Magazine by CCEDIGEST

www.ccedigest.com www.ccedigest.com

ISSUE ISSUENO. NO.45 45

CHINA ECNOMIC

AACCASH ASHMEDI MEDIAAPUBLIC PUBLICATION ATION

DIGEST DIGEST

China’s Car sales may hit 21.5m units this year

in this issue More tourists attracted from emerging markets

Shanghai FTZ tests countryâ&#x20AC;&#x2122;s currency liberalization

6 Apple to sell new iPhones across China

Game developers focus on Chinese market

11 Suzhou Garden Archives re opens to public

China makes high capacity Nuke Generator

12 China should follow sustainable urbanization path

21 Home prices continue to rise

in this issue cover story

CHINA ECNOMIC

A C ASH MEDI A PUBLIC ATION

DIGEST

EDITOR IN CHIEF Makhdoom Babar Editor Jamshed Ullah News Editor Summer Wong Ji Long Mike Lincoln Jenny Alvin Resarch & Analysis Wang Aiguo He Cheng Shi Chengwei Leon Ludwing Uzma Zafar Designing & Layout Asmat Ullah Khan Awais Shehzad Raja Pervaiz Technical Suport Sultan Haroon Iqbal Bukhari Co-ordination Sobia Noreen Internet Edition John Nelson Rehmat Chughtai

Fonterra reveals plan for 2nd China dairy farming hub

Contact Head Office 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: editor@ccedigest.com newseditor@ccedigest.com webeditor@ccedigest.com ads@ccedigest.com

| CCEDIGEST

Society

Yungang Grottoes tell old story

The chest of this Buddhist statue at Yungang Grottoes was scarred by years of wind and water erosion at Cave No 3. Desk Report BEIJING

ungang Grottoes, located at the southern foot of Wuzhou Hill, 16 kilometers west of Datong city in Shanxi province, rep-

resent the outstanding achievements of Buddhist cave art in China during the 5th and 6th centuries. Most of the 252 caves and 51,000 statues were constructed during the Northern Wei Dynasty in the mid-5th century, when Chinese Buddhism was at the peak

of its popularity. The statues are among the few remaining historical relics from the dynasty. Cave No 16 to 20, created by monk Tan Yao, with their strict unity of layout and design, constitute a classical masterpiece of the first peak of Chinese Buddhist art.

CCEDIGEST |5

Foreign tourist show Chinese desserts they just bought in Suzhou, East Chinaâ&#x20AC;&#x2122;s Jiangsu province.

More tourists attracted from emerging markets BEIJING

he number of inbound tourists from emerging markets surged year on year in July, while visitors from developed countries continued to decline, according to National Tourism Administration data. The number of visitors from Vietnam, Thailand, and India grew 13.86 percent, 11.29 percent and 10.78 percent, respectively, in July. Tourists from Mexico grew 6.42 percent, according to the figures. Visitor numbers from the Unites States, Japan, Korea, Australia and Canada dropped, the data showed. The slow economic recovery in developed countries led to decreasing tourist numbers from these nations. Tourism industry experts said China should work harder to attract visitors from emerging markets, including the other four economies of the BRICS group - Brazil, Russia, India and South Africa.

| CCEDIGEST

Finance

Shanghai FTZ tests country’s currency liberalization

SHANGHAI

mong a cluster of warehouses located on the outskirts of Shanghai, China is set to experiment one of its most significant reforms since Shenzhen freed the country’s trade 33 years ago -- how China should liberalize its currency. The world’s second largest economy an-

nounced it would build a free trade zone on the shore of the East China Sea. The zone will be a test bed for pushing forward full convertibility of the Chinese Yuan and the opening of financial services. As China’s economy has showed signs of stabilizing during the last two months, economic transitions and reforms are again becoming the focus of attention. Chinese Premier Li Keqiang said at Sum-

mer Davos Forum recently that China’s modernization will not be accomplished without reform, nor will it be achieved without opening-up, citing Shanghai FTZ as one of the new ways to open the country wider to the outside world. “The FTZ will act as a stress test. We are going to explore to what extent can China open its capital account,” said a person with direct knowledge of the issue.

CCEDIGEST |7

According to Shanghai Securities News, a financial newspaper owned by Xinhua, the general plan of the zone will possibly be published by the end of this week. “It’s a landmark event in China’s drive of deepening economic reforms,” said Citi Bank senior economist Ding Shuang. “The Shanghai FTZ demonstrates China’s commitment to reforms before key reform packages are to be discussed in the third plenary session of 18th CPC central committee.” China re-started to free its currency exchange rate in 2005, and since then the Chinese Yuan has appreciated over 30 percent against the US dollar. But to buffer China from international financial turmoil, the country’s capital account remains closed, a rule in existence for dec-

ades. Exchanges between the Chinese Yuan and foreign currencies are regulated with strict quota allocation and transactions are scrutinized. Every Chinese person is only allowed to buy up to $50,000 each year. The regulators, however, now believe tearing down the currency wall will do more good than harm. Opening the capital account will improve financial transparency and efficiency as well as spur China’s drive of building Shanghai into a world financial hub. China’s cabinet pledged in May to map out “operational” plans to make the Chinese Yuan convertible under the capital account. Shanghai FTZ is considered the first place to carry out the plan. “It’s difficult to segregate the Shanghai FTZ from the rest of China. There will be money flows underground. It can be said that the FTZ experiment opens a hole in China’s capital account wall,”

