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Wise financial policies BEIJING-- China's central bank and commercial banks are seeing their Yuan funds outstanding for foreign exchange continue to increase amid expectation of a rising Yuan as the world's second largest economy gradually recovers. Chin’s financial institutions bought a record high of 683.7 billion Yuan (109.2 billion U.S. dollars) worth of foreign currencies in January and then purchased 295.4 billion Yuan of foreign exchanges in February, the 3rd straight month of increases. By the start of last month, Chinese financial institutions' total Yuan funds outstanding for foreign exchange amounted to 26.83 trillion Yuan. These continuing increases are for sure to be attributed to companies' willingness to hold assets in Yuan as its value has trended upward while the spectacular financial policies by the Chinese government is the other reason behind this major financial development across the globe. The phenomenon also suggests increasing capital inflow to China against the backdrop of a gentle recovery in the economy. The capital inflow and China's widening trade surplus in the first quarter are the major reasons for the Yuan’s appreciation pressures To mop up excess liquidity resulted by the funds, the People's Bank of China has been draining liquidity via open market operations. The Chinese economy saw its slowest growth in 13 years in 2012, increasing 7.8 percent, but growth began to show signs of recovery in the fourth quarter of last year. We believe that the rising power of Yuan must can be clearly attributed not only to the tremendous financial policies of the government of China but at the same time, the farsighted and well thought-out decisions and long term as well as short term policies, devised and adopted by Chinese entrepreneurs have also played a very significant role in the same.

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in this issue April 22, 28, 2013 04

Cover Story

China firm on tightening traffic rules

Despite public complaints, China will continue to enforce traffic regulations to ensure road safety, according to an official...

06

Bird migration monitoring strengthened to prevent H7N9 Chinese scientists have stepped up monitoring of bird migration paths to prevent the deadly H7N9 bird flu strain from spreading.

China's central bank and commercial banks saw their Yuan funds outstanding for foreign exchange continue to increase amid expectation of a rising Yuan as the world's second largest economy gradually recovers.


in this issue 09

China's new loans, social financing rise in Q1

ADB expects China's economy to Grow 8.2 % in 2013 HONG KONG, -- A report released by the Asia Development Bank here Tuesday forecast China's GDP growth of 8.2 percent in 2013, up from last year's 7.8 percent, due to strong consumption and fiscal spending.

12

SOEs dominate China's wind power projects

Chinese look skyward for oncein-a-millennium eclipse DALI(Yunnan)-- Zhu Juyuan, 65, belongs to the Yi ethnic group, who considers the sun a goddess.


Society

China firm on tightenin

04


ng traffic rules BEIJING -- Despite public complaints, China will continue to enforce traffic regulations to ensure road safety, according to an official with the Ministry of Public Security. A nationwide campaign to discourage pedestrians from running red lights has commenced, and the strict enforcement of the regulations has proven somewhat effective, the People's Daily quoted Wang Changjun, head of the ministry's research institute on traffic management, as saying on Wednesday. The campaign also targets "Chinesestyle street crossing," in which pedestrians cross the road once a large enough group forms, regardless of what colour the traffic light is. Violators often say that they had been waiting for a green light for too long or the duration of the green light had not been enough to allow them to cross the road. Under the tightened rules, pedestrians will be fined if police catch them crossing the street during a red light or jaywalking, with the amount varying in different cities. The fine is 10 Yuan (1.6 U.S. dollars) in Beijing, and 5 to 10 Yuan in east China's Zhejiang Province. Wang said some violators have ignored the strict rules and others have refused fines. Though enforcing the regulations consumes a lot of time and energy, the government intends to stick with it. "As long as we continue to strictly enforce the regulations and promote education, there will be less and less 'Chinese-style street crossing,'" Wang said. The enforcement will continue, and pedestrians are expected to change their bad habits, he said. He added that authorities are repairing broken traffic lights and improving equipment to allow a reasonable amount of time for both pedestrians and vehicles to cross the road. In some cities, local governments have established "safety islands" in the middle of wide roads, allowing senior citizens to take their time crossing the road, he said. Still, Wang said there is no excuse for violating traffic laws.Agencies 05


Society

Bird migration monitoring strengthened to prevent H7N9

06


SHIJIAZHUANG-- Chinese scientists have stepped up monitoring of bird migration paths to prevent the deadly H7N9 bird flu strain from spreading. The move comes as birds in the south have already started to fly north. About ten wildlife conservation centres across China have started monitoring the migration paths of birds in fear of the H7N9 virus spreading to the north, according to the China Wildlife

Conservation Association on Wednesday. Three bird experts from the Qinhuangdao Wildlife Conservation Centre, based in north China's Hebei Province, are collecting fresh bird excrement every day at seven observation points for examination. Qinhuangdao has more than 50,000 square kilometres of wetland. Each year, tens of millions of birds from the south pass the city and some of them stay there.

