented 10 percent of Valeo's total sales globally in 2012. In the first quarter of this year, the company saw 13 percent sales growth in the Chinese market year-on-year, according to Pirey. Doubling the sales in China by 2015 has been a key objective for Valeo. Pirey said that developing

the customer base and securing future orders for the next two to three years are essential for the company to achieve the objective. The French company invests nearly 10 percent of its sales in innovation and its R&D centers, according to Pirey. So far, the company has set up 10 product development centers and three R&D centers in China. When asked about rising labor costs in China, Pirey said that it is a fact that all companies have to deal with. But instead of moving plants out of China, he said, Valeo will continue to add new plants. 27

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China's Chery Automobile inks partnership deal with BWF 28

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Chery cars are sold in over 80 countries and regions around the world, and sales a cc umul a ted ov ers ea s ha v e amounted to more than 800,000 units, according to Zhou B i ren, v i ce p res i d ent of Chery Automob i l e. "I believe that with this col-

laboration with BWF who has significant influence on the global market, it will be an added push factor for Chery towards international development," he said. Chery's cars and advertisements are on display during the ongoing Sudirman Cup in Kuala

Lumpur, capital of Malaysia, where the company has a decent performance in the past few years. Zhou said Chery may use Malaysia as its base for further development in the Southeast Asian markets. 29

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Decline in imported car prices 'good for market' CED Monitoring SHANGHAI-The prices of imported cars in China continued on downtrend in April and will further decline this year because of fierce market competition and the government's clampdown on luxury consumption. However, analysts said this is a positive signal that the country's passenger vehi30

cle segment is developing in a healthy and rational manner, in addition to closing its price gap with the mature Western markets. "The year-on-year average price in April dropped the most in five months, though the month-on-month rates have fallen no more than 0.1 percent recently," said Cheng Xiaodong, chief auto analyst of the price

monitoring center at the National Development and Reform Commission. "Average prices will continue to decline for a longer period, with my prediction of a 5 percent year-on-year drop in 2013," he added. Cheng said the boom in imported cars in recent years made automakers overoptimistic, which meant that the slowed market resulted in an

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excess of inventory. However, he said he believes the sector's price downtrend sends a positive signal to the market. "The demand is still increasing. Private consumption will pick up to fill the gap as China's affluent middle class is expanding rapidly. We expect a 10 percent sales increase in the imported cars segment this year, so a steady price drop indicates the return of a rational consumption and a healthy market," he said. Zhang Xiuying, an auto analyst with I.S.Engine Consulting Ltd, which specializes in auto price research, agreed. "The average price of imported cars dropped 3.4 percent to about 430,000 Yuan ($70,100) per unit in April as dealers tried hard to promote sales in the past two months," said Zhang. "This was an inevitable result of inventory pressure." Moreover, he said, the government's campaign on reining in luxury consumption reinforced the impact on the segment, which has suffered from a severe market competition among foreign automakers.

Cheng said that the government's policy will continue to have an effect in the short term, and "from a long-term perspective, the price decline is normal. It should go down to close to the level in mature markets in Western countries". He told China Daily that the profit margin of imported cars in China is much bigger than in mature markets such as US and Europe. According to a recent Wall Street Journal report, listed prices of luxury sedans in China are on average 64 percent more expensive than similar vehicles sold in the US, based on a comparison of three models: the MercedesBenz C-Class, Audi A4 and the BMW 3-Series. The gap is even bigger when it comes to imported models, the report said. Even after stripping out consumption taxes and value-added taxes, those three vehicles are still an average of 37 percent pricier in China. "As such the price decline trend will not damage the automakers' profitability," Cheng said.

