Li Zhiqi, president of CBCT, a brand marketing institution in Beijing, said that Starbucks has been making strategic deployments based on the consumption trend of the Chinese market since its debut in China, which bears on the needs of its target customers, said the report.

For instance, in the spring of 2008, Starbucks added two classical tea drinks on its menu and launched a low-price strategy of serving dim sum within the range of 8 to 15 yuan ($1.27 to $2.38) in South China, where dim sum attracts a big clientele.

In 2010 Starbucks began to sell Biluochun tea, a type of popular green tea in China, and now it has 9 types of tea drinks on its menu.

On the front of expansion, it now owns over 700 stores in the Chinese mainland and plans to increase that figure to 1,500 by 2015.

The strategies have been working well for the brand. Starbucks saw record net revenue of $3.4 billion in the 13-week fiscal first quarter of 2012, according to fiscall results released on January 26. The net revenue of the Asia-Pacific market accounted to $167 million, an increase of 38 percent over the previous year.

Zhang Lan, Chairwoman of South Beauty, told the newspaper that the result was not surprising as the CSRC tightened its approval requirements for IPOs by restaurants earlier.

In 2011, the CSRC planned to raise the requirement for annual profits for restaurant operators seeking IPOs from 30 million yuan to 50 million yuan. A higher requirement for the growth rate, net assets and profitability of the companies has also been enforced, the newspaper said.

The failure of the IPO of South Beauty cools down investment in the restaurant industry. Statistics show that the amount of investment in the food industry has hit a historically low point, according to the report.

Each employee of a company in Qingdao, Shandong province gets a car as the yearly bonus on Feb 10, 2012. The company spent 1 million yuan on buying cars for its 12 employees. [Photo / CFP]

Each employee of a company in Qingdao, Shandong province gets a car as the yearly bonus on Feb 10, 2012. The company spent 1 million yuan on buying cars for its 12 employees. [Photo / CFP]

Each employee of a company in Qingdao, Shandong province gets a car as the yearly bonus on Feb 10, 2012. The company spent 1 million yuan on buying cars for its 12 employees. [Photo / CFP]

Each employee of a company in Qingdao, Shandong province gets a car as the yearly bonus on Feb 10, 2012. The company spent 1 million yuan on buying cars for its 12 employees. [Photo / CFP]

"Many mainland brewers are interested in the assets including CR Snow, Tsingtao, Beijing Yanjing Brewery Co Ltd and Guangzhou Zhujiang Brewery Co Ltd," said a source close to the company, declining to be identified because of the sensitive nature of the matter. "Many of them have asked for supplementary information. Nothing has been finalized yet."

Kingway, a smaller rival of CR Snow, said in January that it planned to invite beer producers to submit proposals and indicative offers for the possible acquisition of some of its brewery business and assets, as the company reviewed its strategy in uncertain economic conditions.

China's largest brewer CR Snow is a joint venture between China Resources and SABMiller Plc.

In April last year, Kingway Brewery said GDH Ltd, a unit of Guangdong Holdings Ltd, had exercised the right to buy the 21.37 percent stake held by a Heineken NV joint venture in China, blocking a bid from China Resources. GDH would buy the stake for 1.08 billion yuan ($164.94 million), increasing its holding to 73.82 percent.

Kingway was previously jointly controlled by Asia Pacific Breweries Ltd (APB), a unit of Singapore food and property conglomerate Fraser and Neave Ltd, and the world's third-largest brewer Heineken.

Shares of Kingway, which has a market capitalisation of about $570 million, rose 3.2 percent on Monday afternoon, the highest in three weeks.

The world's largest brewer Anheuser-Busch InBev SA had also expressed interest in buying the assets, Dow Jones reported, citing people familiar with the situation. The report added that bids were due by the third week of February and several parties had expressed interest in buying the assets.

China Resources, whose beer brands include Snow, and Kingway declined comment. Anheuser-Busch InBev and Tsingtao were not immediately available for comment.

China's beer consumption hit 450 million hectoliters in 2010. It is expected to grow 5 percent per year in coming years, double the 2.5 percent growth forecast for the global market this year.

Chinese brewers are making an aggressive push into premium brands, lured by high margins and huge growth potential and posing a tough challenge to the foreign companies that dominate the category in the world's largest beer market.

The benchmark Hang Seng Index traded between 20,673.96 and 20, 969.80. Turnover totaled HK$61.94 billion ($7.99 billion).

The index, together with the Shenzhen Component Index and the Shenzhen SME (small and medium-sized enterprises) Board Index, makes up the three core indices reflecting the performance of China's stocks listed on the Shenzhen Stock Exchange.

The ChiNext Board, which started trading on October 30, 2009, mainly lists high-tech companies and those with high growth potential.

Martha GT S [Photo/maserati.com.cn]

Italian luxury car-maker Maserati will recall 222 vehicles imported to the Chinese mainland due to defective rear lamps, China's quality watchdog said recently.

The recall, which began Wednesday, includes Martha GT (Gran Turismo) and Martha GT S (Gran Turismo S) and Maserati GT (Gran Cabrio) models produced between June 6, 2008, and April 29, 2010, the General Administration of Quality Supervision, Inspection and Quarantine said in a statement.

The statement said the vehicles contain defects in their rear lamps' internal circuit boards, which may cause the cars' lights to fail.

Ferrari Maserati Cars International Trading (Shanghai) Co Ltd, the only importer of Maserati cars in China, submitted a report on the problem to the quality supervisor, said the statement.

The company will notify customers for safety tests and offer free replacement of defective rear lamps to eliminate risks, the statement said.

The Shenzhen Component Index edged down 0.06 percent, or 5.88 points, to end at 9,585.08.

The March contract rose 0.08 percent to 2,542.6 points. The June contract gained 0.2 percent to 2,566.6 points, while the September contract was up 0.1 percent to finish at 2,592.4 points.

The stock-index contracts, agreements to buy or sell the Hushen 300 Index at a preset value on an agreed date, are designed to allow investors to bet on and profit from both gains and declines in the market.

The index futures was launched at the China Financial Futures Exchange (CFFEX) and started trading from April 16, 2010. The CFFEX has set the base value for all the four contracts at 3,399 points.

In a recent study on the impact of the revaluation on companies, two economists -- Barry Eichengreen of the University of California, Berkeley and Hui Tong of the International Monetary Fund (IMF) -- argued that a yuan appreciation might have an overall negative effect on foreign companies.

The authors examined performances in share price of more than 6,000 manufacturing companies from 44 countries during two announcements of the Chinese currency exchange rate, or yuan appreciation, by the People's Bank of China (PBOC) in July 2005 and June 2010, respectively.

China revalued the yuan by 2.1 percent against the dollar in July 2005, and the yuan has appreciated at least 7 percent against the dollar since June 2010.

Beijing is SWISS's third destination in China, joining Hong Kong and Shanghai. The airline closed its service between Beijing and Zurich in 2003.

SWISS will operate Airbus A340-300 aircraft from Beijing Capital International Airport Terminal 3. Flight LX 197 will depart Beijing at 6:45 am and arrive in Zurich at 10:40 am; the flight time will be 10 hours and 55 minutes. Flight LX 196 will leave Zurich at 00:30 pm and land in Beijing at 5:15 the next morning, with a flight time of 9 hours and 45 minutes.

"Our new route marks a genuine milestone in the development of our company and our network," said SWISS CEO Harry Hohmeister.

The new service also offers major opportunities for the company's business unit.

"We look forward to positioning our brand and quality offerings in Beijing … where we will offer 18 tons of cargo capacity in both directions," said Oliver Evans, chief cargo officer.

The new service also meets a strong demand from the tourist sector for a direct Beijing-Zurich connection.

In the past few years, Switzerland has proved a popular destination for Chinese travelers, with average annual growth of 25-40 percent over the past three years,

Last year, China replaced Japan as Asia's largest source of tourists to Switzerland, with roughly 350,000 visitors and 680,000 overnights.

"This daily direct link between Beijing and Zurich is a major step in the further development of outbound tourism from China to Switzerland," said Urs Eberhard, executive vice president of markets and meetings at Switzerland Tourism.

Eberhard said he expects the number of overnights to grow to 1 million in 2015 and 2 million in 2020, which would raise China from Switzerland's eighth largest source of tourists to third.

The Federation expects the growth rate of both imports and exports in the machinery industry to be approximately 15 percent in 2012. Machinery exports were $321.8 billion in 2011, up 24.5 percent compared with 2010, while imports were $309.4 billion, up 21.2 percent from a year earlier.

Cai said he expects the growth rate for China's machinery exports to keep falling in the coming years.

"Europe is an important market for China's machinery industry. Its gloomy economy has led to a shrinking market, which has resulted in a reduction of China's exports," he said. "The increasing number of trade disputes will also add to the difficulties.”

Cai said China's increasing machinery exports in the past few years have made some foreign competitors feel threatened. Some industrial organizations have instituted trade disputes against China, such as the probe into Chinese wind turbine manufacturers recently instituted by US companies.

Overall, the Federation expects the machinery industry's production and sales to grow by 18 percent and 12 percent respectively in 2012, 7 and 9 percent lower than in 2011.

A 2013 GMC Arcadia is seen during the first media preview day of the Chicago Auto Show in Chicago, Illinois Feb 8, 2012. [Agencies]

A 2013 GMC Arcadia's LED headlight is seen during the first media preview day of the Chicago Auto Show in Chicago, Illinois Feb 8, 2012. [Agencies]

Combined profits for the country's machinery industry are expected to grow 12 percent year-on-year this year, down from last year's 21.14-percent rise, said Cai Weici, vice president of the China Machinery Industry Federation.

The sector, which accounts for about 19 percent of the country's total industrial output, will also see a sharp retreat in export growth this year, down to 15 percent from the 24.49-percent expansion registered last year, Cai said.

He attributed the pullback to the global economic downturn, weakening demand and continuously rising costs.

The sector will also have to deal with more trade protectionism measures from China's trade partners during the downturn, he said.

The sector's industrial output rose 25.06 percent year-on-year to 16.89 trillion yuan ($2.68 trillion) in 2011 after surging 33.93 percent in 2010. Profit growth in the sector fell to 21.14 percent in 2011 from 55.6 percent in 2010.

The CSRC also granted the licenses to some Chinese financial institutions outside the mainland, including Taiwan's Mercuries Life Insurance Co Ltd and Hong Kong's Hospital Authority Provident Fund Scheme.

China launched the QFII scheme in 2003 to allow foreign investors to buy Chinese stocks and bonds and has so far granted 142 QFII licenses and $22.24 billion in combined investment quotas.

The government will strengthen the survey and appraisal of shale gas this year to speed up the development of the shale gas industry, MLR Vice Minister Wang Min said at a national geological survey conference.

The move comes after the recent approval of the State Council, or the Cabinet, to list shale gas as an independent mineral resource, making the total number of mineral resources discovered in China to 172.

Realizing scale production of shale gas will help ease the country's natural gas shortage and even change its entire energy supply structure, Wang said.

China has a rich reserve of shale gas resource, which is estimated at 31 trillion cubic meters, equivalent to the total amount of conventional natural gas, according to Wang.

If developed properly, the country's shale gas output will exceed 100 billion cubic meters in 2020, Wang said.

Shale gas, a clean and high-efficiency energy resource, is produced from shale through a complicated process called hydraulic fracturing, or "fracking".

Currently, China has no commercial shale gas production, but shale gas has become an increasing important source of natural gas in the United States and Canada.

The MLR said in December that it will formulate a series of supporting policies to bring in diversified investment in shale gas exploration to push forward large-scale extraction of the resource.

Neither company has confirmed the news, and Dangdang declined to comment on the report to China Daily on Monday.

The two companies may cooperate in sales of electronic devices and home appliances, and a deal may be reached if talk between them goes well, according to a source close to the matter, the newspaper said.

Industry experts said the rapid growth of Beijing Jingdong Century Trading Co, the operator of 360buy.com, has put great pressure on other e-commerce websites. "Dangdang has a strong advantage in selling books, while Gome is good at selling electronic products, so it would be a win-win model for them," an expert told the newspaper.

360buy.com had about 17 percent of 240 billion yuan of China's e-commerce market in which businesses sell to consumers last year, while Gome's online shop and Dangdang together only had some 3 percent, according to Chinese IT research company Analysys International.

Of the 22 companies, the newly tradable shares in Southwest Securities China Shipbuilding Industry Company Limited and Jiangsu-based jean fabric maker Black Peony (Group) Co Ltd amounted to more than 12 billion yuan in market value, according to Friday's closing prices.

The market value of shares freed from expiries of the lock-up periods more than tripled from the previous week.

Even though China's benchmark stock index has rebounded about 6 percent since January, majority shareholders of listed firms were less willing to cut their equity holding last month amid the recent market rally.

The volume of unlocked non-tradable shares sold in January fell 62 percent year-on-year to 104 million shares, a 44-month low.

The volume of unlocked non-tradable shares sold in January was also 67 percent lower than that seen in December last year.

The Shanghai-based retailer was fined 1.33 million yuan ($211,777) by the city's industry and commerce bureau in December, months after it was found to have deceived customers about the origin of its products.

The company sold substandard furniture and those pieces of furniture would all be confiscated, the bureau said on December 23.

Da Vinci later said that it would not pay the bill and would lodge a complaint against the bureau.

However, the bureau said in a statement on Saturday that the company has paid its fine within the required time frame and it has not heard anything about the complaint yet.

An investigation was launched after media reports in July accused Da Vinci of lying about places of production and selling inferior-quality products at high prices.

The company claimed its furniture was made in Italy, but the furniture had actually been manufactured in Chinese factories, "exported" to the Shanghai Waigaoqiao Bonded Zone, and Da Vinci later "imported" and stored the products in its warehouses in Shanghai.

However, the industry and commerce bureau's punishment mostly focused on the company's substandard furniture. Investigation results have yet to be released by the customs department in charge of the "fake imports" claims.

The bureau has also ordered the company to replace nonstandard descriptions on labels such as "Famous American Brand" and "Global Purchase."

The company's advertising slogans, including "the biggest in Asia" and "with the highest quality," should not be used again, according to the bureau.

Reservoirs with a storage capacity between 100,000 cubic meters and 10 million cubic meters are categorized as "small" reservoirs in China.

The ministry said the reinforcement of reservoirs with a storage capacity between 1 and 10 million cubic meters will be finished by the end of 2012.

The rest of the small reservoirs included in the plan will all be reinforced by the end of 2013, the ministry said.

Since 2006, the central budget has allocated 59 billion yuan ($9.37 billion) in special funds to support the reinforcement of small reservoirs, the ministry said.

During the period, local governments also raised over 30 billion yuan to help cover costs, the ministry said.

The ministry's budget for the special fund increased to 16.8 billion yuan in 2011, compared with 3.2 billion yuan in 2007 when the fund was first set up, it said.

China has made great efforts to improve its underdeveloped water conservation system, as floods and droughts in recent years have exposed weaknesses in water conservancy infrastructure.

Gui Zhen Tang, a pharmaceutical company that produces traditional Chinese medicine containing bear bile, has roiled the public after being spotted on an IPO application list published by China's securities regulator earlier this month.

The company, based in southeast China's Fujian province, harvests and processes bear bile for medicinal powders, capsules and other products. The company owns the largest black bear breeding center in south China.

Internet users and animal lovers have accused Gui Zhen Tang of animal cruelty in extracting the bile from live bears, despite the company's claims that it uses humane "no tube" drainage methods.

Gui Zhen Tang plans to use the raised capital to expand its annual output of bear bile powder to 4,000 kg, as well as increase its breeding center's bear population from 400 to 1,200, according to Yu Ji Chun, the producer of a wildlife program on southwest China's Yunnan TV network.

"If it really goes public, this year will mark doomsday for those bears," Yu said, posting a video depicting the bloody bile-milking process on Sina Weibo, a popular Chinese microblogging site.

Yu's microblog post about the bears has been retweeted more than 8,000 times, and thousands of Weibo users have joined him in bashing the company and opposing its listing.

However, this is not the first time for Gui Zhen Tang to face a backlash over its IPO drive.

Last February, the company also became the target of online anger after local media reported it was planning to go public.

A British-based NGO, Animals Asia, headed the online protest and wrote to the Fujian branch of China's securities regulator to throttle the listing.

Under China's current IPO rules, after submitting an application, companies typically need to wait for six months until authorities approve the listing. But the process can be prolonged, depending on application quality and market conditions.

With rapid industrialization and urbanization, which have improved people's living standards, the country's food consumption level and structure have changed, posing increasing pressures on grain production, said Li Jiayang, vice minister of agriculture.

Globally, the grain output also grew at a slower pace than that in population, Li said at a forum held in Haikou, capital of island province of Hainan.

The world's grain output rose at an annualized rate of 1.16 percent in the last 25 years, compared to 1.46 percent in population growth, Li said.

But the country's food security situation has been improved, Li said, noting that the grain output has increased fourfold since 1949, though planting areas almost stayed unchanged.

China's grain output rose 4.5 percent year-on-year to a record high of 571.21 million tons in 2011, marking eight consecutive years of growth.

The new rules, issued Friday evening by the China Banking Regulatory Commission, said all fees must be set by banks' head offices and not local branches, that banks must be more transparent when setting prices, and that they must give three months' notice before raising fees.

Customers of Chinese banks have long had to deal with fees that overseas bank users don't. Customers at a bank in one city will often be charged a fee when using the ATMs of the same bank outside the city. But over the past year, fees have become the source of rising frustration, with customers complaining about being charged for everything from transferring funds to changing their Internet banking password.

Fee income has become an increasing proportion of bank revenue, in some cases having risen more than 50 percent as a share of operating income for some of China's biggest banks over the last four years. And as the banks continue to post record-beating profits each quarter, anger has been growing over customer service in general.

Banks questioned in the recent past have said that improving customer service is a priority. None were available for comment following the announcement of the new fee regulations.

Boston Consulting Group, which surveyed 1,600 consumers in 15 Chinese cities last year, said in August that more than half of home- and car-loan seekers claimed that procedures were too time-consuming and that China's main banks took up to a month to process a loan application.

A June survey by consulting firm McKinsey & Co of 56,000 bank customers in Asia found that loyalty among Chinese people to their bank has dropped significantly over the last five years.

"China's front-line banking service is still one step behind the rest of the Asia-Pacific," said Kenny Lam, a partner with McKinsey in Hong Kong. "China still needs to make sure the basics are taken care of."

According to that survey, key factors that drive loyalty in China toward a bank include whether its employees are familiar with bank procedures, whether staff make mistakes with accounts, and whether employees are courteous—factors that didn't even register as concerns throughout Asia as a whole.

"I try not to visit the bank," said Zhang Xiuqin, a 54-year-old from Beijing who has accounts with Bank of China, ICBC and Bank of Beijing, with little attachment to any of them. "Every time I go I waste too much of my time standing in line."

Tina Tian, a 29-year-old Beijing native, spent two hours recently at a Beijing branch of Industrial & Commercial Bank of China Ltd waiting in line and arguing over how to pay her tuition.

"I always end up standing in a long line for at least half an hour, or even longer, to buy electricity, a very simple service, so it's always a frustrating experience," she said. Bank branches also serve as utility portals.

The banking regulator has encouraged banks to offer new services to clients in an effort to diversify their businesses, which have traditionally been dominated by making loans.

In China's foreign exchange spot market, the yuan is allowed to rise or fall by 0.5 percent from the central parity rate each trading day.

The central parity rate of the yuan against the US dollar is based on a weighted average of prices before the opening of the market each business day.

What makes the store unique, and recently a winner of an industry award, is that Shen and some 20 customer service assistants of the store are all blind people.

Equipped with screen reader software, which can "translate" characters on the web into voice for blind or visually impaired users, the staffs are able to type and communicate with customers by using computers especially designed for the blind.

The founding members of the online store, named "Creating New World With Hearts," are four visually impaired people led by Shen, who lost eyesight in 2003 due to glaucoma, an eye disease that leads to optic nerve damage.

"I felt I was discarded by the whole world when I became blind," says Shen, who had majored in landscape designing at college but the disease smashed her dream of becoming a designer.

The young girl gradually came out of the shadows after she began to learn how to use computers specially designed for blind people.

"I was thrilled by the design of the computer and screen reader software and realized that I am not a useless person and I could do something," Shen recalls.

She then persuaded three of her blind friends to join her and open the online store in 2009, selling various wares including clothes, shoes and watches.

The financial requirements for opening an online store are low, compared to the costs of establishing a high-street business. Correspondingly, the competition for business is extremely fierce.

Not until 39 days after the opening did the store clinch its first order, a hand-warming stove sold for only a few yuan.

"I couldn't believe it was true when we received the first order, and I thought there would be more business if only we persisted," says Gu Min, another co-founder.

Their business began making profit about half a year later.

Having acquired enough experience, the group then shifted their core focus from online sales to customer service outsourcing.

They have recruited and trained more than 20 blind or visually impaired people to join their group and undertake outsourcing customer service for six other online stores.

He Ruiyun is one of the customer service assistant who sits seven hours a day in front of the computer to answer questions of online buyers and deal with orders.

Aided by the software, the assistant could respond so quickly and fluently that few people would realize they are chatting with a blind person.

"Now I can handle several customer inquiries at the same time," He says.

Yet they still face challenges, especially when a customer sends a picture over to inquire, as the software has no way to translate pictures into voices.

At such times, He has to seek help from her parents or from online friends via the instant messenger tool Tencent QQ.

Their efforts have gained them not only profit but also encouragement from business peers, as well as netizens both visually impaired and sighted.

Last month, the store was named "the online store with the most growth potential" on the Taobao.com platform.

An Internet user with the screen name "Ye Ru" said in a message posted on the online store's webpage, "I've read news of you and your store. You are really amazing! Please keep on going!"

Another one, "Lalala122127," said, "I got to know about your store through TV reports. I really adore you and I am in full support of you."

Their online store has also caught the attention of the China Association of the Blind and the Shanghai Labor and Service Center for Disabled Persons (SLSCDP).

Zhao Weishi, deputy director of the SLSCDP, says their venture into online business is a new model and is an inspiration to other disabled people who are looking for self-employment opportunities.

And the group have a yet more ambitious plan, says Zhang Ping, their chief technical officer. With the help of experts from the Shanghai Association of the Disabled, they are preparing a training course to help more visually impaired people obtain the know-how of online business.

"We are planning to build a platform from which other disabled people can also benefit and acquire online employment skills," Zhang says.

The local government will roll out multiple measures to lower the city's readings of PM2.5, fine particulate matter measuring less than 2.5 micrometers in size, by nearly 30 percent by 2020, reported Thursday's Beijing Morning Post, quoting the local government plan.

According to the plan, governments and institutions at the municipal level will be required to stop using some vehicles when air pollution is heavy. Some factory productions and construction site operations will also be halted in such weather.

Automobile exhaust has been blamed as the biggest source of air pollution in the Chinese capital.

Two companies near a merger deal

BEIJING - China Grand Auto, the second-largest domestic car dealer measured by revenues, is eyeing an acquisition that is still under negotiations.

A total of 1,500 Audi cars were delivered to China Grand Auto in Urumqi for leasing in March 2011. [Photo/China Daily]

The distributor has been in talks with Sanroad to buy the second-largest auto sales company in Sichuan province for about 1.4 billion yuan, according to local media reports.

The deal hasn't been finalized as both sides are declining to talk publicly about it.

China Grand Auto sold more than 410,000 vehicles last year and reaped over 63 billion yuan in revenues, according to its Website. The dealer operates nearly 400 4S shops (authorized franchises offer sales, spare parts, services and surveys) across the country.

A success story in the energy and real estate sectors, its parent company, Xinjiang Guanghui Industry Investment Group Co Ltd based in Urumqi, got into auto sales and services in 2001 and expanded rapidly by acquiring leading local dealerships in the Guangxi Zhuang autonomous region and Henan province.

China Grand Auto was registered in Guilin, Guangxi in 2006 and grew into a sizable group by taking over dealerships in various provinces and cities such as Hebei, Anhui, Gansu and Chongqing.

It is seeking an initial public offering to finance future acquisitions and expansions. The company is backed by the US private investment firm, TPG, which owns 42 percent shares while Xinjiang Guanghui is the biggest shareholder.

China Grand Auto has just a small margin of revenues less than the Shanghai-listed Pang Da Automobile Trade Co. If the acquisition of Sanroad succeeds, it could become the top car dealer in the nation.

Domestic auto dealers are fragmented and a trend has developed for successful dealerships to expand through mergers and acquisitions, analysts said.

According to statistics of the China Automobile Dealer Association, the top 100 dealerships in China account for just 21 percent of market share.

A guideline issued by the Ministry of Commerce last December called for more consolidation with a target in 2015 to have three to five large dealerships that hold revenues of over 100 billion yuan and 30 regional dealers with revenues of over 10 billion yuan.

The top-ranked 100 dealers should account for at least 30 percent of the market share by then, the document said.

The luxury car dealership China Zhengtong Auto Services Holding Ltd that ranks just No 20 in the industry, acquired the ninth-biggest domestic auto dealer - SCAS Investment Co Ltd - for 5.5 billion yuan last September, marking the largest acquisition in recent years.

Additionally the Hong Kong-listed Zhengtong had succeeded with three smaller takeovers last year at a combined payment of up to 534 million yuan.

Statistics from CCCME AUTO showed that China exported 849,900 vehicles, full sets of car spare parts and car chassis in 2011, up 49.96 percent from a year earlier and the largest figure seen since 2009. The exports were valued at $10.95 billion, up 56.72 percent from 2010.

"China's automobile exports have pulled through a difficult period and are developing sustainably. China's automobiles will continue to move into the international market," said Yang Aiguo, deputy secretary-general of CCCME AUTO.

China exported automobiles to 190 countries and regions last year, with Russia, Brazil and Iran accounting for most of China's automobile export value, CCCME AUTO said.

The minimum wage in the country will be raised by at least 13 percent a year during the 12th Five-Year Plan (2011-15), according to a State Council special employment promotion plan. The plan stipulates that the minimum wage should be increased to at least 40 percent of an average citizen's income.

Domestic demand cannot be boosted without setting up a rational wage-increment mechanism and a supporting institutional framework. And since the State Council's plan envisages both, it should also be seen as part of the efforts to transform the existing economic development model.

Only when people have enough disposable income will their consumption level increase. The plan rightly lays emphasis on increasing workers' wages, but it is impossible to maintain demand and consumption levels without fair distribution of national wealth.

Statistics show that per capita income in rural areas last year was 6,977 yuan ($1,107), compared to 23,979 yuan in cities. Besides, the average annual disposable income of urban residents is only 21,810 yuan, far from enough to boost consumption.

The consumer price index (CPI) in January increased by 4.5 percent year-on-year, higher than the predicted 4 percent. If the increase of workers' real income is not higher than the inflation, their purchasing power will actually decline.

Wealthy people are not sensitive to the CPI because they have many more sources of income than wage earners.

Studies show that in 1985, the income of the richest group was 2.9 times that of the lowest, but the gap widened to 8.9 in 2009. Some experts think that the real gap is much wider, though.

The lower an average worker's wage, the wider will be the income gap. And if more of the national wealth goes to the rich, the higher will be the chances of it flowing overseas. For example, well-off Chinese spent about $7.2 billion abroad during just the Spring Festival holiday.

So the State Council's plan may not reach its goal if the wealth gap is not narrowed and prices are not controlled.

BEIJING - In the midst of stiffer competition that placed Chinese homegrown cars in a tight spot, Beijing Automotive Group (BAIC Group) announced it would launch its first own-brand car next month.

Beijing brand car on display at local exhibition in 2010. The model was expected to enter the market last year but struggled with a delay due to a longer than anticipated process over obtaining government approval. [Photo/China Daily]

The compact hatchback with the nameplate "Beijing", was expected to hit the market last year but struggled with a delay due to a longer than anticipated process over obtaining government approval.

With the green light from regulators, the automaker, based in the capital city, can sell its cars this year: first a low-priced five-door model in March with engine options of 1.3 and 1.5 liters, and later a medium-sized sedan coming in the latter half the year.

The fifth-largest auto group in China will open approximately 80 nationwide dealerships for the Beijing vehicles by the end of the year along with a separate sales network of 100 shops for Weiwang minivans that were launched a year ago.

Combined sales of Beijing cars and Weiwang minivans are expected to reach 100,000 units this year, the company said.

"The biggest challenge is winning over consumer confidence in regards to homegrown brands," said Dong Haiyang, vice-president of BAIC Motor, a subsidy of the group set up for a planned stock listing.

About 2.9 million domestic-brand cars (excluding minivans) were sold last year, less than a third of the total market volume, according to the China Association of Automobile Manufacturers.

Its market share had dropped by 1.78 percentage points compared with a year earlier as a result of fiercer competition from foreign-brand rivals and the expiration of tax incentives for small cars - a segment that most domestic automakers compete in.

Before the Weiwang minivan hit the market in March last year, BAIC Group did not produce self-developed passenger vehicles and the majority of its earnings were contributed by its partnerships with the German luxury carmaker Mercedes-Benz and Hyundai Motors of South Korea.

With 1.54 million vehicles sold last year, revenues increased 27 percent to 201 billion yuan and net profits surged 46 percent to 15.8 billion yuan. More than 80 percent of profits originated from its joint ventures.

The group announced a target to achieve a modest increase of 8 percent in net profits this year that indicates a determination to invest heavily in the development of homemade vehicles.

The company seeks to sell 1.8 million vehicles this year, up 17 percent from the previous year with targets of a 14 percent increase in revenues to 230 billion yuan and net profits of 17 billion yuan.

BEIJING - Government-owned cars would likely be subjected to a central government-proposed traffic volume control regulation that aims for more energy savings and emissions reductions.

A parking lot for cars of a government department in Beijing. [Photo/China Daily]

According to guidelines drafted by 17 central government departments including the National Development and Reform Commission and the Ministry of Finance, cars owned by government institutions should not be used at least for one day during the five-day workweek.

The absent days would be assigned according to the last number of the license plates.

The practice is similar to a Beijing policy.

For example, at present, cars carrying license plates with the last numbers of 4 and 9 are restricted on Mondays, and with 0 and 5 on Tuesdays.

The proposal also called for staff to drive one day less every month, ride a bike when their travel distance is within 1 km and take public transportation within 5 km.

It asks government organizations to renew vehicle purchase plans with changed vehicle purchase standards. Buying medium and small-displacement cars as well as new-energy vehicles has been encouraged when making purchasing budget.

The trial on government-owned vehicle restrictions has been carried out in Jiangsu province since October 2008.

Media reports said, "no one has been heard to be punished due to breach of the restrictions." Other reports quoted interviewers saying that, "it worked well at the beginning, but was gradually neglected later."

According to the Government Offices Administration of the State Council, which has been engaged in drafting the proposal, the restriction will not be compulsory.

Wang Zechu, a Guangdong provincial official, applauded the proposal and said there is no need to make compulsory documents or punishments over its implementation. "Whether it can be carried out or not depends on government departments and officials themselves," he said.

But Li Gongming, a renowned scholar in Guangdong, said the proposal is only logically feasible. He said the most important is that government bodies should make their vehicle purchase budgets transparent.

Han Zhipeng, a member of the National Committee of the Chinese People's Political Consultative Conference from Guangdong, said lack of supervision and implementation measures would be the fatal flaw of the plan.

"The key is whether related governments have the resolution to implement it," he said.

Ordinary people have expressed concerns on BBS and microblogs (Weibo).

"I'm wondering if some regional governments will buy even more vehicles. I wonder if some organizations will purchase several license plates for one car to avoid the restriction," a netizen commented on Weibo.

"It is just a show," another Weibo user named "Jiangweishengbu" said. "It might be our luck to see that a government-owned vehicle only run 5,000 km every month on roads," he mocked.

The Nandu Daily newspaper in Guangzhou, which is known for insightful comments, said, "When it comes to issues relating to energy conservation and emissions reductions, why are the rules so strict on ordinary people, but very loose on officials?"

The article added, "no doubt, only when the government and its staff sacrifice some privileges and give up some personal gains for a greener environment, can public awareness on energy savings and emissions reductions really occur.

Otherwise, no matter how many documents and plans are released, or how definite and loud the slogans sound, it makes no sense to the public good."

Han made the remarks in an interview with Xinhua prior to Chinese Vice President Xi Jinping's visit to the United States.

Agriculture was one of the first areas in which China and the United States began to cooperate, as the two are both large nations of agricultural production, trade and consumption and viewed agriculture as a strategic and basic industry, said Han.

After 30 years development, China-US agricultural cooperation has laid a solid foundation, with extensive exchanges and cooperation at all levels, the minister said.

According to Han, the agricultural ministries of both countries will push forward cooperation in the areas of food security, sustainable development, agricultural trade and science and technology, creating opportunities for cooperation between agricultural enterprises of the two countries and promoting joint research on agriculture.

He believes that, with the deepening of agricultural cooperation and the increasing openness of agricultural trade and investment, bilateral agricultural cooperation will have broader prospects.

Effective agricultural science and technology cooperation

The United States is a country with advanced agricultural science, technology and research into such fields as seed breeding and production, and has world-class multinational companies in agriculture, while China has broad market demands as well as leading technologies in food production, biomass energy and agricultural produce processing, said Han.

It will help improving the agricultural science and technology strength of both nations if China and the United States enhance their cooperation, he argued.

China and the United States have conducted effective cooperation in crop plantation, stock raising, fishery, agricultural research and education, agricultural product processing and circulation, he explained.

The two nations have launched more than 500 science and technology exchange programs since they established the working group on agricultural science and technology cooperation in 1980, with around 3,000 experts get involved.

They have maintained effective cooperation between academies and universities of agricultural sciences and nurtured a great number of talents, which have made important contributions for the advancement and development of agricultural science and industry of both nations, said Han.

Fast growth in agricultural trade

Han said the fast growth of bilateral agricultural trade has greatly promoted the industrial restructuring of agriculture and made agricultural produce more abundant for the two countries.

Bilateral agricultural trade volume has increased to $24.5 billion from $4.1 billion during 2001 to 2010, with an average annual growth of 22 percent, according to official statistics.

In 2010, China imported $18.6 billion-worth of agricultural produce from the United States. This accounted for 13 percent of the United States' total agricultural exports, said Han, noting China has become the main destination for US agricultural exports.

In the same year, China exported $5.8 billion-worth of agricultural produce to the United States, 12 percent of its total exports in the area. The United States is the third-biggest recipient of Chinese agricultural exports.

Although the proportion of agricultural trade in bilateral total trade volume is not high, the two countries still attach great importance to it due to the unique features of the agricultural industry, said Han.

The growing challenges posed by food security and climate change have also promoted cooperation between the two agricultural industries, he added.

Increased cooperation on agricultural investment

Han paid great attention to the expansion and reinforcement of bilateral agricultural investment cooperation, noting enterprises are the main driving forces for the development of bilateral agricultural trade.

Since its reform and opening-up, China has attracted and made use of foreign capital to step up its construction of a modern agricultural industry, he said.

The minister noted that a great number of U.S. enterprises have invested in agriculture in China. From crop-plantation to machinery and sales, these investments have gained remarkable economic benefit.

Foreign investment also introduced advanced technology and management to China, which promoted the upgrading of its agricultural industry.

Chinese investments in US agriculture have also increased in recent years, with growing desire from Chinese enterprises to invest abroad, according to Han.

He called on China and the United States to jointly promote investment cooperation between enterprises of the two countries in the areas of technology application and sustainable development, and create a good atmosphere for developing bilateral agricultural trade relations.

Efficient mechanism for agricultural cooperation

Han said the sustainable development of China-US agricultural cooperation has benefited from sound and efficient cooperative mechanisms such as the China-US Strategic and Economic Dialogue, the China-US Joint Commission on Commerce and Trade and the China-US Joint Commission on Agriculture.

These have established a platform for agricultural cooperation and have given full play to the guiding role of both governments, he said.

Under the sound cooperative mechanisms, the two agricultural ministries have maintained regular contact.

In 2011, the two sides held the fourth meeting of the China-US Joint Commission on Agriculture, which further enhanced its status as the main channel for bilateral agricultural cooperation and tightened guidance to the two working groups on agricultural sciences and biotechnology, he said.

In recent years, the two ministries have also enhanced their cooperation in agricultural policies, market information, research and development of agricultural sciences and technology, sustainable development and global food security, said Han.

Deliveries to Chinese dealers fell 8 percent to 246,654 vehicles in January, from 268,071 a year earlier, the Detroit- based company said in a statement today. This year's holiday extended from Jan 23 to Jan 29 and marked the start of the year of the dragon.

"People and workers are leaving for their hometowns, families are going on holiday," said Namrita Chow, Shanghai- based analyst at IHS Automotive. "This reduces the number of people looking to buy cars."

GM, which regained its global sales crown from Toyota Motor Corp last year, is counting on the world's biggest vehicle market to help protect its lead as Japanese carmakers rebound from a year of natural disasters. The Detroit-based company plans to focus on expanding its luxury car brand Cadillac and its sport-utility vehicle lineup in China to double deliveries in the country by 2015.

The Lunar holiday, like Thanksgiving or Christmas in the US, is among the biggest selling periods in China and parts of Asia. Chinese consumers spend more at home and at overseas vacation spots such as Hong Kong and Macao.

Holiday sales

Holiday retail sales on the mainland grew 16 percent to 470 billion yuan ($75 billion), according to data from the Ministry of Commerce, the slowest pace since the 2009 financial crisis and three percentage points below last year's increase.

Chevrolet sales fell 20 percent from a year earlier to 54,399 units. Deliveries of Wuling vehicles, commonly used for transporting both people and goods, dropped to 106,573 from 123,920. Buick sales rose to 71,056 units from 70,441 a year earlier, while sales at the luxury Cadillac brand rose to 2,987 from 2,530 units.

China's overall vehicle sales will probably increase 8 percent this year, according to the China Association of Automobile Manufacturers. Deliveries slowed to 2.5 percent in 2011 from the 32 percent rate in 2010, after the government withdrew a two-year package of tax breaks and rebates that helped the country overtake the US.

Vehicle sales growth in China last year lagged behind the US for the first time in at least 14 years, according to figures from the Chinese industry group and US researcher Autodata Corp.

Product lineup

GM, which received a $50 billion bailout from the US government in 2009, sold an average of one car or truck every 12 seconds in the world's largest car market last year as it started a five-year rollout of more than 60 new and upgraded models in China.

The carmaker's deliveries to Chinese dealers rose by 8.3 percent to 2.55 million vehicles in 2011. That compares with the 29 percent increase it reported in 2010.

GM aims to double deliveries in the country to 5 million by 2015, Kevin Wale, the automaker's China president, said on Dec. 21. He forecast that Chinese auto demand may expand 7 percent to 10 percent in 2012, led by demand for passenger cars, with sales of commercial vehicles probably growing 5 percent.

Daimler expects car sales to rise by more than 4 percent to a new record in 2012, but the ramp-up of a new plant, spending on greener technology, and a new range of luxury compact cars will leave its mark on operating profit.

"Although these efforts will have a positive medium-term effect, they will burden our finances somewhat this year," Chief Executive Dieter Zetsche told reporters at the company's annual news conference on Thursday.

Earnings before interest and taxes (EBIT) rose 39 percent in the fourth quarter, in line with estimates, but it offered an unexpectedly high dividend after net income jumped by over half to 1.79 billion euros, significantly more than Reuters polled.

That boosted shares, which were trading 5 percent higher at 46.90 euros by 1330 GMT. The company's outlook reassured nervous investors prepared for a weaker 2012 performance at Mercedes.

The stock has lost almost 20 percent of its value over the past year, with analysts criticizing management's inability to deliver structural profitability comparable to rivals BMW and Audi.

Daimler said full-year earnings before interest and taxes (EBIT) were likely to be level with 2011, while revenue would grow. Dividends would continue to improve steadily in the coming years, according to Zetsche.

"Daimler looks for 9 billion euros in 2012 including all launch and ramp-up costs. This is strong... we were expecting Daimler to aim for over 8 billion in clean group EBIT," wrote analysts at Credit Suisse on Thursday.

"If guidance is plugged in, the street needs to raise 2012 earnings estimates by circa 8 percent."

Daimler's market capitalization recently fell below that of BMW for the first time but has since regained the lead. Rivals Audi and BMW are due to publish their annual results next month.

Advertising agency Publicis said on Thursday carmakers and banks were trimming marketing budgets and other clients delaying spending decisions, providing further signs that the global economy remains in a fragile state.

Renminbi onshore

Daimler's finance chief said one of the major uncertainties for this year's profit target stemmed from foreign exchange rates, which could cost the export-driven company a couple of hundred million euros even with hedging.

"Banks currently give us a range of forecasts for the US dollar-euro cross for this year that spans 20 cents, so no one really has an idea where it's going to end up," Bodo Uebber told Reuters.

Daimler aims to smooth out fluctuations in currencies via a system of rolling hedges stretching into 2014, using everything from plain vanilla forwards through options to so-called "collars" that secure exposure within a specific band.

It currently has about 80 percent of its overall currency risks for 2012 already hedged, or locked in, and another 40-50 percent for next year.

While the largest chunk of its forex risk stems from the current $15-16 billion net exposure, anywhere between 30-40 percent of that amount actually relates to China due to its currency peg.

Since the business is growing at a brisk pace there, Daimler's head of Treasury says an inconvertible yuan causes a problem for Mercedes when it supports sales by offering customers more loans and leasing deals.

Issuing offshore renminbi-denominated debt -- or "dim sum" bonds -- to refinance doesn't help, however, according to Michael Muehlbayer, Senior Vice President for Treasury.

"Industrial companies like Caterpillar can issue onshore renminbi bonds, but we don't need to fund the construction of a new plant - we can do that out of our own cashflow," said Muehlbayer.

"What we really would like is to fund our financial services business in China by issuing onshore renminbi bonds, and that will eventually come at some point," he continued.

The plant, operated by GM's passenger-car venture with SAIC Motor Corp, will have an annual production capacity of 300,000 vehicles and will be located in the central city of Wuhan, the Hubei Environmental Protection Bureau said on its website. Shanghai GM is satisfied with its current capacity arrangements and has yet to make a decision on building a new factory in Wuhan, said Jerry Ma, a Shanghai-based spokesman.

The Hubei bureau statement comes less than two months after China moved to end a seven-year policy attracting foreign investments into the carmaking industry. The factory would increase GM's passenger-vehicle capacity, estimated at 2 million last year by research firm IHS Automotive, by about 15 percent in China, easing the strain on existing plants that are producing cars in excess of their normal output.

The move may also help increase GM's lead as the biggest foreign automaker in the world's biggest vehicle market. GM's deliveries of vehicles to Chinese dealers rose by 8.3 percent to 2.55 million vehicles in 2011 after climbing 29 percent the previous year, according to the company.

For the Shanghai GM passenger-car venture, which is expanding capacity in two existing plants in Shenyang and Yantai, the new factory will provide enough capacity for the company to meet its target of selling 1.3 million vehicles in China this year, Ma said. Shanghai GM sold 1.2 million vehicles last year, it said Jan. 9.

The National Reform and Development Commission on Dec 29 dropped vehicle manufacturing from the "encouraged" external investment list, ending benefits that analysts at Booz & Co said include the waiver of import duties on automaking equipment and tax breaks.

SHANGHAI / BEIJING - Digital single-lens reflex cameras may be the most powerful gadget for taking photos but are far from the simplest to use. And the simplest pocket ones? They are usually not so powerful.

An enthusiast tests a mini digital single-lens reflex camera at a photographic equipment exhibition in Hangzhou, Zhejiang province. Mini SLR cameras have become a new and more cost-efficient choice for customers in the domestic market.[Photo/China Daily]

The dichotomy had long obsessed Qian Jingjing, a photography enthusiast, until camera manufacturers began releasing products that fall between the two - the mini SLR.

Qian likes to go hiking over the weekend and takes pictures along the way, but compact digital cameras simply don't shoot pictures in the way she desires. They are either slow or the color rendition was poor. However, a big SLR was too bulky.

"It's like you are forever stuck with two camera categories: digital ones that take mediocre pictures and heavy black ones that take stunning photos but require a neck strap. But a mini SLR is like a white knight riding to the rescue," Qian said.

Qian bought her first mini SLR, an Olympus E-PL1, in 2010 upon its debut. She said the light weight and good picture quality encapsulated all her needs.

China's digital camera market enjoys thriving growth. Statistics from data provider Euromonitor showed the market size doubled to 20.6 billion yuan ($3.27 billion) in 2010 from five years ago. But there is no further breakdown for mini SLRs, indicating it is a fledgling sector.

As both ends of the product spectrum are already teeming with models, manufacturers are eager to differentiate their products in the hope of gaining a foothold in the new market.

Panasonic Corp, a forerunner in the mini SLR field, unveiled its first such product - the Panasonic G1 - in 2008, in a bid to carve out a potentially lucrative niche for itself in a market crying out for innovation.

With the rise of high-end smartphones, ordinary DCs are losing momentum while SLRs are mostly for professionals, creating an "enormous market opportunity in between", the company said in an e-mail to China Daily. Panasonic now has a product line of 10 mini SLRs.

Sony Corp, also a leading producer of electronics products, released its first mini SLR - the NEX-5C - in June 2010.

The mini SLR was intended to act like a compact DC while offering the quality and versatility of a digital SLR, in an attempt to "convert the millions of pocket camera buyers who are put off SLRs by their bulk, complexity and lack of user-friendliness", Hatano Satoshi, vice-president of the digital department of Sony China, wrote in an e-mailed reply to questions from China Daily.

Other major camera makers also joined the mini SLR fray. Olympus Corp's PEN series hit the market gaining an unprecedentedly strong response, and Nikon Corp, a heavyweight player in the camera industry, unveiled Nikon 1 last year, sending a strong signal that fierce competition is kicking off.

A mini SLR uses a much bigger image sensor that is good enough to act like the mirror in its bigger cousins. It is compatible with various types of lenses, said Ai Lun, a seasoned photographer who lectures in several universities in Beijing.

"Physics explains why you can't take professional-quality pictures with a small camera. Big, bright photos require big sensors and big lenses to shine on the chips," Ai said.

According to Ai, the mechanics of an SLR camera involve light hitting a mirror and then passing through a focusing screen and into a block of glass called a pentaprism. When someone takes a photo, the mirror flips up and a shutter opens that exposes the digital sensor to the light.

Mini SLRs use an image sensor, a device that converts an optical image into an electronic signal, thus replacing the mirror and the pentaprism, effectively reducing its size. The chips in mini SLRs are on average 15 times bigger than those in portable DCs, ensuring a high resolution picture with less noise.

The interchangeable lenses allow users to have a lens for each and every occasion.

The mini SLR has become a cost-efficient choice. Research by 360buy.com, a major home appliances online marketplace, shows that prices normally range from 3,500 to 7,000 yuan, which is acceptable to those who crave a device that produces output of a similar quality to that of an SLR, but find themselves financially stretched. It can cost up to 20,000 yuan to buy an SLR, without a fancy lens.

"With all their advantages, mini SLRs will eclipse their counterparts very soon and hold a dominant position in two years," Ai said.

Red Bull energy drinks are removed from the shelf in a supermarket in Shanghai on Saturday. Sales of the drink were suspended by many retailers in China after media reports said that it contained unapproved ingredients. [Photo / Xinhua]

SHANGHAI - Many supermarket chains around the country have stopped selling Red Bull products in reaction to concerns that the energy beverage might contain unauthorized additives, even though the manufacturer insisted that its product was safe.

The moves follow media reports in Harbin, Heilongjiang province, that claim some ingredients in the drink have not been registered with the State Food and Drug Administration and are not approved for vitamin drinks.

"We took all the beverages from this brand off the shelf on Saturday out of safety concerns, even though the reports gave conflicting answers as to whether the drink was safe or not," said a store manager surnamed Sun at City Shop in Shanghai's Huangpu district on Sunday.

"We will consider returning the goods to the supplier, or putting them back on the shelf, if the quality watchdog says they are safe," he said.

A woman surnamed Shi in the customer service department of the Furong outlet of Carrefour in Changsha, capital of Hunan province, also said that sales of Red Bull products had been suspended after a weekend order by the chain's city headquarters.

Some major stores in Guangzhou and Beijing also told reporters that they had temporarily suspended sales.

The company posted a statement on its official website on Saturday, saying all of its functional beverages were safe and produced in line with national laws and standards.

Functional beverages are a category of drinks that includes sports and nutrition beverages.

The company also uploaded an announcement from the National Food Quality Supervision and Inspection Center.

"Long-term regular and unscheduled sample checks showed that Red Bull products are in accordance with the standards it has claimed, and have never been found to contain unregistered substances," reads the announcement dated Saturday.

The Harbin food and drug administration on Saturday put a statement on its website, which said that Red Bull beverages were approved as a health food by the Ministry of Health in 1997.

The statement said that government records show that sodium benzoate, sodium citrate, carmine pigment and tartrazine - which are said to have been listed among the food additives on the product bottles, though they are not registered with government agencies - are included in its ingredients.

But records on the website of the State Food and Drug Administration did not provide the same information. None of the four additives are listed among the primary ingredients of the beverage, a China Daily reporter found.

Regardless of whether these substances are registered, food experts said some might have been abused.

"The use of sodium benzoate in the product, a beverage for special purposes, doesn't meet the requirements for using food additives," said Yu Yuqin, a senior engineer from a Shanghai food industry institute.

The national standards for food additives implemented in 2011 indicate that the preservative can be used - in limited amounts - in tea, coffee and herbal drinks. Vitamin drinks are excluded.

Some other additives listed on the product's bottles might also be misused.

Sodium citrate is only allowed in baby formula and infant food supplements as an acidity regulator, and caffeine is only permitted in cola-type carbonated drinks, according to the standards.

People with cardiovascular diseases must be cautious about caffeine, which is a stimulant, said doctors.

"Long-term intake will affect kidney functions and calcium retention," said Gu Zhongyi, a dietitian at the Beijing Friendship Hospital.

Chen Xu, a 27-year-old Shanghai resident, said he was surprised that a product launched 15 years ago had been faulty for so long.

"I think government watchdogs should have guarded the pass. Now they must put the products under scrutiny, and give a clear answer to the public," he said.

SHANGHAI - If we need another sign that the Valentine's Day has become over-commercialized in China, e-commerce sites have now joined in the annual frenzy.

Data from an e-commerce portal shows that searches for the word "chocolate" on its website numbered 1.48 million, a 268 percent month-on-month rise. As part of an attempt to promote brands, some e-shops encourage users to share their love stories and photos in online forums and social networking sites. [Photo/China Daily]

Zhong Junwei, a self-employed online retailer in Shenzhen, never expected to be so busy just two weeks after the Spring Festival, the country's most celebrated holiday.

But with the Valentine's Day around the corner, he soon realized it was a great opportunity to cash in.

Zhong registered his company website, OnlyLove Gift Co Ltd, in Hong Kong five years ago. With the right business acumen, he sensed that the then-fledgling e-commerce was a perfect match for the gift-giving tradition in the Chinese culture.

"We design, manufacture and sell holiday gifts online. Valentine's Day is the one occasion we value most," Zhong told China Daily.

His product line for this Feb 14 stretched from glass trophy cups with sculpted characters that read "Best Boyfriend Award", personalized cushions with a spouse's picture depicted on top and jewelry tailor-made to customers' needs.

Revenue generated on Valentine's Day is on average three times higher than on a normal day. Zhong expects sales to be double those of last year, hitting 2 million yuan ($317,460), a decent gain for a company of 500,000 yuan registered capital.

"The exchange of gifts is important during courtship. It is based in part on establishing one's credentials as a romantic and generous soul," he said.

Zhong's story resembles that of many bigger online markets, where cashing in on romance has started to thrive.

According to data from e-commerce giant Alibaba Group Holding Ltd, searches for the word "chocolate" on its Taobao marketplace numbered 1.48 million, a 268 percent month-on-month rise. Nearly 100,000 people ordered 790,409 pieces of chocolate through taobao.com.

Juhuasuan.com, the group-buying arm of Alibaba, introduced localized services such as discounted movie tickets, restaurant reservations and wedding photo coupons in 43 cities one week ahead of the holiday.

Rovio Entertainment Ltd, the maker of the popular game Angry Birds, unveiled its Valentine's Day special offers on its Tmall website, Alibaba's business-to-customer branch.

In an e-mail reply to China Daily, the company said Angry Birds-themed cookies are targeted at the upcoming festival. If bought with a couple of T-shirts, there is a 50 percent discount.

Likewise, yihaodian.com, a Chinese online supermarket in which the US retail giant Wal-Mart Stores Inc took a stake, also joined the fray. Its group-buying services tried to strike decent bargains for users. A bunch of 11 teddy bears wrapped in a bouquet sells for just 89 yuan. In main street stores the price can be 300 yuan or more.