The bird flu virus could infect many wild birds, especially migratory waterfowls, said Xiao Jinggui, a bird expert with the centre. Xiao called for local residents to stay away from injured and dead birds and report the discovery of such birds to relevant authorities. Migratory birds may have carried the H7N9 avian influenza virus into China, Yu Kangzhen, the chief veterinarian with the Ministry of Agriculture said.(Agencies)

07


Society

China's new loans, social financing rise in Q1

08


09


Finance

BEIJING -- China's new Yuan-denominated lending stood at 2.76 trillion Yuan (441 billion U.S. dollars) in the first quarter, up 294.9 billion Yuan year on year, the People's Bank of China, or the central bank, announced on Thursday. New loans denominated in foreign currencies stood at 70.9 billion U.S. dollars, the bank said in a statement. It said that the country's social financing, a measure of funds raised by entities in the real economy, amounted to 6.16 trillion Yuan in the first quarter, up 2.27 trillion Yuan from the same period last year. In March, both new loans and social financing rebounded significantly, the data showed. New Yuan-denominated lending reached 1.06 trillion Yuan in March, 440 billion Yuan more than that of February. Social financing hit 2.54 trillion Yuan, 1.48 trillion Yuan more than the previous month. The data pointed to a recovery in corporate financing demand, analysts said. As a leading economic indicator, the rebound in social financing sends a signal that China's economic recovery is on solid footing, they said. The money supply also rose. By the end of March, the broad measure of money supply (M2), which covers cash in circulation and all deposits, increased 15.7 percent year on year to 103.61 trillion Yuan, the statement said. The increase was up 0.5 percentage points from the end of February and 1.9 percentage points higher than the year-onyear growth registered at the end of 2012. Meanwhile, the narrow measure of money supply (M1), which covers cash in circulation plus current corporate deposits, jumped 11.9 percent year on year to 31.12 trillion Yuan, while the growth rate was 2.4 percentage points higher than that of the end of February. Analysts attributed the ballooning money supply to a sub10

stantial increase in deposits and an increase in Chinese banks' forex purchases. The central bank data showed that new Yuan-denominated deposits in March hit 4.22 trillion Yuan, accounting for 69 percent of the first quarter's total. "This inevitably affected M2," said Zhao Qingming, an economist at China Construction Bank. Data showed that M2 rose from 13 trillion Yuan in 2000 to 97.4 trillion Yuan in 2012. The proportion of M2 in the country's GDP also ascended, triggering inflationary concerns. China's fast economic growth needs the support of a certain size of M2, said Zhang Qizuo, an economist working on the strategic development of the G20 and emerging economies. With regard to inflation, economists have maintained that the M2 increase has no inevitable connection with inflation. "China's inflation cannot be explained simply by one reason. There are complicated factors behind inflationary pressures," said Yu Yongding, a member of the Chinese Academy of Social Sciences. Situations in other major economies support the argument. For instance, Japan's consumer prices registered a negative growth, with the proportion of money supply in its GDP reaching as much as 238 percent. Nevertheless, the unexpected M2 surge means accelerated economic restructuring is needed, said Li Daokui, a former advisor to China's central bank, adding that efforts should be made to expand the country's bond and capital markets. The country should be aware of the fact that its economy is increasingly monetarized, said Liu Yuhui, a financial researcher with the Chinese Academy of Social Sciences, a government think tank. According to a government work report delivered by former Premier Wen Jiabao on March 5,

the central bank expects M2 to expand by just 13 percent this year, compared to forecasts of 16 percent in 2011 and 14 percent in 2012. The M2 surge is related to an increase in Chinese banks' forex purchases, said E Yongjian, financial analyst with the Bank of Communications. China's central bank and commercial banks saw their Yuan funds outstanding for foreign exchange continue to increase amid expectations of a rising Yuan as the country's economy gradually recovers. After buying a record high of 683.7 billion Yuan (109.2 billion U.S. dollars) in foreign currencies in January, Chinese financial institutions purchased 295.4 billion Yuan in foreign exchange in February, the third straight month of increases, data from the central bank showed. As of the end of February, Chinese financial institutions' total Yuan funds outstanding for foreign exchange amounted to 26.83 trillion Yuan. Analysts attributed the continuing increases to companies' willingness to hold assets in Yuan, as its value has trended upward. On Wednesday, the Yuan hit a record high against the U.S. dollar. The phenomenon also suggests increasing capital inflow to China against the backdrop of a gentle recovery in the economy. "The capital inflow and China's widening trade surplus in the first quarter are the major reasons for the Yuan’s appreciation pressures," noted Wang Tao, chief economist with UBS Securities. To mop up excess liquidity resulting from the funds, the People's Bank of China has been draining liquidity via open market operations. This week, 76 billion Yuan was removed from money markets through 28-day repos in the bank's regular open market operations Considering the 59 billion Yuan in central bank repos and


bills maturing, it actually withdrew 17 billion Yuan from the markets, a softer move from a week earlier, which analysts read as the bank's attempt to keep moderate liquidity to support tepid economic recovery in the context of lower-thanexpected inflation data. The country's consumer price index rose 2.1 percent year on year in March, down from a 10month high of 3.2 percent in Feb-

ruary, while the producer price index, which measures wholesale inflation, fell for the 13th consecutive month. The mild inflation and relatively gentle recovery suggests little possibility of monetary tightening, while ample liquidity in the markets makes policy easing equally unlikely, according to analysts. "The monetary policies will be

set to neutral," said Peng Wensheng, chief economist at the China International Capital Corporation. The Chinese economy saw its slowest growth in 13 years in 2012, increasing by 7.8 percent, although growth began to show signs of recovery in the fourth quarter of last year.(XINHUA)