"By contrast, the shrinking profit margin amid fierce competition and more individual purchases of luxury cars will make the automakers pay more attention to the Chinese market and improve their services." Analysts agreed the drop in price will benefit not only consumers, but also the industry in the long run. In the first quarter, sales growth for luxury vehicles in China slowed to 4 percent, far behind the 13 percent annual growth in the overall passenger car market, according to the China Association of Automobile Manufacturers. The 4 percent figure was even more eye-catching compared with the average growth of 36 percent in the sector over the past 10 years, statistics from consulting firm McKinsey & Co show. However, Yale Zhang, director of automobile consulting firm AutoForesight (Shanghai) Co Ltd, said the single-digit rate is normal and reasonable on a big base of 1.2 million units of sales in 2012. 31

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Chinese companies to build hydro-power plants for Nigeria


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LAGOS -- Two Chinese firms on Tuesday officially commenced the construction of 700 megawatts (MW) Zungeru Hydroelectric Power Plant in Nigeria. The plant, located in central north Niger State, is expected to be completed in 2017 and is being constructed by China-based consortium of Sinohydro Corporation Ltd and Chinese National Electric Engineering Co (CNEEC). Both Chinese firms signed the Engineering procurement construction (EPC) contract with the federal ministry of

power to complete the project by the end of 2017. President Goodluck Jonathan said at the ceremony that the hydro dam project when constructed would generate 700 megawatts of electricity for the country. The Zungeru Hydro Electricity Power Project was conceived in 1982, but due to constraints of funds the construction work could not commence. The president said the 1.293-billion-U.S.-dollar power plant would be the largest power plant to be built by this

administration. The project when completed would open new frontiers to drive the socioeconomic transformation of the entire country to another level. The government has been pursuing a strategy to develop hydro- power projects to meet the desperate demand for electricity. The Nigerian government approved the project in 2012 in order to obtain more electricity, help maintain appropriate power price and promote economic growth and development of the country. (XINHUA)


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Real Estate

China’s Rail industry to see more orders


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BEIJING -- Booming demand for urb a n ra i l tra ns i t from a n increasing number of Chinese cities would reignite the railway equipment industry, the China Securities Journa l rep orts . The National Development and Reform Commission (NDRC) on Thursday revealed an urban transit p l a n for Kunmi ng, ca p i ta l of southwest China's Yunnan Province that features a tota l i nv es tment of 6 3 .4 9 b i l lion Yuan (10.34 billion U.S. d ol l a rs ) . The NDRC, China's top economic planner, has approved urban transit construction plans for several cities, including Guiyang a nd Chongq i ng, for 2 0 1 3 . Official statistics indica te tha t tota l urb a n tra ns i t i nv es tment ha s rea ched 1 .2 3 trillion Yuan thus far, of w hi ch 1 8 9 .6 b i l l i on Yua n w a s us ed to b ui l d 3 3 7 km of s ub way lines in 2012. Another 2 2 0 b i l l i on Yua n w i l l b e us ed to build 290 km of subway l i nes i n 2 0 1 3 . The increased input has accelerated the expansion of the rail equipment industry. China CSR and China CNR, China's two biggest train manufacturers, have boosted their business with the hel p of the i ncrea s ed i nv es tment. Chi na CS R i s fi l l i ng ord ers for urb a n tra ns i t v ehi cles in the cities of Shenzhen, Shanghai and Chengdu, while China CNR ha s s i gned a greements c oncerning train manufacturing or cooperation in public tra ns i t w i th s ev era l c i ti es . The increasing development of intercity railways will also benefit the rail equipment industry. The Pearl River Delta, one of China's most developed areas, will s p end 1 1 8 b i l l i on y ua n on i n-

terci ty ra i l w a y s from 2 0 1 2 to 2020. China CSR and China CNR have produced new trains that specifically cater to i nterci ty ra i l w a y netw orks . The intercity railway market is hoped to boost the slumping profits of the two companies, which have seen their income drop due to the country's suspension of bidd i ng for b ul l et tra i ns i n 2 0 1 0 . China CSR saw its yearon- y ea r net p rofi ts fa l l i n the first quarter of 2013, with income from bullet train sales slumping 50 percent from a y ea r ea rl i er to 3 b i l l i on y ua n, according to a report from UB S S ecuri ti es . Chi na CNR's q ua rterl y report also showed weak performance, as its total sales amounted to 18.15 billion Yuan, down 1.35 percent y ea r on y ea r. However, the gloomy trend is likely to be reversed in 2013 due to the looming resumption of bullet train bidding, the journal reported. The China Railway Corporation (CRC), newly formed in March 2013 after the breakup of the Ministry of Railways, has finished preparing for restarting the bidding, which is expected to b egi n i n Ma y or June. Meanwhile, construction work on the new West Railway Station in the city of Fuzhou, Fuj i a n p rov i nce, ha s just finished and an inspecti on i s und erw a y . The new s ta ti on, l oca ted at the intersection of Wulongjiang Street and Guangxian Road, near Minhou New University Town, covers an area of 85,333 square meters, three times l a rger tha n the ol d one. It will mainly serve lines b etween w es tern Fuj i a n a nd ci ti es a nd counti es s urround i ng Fuzhou.