said Wang Tao, chief China economist at UBS. “It’s technically possible to completely segregate the FTZ from the rest of China, but that will be unnecessary. If China completely segregates the FTZ, there will be no meaning for building such a test bed,” Ding said. “But unlimited opening is also unlikely. The regulators may adopt quota regulation.” While such reforms have long been advocated, some analysts argue rolling them out now could be hasty, saying opening the capital account would make China vulnerable to the Federal Reserve’s quantitative easing (QE) tapering and add to risks rising from other reforms at home. It is feared that demolishing the currency curb will trigger a capital flight draining China of liquidity. According to foreign media reports, it was reported that cash in billions of US dollars has already left China through money trafficking to seek better yields or alternative investments overseas. Although the general plan is about to be released, until now, no detailed proposal of how to operate the test bed has been finalized, which suggests the regulators vary on the pace and steps of opening the capital account, according to sources with direct knowledge of the issue.(XINHUA)

| CCEDIGEST

B ankcard consumer confidence slight drop BEIJING

hinese consumer spending using bankcards dropped slightly in August illustrating stable consumer confidence, according to the Bankcard Consumer Confidence Index (BCCI) released here. The BCCI, compiled by the Xinhua News Agency and China UnionPay, a national bank card association, dropped 0.03 points to 86.73 in August from July. The index was up 0.52 points on a yearon-year basis, according to the BCCI report. The value of transactions recorded at supermarkets took a higher share of consumption in August, about 0.2 percentage points up from July. Consumers reduced spending in areas including air, tourism agencies and tourist sites as summer holidays ended in August, said the report. With the rising price of gold and jewelry, the value of transactions recorded at jewelry dropped 0.02 percentage points in

August from July. The consumer price index (CPI), a main gauge of inflation, rose 2.6 percent year on year in August, down from 2.7 percent in July, according to the National Bureau of Statistics (NBS). Chinaâ&#x20AC;&#x2122;s producer price index (PPI), which measures inflation at

the wholesale level, fell 1.6 percent in August from a year earlier, compared with a 2.3-percent drop in July, said the NBS. The BCCI index, first released in April 2009, is based on bank card transaction data and analysis of structural changes in urban consumption.(Agencies)

CCEDIGEST |9

Information Technology

Game developers focus on Chinese market

Monitoring Desk Report BEIJING

he mobile games market in China is set to generate more than $1.2 billion in 2013, up from $750 million in 2012, according to new research estimates, and that could set the stage for game developers to concentrate more on that booming market. Asian games research firm Niko Partners recently released its new “Chinese Mobile Games Market Report 2013” and estimated that approximately 500 million smartphones will be in use by the end of 2013, five times more than the 100 million in early 2012. “These smartphones are taking advantage of the fast migration of users to 3G and faster networks, which is creating a ripe environment for increasingly engaging games,” according to the report. PopCap Games, the American game developer and publisher behind the hit “Plants vs. Zombies,” launched its sequel, “Plants vs. Zombies 2: It’s About Time” last month on Apple devices only. In a move that shows a focus on Chinese players, the sequel became available to the Chinese market before being released worldwide. Though download numbers don’t include pirated copies through jailbroken phones or otherwise,

there have been approximately 20 million downloads of the game to date since its release in China in August. In the US, there were 25 million downloads within the first two weeks of release. PopCap is currently working with Changsha-based TalkWeb to help distribute the sequel to the Chinese Android market, according to a media report. The game-maker hasn’t announced a PC version yet, and PopCap’s efforts to cater to the mobile market reflect prioritizing an increasingly i mp ortant

| CCEDI�

mobile games sector. Rapidly growing smartphone usage in China has led to an increase in mobile gaming with a decrease in PC gaming. “Mobile games…have taken market share from PC based casual and social online gaming,” said Kevin Hause, senior partner of Niko Partners, in a statement. In a similar study, research and consulting firm Pearl Games found “in 2012 and 2013, there was a significant shift in user activity from PC to mobile, driven by rapid expansion of China’s mobile Internet user base, smartphones and new mobile apps and games. Pearl Research believes the number of smart devices (phones, tablets) in China could exceed 400 million by the end of 2013. Top mobile titles can generate $2 million or more a month.” PopCap’s China general manager, Leo Liu, agreed that there are opportunities to be found in the Chinese mobile market: “From a business perspective, the Chinese market, even if it’s not bigger than the US [market], will be the same size as the US’. If you’re looking at growth rate, it’s higher [in the Chinese market] than in the US market.”

CCEDIGEST |11

Apple to sell new iPhones across China

BEIJING

pple Inc will start selling two new iPhone models in the Chinese mainland as of Sept 20, the first time the region has been included in the company’s maiden launch list. The iPhone 5S and iPhone 5C will be available to buy in the world’s largest mobile market on Sept 20, when the two models will also be on sale in the United States, Australia and Japan, according to a company press conference held in Beijing. The retail price of the iPhone 5C in China will be 4,488 Yuan ($728), while the iPhone 5S will cost 5,288 Yuan. Both the prices are much higher than their peers in markets outside the Chinese mainland. Apple fans said the simultaneous maiden launch in China’s mainland together with other major markets shows the company’s sincerity towards Chinese customers. But some have been left disappointed. A white-collar female worker surnamed Chen who works at Zhongguancun, or China’s “Silicon Valley,” said, “Apple Inc has finally attached importance to Chinese customers by including China into the first launch markets, although the prices are a little high.” “There was no surprise at all. We miss the era of Steve Jobs,” said Zheng Xiyun, a marketing director with the interactive group IM2.0. However, Wu Shu, an IT expert and Chief Editor of iheima, an online platform to encourage creativity, said Apple has developed a complete integrated system. “If it makes major changes, such as enlarging the screen size, it will cause trouble for the application developers. Meanwhile, Mobile chat application Yixin, which was launched by China Telecom Corp Ltd and NetEase Inc, is pushing China Mobile Ltd, the nation’s biggest telecom operator, into an awkward corner, analysts said. On Aug 19, China Telecom and Internet company NetEase Inc jointly launched Yixin, a smartphone app similar to Tencent Holdings Ltd’s WeChat. Yixin, which has created to challenge WeChat, has several features that set it