11


Finance

SOEs dominate China' BEIJING -- State-owned enterprises (SOEs) controlled a sweeping majority of investment and construction in wind power projects last year, accounting for about 81 percent of the sector's installed capacity, the National Energy Administration (NEA) said 12

Wednesday. As of the end of 2012, some 1,300 companies had invested in or built wind power development projects, of which 1,000 were controlled by SOEs, according to NEA data. The China Guodian Corp.

was the most aggressive in developing wind power, with an aggregate of 13 million kilowatts of on-grid installed generative capacity, followed by the China Huaneng Group and China Datang Corp., which had 8.34 million kilowatts and 7.71 million


's wind power projects kilowatts of capacity, respectively. Other major state-owned players included the China Huadian Corp., Shenhua Group, China Guangdong Nuclear Power Holding and China Power Investment Corp. A total of 1,445 wind power

farms were built by the end of last year, while 62.66 million kilowatts of installed capacity was connected to the state grid by the end of 2012, according to NEA. Meanwhile, - China generated 100.8 billion kilowatt hours of wind power in 2012, marking a

41-percent rise from 2011, the National Energy Administration said Tuesday. The amount represented about 2 percent of the country's total electricity sent through the state grid, according to a statement on the administration's website. 13


Finance

ADB expects China's economy to

Grow 8.2 % in 2013 HONG KONG, -A report released by the Asia Development Bank here Tuesday forecast China's GDP growth of 8.2 percent in 2013, up from last year's 7.8 percent, due to strong consumption and fiscal spending.

14


The above estimation was made assuming that the U.S. economy will continue its slow recovery, conditions in the Eurozone will not worsen and the Chinese government will continue to boost public spending. "The country's new leaders are focused on delivering sustainable, quality growth, which is a welcome change from the growth-at-all-costs approach of the past," said ADB Chief Economist Changyong Rhee. The report, Asian Development Outlook, also predicted the GDP growth in developing Asia of 6.6 percent in 2013 and 6.7 percent in 2014, from a growth of 6.1 percent in 2012. The report projects stronger economic activity in developing Asia to spur renewed price pressures, with inflation seen moving up from 3.7 percent in 2012 to 4 percent in 2013 and 4.2 percent in 2014. Rhee said the rebound in China and solid momentum in Southeast Asia were lifting the region's pace after the softer performance of 2012. "Domestic spending, in particular consumption, is the main driver of the recovery, and is a welcome shift from the reliance on the markets of advanced economies," he said. Talking about Japan's easing monetary policy, Rhee said it aims to stimulate economy at the moment, while a flexible fiscal policy and an economic structure reform are needed for the economy to revive i n

the long term. The report also said reforms are needed in India to facilitate the turnaround from growth deceleration due to structural bottlenecks, deteriorating investment and a worsening current account deficit. "Supply and policy obstacles have seen growth decelerate and investment and industrial output slump, with the stasis compounded by weak global demand," said Rhee. It projects India's GDP growth to edge up to 6 percent

in the fiscal year to end March 2014, picking up slightly to 6.5 percent the following year, in the back of stronger external demand and progress on reforms. The bank also suggested that Asia is moving along a dangerously unsustainable energy path that will result in environment disaster and a gaping divide in energy access between rich and poor unless the region dramatically changes course. The report recommended a pan-Asian energy market to be established by 2030, including the setting up of ministerial level task force to study European experience.(XINHUA) 15


Finance

16


BEIJING-- China's central bank and commercial banks saw their Yuan funds outstanding for foreign exchange continue to increase amid expectation of a rising Yuan as the world's second largest economy gradually recovers. After buying a record high of 683.7 billion Yuan (109.2 billion U.S. dollars) worth of foreign currencies in January, Chinese financial institutions purchased 295.4 billion Yuan of foreign exchanges in February, the 3rd straight month of increases, data from the central bank showed. As of the end of February, Chinese financial institutions' total Yuan funds outstanding for foreign exchange amounted to 26.83 trillion Yuan. Analysts attributed the continuing increases to companies' willingness to hold assets in Yuan as its value has trended upward. On Wednesday, the Yuan hit a record high against the U.S. dollar. The phenomenon also suggests increasing capital inflow to China against the backdrop of a gentle recovery in the economy. "The capital inflow and China's widening trade surplus in the first quarter are the major reasons for the Yuan’s appreciation pressures," noted Wang Tao, chief economist with UBS Securities. To mop up excess liquidity resulted by the funds, the People's Bank of China has been draining liquidity via open market operations. This week, altogether 76 billion Yuan has been removed from the money markets through 28-day repos in

the bank's regular open market operations Considering the 59 billion Yuan in central bank repos and bills maturing, it actually withdrew 17 billion Yuan from the markets, a softer move from a week earlier, which analysts read as the bank's attempt to keep moderate liquidity to support the tepid economic recovery in the context of the lower-than-expected inflation data. The country's consumer price index rose 2.1 percent year on year in March, down from a 10-month high of 3.2 percent in February, and the producer price index, which

measures wholesale inflation, fell for the 13th consecutive month. The mild inflation and relatively gentle recovery suggests little possibility of monetary tightening, while ample liquidity in the markets makes policy easing equally unlikely, according to analysts. "The monetary policies will be set to neutral," said Peng Wensheng, chief economist at the China International Capital Corporation. The Chinese economy saw its slowest growth in 13 years in 2012, increasing 7.8 percent, but growth began to show signs of recovery in the fourth quarter of last year.(Agencies)