The six-story main building includes a basement with parking lots the first and second floors contain a ticket hall and waiting hall, and all the other floors contain staff offices and apartments. The waiting area has a capacity for a maximum of 2,500 passengers, and a shopping area near the waiting hall will include res ta ura nts a nd s hop s a nd i s exp ected to op en s oon. The station is expected to serve 25,000 people a day, and up to 40,000 during peak seas ons . On the other side, 2 railway lines that Anhui province has been working on, to improve connections in the northern part of the province, are close to completion, according to a Shanghai Railway Bureau report. One of the lines connects the city of Fuyang in the north with Lu'an, a prefecture-level city in the western part of the province. This 166-kilometer-long line is expected to be completed by late August, at an estimated cost of 4.3 billion Yuan ($702 million). It has a top speed of 160 kilometers p er hour, a nd w i l l ta ke s ome of the burden off the busy Beijing-Kowloon line, while a s s i s ti ng w i th coa l d el i v eri es in northern Anhui, the S ha ngha i Ra i l w a y B urea u ex p l a i ned . The other railway line, costing around 4.9 billion Yuan ($800 million), connects the city of Suzhou in northernmost Anhui with the city of Huai'an in Jiangsu province and is 210 kilometers long. it is mostly for moving cargo, especially coal. Construction work on it began in July, 2009 and is expected to be completed thi s Nov emb er.( Agenci es ) 35

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Real Estate


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What next for property market? CED Monitoring BEIJING-He Yuanxiang is a Beijing-based real estate agent working at Homelink, one of the biggest house brokerages in the country. She expected a lesser workload after an extremely busy March, but that's not what she got. In March, the central government rolled out measures designed to cool China's redhot property market by reining in speculative investment. One of the measures, a 20-percent tax on capital gains from property sales, a pilot project in some cities, triggered widespread panic among potential buyers and sellers. Fearing higher home costs after the implementation of government control measures, potential buyers rushed to buy before the changes went into effect, creating a secondhand property-purchasing spree in March in many cities. "After the March purchase spree, the market only cooled off for a short period and then started to heat up again," He told Beijing Review, noting that the Homelink branch she works for sealed six deals during the

second weekend of May. "If the apartment is exempt from paying the 20-percent tax, the price shoots up by hundreds of thousands of Yuan by sellers. If not, secondhandhome buyers will have to pay the exorbitant tax," she said. "Anyway, home costs are higher than before. It turns out that the earlier you buy a home in Beijing, the better." He's words were echoed by a Real Estate Blue Book published by the Institute for Urban and Environmental Studies at the Chinese Academy of Social Sciences (CASS) on April 25. The blue book projects that housing and land prices in China will see a continuous increase in 2013. In big cities like Beijing, Shanghai and Guangzhou, a sharp price surge is likely to occur in 2013, due to a growing imbalance between supply and demand. The Chinese Government will face greater pressure in terms of housing price controls and may consider expanding the capital gains tax to more regions. Latest figure showed that new home prices rose in almost all Chinese cities in March. Of a 37

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Real Estate

statistical pool of 70 major Chinese cities, 68 saw home price increases in March from a month earlier, up from 66 in February, according to the National Bureau of Statistics. On a year-on-year basis, 67 cities registered higher prices in March. The number in February was 62. First-tier cities recorded the largest monthly increase in new home prices, with Shanghai's 3.2-percent growth topping the list, followed by 2.8 percent in Shenzhen and 2.7 percent in Beijing. The average price of newly built apartments in 100 Chinese cities hit 10,098 Yuan ($1,640) per square meter in April, rising 1 percent from the previous month. Prices have risen for 11 consecutive months since June, according to a report from the China Index Academy. "Demand outstripping supply is the key reason for the price hike," said Li Enping, a research fellow with the CASS and also one of the authors of the blue book. "If the 20-percent profit-gain tax is strictly implemented, housing prices will rise faster because the tax suppresses supply. On the one hand, the new tax will add a burden to homebuyers. On the other, people who can no longer afford a secondhandhome will turn to newly built homes, pushing up prices of the latter," said Li. China's young have rushed to the market to buy homes, as many consider owning an apartment a prerequisite for getting married. The average 38