Yihaodian also enticed customers by offering deeply discounted candies and chocolate bars and "buy one get one free" discounts on about 50 items. For instance, it offered 15 yuan of Ferrero Rocher chocolates for 7.2 yuan. Healthcare food and massage items are also on the promotion list.

These discounts are intended to serve courting couples but also long-married couples when love has outgrown gift-giving rituals and both want something more substantial, said Zou Pin'e, the public relations manager at the company.

Festival marketing has gained a foothold on the e-commerce landscape, according to Wang Yong, vice-president of kela.cn, a shopping portal that sells jewelry.

The company's marketing slogan was that no price was too high for an engagement ring. It presented six rings with heart-shaped diamonds for the special occasion and more than 20 pendants and pearl ornaments at a 20 to 50 percent discount.

As part of its brand promotion, kela.cn encouraged its users to share their love stories and photos in online forums and social networking sites. Couples who join in are entered in a lucky draw with a top prize of a holiday in the Maldives.

"Holiday marketing has encapsulated all the assets of e-commerce businesses, ranging from price, logistics to quality. It is the versatility of products and after-sales services that help us to prosper," Wang said.

Car manufacturers boost sales in Chinese market

BEIJING - Brilliant sales in the car market of China last year helped General Motors, Volkswagen and the Renault-Nissan Alliance outperform Toyota to become the top three global carmakers.

China has transformed into the single biggest market worldwide for the three auto leaders and is expected to play a decisive role in the years ahead.

US carmaker GM regained its crown as the No 1 automaker after selling over 9 million vehicles last year. Industry observers concede that China sales had contributed significantly to its rising status.

With two joint ventures in China, GM sold approximately 2.55 million vehicles in the country last year, which accounts for more than a fourth of its global tally. About half of the vehicles sold were minivans, a small and cheap vehicle practical for carrying cargo and people and popular in rural regions.

Volkswagen of Germany did benefit from explosive domestic sales as well. Chinese consumers accounted for more than a quarter of its 8.16 million vehicles delivered last year.

The automaker announced last year it would invest 1.4 billion euros ($1.86 billion) into joint ventures in China from 2012 to 2016 to lift production capacity and develop new models. Combined annual capacity at its joint venture plants are expected to surpass 3 million vehicles in the next few years.

The Renault-Nissan alliance reported combined sales of over 8 million last year and about 1.27 million cars were sold to the Chinese. It maintains domestic production of Nissan cars and in talks with a local partner, Dongfeng Motor Corp, to restart manufacturing Renault vehicles in the near future.

Toyota sold just 880,000 vehicles in China, the least amount compared with the previous three companies. Its global sales totaled 7.95 million last year causing it to drop to the fourth position for global sales. Toyota had been the No 1 in the world for three consecutive years before.

The Chinese-language media reported that Toyota plans to move its China business department to the country from Japan so all decisions could be made by local operations with a quicker response.

Toyota plans to boost its sales in China to over 1 million units this year.

The fifth-largest automaker, Hyundai-Kia of South Korea, enjoyed strong sales here with more than 1 million vehicles sold last year. Meanwhile, it sold nearly 6.6 million vehicles worldwide.

Vehicles sales last year in China totaled 18 million units, which maintains its position as the largest market in the world for three consecutive years.

The nation has become a new center of gravity and annual light vehicle sales could well exceed 30 million by 2018, about twice the market size of the US, according to market research firm JD Power and Associates and LMC Automotive.

The mid-sized city in Anhui province will temporarily suspend its home subsidy policy so it can study details on how to implement the rules, according to a statement on the local authority's website on Feb 11. Wuhu will waive a deed tax and subsidize some home purchases, it said Feb 9, becoming the first Chinese city this year to signal its intention to ease property curbs.

China won't waver on its real-estate controls, which aim to bring home prices down to a reasonable level, to ensure fairness and stability, Premier Wen Jiabao said during a meeting with business executives last week, Xinhua News Agency reported yesterday. Wuhu followed in the footsteps of the southern Chinese city of Foshan, which in October shelved plans to ease limits on home purchases one day after its announcement.

China intensified measures last year with home-purchase restrictions in 40 cities and higher mortgage requirements. Home prices fell 0.18 percent in January from December, a fifth consecutive monthly decline and the longest streak of drops since SouFun Holdings Ltd, China's biggest real-estate website, began tracking prices.

Wuhu will give subsidies of 50 yuan ($7.90) a square meter for the purchase of homes of 70 square meters to 90 square meters, and 150 yuan a square meter for new homes smaller than 70 square meters, the local government said in the Feb 9 statement.

The measures in Wuhu were intended to meet demand from buyers with low incomes and to attract residents with higher education rather than to bail out the property market, the official Xinhua News Agency reported Feb 11, citing comments by Hong Jianping, Wuhu's deputy mayor, at a media briefing a day earlier.

Under the policies, the subsidies would apply to purchases of first homes, Xinhua said. Home buyers with more extensive educational backgrounds or professional qualifications would be entitled to higher subsidies, the agency said.

HAIKOU - Political advisers in South China's Hainan province urged authorities to levy taxes on vacant homes in popular travel destinations to discourage speculation and cool the island's overheated property market.

The vacancy rate among residential buildings in Hainan has become alarmingly high because many non-residents have flooded the property market to buy winter vacation homes and investment properties, said Wang Yiwu, a member of the Chinese People's Political Consultative Conference Hainan Committee, on Saturday during the committee's ongoing annual plenary meeting.

"About 80 percent of the new residential buildings in cities such as Haikou and Sanya are vacant, according to my research on the property market in Haikou and Sanya," said Wang, who is also an economics professor from Hainan University.

Liu Huizhen, who works for a property maintenance company in Haikou, the capital of Hainan, said about 450 out of 500 apartments in the neighborhood she works for are owned by people who are not from the island, and about 200 homes are often vacant.

The market for winter homes has become very lucrative, said Dai Hong, another member who attended the committee's annual meeting, which concluded on Sunday.

"Many developers are keen on building high-end property projects in Hainan that target these well-off outsiders," Dai said.

The price increase resulting from the property boom hurts the local population, Dai said.

"When locals cannot afford them and non-locals can afford them but often do not live there, then a high vacancy rate is inevitable," Dai said.

Liu Shengnan, a property salesperson in Sanya, a popular tourism destination in the province, said on Saturday that nearly all of the buyers for her company's commercial residential buildings near Haitang Bay are not permanent residents.

Her company's project contains 358 apartments sized from 80 square meters to 220 square meters, and the average price is 30,000 yuan ($4,770) per square meter, she said, declining to reveal the exact number of apartments that have been sold.

According to the latest report released by the China Index Academy, a Beijing-based real estate consultancy, the average home price was estimated at 8,326 yuan per square meter in Haikou in January.

"It's impossible for me to afford a two-bedroom apartment with a monthly income of 1,000 yuan," said Liu Huizhen, the property management agent, who is a 24-year-old Haikou native and plans to get married late this year.

Professor Wang said that the rising purchasing power of mainlanders has accelerated the rise of housing prices in Hainan.

"Because our local residents' incomes have not increased so rapidly, this trend will hurt the quality of life and rights of local people if it is not effectively curbed," he said.

He said the high vacancy rate has also led to a waste of land resources and public services.

Liu said that the issue has also complicated her company's day-to-day work and even led to losses.

"It is really difficult for us to handle the situation when water leakage, electricity leakage and burglaries occur in those apartments. What's worse, our company has to prepay the fees that the government requires, such as fees for garbage disposal. The money cannot be returned if no one lives in those homes," she said.

Wang suggested that the local government should tax homes with high vacancy rates to crack down on property speculation. It should also simultaneously encourage the construction of more public rental apartments to accommodate low- and middle-income residents.

Dai suggested that the government should tax a residential home if it remains vacant for two years or longer, and the tax on a vacant home shall be assessed annually at the rate of 1 percent of the standard value of the building and increase year by year.

In a work report that he delivered to the annual plenary session of the provincial people's congress on Thursday, Jiang Dingzhi, acting governor of Hainan province, pledged to build 75,500 government-subsidized homes in 2012.

Liu Xiaoli contributed to this story.

BEIJING - The government plans to introduce 500 to 1,000 high-end non-Chinese foreign professionals from other countries in 10 years to spur innovation and promote scientific research.

The One Thousand Foreign Experts Project, launched late last year, has attracted 214 candidates from countries including the United States, Japan and Germany, said Yi Fanping, deputy director of a work team under the State Administration of Foreign Experts Affairs that oversees the project, over the weekend.

The first application phase of the project started in November after requests were submitted from 214 universities, scientific research institutions and corporate units nationwide that seek foreign talent, according to Yi.

Potential employers are asked to make an initial deal with candidates and then apply for the project.

The project awards each foreign professional a subsidy of up to 1 million yuan ($159,000) from the central government and scientific researchers can get a 3 million yuan to 5 million yuan research allowance.

The professionals are also entitled to favorable visa, taxation and wage, residence, medical care and insurance policies.

According to the project's eligibility criteria, employers should be universities, scientific institutions, Chinese-invested enterprises or joint ventures in which Chinese investors have a more than 50 percent stake.

The targeted foreign professionals include professors at prestigious universities and scientific research institutions as well as senior technology and management professionals at world-renowned corporations or financial institutions. The program also seeks those who control intellectual property rights to master core technology and those with overseas experience in starting and running businesses and other skill sets China urgently needs.

Candidates must be non-Chinese, under the age of 65 and currently not employed full time in China. However, those already working in China can still apply for the project if they started their current job fewer than six months before each application phase of the project ends.

The second round of applications started on Friday and will close on March 12.

The project also requires foreign experts to work no fewer than three consecutive years and spend at least nine months a year in China.

"Central authorities will organize 40 experts to check each candidate's qualifications, including their achievements and influence in his or her field as well as each potential employer's expectations of the person it wants to hire and the work conditions it provides. Special meetings using video teleconferencing will also be held to see if individual candidates can really meet employers' demands," said Yi.

Yi did not reveal the date that the first meetings will be held.

"We will also work out measures to deal with any emergency that could happen, such as the illness or sudden death of a foreign expert," he said.

Many corporations in Beijing have expressed their desire to hire high-end professionals from overseas to give a shot in the arm to their business.

"My company already has an expert from Germany. We plan to introduce two to three experts from the United States or Japan this year through the project because experts from those countries are leading in the industry," said Ye Jing, a human resources manager with Pulead Technology Industry Co, a new material and new energy developer.

Chen Bei, deputy director of the Beijing municipal bureau of human resources and social security, said they are designing a website that will provide positions offered by employers to better implement the project.

"Currently, an employer is on its own when seeking high-end foreign talent, which is not very efficient. In the future, we will provide a platform that can ensure better interaction and matches between employers and foreign experts," she said.

Chen said her organization will also meet with Beijing's high-tech companies to introduce the project to them and help them better develop in order to facilitate innovation and promote upgrades to the city's industrial infrastructure.

More than 40,000 foreign experts - mainly senior technology and management personnel in fields such as education, scientific research, manufacturing and health - come to work in Beijing every year, Chen said.

BEIJING - Chinese Premier Wen Jiabao pledged to adopt further measures to encourage private investment in monopoly industries to address problems with China's economic structure.

In response to economic turmoil, Wen said the government this year will further support the real economy, small-and medium-sized enterprises (SMEs) in particular, and push forward reform of monopoly industries.

The government should also better handle issues related to living standards, tackle unfair income distribution and corruption, and address public concerns about inflation and the affordability of housing, Wen said.

The premier made the remarks in meetings held last week to solicit opinions from representatives of different sectors of society on the draft of the government work report, which is to be delivered at the annual session of the National People's Congress, China's top legislative body, next month.

Wen said private capital should be encouraged to flow to fields such as finance, energy, transport and social services, "which can not only alleviate the difficulties of economic development but also accelerate the development of these causes," he said.

Details of policies supporting private investments must be drawn up within the first half of this year, Wen said.

Zhou Tienong, vice-chairman of China's top legislative body, said reform of monopoly industries has lagged far behind and resulted in unfair competition.

Although there are already policies in place allowing the involvement of private capital in financial markets, those applying to do so were often rejected because of the high requirements, said Zhou Dewen, chairman of the Wenzhou Small-and Medium-sized Enterprises Development Association.

The establishment of private sector financial institutions will play an active role in solving the financing difficulties of SMEs and promote the healthy development of the private sector, he said.

Wen said the government is paying close attention to the economic situation in January and the first quarter of this year.

"We have to make a proper judgment as early as possible when things happen and take quick action," Wen said, adding that fine-tuning of macro policies should begin in the first quarter. China's inflation rate rebounded to a higher-than-expected 4.5 percent in January, fueling speculation that policymakers may be showing more caution when considering further easing measures, according to figures compiled by Wang Tao, chief China economist with UBS AG.

In addition, it is still difficult to determine the actual strength of the real economy at the current stage. Therefore, the market should not expect the central bank to cut the bank reserve ratio in the next few weeks, Wang said.

But in the long term, the downward trend of inflation has not changed, so the credit supply target and overall policy stance will not be affected, Wang said.

Xinhua contributed to this story.

Chocolates and flowers said to be high on the list of priorities for young sweethearts

SHANGHAI - Businesses in China are expecting a new boost after the New Year and Chinese Spring Festival spending frenzies thanks to the forthcoming Valentine's Day.

Will you be buying chocolate for your sweetheart? Hotels, restaurants, shopping malls and even flower vendors see this year's Valentine's Day, which is on Tuesday, as a big business opportunity after the Chinese lunar New Year holiday. [Photo/China Daily]

Although Valentine's Day is not a traditional festival in Chinese culture, it has received wide recognition among young people over the past decade. They consider it to be a good opportunity to express their love and some young men even try to persuade girlfriends to become brides in creative ways.

It's good news for retailers because most lovers will exchange small gifts to commemorate the occasion. Florists started to receive orders two weeks before Feb 14 and chocolate makers also increase their supplies to meet booming demand. Hotels also started receiving bookings several days ago.

To better meet demand, businesses are sparing no effort to ensure they have something new to attract attention. For instance, some restaurants in Shanghai are offering big discounts to customers who walk in hand-in-hand.

Godiva, a luxury Belgian chocolate brand with outlets in six cities on the Chinese mainland, said it has cooperated with Spanish designer Jaime Hayon to design special packaging for Valentine's Day.

"Valentine's Day is one of the most important days for chocolate retailers. We need to make sure we can offer something different every year," said Quasar Liang, senior marketing executive of Godiva (Shanghai) Food Trading Co Ltd.

Florists expect to make substantial sales on this Valentine's Day, more than last year's when it came three days ahead of the traditional Chinese Lantern Festival and four days after the Spring Festival holiday. That is a time when many young people prefer to stay with their family rather than sweethearts. Many businesses said sales in 2011 were not as good as expected.

"We expect market demand to double this year because Valentine's Day falls on Tuesday, a working day when we can receive many orders from offices," said Xiong Qin, a manager at Uling Flower. Xiong's shop is close to Middle Huaihai Road in Huangpu district, Shanghai. "We will hire a taxi to deliver flowers in the central business area block by block".

Xiong said she expects to receive about 100 orders before Feb 14 and about 150 orders on the day itself. A bouquet of flowers with 11 roses will cost about 300 yuan ($48) or more. Some imported roses will be priced at 60 yuan each.

Many florists will raise prices significantly for orders made on Feb 14. Customers will be better off sending orders in advance to ensure a better deal and better quality.

"I am sure florists will spend less time on each bunch of flowers on Feb 14 because orders will be flooding in when we start work. We may not do our job as carefully as we normally do," added Xiong.

Some five star hotels are offering Valentine's Day dinner packages and have received bookings in advance.

Fairmont Peace Hotel in Shanghai has introduced a room package priced at 1,992 yuan. It includes a room decorated with rose petals and a bottle of Champagne.

Qunar, a Chinese online travel service provider, said hotel bookings reached a peak about one week before Valentine's Day. The most popular are rooms priced at 200 yuan to 300 yuan a night.

"Young people are paying more attention to protecting their privacy and like to enjoy a moment only for themselves. As it will be a working day after Valentine's Day, many people will spend the night in a hotel," said Wang Jing, senior director of the hotel sector with Qunar.com.

Qunar has introduced a hotel online booking system that allows people to name their own price for a room. Hotels will accept the offer if it is considered reasonable. It is believed to be the first time this kind of business model has been introduced in the industry.

However, not all leisure service providers are optimistic about the market. Several travel agencies report demand for short distance traveling is not good because of cold weather and the fact that Valentine's Day falls on a working day.

Yang Yijun in Shanghai contributed to this story.

SHANGHAI - For Zhang Youhai, a 33-year-old pomelo grower in Meizhou, Guangdong province, one of his happiest memories of 2011 was having all his produce sold through the government's farmer-supermarket direct purchase program at an early negotiated price. Many other individual growers suffered from a fall in prices.

Two workers unloading tomatoes at a stall in a supermarket in Beijing. Most retailing giants in China have implemented direct purchase plans either by working with farmers' cooperatives or setting up growing bases.[Photo/China Daily]

The Year of the Rabbit was good for pomelo growers in terms of output. The annual output of the citrus fruit in Meizhou was about 400,000 tons, an increase of 20 percent from 2010.

However, farmers' incomes did not rise alongside the growth in output. The increasing market supply and lower demand in the global market triggered competition among growers and the retail price went down significantly.

The price at the end of 2011 was about 2 yuan (32 cents) a kilogram, a drop of 50 percent from August 2011.

"We had good expectations for the market performance in August. We never expected the price to drop so significantly," said Zhang. "The growing cost for a kilo of pomelos is around 2 yuan. The price drop meant some pomelo growers earned nothing for the whole year of 2011."

Zhang, whose family has grown pomelos for more than 20 years, did not suffer from the competition thanks to the farmer-supermarket direct purchase plan, which allowed him to sell 75,000 kilos of pomelos at 3.64 yuan a kilo, much higher than the average prices.

Zhang said some of his pomelos are sold to consumers through global retailing giants' distribution channels including CP Lotus Supermarket, which is a subsidiary of Thailand-based Charoen Pokphand Group.

"I signed a contract to sell all my pomelos to a fruit trading company at a fixed price. The company acted as a channel in the direct purchase plan in Meizhou. They buy our pomelos and sell them to supermarkets. My task is to supply enough pomelos at the end of 2011 to fill the orders," said Zhang.

It was the first year Zhang had joined the direct purchase plan. In previous years he said he would have had to join in price wars either to sell his pomelos or lose out in poor market conditions.

"I think I will stick to this direct purchase plan because it provides us with a guarantee in all situations," added Zhang.

The farmer is one of many in Meizhou who have benefited from the farmer-supermarket direct purchase plan, which was set up by the central government in 2008. Initiated by the Ministry of Commerce, the plan is designed to guide farmers, strengthen connections, promote distribution channels and guarantee food safety. It is also a way to help farmers increase their income and reduce intermediaries to stabilize prices at a time of high inflationary pressure.

"Urbanization has increased demand for agriculture products significantly in large cities and the development of agriculture technology and new farming skills have boosted the supply of farm produce.

"Poor information distribution channels and unstable retailing channels led to many agriculture products failing to be delivered to consumers in the most economic and effective way, and that caused significant problems for both consumers and farmers," said Liu Shijia, vice-president of China Agriculture Wholesale Market Association. "It is necessary for farmers to promote their products and develop more ways to boost sales."

Now most retailing giants in China have implemented direct purchase plans either by cooperating with farmers' cooperatives or setting up growing bases.

In June, Carrefour SA China signed a strategic memorandum with the Ministry of Agriculture to improve the existing plan. The French retailing giant is providing training to farmers to improve quality and guarantee food safety. More partnerships are being planned.

Shanghai-based Hualian supermarket said that it would add five production bases to its direct purchase program and increase the direct purchase volume by 1,500 tons of farm produce in 2012. However, the direct purchase model is not perfect and it still needs to be improved, industrial experts said.

At a time when more and more farmers are enjoying the benefits of direct purchase plans, experts say total revenue generated from them only accounts for a tiny part in the whole agriculture marketing system. Many farmers still find their products cannot be sold at good prices. Implementing the process is still challenging.

"Many farmer-supermarket direct purchase programs across the countryside are not carried out in the manner anticipated," said Liu Yutao, the deputy director of the Agriculture Bureau of Meizhou. "Some local governments or institutions simply tried match retailers with farmers. They did not really solve the problems at the heart of the plan."

Liu said it is quite important to have an agent to link the supermarkets and farmers.

"Agriculture production in China involves millions of rural households and their respective production scale is small so there should be an agent between the vast fields and urban supermarkets because I believe sufficient supply is the key to maintaining the long-term success of the plan," said Liu.

BEIJING - Although shares of US-listed Chinese companies have started to rally recently, the end of 2011 saw them under pressure as the result of a series of short sales.

A trader on the floor of the New York Stock Exchange. The differences in accounting rules between China and the US is the main reason for widespread short-selling of Chinese companies listed in the US, experts said.[Photo/China Daily]

In the last three months of 2011 around 58 Chinese companies were facing the prospect of delisting from the US market, either because their share prices had fallen below the $1 mark for 30 consecutive days or their market capitalization was less than $35 million, according to reports in the Economic Information Daily newspaper.

"If a company's stock price or market cap does not meet the requirements of the US market, it will be sent to the Pink Sheets (the third tier of the over-the-counter market, where companies do not have to report to the US Securities & Exchange Commission or other regulators), where they will be lumped together with a lot of bad companies. Investors cannot tell the good from the bad and so they will not buy any of them," said Hong Hao, an equity strategist at China International Capital Corp Inc.

One of the most high-profile cases of US short-selling of a Chinese company is that of Sino-Forest Corp. Last year, the Hong Kong and Canada-based company was accused of financial irregularities by the US researcher, Muddy Waters LLC. The ongoing furore - which was inflamed after Carson Block, the founder of Muddy Waters, accused the Chinese company of being a 'Ponzi' scheme - saw Sino-Forest's share price plummet and brought the whole issue of short-selling of Chinese stocks to prominence.

"The difference in accounting rules between the two nations (China and the US) is a fundamental reason for the problem," said Chen Yugui, vice-president and secretary-general of the Chinese Institute of Certified Public Accountants.

Chen said that, according to US regulations, if an accounting firm wants to undertake assurance work for a company listed in the US, it should register with the US Public Company Accounting Oversight Board (PCAOB). Although a few Chinese outfits have registered with the PCAOB and are approved by the authority, many more are qualified, but have not been engaged for a variety of reasons.

"So when Chinese companies purchase 'shell' companies, in a process also known as a 'reverse takeover', to obtain a listing, their assurance work is usually conducted by small agencies, including some low-level firms that simply help with the listing procedure and then exit without offering further financial guidance.

Therefore, many Chinese companies list on the US market without being fully aware of their responsibilities or knowing how to compile annual reports under the US rules," said Chen.

He added that a few Chinese companies do have financial problems that should be checked and rectified, but many of them are not governed by the regulations pertaining to either nation.

"US-listed Chinese enterprises need not be examined by Chinese authorities, but the US does not check their financial statements in China because all their accounting work is signed off by US accountants," said Chen.

Zhou Hongyi, chairman and chief executive officer of Qihoo 360 Technology Co Ltd, China's leading Internet company in terms of active user base, wrote on his blog that a limited understanding of Chinese innovative business models is another reason why a short-seller can hurt a Chinese company.

"We (Qihoo 360) created the idea that our software is completely free and our business model based on it is unique. Because our company's business model does not have a parallel in the US and the performance of our stock is very good, this may be the kindest explanation for Citron's short-selling against us," said Zhou.

Since November 1, CitronResearch.com has released four unflattering reports on Qihoo 360. The company responded positively by releasing reports of its own and on December 7, when Qihoo 360 published its third response to the reports, its stock closed higher by 3.35 percent.

Hong said that although a few Chinese concept stock companies - defined by Investopedia.com as "a company whose assets or earnings have significant activities in China" - have financial problems, many of them are of high quality and are welcomed by US investors.

"When the US economy is not good, companies' financial problems are more easily exposed. Other companies should regard it as a warning and take care of their own financial conditions. However, we can see that China concept stocks, such as New Oriental Education & Technology Group Inc, Home Inns & Hotels Management Inc and Mindray Medical International Ltd, are very popular among investors.

"It's not a good time for Chinese companies to list on the US market; instead, they can consider delisting because share prices are very low," said Hong.

According to Hong, current conditions in the Chinese stock market are not favorable, so US-listed Chinese companies can take their time delisting from the US market. He added that it usually takes a company one full year to deal with the delisting process.

"No matter whether they are delisting from the US market or continuing to play, Chinese companies should always be strict with their financial statements and improve their competitiveness and financing capability," Hong said.

Yang Ge, the chief representative at the Beijing bureau of NYSE Euronext Group, said that the strong development of the Chinese economy means that US investors have been showing great confidence in Chinese companies and that they welcome Chinese enterprises with good prospects listing in the US market.

"Compared with several months ago, investors are no longer easily influenced by reports released by short sellers. Instead, they have been able to tell the good companies from the bad," Yang said.

"Our best ways of combating short-sellers are good governance, transparency and strong investor relations. We are inviting good investor-relation companies, including Thomson Reuters Corp, to help companies improve their communication with investors," he added.

Zhou Hongyi said after the short selling, Qihoo 360 will deepen communication with overseas investors. In addition, he said the company will continue to focus on offering users high-end experiences and creating long-term value for them to develop Qihoo 360 into an influential company.

According to Chen, Chinese accountants are necessary for Chinese companies looking to list in US. Meanwhile, US accounting firms also hire Chinese partners to deal with assurance work, because they have a limited understanding of China and feel that the work is too difficult to be undertaken without back-up.

"If Chinese accountants can sign their names on the auditing report, which means they can be responsible for the auditing work of Chinese enterprises listed in the US, the auditing processes and standards can be simplified and the regulations will be more strict."

Chen said that to achieve that goal, China and US should work together to promote the convergence of the accounting systems, so that eventually Chinese accountants will be accepted in US market and vice versa.

Chen said China and the European Union have reached an agreement on the convergence of accounting systems, which will mean that Chinese accountants can be directly responsible for Chinese companies going public in the European market.

According to Yang, although only a small number of Chinese companies listed in the US during the last four months of 2011, conditions will improve in 2012. Yang said that NYSE Euronext has about 20 companies in an active pipeline. He believed that there will be a handful of deals that will test the market in the first few months of 2012 and then a larger group will emerge in the first half of the year.

"Companies in sectors such as Internet, electronic commerce and new energy are easily accepted by US investors. And we are encouraging companies with high growth potential to come to the US market because they will have good valuations here," said Yang.

"The US market is not good now and we will follow Vancl and Xunlei and list in the US," said Li Shubin, president of the Chinese online shoe retailer OkBuy.com,

Vancl.com, China's biggest online clothing retailer, and Shenzhen Xunlei Network Technology Ltd, a video and music file-sharing company, had both planned to go public in 2011, but delayed their IPO plans until later this year.

Li said the current economic uncertainty in the US, coupled with the behavior of short-sellers with regard to Chinese companies, prevented a number of Chinese companies, including OkBuy.com, from going public in the US in the last few months of 2011.

However, Li said he is not too concerned about the short-sellers because electronic commerce companies face their end users directly and their performance indexes, including the purchasing rate, are publically available.

"Amazon is a good instance of e-commerce companies being widely recognized in the US, so we would like to choose the US market," Li said.

Hu Boyu, an associate at DCM, a global venture-capital company, said the companies his company has invested in are mainly engaged in popular sectors in the US, including technology, media, and telecoms, and have their investment funds in dollars, so the US market will still be their main choice for a public listing.

Hu added that many companies with foreign investment funds are not able to list in the domestic market, and that those companies leaving the US market and listing in China can not be guaranteed a successful listing.

The government of Wuhu, a city in eastern Anhui province with 1.5 million residents, announced Thursday that it will grant subsidies and deed tax exemptions to first-home purchasers in 2012.

The measures, which made Wuhu the first Chinese city to boost home sales since 2010, triggered speculation that authorities may lift curbs on the real estate sector, as the market has cooled since the introduction of tightening measures last year.

However, the Wuhu city government rebuffed bailout speculation on Friday, saying the policies are intended to meet consumers' rigid demands for home purchases and attract talented people to work in Wuhu.

"The essence of these measures is to curb the property market, clamp down on speculation and satisfy the home-buying demands of those with low incomes and new residents, as well as give a boost to affordable housing projects," Hong Jianping, the city's deputy major, said at a press conference.

Under Wuhu's new policies, the local government will offer subsidies ranging from 50 to 150 yuan ($7.9 to $23.8) per square meter for purchases of first homes no larger than 90 square meters.

Home buyers with more extensive educational backgrounds or professional certificates are entitled higher subsidies, a policy that the government has cited as a method to attract more talented workers.

But analysts have argued that Wuhu's subsiding polices are intended to bail out the sagging property market, warning that more local governments may follow suit.

Housing prices in Wuhu dipped for the eighth straight month in January, with the average price standing at 5,567 yuan per square meter, down 5.68 percent from a year earlier, according to data from the China Index Academy (CIA), a leading property research institute.

"Wuhu is the first city in China to waive deed taxes and grant housing subsidies. It is really hard to convince people that they're not just trying to rescue the market," Zhang Dawei, chief analyst at Centaline Property, was quoted as saying by the 21st Century Business Herald.

Since 2010, China has introduced a series of tightening measures to cool down the runaway property market, including bank lending restrictions, a ban on third-home purchases and trial property taxes in the cities of Chongqing and Shanghai.

The policies will be maintained in 2012 to bring housing prices to a reasonable level, authorities said following China's central economic work conference last December.

Housing inventories in major cities such as Beijing and Shanghai have piled up to a record high, according to 5i5j Real Estate Service Co, one of the country's largest real estate agents.

Average property prices in China declined for the fifth consecutive month in January, a sign that efforts to crack down on speculation are working, the CIA said.

Including the four 700,000-kilowatt power units starting to generate electricity last year, the six units are situated inside the mountain on the right side of the river bank.

Construction on the underground hydropower station in Central China's Hubei province began in July 2001 to harness the power of the water discharged during flood season on the Yangtze River, China's longest waterway.

The Three Gorges Project, launched in 1993 with a budget equivalent to $22.5 billion, consists of a dam, a five-tier ship dock and a total of 32 hydropower turbo-generators.

The 26 generators on the two sides of the dam had gone into operation as of October 2008, with each unit having a generation capacity of 700,000 kw.

The project generates electricity, controls flooding by providing storage space and adjusts shipping capacity on the river.

Last year, it generated 78.29 billion kilowatt-hours of electricity.

It also withstood three major floods last summer, taking the edge off the fierce flows by holding back the majority of the flood water in its reservoir to ease the flood's impact on the river's lower reaches.

The dam reservoir releases water in the dry season to ease droughts, particularly in downstream rice-growing areas.

In a newly released financial statement, the company reported $265 million in net income in the final quarter of 2011, up from $206 million in the fourth quarter of 2010.

Along with the fourth quarter financial summary, Cameco also released its year-ending report, which saw net income increase compared to 2010.

"2011 was also strong from a financial and operational perspective,"  Cameco CEO Tim Gitzel said. "We saw high uranium sales volumes and record realized prices, which combined to generate almost $2.4 billion in revenue for our nuclear business - 12 percent higher than in 2010 and a record for the company. $1.6 billion of that was from our uranium segments."

Cameco, one of the world's largest uranium producers, signed an agreement in 2010 to supply China's Guangdong Nuclear Power with 29 million pounds of uranium through to 2025.

Canadian Prime Minister Stephen Harper has been touring China this week and managed to secure a deal that would see business between the two countries increase even more.

"(February 9) it was announced that Canada and China have agreed on a protocol to allow deliveries of Canadian uranium concentrate to the world's fastest-growing nuclear market," Gitzel said.

"Once ratified, this will help us build our position as a key uranium supplier to China and grow employment and investment in Canada's uranium mining industry. We commend the governments of both countries for getting this done."

The protocol will allow the shipment of Canadian uranium directly into China. Some 50 million pounds of uranium is expected to ship from Cameco's operations to China over the next 15 years.

Despite challenges such as lower uranium prices and the Fukushima nuclear meltdown that rocked Japan last year, Gitzel said "it was also a year of record performance for us at Cameco."

Revenue went from $673 million in the fourth quarter of 2010 to $977 million in the final quarter of 2011 - a jump of 45 percent. Gross profits in the fourth quarter also climbed to $353 million, up from 252 million compared to the same time last year.

Cameco managed to generate 13.8 million pounds of uranium in terms of sales volume. Gitzel said the company benefited from a good safety record and stronger than expected production at a number of its facilities.

"For us it's been business as usual and in some ways, even a little better than usual," he said. "Looking forward, we remain confident in the long-term fundamentals of the nuclear industry. With our extraordinary assets, contract portfolio, employee expertise, industry knowledge and financial strength, we are well positioned to meet the growing demand for uranium and add value for our shareholders."

BEIJING - China is vowing to eliminate substandard meat processing in the country within the next few months as part of a campaign to ensure food is safe, officials said on Friday.

"Some small and medium-sized slaughterhouses and processors that have the proper authorization now fail to meet the standards for meat processing, and that has raised great potential risks for the country's meat supply," Jiang Zengwei, deputy minister of commerce, said at a news conference held by nine government departments, including the Ministry of Commerce, the Ministry of Agriculture and the Ministry of Environmental Protection.

The departments will begin a four-month campaign in March to improve standards at plants where pigs are slaughtered and processed. They will work to ensure the conditions at such places are sanitary, that proper quarantine measures are being taken and that the environment is being protected.

The campaign will look at the 18,150 authorized slaughterhouses and processors in China. Its goal will be to prevent water-injected meat, meat from sick animals or other substandard products from reaching the market, he said.

Jiang called on the ministry's local branches to use the campaign to clean up substandard slaughterhouses and processors, saying "they are the biggest obstacles to ensuring the safety of meat".

Meat slaughtering and processing that has not received official approvals is illegal in China, the only exception being that rural residents are allowed to slaughter their own livestock.

Pork makes up more than 60 percent of the meat the Chinese eat every year, according to official figures.

Many in the public became concerned about meat safety after reports came out alleging that the illegal feed additive clenbuterol had been used by farmers in Henan province in March 2011.

Clenbuterol, better known as "lean meat powder", can cause pigs to build muscle and burn fat faster, resulting in leaner pork.

The drug can cause dizziness and heart palpitations among people who eat meat that has been treated with it, and China prohibits its use as an additive in pigs feed.

The growth of the slaughtering industry, meanwhile, has led to environmental pollution.

To meet the demand for meat in 2011, about 210 million pigs were slaughtered, producing 100 million tons of wastewater along the way, Li Ganjie, deputy minister of environmental protection, said at the conference.

"Starting this year, the ministry will use its website to blacklist slaughterhouses and processors that have been found to be violating the law, and it will also regulate the approval of new slaughterhouses in the future," Jiang said.

Liang Haoyi, a senior researcher at the China Animal Agriculture Association, said on Friday that the pig-farming and meat-slaughtering industries in China must ever contend with greater and greater obstacles as they try to protect the public's health.

"Government authorities should take measures to prevent sick animals from being sold for slaughter," he said. "And there is a need for harsher punishment to be imposed on those who trade sick animals."

China needs to solve the problems of migrant workers and provide them every possible help to become permanent members of cities

According to the 2011 data released by the National Bureau of Statistics, China's urban population has reached 51.27 percent of the total, thus exceeding the rural population for the first time in history.

This is a critical point for China's urbanization. From now on, China needs to promote both the quality as well as the quantity of urbanization. For that purpose, the emphasis should be put on making rural people true urban residents, not simply introducing them to cities.

The greatest challenge for this is the problems of migrant workers, whose number has reached 242 million and is still growing. It is their labor that has made China's urbanization possible: a recent survey shows that migrant workers contribute 34 percent to the urbanization of Beijing and 30.6 percent to that of Shanghai, providing most of the labor for sectors such as construction.

But, though the cities have been built on the sweat of their labor, these workers are not formal residents of the cities they toil in. This is because their hukou, or permanent residence permits, are not registered there. We have already heard too many sad stories about migrant workers being discriminated against by urban residents and we do not want to hear more.

The following is an incomplete list of basic public services that exclude or partly exclude migrant workers: compulsory education, pension, medical insurance, lowest living standards insurance and public housing.

The result of such discrimination, which widens the gap between migrant workers and urban residents, has already caused mass incidents in provinces like Guangdong. Urban administrators need to help improve migrant workers' lives to prevent similar incidents in the future.

Such discrimination has not only caused social injustice, but also become a bottleneck to urbanization because it seriously restricts domestic needs by limiting migrant workers' consumption power. A 2010 research shows that the average Engel's coefficient - which measures the percentage of a household's expenditure on food to its total spending - of migrant workers is more than 50 percent, which seriously restricts both the willingness and the ability to consume, in turn curbing domestic demand.

Therefore, to further propel urbanization, China needs to solve the problems of migrant workers by helping them become permanent members of the cities in which they live, with equal access to public services and benefits.

The central government addressed the problem in its 2011 Central Economic Work Conference. In its concluding document, the conference claimed it would orderly guide qualified migrant workers to become permanent urban residents, and solve their education, healthcare and housing difficulties. That is a praiseworthy move for it might break the barrier between urban and rural residents.

In fact, many regional governments have already taken measures to include some migrant workers into their public service systems. For example, many counties in Guangdong and Zhejiang provinces and Shanghai have already started to let migrant workers enjoy endowment insurance like local residents. Some other cities like Nantong in Jiangsu province have also tried to offer public housing to migrant workers.

But to really address the issue the hukou system, the fundamental mechanism of China's urban-rural division, must be reformed to finally end these inequalities. However, local governments cannot make great progress in this regard, as the power to totally reform the hukou system belongs exclusively to the central government. The central government mentioned the problem in 2009 and reiterated it in 2011, but it needs to do more in the future to provide support for such reforms.

While gradually altering the division, the cities also need to change other discriminative policies to diminish the differences between local residents and migrant workers. And more importantly, they need to provide equal education opportunities for the children of migrant workers, for that will prevent inequality from being inherited by the next generation.

Of course, turning migrant workers into true urban residents is a huge program that involves the interests of tens of millions of people, so we cannot expect it to be done all at once. The problems can only be solved step by step, with priority given to those with the most urgent needs.

Metropolises such as Beijing and Shanghai already have extremely large populations, so it is important to guide the population flow into small and medium-sized cities.

But to ensure China's urbanization proceeds smoothly the State needs to take measures to honor its promise of helping turn migrant workers into true urban residents.

The author is a researcher on urban development at the National Development and Reform Commission. The Chinese text first appeared in China Development Observation magazine.

The US International Trade Commission (USITC) voted in the affirmative in the case, which was petitioned by the US wind tower trade coalition comprised of four wind tower companies.

The commission believed there was "a reasonable indication" that the US industry was threatened with material injury by imports of utility scale wind towers from China that are allegedly subsidized by the Chinese government.

It also said these wind tower imports from China and Vietnam are allegedly sold on the US market at a less than fair value.

The USITC's move would allow the US Department of Commerce to continue its investigations on imports of these products. The preliminary countervailing duty (CVD) determination regarding China is due around March 23, 2012, while the anti-dumping (AD) one on China and Vietnam is due around June 6, 2012.

These investigations, started on January 18 by US Commerce Department, intend to impose duties of up to 213.54 percent on China and of 140.54 to 143.29 percent on Vietnam.

The United States imported nearly $158.7 million worth of wind towers from China and Vietnam in 2010, according to the USITC.

China's Ministry of Commerce (MOC) said late last month on its official webpage that these acts would not only hamper bilateral cooperation in new energy and harm relevant US industries, but also went against global efforts to tackle the challenges of climate change and energy security.

Trade tensions with China are a particularly sensitive issue as the United States is trying to boost its exports to revitalize a flagging economy and slash the unemployment rate in the aftermath of the 2008 financial meltdown and subsequent global economic recession that have hurt the US economy badly and sparked a new wave of protectionism.

Observers see trade protectionism as a short-sighted approach, while some US officials believe a deeper trade integration into other regions could help the United States create more jobs and improve its competitiveness.

The Chinese MOC has repeatedly urged the United States to abide by its commitment against protectionism and work together with China and other members of the international community to maintain a free, open and just international trade environment.

Leather and fur products made in Haining, Zhejiang province. The city is striving to use unique designs to reinforce China's standing in the global leather trade. [Photo / Provided to China Daily]

Leather and fur firms in Haining are aiming to raise the profile and the profits of this clothing center

HAINING, Zhejiang - The dusty streets of Haining, a city in Zhejiang province, may not be as grand as the glittering avenues in Paris, the fashion and brand capital of the world and the design home of the global fur and leather trade.

However, Haining may soon give Paris a run for its money with its own set of unique designs and brands that will not only reinforce China's standing in the global leather trade, but also help the nation shed the "imitation" tag.

The leather renaissance, however, does have a French connection. Giving shape to the dreams are a group of designers from Paris, who have shunned big brands such as Gucci, a subsidiary of PPR SA, or Chanel for lesser-known companies in Haining.

Encompassing an area of just 700 square kilometers, Haining accounts for more than 30 percent of China's leather and fur products. As part of its efforts to boost the leather industry, the city has joined hands with Union des Designers Mode et Maison, a French fashion design association, for designer exchange and education programs.

"Haining's leather manufacturing capability and China's big market potential have been the main attractions for us," said Jean-Michel Glasman, chairman of the union.

With more than 3,000 manufacturing companies and more than 70,000 employees, a leather jacket is produced every 1.3 seconds in this city. According to statistics from the China Leather Industry Association, the country's leather and fur industry reported a combined profit of 3.1 billion yuan ($491 million) during the first nine months of 2011, with year-on-year growth of 24.6 percent.

"Though the city's leather and fur products can compete with international players in terms of quality and technique, they still do not have much added value. As a result prices are still low. Fashion is the best way to raise the added value of leather products. There are about 6 million leather products in Haining that are sold as fashion clothes. If we add 200 yuan to each of them, the added value can reach 1 billion yuan," said Ren Youfa, president of Haining Leather Market.

Ren said that although exports have not been so rosy in the last few years because of uncertain global market conditions, domestic demand for leather and fur products has grown considerably. This has also sparked the interest of foreign companies, he said.

"Europe is mired in its debt crisis, and its leather industry has been hit because people no longer have deep purchasing budgets. The European designers need a better and more promising platform to work on, while we need more fashion designers. So to some extent this alliance is a union made in heaven," Ren said.

Though the alliance is relatively new, matchmaking efforts started much earlier.

In May 2010, Union des Designers Mode et Maison sent two senior designers to Haining to study the city's leather and fur industry and give lectures to local companies and designers.

"When you walk into a leather jacket shop in Haining Leather Market, you can find any design and pattern that you are looking for. But none of the products have their own style," Glasman said.

In October 2010, the two sides decided to form an alliance between European designers and local companies. Consequently the Haining Leather International Cooperation Center was established, and is currently the working center for French designers who come to Haining on exchange programs.

Glasman said the union aims to help local industries achieve their branding strategies, improve business models, and help local industries with international communication.

To date, the union has sent two groups of European fashion designers to Haining for consulting and communication.

"Needless to say, our designers have shown their best designs to the companies in Haining, and a lot of them are keen to team up with our designers for products," he said.

Zhejiang Xuebao Fashion Co is one of the oldest producers of leather jackets in Haining. In its 28 years of existence, the company saw peak sales during the mid-1990s, and a downturn since the beginning of 2000.

Realizing that consumers value the design of leather jackets, the company started to invest more in introducing designers, both local and international.

"Now, we have more than 40 designers in Haining, in one of the largest designer groups there. They work on thousands of leather jackets every year," said Zhu Weixiang, general manager of Xuebao.

In addition to the Haining-based designers, Xuebao also invites designers from France and Italy to provide samples every season.

"The top European designers are the closest to the original center of fashion and they can gauge the fashion trends for the next year from experience. This is what most of our designers lack," said Zhu.

According to Zhu, Xuebao's European designers send sketches of their designs to the company every season, and local designers and experts discuss whether they are suitable for the Chinese market.

"The European designers really have a good sense of fashion, but sometimes, their ideas do not necessarily work in the Chinese market. That is why we also have a strong local design team to improve on their ideas," he said.

Thanks to its strong design capability, Xuebao has attracted OEM (original equipment manufacturer) orders from big brands internationally.

"OEM today is not like what it was in the past, when brands gave us the samples and we copied and produced. Today, they come empty-handed, picking directly from our samples. So the better our designs, the more orders we get," said Zhu.

But the 50-odd European designers at the Union des Designers Mode et Maison are far from enough for the nearly 3,000 leather and fur companies in Haining. The Haining Leather Market, the main motivator of the industry, is also making efforts to cultivate more local designers.

Last April, a team of 26 Chinese designers visited Europe as part of a two-week study course organized by the leather market and the French union. They visited a leather trade fair in Bologna, Italy, and also attended fashion seminars in Paris.

"The trip was meant to provide an opportunity for the designers to discover the features they lack in fashion design, and look for ways to improve," said Zha Jialin, deputy general manager of the leather market.

The local government has also realized the importance of the industry and has designated it as one of its pillar industries.

"We expect Haining to account for 60 percent of China's leather and fur industry by 2015. Raising competitiveness through stronger and better fashion design is the key to the drive," said Lin Yi, the Haining Party chief.

The French design team has been largely supportive of the city's plans. The union has invited designers working for reputed fashion brands such as Chanel and Dior to give lectures and has also arranged visits to fashion institutes and colleges.

Glasman said the union will continue to organize more trips to improve the skills of local designers.

Zhang Sifeng, president of Haining Leather Designer Association, said the number of designers that signed up for the European trip was beyond expectations and reflects the growing interest in the sector.

"Some people and companies thought leather and fur are only for winter wear. After studying the European practices, an increasing number of companies have realized that with proper design, leather products can also be used in spring, autumn and even summer. This has helped dispel the notion that leather and fur wear are season-restrictive," said Zhang, who is a designer himself and runs a leather company in the city.

Haining's efforts to upgrade its leather and fur industry have also attracted the attention of fashion experts.

Xiao Wenling, dean of the Department of Textile and Fashion Design at the Academy of Art and Design at Tsinghua University, said innovation and design have brought vibrancy to the traditional industry in the city.

"It is not hard to believe now that the leather and fur industry in Haining will have a major say in the global market," he said.

The department is joining hands with the Haining Leather Market for fashion design programs.

But even as the industry chugs along, there are still bottlenecks, such as the acute scarcity of good designers for longer periods of work.

"We have just two full-time designers now, which is far from enough," said Zhang Xu, general manager of Mibaidun Fur Co Ltd.

The company, which made its public debut during last year's Shanghai Fashion Week, is searching desperately for experienced designers.

According to Haining Leather Market, the city now has 2,000 designers, but there are more than 3,000 companies vying for their services.

"We have set up a fashion center for independent designers who are keen to settle in the city. We offer houses as workshops and if they want to establish their own brands there are preferential policies," said Zha.

The companies are also trying to attract more designers by offering higher salaries. An increasing number of leather manufacturers in the city are sending their designers to participate in fashion weeks and fashion competitions.

"You can see the changes in this industry from our slogans during the different periods. In the beginning, our slogan was 'Go to Haining for a leather jacket', but now, it is 'I see the world, lead the fashion,'" said Zha.

BEIJING - The United States should form a united front with China to combat European Union carbon-emission taxes, a senior executive with Boeing Co said on Friday.

"Without a doubt, the united front between China and the US on what action to take would be quite powerful," said Marc Allen, president of Boeing China, talking about the EU Emission Trading Scheme.

Under the scheme, which took effect on Jan 1, airlines must buy additional allowances for emissions beyond a set level or face fines. However, the charges have been opposed by a number of countries, including China and the US.

On Monday, the Civil Aviation Administration of China issued a ban on all domestic airlines complying with the EU scheme to impose charges on carbon emissions from flights to and from Europe.

"The Chinese government officials with whom I spoke are confident that the US will follow them and take similar action," said Allen.

He said the US government has already shown its opposition to the European scheme, although the company does not know what action the US government will take.

The US Congress is expected to pass a bill to oppose the scheme covering US carriers, Reuters reported on Feb 1.

Meanwhile, the Chinese authorities also need to get support from the US, which should be the main force to oppose the taxes, said analysts.

After all, US airlines operate more routes in Europe and they will be charged more than Chinese carriers, said Li Lei, an aviation analyst at CITIC Securities Co Ltd.

As an aircraft manufacturer, Boeing believes that the problem of carbon emissions should be resolved globally through advanced technology rather than imposing taxes.

"What the ETS is doing is just the opposite of the right way," Allen said.

He said Boeing is working on developing more energy-efficient aircraft, such as the 787 Dreamliner, which reduces fuel consumption by 20 percent more than any other aircraft of comparable size.

But the B787, the delivery of which was delayed by three years, encountered a problem recently after it was revealed that some spacers - called shims - on the tail section, had been installed incorrectly.

There's no immediate safety issue and the problem will not slow production, said Jim McNerney, chief executive officer and chairman of Boeing, when he responded to concerns on his blog.

"The delivery of the 787 to Chinese carriers will not be affected by the problem either," said Allen.

China Southern Airlines Co will be the first Chinese carrier to take receipt of the 787 and the first delivery will happen in the second half of the year, Allen said.

FUZHOU - A pharmaceutical company in Fujian province that makes medicines from bear bile has again been targeted by animal rights activists as it makes a second attempt to become publicly listed.

Guizhentang Pharmaceuticals, founded in 2000, extracts bile from captive bears to make traditional Chinese medicines. The company keeps 470 bears and hopes to increase the number to 1,200, according to its website.

Bai Yipeng, founder of China SOS Help, a non-government organization whose activities include advocating for animal rights, said on Wednesday he had formed an alliance with others to buy shares of the drug company in order to stop it from going public.

Guizhentang could raise up to 120 million yuan ($19 million) with the initial public offering, Bai said, more than twice the estimated value of its first IPO attempt - 50 million yuan - last year, according to China Securities Journal.

On Feb 1, the China Securities Regulatory Commission released a list of 220 companies awaiting approval by the Growth Enterprise Board to trade on the Shenzhen Stock Exchange. Guizhentang was one of them.

"Our social morality has come to a crossroads. Whether the company goes public or not is a matter of life and death for the suffering bears," Bai said on his micro blog on Wednesday. He added that the fundraising would help the company expand its farm where the bears are kept and increase the number of bears in captivity.

Bai said he had sent the tender offer to three big investors in the drug company, and it might be received in one or two days. He hoped those shareholders would make the "right" decision by accepting the offer within 10 days.

"If we succeed in buying enough shares as a large shareholder with a right to veto business decisions, we will strategically make the drug company diversified in its production and abolish bile extraction from bears," he said.

The company said it hasn't got the offering proposal from any individuals or activist groups yet.

"So far we haven't received documentation from Mr Bai about the proposal to buy shares," said an employee surnamed Xu in the company's administrative office.

Xu said he couldn't say whether opponents will stop the company's IPO plan or not, and that he would need permission from the company's senior executives, who can't immediately be reached for comment.

Guizhentang's attempt to go public last year triggered furious protests from animal rights groups and netizens who accused it of cruelty in the captive breeding of bears and method of bile extraction. The company argued that the method was legal and has replaced the traditional method, which was to first kill the bears.

On its website, Guizhentang says it can collect bile in five to eight minutes without causing the bears pain.

The company is expected to use the funds raised by the IPO to expand the size of its farm and the number of its bears to 1,200.

Guizhentang is not the only drug company extracting bear bile for medicines. Another such pharmaceutical company, Kaibao Pharma Co in Shanghai, was listed in January 2010.

"The company's move got the attention of animal activists several months later. There were not so many people concerned about the practice of extracting bear bile at the time," said Zhang Xiaohai, director of external affairs of Animals Asia Foundation's China Office, which is based in Hong Kong.

"But now, we (the foundation) are inspired, because more people are concerned not only about the cruelty, but also related industries," he said.

Bear bile has been used in traditional medicine in China and other Asian countries because it is thought to have benefits, such as detoxification, cleansing the liver and improving vision.

In the 1980s, captive breeding replaced the original method of killing wild black bears to get the bile.

By 2006, China had 68 registered bear farms where about 7,000 black bears were kept for bile extraction, according to the State Forestry Administration.

The number of bear farms increased to 98 in 2011.

Bear farms can now be found in 11 provinces, such as Jilin, Heilongjiang, Sichuan, and Yunnan, according to the foundation.

Medical professionals say bears are subjected to crude surgery that leaves permanent wounds in the abdominal wall and their gall bladders, causing serious diseases and even killing many of the animals.

As parts of its efforts to end bear farming in China, the foundation has rescued 277 black bears from farms in the past 10 years.