17


Science and Technology

Cloud theory implies rally at telecom co CED Monitoring BEIJING-- China Mobile Ltd, the world's biggest telecom operator, may rally 13 percent after breaking out of a so-called "ichimoku cloud" this week, according to technical analysis by BTIG Hong Kong Ltd. Christian Kielland, head of trading at BTIG, said China Mobile will rally toward the HK$90 level after analysing the stock using the Japanese method of "ichimoku kinko", which looks at wave patterns and repeating trends. The stock closed at HK$78.9 last week. Technical analysts make predictions based on patterns in price charts and market data. Ichimoku kinko, a strategy developed by a Japanese journalist before World War II, translates as "one glance equilibrium chart" because of the cloud-like patterns formed by trend lines that make it easy to understand at a glance. "China Mobile breaking out of the ichimoku cloud is a strong bull signal," said Kielland. "This stock could be one of the best performers in Hong Kong this year." The last time China Mobile broke above the ichimoku cloud was on July 27, 2009, after which the shares rallied 15 percent to peak at an intraday high of HK$92.25 on Aug 10. It has fallen 14 percent since then through to last week's close. It's "reasonable" to expect China Mobile to go back to HK$90, Kielland said. "It may even go to HK$100, though there is a lot of psychological resistance before 18


that."

An ichimoku chart analyses the midpoints of historic highs and lows. The conversion line is the same calculation over the past nine trading days. The baseline is the sum of the highest high and the lowest low over the past 26 trading days. A

lagging span is the most recent closing price plotted 26 days behind the current level. Kielland said positive news for China Mobile will also support the rally. Its high-speed, 3G mobile service is beginning to show good results and the stock also offers a high divi-

dend yield, he said. China Mobile's yield of 3.5 percent is more than smaller rival China Unicom Hong Kong Ltd's 2.3 percent. China Mobile's recent gains may also be attributed to the stock being relatively cheap compared with its peers, Kielland said.

19


Science and Technology

Chinese look s

for once-in-a-millenni

DALI(Yunnan)-- Zhu Juyuan, 65, belongs to the Yi ethnic group, who considers the sun a goddess. When it became a black orb encircled by a fiery ring on Friday, he ran out of his home in southwest China's Yunan Province to see the event. Hundreds of thousands of Chinese turned skyward in the afternoon, attracted by the planet's longest annular solar eclipse in 1,000 years, as it crossed China. It was visible in parts of Yunnan, Sichuan, Guizhou, Shaanxi, Hunan, Hubei, Henan, Anhui, Jiangsu and Shandong provinces as well as Chongqing municipality. A crowd of more than 700 people cheered at 4:45 p.m. at Erhai Lake in Yunnan's Dali

City, which was thought to be the best location for observation. "Too beautiful. I'm lost for words," said Dong Liang, a 27year-old college student from Kunming, capital of Yunnan. 20

"The sky turned a kind of mysterious blue. A round shadow was moving fast into the bright disk and later a white ring appeared, just like a ring on someone's finger," said Yang Chunjin, a local resident. Amateur astronomers

with professional equipment from Beijing, Shanghai, Hong Kong, Macao, and the provinces of Hunan, Hubei and Sichuan, had swarmed to the romantic ancient city of Dali days before, filling the hotels. Zhu Juyuan looked into


skyward

ium eclipse

water to see the reflection of the darkened sun as his Yi ancestors did to show respect. "The eclipse was considered to be the sky tiger eating the sun. When the eclipse occurred, elderly people always said something evil would happen, so they would beat drums and gongs to scare the sky tiger away," said Zhu. The days when people feared an eclipse had long gone, he said. "It's common knowledge here that the moon has blocked the sunlight." The eclipse started at 3 p.m. in Ruili City, Dehong Autonomous Prefecture in Yunnan, which saw the longest duration of the eclipse in China at 8 minutes and 17 seconds. The ring occurred at4:37 p.m. The phenomenon ended in east China's Jiaodong Peninsula,

Shand o n g Province, where a sunset eclipse was supposed to occur. Although Shandong was the last stop, amateur astronomers had set up their equipment at the best observation sites in the morning. Hundreds of people who gathered in Hongdao, a scenic spot in Qingdao, a coastal city of Shandong, were on tenterhooks as the sun appeared and disappeared behind the clouds. "I guess it's another kind of spectacle to see the sun setting into the clouds instead of the sea," said Tan Yiqing, who came from Jinan, capital of Shandong, with his wife. Experts consider the event as a chance for the public to learn more about astronomy as the images and descriptions of the eclipse had been spreading on-line and on television. Ordinary people in ancient China were forbidden to study solar eclipses, which were believed to be able to foretell the fate of emperors, said Liu Ciyuan, researcher of National Time Service, of the