age of first-time homebuyers is 27 in Beijing, while it's 37 in Britain and 42 in Germany and Japan, according to the CASS blue book. Also, insufficient affordable housing projects and fast-rising rentals make Chinese people constantly insecure, pushing up the demand for buying a home. Bo Wenxi, vice president of Zhuoda Group, a domestic property developer, said there are three reasons for the ongoing surge in housing prices. "First, local governments strongly rely on land sales and the real estate market as significant parts of their fiscal revenue and GDP growth. Second, demand will outstrip supply for a long time in China. As more rural people flock to cities, the demand is getting stronger. With further urbanization underway, this trend will be intensified," said Bo. "Finally, housing prices are affected by currency issuance. Under the influence of quantitative easing in many Western countries, China has to implement quantitative easing policies as well, for fear of large-scale capital flight. With so much money in the market, it's quite unlikely that property prices will fall." He said, "Two months after the new tightening policies, the market has rebounded. Prices are continuously rising after a short period of hesitation and observation from buyers." For the Central Government, housing price controls have become vital in improv-

ing people's livelihoods amid growing public complaints over runaway real estate prices. While purchase limits proved to be ineffective, a property tax was touted as a much-needed solution to skyrocketing prices. In China's real estate market, a property tax—while well-established and taken for granted in Western countries—is a relatively new phenomenon in China, and is viewed as a measure to restrict the buying of homes for investment purposes. Recent rises in China's housing prices have fueled calls for an expansion of the tax, which has been limited to only Shanghai and Chongqing. Property taxes in the two cities were introduced on a trial basis on January 28, 2011, in a bid to help cool the real estate market. Nearly 20,000 units of residential homes were hit with a property tax in Shanghai in 2011 and the number jumped to 37,000 in 2012, bringing in 2.46 billion yuan ($395.1 million) in tax revenues last year, according to the city's finance and taxation authorities. The Shanghai property tax model covers only buyers of second homes, while the Chongqing program levies it on both new and existing high-end houses. "In China, most taxes were levied on property transactions instead of on property ownership. This is really unreasonable," said Li of the CASS. Li suggested the government expand trial property tax programs to more regions to avert

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a possible price rebound in 2013. Jia Kang, Director of the Research Institute of Fiscal Science, affiliated with the Ministry of Finance, said the property tax would expand to more cities this year. The CASS blue book also mentioned that maintaining a steady land supply and accelerating the construction of affordable

housing projects are effective ways to tame the overheated market. "Local governments should guarantee fairness in the allocation of affordable housing, by setting up a transparent system. Also, the system should cover migrant workers in cities or townships," said Li. "Land supply should be scientifically planned accord-

ing to regional conditions. In first-tier cities and cities with faster-than-expected surging housing prices, more land should be put into use for the construction of residential housing. In third- or fourth-tier cities with too much inventory, land supply should be reduced to avoid rampant construction."(Courtesy Beijing Review) 39

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Real Estate

DEVELOPERS CONTINUE TO RAISE FUNDS FOR LAND PURCHASE CED Monitoring SHANGHAI-China's 10 largest property developers have raised nearly 38 billion Yuan ($6.2 billion) in funding at home and abroad since the start of 2013, nearly equal to last year's total, and analysts say the borrowing binge is likely to continue. The demand for capital has mainly come from land purchases as domestic developers continue to bid for highpremium plots, said Zhang Dawei, Centaline's research director. The 10 developers raised 41.3 billion Yuan in capital during the whole of last year, according to figures from Centaline Property Research Center. Public information showed that in eight days from May 3 this year, three land parcels were auctioned off separately for record prices in Shanghai, Guangzhou, in Guangdong province, and Changsha, the capital city of Hunan province, showing that the land market - which fell sharply after the execution of the central government's latest property tightening policies 40

