Magazine 40 edition

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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

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Food self-sufficiency

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ccording to reports, China is set to remain selfsufficient in the main food crops, though output will slow in the next decade under increasing resource and rural labor constraints, China will import more oilseed and livestock, for both the meat and dairy sectors, as consumption growth will outpace production during the 2013-2022 period.

The country's imports of oilseed are expected to rise by 40 percent in the next decade, accounting for 59 percent of global trade, while dairy imports are projected to rise 20 percent, according to the OECD-FAO Agricultural Outlook 2013-2022.

Rise in prices for both crop and livestock products are expected in the next decade due to a combination of slower production growth and stronger demand, including for that for the bio-fuels.

It is said that limited expansion of agricultural land, rising production costs, growing resource constraints and increasing environmental pressures will pressurize agricultural production, which is expected to grow 1.5 percent annually in the period, down from an annual growth of 2.1 percent between 2003 and 2012.

Despite all the prevailing and expected challenges, it is a really good omen that the country will remain self sufficient with regard to food demands. It clearly indicates that the Chinese leadership is keeping a very specific focus on the food requirements of the nation in the coming years and is successfully evolving policies and measures to ensure the country’s self sufficiency. It also clearly reflects that while the Chinese government is keeping an eagle eye on maintaining a foolproof security of country’s geographical boundaries, at the same time it has by no means, ignored the food security perception at all. We believe that the model for food self sufficiency that the Chinese leaders have set, must be followed by all the countries in the region to ensure a starvation-free future of the nations.

Editor

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in this issue 24, 30 June 2013 04

Cover Story

Battle cries of examinees reflect reality 06

Hometown could affect your health

Vodafone and China Mobile have withdrawn their joint bid for one of two licenses offered in Myanmar, saying the returns do not justify their investment.

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in this issue 09

Two new funds to boost trade with Africa

Vodafone, China Mobile withdraw Myanmar license bid

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How could Shanxi merchants thrive for 100s of years?

ChinaSoft wins China Mobile’s Wireless Fetion contract

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Society

Battle cries of examinees reflect reality

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CED Monitoring BEIJING-How do Chinese schools psych seniors up for gaokao, the all-important national college entrance examination that is held around this time every year?

A number of slogans and mottoes doing the rounds in high schools have hit the Internet recently. And they are both amusing and disturbing.

The lighter ones encourage students to aim for top Chinese universities with a sense of humor: "Go to Tsinghua (University) to be young alumni of the president and premier", or "Today Beida (Peking University) is in my dream, tomorrow I'll dream in Beida". In a video that went viral on the Internet, students of a high school in Fujian chanted "May elder sisters be butterflies emerging from cocoons and elder brothers eagles soaring in the sky" in unison to wish seniors good luck in gaokao.

But many others have created controversies because they intend to exert extreme pressure on students to persevere through the ordeal of cramming, including "Why need to sleep so much? You can rest long after you die", "Never raise your head, be soundless (while studying)" and "You must go crazy first to be successful".

Some even play on the public resentment against the widening social divide: "Without gaokao, do you have a chance to compete

with the rich second generation?" Or, "Let's score better than the rich and the handsome, and outsmart the children of officials".

I took gaokao decades ago when it was much more competitive with a national college enrolment rate of about 5 percent. For almost all high school graduates then, the options were either to go to college or to take up work in a factory or a farm. School buildings then were adorned with slogans such as "Study hard for China's modernization" and "One red heart, two preparations", which students found a little pompous and funny. Yet no school or teacher would tell students openly that the exam was a make-or-break time for them.

Ironically, the tribulations of the national college entrance exam have increased many fold, especially in provinces where good universities are few, despite the decreasing numbers of high school graduates, exodus of rich students to foreign campuses and the proliferation of colleges and courses in recent years that have resulted in a dramatic increase in the enrollment of students.

While more seats are available for fewer applicants, the stakes have been upped for high schools as an increasing number of parents and students are keen to get into elite universities, a trend further exacerbated by the preferential treat-

ment meted out by the education authorities and employers to such universities.

Many high schools have long prided themselves on being able to produce crops of top scorers every year owing to their tough management and teaching methods.

Education policymakers have long known that holding the same test for different universities is not the best way to select students from diverse backgrounds and abilities, and admissions based mainly on a single exam have forced many students to spend as much as a year to raise just a few points to surge ahead.

But they cannot do much about the system, because in times of widespread mistrust of the privileged and powerful, gaokao results are still seen as the fairest criterion for admission to college, as well as one of the few avenues still open for poor and connection-less people to move up the social ladder.

Besides, it would be difficult to expand the scope of gaokao and change its emphasis on rote memory because of the vast gap between students from families living in cities and those from poor rural areas.

Until gaokao is relegated to just one of the criteria for admission, as many education policymakers hope, we may just have to continue hearing examinees giving battle cries like "Every point raised eliminates 1,000 rivals".

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Society

Hometown could affect your health The place you call home can affect your likelihood of being a smoker, overweight or obese, according a report released Friday by the Australian Bureau of Statistics.

The Australian Health Survey found that people living in outer regional and remote areas had higher rates of daily smoking in 2011-12 (22 percent) compared with those living in major cities (15 percent).

People living in areas of most disadvantage were even more likely to smoke every day than 06

those living in areas of least disadvantage -- a gap of one in four compared with one in ten.

"While rates of daily smoking in remote areas of Australia have dropped over time, they are still significantly higher than the rates in major cities of Australia a decade ago," said Louise Gates, Director of Health at the Australian Bureau of Statistics.

The survey also found links between remoteness and socialeconomic disadvantage and obesity -- with seven out of ten adults living in outer regional and

remote areas overweight or obese compared to six out of ten in cities. However, the survey found that the relationship between obesity and socio-economic status was not the same for both women and men.