Chinese Academy of Sciences, in Xi'an, capital of Shaanxi Province. "Ancient Chinese believed solar eclipses were warnings given by the heaven to its son, the emperor," Liu said. However, centuries later, people watched the eclipse in the ancient city, which had been the capital of 13 dynasties over more than 1,200 years. The earliest known solar eclipse was recorded in the Book of Documents, China's first official history book written more than 2,000 years ago. The eclipse took place 4,000 years ago, when people performed rituals -- sounding gongs and beating basins -- to drive away the "celestial dog," whom they believed was eating the sun, he said. "It is a chance for Chinese people to look up into the sky again, for beauty, for science, or simply out of curiosity," said Bian Yulin, 67, executive director of the Chinese Astronomical Society. China had experienced many recent astronomical events, including last year's eclipse and meteor shower, and the nation's space exploration had raised public awareness of the stars, Bian, 67, said. "The boundless cosmos and the changing astronomical phenomena are helping Chinese people to escape from the daily grind and are stimulating their curiosity to learn and explore," said Bian.(Agencies) 21


Automobile

Models and cars at Seoul Auto show 22


Models pose next to Kia Motors' Carens at the Seoul auto show in Goyang, north of Seoul. South Korea's Kia Motors is worried about the sharp decline in the value of the yen, which is aiding Japanese rivals, an executive at the affiliate of Hyundai Motor said. 23


Automobile

A model poses next to four-door coupe comp Seoul auto show in Go Seoul. 24


o Kia Motors' pact, CUB at the oyang, north of

25


Automobile

China's FAW opens n plant in Jilin

26


new Auto

CHANGCHUN - The FAW Group, a major automobile manufacturer of China, opened a new plant in Northeast China's Jilin province. The factory, based in the city of Jilin, will be able to produce 200,000 small vehicles and vans each year. FAW Jilin Automobile Co Ltd, a subsidiary of the FAW Group, spent 1.86 billion Yuan ($297 million) to build the factory. The FAW Group, which employs 118,000 people globally and sells products in over 70 countries, was the first automobile manufacturer to be established in China.

27


Automobile

Nissan concept car

to debut at Shanghai auto show A preview picture of the Nissan concept car, Friend-Me. The concept car is set to make its global debut on April 20 at the Shanghai International Automobile Industrial Exhibition.

A preview picture of the Nissan concept car, Friend-Me. Auto Shanghai 2013 will mark Nissan's first deployment of its new global exhibit space design International Auto Show 2013 in Detroit. The booth is designed to immerse guests completely new green tea-inspired "Nissan fragrance". 2013 will also mark a commemorate year for Nissan. Since the first Nissan vehicle arrived in C years ahead in the country and is committed to continue delivering innovative and exciting p Look for the latest from Nissan at its more than 2,300 sq m exhibit area from April 20 (press

28


w

n formotor shows in Asia. The new design was first used this January at the North American y into a Nissan world, appealing throughout with sight, sound, touch and even smell, with a

China, Nissan has grown deep roots in the country. Nissan looks forward to many more products to the Chinese community. s day) to 29 in Hall E3 at the Shanghai International Exhibition Center.

29


Agriculture

Super Rice ke supply self-su CED Monitoring BEIJING-New super rice strains with an expected yield of 14.9 metric tons per hectare will help China maintain its largely self-sufficient supply of rice, a staple food for more than 60 percent of its population, over the next few decades, experts said. Minister of Agriculture Han Changfu launched a scientific research project in Hainan province to develop new super rice strains.

30


eeps China's ufficient

31


Agricluture

Minister of Agriculture Han Changfu (right) and agricultural scientist Yuan Longping, known as the"father of hybrid rice", check a crop in Sanya, Hainan province, . The project, which will be undertaken by agricultural scientist Yuan Longping, known as the “father of hybrid rice" for developing the first hybrid rice varieties in the 1970s, will realize its target within five to eight years, according to the ministry. "New super rice strains with high yields will be mainly cultivated in north-eastern China and major rice-producing regions along the Yangtze River, such as Sichuan, Hubei, Hunan, Zhejiang, and Jiangsu provinces," said Cheng Shihua, head of the China National Rice Research Institute, which is also participating in the project. Besides harvest yields, the taste of rice and its resistances to pests and diseases will be considered when new super