- had picked up significantly. "Domestic developers are raising funds overseas because the borrowing costs are much lower than in the domestic finance market," said Zhang. "The funds raised are being used to repay maturing loans and stockpile prime land." About 50 Chinese developers raised an estimated $23 billion overseas through issuing bonds and through trusts, according to the Centaline research. Another notable change is that borrowing costs for some leading developers are dropping sharply, helping them stockpile land at lower cost, added Zhang. He said that he thought the central government's latest tightening policy had had a limited effect in bringing property prices down, and that institutional investors still regard China as a premium destination for property investment. Other recent industry figures from Hong Kong-based Midland Realty showed that the amount of land auctioned off in Shanghai during the first

four months of the year soared 113 percent year-on-year, in Shenzhen the volume surged 227 percent, and in Hangzhou, 273 percent. Hui Jianqiang, director of real estate information provider Beijing Zhongfangyanxie Technology Service Ltd, said: "We are seeing apparent growth in domestic financing, but developers are also taking the opportunity of raising capital outside China." According to James Macdonald, head of Savills research China, a large number of offshore corporate bonds have been issued by HK-listed mainland developers. In January, 16 companies raised about $6.85 billion, more than half the total US dollar-denominated debt issued by mainland developers in 2012, he said. Among Hong Kong-listed developers, Guangzhoubased Agile Property Holdings Ltd has raised 12.88 billion Yuan in senior notes and bank loans so far this year, China Resources Land Ltd has raised around 9.35 billion Yuan, and China Overseas Property Ltd has raised 17.38 billion Yuan.

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China's decelerated economic growth, which is expected to become the new norm, might hamper its countryside's advancement, a top agricultural official said on Saturday. "Annual economic growth rates of around 7 percent will bring some uncertainties in creating enough job opportunities for China's rural population," said Tang Renjian, deputy director of the Office of the Leading Group on Rural Work, Communist Party of China's primary rural management organ.The central government's enhanced support for domestic enterprises and the service industry will provide some cushioning against job losses. "But we don't know how long that can be sustained," Tang said. The buoyant inflation rates of recent years have enticed the government to contain agricultural products' price growths, creating obstacles for farmers' income increases, he said. Production will also face challenges from diminishing nat-

ural resources and agricultural reforms, Tang said. "The government needs to devise a mechanism to protect farmers and encourage agricultural production," Tang said. He made the remarks at a high-end forum organized by the Research Center for Rural Economy at the Ministry of Agriculture in Beijing. The government has long stressed agriculture's importance and takes pride in the past nine years of increased grain outputs. The country produced 589 million metric tons of grain, official data showed in 2012. Growing grain yields, however, did not rein in surging agricultural imports. In 2012, China's total grain imports hit a historical high of more than 70 million tons, renewing food security concerns, experts said. "Increasing grain output cannot catch up to increasing consumption," said Yin Chengjie, head of the Chinese Association of Agricultural Economics, a government think tank.

"Now, we face a tight supply and some structural problems in the domestic food market." Depletions of natural resources as agricultural inputs will also take a toll. Sunny Verghese, CEO of Singapore-based grain trader Olam International Ltd, pointed to a recent Bloomberg report forecasting China will become a major importer of corn, wheat and rice by 2015 because of shrinking land and water resources. The government should deepen rural reforms and expand support for farmers, forum participants said. Han Jun, deputy chief of the State Council's Development Research Center, a top government think tank, said farmland should be a key reform issue. "The government should let farmers have more property and economic rights over their land," Han said. "We have an opportunity window over the next seven to eight years, and we must make full use of it." 43

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U.S. BREEDING ExPERT VISITS BRIGHT SEED UNDER BRIGHT RICE INDUSTRY LTD. On May 10, Cui Zhiren, Chairman of the Board of Supervisors and Vice President Zhang Hanqiang of Bright Food (Group) Co., Ltd. met with Dr. Ronnie Coffman, Director of International Project Department of Cornell University who is also a plant breeding expert from the U.S. They expressed their welcome and thanks to Dr. Coffman for his special visit to Bright Food Group for professional guidance on cultivation of high-yield rice and wheat and quality rice screening and breeding. During the meeting, Cui briefed the development of modern agriculture Bright Food Group has made in recent years, and also talked about the development and business model of the group in creating modern urban sight-seeing agriculture and building a safe industry chain “from field to table”. According to Cui, modern agriculture sector is an important part of industrial pattern of Bright Food Group. 44