While women living in areas of most disadvantage were more likely to be overweight or obese (64 percent) compared with women living in areas of least disadvantage (48 percent), men had similar obesity rates despite their level of disadvantage.(XINHUA)

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Finance

Two new funds to boost trade with Africa CED Monitoring BEIJING-The China-Africa Business Council and the ChinaAfrica Development Fund have decided to set up two new funds this year boost China's investment in Africa. One fund is for commercial ventures, and the other, for mining activities.

Zheng Yuewen, Chairman of CABC, which represents the interests of more than 550 Chinese companies in Africa, said each fund will raise $1 billion in its initial phase from member companies and the CADFund, China's largest private equity fund focusing on African investments. Offices for the funds will be established in Beijing this month.

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"China has been looking to invest in different ways in Africa, instead of focusing only on building infrastructure projects such as roads, bridges, ports and stadiums throughout the continent," said Zheng.

The changing global investment environment and the lingering debt crisis in the eurozone have prompted major economies such as the United States, the United Kingdom, France, India and Japan to shift their investment focus from traditional markets in Europe and Asia, to Africa.

Additionally, Africa's hunger for urbanization, commodities, jobs, new overseas markets, and improved manufacturing, trade,

services and resource sectors, has presented unprecedented business opportunities to foreign investors.

"African countries have good opportunities to capitalize on high international commodity prices, their young energetic labor forces and abundant resources," Zheng said.

"They also have the opportunity of taking advantage of the global investment trend to seek solutions to poor levels of infrastructure, the high unemployment and poverty by accelerating transformation through commodity-based industrialization.

"The continent can go through the same industrial trans-

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formation as China did three decades ago, and in time it will become a major goods producer, rather than just being a shipper of raw materials to different foreign destinations," Zheng said.

He said that during this longterm transition, more Chinese companies will move their factories to Africa to help the continent upgrade its technological ability.

The two new funds will provide capital to Chinese enterprises seeking investment opportunities in Africa, particularly in the mining sectors, commercial and trade investment.

To further strengthen cooperation with Africa, the Chinese government has consistently encouraged capable State-owned and private companies to invest there.

It has also supported the African Development Bank and the West African Development Bank by injecting funds, canceling debts, and establishing joint funds for a number of manufacturing and construction projects.

China-Africa trade stood at nearly $200 billion last year, while Chinese investment in Africa has reached $17 billion, according to the department of African affairs

at China's Ministry of Foreign Affairs.

In December of 2012, CABC surveyed the 198 member companies which had established a presence in 32 countries across Africa. With 34,000 local employees and 6,400 Chinese workers, the companies had trade relations with 51 African countries and $2.4 billion in sales revenue last year, representing about 16 percent of their total business revenues.

The 198 companies, including Chongqing-based automobile producer Lifan Group, Guangdong-based shoemaker Huajian Group and power supplier Shenzhen Energy Corporation, have so far invested $1.1 billion in the 32 African countries and have plans to invest an additional $5 billion over the next three years.

Around 80 percent of CABC's members are private companies and the rest are State-owned enterprises.

Chi Jianxin, president of the CADFund, said: "In contrast to State-owned enterprises, whose African sales are largely based on huge infrastructure projects, private-sector Chinese companies are more sophisticated in processing local products like

cotton and leather into manufactured goods such as garments and shoes."

Chi added that even though logistics costs remain high in Africa, preferential tariffs for African exports to developed markets, low labor costs and favorable investment policies can make up for this.

More than 700,000 people have benefited from the CADFund throughout the continent over the past six years. Its investment now contributes $1 billion in tax revenues to different African governments, and funds the export of some $2 billion worth of goods each year.

The latest China-Africa ventures to be created include a partnership between Chinese cement producer Tangshan Jidong Cement Co Ltd and household appliance manufacturer Hisense Group, who have created a cement plant with 1 million tons of annual production capacity, and a home appliance factory that will be operational in South Africa this month.

Elsewhere, a cotton spinning industrial park in Tanzania and an iron mine that produces 1 million tons per year in Liberia, will be launched in the second half of this year.

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Finance

How could Shanxi merchants thrive for 100s of years?

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Finance

CED Monitoring BEIJING-How could Shanxi merchants stay at the top of China's business world throughout the Ming (13681644) and Qing (1644-1911) dynasties? And why did so many Shanxi people take to business? In a sense, this was determined by both geographical and historical factors.

At the same time, the spirit of Shanxi merchants was another important reason for their prosperity. They showed no fear towards any kinds of difficulties, which were described by Western scholars as "the Spirit of Shanxi," or more precisely, "the Spirit of Shanxi Merchants."

Shanxi is not a good place for crop production. So throughout the ages people had to earn their living through business. The earliest record of this can be found in History Record. According to other historical literature, the southern part of Shanxi was not able to provide enough food for residents, so people had to do business in other areas. Yet few people in north Shanxi needed to do so.

Beginning in the Ming Dynasty, the arable soil became more precious due to the increasing population. Therefore, more and more Shanxi people began to leave their home to do business.

Most Shanxi merchants were originally miserable farmers with little property.

They were forced to start their business from scratch. When they obtained some profits, they became models for neighborhood, which gradually led to the creation of 12

merchant groups.

Bordering the northern section of the Great Wall, Shanxi lay next to the nomads of Inner and Outer Mongolia.

South Shanxi contained plains for agriculture.

Therefore, Shanxi lied in the junction of the stock raising, agriculture, and handicraft industries.

Shanxi merchants' business route The geographical position made Shanxi into the communication center for the production of the abovementioned industries.

The nomads bartered horses for tea, fabric, and crops with Shanxi merchants. Meanwhile, the merchants also carved out trade with the Russians.

Since 1768, Kiakhta has been the trade center for Russia and China.

Shanxi's geographical importance has given many advantages to its people.

Starting from the Yuan Dynasty(1271-1368), the transport channels were gradually developed by Shanxi merchants, who organized camel teams to deliver goods. The merchants also purchased silk, sugar, fabric, and other groceries from different cities, and sold them in Xinjiang, Mongolia, and so on.

Until recently, in the long history of Chinese society, agriculture has always been put at the top in social development, while business has been given little importance.