As of January, 111 of the rescued bears had later died, and 38 percent of those from liver cancer, according to the foundation.

"The bile extracted from the sick black bears is very likely to carry a cancer cell, which could trigger health risks when ingested by humans," said Wang Shengxian, head of the pathology department at Chengdu Military General Hospital.

"Years of research showed that we can produce drugs with substitutes that have the same properties as the drugs with bear bile," said Jiang Qi, former vice-president of Shenyang Pharmaceutical University.

So far, government authorities have not approved the substitute drugs for sale on the market, Jiang said.

"The relationship has grown significantly over the past three decades thanks to the collaborative work of the governments, business communities, and other stakeholders in both countries," its president John Frisbie said in a statement.

Muhtar Kent, chairman and CEO of Coca-Cola, a USCBC member, said the United States and China have a tremendous opportunity to build stronger economies and improve people's lives through joint efforts.

The council pointed out that more work needs to be done to develop commercial ties between the two countries.

Hubei, Hunan, Jiangxi cooperation plan could benefit 90 million people

WUHAN - More than 90 million people will benefit from comprehensive business cooperation jointly launched by Hubei, Jiangxi and Hunan provinces, Li Hongzhong, Party chief of Hubei province, said on Friday.

Addressing a conference in Hubei's provincial capital Wuhan, Li said the agreement reached by leaders of the three provinces is a sign that cooperative efforts to establish a new urban hub in Central China have officially begun.

According to Li, the blueprint will strengthen business cooperation between three capital cities - Wuhan, Changsha and Nanchang - which form a natural triangle where more than 90 million people live, nearly 8 percent of China's population.

The zone had a total economic output of 2.5 trillion yuan ($397 billion) and maintained 7.3 percent of the country's gross domestic product in 2010.

More than 129 of the top 500 global companies have either investments or offices in the region, he said.

"The three provinces will work together to build a new urban hub, which will play a significant role in optimizing the region's productive forces," said Lu Xinshe, governor of Jiangxi.

Their cooperation "will greatly promote the economic development of the middle reaches of the Yangtze River", Lu said.

Wang Yuqi, director of the Jiangxi Academy of Social Sciences, said at the conference that the cooperation is expected to build a fourth significant urban hub in China, after the Bohai-Rim Economic Circle (Beijing-Tianjin-Tangshan); Yangtze River Delta (Shanghai-Nanjing-Hangzhou), and Pearl River Delta (Guangzhou-Shenzhen-Zhuhai).

"It can be estimated that competition among urban hubs will become more evident," said Wang.

The idea of building an economic zone in Central China was first raised in 2003 by Qin Zunwen, a professor of economics from the Hubei Academy of Social Sciences. "As long as the three provinces work together, a competitive urban hub is well in sight," Qin said.

In 2010, the State Council issued a regulation on the importance of developing urban hubs in the three provinces, providing a foundation for the close cooperation among the provinces.

Hunan and Hubei both contributed more than 1.9 trillion yuan in gross provincial product last year, according to provincial data, both overtaking Shanghai.

Wang Xiang, 29, a real estate project manager in Wuhan, said based on his experience, the investment environment in the city still needs improvement, compared with that in eastern coastal cities.

Wang Yan, 23, a Jiangxi woman who is studying in Wuhan, said that the transport system between the two regions is convenient. "We can travel back and forth within a day."

But some people say the initiative needs further discussion and study.

"Regional development should be in line with national strategy, so we support further discussion (about the cooperation)," said Fan Hengshan, director of the National Development and Reform Commission's regional economy department.

"The central cities are finally getting their chance," said Ye Yonggang, a professor of finance from Wuhan University. "But the success of the plan still depends on different factors."

Ye said effective cooperation is based on more than just an announcement. "The most important job is working out how to have each party get real benefit from the cooperation."

GUANGZHOU - The Guangdong provincial government has mapped out a plan to crack down on economic crimes including monopolizing, counterfeiting and commercial bribery, officials said at a conference in the provincial capital on Thursday.

The crackdown, meant to create a favorable market environment and maintain normal market order, is urgent because the province is in a critical period transforming and upgrading its economy, said Wang Yang, Party chief of Guangdong.

"Monopolizing, counterfeiting and commercial bribery are the 'cancer' of the economy," Wang said, adding that the criminal activity damages social stability, threatens people's lives and property and is hated by the public.

The conference also focused on establishing a credit system and a market supervision system.

Enterprises in South China's economic powerhouse Guangdong face challenges from the complex domestic and global economic situations this year. According to Wang, the crackdown on economic crime and establishing the market supervision and credit systems will help enterprises overcome the challenges by reducing the cost of transactions.

Guangdong Governor Zhu Xiaodan advised the government to strike hard on big cases first, to deter others. Zhu also asked all departments of the government and the public to support the crackdown.

Public security agencies in Guangdong launched a campaign against counterfeiting and violations of intellectual property in October 2010.

By October 31, 2011, more than 2,000 cases of counterfeiting had been solved, 2,511 counterfeiting operations destroyed and 70 websites for selling counterfeits shut down. Authorities broke up 618 gangs and arrested 2,429 people across the province.

That's after the announcement of a $1 billion fund focused on investing in the sector.

The Import-Export Bank of China and the Canada-based Canaccord Financial Inc announced the move on Thursday during a five-day visit to China by the Canadian Prime Minister Stephen Harper.

"The China-Canada Natural Resource Fund demonstrates the importance of Canadian financial markets in the development of resources companies and the continued expansion of Chinese participation in natural resource projects around the world," Paul Reynolds, president and CEO of Canaccord Financial, told China Daily.

The fund aims to invest in both public and private natural resources and energy companies and projects in Canada, and in companies that are listed, or have the potential to list, on the Canadian stock exchange.

The Chinese and Canadian sides will each own 50 percent of the fund. Investment will primarily come from individuals, investment groups and sovereign wealth funds.

Howard Balloch, the former Canadian ambassador to China and chairman of Canaccord Genuity Asia Ltd, the capital markets division of Canaccord Financial, said that the company has been in discussions with a number of potential investors and the first closing will be in the first half of this year.

Balloch said Canaccord Genuity helped China's third-biggest steelmaker, Wuhan Iron and Steel (Group) Co, invest in an iron ore program in Canada, and participated in the acquisition of the Canadian oil and gas company Daylight Energy Ltd by China Petroleum & Chemical Corporation, also known as Sinopec, for C$2.2 billion ($2.1 billion).

"I have been living in China for 16 years and the economic structure of the country has undergone a fundamental change," Balloch said. "When I was an ambassador here, China was exporting coal and petroleum and now it is a major consumer of natural resources."

In 2011, China overtook Japan to become the world's largest importer of coal. According to statistics from the General Administration of Customs, China's net imports of coal were 168 million tons in 2011, a rise of 15.2 percent, year-on-year.

Net oil imports to China, the world's second-biggest consumer of the fuel, rose to 264 million metric tons, an increase of 7.7 percent from 2010.

"Canada has abundant natural resources and a center of financing for natural resources companies," said Balloch.

More than 400 natural gas and petroleum companies and more than 1,600 mining companies globally had listed on the Toronto Stock Exchange and TSX Venture Exchange by the end of 2011, according to data from TMX Group.

In a speech at a business forum on Thursday, Vice-Premier Li Keqiang made a pitch for China as a buyer of Canadian energy.

Canada is one of the countries with large reserves of energy and resources. China is a stable and reliable consumer market, he said.

Li added that both sides should facilitate large-scale cooperation in oil, gas and mineral resource projects, in addition to increased collaboration on nuclear and clean and renewable energy sources.

On Wednesday, Harper and Premier Wen Jiabao oversaw the signing of agreements worth $3 billion to boost investment and promote energy exports to China.

The visit highlights Canadian efforts to diversify energy sales. The US market currently absorbs 97 percent of Canada's oil exports.

AP contributed to this story.

BEIJING/SHANGHAI - China's exports in January registered a decline from a year ago - the first monthly fall in more than two years - as demand from the debt-stricken European markets continued to shrink and the week-long Chinese New Year holiday hurt global purchases.

Economists said the decline is an isolated case and the country's exports will rebound in February.

Exports declined by 0.5 percent year-on-year to $149.9 billion last month, and imports dropped by 15.3 percent to $122.7 billion, leading to a trade surplus of $27.2 billion, according to statistics from the General Administration of Customs on Friday.

The administration explained that fewer working days in January resulted in the export decline. "Disregarding the seasonal factors, China's exports posted double-digit growth," it said.

Experts differ on the reasons for the decline. "Obviously, the fall should be attributed to seasonal distortions and the week-long holiday," said Wang Tao, chief economist with UBS AG in China.

However, Li Wei, an economist from Standard Chartered Bank PLC in Shanghai, held a different view. "It's hard to tell if it is a reflection of the slackening global demand or the result of seasonal distortions."

In January, China's exports to the European Union, the largest destination for Chinese-made goods, fell by 3.2 percent year-on-year, mainly dragged down by a drop of 28.2 percent in shipments to Italy.

Exports to Hong Kong fell by 16.4 percent year-on-year, while those to Taiwan decreased by 28.2 percent.

Sagging demand

Many small and medium-sized enterprises, especially those in light industry, said they are suffering from sagging demand in the United States and the European markets. In addition, the lower-cost Southeast Asian markets are taking orders away from Chinese companies.

"It's getting harder to obtain orders and the profit margins are narrowing while cost pressures are mounting," said Ni Bayi, chairman of a shoe-material company in Wenzhou in Zhejiang province.

"Everything is getting higher in price ... raw materials, labor and land. The appreciation of the renminbi is also adding to our difficulties," Ni said.

Since late last year, Chinese exporters have been complaining about the worsening business environment both at home and abroad, represented by shrinking global demand, especially in the developed markets, a rising yuan, and higher labor costs.

On Wednesday, the State Council, China's cabinet, said in its new guidelines on promoting employment that China's minimum wage will register annual growth of more than 13 percent from 2011 to 2015.

The yuan advanced to an 18-year high on Friday, standing at 6.2937 against the greenback.

Premier Wen Jiabao said last week that China will try to maintain basically "stable" foreign trade policies, adding that any adjustments should be more "encouraging than restrictive".

"Exports will rebound in February, turning to growth, as the world economy is not as bad as we had expected," said Wang.

Economists said the economic recovery in the US is gaining ground, after figures were released that showed the country added 243,000 jobs in January.

According to the Chinese customs, the country's exports to the US surged by 5.4 percent year-on-year in January. Meanwhile, exports to Japan rose by 6.1 percent, while those to South Korea increased by 9.2 percent.

However, experts were not optimistic in the longer term as they believed increasing European debt woes will drag on demand.

"One thing is for sure, China's exports will decelerate after the second quarter," Li said.

In January, China's imports fell for the first time since October 2009, fueling concerns over whether domestic demand can sustain and support the global economy.

Under to the plan, China aims to keep population growth rates within 0.8 percent in key poverty-relief counties by 2015, a move that it hopes will see people's living standards improved. By 2020, birth rates in these counties should be kept low and steady.

The plan was jointly issued by the National Population and Family Planning Commission and the State Council Leading Group Office of Poverty Alleviation and Development.

"China's population development is in a significant changing period and affected by population structure and quality. And the large population and rapid growth also leads to regional poverty," it said.

While calling for the promotion of free pre-pregnancy examinations in key counties, the plan requires local authorities to integrate resources based on local realities and transform economic development to safeguard and promote people's well-being.

"The birth rate in poverty stricken areas has been steadily reducing and population growth effectively curbed," the plan said.

In addition, the size of the poor population has been reduced in rural areas and the income level raised, according to the plan.

The minimum monthly salary for full-time workers will be raised to 860 yuan (140 U.S. dollars) as of April 1, the Gansu provincial bureau of human resources and social security said in a statement.

The bureau said it aims to hike the minimum monthly wage to 1,500 yuan by the end of 2015 to help bridge a widening income gap.

Severe labor shortages, sporadic strikes and rising living costs in cities have prompted wage hikes over the past two years.

China as a whole aims to increase the nationwide minimum monthly wage by 13 percent annually before 2015, according to a central government plan announced on Wednesday.

Twenty-four provinces, autonomous regions and municipalities raised their minimum monthly wage by an average of 22 percent last year, according to Yin Weimin, minister of human resources and social security.

The southern manufacturing city of Shenzhen led another round of wage hikes this year. It raised its minimum monthly wage by 13.6 percent to 1,500 yuan, the country's highest, starting this month to woo migrant workers from inland regions to help ease labor shortages.

Experts say rise shows market has confidence in Chinese economy

BEIJING - The yuan rose to an 18-year-high on Friday, climbing as Vice-President Xi Jinping prepares to step onto a plane for his trip to the United States next week.

The People's Bank of China set the yuan's central parity rate against the US dollar at 6.2937 after the rate rose for two consecutive trading days, according to the China Foreign Exchange Trading System.

"The exchange rate will see more fluctuations, although the positive outlook for the Chinese economy has sparked expectations of a strengthening of the currency," said Zhuang Jian, senior economist with the Asian Development Bank.

Zhuang predicted the yuan may rise about 3 percent this year. However, that is slower than the 6 percent against the dollar in real terms last year.

Deputy Foreign Minister Cui Tiankai said on Thursday that Xi's visit is an important opportunity to enhance mutual trust between China and the US.

Cui also expected the visit would help remove hurdles from Sino-US trade, including restrictions on US exports of certain high-tech products and obstacles to Chinese investment in the US.

Xi is scheduled to visit the US next week, where he will meet President Barack Obama and other high-level leaders.

"The rise largely reflects market supply and demand," said Zhang Jianping, senior economist with the Institute for International Economics Research under the National Development and Reform Commission.

He said the market expects the Chinese currency to rise because the economy remains positive and the government has adopted a rather tight monetary policy.

Il Houng Lee, senior resident representative at the Beijing office of the International Monetary Fund, said the currency will go forward over the medium term but in the short term it will see more ups and downs.

A report released by the IMF's Beijing office on Monday said upward pressures on the currency have diminished recently.

However, as the current account still has a sizable surplus of US dollars, and foreign direct investment remains strong, China is supposed to resume the strong pace of accumulation of foreign-exchange reserves, according to the report.

The country's foreign-exchange reserves increased by $11.7 billion between October and December, regardless of changes in the exchange rate and asset prices, the State Administration of Foreign Exchange said on Friday.

China's capital and financial account suffered a deficit of $47.4 billion in the fourth quarter of 2011, from a surplus of $66.2 billion in the third, indicating net capital outflows. Analysts said the exchange-rate fluctuations are closely connected with the crisis-affected economic scenario overseas and with speculative activities.

Pedestrians walk past the People's Bank of China in Beijing. The central bank statistics suggest that Chinese banks lent less than expected in January and the broad measure of money supply hit the lowest level in more than 11 years. [Photo / Bloomberg]

BEIJING - Concerns over market liquidity and economic recession have become more acute after banks lent less than expected in January and the broad measure of money supply hit the lowest level since June 2001.

That's according to data released by the People's Bank of China, the central bank, on Friday.

Chinese lenders lent a total of 738.1 billion yuan ($117.3 billion) in the first month of 2012. "That's a lower figure than our expectations and the records over the years. Between 2009 and 2011, new yuan loans in the first month of the year were all above the level of 1 trillion yuan," said E Yongjian, an economist at Bank of Communications Co Ltd.

He said the main reason for the decline was that the authorities had strengthened controls over the pace of lending. "And the declining credit demand from enterprises, as overseas demand dropped and export orders fell, also accounted for the lower figure."

While lending shrank compared with previous years, 800 billion yuan flowed out from banks in January and money supply indicators tumbled.

M2, a broad measure of money supply that covers cash in circulation and all deposits, grew by 12.4 percent year-on-year, down by 1.2 percentage points from the end of 2011.

Meanwhile, M1, a narrow measure of money supply which covers cash in circulation plus demand deposits, increased by 3.1 percent from a year earlier, 4.8 percentage points lower than the growth rate at the end of 2011.

"These numbers are a huge disappointment," Yao Wei, China economist at the French bank Societe Generale SA, was quoted by Reuters as saying.

She said that the main reason for the fall lay in a seasonal decline in deposits and the "low lending number" caused by two factors - the central bank doesn't want banks to increase lending too much in the first month of the year, and many banks are probably constrained by the loan-to-deposit ratio, which technically means they can't provide any more loans.

Yao said the central bank is saving some bullets to shore up the economy in the future, but if it decides to ease monetary conditions more obviously, the policy should be targeted at the loan-to-deposit ratio, the real binding constraint for lenders, instead of the required reserve ratio.

E said the January figures carry signals from the regulators that the government requires banks to lend at a moderate pace and that credit supply this year will not be overly loose.

"We maintain our prediction that growth in new yuan lending throughout the year will stand at somewhere between 8 and 8.5 percent, a moderate easing compared with 2011." Banks lent a combined total of 7.5 trillion yuan last year.

E also predicted that the reserve requirement ratio will be lowered twice this year, each time by 0.5 percentage points, and interest rates would remain stable.

While pledging to further improve laws and regulations concerning government procurement, China will respond actively to negotiations for entry to the Government Procurement Agreement (GPA), according to a MOF document that outlines the procurement work for 2012.

The GPA is a voluntary pact within the World Trade Organization that allows member countries to bid for public contracts in each other's markets.

China entered its first offer to join the pact in 2007, but it was turned down as the offer did not include local governments' spending.

Meanwhile, the document said the year's key procurement projects will include the nutrition improvement in rural areas and the purchase of school buses, which have triggered nationwide concerns.

It also vowed to place an emphasis on emission reductions and environmental protection in the purchases.

Regarding the purchase process, the ministry said it will strengthen management by strictly laying out the budget and stipulating the standards.

Industrial output in Guangdong surged 20.9 percent year-on-year in 2011, but industrial profits only rose 2.4 percent, sharply down from over 30 percent annual growth in 2010, the local bureau of statistics said in a statement.

In a government work report last month, Guangdong Governor Zhu Xiaodan urged optimizing the economic structure and helping local enterprises move up the value chain to boost profit growth.

In Zhejiang, industrial profits rose 9.9 percent year-on-year, 37.4 percentage points lower than the growth pace in 2010, according to the Zhejiang provincial bureau of statistics.

The statistics agencies compiled the industrial profit figures using data collected from industrial businesses with at least 20 million yuan ($3.18 million) in annual sales revenues each.

Meanwhile, small and micro-enterprises in the Yangtze River and Pearl River deltas and the economic belt surrounding the Bohai Sea also were squeezed by the credit crunch, rises in costs, and declines in orders, according to a survey by e-commerce group Alibaba and Peking University's National School of Development.

The small and micro-enterprises urged the government to tame inflation to reduce the impact of rises in material and labor costs on profitability, and also cut taxes to reduce their operation burden, according to the survey.

Large French windows flood the room with natural light and furniture in complementary colors dot the office. Mannequins attired in the company's latest designs are scattered around Zhu's desk.

Zhu Weiming, founder of the leather wear brand Natural Gift

"I was born to be a designer and I established the company not only to make my own designs, but also to provide a platform for young designers to showcase their talents. I know the disappointment of being a designer who has come up with a really great idea, but failed to get the required support from his employer," said Zhu.

Zhu said that almost all his design ideas were rejected when he was working at his uncle's leather jacket factory in 1998, because his uncle did not want to take any risks.

"I always believed that leather wear should go beyond necessity. It should reflect the latest fashion and the style of the people who wear the items. Hence, I decided to be my own boss and work out the designs that were in my mind," he said.

Zhu established his own factory in 1999, with 100,000 yuan ($15,800) he borrowed from his uncle. In 2005, he created his own brand, Natural Gift, and positioned it as casual fashion leather wear.

It was the hardest time in Zhu's career. Companies manufacturing leather jackets usually receive their orders from August onwards, but Zhu's company had no orders until the end of September.

"At that time, all leather wear looked the same, and most people were reluctant to accept new styles. Many people advised me not to take the risk, but I insisted," he said.

Zhu proved that his determination was justified. After his first order sold out, the company saw its sales revenue grow by 20 percent every year.

As one of the leading leather wear companies in Haining, touted as China's center of leather products, Natural Gift is also representative of fashionable design and has made its presence felt at a vast number of fashion shows.

"The products sell very well, even though the prices are higher than average," said Zhang Shigang, who runs a fashion shop that sells Zhu's leather wear in Beijing's upmarket Sanlitun area, and only deals in haute couture or extraordinary costumes with unique designs.

Most of the products that Zhang sells are limited editions of brightly colored products with prices starting at 10,000 yuan.

"They can stand out even in a building like this. Sometimes when I get new samples, I have to replenish them the next day due to the huge demand," he said.

Pei Xiaoqin is one of the chief designers in Zhu's company. She has been in Haining for more than 10 years.

"I have witnessed how people are now attaching greater importance to original designs. I found my values here at Natural Gift because I am given opportunities to work out whatever idea I come up with. This is the biggest advantage of having a boss who is also a designer," she said.

Zhu said his intention is to give a free hand to the designers if they come up with a new idea. "Some of the products are not for sale, but only for art collections. They are so beautifully designed that I cannot give them up," he said.

But he is also very strict about the style of his products. If a piece of new design has not been sold in 10 days, it goes off the shelf.

As an increasing number of Zhu's designs entered public life, Natural Gift also managed to attract the attention of the showbiz fraternity.

Zhu is now cooperating with the fashion brand of Jay Chou, China's top pop musician, and is also planning to work with the fashion brand of Andy Lau.

"Cooperating with famous stars is one of the easier ways of getting publicity and this is only a starter for my company in this field," he said.

Apart from designing, Zhu also considers marketing strategies to be of prime importance. He changes models and photographers every year to constantly keep fresh faces and minds on his clothes. He also attends business conferences and forums to attract publicity for his company.

"During the 2011 Halter Financial Conferences which was held in Guangzhou, I met the former British prime minister Gordon Brown and gave him one of our company's products as a gift. It does not really matter whether he wears it or not. It is an achievement for me that he is acquainted with the name Natural Gift," Zhu said.

The especially harsh European winter is responsible for the increased demand for down products, bringing greater profits for businesses in the city of Xiaoshan, a major manufacturing center for down products.

"Our company received rush orders from Italy in late January and they were willing to pay air freight charges," said Zheng Fangli, marketing manager of Rongda Down Products Co Ltd.

However, the orders were received just as the Chinese Spring Festival holiday was ending, with hundreds of thousands of migrant workers remaining in their hometowns.

"To guarantee delivery, we had to call workers located around the country and ask them to return to the factory to work," Zheng said.

The company promised to pay round-trip transportation costs for the workers. Other down companies have offered salary bonuses to encourage their workers to come back early.

The province's down companies have dealt with dim export prospects since 2009, largely because of the global economic downturn. Official data showed that China's exports in January dropped 0.5 percent year-on-year.

However, down factories in Zhejiang have received significantly larger export orders than in months past. Some companies have had to cancel orders due to a lack of labor, while others have had to wait for their factories and logistics companies to go back into operation following the Spring Festival holiday.

The report said the gap between China's three State-owned oil giants, namely China National Petroleum Corporation (CNPC), Sinopec Group and China National Offshore Oil Corp (CNOOC), and their foreign competitors remains huge in terms of percentage of overseas business and "transnationality Index (TNI)", a means of ranking multinational corporations by the ratios of foreign assets, foreign sales and foreign employment to their total amount, local newspaper Beijing Times reported Friday.

The TNI of the three oil giants average only 30 percent, about 50 percent lower than the international oil giants such as BP and Exxon Mobil.

The report is drafted by a think tank of CNPC.

The report also found China is becoming increasingly dependent on oil imports. In 2011, imported oil occupied more than 55 percent of the total consumption. The figure is expected to top 57 percent in 2012 as more than half of the imported oil is from the volatile Middle East.

The city will also renovate 15 million square meters of housing to add quake-proofing and energy-saving features, said Yang Bin, director of the Beijing Municipal Commission of Housing and Urban-Rural Development.

Yang also said the city will maintain existing housing curbs until prices have been brought to "reasonable levels."

China's housing transaction slumped after the government implemented new policies in early 2011 to curb speculation, including increased deposit requirements and second-home purchase restrictions.

Beijing started construction on more than 230,000 low-income housing units in 2011.

The plant, owned by Nigeria-based cement giant Dangote Group, was formally unveiled Thursday evening by Nigerian President Goodluck Jonathan at Ibese, in southwest Nigeria's Ogun State.

Sinoma signed a $1.6-billion contract and $1.177-billion letter of intent with Dangote Group in February 2008 to build the plant, which will have an annual capacity of 6 million tons and is expected to make cement more available and affordable in Nigeria.

Jonathan said the country was set to be an exporter of cement under the 2002 backward integration policy introduced by former President Olusegun Obasanjo.

Jonathan said his administration would continue to encourage the private sector in the development of the nation's economy.

Dangote Group chairman Aliko Dangote said the new plant would generate 7,000 direct jobs and many indirect jobs, noting it was the biggest cement factory in sub-Saharan Africa.

"With the commissioning and full operation of the plant, Nigeria will start exportation of cement to African countries and beyond in a month," he said.

Sinoma senior director Wu Shoufu told Xinhua that local workers had made a great contribution to the company's rapid completion of the project.

More than 2,000 Nigerians had been involved in the building process, he said.

"We are glad that this is happening," he told Xinhua.

Qiu Jian, China's acting consular general in Lagos, said cooperation between China and Nigeria in various aspects had benefited thousands, if not millions, of citizens of the two countries.

"China and Nigeria need each other economically and politically, and we attach great importance to developing the bilateral ties from a strategic perspective," the diplomat said.

The benchmark Hang Seng Index traded between 21,002.33 and 20,703.79. Turnover totaled HK$77.26 billion ($9.96 billion).

Food-related use of banned pesticides, veterinary medicine, and illegal additives, will also be targeted, said Chen, in a recent interview with Xinhua, referring to key tasks of food safety risks control for 2012.

Meanwhile, the country will increase monitoring of radiation levels in food in response to the Fukushima nuclear accident in Japan, said Chen.

As a major move to prevent food safety accidents through improved scientific management, China established the National Food Safety Risk Assessment Center in October last year.

The government-funded organization is designed to offer technological support in assessing and monitoring food security risks and food safety standards, as well as issuing early warnings and communicating information regarding the risks and standards.

Calling for top-calibre food safety professionals to join the center, Chen said it will also strive to forge closer technological cooperation with researchers and universities in the sector and improve a nationwide food safety monitoring system.

According to Chen, there are a total of 1,196 sites across China for monitoring food safety risks arising from chemical pollutants, illegal additives and pathogenic microorganisms.

The index, together with the Shenzhen Component Index and the Shenzhen SME (small and medium-sized enterprises) Board Index, makes up the three core indices reflecting the performance of China's stocks listed on the Shenzhen Stock Exchange.

The ChiNext Board, which started trading on October 30, 2009, mainly lists high-tech companies and those with high growth potential.

The contract for February, the most actively traded, lost 2.8 points, or 0.11 percent, to close at 2,531.404.4 points, much lower than 2,351.98 points on the spot market.

The March contract was almost unchanged at 2,542.8 points, down 0.8 points. The June contract skid 1.4 points, or 0.05 percent, to 2,564.4 points.

The stock-index contracts, agreements to buy or sell the Hushen 300 Index at a preset value on an agreed date, are designed to allow investors to bet on and profit from gains or declines in the market.

The index futures was launched at the China Financial Futures Exchange (CFFEX) and started trading from April 16, 2010. The CFFEX has set the base value for all the four contracts at 3,399 points.

The "real name" policy requires the sender to show their identity card to the express delivery company whenever there is a parcel to be sent. The delivery person should then open the parcel and go through the items to make sure no illegal or dangerous objects are inside. The information of the items should also be put in to computer. The receiver is also requested to show the identity card when he signs the parcel.

Industry insiders said it can, to an extent, increase the security of express delivery services.

Shaoxing, a city in Zhejiang province, has been chosen as a pilot city to test the real name delivery policy.

The benchmark Shanghai Composite Index added 2.39 points, or 0.1 percent, to close at 2,351.98, capping this week's gains to 2.23 percent.

The Shenzhen Component Index advanced 30.23 points, or 0.32 percent, to finish at 9,590.95, registering a weekly rally of 1.63 percent.

Inner Mongolia holds China's largest coal reserves. It surpassed neighboring Shanxi province to become the largest coal producing region in 2010. Its coal output reached 908 million tons in the first 11 months last year, rising 26.6 percent from a year earlier.

The autonomous region's reserves of molybdenum, copper, and gold also grew by 37 percent, 25 percent, and 14 percent, the regional land and resources department said.

Inner Mongolia spent 5.86 billion yuan ($938 million) on exploration work last year and discovered 71 new mine sites, it added.

Fourteen government departments, including the Ministry of Commerce, the Ministry of Health, and the Administration of Traditional Chinese Medicine, will contribute to Traditional Chinese Medicine Service Trading Expansion Guidance, according to an executive of TCM industry association.

The policy will not only support Chinese who wish to open clinics overseas, but will also help introduce TCM to foreigners in China. TCM related services can now be found in more than 160 nations and regions around the world.

"The guidance will popularize and promote TCM culture overseas, which will further stimulate demand for TCM around the world," Liu Zhanglin, vice-president of the China Chamber of Commerce for Import & Export of Medicines and Health Products, told China Daily.

The industry association covers TCM clinics, pharmacies, Chinese acupuncture and massage, TCM culture promotion and education, as well as professional talent recruitment, Liu said.

China's exports declined by 0.5 percent year-on-year to $149.9 billion. Imports dropped by 15.3 percent to $122.7 billion, leading to a trade surplus of $27.3 billion, according to the General Administration of Customs.

Last month, China's exports to the European Union fell by 3.2 percent year-on-year, dragged down by a drop of 28.2 percent in exports to Italy.

China's exports to emerging markets slowed, as exports to the ASEAN markets increased by a mere1.1 percent. The nation's exports to the regions of Hong Kong and Taiwan decreased by 16.4 and 28.2 percent respectively.

Minister of Commerce Chen Deming said on the ministry's website that China's export picture was not optimistic for January, and that the pressures on China's exporters, especially the micro-companies, are growing.

Chinese Premier Wen Jiabao said last week that China will try to maintain "stable" foreign trade policies, adding that any adjustments, if made, should be more "encouraging than restrictive".

Chen echoed Wen's remarks by saying that China will try to maintain stability with its import and export policies, including tax rebates for exports, currency policy, and policy for the processing trade.

Since late last year, Chinese exporters have been complaining about the worsening business environment at home and abroad, particularly shrinking global demand from the developed markets, rising Chinese currency rates, growing labor costs, and raw materials.

China's yuan advanced to an 18-year high on Friday, standing at 6.2937 per dollar.

BEIJING - China's consumption of fossil fuels declined slightly in 2011, but the world's largest energy consumer still faces great challenges in optimizing its energy structure, said analysts.

Workers load coal at a railway station in Jiujiang, Jiangxi province. China's consumption of fossil fuels such as coal and oil dropped slightly last year, while its production of clean energy increased.[Photo/China Daily]

Non-fossil fuels accounted for 9.4 percent of China's overall primary energy consumption in 2011, compared with 8.7 percent in 2010, said Li Junfeng, deputy director of the Energy Research Institute of the National Development and Reform Commission.

The figure means the country needs to increase the proportion of non-fossil fuels in the mix by 0.5 percent annually in the coming four years to realize a government target of 11.4 percent by 2015, he said.

"The country is facing great pressure to reach the target because the efforts to build the nation's nuclear capacity have slowed," said Li.

The 21st Century Business Herald, a Chinese publication, reported recently that the proportion of China's non-fossil fuel in the overall energy mix declined to about 8 percent in 2011. However, Li said these data were inaccurate.

But he admitted that the pace of energy use restructuring has been sluggish,as the use of coal-dominated fossil fuels continues to increase.

The newly added capacity for coal output reached 95 million tons in 2011, and the country plans to add another 200 million tons in 2012, according to the National Energy Conference in January.

The country is caught between the urgent need to save energy and reduce greenhouse gas emissions and the desire to increase energy generation to sustain economic development.

Reducing dependency on coal by promoting the use of cleaner energy sources, including wind, solar and biomass, is one of the most feasible ways of solving the problems faced by the country, according to experts.

China plans to add 20 gigawatts of installed hydropower capacity in 2012, while prioritizing ecological protection and the relocation of residents in areas designated for major hydropower projects.

China's hydroelectric energy generation decreased by 3.5 percent year-on-year in 2011, which resulted in a great increase in the use of coal, said the China Electricity Council on Friday.

Nuclear power output increased by 16.9 percent and wind power increased by 48.2 percent year-on-year. Meanwhile thermal power production increased by 14.1 percent over the same year, it said.

Ren Dongming, deputy director of the Center for Renewable Energy Development at the National Development and Reform Commission, said the country will adopt more policies aimed at stimulating the development of renewable energy.

The government is also expected to launch the Renewable Portfolio Standard, a scheme that will require electricity suppliers to provide a minimum level of electricity generated from renewable sources.

The mechanism, which is still at the design stage but is expected to be unveiled soon, will focus on energy generated from sources such as wind, solar and biomass, said Ren.

China aims to cut the amount of energy consumed for every unit of GDP by 16 percent between 2011 and the end of 2015.

However, the country may have missed the target of a 3.3-percent reduction in energy consumption per unit of GDP in 2011, said Xie Zhenhua, deputy minister of the National Development and Reform Commission last week, although the data have yet to be released

China's energy consumption totaled 3.25 billion tons of coal equivalent in 2011.

The bond issuance period is set for February 10-14. The maximum value of the five-year bonds to be issued is 30 billion yuan ($4.8 billion).

The interest rate of the bonds is yet to be decided but will be based on agreement by the bank and underwriters.

According to a previous announcement by the bank on February 7, the money raised will be used for capital lending to the country's small and micro-sized companies.

Credit has long been a headache for the country's small companies as major state-owned banks tend to favor lending to large companies. The State Council last October pledged more support to small and micro-sized companies, financially and fiscally.

China's banking regulator has since November allowed banks including Minsheng, the Pudong Development Bank and the Industrial Bank to issue financial bonds tailored to support credit-lending to small and micro-sided firms.

In December, the Industrial Bank issued 30 billion yuan of five-year bonds with an interest rate of 4.2 percent.

Chinese government is committed to opening-up and does not make technology transfer a precondition for market access

Editor's Note: Minister of Commerce Chen Deming talks about China's trade and investment policies and the cooperation at sub-national levels between China and the United States in an interview with Bloomberg News. The following is the transcript:

Q: The investment environment in China has always been a topic of interest to foreign governments and companies. We've heard some companies complain about the forced transfer of technologies from foreign investors to their joint ventures in China. Is that the case?

A: Shortly after it joined the World Trade Organization, China conducted a comprehensive review of its laws and regulations governing foreign trade and economic relations. It revised those that did not conform to WTO rules and its accession commitments, and canceled stipulations for forced technology transfer. Taking this opportunity, I want to reiterate that the Chinese government is committed to the policy of reform and opening-up and welcomes and encourages, as always, foreign investment. Technology transfer and technological cooperation should be independently decided by businesses and will not be used by the Chinese government as a precondition for market access.

Q: Why has China been strengthening its commercial and investment ties with US states and big cities? Is that because US states are now more open to Chinese investment?

A: A stronger cooperative relationship between China and the United States is in the fundamental interests of both the Chinese and American people, and is also the consensus and shared will of people in all walks of life in both countries.

Thirty-eight and 176 sister relations have been forged between the two sides at provincial and city levels respectively. Exchanges and cooperation across the two countries in trade, investment, energy, the environment and cultural fields are being broadened at sub-national levels.

As the financial crisis is spreading and worsening, all countries are faced with the task of promoting economic growth and creating more jobs. China and the US are seeing greater interest, at both the provincial and city levels, in strengthening trade and commercial ties. Both Chinese provinces and cities and US states share this desire for cooperation. For 29 out of the 50 US states, China has been one of their top three export markets. Forty-five states increased their exports to China between 2007 and 2010, among which 10 states, including Vermont, Oregon and Montana increased their exports to China by over 100 percent. More than 30 investment and trade promotion offices have been opened in China by US states. Last year, the Ministry of Commerce of China set up a "US Pavilion" at the China Import and Export Fair, the biggest and most well-known trade fair in China, which hosted the governments and companies of some US states. They were invited to set up booths and display their products. The invitation was warmly echoed by the US side.

Closer communication and cooperation at sub-national levels serve as a solid foundation for a stronger friendly relationship between China and the US, as well as being a powerful driving force for bilateral trade and economic relations. We are hopeful that the comprehensive cooperation at sub-national levels between China and the US will enable the bilateral trade and economic cooperation to generate more benefits for both peoples.

Q: When visiting some trading companies in Guangzhou, Premier Wen Jiabao said export and import policies will maintain overall stability, should there be any change, it will be more of a support than restraint. Given lackluster demand from the US and Europe, what measures will be taken by the Chinese government to maintain a stable growth in exports?

A: China's foreign trade growth has slowed in the second half of 2011. The export figure in January does not make us optimistic and is expected to show negative growth year-on-year due to Chinese New Year and other factors. Chinese trading companies, particularly small and micro businesses, have come under growing pressure. Foreign trade, an integral part of the Chinese economy, is essential to people's lives and jobs. Premier Wen Jiabao has said on various occasions that the government will adopt measures to help businesses overcome difficulties in order to maintain stable growth in foreign trade.

First, we will keep the overall stability of our export and import policies. For example, we will keep the export rebate policy basically stable and speed up its implementation. We will maintain the overall stability of the renminbi exchange rate and relevant policies for the processing trade. Should there be any fine-tuning, it will be supportive rather than discouraging. Second, we will take concrete measures to ease the tax burden on trading companies and give more financial support. For example, we will speed up the pilot program for replacing the business tax with value-added tax for small and micro businesses and improve the structural tax reduction policy. We will introduce a credit-worthiness assessment and reward system for small businesses and encourage qualified commercial banks to give more credit to small and micro businesses. We will support small and micro businesses raising funds through the stock market and will give more support to export insurance. Third, we will intensify trade promotion. We will step up efforts to build business platforms such as e-commerce, professional markets, demonstration centers at home and abroad, and marketing networks etc. We will vigorously carry out trade and investment promotion events, such as the Canton Fair, China International Fair for Investment and Trade in Xiamen, Expo Central China, and China-Eurasia Expo.

While taking measures to stabilize exports, the Chinese government will continue to energetically expand imports and further balance foreign trade. For example, we will do more to remove unreasonable restrictions against imports, promote import facilitation and formulate financial policies to encourage and support imports.

The crackdown will focus on stamping out counterfeiting and commercial bribery to maintain normal market order as the province is in a critical time in transforming and upgrading its economy amid the complicated domestic and global economic situation, said Wang Yang, secretary of the Guangdong Provincial Committee of the Communist Party of China(CPC).

To create a favorable market environment, Guangdong provincial government will also establish a credit system as well as a market supervision system, Wang told a provincial work meeting on Thursday.

"Monopolizing, counterfeiting and commercial bribery are the 'cancer' of the economy," Wang said, adding that they damage the stability of the society and are hated by the people.

Governor Zhu Xiaodan called on the participation of all social forces in the crackdown to give hard strike on various crimes.

That controlling PM2.5 has been made top priority on the municipal government of Beijing's 2012 list of public welfare projects is indeed beyond many people's expectations.

Yet in spite of the loud public outcry for addressing the deteriorating local air quality, which slid to unacceptable levels late last year, the city is embarrassingly unprepared for such a challenge. After all, the city is yet to declare substantial headway in dealing with the much larger PM10 particles in the atmosphere.

The difficulty in controlling PM2.5 is compounded by the fact that facilities for monitoring the minute particles are just beginning to appear in the city, and there are no agreed standards in existence.

Still, we appreciate the municipal authority's resolve to tackle this issue. This indeed is an overriding concern shared by everyone living and working in the capital.

However, no matter how anxious we are for significant progress in the fight against the invisible fine particles, it will inevitably turn out to be a protracted process. There is no magic formula that will work wonders overnight.

But by committing itself to this difficult mission, the local authorities have displayed the courage to face complaints about slow progress.

And the decision doesn't look impromptu. It is based on a plan that will last to 2020, and has the support of specific environmental improvement steps.

The very first move, planting 133 square kilometers of forests in and around the city this year, does not seem impressive enough for dealing with PM2.5, which derives mainly from motor vehicle exhausts, fuel burning and building sites. But they may prove a useful defense against particulates blown into the city from neighboring areas.

Aside from this welcome greening project, however, all the other measures may meet resistance in implementation.

Disqualifying old vehicles, upgrading motor vehicle emission standards, remodeling boilers, and even imposing stricter dust-control standards at construction sites will raise a cost problem for the individuals and institutions involved.

Making better use of the public transport system is widely believed to be an effective way to reduce air pollution. But for public transport to appeal to more local residents, it has to be convenient enough. That, too, calls for substantial financial investment.

And since one-fourth of the PM2.5 particulates are of non-local origins, the city has to effectively engage surrounding areas in the process. It will not be fair for the city's neighbors to make sacrifices without due compensation. But to what extent, and in what manner, can the city contribute to the industrial restructuring its neighbors need?

This is a question the city cannot afford to ignore.

China and Latin American countries have deepened their economic ties over the past decade. According to China's statistics, two-way trade increased from $15 billion in 2001 to more than $ 200 billion in 2011, and Chinese investment in the region grew from $4.6 billion in 2003 to $43.9 billion in 2010. But there is still plenty of room for improvement.

China and Latin America both have benefited from their deepening economic ties. Latin American countries now get higher prices for their raw materials thanks to growing Chinese demand. In return, Latin Americans get inexpensive China-made goods. A steady supply of raw materials from Latin America has helped China's burgeoning economy and expanded the market for its finished products. In fact, China has already become the biggest trade partner of countries like Peru, Chile and Brazil.

While many developed countries are battling with low growth or even recession, China and Latin America nations experience robust growth. They are middle-income countries with a growing middle class, where internal demand is playing a bigger role in fueling economic growth. China and Latin American countries, however, need to strengthen their trade, investment and other economic ties, and expand their people-to-people exchanges.

Chile, Costa Rica and Peru already have bilateral trade agreements with China. But to increase trade, more Latin American countries have to sign similar agreements with China, and seek investment treaties to protect investment on both sides. Regional schemes, like the Asia-Pacific Economic Cooperation forum, which China and some Latin American countries are part of, and the Forum for East Asia-Latin America Cooperation, which has China and most of the Latin American countries as members, should be put to maximum use for even better results.

Perhaps in the not so distant future it is possible to see a Latin America-China summit on the lines of the Africa-China and ASEAN-China summits to bring leaders on both sides closer. After all, China's participation in the Inter-American Development Bank to help finance development projects in infrastructure and other fields is very much appreciated by Latin American countries.

The fact, however, is that some factors still obstruct the development of stronger economic ties between China and Latin America. For one, Chinese and Latin Americans lack proper knowledge of each other's language and culture, and thus temperaments. For business to increase, businesspeople on the two sides have to have a better understanding of their differences. Confucius Institutes are playing an important role in spreading Chinese language and culture in many Latin American countries. But Chinese people, too, should have knowledge of the languages and cultures of Latin America, to ensure which governments of the region should make greater efforts.

Increasing people-to-people exchanges, from the students to the highest level, is also necessary to help Chinese companies better understand Latin America and have a good relationship with the communities there.

Also, China has to diversify its investment from the primary sector to the manufacturing sector to make more value added goods in the region. The domestic markets of Latin American countries are growing and many of them have a host of preferential trade agreements with North American and European countries. Chinese companies could take advantage of these agreements to make goods for those markets.

Latin American countries now sell mainly primary goods to China and buy manufactured products from it. China should continue opening up its market and Latin American companies should endeavor to sell more of their products to China to establish a more symmetric trade pattern, which would benefit both sides greatly.

It takes a long time for people to travel from China to Latin American countries and vice-versa, with the dearth of direct flights making matters worse. So China and the region's countries should start more direct flights and simplify the visa procedures to promote business trips and tourism.

To continue their economic growth and become high-income economies, China and Latin American countries should develop their own technologies and produce more added value products. This will reduce their dependence on advanced countries, and perhaps more importantly, help increase the salaries of their workforce. The two sides should also upgrade their educational systems by increasing the number of top class universities that can produce talents with mastery of the most advanced technologies. Besides, they should take urgent steps to reduce the growing income gap to ensure that everyone shares the fruits of economic growth.

China, on its part, should address the imbalance between consumption and investment, and take measures to increase consumption as a proportion of aggregate demand by raising workers' wages, increasing social service facilities and expenditure - to improve social security - and allow a gradual revaluation of the yuan. And Latin American countries should make greater efforts to increase social mobility in areas where indigenous people still face social and economic discrimination.

The author is a professor of economics at San Marcos National University in Lima, Peru.

The ratio hit a record high of 10.1 percent in 2007 and has since seen a steady decline, as the government moves to promote the balance of international payments, the State Administration of Foreign Exchange (SAFE) said in a statement on its website.

The 3-percent figure falls within a "reasonable range" on international standards, the statement said.

The improvement comes as China has taken a slew of measures to revamp its growth model and adjust its foreign trade policies. Meanwhile, the waning eternal demands due to the worldwide slowdown also contribute to the narrowing trade surplus in China, SAFE said.

Despite the dwindling export growth, SAFE forecast that China's international balance sheet will retain a surplus this year, as China's savings-prone structure is unlikely to change in the short term.

Moreover, foreign capital will continue to flow into China as the outside economic shocks will not hamper China's steady and relatively fast growth, SAFE said.

China's surplus under the current account reached $145.6 billion in the first three quarters of 2011.

The figure was also up 25.1 percent from last month, indicating strong overseas sales growth, said Jin Yibo, Chery's spokesman.

The eastern Anhui province-based carmaker exported a record 160,200 vehicles last year, maintaining its status as top exporter among domestic carmakers for a ninth year, Jin said.

The strong sales overseas helped Chery to cushion the sluggish market in China, Jin said.

To expand overseas, Chery opened a plant in Venezuela last August and is expected to start operation at another plant currently under construction in Brazil in September 2013.

It also has announced plans to build assembly plants in Myanmar and some African countries.

The People's Bank of China set the yuan's central parity rate against the US dollar at 6.2937, the highest since the country's major exchange rate reform in 2005.

The yuan is allowed to be traded up or down by a maximum of 0.5 percent from its daily mid-point on China's foreign exchange spot market.

Benchmark one-year dollar/yuan non-deliverable forwards (NDF) were bid at 6.2550 on Thursday, a record high since March 2008.

The London subsidiary started operation on Thursday, marking "significant progress" in ABC's strategy to explore the international market, the bank said in a press release.

"The establishment of the London unit will support our expansion in the European market and our efforts to create a 24-hour global capital operation platform, as well as a multi-currency cross-border settlement network," it said.

Jiang Chaoliang, chairman of ABC, said the lender will continue to execute its international development strategy and integrate overseas development with its domestic operations.

The London subsidiary will concentrate on wholesale banking, including corporate deposits, syndicated loans, bilateral loans, trade financing, international settlement, and foreign exchange settlement and transactions.

"The London unit will rely on the strong customer, financial, and network advantages of its parent bank to serve Chinese enterprises operating overseas, foreign companies that have close trade connections with China, and local businesses in Britain," ABC said.

To date, ABC has established 10 overseas institutions in eight countries and regions, and uses 1,365 agent banks globally. Last year, it was the world's fifth largest commercial lender by market value.

ABC's steps followed other major Chinese lenders, which have increasingly explored global markets in recent years, especially since the financial crisis of 2007-2008.

In the two years since the end of 2008, overseas assets of the Big Four banks - Industrial and Commercial Bank of China Ltd (ICBC), China Construction Bank Corp (CCB), Bank of China Ltd (BOC) and ABC- have increased from 2.41 trillion yuan to 3.43 trillion yuan. The number of overseas institutions has increased from 959 to 1,212.

BEIJING/HONG KONG - When 23-year-old teacher Liu Yuqi had her annual medical check-up recently, her main concern was about cervical cancer.

Her aunt was diagnosed with the disease in 2010.

"I'm thinking about getting the HPV vaccine which protects me from cervical cancer next time I travel to Hong Kong because it's not yet available on the mainland," said Liu, a math teacher at a Beijing middle school.

According to the World Health Organization, cancer of the cervix is the second most common cancer in women globally, with about 500,000 new cases and 250,000 deaths each year.

In China, at least 100,000 women are diagnosed and about 40,000 die from it each year on the mainland, statistics from the Ministry of Health show.

Chen Yong, a director of the Ciming Check-up Group, which specializes in health screening, said they had received an increasing number of enquiries in recent years about the vaccine that prevents genital infection by the human papilloma virus (HPV), a cause of cervical cancer.

Two HPV vaccines, Gardasil and Cervarix, are being used in more than 100 countries and regions but are not yet available in China, except in Hong Kong.

In some countries, such as UK and Japan, and in regions of Italy, Spain and Malaysia, HPV vaccination is provided free.

"Unfortunately, the Chinese drug authority has yet to approve any of the vaccines," said Chen. "So we can only refer our customers to partner clinics in HK that provide them."

Francois Fong, a sex therapist at Neo-Health Care in Hong Kong, said they launched a HPV vaccine service for mainland women three years ago and there were about 40 to 50 coming each year.

"Most are between 20 and 30 years old," he said.

The best time for HPV immunization for girls is before they become sexually active. It can be given to girls as young as 9, according to Qiao Youlin, vice-chairman of the advisory board for early detection and treatment of cancers at the Ministry of Health.

It is not recommended for pregnant women.

Esthel Kong, a nurse from TY Healthcare Center in Hong Kong, said the HPV vaccine should be given in three doses over a period of 6 months. Each dose cost HK$ 1,280 ($165).

"As far as I see, the number of mainland consumers has increased a little recently," she said.

Qiao Youlin expected that the availability of the vaccines on the mainland would help contain HPV infection.

"It's kind of urgent because as the Chinese become more open about sex, HPV infections would be on the rise," he said.

According to the State Food and Drug Administration (SFDA), manufacturers of both vaccines had filed applications to market them in China.

"We have submitted the application to SFDA and the clinical trials for Cervarix are under way in China," said Sharon Zhang, corporate communications and public relations director of GlaxoSmithKline China.

Lu Zhiyuan, director of the Hainan tourism development commission, is interviewed by reporters in Haikou, Hainan province, on Thursday, at a plenary session of the provincial congress. [Photo / China Daily]

HAIKOU - Officials from South China's Hainan province on Thursday reiterated the island's "zero tolerance policy" toward price gouging at tourist attractions during the peak travel time and vowed a stern crackdown over the next three months.

"We will not allow one rotten apple to ruin the whole barrel," said Lu Zhiyuan, director of the Hainan tourism development commission and a deputy to the ongoing plenary session of the provincial people's congress.

Lu's remarks came after the administration of industry and commerce in Sanya city on Wednesday decided to revoke the license of a seafood restaurant called Fulinyucun, which was found guilty by official investigation of fraudulent pricing practices.

The restaurant labeled two types of seafood with fabricated names and overcharged customers, according to an official statement jointly released by the administration and local bureau of price control.

The two departments probed into the case after Luo Di, whose identity was confirmed by micro-blogging site Sina Weibo, said online on Jan 28 that his friend's family ordered three ordinary dishes and the restaurant charged them 4,000 yuan ($636). The post was forwarded and commented on thousands of times by netizens, some of whom complained of similar experiences in the tropical vacation destination.

Another restaurant was fined 500,000 yuan on Thursday for price gouging, the statement said.

Wu Caigui, who has run a seafood restaurant for more than a decade by a scenic spot near Sanya, applauded Sanya government's crackdown.

"Although my business has not been affected by the price scandal, it definitely sullied the reputation of the whole industry and Hainan's image," he said.

However, Wu stressed that seafood restaurants are not the only one to blame for high food prices.

"Many fishermen didn't go fishing during the Spring Festival holiday. Meanwhile, the island was overwhelmed by tourists who wanted to treat themselves to the best food, so the prices rose naturally," he said.

"What made tourists angry was that some restaurants in Sanya tampered with the scales, causing the seafood to weigh heavier than it should be," he said.

Lu said the aforementioned phenomenon reflected the mentality of some businessmen who pursue profit above all, and an adequate supervision system has yet to be established in Hainan.

He also admitted that the service and management capacity of the island province have failed to keep pace with the soaring demand from the rapidly increasing number of tourists that have poured in since local authorities vowed to develop the province into an international tourism island in 2010.

About 30 million tourists visited Hainan last year, an increase of 10 million compared with the tally for 2008, Lu said.

The latest statistics from Hainan's tourism office also showed that the warm weather and beaches attracted more than 1 million travelers during the Spring Festival holiday, which ran from Jan 22 to 28, raking in about 4.3 billion yuan in revenue for tourism-related sectors.