apart from the competition. For instance, the app is capable of sending free text and voice messages to any mobile phone user, whether the receiver has installed Yixin or not. To show the companies’ determination to fight against WeChat, which has attracted more than 300 million users in two years, China Telecom’s Chairman Wang Xiaochu and NetEase’s Chief Executive Officer William Ding both appeared on stage at the launch ceremony. Other celebrities, including Sohu Inc’s chairman Charles Zhang and Lan Ye, vice-president of Chinese e-commerce giant JD.com, were also present. Before that, China United Network Communications Co Ltd (China Unicom) - China’s second-largest mobile carrier - had joined hands with Tencent in July to launch the nation’s first SIM card customized for WeChat. After these moves, China Mobile is now expected to come up with its own strategy for the mobile instantmessaging sector, said Tian Siyu, an analyst with research firm Zero2IPO. “People cannot help but wonder what kind of move will China Mobile take next? Will the world’s biggest telecom carrier endure the situation and be left behind?”

Tian asked. There’s no indication yet that China Mobile will react to the market changes or release any strategy for the sector soon. The company declined to comment for this story. However, the carrier did not abandon the mobile chat market. In June, China Mobile launched Jego - a Skype-like mobile app that targets users with international communication needs. But Jego did not last long, and China Mobile suspended the service three weeks after its launch. “It’s quite hard for China Mobile to do the same things that Internet companies do. China Mobile is a telecom carrier and it lacks that sort of Internet gene,” Tina Tian, a telecom industry insider, pointed out.

| CCEDI�

Industry

China makes high capacity Nuke Generator

File photo of an employer of Dongfang Electrical Machinery Co Ltd working on a 1,150 mW nuclear generator completed by the company in 2009. CHENGDU

ongfang Electrical Machinery Co Ltd (DFEM), a major Chinese power generating equipment manufacturer, has completed construction of a 1,750 mW nuclear generator and started transporting it to a nuclear power plant in South China. The 1,750 mW generator currently has the biggest per-unit installed capacity among the nuclear generators in the world, according to the DFEM, which is

based in Southwest China’s Sichuan province. The generator is being sent to the Taishan nuclear power plant in South China’s Guangdong province from the company’s production base in Deyang city, Sichuan province. DFEM will provide two such generators for the nuclear power plant. DFEM has produced 14 nuclear generators so far with a total installed capacity of 15,790 mW. The Taishan nuclear power plant is a joint venture of China Guangdong Nucle-

ar Power Holding Co Ltd (CGNPC) and Electricite de France. According to CGNPC, the first-phase project of the nuclear power station got a total investment of 50.2 billion yuan ($8.13 billion), and would include the construction of two units using the Electron Paramagnetic Resonance (EPR) technology, with each unit capacity up to 1,750 mW. The two units of the first-phase project are to be respectively put into commercial operation in 2013 and 2014, and will annually generate 26 billion kilowatt-hours on-grid energy when completed.(Xinhua)

CCEDIGEST |13

High tech industry grows fast in Sanmenxia Desk Report BEIJING

he new and high-tech industry of Sanmenxia, a city in western Henan, continued to prosper in the first half of this year, driven by innovation and high-tech industrialization. In the first half, total output value of the new and high-tech industry in the city amounted to 7.36 billion Yuan ($1.2 billion), a growth of 28.6 percent from a year earlier. The added value of the industry reached 2.26 billion Yuan, an increase of 29.3 percent year-on-year. During this period, 66 new and hightech projects were launched. A total of 6.46 billion Yuan was invested into these

projects. These projects are expected to further boost the new and high-tech industries in the city. At present, the city has 96 new and high-tech enterprises; 20 of them have been certified as high-tech enterprises. Innovation and technology have contributed greatly to the upgrade of traditional industries. By applying new technologies, the city has basically developed a gold and silver processing industrial chain. In the aluminum industry, innovation and new technology have given enterprises in this sector more room to grow. The city has attached greater importance to the development of new and emerging industries, including environmentallyfriendly gold-plating materials, battery

materials and biological pharmaceuticals. A number of high-tech enterprises have been established in these sectors. The city has also sped up the construction of a science, technology and R&D system. The city has set up 33 provinciallevel engineering R&D centers and 21 provincial-level corporate R&D centers. The construction of industry clusters has also benefited greatly from innovation and high-tech development. Enterprises have also established technological cooperation with universities and research institutes, implementing a great number of technological projects. At the same time, the municipal government offered assistance and support for innovation and high-tech development in terms of finance and taxation.

| CCEDI�

Automobile

China’s Car sales may hit 21.5m units this year Auto Desk Report shanghai

hina’s passenger vehicle sales maintained a stable growth trend in August, making it possible that the country’s overall automobile sales will reach 21.5 million units this year, analysts said. In August, the total sales of cars, multipurpose vehicles, sport utility vehicles and minivans in China increased 13.3 percent year-on-year to about 1.32 million units, the China Passenger Car Association has said.