However, in Shanxi, especially in its middle part, it has been a tradition for people to learn to do business since the Song Dynasty (960-1279).

Shanxi people long believed that it was a good way to obtain wealth by trade, and

then to purchase arable soil, or to invest in the finance and bank industry to generate more wealth.

Shanxi merchants believed that to be faithful and honest were the best ways to expand markets. According to business ethic principals, merchants are driven by profits, yet cheating and fraud is not allowed. Actually, faithfulness and honesty have long been at the core of Shanxi merchants' value view. This is also the reason why Shanxi merchants enjoyed their good reputation for such a long period. A Guanyu temple, which symbolizes honesty and justice, could be found in almost every town in Shanxi.

As has been mentioned above, the natural environment in Shanxi is rather harsh.

So in the past, people had to leave their hometown to gain their living. They traveled throughout China to purchase commodities and then organized camel teams to trade with Mongolia, Russia, and even Japan. In this process the merchants had to overcome various obstacles such as different languages and, habits of life. Hence persistence and entrepreneurship was also critical for the success of Shanxi merchants.

Shanxi merchants believed that "harmony brings wealth." They competed with each other, while helping and looking after each other when needed as well. Since most of the Shanxi merchants had good faithfulness and honesty, they would believe in each other even in the most difficult times.

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IT

Vodafone, China Mobile withdraw Myanmar license bid CED Monitoring BEIJING-Vodafone and China Mobile have withdrawn their joint bid for one of two licenses offered in Myanmar, saying the returns do not justify their investment.

According to media reports, world's two largest mobile operators said the consortium decided not to proceed with the bid as it did not meet "strict internal investment criteria" which both companies adhered to.

The Chinese and British 14

telcos had partnered in April to bid for a license in Myanmar, where the government was looking to increase the number of mobile operators from two to four.

The two operators had been among 12 applicants to make the shortlist which included Airtel Consortium; Axiata Group; Digicel; France Telecom-Orange and Marubeni; KDDI, Sumitomo, Myanmar Information and Communication Technology Development and A1 Construction; Millicom Interna-

tional Cellular; MTN Consortium; Qatar Telecom; SingTel, KBZ and Myanmar Telephone Co; Telenor; and Viettel Group.

Industry watchers said in a previous ZDNet Asia report that as Myanmar looked toward economic reforms which would open up its telecom market to outsiders, investments might take a long time to pay off as telcos would face a lack of clarity in regulations, government red tape, and the limited infrastructure when rolling out networks.

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IT

ChinaSoft wins China Mobile’s Wireless Fetion contract

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CED Monitoring BEIJING-ChinaSoft International Limited ("ChinaSoft" or "the Company"), a leading IT solutions and outsourcing service provider in China has announced that it was awarded the 2013 Wireless Fetion contract by China Mobile. This one-year contract amounts to approximately RMB 100 million, and is expected to have positive contribution to the Company's overall profitability in 2013 and beyond.

Launched by China Mobile in 2011, the new Fetion provides SMS, voice, image and document messaging

cross the different platforms free of charge to the user. It is a internet social networking platform focusing on communicating, listening and sharing, and it is also a crucial element within China Mobile's mobile internet strategy. As a comprehensive communications service which integrates IVR(Interactive Voice Response), GPRS, SMS and other means of communication, Fetion is now a major domestic mobile Internet platform connecting a large number of users between PCs and mobile phones.

The Wireless Fetion project recently won by China-

Soft will provide business construction and support for Mobile Fetion and Fetion HD products to China Mobile (Guangdong). The project aims to provide product design, technology implementation plan and formulate a differentiated competitive strategy, according to the China Mobile's telecom operator business features as well as Fetion business's core advantages. The Company will provide excellent solutions based on the mobile terminal features, to continuously strengthen IM basic capabilities and provide mobile IM new product features.

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IT

Meanwhile, the design and implementation of this project will give full consideration to its integration with China Mobile's other businesses, and will provide unified standardized interface to quickly achieve integration. It will provide China Mobile's customers with richer content services and a more user-friendly experience through various product types and contents, including but not limited to,

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cross-platform audio and video services, Fetion Desktop Launcher, Fetion ROM, and the integrations with China Mobile's other mobile internet businesses as well as the third-party businesses.

The Company plan to use all resources available to ensure the successful implementation of this large scale project including bringing on other consulting partners such as YunBo Digital.

Through the acquisition

of MMIM Technologies Inc. in 2010, ChinaSoft strengthened its mobile internet service capabilities and became a core service provider for the mobile instant messaging, mobile community and app store businesses of China Mobile.

With its strong product development capability and valuable experience in the mobile internet field, ChinaSoft won this contract while competing against a num-

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ber of strong peers for this highly coveted project.

Through our active participation in Fetion project, ChinaSoft will further strengthen its strategic partnership with China Mobile. Last year, the Company also won China Mobile Wireless City operation platform project.

ChinaSoft strongly believes that all over the world the IT services business model is changing due to the evolution of information

technologies like social networking, mobile communications, big data analytics and cloud computing. As part of its growth strategy set in 2011, ChinaSoft embraced the Professional, Outsourcing and Emerging (POE) structure. The Company will pursue growth in its traditional IT professional consulting & solutions business (P) and outsourcing business (O) while pushing into innovative and emerg-

ing technologies (E) such as mobile communications and cloud computing. The Company believes that this transformation is in alignment with the strategies of its customers such as China Mobile, Huawei, Alibaba and Microsoft. Winning the China Mobile Wireless Fetion contract further demonstrates that the company is on track in its execution of its business strategies.

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Industry

Chinese travelers moving up the value chain

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CED Monitoring BEIJING-Years ago there was a phrase in the international travel industry describing Chinese tourists - they "sleep cheap, shop expensive".

Even today, shopping still dominates their spending with 34.1 percent of the total while traveling, followed by transportation at 21.6 percent and hotels at 14 percent, according to a report released by the China Tourism Academy in April.

Though still comparatively low, Chinese spending on overseas hotels last year was 4 percentage points higher than that in 2011.