Zhou Jingmin, a deputy to the provincial people's congress and a Sanya native, said locals have a right to enjoy the fruits of Hainan's tourism development. Zhou said the provincial government can never achieve the goal of developing Hainan as a world-class travel destination without improving the "happiness index" of local residents.

"If the hosts are not happy, how can you expect them to show hospitality to guests?" asked Zhou.

Zhou urged the government to ensure that local residents can benefit from the booming tourism industry by measures to raise local incomes, and he called on leaders to guarantee that the lives of local people are not disturbed by travelers.

"Right now, the floods of tourists have brought traffic jams and raised living expenses, including food and housing prices, in Hainan, especially Sanya, which has made local residents unhappy," he said.

Liu Xiaoli in Haikou contributed to this story.

BEIJING - As part of the municipality's push to further reduce pollutants in the air, Beijing's traffic authority has launched a campaign targeting large trucks that fail to meet gas emission standards.

Cargo trucks are to blame for 33 percent of nitric oxide emissions in the city and account for a majority of fine particle emission by vehicles, officials from the Beijing traffic management bureau said on Thursday.

Starting on Thursday, the authority began stepping up gas emission checks of cargo trucks at checkpoints and onramps outside Beijing, and trucks that fail to meet the standard will not be given access to the city.

Meanwhile, gas emission checks of cargo trucks will also be conducted inside the city 24 hours a day, and trucks that evade emission checks and sneak into the city will also be targeted, according to the authority.

The move, the authority said, is intended to improve the capital city's air quality and further reduce the city's PM 2.5 index.

Micro blogs have also helped ensure that news of scandals spreads faster, and with a greater reach, the report said.

The far-reaching popularity of micro blogs will have serious consequences for companies and brands operating in China, said Debby Cheung, president of Ogilvy & Mather Group Shanghai on Thursday. Micro blogs have become one of the most common means of provoking scandals and furthering their spread, she said.

Ogilvy & Mather, an international advertising agency, and CIC, a provider of business intelligence in China, worked together to publish the white paper Crisis Management in the Micro Blog Era.

Their work used information culled from micro blogs on Tencent Weibo and Sina Weibo, as well as from reports from the search engine Baidu and various media reviews, to identify and analyze the biggest online scandals of 2011.

The report said the pervasive use of micro blogs has led to scandals arising with increasing frequency and speed.

In 2011, a series of corporate scandals affecting both multinational and domestic brands first came to public notice or spread on micro blogs - called weibo in Chinese. The issues they pertained to ranged from the detection of the toxic chemical clenbuterol in pork to flaws found in refrigerator doors made by Siemens AG.

Statistics from the China Internet Network Information Center showed there were more than 250 million micro-bloggers in China by December 2011, a 297 percent increase from 2010.

Many multinational companies have also taken to using micro blogs.

"We hope to reach all our stakeholders through weibo," said Isabelle Liu, vice-president of ABB North Asia and China, a division of the power and automation technology group ABB. "We also want to hear their comments and suggestions."

ABB is using social media in about 100 countries.

Eaton Corp, a power-management company, opened its corporate weibo in 2011 in China. "We believe there are huge opportunities for us to use social media networks to capture insights and feedback, share information and build relationships with and among our target stakeholders," said Vivian Xiao, head of corporate communications of Eaton Corp China.

Micro blogs can contribute to corporate communication if "a company can set a clear communication target for them, build a complete and sound process in coping with obstacles and design blogging content based on the needs of an audience," said Wang Yukui, communications vice-president of Boeing China, a division of the US aircraft manufacturer Boeing Co.

The company has been using the social media websites Twitter, Facebook, YouTube and Flicker in the United States and that has helped promote its brand, Wang said.

The report said online information can be swiftly aggregated and amplified through micro blogs and that companies should understand how to mitigate their risks.

"Real-time monitoring and analysis of micro blogs are especially critical at the initial outbreak of a scandal, when the spread of news occurs not in hours, but in minutes and seconds," said Daisy Zhang, CEO of CIC.

Wang Zhuoqiong contributed to this story.

Xu Shaoshi, head of the Ministry of Land and Resources (MLR), said this at a conference on Thursday staged to plan how the strategic outline of prospecting mines from 2011 to 2020, released by the State Council in late 2011, will be put into practice.

Xu said the key requirement of the outline is to provide information on potential mining sites for the public good and to give private investors low-risk access to the industry.

The government will not compete with enterprises for profits in mining, and mining operations can be run by private enterprises under the outline.

It is hoped that the policy will provide a boost to China's domestic mining industry, and that the country's reliance on imported mineral resources can be lessened.

In 2011, mineral resources took up over 30 percent of China's foreign trade -- a dependance that puts the country at increasing economic and political risk, it is thought.

Zhang Shaochun, deputy minister of the Ministry of Finance, said the central government has been enhancing research of the country's land and resources, and injected 11.5 billion yuan ($1.83 billion) into prospecting mines for 2010 and 2011.

Xu said the government will build a platform based on market mechanisms to attract private investment in mining rights, labor services, technical services and capital so as to make a breakthrough in finding mines.

China is expected to pump 120 billion yuan into geologic prospecting in 2012, with only 12.5 billion yuan coming from government at all levels.

Xu said the country's fixed investments in 2012 feature private capital in the real economy, and that the MLR is to create a better situation for private capital and guard its benefits.

BEIJING - Chinese authorities punished a total of nearly 290 people in more than 5,200 food safety cases in 2011, according to new figures.

Sources with the State Council's Food Safety Committee said on Thursday that those who violated food safety laws were handed stiff sentences, including life imprisonment and the death penalty with probation, a special form of punishment in China in which a death sentence can be reduced to life imprisonment if the person commits no new crimes.

Law enforcement authorities closed more than 5,000 enterprises involved in food safety crimes and also gave administrative punishments to government officials for misconduct related to the cases.

Health Minister Chen Zhu admitted on Wednesday that China's food safety standards are in urgent need of improvement following a spate of food safety scandals, reported Xinhua News Agency.

Chen said the total number of national food standards, local standards and industrial standards has topped 5,000, and many of them overlap or contradict each other. He said this is the motivation behind the Ministry of Health's announcement last month that it will overhaul and streamline the current standards.

Chen noted deficiencies in some vital assessment measures, such as the lack of processes to ensure the quality of food packaging.

Some current food standards have become outdated, requiring officials to devise new standards, Chen said.

The Ministry of Health issued a draft on revised food standards last month and will be soliciting public feedback until the end of February.

The minister said the sluggish pace of research on national food standards and the country's fledgling risk evaluation system have hindered the construction of national food standards.

Chen also said the regulation of food safety is falling behind in part due to the shortage of professional technical management organs.

An outline for China's quality-control development (2011-2020), issued by the State Council on Thursday, stressed the importance of improving the quality of Chinese products. According to the document, the issue is vital to the country's sustainable development, the public welfare as well as the nation's image.

Serious economic losses due to substandard products, environmental pollution and food safety scandals are still prevalent, according to the outline.

Food safety has become one of the most crucial issues for Chinese people in the wake of various scandals, such as the now-infamous melamine poisoning incident in which affected an estimated 300,000 infants, left six dead and sent hundreds to the hospital, according to official statistics.

Xiong Wenzhao, a professor of administrative law at Minzu University of China, told China Daily on Thursday that the core issue in the frequent quality scandals is the lack of professional ethics.

"Many enterprises are looking for any way to find loopholes in the country's quality supervision during the process of production because profit is their primary concern," he said.

China's quality supervision departments investigated and seized counterfeit goods valued at 5.33 billion yuan ($ 846.7 million) in 2011, statistics from the General Administration of Quality Supervision, Inspection and Quarantine showed.

Zhi Shuping, minister of quality supervision, said in January that the administration's work last year focused on inspections of dairy products, liquor, meat and food additives as well as intellectual property rights infringements.

Quality supervision departments revoked 15,000 licenses for industrial enterprises found to be producing counterfeit food products and shut down 426 dairy companies.

Xinhua contributed to this story.

Vice-President Xi Jinping and his US counterpart Joe Biden in Dujiangyan, Sichuan province, during Biden's visit to China in August. Xi will begin a visit to the US soon. Below left, NBA star Kobe Bryant has some fun with a Chinese player during his visit to Shanghai in July. An American student at Marywood University in Pennsylvania learns Chinese opera from a Chinese performer in September. [Photo / China Daily] [Photo / Xinhua]

Respondents in both China and US believe relationship is crucial, want ties to be closer, report Cheng Guangjin in Beijing and Chen Weihua in New York.

Two recent surveys highlight positive attitudes that seem to be at odds with the often-strained China-US relationship. A majority of those interviewed said that the relationship is crucial to both countries. They also want greater cooperation, especially in economic and energy issues.

The surveys were commissioned at the end of 2011 by China Daily with Gallup in Washington and Horizon Research Group in Beijing. China Daily released the results on Thursday, days before Vice-President Xi Jinping's trip to the US. His visit, which begins on Monday, is widely expected to improve ties in what will be a turbulent US election year.

The data generated by the surveys, including opinions on US-China relations and perceived barriers to building stronger ties, was drawn from a wide range of people, including members of the general public and opinion leaders in the two countries.

The China Daily-Gallup survey covered 2,007 members of the general public and 250 opinion leaders in the US. Seven in 10 US respondents said strong relations between the US and China are "somewhat" or "very" important.

Opinion leaders were even more emphatic, as 85 percent said strong relations between the two countries are important.

It also showed that Americans tend to want more bilateral cooperation, especially with economic and energy issues, in addition to cultural, educational, scientific, political and diplomatic cooperation.

Similar results were found in the China Daily-Horizon survey, which polled residents from Beijing, Shanghai, Guangzhou, Wuhan, Chengdu, Shenyang and Xi'an, most of which host US embassy or consulates.

More than 90 percent of the Chinese public, regardless of their location, has believed for many years in a row that the Sino-US relationship is important, according to the survey.

In 2011, about half believed the relationship was "very" important, a 20 percent increase from a similar survey by Horizon in 2009.

Nearly 60 percent of Chinese respondents think the bilateral relationship will remain stable in general, and nearly one-fourth believe it will improve.

Yet Chinese citizens' favorability for the US declined in the past two years from the highest level reached between 2006 and 2009, according to Horizon's data in the last decade.

The survey shows "the hegemony by the US on other countries" has become a major factor that affects Chinese citizens' impression toward the US.

About 42 percent of Chinese respondents said the US war on terror, even after Osama bin Laden was killed in May 2011, made their impression of the US worse. That is an increase of nearly 8 percent from the result in 2007 in the midst of the war.

Around 63 percent of respondents said their impression of the US has worsened because of the US intervention in Libya and stance on Syria.

Impressions change

Researchers said changing impressions of the other country reflect the changes in the bilateral relationship. According to the China Daily-Horizon survey, more than half of the respondents said the current China-US relationship is "bad" or "very bad".

In addition to US hegemony, its negative political and economic policies on China are also some of the top factors affecting Chinese citizens' impressions of the US, it showed.

In the China Daily-Gallup survey, Americans are almost evenly split on their overall view of China. Forty-two percent said they have a favorable opinion of China, 44 percent had an unfavorable view and 12 percent said they had neither a favorable nor an unfavorable opinion.

Certain groups were slightly more likely to have favorable views of China, such as African-Americans and Americans between the ages of 18 to 34, the survey found.

Historical view

It is not surprising that there are different views among the US populace on ties with China. From the beginning, the American perception of China has been divided between "acceptance and rejection, admiration and contempt", said Terry Lautz, a visiting professor at Syracuse University and former vice-president of the Henry Luce Foundation.

Historically, Americans have looked at China's rich history and culture with great fascination, but they also treated a weak and disorganized China with much disdain, he said. "American views of China, whether positive or negative, generally have been constructed on an assumption that American values and powers are superior," Lautz said at a recent seminar in Washington DC.

"The notion that China ought to be just like the US was especially nourished by several generations of American missionaries who had vested interests in creating ties that would bind the two cultures together," he said.

The China Daily-Gallup survey showed only 13 percent of American respondents said China is an ally of the US. Almost two-thirds said they view China as friendly but not an ally, while 23 percent said China was unfriendly or an enemy, it said.

"I am glad to see that most Americans are in favor of friendly ties with China, considering that both nations have neither a formal alliance nor alliances. But both nations are friendly and have common interests. It is these common interests that are more important," said Jerome Cohen, a law professor at New York University and a leading Western scholar on China's legal system.

"China is certainly not an enemy of the United States, and the US is not an enemy of China. But there are some people in both nations who think that the two countries are enemies or will become enemies. They are a minority. It is for the rest of us to prove that they are wrong," says Cohen.

Cohen feels that China's economic progress is a good thing. "We benefited from China's economic development. But we are a country that is increasingly divided. I think that's a dangerous situation. We have to educate our people more," he says.

Despite the desire for stronger relations, Americans see barriers to achieving that goal, such as a lack mutual trust, an imbalanced trade demand for oil supplies and different political institutions.

Nearly half of the general population and opinion leaders in the US agreed that China's currency was a factor for the US economic situation. Findings in the China Daily-Horizon survey showed more Chinese citizens think the two countries should share a common responsibility to solve their problems, which is an increase of nearly 10 percent from 2010.

Analysts said despite the differences between the two countries, which are likely to last for a long time, the polling data showed people on both sides recognize the importance of trying to get along with each other.

Chas Freeman, a US diplomat and interpreter for US president Richard Nixon during his ice-breaking visit to China in 1972, said the bilateral relationship, "strong and interdependent as it is, is tinged with a measure of suspicion, misapprehension, and mistrust".

There is broad recognition in both China and the US of economic interdependence, and most people in both countries also recognize that there are now few global problems that can be solved without cooperation, Freeman told China Daily.

But the "very complexity" of the relationship means that "a myriad of special interests are affected by it, and there are constantly many minor frictions", he said.

"This is entirely normal but, at any given moment, there is always something going on to agitate people and cause concern on one or both sides," he said.

"No one issue exists in a vacuum," said Clayton Dube, executive director of the US-China Institute of University of Southern California.

He told China Daily that protectionism and other economic disputes play out against a backdrop of images - confrontations in the South China Sea, commitments to nuclear non-proliferation, the treatment of individuals and ethnic groups and more.

"All these influence particular positions at particular times," said Dube, adding that the bilateral relationship in many aspects "is better then ever".

Dube said the key reason for disagreements is that the two countries are much more fully intertwined with each other and with other countries.

"Our perceived interests are not always aligned. Sometimes this is a matter of suspicion and insufficient communication. More often it's rooted in serious differences over policies and practices," Dube said.

Dube said it is ultimately in both countries' interests to expand and deepen cooperation wherever possible, but fundamental differences do exist and aren't likely to disappear anytime soon.

Freeman said despite all the difficulties, the two sides have "so far managed the necessary adjustments quite well".

"I am optimistic that this will continue to be the case. All the more so because, as the polling data shows, people on both sides recognize the importance of trying to get along with each other," Freeman said.

Zhang Yuwei and Kelly Chung Dawson contributed to this story.

30 stations to monitor PM 2.5 will be built across capital by end of year

BEIJING - Reducing fine particle pollution is the Beijing municipal government's top priority for 2012, ahead of housing, health, and education, according to a local government report.

"Reducing fine particle pollution will be a long, tough battle," Du Shaozhong, deputy director of the Beijing municipal environmental protection bureau, told China Daily, "but we will stick to it."

According to the environmental protection bureau, the average reading of PM 2.5 was between 70 micrograms and 80 micrograms per cubic meter in 2010. The city aims to cut the concentration down to 60 micrograms per cubic meter in 2015 and 50 micrograms in 2020.

In a addition to the goals for limiting the concentration of pollutants, the new national standards preliminarily passed by the Ministry of Environmental Protection expanded air quality readings to include PM 2.5 as well as tightened rules for some already monitored pollutants, such as PM 10 and nitrogen oxides.

Wang Qiuxia, a researcher with the Green Beagle, an environmental protection non-governmental organization based in Beijing, said it took European countries several decades to improve air quality, but the government can still make more progress if environmental protection is put ahead of economic development.

"The government can accelerate their efforts to clean up the air if they are really determined," Wang said.

"We've learned over the decades that once the environment is damaged, it takes great effort to repair," she said.

According to the bureau, the city has witnessed a steady decline of PM 2.5 concentration in recent years, from a yearly average reading of 100 micrograms to 110 micrograms per cubic meter in 2000 to 80-90 in 2005 and 70-80 in 2010.

The city will have 30 PM 2.5 air monitoring stations installed throughout the city's 16 districts by the end of this year, and six of them will be set up in the near future.

Du said vehicle emissions play a significant role in contributing to the city's particulate pollutants, and the city is determined to scrap another 10,000 cars that produce heavy emissions out of the 5 million total in the city, and the city's fuel emission standards will be tightened.

Du said that fighting pollution is a regional effort. According to the bureau, 24.5 percent of the PM 2.5 pollutants are from the neighboring provinces.

"The air pollution control is not an issue for Beijing alone," said Du. "It's important we make joint efforts with surrounding provinces to fight against air pollution together."

"We are resizing certain businesses, but part of the resizing is to relocate the resources to where the growth is," he told China Daily.

The bank's "new stage" in China "requires investment. We would continue our investment in China", Pandit said. He added that the bank looks forward to adding staff in China.

In December, Pandit announced 4,500 job cuts worldwide as Citi sought to trim costs. The layoffs equal about 2 percent of the workforce. The company also aims to eliminate 3 to 5 percent of expenses each year.

"As a global company, we've been working very hard at connecting the emerging markets with each other.

"China is at the center of that (effort) as one of the fastest-growing economies in the world and our fastest-growing businesses," said Pandit.

He said a securities joint venture, the newly approved credit card business and a focus on helping Chinese enterprises around the world will mark a new stage for Citi in the world's second-largest economy.

Citi is "extremely" well-capitalized in China with sufficient returns, and it wishes to expand in the market in a very steady, methodical way as it did in past years, Pandit said.

He described Citi's attempt to launch a credit card business independently as a "natural solution" to the next stage after "successful" joint venture cooperation with Shanghai Pudong Development Bank Co Ltd, which began in 2003.

"It's very important for our retail banking business in China," he said. Citi China launched the retail banking services in 2002.

Citibank (China) Co Ltd announced on Monday it had won approval from regulators to launch its credit card business independently in China this year, making it the first non-Asian bank to do so.

In response to doubts that Citi's still-small network in China could support its credit card ambitions, Pandit said Citi's experience around the world in using branch-based and direct marketing to reach clients would help.

"Each of our credit card businesses started very small," he noted.

Citi has 13 corporate bank branches and 46 consumer bank outlets in 13 Chinese cities.

Pandit said he is also looking forward to the joint venture securities business that has received preliminary approval to develop underwriting and trading services in China.

He said the bank also wants to tap opportunities in the asset management business and corporate bond market, as the country is still at a very early stage of capital formation and many entrepreneurs need access to capital.

China is his second stop on a trip to mark Citi's 200th anniversary globally. He visited South Korea on Monday.

Emerging markets contributed 50 percent of Citi's core business last year, and Asia contributed half of the businesses in emerging markets.

"China is a big part of Asia and its influence goes beyond the boundaries," he said.

Citi reported lower-than-expected results in the fourth quarter, with revenue falling by 7 percent year-on-year to $17.2 billion and income declining by 11 percent to $1.17 billion.

Trading revenue fell 37 percent while investment banking revenue dived 45 percent.

Rating agency Standard & Poor's Financial Services LLC cut Citi's rating to A- from A in late November.

"The fourth quarter was a tough quarter. But that's a reflection of investment we are making around the world.

"It's also a reflection that the markets had been quite volatile," Pandit said.

Despite rising economic uncertainties, he said Citi is well-positioned to weather turbulence and has been making preparations if the eurozone debt problem doesn't work out in the expected way.

"Our direct exposure to Europe is extremely manageable, as 25 percent of our balance sheet is liquid in cash and tradable securities we are well-positioned to capture the growth where it is going to come from."

Workers arranging bottles of traditional Chinese medicine at a pharmaceutical plant in Hangzhou, Zhejiang province.[Photo/China Daily]

The growth rate for the exports measured by weight is expected to increase from 5 percent to 10 percent annually during the same period, Liu Zhanglin, vice-president of the China Chamber of Commerce for Import & Export of Medicines and Health Products, said.

"The growth in the export value is forecast to be higher than the weight increase because the prices of raw materials used in traditional Chinese medicine are increasing continuously," he said.

He said the demand for the medicine is ever-increasing in the international market and that will help maintain a steady increase in exports of traditional Chinese medicine.

The value of those exports increased from $600 million in 1996 to $1.8 billion in 2010. Traditional Chinese medicines include proprietary Chinese medicines, raw materials and ingredients, as well as herbal extracts.

The value of China's exports of the medicine reached $2.33 billion last year, an increase of 36.2 percent from the year before, according to the chamber. At the same time, the weight of the exports increased by 14 percent and the prices of such products increased 23 percent.

"Given the appreciation rate for the renminbi in 2011 - which was about 7 percent - the value of traditional Chinese medicine exports hit a record last year," Liu said.

To sustain export growth, Chinese companies are working to make prices more stable and modify the composition of the exports.

During the past few years, the proportion of raw materials and ingredients among exports has decreased and that of herbal extracts has risen.

"The herbal extracts are semi-processed products ... so they have more added value," Liu said.

Although the future is promising, Chinese exporters are faced with trade barriers and other obstacles.

In May 2011, the European Union imposed new registration requirements on makers of traditional Chinese medicine, a step that has hindered imports of proprietary Chinese medicines. South Korea, one of the biggest importers of the raw materials used in the medicine, also adopted stricter quality and registration requirements.

In keeping with China's 12th Five-Year Development Plan for the Pharmaceutical Industry (2011-15), the government will improve industrial standards for traditional Chinese medicine, which will help companies in the business deal with technology issues that arise in the international market.

The country, for instance, will carry out scientific research on 300 ingredients used in traditional Chinese med to Chinese exporters who must register their products abroad.

"Our chamber will continue to provide market analysis and training for traditional Chinese medicine companies," Liu said. "And we will also strengthen cooperation with government departments, research institutes and trading agencies to establish industry-supporting policies, such as the establishment of international trade guidance for traditional Chinese medicine."

Exports reached $149.94 billion in January, while imports slumped 15.3 percent year-on-year to $122.66 billion in January, the General Administration of Customs (GAC) said in a statement.

The country's foreign trade fell 7.8 percent year-on-year to $272.6 billion in January, it said.

The figures were affected by an earlier Chinese Lunar New Year holiday, which fell in January this year and cut four workdays off the month compared with January of 2011, according to the statement.

After seasonal adjustments, exports rose 10.3 percent year-on-year in January, the GAC said.

It was a faster growth compared with 2.4 percent in February 2011, when last year's New Year holiday week arrived.

Foreign trade and imports climbed 6.2 percent and 1.5 percent year-on-year respectively in January after seasonal adjustments.

The GAC said China's trade surplus reached $27.28 billion in January, up from $16.52 billion in December 2011.

China's trade with the European Union, the country's top trade partner, dipped 7.1 percent year-on-year to $42.68 billion in January.

Trade with the United States, the country's No 2 trade partner, shrank 3.9 percent year-on-year to $35.46 billion.

China's trade with emerging economies bucked the downward trend in January, with its trade with Russia and Brazil rising by 26.8 percent and 5.7 percent year-on-year respectively.

Vice-Premier Li Keqiang and Canadian Prime Minister Stephen Harper attend an economic forum that brings together Chinese and Canadian business leaders in Beijing on Thursday. [Photo / China Daily]

Canada's Prime Minister Stephen Harper and his wife Laureen arrive for lunch at a Beijing restaurant on Thursday. [Photo / Agencies]

President and vice-premier target stronger Canada economic relations

BEIJING - China is willing to increase imports from Canada and to boost cooperation in energy and other areas, Chinese leaders said on Thursday.

During a meeting with Canadian Prime Minister Stephen Harper, President Hu Jintao said cooperation should be strengthened across a range of sectors.

"The countries should enhance political dialogue to expand common ground," Hu said.

To boost trade links, Hu suggested that the potential of both economies to interact be realized and cooperation expanded.

Vice-Premier Li Keqiang called for the countries to "promote energy trade".

"Canada is a nation that has bountiful energy resources, and China is a stable and reliable consumption market", he said in a keynote speech at a Beijing business forum.

And the two nations should also enhance energy cooperation, including renewable and nuclear, and promote joint oil and mining projects, he said.

"We should ensure a stable partnership in the field of energy resources," Li said.

Harper is leading a delegation of more than 40 business executives during his visit as he endeavors to sell more oil to China, attract Chinese investment in Canada and win more access to China for Canadian companies.

Harper's visit comes as Canada plans to diversify exports of crude oil to Asia, including China, and aims to speed up the regulatory-approval process for large energy projects. This comes on the heels of US President Barack Obama rejecting TransCanada Corp's $7 billion pipeline to the US Gulf Coast.

"The potential for China-Canada economic and trade cooperation has never been bigger than today," Li said.

"We are glad to see that Canada is diversifying its trade and investment and stressing the importance of the Asian market," Li said.

"Asia is the most dynamic and potential region worldwide in terms of economic growth and China is a major economy in Asia."

China plans to expand domestic consumption and develop strategic emerging sectors.

Harper's visit has resulted in a number of deals on energy. Canadian businesses signed nearly $3 billion worth of deals with Chinese enterprises on Thursday.

Canada reached an agreement with China on Thursday to facilitate uranium exports by giving Canadian uranium producers more access to China's civilian nuclear power industry.

China could start receiving Canadian oil as early as 2016 if a pipeline project from Alberta to Canada's Pacific coast goes ahead, said Enbridge Pipelines chairman Patrick Daniel, who accompanied Harper on the visit.

Harper agreed with Li by saying that China-Canada economic relations are "reaching a new level".

After meeting President Hu Jintao on Thursday, Harper said: "I think Canada-China relations are continuing along a very positive route.

"Canada has the resources, technological sophistication and geo-strategic positioning to complement China's economic growth strategy," he said.

"And China's growth, in turn, complements our determination to diversify our export markets."

China is Canada's second-largest trading partner. Bilateral trade stood at almost $50 billion in 2011, up $6 billion from 2009. The two countries set a target of increasing bilateral trade to $60 billion by 2015.

"There is more room for us to enlarge bilateral trade, as it is still small," Li said.

Premier Wen Jiabao said on Wednesday the two nations should discuss the possibility of signing a free trade agreement.

Two-way investment

"We welcome Canadian companies to invest in China's western, central and northeastern regions. We also encourage Chinese companies to invest in Canada," Li said.

On Wednesday, the two nations concluded negotiations on a foreign investment promotion and protection agreement, which began in 1994.

Canadian investment in China surged by 39 percent year-on-year in 2010 to $5 billion. Chinese investment in Canada totaled $14 billion during the same period, up by 9 percent from 2009.

China has been encouraging its enterprises to expand globally, and experts have said that the current global slowdown has provided a number of investment opportunities.

German firm aims to utilize funds to build new facility in Jiangsu province

SHANGHAI - The German specialty chemicals company Lanxess AG announced on Thursday that it will issue Chinese offshore renminbi-dominated bonds in Hong Kong worth 500 million yuan ($79.4 million) to build a new leather chemicals plant in Changzhou, Jiangsu province and a new pigment plant.

According to the company's news release, the bonds have a yearly coupon of 3.95 percent and will begin trading on Monday. The bonds have been placed with institutional investors in Asia and Europe.

"Investor allocation in this new bond is approximately 50 percent from Asia and 50 percent from Europe," said Martin Kraemer, chief executive officer of Lanxess Greater China.

Joint lead-managers of the issue are Standard Chartered Bank PLC, Deutsche Bank AG and Bank of America-Merrill Lynch, the investment banking unit of Bank of America Corp.

Lanxess is the first German chemicals company to issue an RMB-denominated bond, according to the company's news release.

"The successful placement of the 'Dim Sum' bond reflects the confidence investors have in Lanxess' solid financial position," said Bernhard Duettmann, the company's chief financial officer. "The bond also underlines the growing importance of our commitment to the Chinese market."

The company said that it will also invest about 30 million euros ($40 million) in the plant in Changzhou.

It is the company's single largest investment in the leather chemicals business in China to date, according to the news release. It added that the new plant will have an annual production capacity of 50,000 tons and will create approximately 150 jobs.

"The ground-breaking for this Changzhou facility started in July last year and we expect the plant to start running in the first half of next year," Kraemer said.

"The second project that will also use the financing is a pigment facility. Lanxess is currently considering whether to increase its pigment activities in China by investing in a new plant for the manufacture of inorganic pigments," he added.

According to Kraemer, the debt crisis sweeping Europe has "not at all" affected the company's funding process.

"What we see currently is the public debt crisis. If you look at the corporates coming into the market, the financing situation is quite normal," he said

"Although our financial figures for 2011 have not been released, we have guided the market for EBITDA (earnings before interest, taxes, depreciation and amortization) growth of 20 percent, which will translate into EBITDA of 1.1 billion euros last year. That's the highest ever," he added.

China contributed roughly 11 percent of Lanxess' overall business in 2010. Last year was the first time that the Chinese market exceeded 1 billion euros in sales.

Although Germany is still the single-biggest market for Lanxess, contributing about 18.5 percent of the company's annual sales, Kraemer said the prime focus is currently on China and also Brazil and India.

He explained that the company has avoided the effects of the European debt crisis by the use of a long-term financing strategy and by always having "liquid means" available during the crisis.

"A big advantage for Lanxess is our credit rating. We have a BBB credit rating from Standard and Poor's and Baa2 from Moody's, which are firmly in the investment grade," he said.

"Issuing bonds in Hong Kong is cheaper compared with going to banks here in the Chinese mainland. Lanxess' financial policies have always been prudent. For us, it is important not to always go for the cheapest (means of finance), but also to have a range of alternative financing instruments."

Liquor maker Kweichow Moutai Co led an advance for consumer-staples producers after January inflation unexpectedly rebounded to 4.5 percent during the Spring Festival holiday on accelerating food prices.

Ledman Optoelectronic Co jumped 3.4 percent after benchmark money-market rates fell, signaling improving liquidity. China Vanke Co paced a two-day rally for property developers. Jiangxi Copper Co slid 2 percent.

"The Spring Festival effect boosted January inflation and it's a one-off rebound," said Dai Ming, a fund manager at Shanghai Kingsun Investment Management & Consulting Co.

"Prices will come down in the following months. But the central bank will be reluctant to relax monetary policies since the inflation rate is still perceived as high."

The Shanghai Composite Index rose 2.06 points, or 0.1 percent, to 2349.59 at the close, the highest since Dec 2. About two stocks advanced for every one that declined. The CSI 300 Index gained less than 0.1 percent to 2529.23. The Bloomberg China-US 55 Index, the measure of the most-traded US-listed Chinese companies, added 1.6 percent on Wednesday in New York.

The Shanghai index has rebounded 6.8 percent this year on speculation the central bank will further cut lenders' reserve- requirement ratios to spur growth. It announced a cut in reserve ratios on Nov 30, the first reduction since 2008, after boosting them and interest rates last year to cool inflation that accelerated to its fastest pace in three years in July.

Reserve-ratio cuts may be postponed after inflation jumped last month, Market News International reported, citing unidentified government officials and economists.

The January inflation rate compared with the median 4 percent estimate in a Bloomberg News survey of 33 economists and 4.1 percent in December. Producer-price inflation eased to 0.7 percent from a year earlier after a 1.7 percent gain in December, the statistics bureau said on Thursday.

A measure of consumer staples stocks in the CSI 300 advanced 0.4 percent. Kweichow Moutai, China's biggest producer of liquor by market value, rose 1.3 percent to 190.75 yuan ($30.27). Zhejiang Beingmate Scientific-Industrial-Trade Share Co, a producer of milk powder for babies, climbed 2.4 percent to 24.11 yuan.

"Most investors and traders know January inflation readings were significantly distorted by the Lunar New Year holiday," Lu Ting, a Hong Kong-based economist at Bank of America Corp, wrote in a report on Thursday. Inflation may slow to below 4 percent this month, Wang Tao, an economist at UBS AG, said in an interview with Bloomberg on Thursday.

Bloomberg News

It strengthened by 72 basis points to stand at 6.2937 against the US dollar on Friday, according to the China Foreign Exchange Trading System.

It is the first time that the yuan broke the 6.3 mark since China's central bank announced on June 19, 2010 that it would further the reform of the formation mechanism of the yuan exchange rate to improve its flexibility. The yuan appreciated by 7.82 percent during the period.

The previous record was set on January 4 when the yuan stood at 6.3001 against the dollar.

In China's foreign exchange spot market, the yuan is allowed to rise or fall by 0.5 percent from the central parity rate each trading day.

The central parity rate of the yuan against the US dollar is based on a weighted average of prices before the opening of the market each business day.

The blueprint, featuring the development of enhanced quality, establishes targets for the 2011-2020 period.

By 2015, China pledges to keep the qualification rate of agricultural products above 96 percent, while that of the general products in the national checks over 90 percent, according to the blueprint.

Regarding project quality, the passing rate for large and medium projects should be 100 percent, while the rest should reach 98 percent.

In the service sector, the customer satisfaction index in the producer service industry is targeted at above 80, while that in the consumer service at above 75, the blueprint said.

The blueprint also requires local authorities to include quality safety issues to their performance assessment system.

To better implement the policies, China's quality watchdog will produce a specific plan annually to guide the work, according to the blueprint.

Women's clothing company Ochirly reportedly valued at $2 billion

SHANGHAI - The Chinese investment company CITIC Group is joining with a private-equity fund financed by the French luxury giant LVMH Moet Hennessy Louis Vuitton SA to buy a 10 percent stake in the Chinese fashion brand Ochirly, the South China Morning Post reported on Thursday.

A LVMH Moet Hennessy Louis Vuitton SA store in Shanghai. Analysts said an increasing amount of international capital is being invested in the world's second-largest luxury market.[Photo/China Daily]

Ochirly is a Hong Kong-registered brand that was founded by mainland businessmen in 1999. The company's latest numbers show it had annual revenue of more than 250 million yuan ($39.7 million) in 2009 and has more than 800 stores in 28 provinces and cities.

The public relations director for Ochirly, who would only provide her surname, Luo, said on Thursday that the company has not received an official statement about the deal. L Capital Asia, a private-equity fund financed by LVMH, could not be reached for comment.

The South China Morning Post reported that L Capital Asia paid $200 million for the stake in Ochirly, a women's clothing company that is valued at $2 billion and is considering listing on the Hong Kong or New York stock exchange.

This is the first time the financial arm of LVMH has held a share in a Chinese mainland company.

Analysts said the reported deal is notable for showing that an increasing amount of international capital is being invested in the world's second-largest luxury market.

"Global investors' attention (to the Chinese luxury market) has been strong ever since Hermes bought the Chinese brand ShangXia," said Yang Qingshan, chairman of the China Brand Strategy Association and secretary-general of the China Brand Wealth Forum.

"And now it's just becoming a growing trend as more foreign capital eyes the booming market," said Yang.

In December, the Singapore-headquartered L Capital Asia announced it would invest in the Chinese fashion brand Jorya. Both Jorya and Ochirly market their products, ranging in price from 500 to 1,000 yuan per item, toward working women.

"Industry tycoons like LVMH merely need a Chinese brand that is full of potential that they can reshape and operate in a Louis Vuitton style, a plan that has been put into effect successfully in China," said Yang.

Rupert Hoogewerf, the founder of the Hurun Rich List, which ranks the wealthiest people in China, had similar thoughts.

"This investment signals general optimism in the international capital market about the Chinese brand," said Hoogewerf. "What has been brought here is not only good money but also expertise and know-how about brand management."

Yang, though, noted that international investors who want to put their money into Chinese brands have few choices.

BEIJING - Salary increases in China are likely to exceed the rate of inflation in 2012 and job opportunities are expanding despite slowing economic growth, said human resources executives.

"Expectations for growth in China are rising as demand in the US and European markets remains very weak. Recruitment is doing well in China, the key market for growth," David Nagy, managing director of the US-based executive search firm DHR International, said in an interview on Thursday.

Although China's GDP growth might decelerate further, due to weakening external demand and structural shifts, the consumer market offers opportunities.

Medical care is a new frontier for employment, with the government's commitment to providing better health care and individuals' improved ability to pay for medical care.

China is improving its medical service system and has increased the subsidy for rural residents to 240 yuan ($38) a year for each person, from 200 yuan previously.

"Some medical companies are transferring their research and development centers to China, presenting more opportunities for us as well," he said.

The market will remain strong across almost all industries, including vehicles, online digital services and technology.

In particular, demand from foreign and domestic companies is robust for senior-level positions and for human resources and finance positions.

Base-pay growth

Foreign employers in China are expected to offer employees base-pay increases of 6 to 11 percent in 2012, Nagy said. China recorded a 4.5-percent year-on-year increase in the consumer price index in January.

In terms of bonuses, those in support positions such as human resources, public affairs and government relations are expected to see growth of 20 percent or so.

For sales, marketing and leadership positions, growth could be up to 35 percent, and sometimes, there is no cap, Nagy said.

A survey by Hays PLC released on Thursday found that more than 80 percent of employers in China plan to increase salaries by more than 6 percent in 2012.

The UK-based recruiting consulting company said that robust economic growth in China has prompted companies with operations in China to raise salaries to retain talent and support business development.

Among the 291 surveyed employers in the Chinese mainland, 29 percent said they would increase salaries by at least 10 percent. Another 29 percent gave a range of 5 to 10 percent and 13 percent said salaries would rise by 3 to 6 percent.

The surveyed industries included finance, high-technology, education, manufacturing, energy and biological science.

The survey also found that last year, 72 percent of the respondents in China increased salaries by more than 6 percent, with 51 percent reporting an increase of 6 to 10 percent and 21 percent offering more than 10 percent.

"Though the global economy is uncertain, China is still achieving strong growth," said Simon Lance, regional director of Hays China.

"In 2012, we expect to see more companies here focusing on recruiting and retaining key talent, a move to promote their expansion."

Among more than 900 employers, 64 percent said they expected business activity to increase and 41 percent expected their permanent staff levels to increase.

Rate hits 4.5% after food prices soar during Spring Festival

BEIJING / SHANGHAI - The inflation rate hit an unexpected three-month high in January as consumers increased spending during the Chinese New Year holiday.

The rate may deter policymakers from further loosening monetary policy, analysts said.

The consumer price index (CPI), a main gauge of inflation, rose 4.5 percent in January from a year earlier, higher than the 4.2 percent forecast among economists. This brought an abrupt halt to a run of five months of easing price pressures, according to data released by the National Bureau of Statistics (NBS) on Thursday.

If the holiday factor is discounted, inflation may still be declining, said Daniel Farley, a senior managing director of State Street Global Advisors, a US-based asset management company.

"The central bank may still have room to further loosen monetary policy, but at a moderate pace," Farley said.

Zhang Zhiwei, chief economist with Nomura Securities, said that the inflation rate provides evidence of risks and consequently "constrains the ability of the central bank to loosen monetary policy".

Food prices that account for about one-third of the CPI basket gained 10.5 percent year-on-year in January, compared with a 9.1 percent increase in December. Surging food prices have driven the CPI up by 3.29 percentage points.

China's one-week Lunar New Year holiday ran from Jan 22. According to an NBS survey on food prices in 50 cities, from Jan 21 to 30, the average price growth of nine popular vegetables increased by about 10 percent.

"I spent more than 10,000 yuan ($1,587) during the holiday," said Fan Ye, who works with a Shanghai-based US company. Preparing for family dinners and buying gifts for relatives accounted for most of Fan's expenditure.

Some people are taking measures to combat the inflation risk.

"I do not see any sign that consumer prices will go down in the near future. I prefer to buy art and gold to retain value," Li Feifei, an employee at a State-owned company in Shanghai, said.

Non-food prices gained 1.8 percent last month from a year earlier, compared with 1.9 percent in December.

The producer price index, which measures the cost of goods at the farm and factory gate, rose 0.7 percent in January compared with 1.7 percent in December, the NBS said, indicating consumer price pressures would ease in the coming months.

Inflation was a headache for the government last year. The authorities took measures, including tightening bank lending and capping prices, to curb it but it still hit a 37-month high of 6.5 percent in July before declining to a 15-month low of 4.1 percent in December.

The festering European debt crisis is squeezing out China's exports.

The International Monetary Fund (IMF) this week warned that an escalation of Europe's fiscal woes could slash China's economic growth by half this year, and it urged Beijing to prepare stimulus measures in response.

In the IMF's "downside scenario" China's growth would fall by around 4 percentage points this year from the 8.2 percent rate it projected in January.

The nation's GDP slowed in the last quarter of 2011 to 8.9 percent from 9.1 percent in the third quarter and 9.5 percent during the April-to-June period.

Wang Tao, chief economist with UBS AG in China, said that the macroeconomic stance should support economic growth, instead of being changed on inflation fears.

"We continue to expect a generally stable macro stance in 2012, with modest easing in credit and more fiscal support in livelihood areas," Wang said.

Zhang, with Nomura Securities, predicted that there might be another 50 basis point cut in the required reserve ratios for banks next month. The central bank cut the cash that banks should keep aside in December.

"The January CPI may be the year's peak," said Zhu Haibin, chief economist of JP Morgan in China.

In February the CPI may still be higher than 4 percent, but is likely to ease from April and may drop to the lowest point of 2.8 percent in the second half, Zhu said.

BEIJING - The gap in market share between the computer manufacturers Hewlett-Packard Corp and Lenovo Group Ltd has narrowed to 2 percent, according to the Chinese company on Thursday.

A sales assistant holds up a Lenovo netbook at the Hong Kong Computer Festival. Lenovo Group Ltd has a global market share of 14 percent, making the company the second-largest global PC maker by market share, after reducing the gap with Hewlett-Packard Co to 2 percent from 9 percent in 2010. [Photo/China Daily]

Lenovo reported record sales of $8.4 billion for the company's fiscal third quarter of 2011. It also won a global market share of 14 percent, making the company the second-largest PC maker by market share, after reducing the gap with HP to 2 percent from 9 percent in 2010, according to the IT research company International Data Corp.

The company attributed its performance to a dramatic surge in sales of Internet mobile devices and growth in mature markets. The company said sales revenue for its Internet mobile devices, including tablet PCs and smartphones, grew 159 percent year-on-year to $565 million between October and December.

Liu Jun, Lenovo's senior vice-president and president of the company's Mobile Internet and Digital Home Business Group, said the company's share of the smartphone market increased from about 2 percent at the beginning of 2011 to 10 percent in December, largely because of a promotion campaign by China Telecom Corp Ltd.

"We saw strong progress in our Mobile Internet business. During the (third) quarter, Lenovo sold more than 6.5 million phones, and almost half of those were smartphones. Lenovo's share of the Chinese smartphone market reached double-digits in December," said Yang Yuanqing, Lenovo chairman and CEO.

Yang said that although the Internet mobile devices division only accounts for about 5 percent of total sales revenue at present, the figure will increase to 10 percent in the near future.

The increase in profit was also driven by the company's growth in mature markets, including the US, Japan and Europe.

Lenovo bought the US PC division of IBM Corp in 2005 and last year it announced a $175-million joint venture with Japan's NEC Corp and the acquisition of Medion AG, a German multimedia and consumer electronics maker.

"For the first time, Lenovo has become the global number one vendor of commercial PCs and consumer desktops, despite the worldwide shortage of hard drives in the past quarter," Yang said. Lenovo generated pre-tax income of $192 million worldwide during the quarter.

"Because Lenovo maintains a high volume of PC shipments, it has stronger bargaining power with hard-drive providers than other companies," said Wang Jiping, a senior analyst at IDC Asia-Pacific.

After entering markets through mergers, Lenovo has cooperated with its local partners to introduce tablet PCs to Japan and Germany, and the company said it will introduce smartphones to those markets soon.

"Europe is one of our major battlefields this year, however, previously our business there only focused on the commercial sector," said Yang. "Lenovo will place greater emphasis on the European consumer market from April, with the help of Acer Inc's former CEO Gianfranco Lanci." Lanci will begin working for Lenovo in April.

On Tuesday, Acer said that it has filed a lawsuit in a court in Milan, Italy, against Lanci, its former CEO and president, for breaking a non-competition clause, but declined to release further details.

The Bankcard Consumer Confidence Index (BCCI), compiled by Xinhua News Agency and China UnionPay, a national bank card association, stood at 86.78 in January, up 1.25 points year-on-year and 0.06 point from December.

The report attributed the rebound in consumer confidence to festival spending sprees, as both the three-day New Year holiday and the week long Spring Festival holiday fell in January.

The effects of the holidays have led to noticeable increases in consumer spending on non-essential items, such as festival-related items and tourism, the report said.

The income growth of urban residents also provided a solid foundation for the consumer confidence, according to the report.

Data from the National Bureau of Statistics showed the per-capita disposable income of urbanites was 21,810 yuan ($3,164.41), up 14.1 percent from a year earlier in nominal terms and 8.4 percent after being adjusted for inflation.

Xinhua News Agency and China UnionPay started compiling the BCCI index in April 2009 based on bank card transaction data and analysis of structural changes in urban consumption.

China aiming to raise output of clean energy, such as biomass, wind and solar

BEIJING - China's consumption of fossil fuels declined slightly in 2011, but the world's largest energy consumer still faces great challenges in optimizing its energy structure, said analysts.

Workers load coal at a railway station in Jiujiang, Jiangxi province. China's consumption of fossil fuels such as coal and oil dropped slightly last year, while its production of clean energy increased.[Photo/China Daily]

Non-fossil fuels accounted for 9.4 percent of China's overall primary energy consumption in 2011, compared with 8.7 percent in 2010, said Li Junfeng, deputy director of the Energy Research Institute of the National Development and Reform Commission.

The figure means the country needs to increase the proportion of non-fossil fuels in the mix by 0.5 percent annually in the coming four years to realize a government target of 11.4 percent by 2015, he said.

"The country is facing great pressure to reach the target because the efforts to build the nation's nuclear capacity have slowed," said Li.

The 21st Century Business Herald, a Chinese publication, reported recently that the proportion of China's non-fossil fuel in the overall energy mix declined to about 8 percent in 2011. However, Li said these data were inaccurate.

But he admitted that the pace of energy use restructuring has been sluggish,as the use of coal-dominated fossil fuels continues to increase.

The newly added capacity for coal output reached 95 million tons in 2011, and the country plans to add another 200 million tons in 2012, according to the National Energy Conference in January.

The country is caught between the urgent need to save energy and reduce greenhouse gas emissions and the desire to increase energy generation to sustain economic development.

Reducing dependency on coal by promoting the use of cleaner energy sources, including wind, solar and biomass, is one of the most feasible ways of solving the problems faced by the country, according to experts.

China plans to add 20 gigawatts of installed hydropower capacity in 2012, while prioritizing ecological protection and the relocation of residents in areas designated for major hydropower projects.

China's hydroelectric energy generation decreased by 3.5 percent year-on-year in 2011, which resulted in a great increase in the use of coal, said the China Electricity Council on Friday.

Nuclear power output increased by 16.9 percent and wind power increased by 48.2 percent year-on-year. Meanwhile thermal power production increased by 14.1 percent over the same year, it said.

Ren Dongming, deputy director of the Center for Renewable Energy Development at the National Development and Reform Commission, said the country will adopt more policies aimed at stimulating the development of renewable energy.

The government is also expected to launch the Renewable Portfolio Standard, a scheme that will require electricity suppliers to provide a minimum level of electricity generated from renewable sources.

The mechanism, which is still at the design stage but is expected to be unveiled soon, will focus on energy generated from sources such as wind, solar and biomass, said Ren.

China aims to cut the amount of energy consumed for every unit of GDP by 16 percent between 2011 and the end of 2015.

However, the country may have missed the target of a 3.3-percent reduction in energy consumption per unit of GDP in 2011, said Xie Zhenhua, deputy minister of the National Development and Reform Commission last week, although the data have yet to be released

China's energy consumption totaled 3.25 billion tons of coal equivalent in 2011.

Taken as a strong boost to deeper economic reforms, the free trade zone was put high on the agenda of the Chongqing Municipality at the start of 2012.

The future free trade zone will highlight railway's role in transportation and logistics as Liangjiang is on its way to become a regional railway hub.

"Although fully-fledged railway systems are great attraction for Asian and European countries to invest in Chongqing, doing business will be difficult for investors without setting up a free trade zone," said Professor Pu Yongjian of Chongqing University.

One billion yuan came from the local government's Liangjiang New Area Development and Investment Group, while the rest came from the private sector, the local government said.

TPG launched two yuan-denominated funds last year in Shanghai and Chongqing, aiming to raise 10 billion yuan in capital. The private investment firm, with $48 billion of managed capital and an extensive global presence, has partnered with top-tier Chinese firms such as China International Capital Corporation Limited, Li Ning Company Limited, Lenovo and the Shenzhen Development Bank.

Automobile output slumped 27.47 percent from a year earlier to 1.3million units in the month, the CAAM said.

The index, together with the Shenzhen Component Index and the Shenzhen SME (small and medium-sized enterprises) Board Index, makes up the three core indices reflecting the performance of China's stocks listed on the Shenzhen Stock Exchange.

The ChiNext Board, which started trading on October 30, 2009, mainly lists high-tech companies and those with high growth potential.

The benchmark Hang Seng Index traded between 21,053.06 and 20,787.84. Turnover totaled HK$91.12 billion ($11.62 billion).

The March contract lost 0.24 percent to 2,542. The June contract moved down 0.13 percent to 2,565 points, while the September contract climbed up 0.06 percent to finish at 2,590.8 points.

The stock-index contracts, agreements to buy or sell the Hushen 300 Index at a preset value on an agreed date, are designed to allow investors to bet on and profit from gains or declines in the market.

The index futures was launched at the China Financial Futures Exchange (CFFEX) and started trading from April 16, 2010. The CFFEX has set the base value for all the four contracts at 3,399 points.

Sources with the State Council's Food Safety Committee said on Thursday that a total of 286 people in more than 5,200 food safety cases last year were handed sentences, including life imprisonment and suspended death penalties.

Law enforcement authorities closed more than 5,000 enterprises involved in crimes that jeopardized food safety, and also gave administrative punishments to government officials for misconduct relating to the cases.

Health Minister Chen Zhu admitted during an exclusive interview with Xinhua on Wednesday that China's food safety standards are in urgent need of improvement amid a spate of food safety scandals.

Food safety has become one of the biggest issues of concern for Chinese people since various scandals, such as tainted infant formula and cooking oil collected from sewers, were exposed by the media.

Chen said the total number of national food standards, local standards and food-producing industrial standards has topped 5,000. Among them, many overlap or contradict each other, he added, pointing to the motivation behind the Ministry of Health's announcement last month that it will overhaul and streamline the current food standards list.

Chen noted the deficiency of some vital assessment measures, such as the lack of processes to ensure the standard of food packaging.

According to Chen, some current food standards have become outdated, calling for further efforts to implement new standards.

The Ministry of Health issued a draft on revised food standards last month to solicit public opinion up to the end of February.

The minister said the lag of research on national food standards and the country's fledgling risk evaluation system hindered the mapping of national food standards.

Chen also attributed the falling-behind to the shortage of professional technical management organs.

The minister emphasized the importance of transparency in the forming of new standards, encouraging civilians, lawyers and experts to participate in the process.

The ministry will report the new food safety standards to the World Health Organization, Chen added.

Vice Premier Li Keqiang on Wednesday called for strict and harsh punishments in cases of food safety violation. Speaking at a plenary meeting of the food safety commission under the State Council, or China's cabinet, he urged strengthened supervision of the food industry.

Ernst & Young partner Michael Wong said that after 5 years as an auditor, a graduate has great chance to become a manager, and three years later, senior manager, so that 11 years after graduation there is a chance to become a partner.

As to the frequent overtime work that accounting firms such as Ernst & Young demands, Wong said, "Extra work is an usual practice for accounting firms to meet the demands of customers, but we do our best to relieve our employees, for example to hire more people during busy periods and using flexible work hours."

China's first anchored suspension cross-sea bridge starts its offshore construction phase in Dalian, Liaoning province on Feb 8, 2012. The 5.3-kilometer long bridge is expected to be open to traffic at the end of 2013. [Photo / Xinhua] 

China's first anchored suspension cross-sea bridge starts its offshore construction phase in Dalian, Liaoning province on Feb 8, 2012. The 5.3-kilometer long bridge is expected to be open to traffic at the end of 2013. [Photo / Xinhua]

China's first anchored suspension cross-sea bridge starts its offshore construction phase in Dalian, Liaoning province on Feb 8, 2012. The 5.3-kilometer long bridge is expected to be open to traffic at the end of 2013. [Photo / Xinhua]

China's first anchored suspension cross-sea bridge starts its offshore construction phase in Dalian, Liaoning province on Feb 8, 2012. The 5.3-kilometer long bridge is expected to be open to traffic at the end of 2013. [Photo / Xinhua]

The benchmark Shanghai Composite Index moved up 0.09 percent, or 2.06 points, to close at 2,349.59.