CHINA’S MONTHLY PASSENGER VEHICLE SALES

CCEDIGEST |15

“The figure should be higher but the floods in the south and the super high temperatures in central China hit market demand,” said Rao Da, secretary-general of the association. “The stable uptrend in recent months made us estimate a 12 percent increase in September, thus we are optimistic that China’s total vehicle sales will likely also surge by 12 percent to 21.5 million units this year,” said Rao. China overtook the United States to become the world’s largest automobile market in 2009. That year, domestic demand surged 46 percent from a year earlier, and the boom continued in 2010 as sales grew 32 percent year-on-year. However, the market slowed down in 2011 and 2012 with annual growth of 2.5 percent and 4.3 percent, respectively, as the government ceased stimulus measures. “Now the market’s back to around 10 percent growth, and that’s an indication that the industry is well on track to a healthy and sustainable long-term development,” said Rao.

Even though the country’s domestic brands have seen continued market share losses for months because of fierce competition from their foreign and joint-venture counterparts, Rao said that the “domestic brands’ heavy investment in R&D will gradually improve the quality and design of their

products, and make them attractive to discerning Chinese consumers”. Rao added that the government decision to use Hongqi models for official cars, for instance, will set a good example for private buyers. The latest figures released by the Chinese

| CCEDI�

Association of Automobile Manufacturers showed that the sales of domestic passenger cars in July slumped 17.3 percent from June, with their market share dropping to 35.2 percent, the lowest point since 2008. However, Rao said that the domestic brands’ market share is expected to increase 1 percentage point every year to reach 40 percent in 2020. According to a recent survey conducted by market research firm Nielsen Holdings NV, German brands are the Chinese consumers’ first choice, with 68 percent of the respondents’ preference, followed by Japanese brands with 13 percent.

Chinese brands rank third with the preference of 11 percent of respondents, followed by US brands with 6 percent and South Korean brands with 2 percent. “Consumer attitudes toward the country of origin of the brands indicate a growing challenge worth the attention of Chinese domestic brands. Compared with foreign brands, Chinese brands still enjoy an advantage over international brands by offering lower costs and more benefits, but the situation is becoming tougher as many international brands are trying to price down their cars to get more market share,” said Yan Xuan, president of Nielsen Greater China.

“Though there is a certain gap of core competency against international brands, if more efforts can be made in technology innovation, and in the promotion of their competency in the safety and power-train technology areas, Chinese domestic brands will have more opportunities to convert potential buyers into actual buyers in the future,” said Alice Yu, vice-president of Nielsen China. Also, “the building of a brand image should be based on the segmentation of the Chinese automotive consumers, whether men or women, younger or older”, said Yu.

CCEDIGEST |17

Automakers look to drive sales overseas

Auto Desk Report shanghai

hinese carmakers will have to rethink strategy, improve products in order to compete globally, reports Alfred Romann in Hong Kong. More than 1 million new cars were sold in Indonesia last year. That fact alone makes the Southeast Asia giant a very desirable market for automakers. Indonesia accounts for about 40 percent of the population of the Association of Southeast Asian Nations and its economy has been growing fast, at more than 4 percent a year for more than a decade. It is a natural export market for Chinese auto manufacturers looking to up their market share. Earlier this year, the Indonesian government launched new tax incentives for lowcost green cars, which give automakers another reason to get into the action. The

government has cut the luxury tax by 25 percent for cars that have a fuel efficiency of 20 kilometers per liter, 50 percent for 28 km per liter and 100 percent for cars that can go even further. But there is a catch. These vehicles must be assembled domestically and as much as 84 percent of the components must be made locally. Virtually no Chinese automakers are in a position to take advantage of those tax breaks. For the time being, Japanese automakers will continue to dominate the market. Not only in Indonesia but in most foreign markets, Chinese automakers are having a hard time competing with more advanced multinational manufacturers from Japan, South Korea, Europe and North America. Chinese companies want to go abroad, but their offerings are still of lower quality and the after-sales service typically weak because they generally do not have the networks in place to provide quality services, said John

| CCEDI�

Zeng, managing director at LMC Automotive Consulting in Shanghai. Aside from a couple of standouts such as Great Wall Motors Co Ltd, Chery Automobile Co Ltd and possibly Zhejiang Geely Holding Group Co Ltd, most Chinese automakers simply cannot compete in this area. “(Chinese automakers) are quite eager to go overseas. It is a great marketing tool for them to go overseas. It is good advertising for them,”said Zeng. The problem is that “most of them are treating overseas markets as a trading business. They mainly rely on price as a weapon”. On the surface, it makes sense for Chinese automobile manufacturers to look to new markets. Competition in China is intensifying and overcapacity among domestic makers is still a significant issue, according to a new report by international consultancy AlixPartners. Most Chinese manufacturers operate at 65 percent capacity, compared with the 80 percent considered to be the minimum for stable profits. At the same time, Chinese automakers have struggled to gain market share, particularly in the key sedan segment. The only standout is Great Wall, which has a leading position in the China sport utility vehicle market, according to the report. In the luxury car segment, Bayerische Motoren Werke AG (BMW) and Audi AG lead the way, followed by Mercedes-Benz. Dongfeng Motor Corp, China’s second largest auto group, plans to boost sales abroad from 64,000 in 2011 to about 300,000

by 2016. In October 2012, the Chongqing-based Lifan Industry Group announced plans to invest in its overseas operations to double exports to 120,000 by 2015. If the company meets that target, exports will account for about 40 percent of total sales and jump from around 53,000. In June, Beijing Auto announced an international strategy that would see the company’s annual sales outside China jump to 400,000 vehicles by 2020. More than twothirds of these cars would also be manufactured abroad. Chinese passenger vehicle exports peaked in 2008 at 314,000 before halving the following year. They have been climbing steadily since. In 2012, exports jumped to 616,738. The vast majority of these vehicles are going to emerging markets in the Middle East and Africa. Total vehicle exports last year rose 30 percent to 1.05 million, according to the China Association of Automobile Manufacturers. Chinese automakers have set up 546 companies and institutes abroad with investments approved by the Ministry of Commerce. The top exporters were Chery, Geely, Great Wall Motors, SAIC Motor and Lifan. In the first half of this year, Chinese automakers exported 486,800 vehicles, a drop of 0.6 percent from last year, according to CAAM. Not all is bad news, however. The best and largest Chinese automakers such as SAIC, Great Wall, BYD Auto Co Ltd, Geely and Chery have a shot at developing better cars and better networks, said Zhang Junyi of the strategy consultancy Roland Berger. Some of them are moving in this direction. In October 2012, Geely started producing cars out of new assembly lines in Egypt and Uruguay, which supplement existing assembly lines in Russia and Indonesia. In April, Great Wall