32

rice strains are developed, he said. Research on super hybrid rice began in 1996 as part of China's major efforts to ensure food security. So far, the country has approved 108 varieties of super rice strains, according to the ministry. China recorded a grain output of more than 589 million tons in 2012, the ninth consecutive year of increased grain harvests, according to the National Bureau of Statistics. Officials and experts believed large-scale planting of hybrid rice contributed greatly to the country’s bumper grain harvests. At present, there are 17 million planted hectares of hybrid rice in China, 58 percent of the country’s rice fields, said Yuan Longping during the Boao Forum for Asia Annual Conference2013 in Boao, Hainan province. Another 4.7 million hectares of hybrid rice have been planted overseas, he

said. A gain of 150 million tons of rice could be expected if half of the world's current rice fields are planted with hybrid rice, which could feed an additional 400 to 500 million people, he predicted. China's super rice realized a target unit yield of 10.5 tons a hectare in 2000 and 12 tons in2005, according to the ministry. In 2011, the DH2525 rice breed yielded 13.8 tons a hectare during a trial planting in Longhui county, Hunan province. Another super rice breed called Yongyou 12 produced a harvest of 14.38 tons a hectare at an8.5-hectare demonstration base in Ningbo, Zhejiang province last year. Thanks to the planting of hybrid rice, the average rice yield in China reached 6.7 tons hectare in 2012, much higher than the world's unit yield of 4 tons, Cheng said.


33


Real Estate

Property tycoon doubts Real Estate measures

34


CED Monitoring BEIJING-One of China's leading property tycoons, Ren Zhiqiang, the chairman of Hua Yuan Real Estate Group, has questioned the consistency of China's latest market regulations and whether they will be able to rein in the country's skyrocketing house prices. Attending the Boao Forum for Asia, Ren said the measures had failed to keep China's property price at a reasonable level while hurting the market's autonomy. "The property control policies have gone wrong from day one," said Ren. "A series of policies, including the bidding system for land acquisition, the housing credit policy and the public finance system, have actually helped push up China's property prices, instead of cooling them." He said China's latest moves to curb the property market meant the central government had left the responsibility to local governments. "The government's message is: 'We hope prices won't continue rising; you (local governments) go and fix them; and if you don't fix them, we will punish you'," the outspoken businessman said. Ren added that unless the government boosts the supply of land for new homes, China's property prices will not stop rising this year. He said there was no increase in land supply last year from 2011, and some major cities had only completed 30 percent of their mandated quota, and this shortage in supply had pushed up prices. "It is as simple as this: How can you rein in meat prices by merely killing more pigs while not boosting the number of pigs?" he said. Wang Yijiang, a professor with Cheung Kong Graduate School of Business, agreed with Ren that policies had been inconsistent "over the past 10 years". He added: "Sometimes they have seemed to help push up property prices, while at other times they have been targeted at curbing prices. I'm confused." The latest policies, which include a 20 percent tax on profits from homeowners' housing sales, have created a second hand property purchasing spree as people rush to buy before measures are implemented. Wang said that instead of adding to transaction costs, the government should impose a property tax for high-end real estate, which could add to the cost of owning multiple houses, thus reducing the incentive for investors. Qin Hong, a researcher with a think tank under the Ministry of Housing and Urban-rural Development, said the inconsistency of China's property measures could be attributed to the country’s macroeconomic policy, which sometimes prioritizes cooling off the overheated economy while focusing on bolstering decelerated economic growth. Ren also said that the property market had been downgraded as a pawn of the country's economic policy, and continual government interventions had messed it up. A healthy property market would require the government to use market-oriented mechanisms rather than administrative measures such a slimiting the number of house people could buy, Ren said. Tax collected from property transactions last year totaled 1.01 trillion Yuan ($162.7 billion), and land transfer fees amounted to 2.69 trillion Yuan. 35


Construction

DEvELOPE

TO FOLLOW BU

CED Monitoring SHANGHAI-Shanghai-based property developer Greenland Group is to invest A$480 million ($498 million) in an Australian property project, becoming the latest Chinese developer to explore an overseas market. Greenland said it has reached a deal with Canadian company Brookfield Asset Management Inc to buy two buildings in downtown Sydney. It is the largest single investment made by Chinese developers in Australia. "As a destination for immigrants, Australia is expected to support the sustainable growth of our company with a steady demand from new immigrants," said Zhang Yuliang, Greenland chairman. China Vanke, the country's largest real estate developer by market value, has teamed up with the US real estate firm Tishman Speyer Properties to develop a key site in San Francisco, marking the developer's first venture into the US market. The deal came after Vanke set up a research team last year to examine development prospects in the United States. In January, the Shenzhenbased developer joined hands with New World Development to purchase a residential site in Hong Kong for HK$3.4 billion ($439 million), its first project 36


ERS HAPPY

UYERS ABROAD

37


Construction

outside the Chinese mainland. "After 30 years of development, our go-global strategy is ready to be implemented. Access to an open international capital market is necessary for such a strategy," said Tan Huajie, Vanke's board secretary. Other Chinese real estate companies have also made inroads into overseas markets. Guangzhou-based Country Garden, which trades its shares in Hong Kong, set up a joint venture with Malaysian real estate firm Mayland in 2011 to develop two residential projects, taking a 55 percent stake. This was followed by Country Garden's development of a commercial complex in Malaysia last year. These projects, targeting local as well as Chinese buyers, will open for sale this year. "We are also on the lookout for quality land parcels overseas. If there are appropriate opportunities, we will not miss them," one of the company's executives, who requested anonymity, said. Wang Shi, Vanke's chairman, said on his micro blog that Chinese people make up the largest group of overseas buyers in the US property market, accounting for 11 percent 38