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The group has made some achievements in the development of modern, large-scale, intensive, scientiďŹ c and ecological agriculture. It is actively promoting and exploring the further integration of agricultural resources, construction of modern agro-ecological civilization and optimization of the modern seedgrowing agriculture development to enhance the competitiveness of modern agriculture. He hoped that Dr. Coffman would provide technical support and assistance in grain cultivation and screening and breeding new varieties of rice and wheat, and offer guidance on improving the rice yield, enhancing the rice resistance and improving the rice quality and taste, to help Bright Food Group solve the technical bottleneck

problems encountered in transition and development. Dr. Coffman, accompanied by Vice President Zhang Hanqiang, visited the breeding labs of Bright Seed under Bright Rice Industry Limited Liability Company, the core breeding bases of quality rice and wheat seed and 10000 mu of high-yield grain production demonstration area. He discussed and interacted with the technical personnel and answered their questions. Dr. Coffman spoke highly of the group’s achievements in the development of modern agriculture, gave international forefront suggestions about the seed development of the group and expressed his desire for further exchanges and cooperation in rice breeding. 45

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Tea plantations flourish on the fertile soil of Guizhou's mountains. Photos by Feng Yongbin / China Daily 46

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A worker sifts through tea A Bouyei woman serves local leaves in Meitan county, one of food to visitors in Wanggang the major tea-producing areas village in Guiyang. in Guizhou province.

Wicker baskets become canvases for these fair maidens. 47

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Guizhou offers tourists off the beaten track a sense of hospitality, tranquility - and a splendid cuppa, Tom Clifford reports. Guilt is a terrible thing to bring to a table. For hours our small bus had been buffeted by nature's wrath, exposed on Guizhou's mountain passes, and only the dexterity and skill of our driver kept us this side of paradise. Rain slashed our windows in a Hitchcockian showerscene frenzy. Our schedule had been literally washed away. Up through gorges, down into valleys, tight bends, narrow roads and white knuckles. Then relief as we descended to the flatlands. We were on Bouyei ethnic group land and stumbled upon the village of Yinzhai, still far from our eventual destination, but craving rest and nourishment. "Can you feed us," shouted the driver to a woman in the village kitchen. "How many?" "Eleven." "Twenty minutes. Have a walk, see the village, relax," came the assured response. Like us, the countryside was breathing a sigh of relief. Mountains looming over us ap48

peared picturesque. The sky streaked with red hues, no longer in torment, seemed to be blushing with embarrassment at its previous behavior. Wits gathered after a short walk, we headed for the meal but first acknowledged an old discolored poster in the main village home displaying the core principles of the Bouyei ethnic group. "Heaven, Earth, Emperor, Ancestors, Teachers," it read. History was tapping us on the shoulder, a privilege before we sat down to eat. Fried fish, pork, vegetables of blazing color were offered with joyous abandon to shouts of appreciative approval. And then came the guilt. Had they enough food for the village, or were we eating them out of house and home? We were assured that the village stored its food for months in advance and had more than adequate supplies. On hearing this, not a word was spoken for six minutes as stomachs were replenished. Our thanks were accepted graciously as the plates were cleared. We had been recipients of a kindness to strangers. Outside, darkness had finally overcome its inhibitions and

descended, ushering in a time for reflection. For days we had been traveling through the highs and lows of Guizhou province. Its fertile soil struggles to produce on mountainous terrain, but when given a chance on the horizontal it can provide a vertical harvest for the imagination. Nothing, it seems, is beyond its capability. The usual suspects, broccoli and corn, are joined by delicate leaves for tea, tobacco and chilies to jump-start the synapses. This is Guizhou tea country. If in doubt, look to the heavens where a laser beam cuts across the clouds from a giant teapot that dominates the skyline of Meitan town in Zunyi. Tea, especially green tea, is growing in popularity; you could say it's a top pick. China exported about 300,000 tons of tea last year, 30 percent of it green. The art of picking tea is almost as sublime as its taste, and requires a surgeon's delicacy and optical prowess. "You can never use your nail or sharp edge like a knife," one picker said. "If you do, you cauterize the cut and it turns black. Each leaf has to be torn, delicately, from the plant."

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