Motors showed off five SUV models during the Bangkok International Motor Show. The fancy-looking cars with winged doors that open upwards were intended to generate interest in the manufacturer. Great Wall has announced plans to build a $340 million plant in Thailand to produce 100,000 units for markets across Southeast Asia. In 2012, the company opened a new factory in Bulgaria. Chang’an Automobile Group is building a new plant in Paraguay. Chery has been among the fastest when it comes to international expansion. The company has 16 manufacturing bases outside China and a sales network of 1,153 dealers.

CCEDIGEST |19

Construction

Human centered urbanization to revitalize economy CHENGDU

quat, shabby houses built over half a century ago still stand and harbor more than 100 households in the Alley 14 neighborhood in the center of Chengdu, capital of southwest China’s Sichuan Province. Discarded sewage and garbage on its narrow lanes is a constant eyesore and renders the place a complete mismatch to the tall modern buildings in the vicinity. Residents, mostly elderly and laid-off workers, struggle in their daily lives, from sharing the single public toilet in the area to living in cramped rooms. “My original house here was built before New China was founded. It’s separated into two rooms. The roof was originally thatch. Over the years, we added layers of shingles such as asphalt felt, asbestos, and plastic in order to prevent rain leakage,” said Shi Ziqing, a resident in her 60s.

Shi’s family has moved to an adjacent home more recently, but the new dwelling is barely any better in terms of living conditions. With similar situations in many other Chinese cities, the country has begun work in earnest to do something about the problem and modernize accommodation for its increasingly urban population. Shi’s family and their neighbors are currently experiencing the full force of this drive. Under a government-led renovation plan, Alley 14 will disappear in two or three years, and it is not the only Chengdu neighborhood waiting to be renovated or demolished. Work on Caojia Alley, also a run-down section of the city center, was officially launched in July. Under a range of settlement packages, residents are temporarily living elsewhere as they wait to return to the rebuilt Caojia Alley, being resettled in other districts or accepting compensation.

In late August, the Chengdu municipal government announced that all shantytowns will be renovated or rebuilt over the next five years, a project which will see homes totaling 15 million square meters renovated or reconstructed. In recent years, the city has invested 30.2 billion yuan (4.9 billion U.S. dollars) in renovating 3.7 million square meters of old buildings for nearly 65,000 households. Nationwide, the Chinese government aims to revive another 10 million homes in dilapidated neighborhoods. Between the start of 2008 and the end of 2012, 12.6 million such homes were restored. Analysts point out that such projects are being integrated into China’s new-style urbanization that improves livelihoods on the one hand, and on the other injects new vitality to the economy, which slowed to 7.5 percent in the second quarter of 2013 from 7.7 percent in the first.

| CCEDIGEST

The Political Bureau of the Communist Party of China Central Committee,China’s top decision maker, pledged to maintain a reasonable investment increase and push “human-centered” urbanization in the second half of 2013. Premier Li Keqiang has also reiterated the importance of human-centered urbanization. He emphasized that improving urban infrastructure and other weak sectors can not only satisfy people’s aspirations, but also stimulate investment and consumption. An annual renovation of 2 million to 3 million dilapidated homes can bring about investment of 200 billion Yuan to 300 billion Yuan, adding a 3-percentage points increase in investment growth, the China International Capital Corporation Ltd. has forecast. A cabinet document released in July called for greater efforts to speed up improvements to run-down neighborhoods, and pledged greater policy aids including enhancing credit support and encouraging private investment. Wang Zhong, governor of China Development Bank’s Sichuan branch, told Xinhua that the branch signed an agreement with the Chengdu municipal government

earlier this year to specifically support Chengdu’s new-style urbanization. The branch will offer 100 billion Yuan of credit over the next five years to help with the city’s investment plans on projects such as a public transit system, urban construction and rural-urban integration. China’s urban population hit 690 million and accounted for 51.27 percent of its total population in 2011, the first time more people lived in cities than in the countryside. But the UNDP report said China’s urbanization comes at a critical time with pressure accumulating in matters such as the efficient use of natural and energy resources, development of urban governance systems, employment, transportation, housing and access to basic social services, security, and the livelihoods of migrant workers. In Alley 14, the local government is still negotiating terms with residents, with 15 percent of them remaining unconvinced about whether to sign an agreement under the renovation plan. They fear their interests may be harmed and complain the renovation plan is not completely fair and open. “I am afraid we could be the victims.