of sales. According to Qin Xiaomei, director at the strategic consulting department of Jones Lang LaSalle Beijing, an international real estate service provider, the country's developers are following the trail of Chinese buyers of overseas properties. "We have noticed a growing enthusiasm among Chinese investors to buy overseas real estate and the UK and the US are their favorite markets. It is just the beginning of Chinese property developers going global," she said. Meanwhile, Chinese buyers have been encouraged by the appreciation of the yuan and the central government's tough real estate policies at home to invest in properties overseas, according to Qin. The government's new policies, especially the 20 percent taxation on capital gains for selling homes, further encourage investors to seek overseas property investment opportunities. But for Andy Zhang, China managing director of international realty firm Cushman & Wakefield, Chinese developers' overseas expansion will not be their major business in the near

future. "Although there are more Chinese property developers expanding overseas, it is more like a strategic move and their business focus will remain in China," said Zhang. But there will definitely be more trials with overseas markets, also in the commercial and industrial sectors, he added. For instance, Beijing Capital Land signed an agreement last year to purchase a land parcel in France on which it plans to establish a Sino-French economic zone. Wanda Group, the country's largest commercial property developer, has revealed plans to invest $10 billion in the US over the next decade, particularly in hotels, retail and commercial properties. For Zhang Ping, head of research in Beijing for Cushman & Wakefield, Chinese property investors are sometimes a bit slow in the decision-making process, compared with international competitors. "In some cases they are still unfamiliar with the legal and investment environment in target countries but generally I think they are still a bit conservative."


We have noticed a growing enthusiasm among Chinese investors to buy overseas real estate and the UK and the US are their favorite markets.


Construction

Brown wants China aboard US Bullet train project

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CED Monitoring SHANGHAI — California’s Governor. Jerry Brown's trade mission to China is intersecting with one of the most controversial issues of his governorship: California's $68-billion bullet train. The governor has staked part of his legacy on the rail network, a centerpiece of his vision for California. He is hoping that China, which is enjoying an economic boom and spent $77.6 billion on overseas investments last year, according to official figures, will pump some of its cash into the troubled project. Brown's top economic advisor and rail commission appointee, Mike Rossi, met in Beijing with Chinese investors eager for an update on its progress. And China's vice minister of commerce told a hotel ballroom packed with California government and business officials that his country wanted to explore "the possibility of investment in the high-speed rail project in California." A few potential vendors have already expressed interest. California rail board chief Dan Richard is set to meet Saturday with the China Railway Construction Corp., the country's second-largest government-owned construction concern. On Thursday evening, Brown, Richard and representatives of California-based railroad companies rode to this bustling port city from Beijing, a five-hour trip that covered about 750 miles, roughly the distance from San Diego to the Oregon border. Strolling the aisles, shaking hands with Chinese passengers, Brown extolled the nation's 5,000-mile complex of high-speed rail, built in the last seven years. "People here do stuff," the governor said. "They don't sit around and mope and process and navel-gaze. The rest of the world is moving at Mach speed." The Chinese interest in Califor-

nia's project is a welcome boost for Brown. Although state voters approved $10 billion in bonds for a high-speed railway in 2008, they have soured on it as cost estimates have ballooned by tens of billions of dollars. The governor, who has vowed repeatedly to see the train system built, needs at least an additional $55 billion to make it happen. "We are very interested in California," said rail car designer and engineer Jiang Lay, as the train to Shanghai zoomed along Thursday, without the jerky stops familiar to Amtrak riders. His company, Tangshan Vehicle Co., built the model Brown was riding. "We are very confident that our Chinese technology can be successful in America," he said. The firm has formed a partnership with a U.S.-based company, Sun Group USA, to compete for California business. The company, which has significant Chinese financing, is exploring construction of a plant in Oakland. California officials and the Chinese government have already made preliminary agreements to work together on construction of the bullet train, State leaders, in fact, have long been laying the foundation for Chinese investment. In 2010, Gov. Arnold Schwarzenegger led a delegation to Shanghai, where California's rail chief held discussions with leaders of the China Investment Corp. The state-owned company has assets worth an estimated $480 billion, according to the Las Vegas-based Sovereign Wealth Fund Institute, which monitors large global investors. Participants in the 2010 meetings said China was represented in some discussions by Kathleen Brown, sister of the current governor, who ran the West Coast municipal finance team for Goldman Sachs. No deals were inked, but nearly three years after those

meetings, transportation officials in California say they now have a more compelling story to tell the Chinese. The federal government has chipped in $3 billion for the project, and last year state lawmakers approved the sale of $4.5 billion in bonds to help fund the first stage of construction. This summer, work is set to begin on the first segment of the network, which will connect the Central Valley towns of Madera and Bakersfield. Plans call for the train to reach the San Fernando Valley by 2022. Still, "there will probably have to be more up-front investment from the state before they get to the point where it's really ripe for Chinese or any other outside investment," said Sean Randolph, president of the Bay Area Council Economic Institute, part of the group that organized the China trip for Brown and dozens of California business and political leaders. "A lot of progress has been made over the last three years," Randolph said, but the project is "still speculative." Brown's traveling party boarded the Chinese train, named Harmony, Thursday after a private meeting with Chinese Premier Li Keqiang. Earlier in the day, the governor had addressed Chinese officials, academics and others at prestigious Tsinghua University, pressing for policies that limit greenhouse gas emissions. On Wednesday, he and Chinese leaders signed environmental cooperation agreements. As the train raced through the Chinese countryside, a digital speedometer flashed speeds of 180 mph in the first-class cabin where Brown and his wife, Anne Gust Brown, had seats. Attendants offered snacks of salted dried plums and wasabi-coated peas. The governor had plenty of reading material for the journey: a copy of China's five-year plan. 41