The Shenzhen Component Index gained 0.03 percent, or 3.15 points, to finish at 9,560.73.

China's consumer price index, a main gauge of inflation, rose 4.5 percent year-on-year in January, up from 4.1 percent in December and 4.2 percent in November, the National Bureau of Statistics said Thursday.

The UK-based recruiting consulting company said that robust economic growth in China prompts companies with operations in China to enhance employees' salary, in a bid to retain talents and support sustained business development in the emerging market.

Among the 291 surveyed employers from the Chinese mainland, 29 percent said they will increase salaries by at least 10 percent, while another 29 percent will add between 5 and 10 percent, and 13 percent of respondents will increase salaries by between 3 and 6 percent.

The surveyed industries include finance, high technology, education, manufacturing, energy and biological science. It also showed that in 2011, 72 percent of the respondents in China increased employees' salaries by more than 6 percent, with 51 percent reporting an increase of between 6 and 10 percent, and 21 percent offering an increase above 10 percent.

"Though the global economy is uncertain, China is still maintaining strong growth," said Simon Lance, regional director of Hays China. "In 2012, we expect to witness more companies here to focus on recruit and retain key talents, a move to promote their expansion."

In addition to the Chinese mainland, the survey covers Japan, Singapore and Hong Kong. Among more than 900 employers in the region, 64 percent said they expect business activity to increase and 41 percent expect their permanent staff levels to rise.

A seafood restaurant was fined 500,000 yuan ($80,000) for charging customers 9,764 yuan for a seven-course meal during last month's Chinese Lunar New Year holiday, said officials with the industry and commerce bureau of the city of Sanya, a tropical tourism destination in China's southernmost Hainan Province.

The bureau was prompted into action after the restaurant bill was posted on a popular microblog site, stirring widespread outrage.

Authorities also revoked the license of another seafood restaurant which was found to have deceived customers by exaggerating the names of ordinary seafood items on its menu in order to raise prices.

Over the next ten years, China plans to invest 352 billion yuan in making its southernmost tropical island province of Hainan into a top international tourist destination by 2020.

But critics say that while much of the money is for infrastructure, more needs to be done to improve services, like hospitality, as well as the island's credibility.

Deputy Mayor of Sanya Zhang Yun said the city has launched an intensive three-month crackdown on price-gouging in the seafood market.

Zhang said authorities have "zero tolerance" for fraud, and will immediately shut down those guilty of fraudulent behavior.

Squeezed by a deteriorating export environment and the government campaign to rein in the property market, the country's economic growth will continue to fall steadily during the first quarter, the State Information Center said in a statement.

The center's growth forecast was down from 8.9 percent in the fourth quarter, and 9.2 percent for the entire year of 2011.

Weakening demand from Western countries and slower growth in China's fixed-asset investments will help ease domestic price pressures, pushing the country's consumer price index, a main gauge of inflation, down to 3.5 percent for the January-March period, the statement said.

The center suggested that the government should fine-tune its macroeconomic policies in a timely manner, ensure funds for projects under construction, continue support for small and micro-sized enterprises and strengthen liquidity management.

The government should also increase the supply of affordable housing by giving priority to land supply for such projects and encouraging banks to issue more loans to the projects, according to the statement.

BEIJING - Holders of China UnionPay (CUP) bank cards will be able to use their cards in online stores in Taiwan following an agreement reached between CUP and Taiwanese authorities.

Su Ning, CUP chairman and authorities of Taiwan's credit card center announced the decision on Wednesday, allowing the extension of CUP payment services to online businesses. CUP services are already used by half of the island's merchants and 80 percent of its ATMs.

The agreement makes Taiwan's credit card center the first authorized institution in Taiwan to accept online CUP transactions.

Su said CUP transactions are rapidly developing in Taiwan, becoming a "most remarkable part" of financial cooperation between the Chinese mainland and Taiwan.

Reports of a signed agreement of cooperation in the rare earth industry are "seriously fraudulent," said an official in charge of the Chinese People's Association for Friendship with Foreign Countries in Inner Mongolia autonomous region.

There had been no mention of rare earth cooperation in the talks between representatives of the association and the Japan-China Friendship Association of Okinawa Prefecture during their visit to Inner Mongolia from January 18 to 21, the official said.

A Japanese news agency report, datelined Jan 29, quoted sources familiar with the matter as saying that "the two groups signed a mutual exchange agreement ... under which they have confirmed that they will cooperate in businesses using rare earths."

"Expectations that the agreement will lead to the stable supply of the minerals, which are key to high-tech industries, are likely to grow in the Japanese industry," the report said.

The Chinese official said his association has serious concerns about its counterpart in Okinawa, whose head has issued a formal apology for the false reports.

Rare earth metals are vital components for manufacturing an array of sophisticated products, including cell phones, wind turbines, electric car batteries and missiles.

China now produces more than 90 percent of the world's rare earth metals but its rare earth reserves only account for about one-third of the world's total.

Beijing has suspended the issuance of new licenses for rare earth prospecting and mining, imposed production caps and export quotas, and announced tougher environmental standards for rare earth production in order to control environmental damage and protect the resources.

The total floor space sold slumped 20.5 percent year-on-year to 38.3 million square meters last year, the provincial statistics bureau said in a statement Wednesday.

Sales declines quickened with each quarter passing. The decline for the whole year was 15, 12.1 and 5.2 percentage points higher than that in the first quarter, first half and first three quarters, respectively, it said.

Of all, commercial housing sales fell 21.6 percent last year in terms of floor area, the statement indicated.

China's once red-hot property sector showed signs of cooling off last year with the help of tough government measures, including higher mortgage rates, a ban on third-home mortgage loans and purchase restrictions.

Several major Chinese cities, such as Beijing, Shanghai and Guangzhou, also have reported sagging real estate sales last year following the tough regulatory measures

China will unswervingly maintain its regulation policies on the property market in 2012, which are intended to return housing prices to a reasonable level, according to decisions made at the country's annual central economic work conference last December.

With no signs of immediate loosening of tightening measures and thus gloomy prospects, many cash-strapped property developers rolled out big discounts to promote sales as they struggled to pay back debts at the end of last year, the bureau said.

Earlier several local developers in Zhejiang were reported to be in a liquidity crisis or unable to pay back debts, and many real estate agencies have closed stores due to declining housing sales.

During the period, 5.18 million units of subsidized home appliance were sold to rural consumers, down 32.5 percent from the previous year, the ministry said in a statement on its website.

The ministry attributed the decreases to a bigger comparison base last year and the year's week-long Chinese Spring Festival, which started Jan 22.

Major home appliance makers that won the bid for the program, including Haier Group and Hisense Group, all saw year-on-year growth drops of over 30 percent, as subsidies ended in the provinces of Shandong, Henan and Sichuan, as well as the northern coastal city of Qingdao last year.

Under the subsidy program, farmers can receive subsidies equal to 13 percent of the prices of designated types of refrigerators, televisions, washing machines, computers, air conditioners, mobile phones, water heaters, microwave ovens and traditional ovens.

China first introduced the program in Shandong, Henan, Sichuan and Qingdao in December 2007 on a trial basis, and expanded it to the whole nation in February 2009, with an aim to spur rural consumption amid the global economic slowdown.

As of the end of January, the government issued 60.59 billion yuan in subsidies on the sales of about 220 million sets of home appliances valued at 519.66 billion yuan, according to the ministry.

The stockpiling work will be divided into several batches, and the first batch, which includes 500,000 tons, will begin on Friday through competitive bidding, according to a statement on the NDRC's website.

The base purchase price is set at 6,550 yuan ($1,039) per ton, said the statement.

Su Ning, CUP chairman and authorities of Taiwan's credit card center announced the decision on Wednesday, allowing the extension of CUP payment services to online businesses. CUP services are already used by half of the island's merchants and 80 percent of its ATMs.

The agreement makes Taiwan's credit card center the first authorized institution in Taiwan to accept online CUP transactions.

Su said CUP transactions are rapidly developing in Taiwan, becoming a "most remarkable part" of financial cooperation between the Chinese mainland and Taiwan.

The one-year bonds have an annual interest rate of 2.87 percent, the ministry said in a statement on its website.

The bonds will be sold from Wednesday to Friday and become tradable on exchange markets starting Feb 14, the statement said.

The principal and the interest on the bonds will be returned upon maturity on Feb 8, 2013, it added.

The issue of bonds is the ministry's second batch of book-entry treasury bonds this year.

"Non-resident enterprises" refers to enterprises that are established in China in accordance with foreign (regional) laws and regulations with practical administrative organizations located outside of China, or those that have no establishments or sites in China but have income sourced from China.

The administration attributed the growth to an increase in tax sources and improved tax management.

Of the total tax revenue, 63.1 billion yuan came from non-resident enterprises in the country's economically developed regions, such as the cities of Shanghai and Beijing, the SAT said.

Xinjiang exported $16.8 billion worth of goods last year, up nearly 30 percent from a year earlier while importing nearly $6 billion worth of goods, rising 44 percent year-on-year, according to statistics released by the regional customs bureau.

Kazakstan remained Xinjiang's largest trading partner last year, while trade with five central Asian states -- Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan -- accounted for 78 percent of Xinjiang's foreign trade in 2011, the data shows.

Since 2010, China has been pushing for greater opening-up of the resources-rich and strategically located Xinjiang to transform it into a regional economic hub from a relatively underdeveloped desert region.

Su Nan stood inside a Starbucks on Shanghai's bustling Huaihai Road and complained about the US coffee chain's recent price hike. "It's already expensive. How am I going to live?"

But the 26-year-old still joined a long line for a latte.

The world's biggest coffee chain raised the price of some products on Jan 31, due to what it said were rising operating costs. That brought Su's 16-ounce (about half a liter) "grande" cup to 30 yuan ($4.75) from 28 yuan.

Starbucks was already an expensive choice for regular Chinese customers such as Su, who earns about 7,000 yuan a month. One cup of cappuccino a day for a year would cost her 10,950 yuan - about one-eighth of her income.

Still, Su is better off than many others. China's per capita GDP last year was $5,184. It was $48,147 in the US.

Despite a huge gap in personal income, Starbucks has priced its products almost the same in China as in the US, if not higher, since it entered the Chinese market in 1999.

It also raised prices recently in the US Northeast and Sunbelt, by an average of about 1 percent. In New York, a 12-ounce latte now sells for $2.85 and plain brewed coffee was $1.65. The price of a 16-ounce, "grande" cup of coffee is unchanged at $2.20 plus 20 cents in local tax.

But Chinese consumers, who traditionally drink tea and have little taste for coffee, seem not to mind paying a relatively higher price. They have become one of the engines of growth for Starbucks.

The company has become so popular in China that it opened its 500th store in October, in Beijing, and plans to triple the number by 2015. Globally, Starbucks had 17,003 stores in 58 countries as of Oct 2.

In China, it's expanding not just in the big and rich areas but also in so-called second-tier cities, where consumers have much less disposable income. In December, Starbucks announced it had entered five more Chinese cities, including Langfang in Hebei province, which can hardly be rated as second-tier. Annual per-capita GDP is just above $3,000.

Positioning move

Operating costs in China are much lower than in the US. So why do Starbucks and other American companies price their food and beverages higher in China? Two professors from Long Island University in New York offer explanations.

"From the marketing perspective, the price-setting reflects how the brand positions itself in the market," said T. Steven Chang, chair and professor of marketing and international business. "Therefore, cost is not the only factor considered by the company.

"Starbucks actually is selling their whole package, including the symbol of good taste and prestige, the Westernized atmosphere they created in each retail store, and high-quality coffee and food."

Thomas C. Webster, a professor of public administration and public economics, said, "Usually prices are set based on the conditions of the specific market. In the case of China, the market is probably not saturated with competitors, so if people want designer coffee - which many regard as a status symbol - they are willing to pay the higher price.

"If Starbucks starts making large profits," Webster said, "then you will see other competitors enter the market and that will drive the price down."

'Not just coffee'

One Starbucks patron describes herself as a "heavy coffee user" although she drinks just one 16-ounce cup a day. The price doesn't really matter to her or most Chinese customers. [Photo / China Daily]

"The Starbucks brand continues to resonate with the Chinese consumer," John Culver, president of Starbucks China and Asia Pacific, said in an article on Starbucks' website. The Chinese market has become so important that he rates it as "our second home market outside of the United States".

Zou Deqiang, a professor studying consumer behavior at Fudan University, believes Chinese consumers are willing to pay "unreasonable" prices for a nontraditional beverage because they are buying more than just coffee.

"In China, Starbucks is not just coffee anymore," he said. "It represents a Western lifestyle. Some people in China want to live like people live in the developed countries so, to some extent, drinking a cup of coffee that people in the US drink helps them fulfill that dream."

A lot of people can't really tell good coffee from bad, Zou said, but that doesn't keep them out of Starbucks. If they hold paper cups with the Starbucks logo, it gives them the illusion that they live better than those who don't drink Starbucks.

The foreign allure

The iPhone 4S introduction in China last month filled the plaza outside Apple's store in Sanlitun, Beijing. Many buyers were working for scalpers, and Apple moved the smartphone's sale to the Web. [Photo / China Daily]

Zou's comment sheds some light on some Chinese consumers' obsession for foreign brands, most notably Apple's iPhone and iPad.

The craze was illustrated by the failed introduction of the Apple iPhone 4S in Beijing in January. Apple didn't open its flagship store and a frustrated crowd, which had waited all night, threw eggs at the store's gleaming glass walls. Many in the crowd were migrant workers hired by scalpers, who wanted to take advantage of demand that far exceeds supply. Apple shifted sales online to prevent scalping.

A student in Henan province went to the extreme. Local media reported in June that he sold his kidney for about 20,000 yuan and used the money to buy an iPad and an iPhone.

The starting price of an Apple iPhone 4S is 4,988 yuan ($790) in China and $649 in the US, where average personal income is about eight times higher. The price hasn't deterred Chinese consumers, even though they have easy access to domestic smartphones that cost about half but have similar functions and looks.

Why does 16-year-old Huang Junyi like iPhone in particular? "Because it's cool.

"Everybody wants an iPhone in our class. There is no reason for it," the Shanghai student said. "It will be big news if anybody in class gets an iPhone 4S, and you will be mocked if you use some copycat domestic smartphone."

'Badge of wealth'

Wang Haizhong, a professor studying brand strategy at Sun Yat-Sen University in Guangzhou, said the iPhone does have some advantages over other mobile phones but the advantages are not what Chinese consumers really want.

"It's mostly about vanity. Products like iPhone are seen as a badge of wealth and sophistication by young consumers in China. In fact, it's not just iPhone. Many Chinese consumers have a blind preference for brands in the US and other developed countries," he said.

Chinese consumers, he said, are highly brand-sensitive but price-insensitive, the opposite of consumers in developed countries. That explains why US consumers like cheap but high-quality Chinese products and Chinese consumers love US products.

Fudan University's Zou went deeper, saying that while consumers worldwide all tend to spend on vanity, the will is stronger in China, where "power distance" is longer.

Chinese people have a strong respect for power historically, he said, and it's hard for people to get power in society even if they are rich. So a lot of people turn to consuming to feel important and feel the dignity that is hard to obtain in daily life.

"For some consumers, no matter how their lives really are, they feel they are having a good time the moment they hold up a Starbucks coffee or show the latest version of iPhone to their friends," Zou said.

"In other words, they hope to go up a step in the social spectrum by consuming."

Free-market choice

Some scholars, including Qiu Baochang, head of the lawyers' group of the China Consumers' Association, feel that Chinese consumers should be educated to spend more rationally so no more students will want to sell their organs to buy anything. Campaigns, they believe, are urgently needed on campuses to help students understand the real value of money and what they really need.

But Zou disagreed. "There is no right or wrong about how people spend their money, as long as it's legal. In a free market, people have the right to buy what they like, no matter how irrational the choice is."

Write to gaochangxin@chinadaily.com.cn

Wen and Harper witness signing of agreements across a range of sectors

BEIJING - China and Canada signed a series of agreements on Wednesday covering energy, investments and other sectors, in a sign of improved ties amid the global economic slowdown.

China wants to increase imports of energy and resources from Canada, Premier Wen Jiabao told Canadian Prime Minister Stephen Harper before they witnessed the signing of nine deals, including a Memorandum of Understanding on energy cooperation.

Wen also urged the early signing of an investment protection agreement and said the two sides could step up discussions on the feasibility of a free trade agreement.

Other deals signed covered science, technology, academic exchanges, the development of natural resources and Canadian beef and tallow exports to China.

Harper, on a five-day visit to China that started on Tuesday, leads a strong delegation of five ministers and 40 business leaders.

Negotiations on a foreign investment promotion and protection agreement have been concluded, Wen said.

China and Canada began negotiating the agreement in 1994 but for years made little progress.

Both nations will need to conduct a legal review of the deal and then sign and ratify it before it can take effect, according to Reuters.

"The investment agreement will help boost economic and trade cooperation between China and Canada", Shi Yinhong, a researcher at the China Institute of International Studies, told China Daily.

Canadian investment in China rose by 39 percent year-on-year in 2010 to reach nearly $5 billion. Chinese investment in Canada totaled $14 billion in 2010, an increase of 9 percent from 2009.

Wen also urged the two countries to step up joint studies on the feasibility of a free trade agreement.

China is Canada's second-largest trading partner. Bilateral trade stood at almost $50 billion in 2011, up $6 billion from 2009. The two countries set a target of increasing bilateral trade to $60 billion by 2015.

In the energy and resource sectors, Wen said, the two countries should set up a long-term partnership.

Wen said China is willing to increase imports of Canadian energy and resources, and enhance energy cooperation, including nuclear.

"The agreements being signed today, over such a wide range of areas, are further testimony that we are taking relations to the next level and further strengthening our strategic partnership," Harper said in a statement.

This is Harper's second visit to China. Analysts suggest that Harper is trying to push oil sales and closer economic ties following the rejection by US President Barack Obama of a pipeline carrying Canadian oil across the continental US for environmental concerns.

"Diversifying our markets is a key priority for Canada," Harper told Wen.

"We look forward to expanding our cooperation in any important areas, including energy, natural resources, tourism and education," he said.

At 170 billion barrels, Canada is estimated to have the world's third-largest oil reserves after Saudi Arabia and Venezuela.

This augurs well for future cooperation, Xia Yishan, a senior expert on energy strategies and researcher with the China Institute of International Studies, said.

The rapid economic development in China makes it increasingly energy hungry, Xia said.

China also needs to diversify its sources for energy imports, about 70 percent of which come from the Middle East and North Africa, he added.

As Canada is also trying to diversify its energy export market, "China is the first choice", Xia said.

Harper also spoke at a tourism office in Beijing, promoting Canada as a vacation destination.

China granted Canada Approved Destination Status in June 2010. More than 227,000 Chinese travelers had visited Canada in the first 11 months of 2011, up 24.2 percent year-on-year.

Harper first visited China in 2009. Since then, the relationship between the two countries has become much stronger, analysts said.

Harper missed the 2008 Beijing Olympics and did not travel to China until late 2009. President Hu Jintao visited Canada in 2010.

Today China is the news.

The country's rise as an economic power has been one of the hottest topics in the world. Catching the trend The Economist published a special section on China in its Jan 28 issue, the first time in six decades that it has devoted a separate section to a single country. The last time it did so was in 1942 when it covered the United States. "China's emergence as a global power justified giving it a section of its own," says the magazine's Editor-in-Chief John Micklethwait.

I have often heard odes to China's progress in recent years.

An Oxford postgraduate once told me that during her one year of study at the university, rarely had her classes been concluded without the professor mentioning China. A Siemens executive told me matter-of-factly that he needed a new map of Beijing every several months to avoid getting lost in the city's fast-changing landscape. During my visit to the International Herald Tribune's Paris office in December, its publisher, Stephen Dunbar-Johnson, recalled his recent visit to Shanghai and how impressed he was by the construction boom in the town - "I could smell cement in the air."

Such words sound pleasant to Chinese citizens, who have been desperate for the restoration of the country's glory, lost only in modern history. But it would be naive to get carried away with the idea that China will reign supreme in the 21st century, as some people believe.

For decades, the West has viewed China's rise with mixed feelings of curiosity, doubt, disbelief and awe. Pessimists have long forecast an abrupt end to the country's ascendancy, drawing on what they see as evidence ranging from ideological impediment to public discontent, in addition to economic woes in the State and private sectors. Such views were epitomized in The Coming Collapse of China by Gordon Chang published more than 10 years ago, which predicted the country had only several years to go before its collapse.

Nothing could be farther from the truth.

A decade has passed, and China, instead of collapsing, is booming. As the country emerges as the world's second largest economy and largest exporter, more optimistic views have started to dominate.

Yet China is too large, too ancient and too complex a country to make any arbitrary judgment on it. It is a paradox of affluence and scarcity, a combination of modernity and backwardness, a commonwealth of first and third worlds.

While the country held the world's most extravagant Olympic opening ceremony, has sent men into space, and has the fastest high-speed trains, it still struggles to provide enough food and clothing for 30 million people who live in abject poverty, and to provide adequate social security aid for 60 million disabled people.

It guzzles more than 40 percent of the world's total production of coal, one-third of the total steel production and nearly half of the cement, yet it lags far behind in efficient use of energy, which means it has to consume two times more resources than the developed world, and eight times more than Japan, to turn out the same amount of industrial output, casting a shadow on the sustainability of its development.

Everything seems to be made in China, yet the country has profited little from its position in the global supply chain, to the detriment of its labor force and environment.

This is best illustrated by a recent report in The New York Times, which attempted to capture how value moves in global networks by using Apple's iPad and iPhone as examples. It points out that while these products are made in China, the country makes very little money from these popular products and the primary benefits go to the United States. "Only about $10 or less in direct labor wages is paid to Chinese workers" - often subjected to poor treatment - for each unit sold in the US at a price of around $600. "China's role in the world supply chain", the report concludes, "is much smaller than the casual observer would think".

Nothing has really changed in this respect. More than 10 years ago the Los Angeles Times carried a story about the Barbie doll, which pointed out that China gained only 35 cents in service fees for a doll with an export price of $2 and which was sold at retail price of $9.99 in the US market.

For China to become a real superpower, there is still a long way to go.

The author is a senior writer with China Daily.

Pedestrians pass a Pizza Hut restaurant on Nanjing Road in Shanghai. Yum! Brands Inc said it plans to open at least 150 restaurants in second- and third-tier cities in China this year. [Photo / Agencies]

Pizza Hut plans to open 150 of its restaurants in China this year

SANYA - Pizza Hut, a restaurant chain owned by Yum! Brands Inc, announced it will open at least 150 restaurants in China this year as its parent company moves forward with plans to expand overseas.

"Pizza Hut will accelerate its development speed in China," said Perter Kao, brand general manager of Pizza Hut and Pizza Hut Delivery of Yum! China. "We plan to invest more than 700 million yuan ($111.2 million) and open at least 150 restaurants in third- or fourth-tier cities this year."

Yum! Brands Inc, based in Louisville, Kentucky, has more than 36,000 restaurants in more than 117 countries and regions, according to its official website.

In 1987, Yum! entered China by opening its first KFC store. The catering giant now has more than 4,400 restaurants in the country - KFCs, Pizza Huts, Taco Bells, East Dawnings and Little Sheep.

On Tuesday, Yum! Brands Inc reported that its fourth-quarter profit had increased by 30 percent from the same period a year ago, a result it attributed to its global expansion and the sales increase it has seen at its China stores.

The company's net income increased to $356 million, or 75 cents a share, from $274 million, or 56 cents, a year earlier, Yum! said in the statement.

Yum!, which has about 18,800 restaurants outside the United States, said its fourth-quarter sales at stores that have been open at least 12 months increased by 21 percent in China. The company said it opened 656 stores in the country last year, a record number.

It gets more than 40 percent of its revenue from China.

By contrast, same-store sales during the quarter increased by 1 percent in the US, driven by growth at the Pizza Hut chain, Yum! said.

In addition to the store opening, Yum! announced that its plan for privatizing Little Sheep Group Ltd took effect on Feb 1, making the hotpot chain a subsidiary of Yum!. That change has given the company a much bigger presence in the Chinese market. The acquisition is expected to cost Yum! about HK$4.557 billion ($586.5 million).

"China's catering industry is on a fast development track and has achieved year-on-year growth of about 20 percent during the past 30 years," said Jing Linbo, vice-president of the Chinese Academy of Social Sciences' national academy of economic strategy.

"In 2011, the sales revenue from the Chinese catering industry was estimated to reach 2.05 trillion yuan, up 16.9 percent compared with the year before.

"By the end of 2015, the industry's sales revenue is expected to reach 3.7 trillion yuan. That will provide a huge market for foreign restaurant companies, including Yum!."

Stocks also got a lift from a government pledge to support first-time homebuyers.

Jiangxi Copper Co, the largest producer of the metal, soared 10 percent after an economist said China might "move shortly" to help Europe resolve its debt crisis. China Vanke Co, the biggest developer, rose 2.9 percent after the central bank said the government would increase support for the construction of affordable housing.

China Petroleum & Chemical Corp and PetroChina Co led a climb for refiners after the government raised domestic fuel prices for the first time in 10 months.

January inflation figures are scheduled for release on Thursday.

"It looks as if the market is pricing in expectations about pretty low inflation, which will allow the government to relax its tight monetary policies, such as (making) a cut in the reserve requirement ratio," said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co, which oversees $285 million.

"It's still possible the government will relax its curbs on the property market to avoid a hard landing for the economy."

The Shanghai Composite Index rose 55.63 points, or 2.4 percent, to 2,347.53, the most since Jan 17. The CSI 300 Index gained 2.9 percent to 2,528.24.

The Bloomberg China-US 55 Index, the measure of the most-traded US-listed Chinese companies, added 0.2 percent on Tuesday.

Inflation outlook

The Shanghai Composite has rebounded 6.7 percent this year, after plunging 33 percent in the previous two years, on speculation the central bank will further cut reserve requirement ratios to spur lending to small companies.

The central bank announced on Nov 30 a cut in reserve ratios, the first since 2008. It lifted reserve ratios six times last year and raised interest rates to cool inflation.

Consumer prices probably rose 4 percent in January, compared with a 4.1-percent gain in December, according to 33 economists' estimates compiled by Bloomberg.

Inflation might drop to as low as 3.2 percent this month from a three-year high of 6.5 percent in July, Bank of America Corp said.

China's efforts to curb inflation are starting to pay off in the bond market, where yields are poised to exceed consumer-price increases for the first time in 16 months.

The yield on 10-year government bonds gained 7 basis points this month to reach 3.48 percent. The yield trailed inflation since October 2010, resulting in a so-called negative real yield.

Financials rally

A gauge of financial companies in the CSI 300 jumped 2.6 percent. Industrial & Commercial Bank of China Ltd, the nation's biggest listed lender, rose 1.9 percent to 4.41 yuan (70 US cents).

Citic Securities Co, China's biggest listed brokerage, jumped 4.1 percent to 10.95 yuan.

Vanke led gains for property stocks, rising 2.9 percent to 7.59 yuan. Poly Real Estate Group Co, China's second-largest developer by market value, added 2.9 percent to 10.42 yuan, even after the second-biggest developer said on Tuesday that contract sales fell 69 percent in January.

Officials will ensure that "loan demand from first-home families" is met, the People's Bank of China said on its website on Tuesday.

A crackdown on real-estate speculation threatens to trigger a property slump in the world's second-biggest economy. Concerns about the outlook for China's economy increased after the International Monetary Fund warned this week that its expansion would be cut almost in half should Europe's debt crisis worsen.

China might "move shortly" to help Europe resolve its debt crisis by providing an investment of as much as 100 billion euros ($132 billion), said Yuan Gangming, an economist at the Chinese Academy of Social Sciences.

The money would probably go to the European Financial Stability Facility, the euro bailout fund. He added that these forecasts are his own and don't necessarily represent government plans. Economists from the think tank provide policy advice without direct involvement in decisions.

Helping Europe is like "killing two birds with one stone", Yuan said in an interview in Beijing on Monday. The action would have many benefits and few drawbacks, Yuan said.

A measure of material stocks in the CSI 300 climbed 5 percent, the biggest gainer among the 10 industry groups.

Jiangxi Copper surged the 10-percent daily limit to 27.28 yuan. Tongling Nonferrous Metals Group Co, China's second-biggest copper producer, also advanced by 10 percent to 21.73 yuan.

Fuel price hikes

Sinopec, China's biggest refiner, advanced 1.7 percent to 7.78 yuan. PetroChina, the second-largest, climbed 1.7 percent to 10.26 yuan.

Retail gasoline and diesel prices rose 300 yuan a metric ton from Wednesday. The hikes were announced by the National Development and Reform Commission, the nation's top planning agency, on its website on Tuesday.

Bloomberg News

SHANGHAI - China's futures market will recover this year, after a plunge in trading volume last year dragged many brokers into the red, analysts said.

New contracts and expanded corporate hedging will enliven trading, they said, but a continued clampdown on speculation and tight liquidity would prevent a full rebound.

Last year, futures trading volume declined for the first time in five years, falling more than 30 percent, according to the China Futures Association.

While trading in gold, wheat and cotton surged, other contracts such as those for soybeans and rubber saw activity contract sharply. Volume sank further last month, falling 34.4 percent year-on-year.

The declines came amid an ongoing central government clampdown on speculation in the futures market, which it deemed too risky.

In response to the government's campaign, exchanges nationwide increased margin requirements and suspended discounts for trading fees. They also acted to curb "abnormal" trades among related accounts, which further subdued trading volumes.

"Last year was really a tough year, with the government imposing many negative policies on the futures market. It was the worst year in my career," said a broker with a futures brokerage company in Zhejiang province who declined to be identified, citing corporate policies.

The broker added that last year had seen many brokerages' commission revenue cut in half.

However, conditions are expected to improve this year with many major new contracts.

The Shanghai Futures Exchange is expected to start the nation's first silver futures contracts, on the assumption that investors will transfer some of their passion for gold to silver.

The Dalian Commodity Exchange plans to start trading iron ore futures, while the Zhengzhou Commodity Exchange aims to introduce contracts for silk.

More importantly, the China Financial Futures Exchange is likely to restart trading of government bond futures, which was suspended 17 years ago.

Wang Jun, director of the research division of the Beijing subsidiary of China International Futures Co Ltd, said that financial institutions and mining companies would participate more actively in the futures market this year to hedge "systemic risks", which will help lift volume.

He forecast trading volume will rise to about 1.2 billion lots this year from 1.05 billion lots last year.

Analysts said the futures brokerage industry is facing a big reorganization in the face of declining commissions, the only source of income for most domestic futures brokerages.

"2012 will be a year of consolidation for the futures brokerage industry," Jiang Changwu, general manager of Minmetals Futures Co Ltd, said.

Rich Chinese spent $7.2 billion abroad on luxury goods during the weeklong Spring Festival holiday, becoming the most powerful purchasing group in the process. Contrast this with migrant workers struggling to travel home for that all-important annual family reunion and then return to cities, with many even riding pillion on motorcycles to save money.

Over the last few years, it has become a trend among the rich to travel abroad during the Lunar New Year, which is not surprising given the rising affluence in China.

In high-income Western countries, conspicuous consumption reflecting financial success starts with a nice home and furnishings and then moves on to a desirable automobile. The third consumable is a "status vacation". If one cannot get a "winter tan" on a sun-baked beach in a tropical country, there is always a ski resort as an exhilarating alternative. A cruise vacation is another dream many Westerners aspire to realize.

But given the economic crisis gripping the developed world, many Westerners are tightening their belts. In contrast, an increasing number of Chinese are adopting this foreign travel habit as a welcome escape from the pressures of traveling in China during Spring Festival. And quite a large number of those taking foreign trips really loosen their purse strings.

Many Chinese attribute the frenzy to buy luxury goods abroad to the high tax in the domestic market. Irrespective of what the reason is, there is a side-effect to it: Though China with its per capita income of $4,500 is still a middle-income developing country, Chinese people's spending spree abroad could distort the image of the country's wealth in the eyes of foreigners.

While Westerners are astonished by rich Chinese consumers' appetite for luxury goods, people in rural China on average earn less than 7,000 yuan ($1,100) a year. Besides, more than 120 million Chinese people still live in poverty, making only about 6 yuan a day.

Just a few days ago, media reports said Pan Qihou, a farmer in his 60s in Xianfeng county of Hubei province, committed suicide after being ill for three year because he wanted to save money for his two grandchildren's tuition. Such tragedies are reminders of the widening wealth gap in China, and show the mental poverty of Chinese nouveaux riches who splurge on luxury goods abroad.

Of course, China is not the only country where the wealth gap is widening. Many Western countries face a difficult 2012, and economic inequality and austerity measures threaten to make life more difficult for low-income people.

Everyone has to be in the same boat. Excesses are no longer politically acceptable, including 1 million bonuses for British bankers, which they were forced to give up this month. US President Barack Obama has made economic inequality in the country his campaign platform for the presidential election. He has described battling income equality and maintaining the American dream as "the defining issue of our time".

In South Korea, President Lee Myung-bak is being criticized for his grandchildren's expensive outfits. The white winter jacket Lee's granddaughter wore is thought to be a Moncler, which could cost as much as $1,700.

Even though economic inequality exists everywhere, it's not wise for Chinese society to be blind to the mad pursuit of luxury goods, for it will help consumerism boom and lead to over-consumption, which has dragged Western countries into a debt crisis.

Urban residents in China have now outnumbered their rural counterparts, but the average annual urban-rural personal income gap is as big as 17,000 yuan. Looking ahead, the pace of shift from a rural to urban China should be slowed down and the inequality between rural and urban incomes reduced. In a difficult year for the global economy, if China really wants to boost consumption, it should take measures to improve incomes of lower earners and invest more in rural areas to narrow the income gap and bridge the urban-rural divide.

The author is director of China programs at CAPA International education, an UK-US based organization that cooperates with Capital Normal University and Shanghai International Studies University.

Vice-Premier Li Keqiang's emphasis on the fair distribution of affordable housing on Monday points to the weak link that will have a bearing on the fulfillment of the government's goal of providing low-income residents with decent homes.

Given the reports of frequent instances of people cheating to obtaining various types of welfare accommodation, it is necessary to set up and gradually optimize a transparent and efficient plan to review applications for such houses, and effectively remove those applicants whose incomes raise them above the threshold for receiving such welfare.

The central government has implemented strict policies to make sure that local governments make real efforts to construct affordable housing. In 2011, construction started on 10 million units of affordable housing nationwide and the number of units built this year will be at least 7 million.

The message is that the government attaches great importance to the role such welfare plays in redistributing social wealth in a fair and just manner. Such welfare is also expected to contribute to social and political stability, which China badly needs for further economic growth and social progress.

This explains why Li said that the fair distribution of such welfare housing is the lifeline for sustainable development. Li also said that those found cheating to obtain such housing should be made to pay dearly for their cheating.

Frankly speaking, it is not easy for ordinary residents to cheat on such matters. Cheating is often combined with abuse of power or the malpractices of the rich or advantaged. In the scandals exposed in Shenzhen, Guangdong province, some living in affordable or low-rent homes also owned luxury cars or luxurious houses.

Making the entire process of affordable housing distribution transparent would be the most effective way of preventing cheating and under-the-table deals. The vice-premier stressed that the distribution should be placed under the supervision of the public and the media.

It is much harder to achieve the fair distribution of welfare housing than it is to build them. It tests the governing capability of both the central and local governments. It is something that the government must do well or it will tarnish its reputation and affect the stability of this country.

With the central government's resolve, there is reason to believe that most local governments have the experience and will to do a good job.

Short-term capital flows make exchange rate more volatile, posing new challenges for decision-makers in China and US

From July 2005 until December last year, China's renminbi appreciated steadily. The exchange rate then unexpectedly fell, hitting the bottom of the daily trading band set by the People's Bank of China for 11 sessions in a row. Though the renminbi has since returned to its previous trajectory of slow appreciation, the episode may have signaled a permanent change in the pattern of the exchange rate's movement.

As long as China was running a trade surplus and receiving net inflows of foreign direct investment, the renminbi remained under upward pressure. Short-term capital flows had little impact on the direction of the renminbi's exchange rate.

There were two reasons for this. First, thanks to an effective, albeit porous, capital-control regime in China, short-term "hot money", capital coming into China aimed at arbitrage, rent-seeking, and speculation, could not enter and then leave freely and swiftly. Second, short-term capital flows usually would strengthen rather than weaken upward pressure on the renminbi's exchange rate, because speculators, persuaded by China's gradual approach to revaluation, bet on appreciation.

So why, if China was still running a decent current-account surplus and a long-term capital surplus, did the renminbi suddenly depreciate, forcing the central bank to intervene, although not very vigorously, to prevent it from falling further?

Many economists outside of China have argued that the December depreciation resulted from betting by investors that Chinese policymakers, facing the prospect of a hard landing for the economy, would slow or halt currency appreciation. But if that were true, we would now be seeing significant long-term capital outflows and heavy selling of the renminbi for US dollars in China's foreign-exchange market.

We see neither reaction. More importantly, the renminbi's slow appreciation resumed fairly promptly after December's dip, while investors' bearish sentiments about China's economy have remained consistent.

In fact, the renminbi's sudden fall in December reflects China's liberalization of cross-border capital flows. That process began in April 2009, when China launched the pilot Renminbi Trade Settlement Scheme, which enables enterprises, especially larger ones, to channel their funds between the Chinese mainland and the Hong Kong Special Administrative Region. As a result, an offshore renminbi market, known as the CNH market, was created in Hong Kong alongside the onshore market, now dubbed the CNY market.

In contrast to the CNY market, the CNH is a free market. Given expectations of renminbi appreciation and a positive interest-rate spread between the mainland and Hong Kong, the renminbi had a higher value in dollar terms on the CNH market than on the CNY market. That difference led to active exchange-rate arbitrage by mainland importers and multinational firms - one form of capital inflows from Hong Kong to the mainland. Correspondingly, renminbi liabilities owed by mainland Chinese and multinationals increased, as did renminbi assets held by Hong Kong residents.

Exchange-rate arbitrage by mainland importers and multinationals creates upward pressure on the CNY market and downward pressure on the CNH market. In an economy with flexible interest and exchange rates, arbitrage eliminates the exchange-rate spread quickly. But, because China's exchange rate and interest rates are inflexible, the CNH-CNY spread persists, and arbitragers are able to reap fat profits at the economy's expense.

Last September, however, the financial conditions in Hong Kong changed suddenly. The liquidity shortage caused by the European sovereign debt crisis led developed countries' banks - especially European banks with exposure in Hong Kong - to withdraw their funds, taking US dollars with them. As a result, the CNH fell against the dollar. At the same time, the shortage of dollars had not yet affected the CNY, which remained relatively stable.

The CNH therefore became cheaper than the CNY. Consequently, mainland importers and multinationals stopped buying US dollars from the CNH market and returned to the CNY market. At the same time, mainland exporters stopped selling dollars in the CNY market and turned to the CNH market.

The dollar shortage created depreciation pressures on the CNY, which China's central bank declined to offset. The CNY was thus bound to fall, which it did last September.

Reverse arbitrage meant capital outflows from the mainland. Correspondingly, renminbi liabilities owed by mainlanders and multinationals decreased, as did renminbi assets held in Hong Kong. In fact, increases in financing costs and uncertainty about renminbi appreciation prompted a partial sell-off of renminbi assets by Hong Kong residents.

In short, because the Renminbi Trade Settlement Scheme made cross-border capital movements much easier, short-term flows have become a major factor in determining the renminbi's exchange rate. External shocks affect the offshore exchange rate first, and then feed through to the onshore exchange rate.

The renminbi will continue to appreciate in the near future, owing to strong economic fundamentals, but the inherent instability of short-term capital flows will make its exchange rate more volatile. This change is bound to pose new challenges for decision-makers in the United States and China, particularly as they engage in a fresh round of debate about China's exchange-rate policy.

The author is president of the China Society of World Economics and a former member of the monetary policy committee of the People's Bank of China. Project Syndicate

An online post has claimed there are three cartoon cats on the 100-yuan note, but China's central bank denies this and says the prints are based on ancient lacquerware. [Photo / China Daily]

Earlier this week, an online post said there is a design of three cartoon cats on the 100-yuan note beside the portrait of Chairman Mao Zedong.

The post soon became a hot Internet topic. By Wednesday, 28,000 related comments had already been posted on Sina Weibo, a popular Chinese micro-blogging service.

China has published five series of RMB since 1948. The currently circulated RMB note, which includes denominations up to 100 yuan, was put into use in 1999.

If you rotate the 100-yuan bill 90 degrees, you will find the cat-like prints next to Mao Zedong's portrait, according to the post.

"It indeed looks like three cats, one standing in the middle, the other two kneeling on both sides. That is funny. How is it that I have never noticed before?" said Liu Chen, 26, from Beijing.

"I can only see the cat in the middle, and the kneeling cats on the sides are a little far-fetched," said Jian Biao, 26, also from Beijing.

On Tuesday, the People's Bank of China released a statement saying the prints are not cartoon cats. According to the bank, the patterns are based on lacquerware dating back to the Warring States Period (475 - 221 BC). But the meaning of the prints remains unclear.

"From the prints on the 100-yuan bill, it is hard to tell what is the exact meaning of the figure," said Zhang Tian'en, a researcher with the Shaanxi Provincial Institute of Archeology.

Zhang said he has not seen similar patterns in his studies of ancient lacquerware and bronzeware.

"The artistic concept looks a little like the State of Chu during the Warring States period, but it is different," Zhang said.

"And the figure on the RMB only includes an independent part of the ancient design. Without the entire design, it is hard to tell where it is from."

Li Xueqin, a historian and expert in ancient writing at Tsinghua University, said it is hard to ascertain what the illustration is because it is not completely clear.

"But one thing for sure is that the figure has no relation to cats at all."

Wang Xiaotian contributed to this story.

BEIJING - The government aims to raise its minimum wage at least 13 percent each year from 2011 to 2015, according to a national employment promotion plan released on Wednesday.

China raised its minimum wage by an average of 12.5 percent annually during the 2006-10 period, official figures showed.

The plan issued by the State Council stipulates that the minimum wage should be lifted to at least 40 percent of the average Chinese citizen's salary by 2015.

The proportion of the minimum wage to the average salary varies in different places, ranging from about 20 percent to 30 percent, according to Yang Yiyong, director of the social development research institute under the National Development and Reform Commission.

In Beijing, the minimum wage is 1,260 yuan ($200) a month, and in downtown Chongqing municipality, 870 yuan.

Liu Junsheng, a researcher with the labor and wage institute affiliated with the Ministry of Human Resources and Social Security, said a continuous rise of the minimum wage would most benefit low-income workers.

In many places, including more-developed coastal regions, many enterprises, especially small-and medium-sized ones, do not have a complete wage distribution system and still set workers' wages at a level meeting or slightly higher than the minimum standards, he said.

"The minimum wage increase of more than 13 percent each year will help increase the money in workers' pockets and will also be conducive to an elevation in the level of their social security," said Liu.

China's social security system ensures that the higher salary an employee earns, the more social security funds will be deducted from one's salary, meaning a higher pension after retirement. But there are upper limits that vary in different places.

According to the five-year wage plan, the country will continue and further reform its income distribution mechanism and encourage enterprises to set up scheduled salary increases by promoting collective negotiation on wages.

The government plans to extend collective bargaining to cover 80 percent of corporate work units in the country by 2015. The figure was 50 percent at the end of 2010, according to Xinhua News Agency.

Liu Junsheng said most State-owned enterprises have their own mechanisms for awarding pay raises, but many small-and medium-sized firms still do not have trade unions, through which the country pushes enterprises to conduct collective bargaining.

For firms that employ no more than 10 workers, they could join local industrial associations and then they could sit down with industrial trade unions to negotiate on collective contracts, Liu said.

"Collective bargaining might be the most efficient way for workers to get a raise in pay," he said.

About 450,000 catering industry employees in Wuhan, capital of Central China's Hubei province, would benefit from a collective contract signed by members of a local labor union and their employers in May last year, in which they would receive a monthly minimum salary that is 30 percent higher than the minimum wage paid in the city and they would enjoy at least a 9 percent increase in their wages within a year.

The employment promotion blueprint also promises to make adjustments to income distribution in some industries to close the income gap.

Yang Yiyong said the average income in the industry with the highest-paid workers is about seven times higher than that of the industry with the least paid. In the United States, the gap is about 3.5 times, he said.

The primary task in evening out the distribution of income is to ensure that low-income workers' wages increase faster, Yang said. An increase of only 13 percent is not enough for them to catch up with others because people in all classes will have their wages increased each year, he said.

"High-income workers in monopoly industries should have their wage increases awarded at a much slower pace. More financial and fiscal policies should favor small-and medium-sized enterprises to leave room for them to raise workers' salaries," he said.

The plan also aims to create 45 million jobs from 2011 to 2015 and keep the registered urban unemployment rate under 5 percent for the next five years.

BEIJING - Sinochem Group, China's fourth-biggest oil producer, has agreed to buy assets in Colombia from the French oil company Total SA for about $1 billion.

The deal is meant to give Sinochem, a State-owned company, a bigger presence in the Latin American market.

Sinochem signed a share purchase and sale agreement in mid- January allowing it to acquire Total's stake in Tepma BV, which has a stake in the Cusiana oil field and in Colombian pipelines, according to a statement on Sinochem's website.

The acquired interest in the Cusiana field will be able to yield about 7,000 barrels of oil equivalent a day. A barrel of oil equivalent is equal roughly to the amount of energy that is released by burning a barrelful of crude oil.

Sinochem said the deal will help it explore and develop existing oil fields and further lay its foundation in Latin America, where the company aims to produce 5 million tons of oil equivalent by the end of 2020.

"Disposing of these mature assets and positions in transportation infrastructures is in line with our ongoing asset optimization strategy," Olivier de Langavant, senior vice-president for strategy business development at Total's exploration and production, was quoted as saying by Dow Jones.

"For Colombia, it will allow us to focus our expertise on exploration assets with higher potential."

Sinochem could not be reached to comment on this article.

Before the proposed deal between Sinochem and Total can go forward, it must be approved by government authorities.

This latest step follows on Sinochem's agreement in January to buy a 10 percent stake in five offshore oil blocks in the Espirito Santo basin in Brazil. The seller in the deal is the Anglo-French oil company Perenco.

Sinochem also brokered a deal last year to buy a 40-percent stake in Brazil's Peregrino offshore oilfield from the Norway-based Statoil. The cost of the acquisition was $3.07 billion, making it the biggest that the company has made abroad.

The share in the oilfield yielded more than 1 million tons of oil and gas for the company in 2011.

Sinochem is smaller than its rivals China National Petroleum Corp and China Petrochemical Corp and does not have the licenses it needs for domestic oil and gas exploration and development. To maintain its growth, it has had to expand abroad.

From 2002 to 2010, Sinochem produced 8.72 million tons of oil and gas. Sinochem's output for 2011 was estimated to be 3.2 million tons. That same year, China National Petroleum Corp produced 106.54 million tons of crude oil.

To catch up, Sinochem set the goal of producing 15 million tons of oil equivalent by the end of 2020. Countries in Latin America, Brazil and Colombia in particular, are expected to play large roles in helping it meet that ambition.

Food prices jumped 10.5 percent year-on-year, driving the CPI up to 3.29 percentage points, the NBS showed.

The surge is mainly boosted by consumption before Chinese Lunar New Year holidays, said Peng Wensheng, the chief economist with China International Capital Corporation. "But the inflation pressure is expected to ease this year, with an annual CPI forecast of 3.5 percent."

The government may have more space to loosen monetary policies and make supporting economic growth a priority, analysts said.

The nation's whole-year consumer prices increase from 2010 to 2011 was 5.4 percent. It was the first rise after the CPI figure dropped for five consecutive months since August 2011, after it hit a 37-month high of 6.5 percent in July.

The NBS also released the year-on-year producer price index growth of 0.7 percent in January, compared with 1.7 percent in December 2011.

GUANGZHOU - Local government has urged inspection organizations to speed up examination of suspect fake eggs discovered in the Guangdong capital.

Almost 3,000 eggs were removed from a supermarket in the Panyu district of Guangzhou on Monday after a shopper complained that ones he had bought were fake.

Officers from the local industry and commerce bureau have sealed up the eggs in boxes and sent samples to the city branch of the provincial food quality supervision and inspection station.

The results are expected before the weekend.

"If it turns out the eggs were artificially made, the supermarket will be fined between 2,000 yuan ($317) and 50,000 yuan," said Liu Yuming, head of the food section at Panyu administration for industry and commerce.

Liu revealed that the batch of eggs that contained the suspect ones had come from two wholesale markets in the Baiyun district, Guangzhou.

Officers from Baiyun administration for industry and commerce carried out spot checks on 14 stores in the wholesale markets on Tuesday and have sent samples of the eggs in these stores to China National Analytical Center, Guangzhou.

Zou Yingqiang, head of the food inspection section at Baiyun administration for industry and commerce, added that the 14 stores had bought eggs from suppliers in Guangzhou and other provinces including Hunan, Hubei, Jilin, Liaoning and Chongqing municipality.

A local resident surnamed Guo bought the allegedly fake eggs from a supermarket called Jia De Fu on Jan 30. The next day, when his young child suffered a stomach upset after eating one of the eggs, Guo discovered that the boiled yolk was hard to chew or crumble.

According to Zhao Qiangzhong, an associate professor from the school of light industry and foods at South China University of Technology, the eggs Guo bought are likely to be fake, judging by the abnormal size and flexibility of the boiled yolk, which was like a rubber ball. The yolk is smaller than usual and it bounced on the floor three times, he claimed.

Zhao revealed that there are many ways to mix chemicals and make a bogus egg. For example, sodium alginate solution can be used to fake the egg whites and the yolk.

"Sodium alginate is edible but it certainly doesn't contain the nutrition of a real egg," said Zhao. "But if the egg is made from chemicals that are not edible, such as the material used in a bouncy ball, it will harm health."

However, Professor Yang Lin from South China Agricultural University said the eggs might not be artificially made.

"A high proportion of fried cotton seeds in chicken feed may also make a boiled yolk more elastic than usual," said Yang, an expert in animal feeds.

Yang revealed that in order to reduce costs, some farmers increase the proportion of fried cotton seeds in chicken feed from below 6 percent to over 10 percent because the seeds are cheaper than soybeans.

But the cotton seeds contain a toxic pigment called gossypol that can inhibit sperm production and has been used in experiments in male contraception.

"The free gossypol contained in fried cotton seeds has minor toxicity and may do harm to animals and human beings," Yang warned.

Meanwhile, Fan Zhihong, associate professor on nutrition and food safety from China Agricultural University, questions whether artificially producing eggs is profitable. For example, she said, it takes very refined techniques to create a rough surface with lots of tiny holes and fake an eggshell.

Fan also noted that a small hole in the eggshell can also lead to a hardboiled yolk being hard to chew, because the water had leaked from the hole.

In the past month, suspected fake eggs have been reported in other cities, including Leizhou in Guangdong province and Yantai in Shandong province.

BEIJING - Chinese companies should intensify their drive to invest in Canada, especially in the energy sector, as there are tremendous opportunities, an official from the Ministry of Commerce said.

"We could anticipate the growth (of China's investment in Canada) ... of course, there are already many good examples," Jiang Shan, minister counselor of the nation's embassy in Canada, told China Daily.

"Chinese enterprises could make forays into or add investment in the categories of coal, iron ore and potash manure."

On Wednesday, Canadian Prime Minister Stephen Harper started a five-day official visit to China, his second since his Conservatives took power in 2006.

As an important part of the visit, Harper will promote sales of Canadian oil while pushing for greater access for Canadian banks and insurers in China.

The visit will see the completion of negotiations for bilateral investment protection agreements, said a statement by the Ministry of Commerce on Wednesday.

A joint study on how the economies of China and Canada complement each other will be completed by May, it said.

Jiang said there has been an apparent increase in Chinese investment in Canada.

"We can feel that the Canadian government welcomes Chinese investment, without setting any restrictions. Meanwhile, China's companies have a strong desire to invest in Canada," said Jiang.

"But I strongly suggest that they (Chinese companies) partner with their local counterparts and create jobs in the local market to ensure the success of the deals," he added.

Harper is leading a delegation of more than 40 Canadian executives. He is also scheduled to meet with President Hu Jintao and Premier Wen Jiabao, welcoming Chinese investment into Canada's energy industry.