The government officials are pushing us to agree, but why don’t they just give us the money and we renovate our homes by ourselves?” said a resident who declined to provide his name for fear of coming to the attention of officials, who in turn talk of “sunshine projects” and absolute openness. Shi Ziqing, meanwhile, is in favor of the renovation project. Having already signed an agreement, she has been working to persuade her neighbors to do the same. Wu Shaofu, vice director of the housing management department of Wuhou District in Chengdu, said attentions have lately turned to run-down areas of the city scattered in isolated spots. Compared to large areas of old shingle-roofed houses, these smaller neighborhoods hold little commercial value for development and pose challenges. For Wu, how he uses a fair approach to convince Alley 14 residents of the true benefits of renovation will directly determine the outcome of their new home dreams. And ultimately, it will impact upon such projects’ economy-boosting efforts when they are rolled out across the country.(XINHUA)

CCEDIGEST |21

Suzhou Garden Archives re opens to public DESK REPORT BEIJING

uzhou Garden Archives in Suzhou, Jiangsu province, re-opened to the public after over one year of design and construction. The new archive has an area almost twice as large as the previous archive, displaying celebrity handwriting, paintings, calligraphy and related books. Professionals in archive and gardening can book a visit in person or in a group. The exhibition hall features garden elements such as carved wood windows, gateways and old trees, combining ancient style with modern flavor. This is the first time celebrity handwriting, paintings, calligraphy and related books have been exhibited, said Ni Lexian, an employee of the archive. Paintings and calligraphy works are all about Suzhouâ&#x20AC;&#x2122;s gardens. Meanwhile, Infrastructure projects for the Shuangshan Island holiday resort in Zhangjiagang of Jiangsu province will be completed within the year with an investment of 300 million Yuan ($49.02 million). The projects include three categories: roads and waterways, modern agriculture

and eco-environment. The roads and waterways project focuses on improvement of transportation, such as re-building ports, improving a reception center of a golf course and providing ferry services. It aims to advance service functions of the resort. A tourist town project is being carried out at the same time to meet the requirements of tourists such as food, accommodation, transportation, travel, shopping and entertainment.

Good environment is key to sustainable development of the resort. The island is trying to develop the sight-seeing industry and recreational agriculture. Rice, wheat and oil-producing plants will be planted on a field measuring 4 million square meters. Sunflowers, rape flowers, mulberries and cherries will also be planted in the field. The construction of a waterway for sight-seeing is also underway on the island.

| CCEDIGEST

Real estate

China should follow sustainable urban BEIJING

ith massive city construction and rising urbanization rate over the past decades, the Chinese government should focus more on a humanoriented and sustainable path, experts say. On the back of galloping economic growth since the implementation of the reform and opening up policy in 1978, China has become more urbanized. Data showed that the country’s urbanization rate increased from 17.92 percent in 1978 to 52.57 percent in 2012, an annual growth of 1 percent. However, local governments have favored a campaign of city construction, as their local finances rely largely on revenue from land sales, mostly for real estate development. The sheer focus on construction of real

estate has created many cities with very few inhabitants, such as Erdos city in Inner Mongolia autonomous region, which is known for its sparse residential communities. According to the Beijing News on September 2, permanent residents in Erdos is just above 100,000. Since last year many construction sites have suspended operation and many workers have left, Liu Yao, a taxi driver, said. “Local governments should abandon the mentality of pursuing urbanization for driving up investment and stabilizing growth in the short term,” according to Wang Xiaoguang, an expert with the Chinese Academy of Governance. Last year, the 18th National Congress of the Communist Party of China said that the nation will pursue a new kind of urbanization with Chinese characteristics.

A major task of the government’s economic work in 2013 is to actively promote urbanization and strive to enhance its quality, according to a central economic work conference held in December. Since the beginning of the year, the government has emphasized efforts that put people first, using the potential of urbanization to support growth in the coming decade. Government plans on how to do this should be released later this year. Wang said the new urbanization drive should not be about investment, but about the future direction of related reforms, including “hukou”, or the household registration system, the land system and pushing for equal public services. Hundreds of millions of migrant rural workers in Chinese cities cannot enjoy the same public services and social benefits as urban residents do partly due to the coun-

CCEDIGEST |23

nization path tryâ&#x20AC;&#x2122;s household registration system. Xia Bin, a counselor for the State Council and a former member of the monetary policy committee of Chinaâ&#x20AC;&#x2122;s central bank, believed the old pattern of urbanization is not sustainable in the longer term. The new type of urbanization should be able to overcome the drawbacks of the old path, and a significant job is to solve the housing, education, health care and pension problems of rural workers to grant them the same treatment as urbanites, Xia said. China had 262.61 million migrant workers by the end of 2012, about a fifth of its total population, according to the National Bureau of Statistics. Apart from providing equal public services, the government should also promote the development of the service sector and encourage small enterprises to offer more job opportunities for migrant workers, said Zhang Yansheng, secretary-general of the Academic Committee of

| CCEDIGEST

the National Development and Reform Commission. The country must provide necessary vocational education and technical training for rural workers, Zhang said. â&#x20AC;&#x153;The central issue in seeking new-type urbanization is quality and efficiency, instead

of scale,â&#x20AC;? according to Zhang. Urbanization should also focus on energy-saving, green and efficient development of cities and make scientific plans when it comes to layouts so that land resources can be used with minimum waste, Xia said.

Urbanization needs to explore a new pattern that fits the next 35 years, instead of becoming an extension of the old mode seen in the past threeand-a-half decades, according to Zhang. The secretary-general added that China should take an ur-

banization path that meets high international standards, incorporates the ideas of green and intelligent growth and also features values including frugality, love of the environment and social harmony.(Agencies)