Statistics show that Chinese travelers are becoming more willing to stay in medium-priced star-rated ho-

tels rather than low-budget accommodations.

In 2012, almost half of Chinese tourists stayed in two or three-star international hotel chains, up 10 percentage points over 2011. Some 15 percent were willing to pay for four-star-rated hotels or above, 7 percentage points higher than the year previous.

"The quality of accommodations is tipped as the next big thing," said an industry observer.

But the spending sprees of some Chinese consumers overseas have generated at times eye-popping news even by international standards.

In 2012, Chinese travelers made some 83 million outbound trips, an annual rise of

15 percent. A KPMG study puts the growth at 71 percent this year.

While overseas, they spent $85 billion, double the annual revenue of Exxon Mobil. And 72 percent of these travelers said that they bought luxury items on these trips.

Another report said that of all the luxury spending by Chinese consumers worldwide, a whopping 60 percent happens outside China.

A strong Yuan and prohibitively high prices at home are cited as the driving forces for their binge buying overseas.

In the bigger picture, as China grows more affluent more people can afford to travel abroad and more people spend more. But as con21

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Industry

sumers they have special needs: They require quality services and are at the same time value conscious.

The design of a travel itinerary, attitude and professionalism among tour operators are rated as the decisive reasons in how rich Chinese book luxury travel, according to a report by the China Tourism Academy and leading domestic travel agency Ctrip.

Of the 83 million outbound trips Chinese made last year, more than 92 percent were made for private reasons, unlike the business delegation group tours of years ago paid by sponsors.

And a rising number of Chinese tourists are opting for

natural resorts and historic destinations instead of the hustle and bustle of hurried sightseeing.

By 2012, the number of high net worth individuals in China climbed to 700,000, up from 500,000 in 2011 and 320,000 in 2009, according to a study by China Merchants Bank and Bain & Company in May. Such wealthy individuals are defined as those with liquid cash of at least $1 million.

Another wealth report, issued by Citibank in March 2012, said all of Asia has 18,000 ultra high-net-worth people, each with liquidity of at least $100 million, exceeding the number in North America for the first time. The study said there are now

17,000 in North America and 14,000 in Western Europe, signifying a global shift in the economy and fortunes to the East.

Estimates say there will be 26,000 billionaires in Asia by 2016. About 60 percent of them say travel tops their recreational activities.

The South Pole, South America, South and East Africa, Oceania and even outer space are among their luxury travel destinations.

Though Asia is still the most visited locale for outbound Chinese travelers some 90 percent of the total - per person spending in luxury travel is 10 to 50 times higher than a conventional traveler.

Private jets, cruise liners,

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luxury hotels, seamless tailormade transport services, and customized cultural touches throughout the whole trip are major features of luxury travel.

"Especially the affluent are glad to pay for joyful, unforgettable, in-depth and rare experiences," said Liu Deqian, a senior tourism industry expert.

Abercombie & Kent, a global luxury travel service provider, told the Daily Telegraph that "what we're trying to do with China is to try to understand the quirks of that particular nationality and design products that suit their wants and needs".

"Anyone who conquers the Chinese market will really

do well," A&K founder Geoffrey Kent told media.

Only 3 percent of the Chinese population now holds a passport. If the ratio increases to 10 percent, the numbers become irresistible to travel companies worldwide.

The China Tourism Academy report says the number of Chinese outbound travelers will increase 15 percent to 94.3 million this year. Their total spending is projected to hit $117.6 billion, a 20 percent surge over 2012.

When tour is not only about sightseeing and hotels are not just for an overnight stay, the allure of a special experience is increasingly important. Doing something unique gives tourists an in-

centive to come back.

It is gaining in popularity for the new rich in China as well.

"Reservations for South Pole group tour scheduled at the end of 2013 were full at the beginning of this year," said Wu Zhiyuan with the A&K China office. The 16-day tour - with 10 days spent on the way in and out - costs each of the tour members about 160,000 Yuan ($26,052).

"Most of them are couples, wealthy and well-educated, 40 to 50 years old, younger than their counterparts from Europe and the US," said Wu. She said offering the most knowledgeable and professional private guides is their trump card.

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Industry

Industry to get shock treatment

CED Monitoring BEIJING-Chinese local governments are once again trying to jump-start the electric-vehicle industry as potential customers remain largely ambivalent to incentives to get them to buy what is billed as the transport of the future.

The strongest performer in the industry, Telsa Motors of the US, says it delivered 4,750 cars in the first quarter of the year, 24

but none of its competitors has been able to come up with a formula for getting many customers to buy their products.

Most of the electric cars on the road are run as part of government pilot projects.

The Beijing new-energy development center says the Beijing government has now come up with incentives to lift sales, including a subsidy of up to 120,000 Yuan ($19,548; 15,132 Euros) and exemption from the

ballot system under which number plates are granted. The measures are expected to take effect this year, the center said.

Only electric models are eligible for these favorable policies, not hybrid or plug-in vehicles. The terms are similar to those of previous incentives, but for the first time the government is codifying the rules in legislation.

Local governments have generally accepted that it may

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take a long time to get people to abandon conventional cars in favor of electric ones, and the approach they are taking varies widely. However, one approach that some see as a solution is to rent electric cars to individuals or government bureaus rather than to sell them.

One of those doing that is the biggest state-company in the capital, Beijing Automotive Group Co. The head of BAIC's new-energy division, Lin Yi, says the company will soon launch a high-end electric car targeting domestic customers and governments.

The company had previously said it would sell 3,000 electric cars in Beijing by the end of this year.

Lin says the company is

looking for people willing to test drive the electric vehicles it has produced, the E150 and the C70.

One of the biggest problems with electric cars has been recharging them, and BAIC is working with State Grid to erect charging poles for the test drivers. The catch is that the drivers must own a garage where the poles can be erected. The company says it hopes to soon have "several dozen volunteers".