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Chinese group wins big Harare power tender A CONTRACT worth $1.3bn awarded to China Machinery Engineering for the expansion of the Hwange thermal power station is expected to deliver a boost to Zimbabwe’s power generation, but not before midyear elections. CED Monitoring BEIJING-Zimbabwe has a power deficit of about 700MW, engineers with knowledge of power consumption trends said on Thursday. Analysts at Business Monitor International said Zimbabwe had "peak energy consumption requirements of 2,200MW" and generating capacity of 1,504MW. Refurbishment of the Kariba power plant will add 300MW, while expansion of Hwange power station will add about 600MW. But there are concerns elections later this year may delay the expansion of the Hwange plant. "As the tender was awarded, work can begin any time, but as you know the state of our economy in the face of elections I don’t think much will happen soon," consultant engineer Tafadzwa Manyara said on Thursday. Chinese companies have been winning big construction projects in Zimbabwe, with China’s Avic Construction International this week being awarded a tender

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to build the Tokwe Mukorsi Dam at a cost of $445m. Details of funding for the Hwange power station were not available. Experts say it is possible the Chinese group would fund the project, although the state may fund the project through a loan from regional financiers. Zimbabwe Energy and Power Development Minister Elton Mangoma said he had not been briefed on the $1.3bn deal. A Zimbabwe Electricity Supply Authority unit, the Zimbabwe Power Company, said: "No date has been set on when the contractor would move onto the site."

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Shanghai Tower to be tallest skyscraper in China

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Photo taken on April 11, 2013 shows the Shanghai Tower (R) under construction in east China's Shanghai Municipality. The height of the Shanghai Tower, which is still under construction, reached 501.3 meters Thursday, surpassing the neighbouring Jinmao Tower and the World Financial Center. The designed height of the Shanghai Tower will be 632 meters, the tallest skyscraper in China. (Xinhua)

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Beijing urges US to end tech ban China urged the United States to abandon its new government ban on purchasing information technology systems made by companies in China, the Foreign Ministry said on Thursday. The ban will affect mutual trust and hurt the Sino-US trade relationship, said Hong Lei, the Ministry’s spokesman. He was responding to the provision in a spending bill signed by US President Barack Obama. Analysts said the US is taking advantage of cyber security issues to protect its own information technology industry, which is "pouring cold water on the two countries' trade ties". "China's information technology industry has been developing rapidly in recent years, and this has had a great impact on the same industry in the US," said Ni Feng, a researcher of American Studies at the Chinese Academy of Social Sciences. The provision prohibits the US Commerce and Justice departments, NASA and the National Science Foundation from buying information technology systems that are "produced, manufactured or assembled" by any entity that is "owned, operated or subsidized" by China. The agencies can only acquire the technology if, in consultation with the Federal Bureau of Investigation, they determine that there is no risk of "cyber espionage or sabotage associated with the acqui48

sition of the system", said AP. The bill "uses cyber security as an excuse to take discriminatory steps against Chinese companies", Hong said. The US has stepped up the rhetoric against China since the US cyber security firm Mandiant released a report last month which alleged that a secret Chinese military unit in Shanghai was behind years of cyber attacks against US companies. China said such accusations are groundless and called for cooperation in cyberspace. Meanwhile, the US and Japan will hold their first dialogue on cyber security in Tokyo in May. The two countries said cyber attacks from countries, including China, are new threats to their national security, according to Kyodo. The head of the US Cyber Command said earlier this month that the US is developing 40 new teams of cyber agents that will protect its critical infrastructure from hackers as well as launch attacks against the country's adversaries. Yang Yujun, a spokesman for the Ministry of National Defense, noted that sources of cyber attacks are difficult to locate. "Cyber attacks are a global issue, which is anonymous, cross-border and decep-

tive." Yang said at a news conference on Thursday that China has noted that the US makes groundless accusations about other countries while developing its own offensive cyber army. "What is needed in cyberspace is peace and cooperation, not war and confrontation," he said. The measure "could turn out to be a harsh blow" for Chinese computer maker Lenovo and also "bring some surprises for American companies selling commercial IT gear to the government ",Stewart Baker, a partner in the Washington office of Steptoe & Johnson LLP and a former assistant secretary in the US Department of Homeland Security, wrote on the "volokh Conspiracy", a prominent legal blog in the US. Ni, the Chinese researcher, said that "cyber security serves as a good cause for the US to contain the development of China's information technology industry in order to protect its own". The ban will affect China's exports of information technology products to the US and development of Chinese information technology companies in the US, he said.

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