CCEDIGEST |25

Home prices continue to rise DESK REPORT BEIJING

ew home prices in 100 major cities averaged 10,442 Yuan ($1,706) per square meter in August, rising for 15 consecutive months in month-on-month terms, and indicating the recovery of the property sector, a survey has shown. Of the 100 cities tracked by the China Index Academy, the research arm of Soufun, China’s largest property website, 71 cities posted month-on-month increases, with 31 of them seeing prices rising at a pace above 1 percent, two cities fewer than in July. The other 29 cities saw monthly declines, 10 cities fewer than in the previous month. Of those, 14 cities saw drops more than 1 percent. On an annual basis, new home prices in those 100 cities increased 8.61 percent on average, 0.67 percentage point higher than in July. Among the 10 largest cities, Beijing saw the biggest property inflation with a 3.22 percent month-on-month increase in August, trailed by Wuhan, Hubei province, which posted a 2.16 percent month-on-

month increase. On a year-on-year basis, new home prices in the 10 top-tier cities grew 12.18 percent in August, extending the period of gains to 10 months and pointing to robust housing demand. “It’s increasingly less likely that we’ll see new tightening measures in the property market, and investors and homebuyers are returning to the market and pushing up prices because of the limited supply,” said Huang Zhijian, chief analyst at Shanghai Uwin Real Estate Information Services Co. Loosened purchase restrictions in Wenzhou, Zhejiang province, and Wuhu, Anhui province, have sent signals lately that a relaxed policy environment might be in the works by local governments, and trading is now more active than a few months ago, said the report. In August, Wenzhou quietly loosened purchase restrictions in the housing market by allowing local and non-local residents to buy second homes, while Wuhu decided to abolish transfer taxes and start paying a 20,000-yuan subsidy to undergraduate homebuyers with three-year work experience in the city. Zhang Dawei, research director at real

estate company Centaline Group, said there will likely be more cities following those moves across the nation to ease purchase restrictions. Local governments rely heavily on the property market, a key driver of economic growth and a cash cow for them, Zhang added. However, Hui Jianqiang, research director of Beijing Zhongfang-yanxie Technology Service Ltd, said that Wenzhou and Wuhu tweaked the policies to stop the continuous fall of home prices in the two cities. Wuhu saw the heaviest losses in the home price list after shedding 2.29 percent month-on-month, while Wenzhou saw home prices decrease 0.31 percent. Xu Shaoshi, minister of the National Development and Reform Commission, said in a report delivered to a meeting of the Standing Committee of the National People’s Congress on Aug 28 that the government will launch pilot property tax programs in more cities. “There will be between six and eight more cities with trial property tax programs this year, with some of them possibly levying the tax on pre-owned homes,” said Chen Sheng, vice-president of the China Real Estate Data Academy.

| CCEDIGEST

Agricultural

China plans to tame the Weather BEIJING

n a move appearing to support that saying, China plans to boost its weather intervention through a national plan. The plan, running from 2013 to 2020, will divide the country into six regions and set up an interprovincial mechanism for weather control, Yao Zhanyu, a senior researcher of the Weather Modification Center under the China Meteorological Administration, told media. Each region will build infrastructure and a command center for weather intervention, according to Yao. Programs in northeastern, central and southeastern areas will be used mainly to guarantee the wheat harvest, and the northwestern program will be for environmental protection, Yao said. He added that the southwestern program will focus on ensuring the operation of agriculture and hydropower, while the northern program will be concerned with guaranteeing water supplies. China modifies weather mainly to increase rain or snow and prevent damaging weather such as hail, fog and rainstorms. Cloud seeding is the major weather modification activity in China. According to Yao, the northeastern region — covering Liaoning, Jilin and Heilongjiang provinces and parts of the Inner Mongolia autonomous region — was se-

lected as a pilot area to test the coordination system after the National Development and Reform Commission approved a feasibility report in May 2012. The report said the project will invest nearly 1.1 billion Yuan ($177 million) by 2014 to build a regional weather intervention system in northeastern China, including 12 weather intervention airplanes and ground-based facilities. Yao said a feasibility report for the northwest started recently and the program is expected to be launched within one year if everything goes well. The northwestern area, including Gansu province, the Ningxia Hui autonomous

region, the Xinjiang Uygur autonomous region and parts of Inner Mongolia, is the main source of the sandstorms in spring and autumn. To better meet agricultural demand and relieve disasters, China plans to increase annual precipitation by 60 billion metric tons and extend the coverage of artificial hail suppression to more than 540,000 square kilometers by 2020, according to the State Council. “Cloud seeding to coax rain can relieve agricultural drought, reserve water for lakes, cool down high temperatures and ease pollution,” Yao said. However, as cloud seeding is used on a massive scale, some critics have questioned whether there is an environmental impact as a result of manipulating the weather. China commonly uses silver iodide, a hazardous substance and a toxic pollutant, for cloud seeding. The country has used silver iodide to lessen the impact of periodic droughts since 1958. But Lei Hengchi, a scientist specializing in weather intervention, said little impact would occur because the amount of chemicals in cloud seeding is too small compared with the size of the affected region. Cloud-seeding aircraft use 200 grams to 300 grams of silver iodide during a flight. A rain-enhancement shell contains only 1 gram of silver iodide, while a rocket contains about 8 to 15 grams.

CCEDIGEST |27

Fonterra reveals plan for 2nd China dairy farming hub WELLINGTON

ew Zealand dairy giant Fonterra is to launch a second farming hub in China and is looking for strategic partners in the development planned for Ying County, Shanxi Province. The company, which was at the center of an international food scare last month after issuing a false alert over botulism contamination, said Wednesday that it had received “strong support “ for its strategy to grow its Chinese interests from many levels of government in China. The hub would comprise 3,000 cattle farms and was expected to be in production in the second half of 2014 and was the next step in the company’s strategy to produce 1 billion liters of milk in China by 2020. “This is a key part of our strategy to become a more integrated dairy business in China and to contribute to the growth and development of the local Chinese dairy industry. Having secured the right location in the Shanxi province we are now able to approach potential strategic partners,” Fonterra