Charging stations and poles will be built in big communities, near the premises of car rental companies, and in power stations, the government says. The goal is to have at least one charging pole available every 5 kilometers in Beijing.

Central and local government efforts over the past three years to encourage people to buy electric cars have been hampered not only by the lack of charging stations but widespread anxiety about the limited range of the cars, given that a battery can run only 15o km on one charge. A taxi in Beijing usually runs 500-600km a day.

In 2009 the central government launched a three-year plan to introduce electric vehicles in major cities under which 10 cities will be selected every year to demonstrate 1,000 electric vehicles.

But the demonstration projects have aroused little buyer interest, and most of the electric vehicles running on the roads are paid for by local gov-

One of the biggest problems with electric cars has been recharging them, and BAIC is working with State Grid to erect charging poles for the test drivers.

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Industry

"Compared with foreign competitors, Chinese brands have accumulated a bit more experience in electricvehicle development, so we are not starting from nothing." ernments, and used either as electric buses, taxis or as city cleaning trucks, running fixed routes and serving limited areas.

Two of the most publicized demonstration projects have been with Foton's 250 Midi electric taxis, serving in Yanqing county in northwestern Beijing, and 800 BYD electric taxis operating in Shenzhen.

Beijing Municipal Science and Technology Commission says the city plans to add another 2,000 electric taxis and try to bring them from suburban areas into the city.

Zhao Jingguang, vice-president of Foton, says Midi is just a "transitional product" for the Chinese market, and the company "will definitely replace it with an upgraded product by 2015".

Zhao declines to give more details about the new model, 26

but voices confidence about the future of electric cars.

"Compared with foreign competitors, Chinese brands have accumulated a bit more experience in electric-vehicle development, so we are not starting from nothing."

Last year the State Council's plan for new-energy vehicles called for the country to produce 2 million electric and plug-in hybrid vehicles by 2020, and the market should have 5 million electric vehicles on the road by then.

That plan has excited many Chinese automakers who are eager to retrieve the ground lost to foreign brands in the field of conventional vehicles.

But some industry veterans are skeptical about this grand plan. John Zeng, the Asia-Pacific director of LMC, says individual purchase is not viable in

China because 70-80 percent of customers are first-time car buyers, who are highly unlikely to buy a novel electric model.

"Even the most mature electric models such as Chevy Volt and Nissan Leaf have not found a successful business model, but rely heavily on government subsidies," Zheng says.

"Telsa seems to have found a feasible way to sell its cars, but it is more of a premium sports car than an electric vehicle designed for the public."

An intermediate Telsa model is priced at $67,400 (52,174 Euros), about what you would pay for an Audi A6 in the US. "I'll bet that eventually the government will sell these electric vehicles to taxi companies or government departments, but not the public, as it had hoped," Zeng says.

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Automobile

Time for Chinese Automakers to think out of box

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Automobile

CED Monitoring BEIJING-The road traveled by Tesla Motors, a game changer in the global electric car industry, reminds Chinese automakers that they should think outside the box by exploring commercially viable ways to promote new energy vehicles.

After the Silicon Valleybased electric car maker reported its first profitable quarter in early May, its stock doubled 30

to around $90 within one month, increasing the company's total market value to around $10 billion.

Tesla also raised its 2013 sales target to 21,000 units of its high-end model S cars, up from the previous sales target of 20,000 units.

If it manages to reach this goal, it could exceed China's total electric vehicle sales in 2012, which stood at 11,375 units, according to figures from

the China Association of Automobile Manufacturers.

Such a comparison would eclipse all Chinese automakers' efforts in this respect, including Warren Buffett-invested BYD Auto, which only sold around 1,690 E6 electric cars last year, mainly to taxi companies. Tesla delivered 4,750 Model S cars in the first quarter of this year.

Chinese automakers need to rethink their strategies to gain a concrete market share

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Such a success story akin to that of Tesla should also have a chance in China

for electric cars in the world's largest auto market. Otherwise, they may squander the huge investment made in electric car manufacturing and research and development in the past few years.

The relatively high price of electric cars has been a major obstacle in terms of attracting consumers, but the Tesla Model S costs at least $70,000, without taking into account tax breaks for electric cars.

In many ways, Tesla's products are constrained by the problems facing all electric carmakers such as limited driving range, the high cost of batteries and an inadequate charging infrastructure.

Such a success story akin to that of Tesla should also have a chance in China, the world's largest and most dynamic automotive market. Around 19.3 million vehicles were sold in China in 2012, some 5 million more than in the United States.

China, which in 2009 launched perhaps the most extensive program in the world to promote electric cars, has a more serious energy security problem and there's a more urgent need to curb emissions from the transport sector.

Tesla uses lithium-ion battery packs in its Model S vehicles. China is a major player in lithium-ion battery manufacturing, supplying about half of the world's lithium-ion

batteries for phones, smartphones and laptops.

The Model S is a stylish and well-designed car. Chinese automakers should learn from this by hiring a world-leading design company to design a car like that. In addition, China has no lack of eager luxury-car buyers.

Tesla is also leading the way by synergizing electric cars with fresh and innovative ideas from Silicon Valley.

An iPhone and iPad fan could easily become a Tesla car fan, whether or not they could afford such an expensive car.

The Model S has the largest monitor, a 17-inch touch screen, which is bigger than two iPads, and drivers get full access to the Internet while they drive.

Tesla software knits together Google Voice, Slacker Radio and the Gracenote music database, and streams over 3G, said Elon Musk, Tesla Motors chief executive.

But if Tesla wants to remain successful, it needs to provide affordable models to consumers.

However, its current success also shows that there will always be a niche market if products are appealing enough to customers.

Zero emissions is a laudable concept, but automakers also need other selling points to help consumers make the decision to buy a greener car at a higher cost, as there is little prospect of batteries getting much 31

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Automobile

cheaper before large-scale production gets into full swing.

Sales of electric cars remain lackluster in China despite active government support.

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At the recent Shanghai Auto Show, automakers were noticeably less keen to discuss plans for the commercialization of their electric models.