During the past two years, Chinese companies have poured billions of dollars into Canadian energy assets.

In 2011 alone, there were two large acquisitions of Canadian energy companies by Chinese companies. Each deal was valued at more than $2 billion.

In October, China Petroleum and Chemical Corp, Asia's biggest refiner, agreed to buy the oil and gas producer Daylight Energy Ltd, which is based in Calgary.

In July, CNOOC Ltd, China's largest offshore oil explorer, bought Calgary-based Opti Canada Inc to expand its oil sands reserves.

More recently, PetroChina - which previously agreed to buy a 20 per cent stake in Shell's Groundbirch assets - moved to extend its reach into Canadian shale gas assets through a deal with Royal Dutch Shell. That transaction was reported to be worth more than $1 billion.

Figures from Statistics Canada show that in 2010, China's investment in Canada was three times that of Canadian enterprises' investment in China, or $4.8 billion.

Harper said recently that Canada was making major transformations to sustain its economic growth, prioritizing moves such as building capacity to export oil to Asia and negotiating trade agreements.

An express package delivery hub in Dalian, Liaoning province. DHL Express currently leads the market with 35 percent of China's international business. [Photo / China Daily]

But life at DHL does not deliver a diet of fun and games all the time

BEIJING - Playful, charismatic and energetic, Ken Allen can often be found cheering up a roomful of people with a song. You will hear him sing Ain't No Mountain High Enough, the theme song for DHL's latest promotion campaign if you ask about business confidence amid a largely flat world economy, and I Will Be a Billionaire, a popular song within the company, when he is quizzed about his business targets for the next five years.

And, if you can wait, you will hear him launch into jokes about competitors, which lightens the atmosphere at every staff meeting.

Dubbed the "singing CEO" by his employees, the 56-year-old English businessman has worked for half of his life in the empire of Deutsche Post AG, the world's largest logistics group. He managed offices in small Middle East countries such as Yemen, opened Libya's market for the company and then ran divisions in big countries including the United States and Canada before he reached the top position in 2009 in DHL Express, the group's express division.

One thing about the company he learned from his global experience is that it is "the most international company in the world", he said.

His motto as the CEO in such a company is simple: "It is my firm belief that all you need to do is send one simple message right throughout the organization."

But given the multicultural nature of the company, he said words cannot be trusted. "I broke the messages into songs," he said, with a proud smile.

The message was about the people. "To motivate people is the most important matter. Every frontline guy is an ambassador for the brand. And we will make them proud of working for DHL," he said

Despite the huge investments in networks and facilities, the express business, Allen said, depends on attitude. It matters whether the frontline staff keep the yellow vans clean, wear nice-looking uniforms, crack a smile for clients and maintain the proud speed of the dashing yellow light (the company's symbol, shown in its latest advertisements).

But a CEO's lot is not always a happy one. He or she has to be decisive and practical. For Allen, one of the latest tough decisions he made was to give up China's domestic express business.

Total withdrawal

In July 2011, DHL sold three Chinese express companies it acquired in 2009 to a domestic company, which means a total withdrawal of DHL from the domestic express business on the Chinese mainland.

The major reason for DHL to leave was "the fierce competition in the domestic market" which led to financial losses, said the company. The three Chinese domestic express companies DHL acquired in 2009 reported losses of 99.2 million yuan ($15.5 million) by the end of 2010, according to the company.

In a bid to stop the hemorrhaging of cash, the three companies, bought two years ago for 300 million yuan, were sold in July for just 100 million yuan, according to domestic reports.

For Allen, the withdrawal strategy was not new. In November 2008, DHL announced plans to shut down the domestic business in the US because of "fluctuating fuel costs, the downturn in the US economy and the continued contraction of the US domestic air express business", the company said.

In making this move, the company was able to cut its business budget by 80 percent from $5.4 billion to $1 billion, but had to close all of its ground hubs in the US and reduce the number of US logistics stations from 412 to 103. Of all the approximately 17,000 jobs in the US, only 3,000 to 4,000 remained, according to the company.

One thing about the tough decisions, although important and difficult, Allen said, was not to take them as a personal issue.

"Being a CEO, you have to be objective. You need to admit your mistakes and fix them," he said.

"And you should not hang on too long. Make the decision quickly as in China and maybe you can find someone to buy it. If you wait too long, as we did in the US, the impact can be dramatic on people's lives," he added.

Doomed battle

DHL's withdrawal also raised the question whether foreign express companies are bound to fail in competition with domestic ones. The four largest logistics companies worldwide - DHL, Federal Express Corporation (FedEx), TNT Express NV and United Parcel Service (UPS) - entered China's market during the 1980s but none have managed to claim predominance in the domestic business.

Analysts said one of the reasons is that China's domestic express companies are very competitive in price. With cheap labor and management costs, they have an advantage in local business. Their levels of service may be low but this is more than compensated for by their low prices.

The government seems eager to bring order into the market. In July, the State Post Bureau issued a guideline aiming to boost the development of a number of major domestic companies through consolidation while shutting down 56 small express companies because their services failed to meet the national standard.

Another difficulty for foreign companies might have stemmed from the government's regulation, analysts said. China revised its Post Law in 2009, which forbids foreign companies from participating in the domestic mail express business. The revised regulation, industry insiders said, may have hurt DHL's business.

Coming to China in 1986, DHL formed a joint venture with a major domestic logistics company in charge of its business in China. But according to the revised Post Law, the joint venture, DHL-Sinotrans International Air Courier Ltd and its subsidiaries, were regarded as a foreign company and therefore barred from the mail express business in China.

The mail express business accounted for 35 percent of the three express companies DHL-Sinotrans acquired, Jerry Hsu, CEO of DHL Express Asia Pacific, told Chinese domestic media.

Gene Huang, chief economist and vice-president of FedEx, said the government should enhance the stability and transparency of its regulations and policies to spur the development of the express industry.

Yet despite all the difficulties, foreign companies still have reasons to stay and hope, said Tina Wang, partner and vice-president of Roland Berger Strategy Consultants, Greater China.

"China's express market has been developing rapidly, which will generate demand for different services. Foreign express companies, with a better service, could cater to the high-end clients," she said.

Wang said there is a need for the government to further elucidate its regulations. But she also agreed that "the regulation has been improving during recent years".

"Always be in China"

Pulling out of the domestic business does not mean DHL has left China, Allen said. "My whole strategy is to focus on the international business, where we can have a lot of value."

DHL currently leads the market with 35 percent of China's international business, compared with a "small market share in the domestic business", Allen said.

China's importance has developed rapidly during the last decade, according to Allen.

"China is already the biggest revenue country in DHL's network. But 10 years ago it was not in the top 10," he said. "The development reflected the importance and development of China itself."

China's business is on the increase. "The year 2011 was a strong year of growth in China, which had been expected. We will be cautiously optimistic about the next two or three years and expect the business growth to continue," he added.

For business in the future, besides continuous investment and staff training, DHL will focus on "helping the world enter China", he said.

"We have seen a growing middle class and wealth in China. The next decade will see more and more small- and medium-sized companies in the US and Europe trying to come to China. And we will help them."

In the meantime, China's booming domestic business will remain tempting. According to an industry report, by 2015, China's domestic express business market will expand by four times from now to 129.2 billion yuan while the international business will double to 32.3 billion yuan.

"China's domestic express business will maintain its robust dynamism, while its international business may be subject to international trade growth and remain stable," Wang from Roland Berger said.

But Allen insisted that DHL is unlikely to return to China's domestic business, which "is not our specialty". "But we will always be in China," he said.

"Ain't no mountain high enough ... If You Need Me, Call Me, No Matter Where You Are, No Matter How Faaaaaar..." he was induced to sing in his own inimitable way.

The reading eased further from December's 1.7-percent growth, as most of the country's factories suspended production during the Chinese Lunar New Year holiday.

On a month-on-month basis, China's January PPI fell 0.1 percent from December, the NBS said in a statement on its website.

Producer purchase prices grew 2 percent year-on-year in January and were down 0.3 percent from a month ago, said the NBS.

Economist Dong Xianan said the January PPI growth was in line with expectations and the growth would continue to decelerate in February.

"With the further easing of inflationary pressures, the growth in the country's producer prices may pick up in the second half of this year if demand improves," he said.  

BEIJING - European companies have thrown a large number of Chinese emissions reduction projects into doubt by refusing to pay the pre-agreed price following a market plunge, industry insiders said.

About half of the Chinese Carbon Development Mechanism (CDM) projects are being renegotiated or terminated, according to estimates. No official figures are available.

China is the world's biggest carbon credit supplier. EU companies agreed to buy most of the credits to help them meet caps under the EU emissions trading scheme.

Industrialized countries can buy carbon credits from developing countries under the United Nations Carbon Development Mechanism. The carbon credits help developed nations meet their own emissions targets.

The UN, by Jan 9, issued 484 million carbon credits to Chinese CDM projects. Most involve hydro and wind power projects.

However, the international market in carbon credits has plunged in recent months, and defaults by European firms have surged, said Tang Renhu, general manager of Sino Carbon Innovation and Investment Co.

Many projects are being renegotiated, he said.

"Buyers and sellers were in the same boat when the carbon market was up", but the declining market has changed that, Tang said.

Risks facing Chinese sellers grew as the price of carbon credits fell from 25 euros ($33) a few years ago to record lows of around 4 euros.

The average agreed price was around 10 euros, industry insiders said.

"The buyers are looking for loopholes and are trying to terminate or renegotiate agreements," said an executive of a State-owned CDM developer under condition of anonymity.

A CDM consulting company has about 30 projects in its portfolio and about half are being renegotiated, a company source said.

"Obviously buyers want to renegotiate the prices to help them offset the downside risks in the carbon market," said another developer, who declined to be named.

The developer is facing renegotiation and default on two of his wind power projects.

Wind and small hydropower projects are dependent on emissions reduction revenues that make up 20 percent of their income, Tang said.

Investor confidence has been shaken, he said.

But not all CDM developers are experiencing turbulence.

Judy Fan, manager of the Beijing Tianqing Power International CDM Consulting Co, said most of the projects conducted by the company were performing smoothly.

"Fortunately most of our customers are big power companies or financial institutions, are financially strong and respect the spirit of the contract," she said.

Tianqing is one of the biggest CDM consulting companies in China with more than 200 projects in its portfolio. But some companies did ask to renegotiate prices in 2012, she added.

Zhou Yacheng, a lawyer with Zhong Lun Law Firm, said some Chinese companies failed to pay due diligence when signing the contracts and did not involve a lawyer.

The market is expected to rebound in two years. Carbon credits were one of the worst performing commodities in 2011 with prices plunging by about 70 percent.

Yang Fuqiang, a senior adviser on climate and energy policy with the Natural Resources Defense Council, a New York-based environmental group, said it's time for Chinese companies to transfer their focus from the slumping international carbon market to the domestic market.

China is set to unveil plans to impose controls on total energy consumption and that is closely linked to the country's greenhouse gas caps.

China has approved five cities and two provinces to launch carbon emissions trading markets on a pilot basis, probably in 2013.

The National Development and Reform Commission requested that the cities and provinces, including Beijing, Tianjin and Shanghai, set overall emissions control targets and establish a system for carbon trading.

"The European market faces increasing challenges due to sluggish economic growth and uncertainties in the international climate change negotiations," Yang said.

The exhibition booth of ZTE Corp, China's second-largest telecommunications equipment maker, at the 12th China (Tianjin) Information Technology Exposition in November. [Photo / China Daily]

Chinese companies won't make major strategy changes after Indian court's move on licenses

BEIJING - ZTE Corp, China's second-largest telecommunications equipment maker, said an Indian court's ruling imposing penalties on local telecoms operators has had little impact on its performance, and the company's operations in India are running as usual.

Earlier this month, the Supreme Court of India revoked 122 telecommunications licenses that were issued at below-market prices in 2008 amid a corruption scandal, the India-based Economic Times reported.

The newspaper said Andimuthu Raja, the former telecoms minister, had resigned because of the case and was in jail awaiting trial.

The ruling applies to licenses for eight operators, some of which are held by joint ventures involving foreign companies such as Telenor ASA of Norway and Emirates Telecommunications Corp of the United Arab Emirates.

Media reports have said that many operators had purchased equipment from Chinese vendors Huawei Technologies Co Ltd and ZTE Corp.

Huawei and ZTE, both among the world's top five telecommunications equipment companies, have invested heavily in India in the past decade.

That nation is the world's second-largest cellular market by subscribers, with 894 million at the end of December.

In a statement to China Daily on Wednesday night, ZTE said the Indian court's ruling hadn't had a great effect.

"Our company will pay close attention to the progress, and continue to expand in India's telecom market," it said.

ZTE's Hong Kong-listed shares gained 3.44 percent to HK$22.55 ($2.90) on Wednesday.

Huawei declined to comment on Wednesday. According to Huawei's official website, the company has invested about $200 million in India.

It established its largest overseas research and development center, Huawei Technologies India, in Bangalore, in 1998.

The Economic Times reported that Huawei had sold nearly $800 million worth of second-generation gear to the companies involved in the case, while ZTE had sold equipment worth $500 million. The paper did not reveal the source of its figures.

Chinese analysts said that Huawei and ZTE might not come away unscathed, but the corruption scandal would not force Chinese companies to make a major strategy change in India.

Zhao Hailin, an analyst with the research house IHS iSuppli Co, said that since many of the affected Indian operators had applied for credit from banks, it meant that banks would shoulder more risks than Chinese equipment makers.

In addition, Huawei and ZTE had definitely received at least part of their payments due, Zhao said.

"Because of intensified competition and the low pricing environment (in India), we have seen Huawei and ZTE experience a sliding revenue contribution from India over their global sales since 2008," Zhao added.

In the first half of 2011, Huawei generated the equivalent of 3 billion yuan ($476.3 million) while ZTE gained 1.8 billion yuan in revenue from India, data from IHS iSuppli show.

Revenue growth in India has been slower than in other markets, such as Europe.

"It is inevitable for companies such as Huawei and ZTE to encounter various risks when they expand overseas," said Chen Jinqiao, deputy chief engineer at the China Academy of Telecommunications Research.

"The smart way for Chinese companies is to adopt concrete methods to avoid risks, rather than retreat quickly when a problem occurs."

The growth rate was the highest in three months, accelerating from 4.1 percent in December and 4.2 percent in November. On a monthly basis, the country's CPI increased 1.5 percent in January, the NBS said.

Although the unexpected rebound severed a months-long decline from a 37-month high of 6.5 percent in July, it will not change the CPI's downward trend for the whole year, analysts said.

The CPI increase, which was mainly boosted by food price surges in January amid the traditional Chinese Lunar New Year holiday, will see a remarkable pull-back in February, said Lian Ping, chief economist at the Bank of Communications.

Li Huiyong, chief analyst of Shenyin & Wanguo Securities, expected the country's CPI annual increase to ease to 3 to 3.5 percent in February.

Food prices, which account for nearly one third of the basket of goods in the nation's CPI calculation, climbed 10.5 percent in January from one year earlier and contributed to 3.29 percentage points in January's CPI rise.

Prices of pork, China's staple meat, soared 25 percent year-on-year in January, while grain prices jumped 6.1 percent from one year earlier.

On a monthly basis, the country's CPI increased 1.5 percent in January, the NBS said.

Despite the CPI rebound, the country's producer price index (PPI) only increased 0.7 percent in January year-on-year, down from 1.7 percent in December and was the lowest since December 2009. PPI is a main gauge of inflation at the wholesale level.

However, even if January's rebound was an aberration, the fact that it was well above the market expectations may caution policy makers to hold off policy loosening, said Peng Wensheng, chief economist of the China International Capital Corporation, the country's largest investment bank.

"There is less possibility that the central bank will cut the reserve requirement ratio in February," Peng said.

For more than a year, China has been squeezing its banking system in efforts to rein in high inflation. However, the country's central bank in December cut the amount of cash that lenders have to set aside as reserves for the first time in three years..

"Inflation is a decreasing risk for the economy and policy is likely to emphasize growth in the medium term," Alaistair Chan, an economist at Moody's Analytics said in a statement.

The country's policy makers vowed to maintain the prudent monetary policy and proactive fiscal policy in 2012, but fine-tune these policies as conditions change.

China's economic growth had slowed over the length of last year. Its GDP growth decreased to 8.9 percent in the fourth quarter of 2011 from 9.7 percent in the first quarter.

The country's GDP growth will further dip to 8.5 percent in the first quarter of this year, the State Information Center, a government think tank, projected in a statement released Thursday.

On Monday, the International Monetary Fund cut its forecast for China's GDP growth this year to 8.25 percent from the 9 percent projected in September 2011. It said China's projected growth could be cut by nearly half if the eurozone, its biggest trade partner, suffers a sharp downturn due to the debt problems.

China's PPI up 0.7% in Jan

China's Producer Price Index (PPI), a main gauge of inflation at the wholesale level, rose 0.7 percent in January year-on-year, the lowest since December 2009, the National Bureau of Statistics (NBS) said Thursday.

The reading eased further from December's 1.7-percent growth, as most of the country's factories suspended production during the Chinese Lunar New Year holiday.

On a month-on-month basis, China's January PPI fell 0.1 percent from December, the NBS said in a statement on its website.

Producer purchase prices grew 2 percent year-on-year in January and were down 0.3 percent from a month ago, said the NBS.

Economist Dong Xianan said the January PPI growth was in line with expectations and the growth would continue to decelerate in February.

"With the further easing of inflationary pressures, the growth in the country's producer prices may pick up in the second half of this year if demand improves," he said.  

Monthly rents of the top level offices in Beijing reached 246.43 yuan ($39) per square meter in 2011, with those in downtown CBD district hitting 270 yuan. But that were about three-fifths of the occupancy cost of top offices in New York, said Wei Dong, a regional research bureau chief of the firm.

The assessment came after Cushman & Wakefield placed Beijing ahead of New York in the fifth place for the world's most expensive office rentals on the real estate company's recently published 2012 rankings.

Analysts said the discrepancies might stem from the different gauges chosen by the two firms to value occupancy costs. But both statistics show a sharp rise of office rents in Beijing in 2011.

Wei said the price hike was caused by a shortage of supply in the market as real estate developers hoarded many of the new office spaces in good locations.

According to DTZ, the office rents at the China World Trade Towers were the priciest last year, topping 1,500 yuan per square meter a month. But firms with a tight budgets can still rent an office in the nearby SOHO Shangdu complex for about 150 yuan.

Growth of office rents in Beijing are widely expected to slow in 2012, according to the estimates of several real estate firms.

Workers categorizing packages in a post office in Chongqing before the Spring Festival holiday, which started on Jan 22. [Photo / China Daily]

BEIJING - Business volume for China's postal services maintained strong growth in 2011, according to the State Post Bureau, conjuring up promising prospects for the country's logistics companies.

Revenue from China's postal services jumped by 22.3 percent in 2011 to 15.6 billion yuan ($2.4 billion). Half of the revenue (7.58 billion yuan) came from the express business, up 32 percent year-on-year, according to data from the bureau.

Domestic business continued to shore up the express industry in China. Official data showed that revenue from the international express business in 2011 accounted for only 24.4 percent of the industry's total figure, declining 6.7 percentage points from the previous year.

Geologically, East China accounts for 81.1 percent of the country's total express business revenue, almost unchanged from 2010. In comparison, Central China took up 9.9 percent and West China 9 percent.

Analysts said the market was partly driven up by the country's booming e-commerce industry. The country's total online shopping revenue was reckoned to have reached 800 billion yuan in 2011, said He Liming, chairman of China Federation of Logistics and Purchasing, an industry association.

This generated a total business volume of 3.65 billion pieces of express mail and parcels, He said.

Yet analysts said logistics services need to be further improved and might hold back the development of the country's robust e-commerce industry.

The express companies tend to delay their delivery services especially during holiday seasons when e-commerce companies try to boost sales with promotions. This has given rise to widespread complaints among customers.

Still, the logistics industry is on track for fast development. In 2011, the country's total logistics costs increased by 12 percent from the previous year to 160 trillion yuan, while the industry's added value grew by 14 percent year-on-year to 3 trillion yuan, according to data from China Federation of Logistics and Purchasing.

Su Nan stood inside a Starbucks on Shanghai's bustling Huaihai Road and complained about the US coffee chain's recent price hike. "It's already expensive. How am I going to live?"

But the 26-year-old still joined a long line for a latte.

The world's biggest coffee chain raised the price of some products on Jan 31, due to what it said were rising operating costs. That brought Su's 16-ounce (about half a liter) "grande" cup to 30 yuan ($4.75) from 28 yuan.

Starbucks was already an expensive choice for regular Chinese customers such as Su, who earns about 7,000 yuan a month. One cup of cappuccino a day for a year would cost her 10,950 yuan - about one-eighth of her income.

Still, Su is better off than many others. China's per capita GDP last year was $5,184. It was $48,147 in the US.

Despite a huge gap in personal income, Starbucks has priced its products almost the same in China as in the US, if not higher, since it entered the Chinese market in 1999.

It also raised prices recently in the US Northeast and Sunbelt, by an average of about 1 percent. In New York, a 12-ounce latte now sells for $2.85 and plain brewed coffee was $1.65. The price of a 16-ounce, "grande" cup of coffee is unchanged at $2.20 plus 20 cents in local tax.

But Chinese consumers, who traditionally drink tea and have little taste for coffee, seem not to mind paying a relatively higher price. They have become one of the engines of growth for Starbucks.

The company has become so popular in China that it opened its 500th store in October, in Beijing, and plans to triple the number by 2015. Globally, Starbucks had 17,003 stores in 58 countries as of Oct 2.

In China, it's expanding not just in the big and rich areas but also in so-called second-tier cities, where consumers have much less disposable income. In December, Starbucks announced it had entered five more Chinese cities, including Langfang in Hebei province, which can hardly be rated as second-tier. Annual per-capita GDP is just above $3,000.

Positioning move

Operating costs in China are much lower than in the US. So why do Starbucks and other American companies price their food and beverages higher in China? Two professors from Long Island University in New York offer explanations.

"From the marketing perspective, the price-setting reflects how the brand positions itself in the market," said T. Steven Chang, chair and professor of marketing and international business. "Therefore, cost is not the only factor considered by the company.

"Starbucks actually is selling their whole package, including the symbol of good taste and prestige, the Westernized atmosphere they created in each retail store, and high-quality coffee and food."

Thomas C. Webster, a professor of public administration and public economics, said, "Usually prices are set based on the conditions of the specific market. In the case of China, the market is probably not saturated with competitors, so if people want designer coffee - which many regard as a status symbol - they are willing to pay the higher price.

"If Starbucks starts making large profits," Webster said, "then you will see other competitors enter the market and that will drive the price down."

'Not just coffee'

One Starbucks patron describes herself as a "heavy coffee user" although she drinks just one 16-ounce cup a day. The price doesn't really matter to her or most Chinese customers. [Photo / China Daily]

"The Starbucks brand continues to resonate with the Chinese consumer," John Culver, president of Starbucks China and Asia Pacific, said in an article on Starbucks' website. The Chinese market has become so important that he rates it as "our second home market outside of the United States".

Zou Deqiang, a professor studying consumer behavior at Fudan University, believes Chinese consumers are willing to pay "unreasonable" prices for a nontraditional beverage because they are buying more than just coffee.

"In China, Starbucks is not just coffee anymore," he said. "It represents a Western lifestyle. Some people in China want to live like people live in the developed countries so, to some extent, drinking a cup of coffee that people in the US drink helps them fulfill that dream."

A lot of people can't really tell good coffee from bad, Zou said, but that doesn't keep them out of Starbucks. If they hold paper cups with the Starbucks logo, it gives them the illusion that they live better than those who don't drink Starbucks.

The foreign allure

The iPhone 4S introduction in China last month filled the plaza outside Apple's store in Sanlitun, Beijing. Many buyers were working for scalpers, and Apple moved the smartphone's sale to the Web. [Photo / China Daily]

Zou's comment sheds some light on some Chinese consumers' obsession for foreign brands, most notably Apple's iPhone and iPad.

The craze was illustrated by the failed introduction of the Apple iPhone 4S in Beijing in January. Apple didn't open its flagship store and a frustrated crowd, which had waited all night, threw eggs at the store's gleaming glass walls. Many in the crowd were migrant workers hired by scalpers, who wanted to take advantage of demand that far exceeds supply. Apple shifted sales online to prevent scalping.

A student in Henan province went to the extreme. Local media reported in June that he sold his kidney for about 20,000 yuan and used the money to buy an iPad and an iPhone.

The starting price of an Apple iPhone 4S is 4,988 yuan ($790) in China and $649 in the US, where average personal income is about eight times higher. The price hasn't deterred Chinese consumers, even though they have easy access to domestic smartphones that cost about half but have similar functions and looks.

Why does 16-year-old Huang Junyi like iPhone in particular? "Because it's cool.

"Everybody wants an iPhone in our class. There is no reason for it," the Shanghai student said. "It will be big news if anybody in class gets an iPhone 4S, and you will be mocked if you use some copycat domestic smartphone."

'Badge of wealth'

Wang Haizhong, a professor studying brand strategy at Sun Yat-Sen University in Guangzhou, said the iPhone does have some advantages over other mobile phones but the advantages are not what Chinese consumers really want.

"It's mostly about vanity. Products like iPhone are seen as a badge of wealth and sophistication by young consumers in China. In fact, it's not just iPhone. Many Chinese consumers have a blind preference for brands in the US and other developed countries," he said.

Chinese consumers, he said, are highly brand-sensitive but price-insensitive, the opposite of consumers in developed countries. That explains why US consumers like cheap but high-quality Chinese products and Chinese consumers love US products.

Fudan University's Zou went deeper, saying that while consumers worldwide all tend to spend on vanity, the will is stronger in China, where "power distance" is longer.

Chinese people have a strong respect for power historically, he said, and it's hard for people to get power in society even if they are rich. So a lot of people turn to consuming to feel important and feel the dignity that is hard to obtain in daily life.

"For some consumers, no matter how their lives really are, they feel they are having a good time the moment they hold up a Starbucks coffee or show the latest version of iPhone to their friends," Zou said.

"In other words, they hope to go up a step in the social spectrum by consuming."

Free-market choice

Some scholars, including Qiu Baochang, head of the lawyers' group of the China Consumers' Association, feel that Chinese consumers should be educated to spend more rationally so no more students will want to sell their organs to buy anything. Campaigns, they believe, are urgently needed on campuses to help students understand the real value of money and what they really need.

But Zou disagreed. "There is no right or wrong about how people spend their money, as long as it's legal. In a free market, people have the right to buy what they like, no matter how irrational the choice is."

Write to gaochangxin@chinadaily.com.cn

Lenovo Group exhibits products at the Berlin Exhibition Center. Ministry of Commerce officials say Chinese companies see opportunities to buy assets in Europe amid the debt crisis there, which has led to an economic slowdown and high unemployment. [Photo / Xinhua]

BEIJING - More cash-rich Chinese manufacturers will surge into debt-stricken European nations as the spreading economic and financial crisis creates buying opportunities, said officials from the Ministry of Commerce.

"Chinese companies see attractive opportunities to buy assets in Europe because of the debt problems that have led to an economic slowdown and high unemployment," said Sun Yongfu, head of the ministry's department of European affairs.

Sun spoke on Wednesday at the 2012 Diplomats Economic Forum, which had the theme "the global economic situation and Chinese enterprises' globalization".

Companies "from the manufacturing sector that enjoy industrial competitiveness" will lead the coming acquisition wave, Sun said.

Figures from the ministry show that in 2011, China's investment in the European Union surged 94.1 percent to $4.28 billion, compared with 1.8 percent growth in the nation's total outbound direct investment (ODI).

Sun said he was very optimistic about growth in 2012. "We have seen a good start. Probably it (growth) will be strong," Sun said.

Europe could be a driving force for China's ODI growth this year, he added.

The most recent major deal in Europe was initiated by the Chinese construction equipment maker Sany Heavy Industry Co Ltd, which announced it would pay 324 million euros ($426 million) to buy 90 percent of Putzmeister, Germany's largest concrete pump maker.

With the nation having become a leading world manufacturer, many Chinese industries - including machinery and vehicles - have achieved global competitiveness, and it is an opportune time for them to venture into Europe, where many companies are starved for money, Sun said.

During the past year, as the European debt crisis escalated, there have been many high-level calls from the continent, including France and Germany, welcoming Chinese investment.

During a visit to China last week, German Chancellor Angela Merkel said: "Germany is a country that is open to all. We warmly welcome investment from China."

Premier Wen Jiabao said during Merkel's visit that China would consider how to get "more deeply involved" in resolving Europe's debt crisis.

"European nations now welcome Chinese investment and they are usually relaxed about transferring technology to Chinese companies. The general picture is comparatively favorable," Sun said.

The EU is China's largest trading partner and largest export market. The region is also a major source of high-technology transfers to Chinese companies.

Mei Xinyu, a senior researcher at the Ministry of Commerce's Chinese Academy of International Trade and Economic Cooperation, said: "We could see the debt crisis as (providing favorable) buying opportunities."

"European nations used to impose restrictions on Chinese investors, but they changed their stance and began to reach out during the past two years," he said.

Wealth funds have joined the wave of investment. China Investment Corp, the country's main sovereign wealth fund, said late last year that it planned to invest in obsolete infrastructure in the United Kingdom through partnerships.

The China-EU Summit is scheduled to be held next week, and high-level officials will discuss many topics, including how to strengthen bilateral investment.

During his meeting with Merkel last week, Wen said China expected all sorts of its companies could invest more in Germany. But Wen emphasized this didn't mean that China wanted to "buy Europe".

Fledgling stage

"The global economic gloom will push up Chinese investment abroad through mergers and acquisitions," said Sun.

By the end of 2011, China's cumulative ODI had reached $322 billion, and 70 percent of that sum had gone to the Asia-Pacific region.

China surpassed the United Kingdom and Japan as the fifth-largest investing nation worldwide in 2010.

"The growth momentum is robust, but China's ODI is still at a fledgling stage," said Sun.

"Chinese companies don't lack money, but they are eager to enhance their brands, improve their technology and expand their sales networks."

The recall, which began Wednesday, includes Martha GT (Gran Turismo) and Martha GT S (Gran Turismo S) and Maserati GT (Gran Cabrio) models produced between June 6, 2008, and April 29, 2010, the General Administration of Quality Supervision, Inspection and Quarantine said in a statement.

The statement said the vehicles contain defects in their rear lamps' internal circuit boards, which may cause the cars' lights to fail.

Ferrari Maserati Cars International Trading (Shanghai) Co Ltd, the only importer of Maserati cars in China, submitted a report on the problem to the quality supervisor, said the statement.

The company will notify customers for safety tests and offer free replacement of defective rear lamps to eliminate risks, the statement said.

Statistics from CCCME AUTO showed that China exported 849,900 vehicles, full sets of car spare parts and car chassis in 2011, up 49.96 percent from a year earlier and the largest figure seen since 2009. The exports were valued at $10.95 billion, up 56.72 percent from 2010.

"China's automobile exports have pulled through a difficult period and are developing sustainably. China's automobiles will continue to move into the international market," said Yang Aiguo, deputy secretary-general of CCCME AUTO.

China exported automobiles to 190 countries and regions last year, with Russia, Brazil and Iran accounting for most of China's automobile export value, CCCME AUTO said.

Vice-premier announces harsher punishment and better supervision

BEIJING / SHANGHAI - Stiffer financial penalties will be imposed on those found guilty of contaminating food, Vice-Premier Li Keqiang told a meeting on Wednesday.

"Food safety is an important issue that concerns everyone," Li said.

"Punishment will be increased for those guilty of endangering food safety, and supervision will be boosted to ensure the safety of food."

The meeting heard a report by the executive office of the Food Safety Commission under the State Council and reviewed progress made in the past year in ensuring food safety.

Illegal additives, including clenbuterol, a chemical dangerous to humans that reduces animal fat, and "gutter oil" or recycled cooking oil, were found in food last year.

Despite the success of the past year in the food safety campaign, severe challenges remain, according to the meeting.

In a national crackdown last year, the police dealt with 120 cases and 60,000 tons of gutter oil being sold as edible oil.

Police also dealt with 150 cases involving the illegal production and sale of clenbuterol and 12 producers were punished, according to statistics of the Ministry of Public Security.

Governments at all levels should shoulder the responsibility of keeping food safe, the meeting said.

An emergency mechanism should be set up to deal with incidents and a system to reward those who report food safety problems should be established, according to the meeting.

Harsher punishment and better monitoring from government agencies are important, experts said.

Qiu Baochang, head of the lawyers' group of the China Consumers' Association, said financial punishment is not much of a deterrent at present.

Consumers are lucky if their compensation for eating tainted food even covers their medical bills, he said.

But, he added, the latest Criminal Law amendment includes the death penalty to punish those who compromise food safety.

"This shows that the country attaches great importance to ensuring food safety," Qiu said.

He also suggested that local governments and their top officials should take responsibility for food safety.

Dong Jinshi, executive vice-president of the International Food Packaging Association, said only a quarter of the hotlines that consumers can use to report food issues are connected.

"We should have a nationwide unified phone number for food safety reports," he said.

The benchmark Hang Seng Index traded between 21,023.33 and 20,755.73. Turnover totaled HK$76.09 billion ($9.81 billion).

The two central banks said in a joint statement that the Bilateral Currency Swap Arrangement Agreement will extend by three years, while the size increased to 180 billion yuan/90 billion ringgit.

The original agreement was established on February 8, 2009, which allows the two banks to swap 80 billion yuan/40 billion ringgit in three years, and could be extended if mutually agreed.

The People's Bank of China and Bank Negara Malaysia said the renewed currency swap agreement will further reinforce the financial cooperation between both economies and facilitate greater bilateral trade and investment.

Bilateral trade between China and Malaysia reached $90 billion for the first time in 2011. Malaysia remained China's biggest trading partner among ten ASEAN countries for the fourth consecutive year, while China retained the position as Malaysia's biggest trading partner.

The figure, based on industrial output of 26,800 major enterprises in the sector, represents an increase of 31.5 percent year on year and takes up 13.2 percent of the national gross industrial output value.

The fixed asset investments of the industry increased 23.4 percent year on year, reaching 1.43 trillion yuan, and the trade volume stood at $607.146 billon, an increase of 32.3 percent over 2010. Aggregate profit of the industry from January to November last year totaled 735.702 billion yuan, an increase of 18 percent, amounting to 15.8 percent of the total profits of China's industrial enterprises above designated size.

The March contract gained 3.07 percent to 2,546.6. The June contract gained 3 percent to 2,568 points, while the September contract climbed 2.67 percent to finish at 2,586.8 points.

The stock-index contracts, agreements to buy or sell the Hushen 300 Index at a preset value on an agreed date, are designed to allow investors to bet on and profit from gains or declines in the market.

The index futures was launched at the China Financial Futures Exchange (CFFEX) and started trading from April 16, 2010. The CFFEX has set the base value for all the four contracts at 3,399 points.

The index, together with the Shenzhen Component Index and the Shenzhen SME (small and medium-sized enterprises) Board Index, makes up the three core indices reflecting the performance of China's stocks listed on the Shenzhen Stock Exchange.

The ChiNext Board, which started trading on October 30, 2009, mainly lists high-tech companies and those with high growth potential.

The debut came after a shareholders' meeting of the listing Tsun Yip Holdings Limited on January 16 decided to change its name to CNC Holdings Limited "based on the company's new business direction," while its stock code remained unchanged, a news release said.

Shareholders' rights will be unaffected by the name change, according to the release.

The website of the company has been changed from www.tsunyip.hk to www.cnctv.hk as of Wednesday, while CNC's logo and symbol have been in use by the company since February 3.

According to CNC, three shareholders of its Asia Pacific's channel carrier, including CNC limited Co, APT Satellite Company Limited (APT) and Ao Rong Investment Corporation, had signed an agreement with Tsun Yip Holdings on September 6.

Under the agreement, Tsun Yip Holdings purchased all the shares of CNC Asia Pacific's channel carrier at a cost of HK$700 million ($90.27 million), with price of newly-issued shares being set at HK$0.196 per share.

After completing the transaction under legal procedures on December 9, CNC's HK branch held 28.5 percent stake in Tsun Yip Holdings, becoming its largest shareholder, and a new board of directors had been established, with Wu Jincai, CNC president and Xinhua's deputy editor-in-chief, as chairman.

With the move, CNC's overseas news service has gained support from the international capital market, a boost which can lay foundations for it to build a modernized media institution with global influence and competitiveness, the news release said.

Wu Jincai said that CNC aims to localize its services while extending its global reach, and will also seek to improve its news reporting and the quality of its programs.

Furthermore, CNC will build itself in accordance with the modern enterprise system into a world's first-class media organization, Wu added.

Established in 2009 as part of Xinhua's ambition to build a multimedia press institution, CNC kicked off its Chinese channel on January 1, 2010, and its English channel on July 1, 2010. Both channels target audiences of all over the world, available via satellite, cable TV, digital media, the Internet, and other platforms.

CNC's signal has reached nearly 60 countries and regions including the United States, the United Kingdom, Canada, New Zealand and Thailand.

Enable Networks, owned by the council in New Zealand's second city of Christchurch, announced Wednesday that Huawei New Zealand would supply the fiber equipment for the city's UFB network, and for services to manage operations and maintenance.

The "multi-million-dollar contract" covered the provision of all network equipment, including fiber ducting, fiber optic cables and open access layer two, or "bitstream," network solutions.

Huawei would also provide the service expertise for the 3,500- km UFB network across Christchurch and neighboring Waimakariri and Selwyn districts, said a statement from the two companies.

"Since we won the UFB contract last year, we've been busy locking in supplier relationships required to deliver on this enormous project. This key relationship is one of the most important," Enable Services general manager network John Humm said in the statement.

"The network equipment provided by Huawei is going to deliver services to our homes, schools and businesses for the next 50 years and more."

Humm said Huawei won the contract thanks to its track record in delivering fiber infrastructure, reputation for quality products, commitment to New Zealand, professionalism and delivery timeframes.

Huawei New Zealand chief executive officer Arthur Zhang said Huawei would play a significant role in New Zealand's second largest UFB coverage area.

"We are very committed to developing our business in New Zealand and playing a significant role in this very important fibre infrastructure project," Zhang said in the statement.

Huawei won a similar contract late last year to build the UFB network in the Hamilton-Central North Island region.

Huawei would supply the optical equipment, including micro tube ducting and optical fiber cables, as well as open access Ethernet network solutions.

The ultra-fast broadband (UFB) network for Christchurch and surrounding centers will pass 180,000 homes, schools and businesses, and is seen as essential for the city's reconstruction after a series of destructive earthquakes since September 2010.

The Enable Networks' deployment will connect a total population of more than 380,000, including about 7,000 businesses, 1,000 medical centres and 170 schools, according to the government.

A government analysis of the potential economic impact of the UFB project indicated it would generate 3,307 extra jobs in Christchurch by 2031.

The roll out, which began in November last year, will be completed over an eight-year period.

Overall the government's UFB initiative will see 75 percent of New Zealanders able to access speeds of 100Mbps or more before 2020 at a projected cost of NZ$1.5 billion ($1.25 billion).

At Xiumei, a small cigarette shop in the eastern Chinese city of Nanjing, business has been booming since many people have come here to dispose of cigarettes they received as gifts during the Spring Festival.

Xiumei also takes in fine wine and gift cards.

"We buy some easy-to-sell gift cards, like those for supermarkets or department stores, at a price equal to 95 percent of the card value. But for some less popular ones, bookstore cards, for example, we offer 55 percent," the shopkeeper said, under condition of anonymity.

The Spring Festival and other major festivals bring good business, he said.

Meanwhile, those hoping to buy decent gifts at better prices also turn to these recycling stores.

Fine wine, tobacco, tea, brand-name watches and jewelry have traditionally been hot items to recycle, but, nowadays, more digital products, including high-end mobile phones and tablets, are popping up.

Many shops have also launched websites and online shops in hopes of improving communications with clients.

However, the booming gift-recycling business has triggered concerns over businesses operating without licenses, selling counterfeits and laundering money.

In China, special licenses are needed to trade tobacco products and alcohol, and many gift-recycling shops do not have such licenses.

Even properly licensed retailers can only buy tobacco products and alcohol from licensed wholesalers, not individuals, which means recycling businesses like Xiumei are operating illegally.

Wang Liang, the director of an economics institute under the Development Research Center of the Shanghai city government, told Xinhua that, to date, no laws or regulations have been enacted to define the gift-recycling business.

These kinds of businesses are not listed among the government business registration categories, and some are even registered as waste recycling businesses, he said.

Since their identities are vague, these shops can easily escape government supervision and are more likely to sell counterfeit products, he added.

These businesses are also suspected of aiding in money laundering activities.

Although people do get impractical gifts from family and friends during the holidays and need to get rid of them, a considerable portion of gifts, especially luxury goods, entering the recycling channel may come from businesspeople and officials looking to cash in on bribes.

Luo Meng, deputy head of the anti-graft department under the Haidian district procuratorate of Beijing, told Monday's People's Daily that the gift-recycling business could be involved in money laundering, especially laundering bribes, and may facilitate bribery if not well supervised.

Experts have called for clear definitions on what gifts can be recycled, as well as regulations on business operators.

The wholesale prices of 18 staple vegetables fell 5.8 percent week-on-week, with prices of green peppers and cucumbers down 16.7 percent and 15.4 percent, respectively, the ministry said in a statement on its website.

Egg prices slid 0.4 percent last week. The pace of decline was 0.3 percentage points faster than one week earlier.

Pork prices dropped 0.8 percent, while prices of beef and mutton gained 0.6 percent and 0.2 percent, respectively.

The wholesale prices of eight aquatic products rose 0.2 percent due to shrinking supply amid the freezing season, the statement said.

Food prices have a one-third weighting in the calculation of China's consumer price index (CPI), a major gauge of inflation. The country's CPI eased to 4.1 percent in December, the slowest rise in 15 months.

As of Tuesday night, all 18 brokers disclosed their unaudited January statistics, with five of them reporting a loss.

The five securities companies are GF Securities Co, Northeast Securities Co, Pacific Securities Co, SooChow Securities Co and Shanxi Securities Co, the newspaper said.

CITIC Securities Co reported the best performance among all the brokers, according to the paper.

The benchmark Shanghai Composite Index jumped 2.43 percent, or 55.63 points, to close at 2,347.53.

The Shenzhen Component Index surged 3.14 percent, or 290.86 points, to finish at 9,557.58.

The National Development and Reform Commission (NDRC) said Tuesday that the retail prices for gasoline and diesel will be raised by 300 yuan ($47.6) per ton starting Wednesday, which has driven up shares of oil producers.

Transaction area dropped 74.69 percent from one year earlier to 125,000 square meters last month, the developer said in a statement filed to the Shanghai Stock Exchange.

On a monthly basis, the group's home sales slumped 73 percent from December, while sold floor space plunged 76 percent.

Zuo Hongying, an analyst with AJ Securities Co, said that in addition to government tightening measures, the retreat in sales was also a result of seasonal factors, as the Spring Festival fell earlier this year in January, which is usually a slack season for home sales.

To contain runaway home prices, the government has enacted a slew of measures to regulate the sector, including tighter monetary policies, higher down payments, restrictions on second-home purchases and property tax trials, slowing down property-related business activities.

"Housing inventories will continue to rise during the first half of the year, and sales volumes are expected to reach a low," said Sun Jianping, an analyst with Guotai Junan Securities Co.

In a separate statement, the developer said one of its subsidiaries has obtained a plot of land in Wuhan, capital city of central China's Hubei province, at a cost of 2.01 billion yuan.

The boutique is to neighbor the Paris flagship store of international premium brand Hermes.

As store design, decoration and products selection works are under way and very complicated, the exact opening date has not been set, the company said.

Shang Xia, meaning "up and down" in Chinese, was founded by Chinese artist and designer Jiang Qionger in 2008 and is an independent brand under the Paris-based Hermes Group.

The brand is devoted to taking advantage of China's cultural heritage and traditional craftsmanship to create fine Chinese fashion.

Collections of Shang Xia include clothes, jewelry and apparel, tea ware and furniture, which are all produced with China's natural materials, such as cotton, cashmere, jade, red wood and bamboo. Jiang said earlier that Shang Xia is 100 percent Chinese-made while also an international brand.

Shang Xia currently has only one store in Shanghai, which opened in September 2010, and another one has been planned in Beijing.

China-based investors, including the government, bought a net 541.4 billion yen in bonds and notes in the last year, compared with 37.4 billion yen of net sales.

Much of the bonds, notes and money market purchases are thought to be in Japanese sovereign debt.

Meanwhile, foreigners were net buyers of Japanese government bonds in 2011, purchasing 4.7277 trillion yen on a net basis.

China held 10.49 trillion yen ($13.6 billion) in Japanese bonds - mainly government bonds - at the end of 2010, up from 3.42 trillion yen the previous year, according to Bank of Japan data.

In comparison, China currently has $1.132 trillion in American debt.

Government authorities will work to spur employment while improving employment structure and further perfecting regulations and related mechanism to protect workers' rights and benefits, according to the plan.

From 2006 to 2010, 57.71 million new jobs were created in urban areas and 45 million people in the rural surplus labor force were transferred to new job positions, official data shows.

By the end of 2011, China's urban unemployment rate stood at 4.1 percent, the same as a year earlier.

China's job market conditions will be "complicated" in the 2011-2015 period, and the country faces increasing pressure from creating more job opportunities, according to the plan.

The country also plans to create jobs for 40 million people in the rural surplus labor force in the five-year period.

Structural problems, like employees' skills not matching labor market demand, are likely to worsen in the coming years, according to the document.

To solve the pressure, the government will provide more effective training and better management of the job market, it said.

The government also pledged to maintain an average 13 percent growth annually in the nation's minimum wage standards in the five-year period, to keep the standard in most regions higher than 40 percent of the average wage of local urban employees.

China has managed to raise its minimum wage standards by an average of 12.5 percent year-on-year during the 2006-10 period.

Canadian Prime Minister Stephen Harper arrived in Beijing late on Tuesday for a five-day visit to China. He has come at an important moment when both sides feel an increasing need to bring bilateral ties to a new level.

This is Harper's first visit to China after his re-election in May 2011 and his second as prime minister. The fact that he is accompanied by five ministers, six members of parliament and 40 business executives indicates his government is looking to garner lucrative business deals with China.

As long as both sides can base their cooperation on equality and reciprocity, there is a huge potential for China and Canada to tap the potential in such fields as trade, natural resources, science and technology, finance, culture and tourism.

Since Harper's first China visit in December 2009, bilateral cooperation and exchanges have witnessed vigorous development. Bilateral trade surged 60 percent in the last two years, and hit a record high of almost $50 billion in 2011. Official statistics from Canada show China is Canada's second largest trading partner after the United States, and China invested a total of C$14.1 billion ($14.2 billion) in Canada in 2010, up from C$12.9 billion in 2009 and C$5.7 billion in 2008.

With China's approval of Canada as a "preferred tourism destination" in 2010, the number of Chinese tourists to Canada has increased by over 20 percent, helping Canada's tourism industry shake off the adverse effects of the global financial crisis.

As a sign of enhanced political mutual trust, high-level exchange visits have also become more frequent, highlighted by President Hu Jintao's state visit to Canada in June 2010, when leaders of the two nations decided to further promote the China-Canada strategic partnership in an all-round way.

Differences aside, there is no conflict of fundamental interests between China and Canada. The growth in Sino-Canadian ties has brought concrete benefits to both nations and at the same time promoted peace, stability and prosperity in the Asia-Pacific region and the whole world.

For the smooth and healthy development of bilateral ties, both sides should treat each other with respect, accommodate each other's core interests and major concerns, and appropriately handle sensitive issues. It is hoped the two countries can make their relationship a model for relations between countries of different social systems and modes of development.

Aside from bilateral ties, pressing international issues are also expected to figure in Harper's talks with Chinese leaders. A mutual exchange of views and mutual understanding of each other's stance in this regard will help cement their cooperation on the world stage.

After the US fast-food giant McDonald's said it was discontinuing the use of the "pink slime", made from beef trimmings treated with ammonium hydroxide, used in its burgers, its China division said the ingredients used for its burgers in China are different from those in the United States. It said its burgers here are made of 100 percent beef and its production process meets China's national standards.

But this has failed to convince many Chinese consumers, who say that since food safety standards and regulations in the US are generally higher and more developed than those in China, how can McDonald's use higher standard ingredients in China than it does in the US.

If McDonald's really wants to reassure Chinese consumers, it should provide evidence that the burgers here are not made from pink slime and have the magnanimity to teach consumers how to identify burgers made with such gunk. And the company's whole production chain should be open to inspection by officials, the public and media.

China's food safety law already grants the General Administration of Quality Supervision, Inspection and Quarantine the right to test samples and inspect the production and process sites of food makers.

Transparency is the best way to overcome the suspicions of consumers. If the company chooses to stick its head in the sand and ignore the public's concerns, consumers will finally vote with their feet.

Since McDonald's China has not yet shown any sincerity or readiness to open its production and processing to inspection, the related authorities should act quickly according to the law to meet the public's right to know in food safety incidents.

Periodic inspections by food safety supervisors should be instituted in the future for all food producers, regardless of their backgrounds. The relevant authorities must be more responsive and crack down hard on any malpractices in food production in order to deter others from compromising food safety.

China's food safety standards are lower than developed countries, but that does not mean food producers can put profit before the safety of consumers.

Chongqing Iron and Steel (Group) Co Ltd (Chongqing Steel) and multinational steelmaker POSCO (Pohang Iron and Steel Company) will collaborate on the project, which will be built at a cost of 15 billion yuan ($2.4 billion), the committee said.

According to the committee, FINEX (Fine Ore Reduxtion Smelting) technology will be a core feature of the project. The technology will allow the companies to save 20 percent in production costs and create more room for additional equipment in steel factories.

The project is expected to have an annual output of 3 million tons of iron and 3.14 million tons of steel.

The committee said the production value of the project will reach 13.5 billion yuan in its first year, earning 2 billion yuan in profits and employing 2,500 people.

Chongqing Steel is one of the largest state-owned industrial enterprises in Chongqing.

POSCO, set up in 1968, is one of the largest steelmakers in the world.

But there is no sign that Beijing is ready to put into full reverse the tightening measures that curb property speculation, with Premier Wen Jiabao saying in a cabinet meeting at the end of January that he wanted to see a pull-back in home prices to a reasonable level.

"I don't think it indicates a major policy shift as previous tightening policies are mostly targeted at speculation," said Dongming Xie, China economist at OCBC Bank.

Li Shaoming, a property analyst with China Investment Securities in Beijing, said the latest statement from the central bank was a fine-tuning of China's property policy.

"The central bank will possibly issue further details or instruct banks to offer mortgage rate discounts for first-time home buyers via window guidance as the next step," Li said.

Chinese banks lent 1.26 trillion yuan ($199.7 billion) to the property sector in 2011, including mortgage loans and loans to developers, which was 770.4 billion yuan less than in 2010, the central bank said.

The proportion of first home buyers in China's overall property market is uncertain, but Li said the modest relaxation announced by the central bank would not change the downward direction home prices in major cities have followed since October.

"Expectations on home price falls will not easily reverse, as there are still huge amounts of inventory and not so many first-time home buyers in China," Li said.

Apart from the first-home buyer policy, the central bank also said that banks should aid the economy's weak points, notably the agricultural sector and areas that are vital to people's living.

In the statement on PBOC website (www.pbc.gov.cn), the central bank said that China will push forward asset securitisation in 2012 and will encourage the development of "safe, simple and appropriate" financial derivatives.

Analysts expect the central bank to ease policy in the coming months by cutting the required ratio of reserves (RRR) that banks must hold to free more funds for lending, after cutting RRR by 50 basis points at the end of November from a record 21.5 percent.

Many had forecast a cut before China's Lunar New Year holidays, but were wrong-footed by the central bank which has opted to use open market operations to inject liquidity into the banking system instead to meet near-term demands for cash.

China's policymakers are looking for ways to cushion the world's second-largest economy from the global economic downturn that avoid expanding credit too quickly that could find its way into speculative investments.

Policy fine-tuning to support growth, launched in the autumn of 2011, has focused more on cutting taxes and red tape for the small businesses that provide about 75 percent of the jobs in China.

A tablet runs a Qihoo 360 Technology Co Ltd program. The company's applications were removed from Apple Inc's App Store on Saturday after receiving abnormal ratings from users. [Photo / China Daily]

BEIJING - The Chinese Internet security provider Qihoo 360 Technology Co Ltd said on Tuesday that its products, which were removed from Apple Inc's online store, will be available for downloading again in the next few days.