president of Fonterra Greater China and India Kelvin Wickham said in a statement. “Ying County provides an ideal environment for us to expand our farming operations due to its new agricultural zone, proximity to customers and the high quality supply of animal feed available in surrounding areas.” Fonterra would employ more than 500 people in Ying County, three quarter of them local employees. “The second hub builds on our existing investment in Hebei Province and will help us to meet customer and consumer demand for high quality fresh milk in China,” said Wickham. “Raw milk supply growth in China has been around 2 percent over the past three years, but demand is growing at around 6-8 percent. So there are significant opportunities for Fonterra to help bridge this supply gap by growing our own domestic milk supply in China and continuing to import our high quality finished dairy products. “ When fully operational, Fonterra’s two hubs would together produce up to 300 million liters of milk per year. (Agencies)

| CCEDI�

S cience and technology

China develops new generation of high speed aircraft S&T Desk Report

n a move appearing to support that saying, China plans to boost its weather intervention through a national plan. China is developing helicopters with the ability to fly at speeds twice the current average, according the country’s major aircraft maker. Lin Zuoming, chairman of Aviation Industry Corp of China, said the company is developing newgeneration helicopters that can travel up to 500 kilometers an hour. “We have been keeping pace with other countries in the research and development of ultrafast helicopters,” he added. Lin was speaking after models of several new-concept helicopters were presented at the Second China Helicopter Expo, which concluded in Tianjin on Sunday. His company produces a wide range of helicopters, from ultra-light models to heavy-lift helicopters. The Blue Whale tilt rotor aircraft being developed by AVIC’s Helicopter Research and Development Institute will have a maximum takeoff weight of 60 tons and a payload of up to 30 tons, an engineer at the institute told People’s Daily. He said the Blue Whale will be able to reach speeds of up to 700 km/h. The aircraft will be able to perform vertical takeoffs and landings in areas with complex geographical conditions and conduct disaster relief supply airdrops and other heavy-lift duties. It also can serve a wide range of military purposes such as battlefield reconnaissance, patrols and air-to-ground strikes. The Jueying-8, an unmanned, highspeed helicopter with coaxial rotors, was also featured at the expo. The aircraft, with much of its airframe made of composite materials, was designed to test the feasibility of ultra-fast helicopters. A prototype of the Jueying-8 is expected

to make its maiden test flight in 2015, and designers hope it will achieve a maximum speed of 400 km an hour. Russia and France have also begun to develop ultrafast helicopters. Russian Helicopters, the leading Russian designer and manufacturer of helicopters, announced in May that it is cooperating with industry and defense authorities in Russia on the development of a high-speed helicopter, which is expected to perform its first test flight before 2020. Meanwhile, the Eurocopter X3, an experimental high-speed compound helicopter being developed by the European helicopter giant, has been reported to be the fastest helicopter in the world, after reaching a top speed of 472 km/h during several test flights in June. Ultrafast helicopters like the Eurocopter X3 will be able to conduct search-andrescue missions, border patrols, passenger transport and a host of other military operations, China Aviation News reported.

Fang Yonghong, director of unmanned helicopters with the Helicopter Research and Development Institute, said China has cracked core technologies in key areas such as rotors, flight control and avionics, and developed a wide variety of unmanned helicopters. In addition to high-speed helicopters, the institute is also developing an all-electric helicopter, Fang said. “Seeing that AVIC has the confidence to display those advanced, new-concept helicopters at the expo, we can conclude that China has authentically achieved substantial progress in helicopter research and development,” said Wu Peixin, an editor at Aerospace Knowledge magazine. “The appearance of these helicopters indicates Chinese designers and technicians have accumulated profound experience in composite material and engine research.” After the unmanned prototype of Jueying-8 passes tests, it’s highly possible that designers will develop manned variations of the aircraft, Wu said.

CCEDIGEST |29

New Nano tech could treat lake pollution hefei

hinese scientists announced on Monday that they have developed a type of nanomaterial which can catalyze algae masses growing on water surfaces into inorganic earth. Chinese lakes are often plagued by catastrophic outbreaks of blue-green algae. Triggered by vast amounts of sewage water drained into rivers and lakes, it can exude an unusually bad odor, suffocate fishery stocks and turn water into a milky green shade. Algae pollution has been a particular problem in three of China’s major freshwater lakes -- Chaohu, Taihu and Dianchi. Chinese governments at multiple levels have invested billions of Yuan in recent years to treat the pollution. But large blooms of algae, although reduced in density, still persist in times of sufficient heat and sunshine, conditions that are favorable for its growth. Scientists with the Chinese University of Science and Technology said on Monday that their laboratory tests had showed a single gram of the new nanomaterial that can kill algae floating in an area equal in size to a basketball court. Fan Chongzheng, who led the research, said that the catalyzer leads to a biodegradation of the algae into an inorganic earthenlike substance. He added that lab tests were conducted

on water covered with a density of algae of over 100 million particles per liter. The water of Chaoku Lake, home to the most serious algae pollution among China’s major lakes, is covered with a density of algae of over 5 million particles per liter. The 13,000-square km lake, located in east China’s Anhui Province, is surrounded by fast-growing cities. Heavy use and local industrial development in recent years have made it one of the country’s most polluted lakes. Sewage discharge has brought excessive amounts of nitrogen and phosphorus to the lake, incurring eutrophication of water, fueling the algae outbreak.

The development and reform commission in the provincial capital of Hefei pledged last year that facilities that can handle 5,000 to 10,000 tonnes of wastewater per day will be built in every township surrounding Chaohu Lake by 2015. Fan said that the biological treatment, along with the government’s measures to intercept sewage from urban areas, can together solve the algae pollution conundrum. He said the project team will conduct field studies at the lake, before reporting the research results to concerned central government departments for the application.