The government has said it

will renew its incentives for new energy vehicles for an additional three years, but industry insiders said that the dividend for electric cars is likely to end soon, and the new policy will

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be shifted to supporting vehicles' fuel efficiency, which means regular hybrids may get more subsidies.

According to the previous policy, the government offered

60,000 Yuan ($9,680) for an allelectric car and 3,000 Yuan for a plug-in hybrid car.

With the expiration of the special protection period, it's time for automakers to spark

their own vitality and innovation not only in technical expertise, but also in business models and market strategies.

Only those able to think outside the box will last the pace.

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Automobile

On the road to a driverless future

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JERUSALEM - On a freeway from Jerusalem to the Dead Sea, I sat in the driver's seat of an Audi A7 in April while software connected to a video camera on the windshield drove the car at speeds up to 100 kilometers per hour: making a singular statement about the rapid progress in the development of self-driving cars.

While the widely publicized Google car is festooned with cameras, radar and the laser range finders called lidars, this one is distinctive because of the simplicity and the relatively low cost of its system - just a few hundred dollars' worth of materials. "The idea is to get the best out of camera-only autonomous driving," said Gaby Hayon of Mobileye Vision Technologies, the Israeli company that created the system in the Audi.

The Mobileye car does not offer the autonomy achieved

by Google's engineers. The Google car will merge onto freeways, drive safely through intersections, make left and right turns, and pass slower vehicles.

By contrast, the Mobileye vehicle is capable only of driving in a single lane at freeway speeds, as well as identifying traffic lights and automatically slowing, stopping and then returning to highway speeds.

But by blending advanced computer vision techniques with low-cost video

cameras, the company is demonstrating how quickly autonomous driving can be commercialized. "You cannot have a car with $70,000 of equipment," said Amnon Shashua, a founder of Mobileye, referring to Google's lidar system, "and imagine that it will go into mass production."

Mobileye has recently begun offering the third generation of its technology, which companies like Volvo have promoted for its ability to detect pedestrians and cyclists. Nissan also recently gave a hint of things to come with a demonstration of a car that could automatically swerve to avoid a pedestrian. The system was based on Mobileye technology.

As soon as this summer, the first limited systems offering a feature known as "traffic jam assist" will begin arriving from more than five major automobile makers. Those cars will drive safely in stop-and-go traffic, but will require drivers to keep their hands on the steering wheel.

But more advanced systems will be introduced as early as 2016, according to Mobileye, and it was that advanced capability I experienced.

In California in 2010, I was the first reporter to drive in the Google car, a Toyota Prius fitted with sensors that created a remarkably detailed map of

the world around the car.

It was a tour de force. The car was taken out of automatic pilot just twice - while passing a cyclist and then again to back into a parking space.

In the Google car, I had felt detached from the machine intelligence that guided it. As the car piloted itself through its first curve, there had been an eerie more-humanthan-human sense.

But in the Mobileye car I was acutely aware of the autopilot's limitations. The car had a tendency to weave a bit when it started to pull away from an intersection - behavior that did not inspire confidence.

Once, while passing a parked car, the Audi pulled in the direction of the other vehicle.

Not wanting to learn the car's intentions, I nudged it back to the center of the lane.

The Mobileye engineers said the single camera would be supplemented with an array of five more: a wide-range camera and additional sidemounted and rear-facing cameras. The goal, they said, was to build a system with the same capability as the Google car's.

After 20 minutes of freeway driving, I put the Audi back on autopilot and headed toward Jerusalem. The demonstration was not as dramatic as my Google ride, but it gave me a clearer understanding of what the automobile industry has in its sights.(Agencies)

Amnon Shashua, a founder of Mobileye, referring to Google's lidar system, "and imagine that it will go into mass pro 35

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Construction

China establishes groundwater monitoring network

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The majority of these monitoring sites are located in north China, the country's breadbasket where most water is polluted to varying degrees.

BEIJING-China has set up a preliminary groundwater monitoring network as part of the country's effort to preserve its groundwater resources, said an official with the Ministry of Water Resources.

So far, 24,417 groundwater monitoring sites have been built, 10 percent of them capable of monitoring water quality, said Chen Ming, an official with the Ministry of Water Resources.

With the network being formed, the ministry will work to ensure the sustainable use of groundwater resources by improving the management of water resources and promoting the construction of a watersaving society, he said.

The majority of these monitoring sites are located in north China, the country's breadbasket where most water is polluted to varying degrees.

The recent achievement is the result of a national groundwater monitoring project launched three years ago.

The National Development and Reform Commission, China's top economic planner, said in a statement issued in November 2010 that a total of 1.7 billion Yuan (269.8 million U.S.dollars) would be invested to build and renovate 20,445 groundwater monitoring sites covering nearly one third of the country's territory.(Agencies) 37

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Automobile

THAILAND TO LINk BANGkOk WITH CHINA VIA HIGH-SpEED TRAIN BANGKOK -- Thailand will be connected with China via a high-speed railway running through northern Laos within the next seven years, assured Thai Transport Minister Chadchart Sittipunt.

Delivering a key-note speech at a seminar and exhibition entitled "Thailand 2020" in the Thai northeastern province of Nakorn Ratchasima, the transport minister said the government has planned to build a 625 km rail system to link Bangkok with the northeastern border province of Nong Khai, across Mekong River from the Lao capital of Vientiane while Chinese high- speed trains will arrive from southern China.

During the initial stage of a 730-billion-U.S.-dollar rail and logistical program, designed for reconstruction of major rail routes in all regions of Thailand, a 250 km Bangkok-Nakorn 38

Ratchasima route will be built first.

Then, the next phase will see a 375 km Nakorn Ratchasima-Nong Khai route built up for the Thai high-speed train to shuttle passengers and cargoes, especially including fruits and vegetables, between Thailand and Laos, which will be connected via the highspeed train with southern China, Chadchart said.

Given such a modernized rail system, Thai food will be delivered fresh and daily to China, according to the transport minister.