At least seven of Qihoo 360's applications - including anti-virus software for mobile phones, a product that the company says is used by more than 70 million people in China - were removed from the App Store on Saturday after Apple saw those products had received abnormal ratings from users, the company said, citing an official response from Apple.

Qihoo 360 said it is trying to discover the source of these abnormal ratings and did not directly deny accusations that it was the source.

The company also contested allegations that its products have security flaws, saying they are groundless.

"The applications will be available for download at Apple's App Store in the next 48 to 72 hours," Qihoo 360 said, adding that it does not need to modify the removed applications, also known as apps in the technology sector.

The company also denied accusations that its apps contain programs that can be used to steal users' personal information.

The money spent on advertising apps from Apple's App Store hit a record high in December, said a report released by the Internet research company iResearch Consulting Group on Tuesday. App developers then paid $1.81 on average to obtain a loyal customer, up from $1.33 the month before, according to the report.

Going to the App Store to give apps good ratings is a way to raise the products' ranking in the store's charts. And if not discovered, such actions cost nothing.

On Monday, Apple asked app developers to avoid using services that will raise their products' user ratings.

"Even if you are not personally engaged in manipulating App Store chart rankings or user reviews, employing services that do so on your behalf may result in the loss of your Apple Developer Program membership," the announcement said.

Previous reports suggested that Apple removed Qihoo 360's apps because those products could be used to hack users' e-mail accounts, passwords and other personal information.

Qihoo 360 alleged Kingsoft Co Ltd, a Chinese anti-virus software developer, for distributing such "slanders" against the company, and said it will sue Kingsoft for libeling its competitor.

Questions to Kingsoft were not answered immediately.

"Chinese Internet security providers should pay more attention to improving data safety rather than getting into spitting contests with each other," said Shen Zhiyong, CEO of Beijing-based Andi Public Relations Consulting.

The stock price for Qihoo 360 slumped by more than 6 percent on the New York Stock Exchange after the company's products were removed from the App Store. The company's price stood at $17.89 at the close of the market on Monday.

Only 5 percent of Qihoo 360 customers use Apple devices. "A greater proportion" of subscribers use phones that run the Android system, developed by Google Inc, or the Symbian system, developed by Nokia Oyj, said Nancy Yang, an analyst at Mirae Asset Securities Co Ltd.

Eight out of nine investment analysts polled by the US financial website CNNMoney recommended buying Qihoo 360's stocks.

Yield of the 28-day repos stood at 2.8 percent.

"Demand for cash has subdued after the holiday and the market's liquidity has eased remarkably due to the PBOC's pre-season operations," said Jiang Chao, chief bond analyst for Guotai Junan Securities.

Since the start of January, the PBOC has released money back to banks by suspending bill and repo issues, or even reverse repos operations.

"Everyone in the market is closely monitoring the central bank's moves," said Liu Junyu, a bond analyst with the China Merchants Bank. "The market is still divided on whether the PBOC will soon lower the bank reserve requirement ratio (RRR) to ease liquidity."

Compared with the pre-season squeeze, Chinese banks are now abundant with liquidity again, as suggested by the Shanghai Interbank Offered Rates (Shibor), which measures the cost of interbank borrowing as a key barometer of liquidity. The overnight Shibor stood at 2.7767 percent on Tuesday, compared with yield exceeding 8 percent one week before the Chinese lunar New Year.

The one-week and two-week Shibor also softened to 3.5 percent and 3.8 percent, respectively, from above 6 percent in the pre-season trading.

Beijing home prices fell in January by 21.3 percent from month before

BEIJING - Beijing's revenue from land sales is expected to drop by 30 percent once again this year to hit 90 billion yuan ($13.6 billion) as the city's property market cools down as a result of continuous tightening measures.

If that prediction comes true, the city will see its worst year on record for raising revenue from land sales, the local bureau of finance said.

In 2011, the value of Beijing land sales fell by 30 percent to hit 123.4 billion yuan, according to statistics from the local bureau of finance. The year before, it had been 176 billion yuan.

Shanghai has likewise lowered its prediction for the revenue it will take in from land sales this year. The city expects to obtain 125 billion yuan from that source in 2012, down 16.2 percent from the year before, according to the local bureau of finance.

The continuous fall is being attributed largely to the government's measures to cool the real estate market, including restricting the number of homes a family can buy and insisting that higher downpayments be made on home purchases.

China Index Academy, a Beijing-based real estate consultancy, reported that the revenue raised from land sales in the 300 large Chinese cities that it monitors dropped by 67 percent in January from a year before.

"As property sales and prices in the first half of the year are expected to decrease further, property developers will be more conservative about increasing their land bank," said Carlby Xie, head of research at the real estate consultant Colliers International (Beijing).

Statistics from HomeLink Real Estate Co Ltd, a real estate brokerage firm, showed that about 4,600 new residential apartments were sold in Beijing in January, down 70 percent from the previous month and 57 percent from the same month a year ago.

The price also fell by 21.3 percent from a month before to hit 18,229 yuan per square meter. The prices of homes in prime locations decreased the most.

"Property sales in first-tier cities will probably fall this year by 20 percent to 25 percent below their peak in March and April of last year," Peter Choy, associate managing director for Asia Corporate Finance at Moody's Investors Service, was cited by Bloomberg as saying.

With China's property market continuing to cool down, a number of economists are concerned that a larger-than-expected correction will lead to a hard landing for the world's second-largest economy.

Stephen Green, chief economist with Standard Chartered Bank PLC, said the correction in China's property market will be the biggest difficulty confronting the economy this year.

The International Monetary Fund has cut its forecast for China's 2012 economic growth to 8.25 percent from the 9 percent projected in September. The IMF forecast that China's economy will grow by 8.75 percent in 2013.

Appointment follows resignations after mislabeling scandal last year

GUANGZHOU - The international retail giant Wal-Mart Stores Inc announced that Greg Foran has been named president and CEO of Wal-Mart China.

The appointment comes in the wake of allegations that a number of the company's stores had sold mislabeled food in the Chinese mainland last year.

Foran is currently senior vice-president of Wal-Mart International and will start his new role in March, the company said in a statement on Tuesday.

Prior to joining Wal-Mart in October, Foran built his career in New Zealand and Australia, beginning as a part-time shelf stocker and moving on to become the head of the food and liquor business at the Sydney-based Woolworths Ltd, Australia's largest retailer.

"With his distinguished career in retail, Greg is uniquely qualified to lead our growing business in China," said Scott Price, president and CEO of Wal-Mart Asia and interim CEO of Wal-Mart China.

Price became Wal-Mart's interim China head in October, following the departure of former Chief Executive Ed Chan and Clara Wong, senior China vice-president of human resources.

Wal-Mart sources said that the two had resigned for personal reasons and that the resignations "had no correlation" with an investigation in Chongqing concerning allegations that more than a dozen of its stores in the city mislabeled regular pork as organic pork last year.

Wal-Mart also suffered a series of high-level personnel losses last year, after both its China chief financial officer and chief operating officer left in May, creating a leadership vacuum.

"I'm very pleased he (Foran) is bringing his talents to help us continue the company's expansion in China and to enhance our efforts to help Chinese customers save money," Price said in a company press release.

"China is a very important market for Wal-Mart and I am looking forward to working with our 100,000 associates."

In response to the Chongqing allegations, Wal-Mart announced last year that it will establish a compliance division, which will be in charge of issues related to food safety and protection of customers' rights.

The company will also work closely with third parties to build an internal food safety system, according to sources in the retailer's China public relations division.

At present, Wal-Mart, based in Bentonville, Arkansas, had more than 370 stores in 140 Chinese cities, after entering the Chinese mainland market and opening its first Supercenter and Sam's Club outlets in the southern city of Shenzhen in 1996.

In 2007, Wal-Mart acquired a 35 percent stake in Trust-Mart, a Taiwanese-owned chain of retail supercenters.

Sources with Wal-Mart China's public relations department said all the Trust-Mart outlets it acquired will be redecorated in the Wal-Mart style to reinforce its image in the country.

Above, water in the Three Gorges Reservoir area, Kaixian county, in Chongqing, rises last month. Below, the water level hits a low point in Kaixian county in March 2010. The depth of the water in the Three Gorges Reservoir area fluctuates up to 30 meters, depending on the season. Experts say these fluctuations have changed the ecology of the banks, killing much of the plantlife. [Photo / China Daily]

QUKOU, Chongqing - Researchers have successfully completed experiments with the vegetation along the banks of the Three Gorges Reservoir area to restore ecological balance, experts said.

"We tested what would be appropriate species to import to the banks for the new environment," said Wang Yihao, a researcher at the Chongqing Forestry Academy. "The survival of the imported plants shows we can begin introducing them to the reservoir area."

"In 2010, we planted a few saplings in Qukou township. They were river birch (Betula nigra) and water tupelo (Nyssa aquatica), which are common in Tennessee and Maryland in the United States," said Wang.

"Most of them survived throughout the two years of the experiment."

According to Wang, forestry experts from the Chongqing academy visited the US in 2009 to observe the species in their habitat, and they worked with US experts to find suitable plants.

"The very first step is to find a species that can survive underwater and to plant it locally," he said.

"The reservoir has immersed large tracts of land," said Zeng Bo, an ecology professor at Southwest University in Chongqing who has been working on the project for 12 years. "In summer, the water is 145 meters, in winter it's 175 meters."

"The depth fluctuations have changed the environment," he said.

"Before the Three Gorges Dam Project, many plants along the bank lived above the waterline, but now they are submerged when the water rises," Zeng said.

"The different water levels kill many plants." Native plants were suddenly unsuited to the new environment. "Plants died, causing a series of environmental problems."

Zeng and his colleagues from the Key Laboratory of the Three Gorges Reservoir Region's Eco-Environment bred 25 species that can survive in the environment.

"We've solved the problem in the lab, and the next step is to take the technology out of the lab and spread it in every township in the Three Gorges area," said Zeng.

Around Qukou township in southwest Chongqing, many tributaries of the Yangtze River are thick with green algae and give off a bad odor.

"It's a sign of pollution," said Zeng. But change may be on the way.

"This area is better since the arrival of the research team," said 32-year-old Ran Cheng, a local villager, standing in front of the experimental field and pointing to the other side of the river. "The rest of the water is dirty."

"The water used to be clean and we could drink it directly," said Ran, who has lived here since birth.

So far, there has been no response from the authorities in charge of the experiment.

The US is attractive to Chinese students and their parents, not just tourists. The Institute of International Education reported that the number of Chinese studying abroad increased 23 percent last year, but those working toward undergraduate degrees in the US rose 43 percent.

EIC Group, an overseas study consultancy, said the appreciation of the renminbi against the dollar made their tuition and living expenses cheaper.

Li Nannan, a consultant with New Oriental education group, said a bachelor's degree in the US now costs at least 1.5 million yuan ($238,000) and a master's degree at least 1 million yuan.

Different from the past, when many Chinese students relied on scholarships, "an overwhelming majority of Chinese parents now pay for the tuition and living expenditure," she said.

That, and the fact foreign students generally pay much higher tuition than in-state students, makes these students welcome as income generators for US colleges and universities.

At a career fair held Monday in central China's Hunan province, more than 6,000 positions at 80 enterprises were advertised. But Guo Hongbo, the human resources manager of a branch factory of Tsingtao Brewery Co Ltd, received only seven applicants.

Guo expected to hire at least 50 laborers for a recently established production line in one of the company's factories.

"Not only do we compete with the coastal areas, where migrant workers used to flow, but more companies that have relocated their production inland are grabbing laborers," said Guo.

Guo said the company started hiring on the last day of the Spring Festival holiday. It hopes to attract returnees who have been working in factories along China's coast.

The company offers wages as high as 1,900 yuan ($351), nearly as much as those offered in the export hub of Shenzhen, Guo said.

Favorable welfare packages that include medical and social insurance are being offered by the companies to entice potential employees.

"There are many returnees who choose to work at home, but there are still not enough to meet the aggressive demands of rapidly expanding enterprises," Guo said.

As a result, companies such as Tsingtao have begun to dispatch recruiting teams to remote areas as Guizhou province, where plenty of cheap labor still exists.

"We even encourage our employees to lure their relatives or classmates," Guo said. "Those who introduce new applicants can receive compensation for their effort."

Guo's concern is echoed by Zhou Yingjing, the human resources director of Chutian Technology Co Ltd. The local medical appliance company has been expanding at a tremendous pace in recent times.

"Hiring has become a headache, as skilled workers now vote with their feet, changing their jobs if they are not happy," Zhou said.

Zhou said the younger generation of migrant workers, particularly those who born in the 1980s and 1990s, are more prone to changing jobs without warning.

"It has created additional hiring difficulties, as we have invested a great deal in their training and then they leave without a word," Zhou said.

Luo Weihua, the labor bureau chief of Hunan's Ningxiang county, said labor exports defined central China's role during the country's economic boom of the last three decades

"The central provinces have been expanding fast, requiring larger numbers of skilled workers and making it hard to fill in the gaps," Luo said.

Zhang Chewei, a researcher at China's Academy of Social Science, said tension in central China can be attributed to China's pressing economic transformation.

"What lies beneath the facts is China's changing labor structure," Zhang said.

"More people have acquired access to higher education with China's expansion of university enrollment, which has aggressively depleted the supply of low-level laborers. The situation will likely become worse in light of weakened population growth," Zhang said.

Wu Ying stands trial at Jinhua Intermediate People's Court in Zhejiang province on April 16. The one-time business tycoon is waiting for the top court's final review of her death sentence. [Photo / China Daily]

BEIJING - Wu Ying, a tycoon once listed among the richest women in China, has come to her last hope of survival.

The former 31-year-old billionaire, now on death row, is waiting for the top court's final review of her capital sentence, which was upheld by a local court last month, a few days ahead of the Chinese New Year.

Shen Ziming, the presiding judge of the case from the High People's Court of East China's Zhejiang province, told China News Service that the court endorsed the previous judgment after finding the defendant illegally raised up to 770 million yuan ($122 million) from 11 lenders with the promise of high returns from 2005 to 2007, and hence should be "severely punished" for the apparent Ponzi-like scheme, as she has "brought huge losses to the nation and people with her serious crimes".

Shen said Wu concealed her debt to lenders and pretended to be financially powerful by "showing off jewelry and registering nominal companies".

According to China's criminal code, a person convicted of financial fraud is punishable by death if the money involved is "especially huge" and an "especially heavy loss" of the interests has been made to the state and the people.

Although some legal experts supported the judgment, wide sympathy and pleas for the fair-skinned woman have quickly ranked top on the country's most popular micro-blogging site.

Speculation swirled around both the suitability of the charge and whether capital punishment is too severe for a non-violent financial crime.

Zhang Sizhi, an 85-year-old barrister with national renown, wrote an open letter to the top court and pleaded for re-consideration when it exerted its right of review, for there are still "reasonable doubts".

Zhang Yanfeng, Wu's lawyer, argues that the case does not constitute the crime of financial fraud, a charge that requires fundraising from the general public by means of "swindling" for the purpose of illegal possession.

"Nine out of the 11 lenders are Wu's old friends and should not be considered general public," said Yang Zhaodong, one of Wu's lawyers.

He then said Wu has used the funds to invest in trading companies, hotels and real estate, instead of using the money to cover existing debt and purchase personal luxuries as accused by the prosecutors.

Oral testimony shows the lenders still believe Wu borrowed the money to improve cash flow instead of illegal possession and personal indulgence.

"The last time I met her was in November 2011, and she looked robust," Yang said.

He said Wu's request to meet lawyers was turned down by the detention house one week before the provincial court announced the final verdict.

Insisting that his daughter is innocent, Wu Yongzheng, a slightly tanned man with a bony figure, said he believes his daughter is being treated unjustly because it "implicates government officials".

The government of Zhejiang's Dongyang city, where Wu Ying was born and rose from a dropout to a billionaire businesswoman, froze her assets and auctioned them at an apparently low price before the court made a judgment.

"The government's auction is illegal, since at that time Wu Ying was still a suspect instead of a criminal," said Chen Guangzhong, a legal expert on criminal procedure.

But it will be difficult to retrieve the revenues from the government if Wu's verdict is overturned, Yang Zhaodong said. Questioning some of the facts in the case, Chen Guangzhong furthered his point about whether the death penalty is suitable for a non-violent financial crime, especially as the country tries to tighten the use of capital punishment.

The National People's Congress, the country's top legislature, moved to slash crimes punishable by death from 68 to 55 last year, following the top court's withdraw of the final say on all the capital punishments in 2007.

Chen said the top legislature considered abolishing the death sentence for financial fraud, although it was later excluded from the final proposal submitted to vote by lawmakers.

The list of crimes carrying a possible death sentence has evolved along with the country's shift of government priorities, since the criminal code was introduced in 1979.

Many economic crimes, including the crime of financial fraud that Wu is facing, were included during the 1980s and 1990s, when the country's opening-up led to both an economic boom and increase in financial offenses.

Apart from doubts in the case itself, public outrage over Wu's death sentence also stems from sympathy for her legendary life and concerns that the punishment may eventually discourage grassroots entrepreneurship, especially when many small businesses in coastal China have been shut down or are suffering.

A farmer's daughter from a small city in Zhejiang, a province known for booming household businesses, Wu started with a small beauty salon at the age of 22 in 2003. Before being arrested four years later, she had become owner of at least seven companies with about 780 employees.

Han Zhiguo, an economist, said even if Wu has illegally raised funds - which is still a disputable charge - it should be taken into consideration that many businessmen in China are compelled to do so since it is too difficult for private companies to borrow money from banks.

A survey polling about 2,800 companies in Zhejiang province last year showed 86 percent of respondents said banks had asked for additional conditions when they applied for a loan.

"The boundary of private lending and fundraising has to be cleared, especially when private lending is indispensable and government support is still difficult to get," said Chen Jun, deputy president of Zhejiang Chamber of Commerce.

BEIJING - Small and medium-sized enterprises are unlikely to close on a large scale this year, and they will receive 3 billion yuan ($475.6 million) annually in central government support for the next five years, said the Ministry of Industry and Information Technology on Tuesday.

Since the first quarter of 2010, SMEs have faced such problems as high production and labor costs and an unfavorable international environment, and export-driven SMEs have been hurt by the weak global economy.

The State Council has urged that more be done to support the development of smaller companies.

On Feb 1, the council discussed the issue in an executive meeting and announced that the government would further support SMEs by establishing a 15-billion-yuan fund.

Small companies "serve as a significant channel for creating jobs, a major platform for the growth of entrepreneurship and an important force for scientific innovation", according to a statement released on Feb 1 and reported by the Xinhua News Agency after the State Council executive meeting presided over by Premier Wen Jiabao.

"The Ministry of Finance will allocate 3 billion yuan every year over the next five years and the State Council will release policy documents on further development of SMEs in the near future," said Zhu Hongren, spokesman and chief engineer at the industry and information technology ministry.

The ministry noted that exports had cooled, and industries' export shipments had increased by just 16.6 percent last year, slower than in previous years.

Domestically, the demand for vehicles and real estate will remain in a slow-growth mode, and SMEs will face greater difficulties than big enterprises, it said.

Starting last year, the government has paid special attention to this issue to support the development and modernization of SMEs.

"Labor-intensive SMEs have no core competitive technology and were hit the hardest during the financial crisis," said Zhu.

The central government will establish 4,000 public service platforms for SMEs, including 500 national level platforms.

The three institutions are taking up nearly half of Sunshine Oilsands' planned $700 million initial public offering (IPO), the source told Reuters on Tuesday. The offering will be the biggest stock market float in the world so far this year.

CIC and China Petrochemical Corp (Sinopec Group), parent of listed China Petroleum & Chemical Corp (Sinopec), have each agreed to buy $150 million worth of shares in Sunshine Oilsands, the source said.

Washington-based asset manager EIG Global Energy Partners pledged $50 million, the source added.

Cornerstone investors back many Asian listings, committing to buy large, guaranteed stakes and agreeing to a lock-up period during which they will not sell their shares.

The source was not authorized to speak publicly about the matter. Both CIC and Sinopec were not available for immediate comment. Sunshine and EIG could not be reached immediately.

The IPO will consist of all new shares, representing 25 percent of the company's expanded capital, one source with direct knowledge of the plans previously told Reuters.

Calgary-based Sunshine Oilsands owns 1.14 million acres of oil sand leases in the Athabasca region in Canada's Alberta province.

The company and its bankers started drumming up demand for the offering on January 30. They are expected to start a roadshow to take orders on the deal on February 15 or possibly a week later, the source added.

Sunshine Oilsands had raised about $230 million in March last year from a group of investors including a unit of Bank of China, China Life Insurance (Overseas) and Hong Kong private equity fund Cross-Strait Common Development Fund.

Sunshine's IPO will be the first major share sale to get off the blocks in Hong Kong in what is expected to be another slow year for IPOs after demand for new listings slumped 42 percent in 2011 from the year before.

A handful of companies have gone public in Hong Kong since the beginning of the new year, with small-sized deals that raised a total of about HK$1.4 billion ($181 million).

Other new listings around the world have also lagged behind the mega offerings seen in 2011, with oil producer RusPetro taking the top spot so far with at $250 million from its London IPO last month.

BOC International, Deutsche Bank and Morgan Stanley were hired as joint global coordinators and joint sponsors of Sunshine's IPO.

Senior management from some leading Chinese overseas companies believe the companies should better assess risks of operating in a foreign country and adopt multi-dimensional approaches to avert or mitigate such risks.

Factors for heightened risks

Overseas Chinese firms have encountered threats to both staff and their investments more frequently in recent years and cases in West Asia and North Africa have been a major contributor to the hike.

China's trade ties with the two regions have witnessed constant growth in recent years. Chinese companies also have an increasingly bigger presence in the two regions amid growing trade ties, exposing them more to the waves of social unrest and political upheavals that started last year.

Wang Xifeng, deputy general manager of China Civil Engineering Construction Corp's Nigerian branch, told Xinhua that Chinese companies tended to be more interested in investing in high-risk regions as yields there were higher.

However, he warned high yields always came with high risks and companies could suffer great losses due to security incidents.

Yan Lijin is the CEO of CETC International Co Ltd, an affiliate of China's state-owned electronics giant, CETC. He said, as China became a more prominent global player, armed groups also started to target overseas Chinese workers in a bid to win more space in negotiations with the government.

Overall risk assessment needed

Wang sorted security risks facing overseas Chinese companies into three categories: political risks such as regime change and riots; local security risks such as robbery and kidnapping; and attacks by terrorist or extremist groups.

"Overseas Chinese companies should make sufficient preparations for the three types of security risks, especially for the first kind, which has long been underestimated or even overlooked," Wang said.

Leading Chinese companies investing in Libya suffered hefty losses last year as the country plunged into turmoil, which later developed into a fully fledged civil war resulting in the defeat of Muammar Gaddafi's government.

China's leading telecom equipment company, ZTE, was among the companies that suffered big losses in Libya. ZTE Deputy CEO Chen Wenjie, who is also the general manager of the company's North African branch, said the aggregation of Chinese companies in certain countries meant aggravated risks and greater losses in case of security irregularities.

He called on the Chinese government to set up a mechanism to regulate and properly guide the overseas expansion of Chinese companies.

Cairo-based veteran investment manager Han Ruihua said, aside from assessing overall risks and making adequate emergency plans, Chinese companies should also speed up the process of localization, creating more job opportunities for local communities, instead of sending in Chinese workers.

"Overseas Chinese companies should work to ensure that local staff members see their own interests integrated with that of the company and become willing to safeguard the interests of the company," Han said.

NANJING - Foreign guests invited to a session of the People's Congress of Jiangsu province this week will be given an English version of its government reports for the first time.

"It will be meaningless if foreigners attend the conference but cannot understand the Chinese language," Hao Risheng, director of the information office of the congress standing committee, said on Tuesday.

"The intention of inviting foreigners is to show transparency in government. In addition to Chinese residents, we want to share our working concepts and plans with foreign friends who work and make investments here."

The fifth session of the 11th Jiangsu People's Congress will be convened on Thursday in the provincial capital Nanjing, and 23 foreigners have been invited, including consular officers, representatives from the Jiangsu office of foreign governments, bosses of foreign businesses and scholars.

It is the second time that foreigners have been invited to observe the annual session, according to Huang Liqun, deputy secretary-general of the standing committee. He said the English report on the work of the government will now become routine.

Prior to Jiangsu, Shanghai and Shenzhen governments were the first on the mainland to hand out English copies of their reports to foreign guests attending as observers in 2004. Beijing adopted the practice the following year and won praise from foreign auditors and journalists.

"Previously we were very much confined to understanding the conference through reading Chinese material without being proficient in the language. The English report helped us a lot to see the developments of the municipality," said Mark Gooding, who attended the 2004 Shanghai session when he was the British consul general in the city.

"The practice showed the determination to open up government to the outside world, which made us confident about investment prospects," said Andy Clayton, China operations director of B&Q, a leading home improvement retailer, who was invited to the 2004 Shenzhen session.

Senior officials from these cities said they were aware that public services should not only be of high quality, but also committed to achieving international recognition.

Social experts applauded the translated reports, saying it made a change from an earlier attitude of seclusion.

"Some provincial or city governments reply to questions and queries from the outside world only when they are asked. Now they are taking the initiative to serve the community better by being more direct in communicating," said Yang Yayun, a professor at the Party School of the Central Committee of Communist Party of China.

Government is a key factor of a city's international competitiveness, she said, and it should not only help businesses and industries compete, but make them excel.

Xia Xueluan, a professor of sociology at Peking University, said the practice of providing English-translation reports should be adopted in other provinces and cities.

The index will be calculated using data for output, sales, prices, imports and exports reported by domestic nonferrous metal production and trading companies, said a source at the China Nonferrous Metals Industry Association.

"Because price gaps among different nonferrous metals are huge, it is hard to reflect the overall picture of the industry in one index," said Jia Mingxing, secretary-general of the association.

"However, it is one of our key tasks in 2012 to introduce the index."

He said his association would cooperate with foreign economic institutions and the National Bureau of Statistics to promote the index, adding that the exact method of calculation was still being discussed.

Separately, the Shanghai Futures Exchange will accelerate the listing of silver this year. In March 2011, lead futures were listed on the exchange. The addition of silver would mean that all four major nonferrous metals would be listed: silver, copper, aluminum and zinc.

Jia said as market mechanisms matured, China would have more nonferrous metals products on the market, offering companies a way to avoid risks and raise their pricing power in the global market.

The association forecast that average domestic nonferrous metals prices would be lower this year than in 2011, especially in the first quarter and even the first half.

"Exports in 2012 will fall because of increasing trade disputes in the nonferrous metals industry," said Jia.

"The profits of the nonferrous metals industry are highly dependent on prices. Prices haven't been good so far, which indicates zero profit growth in the first quarter."

China's electrolytic aluminum companies are facing a severe challenge.

The National Development and Reform Commission raised electricity rates twice in 2011, pushing up production costs for these energy-intensive companies.

Jia noted that the industry's global competitiveness was waning because of rising costs.

He said that power costs accounted for about 20 percent of the total costs of overseas producers, but the proportion was 45 to 50 percent for domestic companies. That reality kept industry profits razor-thin, he said.

Major merger

In addition to rising costs and lower selling prices, Chinese companies face new monopolies in the global mining industry, which could weaken their pricing power.

Switzerland-based Xstrata PLC, the world's fourth-largest metals and mining company, announced on Tuesday that it would form a new company named Glencore Xstrata International PLC, together with Glencore International AG, the world's largest publicly traded commodity supplier.

Each Xstrata share would be equal to 2.8 shares of Glencore's for its shareholders. Xstrata would own 45 percent of the new company's shares, it said.

The merger would create a new monopoly in the global mining sector, said Wang Huajun, deputy secretary-general of the association, on Tuesday. He said Chinese companies needed to work harder on their development to gain more global influence rather than worry about the influence of the merger.

The deal would weaken the power of Chinese buyers in the downstream segment of the mining industry, said an industry insider who declined to be identified.

He said Glencore had direct and indirect cooperation with 40 percent of the aluminum companies and more than half of the zinc companies in China.

"The industry chain cooperation between the two companies will have significant long-term influence in the Chinese market, the world's major commodities consumer," he said.

Glencore has many Chinese partners including PetroChina Co Ltd, China Petroleum & Chemical Corp, Aluminum Corp of China, Shenhua Group Corp Ltd and China Minmetals Corp, which are all major players in natural gas, coal and metal.

On Feb 2, Xstrata announced that Glencore had approached the company for an all-share offer in a "merger of equals".

Glencore already owns 34 percent of Xstrata.

The merger - the largest ever in the mining sector - will result in a global commodity giant with a market value of $80 billion.

Glencore went public in May 2011 in London's biggest-ever IPO, worth about $10 billion.

Beijing home prices fell in January by 21.3 percent from month before

BEIJING - Beijing's revenue from land sales is expected to drop by 30 percent once again this year to hit 90 billion yuan ($13.6 billion) as the city's property market cools down as a result of continuous tightening measures.

If that prediction comes true, the city will see its worst year on record for raising revenue from land sales, the local bureau of finance said.

In 2011, the value of Beijing land sales fell by 30 percent to hit 123.4 billion yuan, according to statistics from the local bureau of finance. The year before, it had been 176 billion yuan.

Shanghai has likewise lowered its prediction for the revenue it will take in from land sales this year. The city expects to obtain 125 billion yuan from that source in 2012, down 16.2 percent from the year before, according to the local bureau of finance.

The continuous fall is being attributed largely to the government's measures to cool the real estate market, including restricting the number of homes a family can buy and insisting that higher downpayments be made on home purchases.

China Index Academy, a Beijing-based real estate consultancy, reported that the revenue raised from land sales in the 300 large Chinese cities that it monitors dropped by 67 percent in January from a year before.

"As property sales and prices in the first half of the year are expected to decrease further, property developers will be more conservative about increasing their land bank," said Carlby Xie, head of research at the real estate consultant Colliers International (Beijing).

Statistics from HomeLink Real Estate Co Ltd, a real estate brokerage firm, showed that about 4,600 new residential apartments were sold in Beijing in January, down 70 percent from the previous month and 57 percent from the same month a year ago.

The price also fell by 21.3 percent from a month before to hit 18,229 yuan per square meter. The prices of homes in prime locations decreased the most.

"Property sales in first-tier cities will probably fall this year by 20 percent to 25 percent below their peak in March and April of last year," Peter Choy, associate managing director for Asia Corporate Finance at Moody's Investors Service, was cited by Bloomberg as saying.

With China's property market continuing to cool down, a number of economists are concerned that a larger-than-expected correction will lead to a hard landing for the world's second-largest economy.

Stephen Green, chief economist with Standard Chartered Bank PLC, said the correction in China's property market will be the biggest difficulty confronting the economy this year.

The International Monetary Fund has cut its forecast for China's 2012 economic growth to 8.25 percent from the 9 percent projected in September. The IMF forecast that China's economy will grow by 8.75 percent in 2013.

Blue toys in the shape of the mascots for the London 2012 Olympic Games await processing inside the Yancheng Rainbow Arts and Crafts Co Ltd in Dafeng, Jiangsu province, on Tuesday. [Photo / China Daily]

Persons quoted by reports either left factory in 2008 or do not exist

YANCHENG, Jiangsu - Representatives of the Chinese manufacturer of Olympic mascot dolls on Tuesday said reports claiming its products were made in sweatshops had been based on untrue information and its factory is open to international organizations and the media for inspections.

Gu Feng, chairman of the board of Yancheng Rainbow Arts and Crafts Co Ltd, located in East China's Jiangsu province, made the comment at a news conference in response to previous reports by British newspaper The Sun.

On Jan 19 and Jan 23, the Sun published stories calling the factory a "sweatshop". The reports said that workers in the factory need to work 358 hours a month to make only 93 pounds, roughly 930 yuan ($147). "The Chinese workers quoted by The Sun as the factory's employees did not even exist," said Gu.

He said that Zhu Shengrong, who was interviewed by the US-based Voice of America (VOA) earlier, fabricated the story to tarnish the factory's reputation out of retribution for his dismissal.

In its report, VOA quoted Zhu as saying that he was forced to work about 14 hours a day without overtime pay.

"Zhu was fired by our factory in the first half of 2008 due to repeated inappropriate contact with some female colleagues," said Gu.

Zhu had demanded compensation for an industrial injury but was rejected by the local courts.

"The verdicts of local courts can prove that Zhu was not fired because of an industrial injury, about which he must have lied to VOA," Gu said.

He said that the factory had passed inspections from the International Council of Toy Industries and the Societe Generale de Surveillance SA, a Switzerland-based multinational company that provides inspection services.

The Yancheng factory is also an authorized manufacturer for the mascots of Disney and the Vancouver Winter Olympics.

John Hales, chairman of Golden Bear, the company that owns the license to produce the official mascots for the London Olympics and Paralympics, also confirmed in a statement that the factory has passed inspections.

"Founded in 1997, our factory has a long history in producing mascots with high quality, and our 72 workers have a neat working environment and relatively good salaries," Gu said.

The monthly salary of an employee who is not absent from work is about 2,000 yuan in the factory, Gu said.

Xia Senlin, a 30-year-old woman who has worked for Rainbow since September 2008, said that her salary was 2,158 yuan in November 2011. She worked 26 days that month.

"My salary in December 2011 was 3,696 yuan, and we work from 7:30 am to 5:30 pm, with a noon break," said Wu Chunping, who is 36 years old and has worked for Rainbow since May 2006.

Workers in the factory make 5.16-5.94 yuan for every Wenlock and Mandeville doll produced, said Gu. "The Sun's report that workers only get 18 pence per item is untrue."

However, he admitted that the factory does not interfere if some unskilled workers choose to work overtime to finish their workload.

"The Hong Kong-based Students and Scholars Against Corporate Misbehavior, which made the report upon which The Sun based its coverage, may face lawsuits if the situation continues to deteriorate," Gu said.

"It is untrue to label our factory a sweatshop, and we can stand up to scrutiny," Gu said.

A 2012 London Olympic Games spokesman said that an independent monitor has been asked to carry out a comprehensive investigation and review the allegations of a breach of workers' rights.

Golden Bear is also launching its own investigation into the allegations, saying that it will work with the British Toy and Hobby Association, the International Council of Toy Industries and other authorities in the process.

Changes to weaken expectations of yuan appreciation, SAFE says

BEIJING - China didn't experience large capital outflows in recent months, although the pace of net inflows slowed, which was in line with policymakers' aims, the nation's foreign-exchange authority said.

"The recent changes in foreign capital flows can help achieve a balance of international payments and weaken expectations of yuan appreciation", which did more good than harm for the economy, said the State Administration of Foreign Exchange (SAFE) on the website of people.com.cn.

"We will crack down on any illegal foreign exchange transactions, including illicit cross-border capital transfers and underground banks' trades, to limit financial systematic risks," SAFE said.

According to the People's Bank of China (PBOC), the central bank, the decrease of its yuan positions for foreign-exchange purchases accelerated in December, showing a drop of 15.8 billion yuan ($2.5 billion) from November.

The figure has contracted each month since October, though the decline in that month was only 3.17 billion yuan. The change indicated a faster pace of capital outflows, economists said.

The PBOC might release the January data this week.

Peng Wensheng, chief economist at China International Capital Corp, forecast that the growth of the yuan counterpart of foreign exchange reserves might "sharply decrease" this year compared with 2011, because of weak exports to Europe.

"It may drive the PBOC to cut commercial banks' required reserve ratio and allow more lending to increase market liquidity," Peng said.

The slowdown of foreign capital inflows in the past few months had eased some pressure for yuan appreciation, but the situation would only prevail in the short term, analysts said.

"The yuan exchange rate against the dollar is likely to rise by as much as 4 percent in 2012", though there might be some brief periods of depreciation, a report from JP Morgan said.

The yuan appreciated by 5.11 percent against the dollar last year, according to SAFE.

SAFE urged small exporters to choose suitable financial instruments in banks, including options and swaps, to hedge exchange risks as global economic growth slowed.

The deepening European debt crisis and the weak recovery of developed economies have brought difficulties for China's foreign-exchange management, and "our primary task is to control risks", SAFE said.

As of the end of 2011, the country's foreign exchange reserves had declined to $3.18 trillion from $3.2 trillion at the end of the third quarter, the first quarterly decline in more than a decade, official data showed.

Appointment follows resignations after mislabeling scandal last year

GUANGZHOU - The international retail giant Wal-Mart Stores Inc announced that Greg Foran has been named president and CEO of Wal-Mart China.

The appointment comes in the wake of allegations that a number of the company's stores had sold mislabeled food in the Chinese mainland last year.

Foran is currently senior vice-president of Wal-Mart International and will start his new role in March, the company said in a statement on Tuesday.

Prior to joining Wal-Mart in October, Foran built his career in New Zealand and Australia, beginning as a part-time shelf stocker and moving on to become the head of the food and liquor business at the Sydney-based Woolworths Ltd, Australia's largest retailer.

"With his distinguished career in retail, Greg is uniquely qualified to lead our growing business in China," said Scott Price, president and CEO of Wal-Mart Asia and interim CEO of Wal-Mart China.

Price became Wal-Mart's interim China head in October, following the departure of former Chief Executive Ed Chan and Clara Wong, senior China vice-president of human resources.

Wal-Mart sources said that the two had resigned for personal reasons and that the resignations "had no correlation" with an investigation in Chongqing concerning allegations that more than a dozen of its stores in the city mislabeled regular pork as organic pork last year.

Wal-Mart also suffered a series of high-level personnel losses last year, after both its China chief financial officer and chief operating officer left in May, creating a leadership vacuum.

"I'm very pleased he (Foran) is bringing his talents to help us continue the company's expansion in China and to enhance our efforts to help Chinese customers save money," Price said in a company press release.

"China is a very important market for Wal-Mart and I am looking forward to working with our 100,000 associates."

In response to the Chongqing allegations, Wal-Mart announced last year that it will establish a compliance division, which will be in charge of issues related to food safety and protection of customers' rights.

The company will also work closely with third parties to build an internal food safety system, according to sources in the retailer's China public relations division.

At present, Wal-Mart, based in Bentonville, Arkansas, had more than 370 stores in 140 Chinese cities, after entering the Chinese mainland market and opening its first Supercenter and Sam's Club outlets in the southern city of Shenzhen in 1996.

In 2007, Wal-Mart acquired a 35 percent stake in Trust-Mart, a Taiwanese-owned chain of retail supercenters.

Sources with Wal-Mart China's public relations department said all the Trust-Mart outlets it acquired will be redecorated in the Wal-Mart style to reinforce its image in the country.

When the United States first allowed tour groups from China's mainland in 2008, cautious travel agents limited their packages to important sites on the East and West coasts and Hawaii - all in about two weeks.

Breathless, see-everything-famous trips were well suited for Chinese who might visit the US only once, especially in an immature market. Now, agencies are offering wider selections of travel options in light of planned improvements to the US visa application process in China and the expected leap in Chinese visitors to the US.

China International Travel Service, one of the largest agencies in Beijing, has begun selling more focused tours. They include shopping trips to both luxury stores in Beverly Hills and large outlets on the East Coast, and themed tours, such as one to national memorials and parks including Mount Rushmore.

Online travel service Ctrip.com said it will work to develop more US-bound group offerings this year. It plans to introduce new tours to Seattle and Florida.

However, Fei Lina from Shanghai Jinjiang International Travel said January and February are a low season for US trips, so it is not a good time to test US President Barack Obama's promise of a shortened and simplified visa procedure.

"Some say we need to wait until the second half of this year to see the real impact of the policy, and I think we need to wait until 2013 at least," she said.

Some agencies worry that expensive US-bound airfare and the lack of local tour guides could make tours to Europe or to islands such as Bali and Maldives during off-seasons appear more cost-effective.

Ge Jingwen, who works at SAL Tour in Shanghai, said, "It's never an easy thing to grab cheap US tickets. For example, you can get a 3,000 yuan ($475) flight to Europe when there's a discount, but any destination in the US costs you at least 5,000 to 6,000 yuan."

Li Meng with China International said that if the number of China-US flights does not increase, the prices of tickets will rise with demand. That would push up the prices of US-bound tour packages as well.

Visa applicants gather outside the US embassy in Beijing on Jan 30. [Photo / China Daily]

The dragon dance produces smiles outside the It's a Small World ride at Disneyland during Spring Festival. About 1,000 Chinese mainlanders visited the California park on Jan 25. [Photo / Agencies]

Travel agencies and destination countries try to cash in on a predicted spending and tourism surge, Xin Dingding, Zheng Yangpeng and Shi Yingying report from Beijing and Shanghai.

The ever-increasing number of Chinese tourists means that more and more countries are trying to simplify visa red tape.

A prime example of this occurred just last month. US President Barack Obama promised that procedures in China for non-immigrant visas will be much more efficient.

Travel services and destination countries are positioning themselves to cash in on the expected tourism surge.

Li Meng of China International Travel Service said that the company doubled the number of April-October air tickets it usually buys for China-US flights. This is the route's peak travel season.

Figures back the confident outlook. The number of Chinese visitors to the US has grown from nearly 400,000 in 2007 to more than 1 million in 2010, according to the China Tourism Academy.

Chinese companies benefit by providing travel services, but the numbers are also good for destination countries. Tourists and students bring in hard cash and in sluggish economic times, cash is king.

The United States is the most frequently cited "dream destination" for Chinese citizens, followed by France, according to research by the US Travel Association. However, more Chinese visited second-place France.

"A big reason has been the US visa system," the Travel Association's Siming Cao told China Daily in an email. "If you look at countries that have made their visa process simpler for Chinese citizens, they capture a larger share of outbound travel than the US."

As evidence, she said that 38 percent of Chinese international travelers visited Western Europe in 2010, compared with 13 percent for the US.

Dun Jidong, a marketing manager with Ctrip, a leading online travel agency, said, "Many Chinese are scared away by the difficulty in filling out application forms printed in English and the inconvenience of personal interviews required for every applicant.

"Often an applicant has to stand in a line for nearly a day for the interview," Dun said. "More troublesome is that before the interview, the applicant has to wait a long, long time."

So many visa applications were submitted during the first half of 2010 and 2011 that applicants had to wait two to three months on average for the chance to interview, Dun said. That eliminated many travel plans with a short lead time.

The delay was compounded by the annual crush of applications for student visas from July through September.

For those who went through the whole process, many who answered a reporter's questions outside the US Embassy found it exhausting. One of them was Zhou Yan, a student from Shandong Normal University in East China.

She said she and her classmates had traveled more than 400 kilometers from Shandong to Beijing for an interview. "We waited for three hours, but the actual interview only took three minutes."

What's changing

The problem with the US visa system has been its capacity to handle the Chinese demand. US Ambassador Gary Locke has said China is the source of about 11 percent of all visa applications to the US, second only to Mexico.

The latest figures from the US State Department show that consular officers handled nearly 260,000 visa applications in China, an increase of 48 percent, in the last three months of 2011. Handling them better and quicker is the goal of policy changes.

Charles Bennett, minister-counselor for consular affairs at the US Embassy, said earlier that 50 more American staff members would be deployed to the embassy and US consulates in China this year. More interview facilities will be built, and the embassy is considering streamlining the application process, allowing applicants to have their interviews as quickly as two days after applying.

In addition, some qualified travelers who previously were granted visas might be able to renew their visas without another interview, saving both time and money. The US hopes it will encourage these travelers to visit the US again, and meanwhile free resources to interview 100,000 more first-time Chinese travelers.

Bennett said the new policy will not loosen standards - "national security remains this administration's highest priority," the embassy's website says - but that the US expects to approve visas for nearly 90 percent of Chinese applicants this year.

Li of China International Travel said the company estimates an additional 80,000 to 100,000 tourist visas could be handled in Beijing and Shanghai combined this year.

What others do

Industry observers noted that the new US visa policy follows a global trend of adopting "Chinese-friendly" policies to boost tourism.

Japan, for instance, has relaxed its visa policy to Chinese tourists three times since 2009. Now, an applicant who lives in a big city and has a credit card can get a visa to Japan.

New Zealand last year reduced the number of documents it requires and raised the number of multiple-entry visas issued.

Spanish Tourism Minister Miguel Sebastian said at a business forum in Barcelona in July that Spain planned to ease visa requirements for Chinese nationals, encourage more direct flights between the two countries and open more tourist offices in China.

Germany, which like the US requires personal interviews of applicants, plans to simplify and speed its visa issuance this year, according to a Reuters report in December. However, the embassy told China Daily recently that no changes are expected soon.

Industry observers noted that all the new measures of developed countries stopped short of lowering the standards for issuing visas to mainland Chinese. However, policy changes do indicate that other countries are realizing the importance of the Chinese market, said Jiang Yiyi, director of China Tourism Academy's International Tourism Development Institute.

"We find that once a country relaxes its visa policy for Chinese tourists, it usually produces immediate results in the growth of visitor numbers."

After Japan eased its visa policy, she said, mainland tourists to Japan exceeded 1 million that year and reached 1.41 million the next.

The World Tourism Organization said global tourism grew 4.4 percent last year, but China's international travel increased 20 percent. Nearly 70 million mainlanders visited overseas destinations including Hong Kong, Macao and Taiwan; about 20 million visited other foreign destinations.

Big spenders welcome

According to the US Department of Commerce, Chinese tourists on average spend more than $6,000 per trip, compared with about $4,000 spent by all international travelers in the country.

More than 800,000 Chinese visitors contributed $5 billion to the US economy in 2010. Based on that, and a projected 135 percent increase in visitors, Chinese travelers would contribute $11.75 billion to the US economy in 2016.

A Beijinger who joined a tour group last year did his part. The man, who gave his name only as Qi, said every member of his group spent at least 20,000 yuan ($3,167) on top-brand clothes, shoes and bags. (Food and lodging were extra.)

Qi said he is thrifty and doesn't buy expensive clothes at home, but regretted having curbed his spending on the trip. "I wished I had bought more, because clothes and shoes of some brands are indeed cheaper in the US than in Beijing."

Yang Wen, 37, a human resources manager in Shanghai, said she plans to apply next month to visit the US in May. She said she spends hundreds of thousands of yuan on luxury goods every year while traveling abroad. People like her can help boost the gross domestic product in the US, she said.

Michele Rothstein, spokeswoman for Simon Property Group's premium outlets division, said in an email that the group is "pleased with the growth (in) visitors from China who have embraced our outlet centers as must-visit destinations. ... We look forward to initiatives that enable more people to come to the US."

Write the reporters at xindingding@chinadaily.com.cn, zhengyangpeng@chinadaily.com.cn and shiyingying@chinadaily.com.cn

Li says inspection teams will be sent to monitor entire process

BEIJING - The State Council will set up inspection teams to monitor the quality and distribution of low-income housing projects, Vice-Premier Li Keqiang said.

Speaking at a national meeting on affordable housing in Beijing on Monday, Li stressed the importance of fair distribution.

As the national housing projects are completed or near completion, distribution is the next "key phase", he said.

"We should bear in mind the importance and urgency of distribution," he told construction officials in charge of the projects. "While ensuring the quality, we should also ensure the efficiency and fairness of the distribution."

The projects are government-subsidized homes and will provide accommodation for low-income earners.

Their construction and urban renovation are part of national efforts to provide affordable housing.

The government should keep a close watch on the application and review process, he said and an examination of the applicant's income and assets should be done before any decision is made.

A redressing mechanism should also be established to disqualify those who fail to meet requirements.

"The whole process should be transparent and open to public scrutiny all the time," he said.

Government officials should disqualify those who fabricated credentials to buy or rent, he said. Officials who are found to be involved in any scams will be punished.

Wu Jingli, 56, a retired woman who still lives with her parents, both in their 90s, in the Xicheng district of Beijing, said she has been on the waiting list to rent a subsidized apartment for years.

"I know some people in my community who can afford to rent at market prices, but they also applied for government-subsidized apartments. I hope the authorities can filter them out of the queue and give us a better chance," she said.

Chen Baocun, deputy secretary-general of the National Real Estate Manager Alliance, said ensuring fair distribution is a tough task.

Verification of applicant credentials is the most difficult part, he said.

There should be strict regulation to supervise the distribution, he said.

Distribution of subsidized homes in first-tier cities, such as Beijing, is better than second- and third-tier cities due to public scrutiny, he said.

Governments at all levels have been boosting efforts to expand the supply of affordable housing in 2012. The number of subsidized units under construction this year will reach 18 million and 5 million are expected to be finished this year, according to figures from the Ministry of Housing and Urban-Rural Development.

It is the first time that all segments suffered monthly negative growth

BEIJING - Sales of passenger vehicles in China registered their largest year-on-year decline in at least 10 years in January.

The retreat came as two holidays in a single month accelerated the slowdown of the world's largest automobile market.

Combined sales of cars, sport-utility vehicles, multi-purpose vehicles and minivans nosedived 16.5 percent from a year earlier to 1.17 million units in January, said the China Passenger Car Association on Tuesday.

It's also the first time in recent years that all those vehicle segments have seen negative monthly rates of growth.

"It's in accordance with our previous expectations of between 15 percent and 20 percent negative growth. The three-day New Year holiday and week-long Spring Festival not only cut production days by almost 50 percent, but also led to a void in the vehicle showrooms," said Rao Da, secretary-general of the association.

However, Rao said that the fact that the Spring Festival fell in January this year will provide a year-on-year sales increase of around 30 percent in February. Compared with the same month in 2011, the month will see working days increase by an additional 31 percent.

General Motors Co, which regained the global top spot for vehicle sales from its Japanese rival Toyota Motor Co in 2011 - partly as a result of its success in the Chinese market - said that its sales in the country were down 8 percent on an annual basis in January. The company's sales in the United States also dropped 6 percent year-on-year over the month.

China's biggest automaker, Shanghai Automotive Industry Corp (SAIC), whose three major joint ventures claimed the top three spots in domestic passenger vehicle sales, also reported a decline in January.

The Shanghai-listed company said in a statement that January sales of 380,350 units equated to a decline of 8.48 percent compared with 2011. Its self-developed brands registered a huge decline of 45.34 percent year-on-year.

The rate of growth of China's automobile market has slowed since the cessation of the government's stimulus measures - including trade-ins and subsidies - that had run for the previous two years.

The cancellation of the stimulus policies ended skyrocketing annual growth rates of 46 percent in 2009 and 34 percent in 2010. The industry saw year-on-year growth of a mere 2.45 percent in 2011, the lowest since 1999.

However, analysts said that the slowdown indicated that the industry is back to single-digit yearly growth, which signals a healthy development.

Shi Jianhua, deputy secretary of the China Association of Automobile Manufacturers, predicted that total domestic vehicle sales in 2012 will be about 20 million units, with year-on-year growth of 8 percent.

Shi also forecast that exports will be between 1.05 million and 1.1 million units this year, a rise of between 25 and 30 percent from 2011.

The cash flow of property developers will be further squeezed as the credit policies relating to them remain tight and most of their financing channels, such as trust and overseas financing products, will come due this year.

According to Guotai Junan Securities Co Ltd, real estate trust products valued at 175.8 billion yuan ($28 billion) will come due this year, with the peak occurring in July.

Ye Chengyu, director of investment at the real estate consultancy Cushman & Wakefield Inc, said that 2012 will be a year of property developer M&A, because they will face a tightened cash flow of unprecedented proportions.

"Though domestic players will still dominate the investment market this year, more deals involving international investors are expected," said Ye from Cushman & Wakefield.

According to Cushman & Wakefield, published en-bloc sales in Beijing hit $3.63 billion in 2011, down 13 percent from the previous year. Chinese institutional investors dominated the market in terms of sources of capital, with 83 percent compared with 60 percent in 2010.

However, the situation in Shanghai was the reverse: published en-bloc deals totaled $5.25 billion last year, up 9.9 percent from 2010. Foreign institutional investors accounted for 51.2 percent of the capital sources, according to statistics from Cushman & Wakefield.

"Shanghai remained the most-favored city by international investors, because the market is more mature and there are more tradable assets for global investors," said Ye.

Frank Marriott, senior director of Savills Real Estate Capital (Asia-Pacific), said the office markets in Beijing and Shanghai are still the favorites for international institutional investors, especially core real estate funds that prefer relatively lower risks.

"However, there are few investment opportunities for international funds in these two office markets because the supply is limited and competition is fierce," said Marriott. "Opportunist international funds are looking at the residential sector, seeking opportunities in second-tier cities with cash-strapped property developers."

Though there has been a capital outflow since October, Chris Brooke, president and CEO of CB Richard Ellis Asia, part of the CB Richard Ellis Group Inc, international investors still have a strong interest in the Chinese property market.

"Some international funds did sell their projects in China, but the major reason for that was that their investment period had come due, rather than any pessimism about the country's real estate sector," said Brooke.

A tablet runs a Qihoo 360 Technology Co Ltd program. The company's applications were removed from Apple Inc's App Store on Saturday after receiving abnormal ratings from users. [Photo / China Daily]

BEIJING - The Chinese Internet security provider Qihoo 360 Technology Co Ltd said on Tuesday that its products, which were removed from Apple Inc's online store, will be available for downloading again in the next few days.