"Nakorn Ratchasima is not only the economic hub of the entire northeastern region of Thailand but a gateway to welcome an ASEAN Economic Community, which will open in 2015," he commented.

Thailand will have one rail system for all high-speed trains

to run throughout the country, including the Bangkok-Phitsanuloak- Chiang Mai route to the North, the Bangkok-Hua Hin route to the South and the Bangkok-Pattaya-Rayong route to the East and the BangkokNakorn Ratchasima-Nong Khai route to the Northeast.

Besides, the Thai government will build motorways to accommodate prompt logistics and transportation between Bangkok's outlying areas and major provinces, including a Nonthaburi- Kanchanaburi motorway and an AyudhyaNakorn Ratchasima motorway.

Kanchanaburi, a western Thai province, will be linked via rail and roads with Dawei, a southeastern Myanmar town, where a deep- sea port and Special Economic Zone project is being built by a Thai construction giant.(XINHUA)

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"Nakorn Ratchasima is not only the economic hub of the entire northeastern region of Thailand but a gateway to welcome an ASEAN Economic Community, which will open in 2015

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Real Estate

SHANGHAI TOpS IN INVESTMENT & UpLIFT pROSpECTS CED Monitoring SHANGHAI-Shanghai is China's most promising city for investment and development as confidence in the real estate market shows signs of recovery, a report said.

A survey issued by Urban Land Institute has found a significant revival in market confidence among major cities in the Chinese mainland, and the top four cities in this year's list all scored higher this time than last year's highest-ranked city — Chengdu of Sichuan province.

The strengthened market sentiment indicates a growing confidence about China's economic outlook, and investors have noticed the real estate opportunities brought about by China's growing middle classes and its younger population.

The report credits Shanghai's top position to its maturing real estate market, which has more liquidity and less volatility than almost all other Chinese cities.

Suzhou of Jiangsu province is the second-most favorable 40

city for both investment and development prospects, jumping 11 and 12 places respectively from last year.

As Shanghai's largest industrial satellite, Suzhou is a vibrant city in its own right and benefits from a substantial concentration of high-tech manufacturing, said Kenneth Rhee, CEO of Huhan Business Advisory (Shanghai) Co Ltd. Beijing rose from ninth to third place for investment prospects and from 16th to fifth for development prospects.

The capital city was favored by investors because of its well-developed office sector. The demand for Grade A office space is expected to continue rising, but the supply shortage won't ease until 2015.

Chengdu, which has topped the rankings for both development and investment prospects for the past two years, fell to seventh and eighth places respectively this year. But Rhee said the city's actual scores changed slightly, and its decline in the rankings is a result of the uplift in confi-

dence among other Chinese major cities.

The report also highlighted respondents' growing interest in a number of specific market sectors, such as industrial properties. China is experiencing a shortage of high-quality modern warehousing and distribution facilities, partly because of the soaring demand from ecommerce.

E-commerce accounts for 6.1 percent of all retail sales in China, and transactions raised by 66.5 percent in 2012 to 1.3 trillion Yuan ($212 billion), according to figures from China Internet Network Information Center.

Despite the strong interest in the industrial and distribution sector, real estate investors are finding it difficult to capitalize on this opportunity because existing assets and land zoned for industrial property are in short supply.

Urban Land Institute is a global nonprofit education and research institute. This is the third year the ULI has issued the survey.

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Real Estate

REAL ESTATE SECTOR AT CROSSROADS CED Monitoring BEIJING-The Chinese real estate industry has reached a crossroads, and Han Qingtao is well aware of it.

The director of China poly Group Corporation's real estate department - the second-largest real estate company in the country - said that it is crucial that Chinese real estate companies be in top form due to changing economic circumstances.

"The Chinese real estate industry was complicated in the past few years," Han said.

"But it's vital that the industry transforms itself, and quickly, if it hopes to establish itself, especially as the market cools."

China's GDp totaled 51.9 trillion Yuan ($8.47 trillion) last year, according to ďŹ gures from the National Statistics Bureau, and the value of real estate contracts amounted to 6.4 trillion Yuan, about 10 percent of the nation's GDp. "There's no doubt that real estate has become one of the country's pillar industries, and it's closely linked with 42

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other industries such as steel and iron," Han said.

However, the real estate market has cooled down since 2010, when the central government introduced policies such as higher downpayments and restrictions on third-home purchases to curb prices.

In March, a 20 percent capital gains tax was imposed on secondhome sales.

Despite the challenges, many real estate developers say they expect more growth, particularly when the urbanization drive is intensiďŹ ed.

Wang Jianlin, chairman and founder of Dalian Wanda Group, said property prices will grow moderately over the next 10 years.

"As China's urbanization continues, there will be strong demand in the domestic real estate market over the next 10 years. A big drop in prices is unlikely. In fact, property prices will continue to rise, but growth will be limited because even stricter government policies are likely to be implemented," Wang said.

Han said that poly Group regards the industry as critical to its development and is conďŹ dent about

its future.

"No doubt there will be turbulence in the market in the short term, but there is great potential in the long term," Han said.

The group entered the real estate industry in 1992, and the revenue of its real estate unit accounted for nearly 90 percent of the group's 98 billion Yuan in revenue last year. Its home sales rose nearly 50 percent last year, making it the second-largest property developer, and accounting for 1.96 percent of the whole commercial residential building market.

Sales from poly Group's real estate business rose ďŹ ve-fold from 2008 to 2012.

Han highlighted three areas that need attention if sound growth is to be maintained: building government-subsidized housing, tapping the markets in second-tier cities, and diversifying its mix of real estate products.

As a large-scale SOE, poly Group says it will unswervingly assume its social responsibilities and support the government by actively taking part in the construction of government-subsidized housing.

By 2012, the group had 37 government-subsidized housing projects under construction throughout the country, with a construction area of 3.4 million square meters. poly Group is also already tapping the markets in second-tier cities, he added.

It has a presence in 25 provinces and 60 cities, and plans to increase its presence in more second-tier cities, such as Taiyuan, the capital of Shanxi province.

Diversifying poly Group's real estate products is another way for the group to strengthen its real estate arm.

"Besides building residential property, we will develop other products such as urban complexes and combine functions of residential and entertainment housing, among other measures" Han said.

Although land is the main raw material for real estate companies, compliance with the government's macro-economic controls is also important.

The group's real estate business also enjoys advantages such as a good access to the capital market, Han said.

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Agriculture

CHINA TO MAINTAIN FOOD SELFSUFFICIENCY BEIJING -- China will remain self-sufďŹ cient in the main food crops, though output will slow in the next decade under increasing resource and rural labor constraints, according to a new forecast by two international agencies.

China will import more oilseed and livestock, for both the meat and dairy sectors, as consumption growth will outpace production during the 2013-2022 period, the Organization for Economic Cooperation and Development (OECD) and the Food and Agriculture Organization (FAO) said in a joint report released here.

The country's imports of oilseed are expected to rise by 40 percent in the next decade, accounting for 59 percent of global trade, while dairy imports are projected to rise 20 percent, according to the OECD-FAO Agricultural Outlook 2013-2022.

The report also predicted rising prices for both crop and livestock products in the next decade due to a combination of slower production growth and stronger demand, including for biofuels.

It said limited expansion of agricultural land, rising production costs, growing resource constraints and increasing environmental pressures will pressurize agricultural production, which is expected to grow 1.5 percent annually in the period, down from an annual growth of 2.1 percent between 2003 and 2012.(XINHUA) 44

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The report also predicted rising prices for both crop and livestock products in the next decade due to a combination of slower production growth and stronger demand, including for biofuels.

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Agriculture

pASTORAL 'HAppY FARMHOUSE' TOURISM pROVES TO BE NATURAL CED Monitoring BEIJING-As urban travelers try to find an escape from the hustle and bustle of the city, "Happy Farmhouse Tourism" is increasingly popular.

The agri-entertainment approach to leisure time offers pastoral scenery and a hands-on experience of farm life.

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Chengdu is at the forefront of the field. It was named the "Birthplace of Happy Farmhouse Tourism" by the National Tourism Administration at the opening ceremony of the first China Rural Tourism Festival in 2006.

There are now more than 6,000 Happy Farmhouses in the city out of the total 100,000 in China.

Most agri-tourism operations are clustered around two areas of suburban Chengdu - Sansheng village and the Eco-Tour Loop Line Five kilometers to the southeast of Chengdu proper is Sansheng - or Three Sages village, known as a paradise for rural tourism.

Villagers have made their living by cultivating flowers

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and trees from one generation to the next. Since 2003, the village has opened up to various forms of tourism - simply leisure, sightseeing, flower appreciation, fruit tasting and experiencing farm work.

Local authorities have now divided the villages into five sections, each with a signature view such as lotus pool under moonlight, plum forest

and farming fields.

The five themed scenic sites won the village the title of the "Five Golden Flowers". The appealing environment also helps inspire creation and has drawn some artists to set up creative studios in the village.

The Eco-Tour Loop Line is another choice for weekend countryside tours. Of the several towns around the loop

line, Dalin is known for its pear blossoms, Hejiang has three cherry seasons a year and Xinglong has a famous rose garden.

With such a large rural population, China's officials at various levels are trying hard to boost the countryside economy. Agri-tourism is one of the most appealing options.

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Science and Technology

SpACE DREAM CRYSTALLIzED WITH SHENzHOU X LAUNCH JIUQUAN - China successfully launched its fifth manned spacecraft, sending three astronauts on the country's longest space trip.

With 10 astronauts and six spacecraft launched into space in a decade, China is speeding up on the path of exploration and building a home for Chinese in the galaxy.

At a see-off ceremony held hours before the launch, Chinese president Xi Jinping extended good wishes to the three astronauts.

"The mission's crew members carry a space dream of the Chinese nation, and represent the lofty aspirations of the Chinese people to explore space," said Xi. The president later watched the launch at the Jiuquan Satellite Launch Center in northwest China, and shook hands with staff at the center after the successful launch.

Unlike the space trip of Yang Liwei, China's first astronaut who boarded the Shenzhou-V spacecraft in 2003, of less than a day, the three astronauts will stay for half a month.

In its journey, Shenzhou-X will dock with the orbiting space lab Tiangong-1 twice, once through automatic operation and the other manual, and a lecture will for the first 48

time be given on board the assembled orbiter to a group of teenage students on the ground.

Compared with the previous nine Shenzhou spacecraft, the Shenzhou-X is no longer experimental but considered an applicable shuttle system for transporting astronauts and supplies to orbiting modules.

"It is like developing a new type of car. You have to try it on roads of different conditions. Now trials are over and the car can be put into formal operation," said zhou Jianping, chief engineer of China's manned space program.

On the other hand, the upgraded Long March-2F carrier rocket is technically the same as the one used with the Shenzhou-IX ma n n e d sp a c e c ra ft.

"No alteration means that China's rocket technology is becoming mature," said Jing Muchun, chief designer of the carrier rocket.

This mission aims to further test technologies designed for docking and supporting astronauts' stay in space, as well as to use new technologies related to the construction of a space station, said Wu ping, China's manned space program spokeswoman, at a press conference on Monday.

The Tiangong-1 space lab has been in orbit for about 620 days, and about three months are left before the designated end of its service.

The module is considered the first step toward China operating a permanent space station around 2020 and making it the world's third country to do so.

The nation is likely to launch a space station before 2016.

There are risks that the conditions of some components on Tiangong-1 might not be at their best since the module is near the end of its service and has gone through four docking tests, Wu said.

For Nie Haisheng, commander of the three-member crew and a second-time space traveler, this mission will be longer, with more experiments to be conducted, than his previous outing in 2006.

"It will be a new challenge with greater risks," Nie told the media.

However, he is looking forward to entering the space lab module. "My colleagues and I will work in a home for Chinese in space," he said.

For this mission, the manned space program also considered approaching the public.