At least seven of Qihoo 360's applications - including anti-virus software for mobile phones, a product that the company says is used by more than 70 million people in China - were removed from the App Store on Saturday after Apple saw those products had received abnormal ratings from users, the company said, citing an official response from Apple.

Qihoo 360 said it is trying to discover the source of these abnormal ratings and did not directly deny accusations that it was the source.

The company also contested allegations that its products have security flaws, saying they are groundless.

"The applications will be available for download at Apple's App Store in the next 48 to 72 hours," Qihoo 360 said, adding that it does not need to modify the removed applications, also known as apps in the technology sector.

The company also denied accusations that its apps contain programs that can be used to steal users' personal information.

The money spent on advertising apps from Apple's App Store hit a record high in December, said a report released by the Internet research company iResearch Consulting Group on Tuesday. App developers then paid $1.81 on average to obtain a loyal customer, up from $1.33 the month before, according to the report.

Going to the App Store to give apps good ratings is a way to raise the products' ranking in the store's charts. And if not discovered, such actions cost nothing.

On Monday, Apple asked app developers to avoid using services that will raise their products' user ratings.

"Even if you are not personally engaged in manipulating App Store chart rankings or user reviews, employing services that do so on your behalf may result in the loss of your Apple Developer Program membership," the announcement said.

Previous reports suggested that Apple removed Qihoo 360's apps because those products could be used to hack users' e-mail accounts, passwords and other personal information.

Qihoo 360 alleged Kingsoft Co Ltd, a Chinese anti-virus software developer, for distributing such "slanders" against the company, and said it will sue Kingsoft for libeling its competitor.

Questions to Kingsoft were not answered immediately.

"Chinese Internet security providers should pay more attention to improving data safety rather than getting into spitting contests with each other," said Shen Zhiyong, CEO of Beijing-based Andi Public Relations Consulting.

The stock price for Qihoo 360 slumped by more than 6 percent on the New York Stock Exchange after the company's products were removed from the App Store. The company's price stood at $17.89 at the close of the market on Monday.

Only 5 percent of Qihoo 360 customers use Apple devices. "A greater proportion" of subscribers use phones that run the Android system, developed by Google Inc, or the Symbian system, developed by Nokia Oyj, said Nancy Yang, an analyst at Mirae Asset Securities Co Ltd.

Eight out of nine investment analysts polled by the US financial website CNNMoney recommended buying Qihoo 360's stocks.

BEIJING - Chinese banks and companies in the northern city of Tianjin have cut exposure to Europe in a move to reduce their risks amid the spreading eurozone debt crisis, a newspaper run by the Chinese central bank has reported.

Europe is Tianjin's second-largest export destination after the United States.

A survey of 53 banks and 15 companies conducted by the local foreign-exchange regulator found that 11 banks had tightened the reins on Europe-related business, the Beijing-based Financial News reported on Tuesday.

The banks had reduced lending to foreign, especially European, lenders, cut or halted trade finance for European countries with high debt risks and suspended derivatives business with European banks, the report by the People's Bank of China-run newspaper said.

In addition, the banks were being choosier about their clients and reminding them of risks related to their foreign trading partners.

Banks also reported cutting issues of euro-denominated wealth-management products, after the weakening euro hurt earnings last year.

However, Chinese banks generally believed they had only limited exposure to the eurozone debt crisis, because their holdings of euro bonds were very low, and their limited euro-denominated assets mainly represented loans to finance trade, which would be little affected by further euro depreciation.

The top Europe-related risk for Chinese lenders was securitized euro-denominated debt, said Li Jianjun, an international finance analyst at Bank of China Ltd.

Although Chinese lenders have become more prudent since the start of the sub-prime crisis in the US years ago, they still held such debt, Li said.

Willem Buiter, chief economist at Citigroup Inc, said on Tuesday that the likelihood of Greece exiting the eurozone over the next 18 months has risen to 50 percent, up from 25 to 30 percent previously, because the willingness of creditors to support Greece has "fallen substantially".

"We continue to think that an uncontained exit would have grave implications for the rest of the euro area, the EU and the world at large," he said in a research note on Tuesday.

"We also expect agreement with its official creditors on a second bail-out. Greece is therefore likely to avoid disorderly default when its next bond redemption is due (which is on March 20, but a seven-day grace period applies)."

As overseas liquidity tightened and funding costs for banks to finance overseas capital have almost doubled since September, overseas payment services provided by lenders to clients have shrunk, the survey found.

Chinese companies had been paying import bills directly by buying foreign currencies, according to the survey.

BEIJING - China raised the ceiling for retail gasoline and diesel prices for the first time this year on Wednesday in tandem with international crude oil hikes.

Average fuel prices increased as much as 3.65 percent, with gasoline and diesel rising by 300 yuan ($47.55) a metric ton each. That equals 0.22 yuan a liter for gasoline and 0.26 yuan a liter for diesel, the National Development and Reform Commission (NDRC), the country's top economic planner, said on Tuesday.

After the increase, domestic gasoline prices on average will be capped at 9,380 yuan a ton, while diesel will reach 8,530 yuan a ton. It's the first time retail gasoline and diesel prices have been adjusted since Oct 9, when the NDRC cut prices by about 3 percent, following two hikes earlier in 2011.

The hike, on the back of volatile surging international oil prices, will motivate refineries to process more oil, guarantee domestic supply as well as propel the pace of cutting emissions, the NDRC said on its website.

The hikes, however, will not stop domestic demand for gasoline and diesel from entering into a growth trajectory as a result of the re-opening of factories and resumption of infrastructure construction after a short break during Chinese New Year, said Han Jingyuan, an energy analyst with JYD Online Co, a bulk commodity consultant based in Beijing.

Industry experts had widely expected the fuel hike in anticipation of moderating domestic inflation.

"Given that China's inflation appears to be confirmed on a downward trend, we expect that policymakers will feel more comfortable allowing upward fuel price adjustments," Deutsche Bank AG said in a recent research note.

Analysts said that more fuel price hikes are expected to occur this year owing to tensions between Iran and the West as well as the expected easing of inflation in China.

Global crude oil prices may increase as much as 30 percent because of sanctions by the United States and Europe on Iran, the International Monetary Fund warned. The authority also said that China is considering reforming the pricing mechanism for the fuel by reducing adjustment period and frequency.

China should adopt more flexible and market-oriented measures to ward off the volatility of global oil markets, said Zhu Fang, vice-director of the information and marketing department at the China Petroleum and Chemical Industry Federation.

It currently measures a standard basket of oil and adjusts prices if the average moves more than 4 percent in 22 working days.

Zhu said that period could be reduced to as short as 10 days. NDRC said China may also consider adjusting the three types in the country's existing pricing basket of Brent, Dubai and Indonesia's Cinta, without elaborating.

The current fuel pricing mechanism was introduced in December 2008 and does not fully fit the ever-changing global oil markets, Zhu said, but the government may take gradual and cautious steps to reform the scheme.

Han Wenke, director for the Energy Research Institute of NDRC, said that the government is considering allowing China's top oil companies, including China National Petroleum Corp and China Petrochemical Corp, to set retail fuel prices instead of the NDRC to better reflect market conditions.

Nation to seek continuity, stability in its policies for processing trade

BEIJING - Exports will remain a major force in helping China maintain economic growth by creating jobs and stimulating domestic consumption, despite decelerating growth in overseas shipments and a gloomy outlook, said the Ministry of Commerce.

Zhang Ji, director-general of the ministry's Department of Mechanical, Electronic and High-tech Industry, told China Daily on Tuesday that the nation would aim for "continuity and stability" in its policies for the processing trades, which remain a significant part of China's foreign trade.

Processing trade involves taking imported parts, components and packaging materials, assembling them and re-exporting the finished product.

Though export growth declined in the second half of 2011 and prospects for the coming months are not positive, the "significance of China's foreign trade (in advancing the economy) will be prominent, probably in the next two to three decades or even longer," said Zhang.

The International Monetary Fund said in a report on Monday that China's economic expansion could slow to 8.25 percent this year, from the previously projected 9 percent, should Europe's debt crisis worsen.

Exports would be a significant drag on growth in the coming two years, the fund said.

The IMF also estimated that exports in January might have fallen 1.4 percent year-on-year. Official trade figures are scheduled for release on Friday.

But Zhang said that exports could still "indirectly" make a significant contribution to the nation's economic growth, even if export shipments actually contracted in the short term.

"We all know that investment, exports and domestic consumption are the three pillars of China's economic expansion, but what if we merely depend on investment and domestic consumption?

"Do you think we could still bet on another round of large-scale investment after the 4-trillion-yuan ($634 billion) stimulus package was wrapped up?" Zhang said.

"Foreign trade could for a long time still guarantee jobs and growing individual disposable income, which would translate into domestic consumption."

China's 12th Five-Year Plan (2011-15) noted that the nation remained committed to expanding domestic consumption as it sought to transform its economic development mode.

"We have to enhance the competitiveness of foreign trade companies to make sure more jobs can be created," said Jin Baisong, an expert at the Chinese Academy of International Trade and Economic Cooperation, a think tank of the ministry.

The processing trade is a significant part of China's foreign trade.

According to the General Administration of Customs, China's processing trade grew 12.7 percent last year to $1.3 trillion, accounting for 35.8 percent of the nation's foreign trade.

During a visit last week to Guangdong province, the nation's export powerhouse, Premier Wen Jiabao said China would pursue basically "stable" foreign trade policies.

He added that any adjustments should be more "encouraging than restrictive", as the global debt crisis was still spreading.

Zhang noted that the nation was encouraging processing trade companies in coastal regions to move up the industrial chain and shift their focus to high-end manufacturing, strategic emerging sectors and service activities such as research and development.

"We will facilitate the transfer of some industries to the central and western regions from the eastern part," he said.

In 2010, China designated the cities of Suzhou in Jiangsu province and Dongguan in Guangdong province as pilot cities for upgrading of the processing trade.

The two provinces have numerous processing trade companies.

Premier Wen Jiabao, European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso will be present at the summit, which was previously slated for last October but was postponed due to EU leaders scrambling to combat the eurozone debt crisis.

Other Chinese leaders, such as President Hu Jintao, will also meet with EU leaders at the meeting, Liu said at a regular press briefing.

The leaders will discuss methods for China and EU to jointly cope with challenges under the context of the EU debt crisis, deepen partnerships and mutually stimulate development in their respective countries, Liu said.

The two sides will also exchange views on bilateral cooperation in multiple fields, he said.

In December 2011, the Ministry of Railway (MOR) released a 2012 railway fixed-asset investment target of 500 billion yuan ($79.27 billion), below Detsche Bank (DB) analyst's estimate of 630 billion yuan and much lower than market expectations of between 650 and 670 billion yuan.

Ma Jun, chief economist of the bank, said that he believed the railway investment target may be revised up in a few months.

"However, we believe that the current MOR budget is based on a conservative expectation of the national government budget, which will not be finalized until the National People's Congress in March," said Ma.    

Given that real economic indicators will likely worsen in the coming months, DB believes the government will get a bit more aggressive in budgeting its fiscal expansion two months from now.

"We will not be surprised if the fixed asset investment target of the MOR is revised up again to 600 billion yuan for 2012," Ma said.

Total electricity consumption is expected to top 5.14 trillion kilowatt-hours (kWh) this year, with the growth rate slowing from 11.7 percent in 2011 to between 8.5 and 10.5 percent, the CEC said in an annual industrial report posted on its website.

The report said that the country is still facing tight power demand and supply this year with a total electricity shortage of 30 million and 40 million kilowatts, due to uncertainties in thermal coal supplies and reduced supplies of hydropower ahead of flood season.

According to the CEC report, China's electricity consumption rose 11.7 percent year-on-year to 4.69 trillion kWh in 2011, with 24 provincial-level power grids reporting electricity shortages.

The CEC projected China's installed power generating capacity to reach 1.14 billion kilowatts by the end of 2012, adding 85 million kilowatts of capacity.

The country needs to increase coal supplies to at least 300 million tons to account for an estimated 150-million-ton increase in thermal coal demand, according to the CEC.

Last year, China's investment in the power sector totaled 739.3 billion yuan ($117.11 billion), according to the report.

The notice said that when the rail construction projects are at the design stage and before the projects begin, or before any major changes take place, the designers and contractors of the rail construction projects should check the construction plans and environmental impact assessment report.

If there is a change happening to the construction plans or to the environmental protection measures, contractors should submit a new environmental impact assessment report for approval.

The notice also defines the major changes of rail construction projects in six aspects, the newspaper said.

Similar to the figures in 2011, the expected GDP growth rate in Western regions appeared higher than those of the Central and Eastern regions.

The highest estimated number was 15 percent from the Inner Mongolia autonomous region, followed by 14 percent from Guizhou province and 13.5 percent from Chongqing municipality. The lowest came from Beijing and Shanghai at about 8 percent and from Guangdong province and Zhejiang province, which were both at 8.5 percent.

Experts warned the risk of more regional direct investment to fulfill the growth target, which may impede economic restructuring and the development of emerging industries, imposing burdens on resource consumption, said the report.

In the annual economic blue book released by the Chinese Academy of Social Science, the expansion of China's economy is to slow to 8.9 percent in 2012. The International Monetary Fund (IMF) has also cut its forecast for China's 2012 economic growth to 8.25 percent from the 9 percent projected in September.

Maintaining the current prudent monetary policy and proactive fiscal policy stance in 2012 was one of the goals set at China's annual Central Economic Working Conference for 2012 held last December. One suggestion was to actively slow down the economic growth rate and return to a more rational track of economic development.

The benchmark Shanghai Composite Index dropped 1.68 percent, or 39.23 points, to close at 2,291.90. The Shenzhen Component Index tumbled 1.93 percent, or 181.93 points, to finish at 9,266.71.

Most shares fell on the two bourses and trading was thin. Losers outnumbered gainers by 838 to 93 in Shanghai and by 1,231 to 154 in Shenzhen.

Aggregated turnover shrank to 109.7 billion yuan ($17.39 billion) from 128.85 billion yuan on the previous trading day.

China's industrial output growth is likely to slow to 11 percent this year from 13.9 percent in 2011, Zhu Hongren, chief engineer of the Ministry of Industry and Information Technology, said at a Tuesday press conference.

The statement sparked new concerns that economic growth will slow this year and erode enterprises' earnings.

On Monday, the International Monetary Fund (IMF) cut its forecast for China's GDP growth this year to 8.25 percent from the 9 percent projected in September 2011. The country's economic growth could be cut by nearly half if the eurozone debt crisis worsens, the IMF said in a report released by its Beijing office.

The Industrial and Commercial Bank of China, the world's largest bank by market value, shed 1.81 percent to hit 4.33 yuan per share. China Vanke, the country's largest real estate developer, gave up 3.15 percent to close at 7.38 yuan. Inner Mongolia Baotou Steel Rare-earth Hi-tech Co., Ltd., the country's top producer of rare earth metals, slid 2.32 percent to reach 44.55 yuan.

Zhu said although industrial growth would ease in 2012, it would still continue to increase at a stable and relatively fast pace.

China witnessed gradual decreases in industrial growth last year. The industrial value-added output expanded 14.4 percent in the first quarter in 2011, and grew by 14 percent, 13.8 percent, and 12.8 percent in the other three quarters, respectively, government data showed.

The European debt crisis has helped stoke concerns of weakening industrial growth in the world's second largest economy.

"The industrial growth may further trim down in the first quarter this year," Zhu said at a press conference held in Beijing, citing weak external demand amid the debt morass in Europe and a slowing global economy.

He also said production costs at home continue to rise. "Small and micro-sized firms, in particular, face greater difficulties. Meanwhile, energy, resources, and the environment are all increasingly constraining industrial development," He said.

However, Zhu said he remained confident because the fundamentals of the Chinese economy had not changed, ensuring long-term and medium-term growth.

The country's industrial growth stood at 13.2 percent in October, 12.4 percent in November, and 12.8 percent in December last year. This suggested that the industrial growth was stabilizing, according to Zhu.

Further, he said by maintaining stable investment growth, the industrial economy can expect fast growth that will be pushed up by the government's efforts to expand domestic demand.

"The moderate decline in industrial growth also will drive companies to speed up restructuring and upgrading so as to improve cost-effectiveness," Zhu said.

As an important channel of creating jobs, the government has vowed to provide more support to small and micro-sized companies in 2012.

Zhu said the central government will roll out more policies tailored for boosting the healthy development of small and micro-sized firms this year.

The central government last week earmarked 15 billion yuan ($2.38 billion) to establish a development fund for small and medium-sized enterprises, particularly focusing on newly-formed ones.

Zhu said relevant ministries of finance and industry are currently finalizing details of the operation of the 15-billion-yuan fund created to support small businesses that face difficulties in loans and rising costs.

The State Council, the country's cabinet, said further support for small and micro enterprises are crucial as they are still facing great operating pressures, rising costs and financing difficulties.

The index, together with the Shenzhen Component Index and the Shenzhen SME (small and medium-sized enterprises) Board Index, makes up the three core indices reflecting the performance of China's stocks listed on the Shenzhen Stock Exchange.

The ChiNext Board, which started trading on October 30, 2009, mainly lists high-tech companies and those with high growth potential.

The March contract dropped 1.54 percent to 2,474.2. The June contract weakened 1.53 percent to 2,495.0 points, while the September contract shed 1.29 percent to finish at 2,521.0 points.

The stock-index contracts, agreements to buy or sell the Hushen 300 Index at a preset value on an agreed date, are designed to allow investors to bet on and profit from gains or declines in the market.

The index futures was launched at the China Financial Futures Exchange (CFFEX) and started trading from April 16, 2010. The CFFEX has set the base value for all the four contracts at 3,399 points.

The plant is capable of manufacturing 100 lightweight civil Mi-2A helicopters annually, the local government and the company reported Monday.

Construction of the plant, located near Beijing in Pingquan county, Hebei province, will be completed by the end of July, county officials said, adding that the plant will also serve as a repair hub for Russia's Mi-series choppers in the Asian region.

The investment for the first phase of the plant, spanning 700 mu (47 hectares), was estimated at 1.4 billion yuan ($224 million), Rostvertol's Chinese partner Hebei Xi'Ao Aeroplane Manufacturing Co Ltd said on its website (www.soarhebei.com).

The continuous drop in Beijing's revenues from land sales is largely due to the government's rigorous real estate measures, which include restricting the number of homes a family can purchase and higher down payments for second home purchases.

In 2011, Beijing's land sales fell 30 percent from 2010's 176 billion yuan, according to statistics from the finance bureau.

Ministries of finance and industry are finalizing details of the operation of a 15-billion-yuan fund created to support small businesses that face difficulties in loans and rising costs, said Zhu Hongren, chief engineer with the Ministry of Industry and Information Technology, at a press conference in Beijing.

The central government has decided to earmark 15 billion yuan ($2.38 billion) to establish a development fund for small and medium-sized enterprises, particularly focusing on newly-formed ones.

Zhu said small and micro enterprises began facing growing challenges of rising costs stemming from raw materials and labor since the fourth quarter of 2010. Moreover, weak overseas demand has also hurt some export-based companies.

To address these difficulties, the State Council, China's cabinet, last October decided to raise the tax threshold for collecting corporate value-added taxes and business taxes, extending a policy to halve business income taxes by another four years, and forgiving banks' stamp tax on lending contracts with small firms for three years.

The State Council last Wednesday called for more efforts to support the sound development of small and micro-sized enterprises as they serve as a significant channel for creating jobs.

Zhu said that with concerted efforts, the nation's small and micro-sized businesses are unlikely to experience a massive wave of bankruptcies this year due to cash flow failure.

Meanwhile, overall users of fixed-line and mobile phones as well as Internet were charged 4.8 percent less than in the previous year, MIIT chief engineer Zhu Hongren said at a press conference held in Beijing.

Zhu said that as of the end of December, the number of phone users reached 1.27 billion, of which 128 million were 3G users. In 2011 alone, 3G users increased by 81.37 million.

He also said that the number of China's Internet users hit 513 million, or 38.3 percent of the nation's population.

Foran, who previously headed the food and liquor business at Sydney-based Woolworths Ltd, Australia's biggest retailer, joined Walmart in October 2011, the same month Ed Chan, his predecessor, resigned. Chan quit amid a pork-labeling probe that shut all 13 of Walmart's stores in the southwestern city of Chongqing.

SAIC, which makes cars in partnership with General Motors and Volkswagen, delivered 380,305 vehicles in the month, down 8.48 percent from a year earlier, it said in a filing with the Shanghai stock exchange on Tuesday.

Its tie-up with General Motors saw its sales down 4.02 percent from the year-ago period to 127,443, while sales at its venture with Volkswagen were down 2.65 percent to 110,008. Sales of SAIC's own-brand cars, including Roewe and MG sedans, came to 11,001 in January, down 45.34 percent, it said.

Last month, SAIC forecast a rise of more than 40 percent in 2011 net income on solid demand for German and American marques made at its Shanghai ventures.

Significant transitions ahead in policies, prices and products

As 2011 has drawn to a close, China's automotive industry has naturally turned its attention to this year's prospects.

While naysayers talk about a continued weak market and optimists speculate about a rebound, we at LMC Automotive prefer to focus on the key changes we can expect to see this year - as we expect there will be many.

We believe that 2012 will be a key transitional year in the development of China's automotive industry.

Economic pressures

The economic environment is one of the most critical factors driving the automotive market.

Influenced by both external and internal difficulties, China's GDP growth in 2012 will most likely fall below 9 percent, its lowest level since 2001.

The global economy is facing its greatest downward pressure since 2008, largely due to the debt crisis in the eurozone, slow recovery in US and Japanese markets and unrest in the Middle East and North Africa.

China, like all developing countries, will inevitably feel the effects of the downturn in mature markets through declining exports, retreating foreign capital and the increasing risk of inflation.

The domestic economy is also getting worse. Though some positive signals from tighter monetary policies have been seen, controlling inflation will remain a priority for Beijing this year.

A large number of projects were put on hold in the second half of 2011 - including high-speed railways, real estate developments and high-energy industries - due to a shortage of loans, and we believe the trend will continue through 2012.

A weak stock market and rising product prices will also dampen domestic consumption.

The old "three carriages" - investment, exports and consumption - carrying China's economy are struggling to pull with the same force as previous decades. Beijing is being forced to change the way it structures the economy and development.

We can expect increased domestic demand and a decreased reliance on exports. The year 2012 is the beginning of this fundamental transition.

Focus on environment

Policy continues to play a very important role in the development of the automotive industry. China's crown as the largest auto market in the world was assumed proudly, but environmental problems caused by soaring vehicle numbers is putting increased pressure on the government. Recent changes in taxation, fees and regulations indicate a transition in policy.

From Jan 1, vehicle and vessel taxes will be based on engine displacement, not the flat rate used before.

The tax on passenger vehicles below 2 liters will decrease up to 83 percent, while vehicles with engines larger than that will increase by up to 14 times.

Because buyers of large displacement cars are largely insensitive to cost, it is low-end small cars that will benefit most from reduced consumer expenses.

New policies also encourage R&D and use of more efficient turbo-charged engines. New sales tax regulations were also implemented at the start of the year to simplify procedures and remove fees in used car transactions.

The move is expected to accelerate turnover in the used car market and as a result stimulate new car sales. It also removes the purchase tax on electric cars, which will help stimulate sales in the long term.

Reductions in vehicle operating costs, including fuel and toll fees, will continue to benefit vehicle sales.

Last year 1,892 toll stations were removed, giving free access to another 94,000 km of highways. This year the first expressway built in China - from Shanghai to Jiaxing - will become toll-free after 23 years of service. We believe more highways will follow.

The pricing system on retail fuel is also expected to be more flexible in 2012. The National Development and Reform Commission - the country's top economic planner - will pass on responsibility for fuel pricing to fuel companies, which should shorten the lag in price changes.

Though the market will remain closed to foreign companies, we think the environment is at least starting to become healthier for the automotive industry.

Another change in policy is that foreign investment in vehicle manufacturing will no longer be encouraged. New vehicle joint ventures will not be approved by the NDRC and additional capacity at existing ventures will be more difficult.

Gas guzzlers

Since nearly every non-premium global carmaker has already entered China, the new policy will mostly impact luxury carmakers such as Land Rover and Lexus, which are planning to locally produce their gas-guzzling vehicles.

Investment in key components for new energy vehicles will be promoted in an effort to strengthen the emerging industry.

There are rumors that the government will release new stimulus policies this year, such as rural subsidies and trade-in subsides. But we think the chance is low because the development of the automotive industry has switched from being volume-oriented to long-term sustainability. Boosting sales at the cost of a polluted environment is no longer an option for decision makers.

Carmakers are changing their way of thinking and the market will diversify.

Foreign brands have started a new campaign of capacity expansion. Volkswagen will have new plants in Ningbo and Xinjiang, Nissan is adding a Dalian plant for Infiniti, and GM, Ford, PSA, Hyundai, Honda, BMW and Toyota will all have new plants ready for production in 2012. As their performance in other markets is expected to be weak, the booming Chinese market is a lifeline they can hold.

The main battlefield for global carmakers will move from compact to midsize cars. VW's Passat and Magotan and Buick's Regal and Lacrosse are competitive enough to challenge the traditional segment leaders - Accord, Camry and Teana.

Second-tier players, including the Mondeo, Sonata, K5, C5 and 508, are also competing hard with an ambition to challenge the top-of-the-segment players, which could bring higher profits and growing brand reputation as well.

Chinese brands are adopting different strategies. Sales targets have been de-emphasized, particularly for leading brands.

Chery has realized the failure of its "more products, more sales" strategy and has cut a number of new product programs and has started to focus resources on the vital few.

BYD, after a sluggish 2011, is now focused on improving product quality and a restructured sales network.

Great Wall has lowered its sales target for 2015 from 1.8 million units to 1.3 million units. For privately owned companies, profits take precedence over sales.

It is highly possible that the market share of the Chinese brands will continue to decline in this transitional year but we believe that sooner or later they will win it back if they stick to their revised strategies.

Overall, we expect the Chinese light vehicle market to grow 9 percent in 2012 to 19.7 million units. But, more importantly, we believe the year will be one in which the long-term sustainability of the market will be defined.

The author is a senior analyst at J.D. Power and Associates and LMC Automotive, who can be reached at MZhu@lmc-auto.com

A maid-themed restaurant opened in Yangzhou, Jiangsu province on Feb 5. The waitresses of this restaurant are all dressed as maids in Japanese cartoons. [Photo / CFP] 

A maid-themed restaurant opened in Yangzhou, Jiangsu province on Feb 5. The waitresses of this restaurant are all dressed as maids in Japanese cartoons. [Photo / CFP]

A maid-themed restaurant opened in Yangzhou, Jiangsu province on Feb 5. The waitresses of this restaurant are all dressed as maids in Japanese cartoons. [Photo / CFP]

A maid-themed restaurant opened in Yangzhou, Jiangsu province on Feb 5. The waitresses of this restaurant are all dressed as maids in Japanese cartoons. [Photo / CFP]

A maid-themed restaurant opened in Yangzhou, Jiangsu province on Feb 5. The waitresses of this restaurant are all dressed as maids in Japanese cartoons. [Photo / CFP]

A maid-themed restaurant opened in Yangzhou, Jiangsu province on Feb 5. The waitresses of this restaurant are all dressed as maids in Japanese cartoons. [Photo / CFP]

David Taylor, President of Asia Pacific & Japan, is upbeat about the growth potential of Micro Focus' business in the region, shares his thoughts. "Obviously China is very, very strong and that's why we're getting great growth in China and in India as well. That's fabulous. Good solid growth." He also commented on the fighting spirit of the Japanese where Micro Focus experienced growth despite the challenges they faced as a nation with the tsunamis and earthquakes.

The proof seems to be in the numbers, with Micro Focus posting an 8.5 percent increase in six-month interim revenues as of October 31, 2011, compared to the same period in 2010.

Taylor attributes the success of Micro Focus in the region to their right entry strategy.

"The approach that we've done is - we've gone in at a (comfortable) level, we've implemented our business plans, we've got the returns that we expected to get, and on the basis of that, we're making further investments," Taylor explained. "So initially we just went into Beijing, set up a team in (there) and now… we're doing the same in Shanghai, but it's all self-funded. So it's not draining on the rest of the company."

Taylor stressed that it is important not to "pull profit out of the business" but to reinvest the profits back in to achieve sustainability

Steven Lee, regional director for Asia, shares his thoughts about the growth potential for the region. "(Our strategy) really depends on which region, (for instance), testing software with the concept of QA (Quality Assurance) has been here in Hong Kong since seven or eight years ago."

Lee further noted that the focus in Hong Kong is with helping their customers to work better in the new Agile environment, in which the testing cycle is now a lot longer and testing has to be performed more frequently.

In comparison, China's testing market is still in its early stages yet Micro Focus is already engaging enterprises that have the foresight to invest in a testing environment to ensure quality. Much of this investment seems to be driven by the Chinese government, which has been taking a more active role in ensuring that enterprises are launching quality applications.

Taylor elaborated on Lee's mention about the Chinese government's involvement and interest in Micro Focus' customer base.

"It's no secret that China is very, very aggressively trying to compete at the IT services sector with (India)," explains Taylor. "As a result of that, they got to ensure that there's quality practices in place in all facets of management of computing environments, as well as from an application development and maintenance perspective, because that's a huge business for (India)… and the government is really, really promoting that. A lot of investment in terms of education and so on that was made in the last five year plan."

Contrary to common belief that companies only explore testing environments when projects hit an obstacle, Jeffrey Findlay, senior consulting manager and solution architect notes that the customers are engaging Micro Focus at a much earlier stage.

"Customers are really coming in much earlier," Findlay explained. "They're recognizing that quality is what they're after and quality starts with good requirements. They have to get their business needs nailed down right up front."

"These enterprises, they understand the importance to link up the business requirement and the testing environment". Lee added. "So this is what we are seeing the customers are putting more investment, to insure that QA is integrated into the whole application lifecycle management."

Micro Focus' work with the financial sector was one area Mr. Taylor particularly highlighted, given the competitiveness of that market. With the focus at banks and insurance companies quickly changing from web banking to providing their customers with mobile based ways to perform financial transactions, new applications need to be written or, alternatively, existing applications need to be enhanced or modified to satisfy these new business requirements.

According to Taylor, what their solutions effectively do is automate the testing of the technology, taking away the "human intervention" and thus reducing or eliminating the room for human error along the way. Taylor, Lee, and Findlay all pride themselves on their claim that when Micro Focus gets brought on board, the end results are good, their customers get to deliver what they need on time and that the end solution does what the customer's business wanted it to do.

Micro Focus is well-prepared for the region's growth and is committed to partner their clients through the process of growing and improving their business.

That would amount to at least 5 percent more than the 75.5 bcm of gas CNPC produced in 2011.

The state-owned company will aim to improve its technological capability in developing coalbed methane gas and shale gas and push forward gas storage construction, Zhao Zhengzhang, a vice president of PetroChina Co Ltd, was quoted as saying by China Petroleum Daily.

CNPC's oil and gas assets are operated by listed PetroChina .

CNPC produced 2.15 million barrels per day (bpd) of crude oil last year, up 2 percent from a year earlier.

Rival China Petrochemical Corp (Sinopec Group) produced 1.31 million bpd of crude oil and 14.6 bcm of gas in 2011 from domestic and overseas fields, up 7.6 percent and 16.8 percent, respectively, from a year earlier, Chairman Fu Chengyu said on Feb 3.

The group, operating its key assets via listed Sinopec Corp , the largest refiner in Asia, processed 4.38 million bpd of crude oil last year, 2.7 percent higher than in 2010, Fu said.

Foran was chosen to replace Ed Chan, who stepped down last October after a pork mislabeling scandal that forced the company to shut a dozen stores in central China.

The Chinese city of Chongqing penalized Walmart after the firm was found to have mislabeled some pork as organic at a couple of its stores. Authorities said the pork scandal was the latest in a string of 21 violations dating back to 2006.

Walmart had also suffered a series of high level personnel losses last year, after its China chief financial officer and chief operating officer left in May leaving a leadership vacuum.

Foran is currently serving as Walmart's senior vice president for Walmart International and will start his new role on March 1, the company said in a statement.

Walmart troubles in China reflect the retail giant's struggles in a complex market where rapid expansion and a cumbersome takeover has marred profit and growth.

The company will be further dealt with in accordance with laws if it fails to submit the application by February 29 but will continue the mapping service, according to a statement Xinhua received from the National Administration of Surveying, Mapping and Geoinformation.

China Unicom has agreed to submit the license application before the deadline, according to the administration, who recently summoned China Unicom and other organizations for talks over their unauthorized mapping services.

The administration said those who continued to provide maps without a permit will be penalized.

As of January 31, a total of 279 firms or organizations have been granted licenses for offering online mapping services in China, the administration said, adding that it has almost achieved the goal of ensuring that all existing service providers operate with permits.

A paper cup in a KFC restaurant in Shanghai, Aug 25, 2011. [Photo / Asianewsphoto]

A Weibo user posts her photo with a KFC delivery boy, and her requirments for the delivery service as shown on the receipts. [Source: Internet]

On Friday, KFC used Sina Weibo, a popular Twitter-like microblog site, to deny that customers can designate handsome boys to deliver food for them, stating that KFC only runs a "normal delivery service," and calling on customers to be kind to the hard-working delivery staff.

The KFC always serves its customers in strict accordance with consistent service process and standard in food delivery, says an email from the publicity department of the Shanghai-based headquarter of KFC China, while expressing thanks to customers for their support and concern for KFC's delivery business.

The announcement disappointed many bloggers. "Lemonuo," for example, wrote, "The limited supply of this service has finished? But I haven't had chance to try it yet!"

"I am a little sad. I had planned to ask a smart guy with glasses to deliver food," the blogger Ariel wrote in the comments column of this statement.

The buzz about the so-called "handsome delivery boy service" first stemmed from a blog posted by "bosnia_woshikaogong" on Sina Weibo on February 1, in which she recounted her recent experience with a good-looking KFC deliveryman.

She ordered food on KFC official site and wrote down that she wanted a handsome man to deliver food to her, she wrote in the post.

She posted that, later, a "rangy handsome delivery boy with big eyes and white skin" had delivered her order. Furthermore, the blogger, who included a picture of her receipt on which her requirement of a handsome delivery boy printed, claimed that the branch called her 10 minutes after his arrival, "confirming 'is the delivery boy pretty, heh?'"

"The boy covered his face with his hands because of shyness and then stammered, 'Am... I... satisfying?'," the blogger, who wished not to reveal her real name, said "I laughed so much I nearly died. I was only making a joke with KFC."

The microblog entry has been forwarded more than 41,000 times since it was posted on February 1, and it has picked up nearly 5,000 comments, most of which described KFC's act as "interesting" and "lovable."

People followed "bosnia_woshikaogong" to raise various requirements concerning delivery boys' appearance: "handsome and plain-looking," "smart with a height above 180cm," "a pretty boy with slender eyelashes"... .

Many have taken photos with their delivery boys and posted them online, accompanied by snaps of their receipts, to prove their demands were met.

Some have speculated that the act is actually a disguised marketing campaign by KFC.

Luo Min, who works in an Internet company, said she doesn't really like fast food, but is amused by the "cute service" and would choose KFC when ordering food for delivery, irrespective of the deliveryman's appearance.

"Chinese need a company with human interest. It's good for the customers and for the KFC to increase the turnover, which will also increase the deliverymens' salary, why not add this service? " blogger Yanie wrote on Sina Weibo.

A paper cup in a KFC restaurant in Shanghai, Aug 25, 2011. [Photo / Asianewsphoto]

A Weibo user posts her photo with a KFC delivery boy, and her requirments for the delivery service as shown on the receipts. [Source: Internet]

On Friday, KFC used Sina Weibo, a popular Twitter-like microblog site, to deny that customers can designate handsome boys to deliver food for them, stating that KFC only runs a "normal delivery service," and calling on customers to be kind to the hard-working delivery staff.

The KFC always serves its customers in strict accordance with consistent service process and standard in food delivery, says an email from the publicity department of the Shanghai-based headquarter of KFC China, while expressing thanks to customers for their support and concern for KFC's delivery business.

The announcement disappointed many bloggers. "Lemonuo," for example, wrote, "The limited supply of this service has finished? But I haven't had chance to try it yet!"

"I am a little sad. I had planned to ask a smart guy with glasses to deliver food," the blogger Ariel wrote in the comments column of this statement.

The buzz about the so-called "handsome delivery boy service" first stemmed from a blog posted by "bosnia_woshikaogong" on Sina Weibo on February 1, in which she recounted her recent experience with a good-looking KFC deliveryman.

She ordered food on KFC official site and wrote down that she wanted a handsome man to deliver food to her, she wrote in the post.

She posted that, later, a "rangy handsome delivery boy with big eyes and white skin" had delivered her order. Furthermore, the blogger, who included a picture of her receipt on which her requirement of a handsome delivery boy printed, claimed that the branch called her 10 minutes after his arrival, "confirming 'is the delivery boy pretty, heh?'"

"The boy covered his face with his hands because of shyness and then stammered, 'Am... I... satisfying?'," the blogger, who wished not to reveal her real name, said "I laughed so much I nearly died. I was only making a joke with KFC."

The microblog entry has been forwarded more than 41,000 times since it was posted on February 1, and it has picked up nearly 5,000 comments, most of which described KFC's act as "interesting" and "lovable."

People followed "bosnia_woshikaogong" to raise various requirements concerning delivery boys' appearance: "handsome and plain-looking," "smart with a height above 180cm," "a pretty boy with slender eyelashes"... .

Many have taken photos with their delivery boys and posted them online, accompanied by snaps of their receipts, to prove their demands were met.

Some have speculated that the act is actually a disguised marketing campaign by KFC.

Luo Min, who works in an Internet company, said she doesn't really like fast food, but is amused by the "cute service" and would choose KFC when ordering food for delivery, irrespective of the deliveryman's appearance.

"Chinese need a company with human interest. It's good for the customers and for the KFC to increase the turnover, which will also increase the deliverymens' salary, why not add this service? " blogger Yanie wrote on Sina Weibo.

Chinese-speaking sales assistants and point of sales terminals for China Unionpay are already standard requirements for the top department stores in London and New York, popular destinations for Chinese tourists. The question is should we be proud of or worried about it.

The latest data released by the World Luxury Association on Feb 1 indicates that Chinese consumers' expenditure on luxury goods overseas during the Spring Festival holiday increased nearly 33 percent year-on-year.

Mainland consumers now account for almost two-thirds of luxury consumers in Europe, Hong Kong, Macao and Taiwan, and one-third of luxury consumers in North America.

At this rate, China will replace Japan as the world's largest consumer of luxury goods well before the predicted 2015.

But luxury goods are not actually necessary ingredients for a good quality life for Chinese people, especially considering the fact there are more than 100 million Chinese citizens still living under the poverty line.

Japanese consumers spent 20 years rationalizing their mania for luxury items. Chinese consumers may also need such a puberty period to liberate their nouveau riche mentality and reflect on their pursuit of the most expensive rather than the most suitable.

What makes it even more worrying is that an increasing number of young consumers are eager to participate in the rush for luxury goods, despite their limited incomes. Reportedly, the average Chinese consumer of luxury goods is more than 10 years younger that the average consumer in the West.

It is important that the national wealth, accumulated through people's hard work over the past 30 years, is not squandered on luxury items.

The Chinese authorities and the media should pay special attention to improving the consumption awareness of Chinese buyers, so that spending power of domestic consumers is not wasted.

Chinese consumers should learn to spend their money wisely, so as not to set a bad example for others at home and promote erroneous judgments about China abroad.

The Chinese government is clear-cut in its attitude towards the European Union's carbon emission charges on flights into and out of airports in EU member countries.

As the Civil Aviation Administration of China announced on Monday, the government does not allow China's domestic airlines to pay such charges as it regards the EU decision as unreasonable and arbitrary.

In the first place, this scheme, which came into effect on Jan 1, does not conform to international legal principle that each state has complete and exclusive sovereignty over the airspace above its territory. The scheme constitutes an infringement on the sovereignty of other countries as it charges for carbon emissions emitted not just within the airspace of EU countries but during the entire flight.

It also runs contrary to the principle of common but differentiated responsibilities enshrined by the United Nations Framework Convention on Climate Change. In line with this principle, developing countries should be exempt from such charges.

Such charges can easily be considered as an arbitrary scheme EU has developed to rip off non-EU countries as there has been no mention of how the money the EU charges will be used and how it will benefit the campaign against climate change.

What is realistic and pressing is the rapid rise in costs for all airlines worldwide.

It is estimated that the cost of Chinese airlines' flights to EU countries would have to increase by about 300 yuan ($48) per ticket to cover new charge. The China Air Transport Association has estimated that the EU scheme might cost Chinese airlines about 800 million yuan in the first year and about 17.6 billion yuan from 2012 to 2020. While the levy will probably earn the EU an income of about 900 million euros ($1,177 million) this year, rising to 2.8 billion euros by 2020.

We can see no sincerity and earnestness in this scheme to help fight against climate change. Rather we see the hypocrisy and condescending manner of the EU lording it over the rest of the world.

As such, there is concern that this may be just the beginning of the EU using its leading position in low-carbon technology to levy carbon taxes on other high-carbon industries. If this is the case then the fight against global warming is merely an excuse for the EU to rip off developing countries, where energy intensity is high thanks to their lack of low-carbon technology.

In this way the underdevelopment and disadvantage of developing countries, which have been caused, to certain extent, by some European countries' colonization, is feeding the greediness of their former colonizers.

We must fight against it.

Editor's notes: In mid-January, the All-China Federation of Industry and Commerce published a report on the development of the country's private sector during the past year and the difficulties and challenges it faces. Excerpts from the report follow:

China's private sector has shown strong vigor during the past year, contributing considerably to the country's goal of maintaining steady and relatively fast-paced economic development amid the complicated internal and external economic conditions.

The sector has seen tangible growth. Statistics show that by the end of the third quarter of 2011, the number of registered private enterprises in the country was more than 9 million, a year-on-year increase of 14.9 percent. Their registered funds were almost 25 trillion yuan ($3.96 trillion), an increase of 38.6 percent.

Private sector investment, too, has increased. By the end of October 2011, domestic-funded private enterprises had invested 14.2 trillion yuan in urban and township fixed assets, a year-on-year increase of 46.5 percent. That accounted for 58.9 percent of the country's total investment and was 7.8 percentage points higher than the figure at the end of 2010. Private enterprises' exports have also increased in proportion to the country's total; with their volume from January to November 2011 increasing 33.3 percent year-on-year to more than 570 billion yuan, one-third of the country's total export volume.

The uninterrupted fast growth in private enterprises' exports has played a crucial role in checking a rapid decline in the growth of China's overall exports.

Apart from its relatively fast development, the private sector has also expedited measures to make structural adjustments in compliance with China's ongoing efforts to promote economic restructuring and transform its economic growth model.

According to official figures, the number of private enterprises engaged in the tertiary industry and the value of their registered funds have grown faster than in other sectors over the past three years. This is part of their accelerated shift from high-energy-consuming, high-polluting and low-efficient industries to high-tech industries with stronger core competitiveness that conform to the country's energy conservation and environmental protection requirements.

The booming private sector has contributed much in creating jobs and increasing urban and rural residents' incomes.

But since the world economy is undergoing complicated and profound changes and facing growing downturn pressures, China's private sector has also encountered some difficulties and challenges.

Private enterprises, especially small ones, face major difficulties because of the drastic increase in their production and operating costs in recent years. The increasing costs of production, ranging from higher energy and resource prices to the rising cost of labor and higher rents, have directly squeezed their margin of profit and chances of survival. Their plight has been worsened by unendurably high taxes and other assorted charges.

Though the government is paying greater attention to easing taxes and reducing other charges, as indicated by the adoption of a series of policies and measures in the past year, the tax burden for domestic private enterprises is yet to be mitigated.

Financing difficulties also remain a problem for domestic private enterprises, especially the small ones. According to the China Banking Regulatory Commission, bank loans have mainly flown into large and medium-sized enterprises, leaving smaller ones underfunded. Worse, unlike their larger counterparts, small enterprises usually cannot avail themselves of the preferential benchmark interest rates policy and thus have to pay much higher floating rates, further increasing their operating costs.

To boost the domestic private sector's development, the government has to first adopt an all-inclusive preferential taxation policy, targeted at domestic small enterprises. Also, it should take measures to ensure that small businesses have equal access to normal financing channels to guarantee their survival.

Besides, the government has to continue encouraging domestic commercial banks to actively develop various kinds of financial products, suitable for small businesses, and expand the scope of mortgage products. It should also take practical and forcible measures to develop township and village banks, as well as community banks to create conditions for grassroots financial bodies to serve grassroots enterprises.

Direct non-governmental capital should be encouraged to flow into the real economy and lower the market admission threshold for the entry of private enterprises into monopolistic fields or those with strategic importance.

Moreover, a favorable environment should also be created to facilitate the fledgling "going global" strategy adopted by some private enterprises. A legal procedure aimed at promoting domestic enterprises' overseas investment should be launched as soon as possible to provide them with legal guarantees to push forward such a campaign. But for that to happen, a pro-overseas investment financial system and a special risk investment fund have to be set up.

Two tourists buy sea duck eggs on Monday from Lin Dingxiu, a 60-year-old farmer who has been breeding sea ducks for years in the mangrove along the seafront of Dongxing, South China's Guangxi Zhuang autonomous region. [Photo / China Daily]

Resource used to develop stable, lucrative trades

BEIJING/NANNING - For thousands of years, mangroves have thrived along the coast at Zhushan village, protecting the land from the surf and lately attracting tourists and photographers with their unique ecology.

For many villagers, though, the mangroves have become more than a beautiful buffer zone from the sea, and are a major source of income.

Yet, it was only in recent years that the locals began exploring this side of their natural, longtime protector.

Lin Dingxiu, 61, raises sea ducks. For years, he barely broke even selling the eggs, but then he got an idea.

"I found that the mangroves provide multiple food sources for sea ducks, as well as small fish, shrimp and sea snails. They are all scattered around the trees beside the sea," he said.

Lin started keeping his birds in the mangrove. Because the ducks have adequate seafood, the eggs they produce are bigger and more delicious than ordinary eggs, and they sell at a good price.

"I can sell every kilo for 24 yuan ($4) at the local market. That's several times more than (the price) for ordinary duck eggs," Lin said.

His eggs have become so well known that he no longer has to go to the market to sell them.

"Since 2009, buyers have come to my home regularly to buy eggs," he said.

"We want to buy 15 boxes of sea duck eggs from Lin Dingxiu for Spring Festival, but he can only offer us six boxes because the demand is too high," said Su Shiyi, an official in Zhushan, which is in Dongxing city in South China's Guangxi Zhuang autonomous region.

Lin, who was packing the eggs, explained that sea duck eggs are popular during festivals, and many people buy them as gifts.

"Most of the eggs have already been reserved, and some people require as many as 30 boxes, so there is not much left now," he said.

Before moving the ducks to the mangrove about 10 years ago, Lin barely scraped by.

"Before 1998, I just kept the ducks in an enclosure, like farmers in other parts of the area did. I sold eggs in the morning, and in the evening I used the money to buy rice as feed for the ducks," he said. "The money I made selling eggs went almost entirely to buying the rice."

He had been on the verge of giving up, but now he makes around 200,000 yuan a year with the sea ducks. "The mangroves really helped me a lot," he added.

About 400 families in Zhushan farm sea ducks and shrimp in the mangrove, said Su Shiyi, the village head.

In addition to crop and poultry farming, the villagers beside the vast mangroves have turned their attention to the increasing number of tourists flocking to enjoy the scenery.

Lin Dinghan, who used to raise shrimp in his pond, opened a restaurant in 2010 to cater to the rising number of visitors.

Compared with shrimp farming, he said, a restaurant is less risky and offers a more stable and higher income. The local government has provided preferential tax policies for restaurants.

"I opened the restaurant in 2010, and by the end of last year I had made 300,000 yuan," Lin Dinghan said.

He now rents his 1-hectare pond to another villager and focuses on the restaurant. To cope with growing number of tourists, he employs three waiters and a chef.

Last year, about 100,000 tourists visited the village and mangroves, Su estimates. Many of them came from neighboring provinces.

"We paid no attention to the value of the mangroves before. Most of the villagers started the use of them only after 2009," Su, the official from Zhushan village, said, adding that many villagers have risen from poverty by raising sea ducks or shrimp, or opening restaurants or hotels for the tourists.

"In addition to exploiting the mangroves, the villagers are eager to protect this precious resource because they know that it is vital to their home and livelihood," Su said.

Fishermen are careful not to harm the mangroves when they put out to sea, and young trees are planted there every year, he said.

Lin Dinghan, the restaurant owner, has planted 2 hectares of mangrove near the village since 1991.

The village has also set up a team to make the villagers aware of the importance of the mangroves and ensure that they conserve the resource.

"Our efforts to protect the mangroves have produced results," Su said.

"The rising number of tourists to our village is an indicator showing the mangroves are well preserved."

How can you set yourself apart from the rest of the job-hunting herd and be noticed by potential employers? Many organizations want people who know what they want and how to get it. They are seeking people who want to win and will work out a way of getting there.

Put on your sales cap

The most effective marketer knows how to position the product and tout all the benefits that are relevant to the needs of a buyer. Similarly, to close a sale and wow the employer, you need to expound on the benefits of the product - your strengths, work experience, industry knowledge, contacts, skills, abilities and successes - and quote examples that matter most to the company's objectives or vision. Relevancy is the key word even if you are seeking to work in a new industry.

Be a networking guru

Attend various business and social networking events to increase your profile and contribute actively to these platforms by sharing your success stories, interesting case studies or market insights that you have gathered from the course of your work.

Be aware of both market and industry trends so that you can build your strengths in the hot areas of specialization, or discuss issues intelligently with potential employers or other contacts you have made at the networking events.

Know the company inside out

Demonstrate your commitment and sincerity by asking concise and focused questions about the company. The employer will see you as someone who is keen, proactive and really serious about the job as well as the organization.

Moving forward

Many people tend to focus too much on presenting their past job responsibilities instead of showcasing their prior achievements and accomplishments to prospective employers. One of the secrets to marketing yourself is to use your previous work experience and successes to convince the potential employers that you possess the knowledge, expertise and skills that their company and industry need to help move them forward.

Work with a reputable headhunter

Professional recruitment consultants from reputable search firms can help highlight your most compelling transferable skills and build a strong case for you to hirers. A good recruitment consultancy can open up new career opportunities in the fields you desire and provide a multitude of potential jobs from the high profile organizations or new industries that they represent.

Contributed by Sarah Li, manager of supply chain & sourcing division at Robert Walters Talent Consulting Ltd China.

Topic 1:

During the Spring Festival, the tourism revenue in Central China's Henan province amounted to nearly 5 billion yuan ($794 million) with the retail revenue of consumer goods reaching 25.2 billion yuan. Purchases surged during the Spring Festival on a variety of items, including expenditure in restaurants, gift costs, transportation fees and the lucky money given to children as a lunar New Year gift. Many micro-bloggers are in heated discussion about their expenditure during this period as they return to work.

HAOHAOCC: I just read the news report about the costly meal in Sanya during the Spring Festival holiday - a three-dish meal at a seafood stall cost 3,600 yuan - and also other rip-off cases in Hainan Island. The tourism market in Hainan lacks order and regulation. The room price of star-level hotels always rises significantly during holidays, which makes me believe that what is spent in Hainan during the holiday could better be spent going to Thailand a couple of times.

SONGSHANX: The Spring Festival is a time for you to spend a lot. In just seven days I have already spent more than 10,000 yuan.

HAPPYTREE'SHOME: During the Spring Festival, all I did was invite others to dinner or attend get-togethers, and all of these cost me a lot, not just money but physical strength. However, I didn't find those expensive meals tasted good.

Topic 2:

Facebook Inc, the world's dominant social-networking website, officially submitted files to launch an initial public offering (IPO) on Feb 2. It aims to raise $5 billion, a record figure globally in the Internet IPO world. The company is considering a valuation of $75 billion to $100 billion. According to files from the Securities and Exchange Commission, Mark Zuckerberg, the founder of the website, as the top stockholder with 28.4 percent of the shares, will have a net worth of $28.4 billion in stock if the valuation reaches the ceiling, catapulting him into the top 10 richest in Forbes' listing.

BOQUNYISHUBA: With Facebook's IPO, a story about a wall painter's way to wealth soon takes off on micro blogs. In 2005, a man called David Choe painted the walls of Facebook's headquarters. When he finished work, he was offered two choices as a reward: thousands of dollars in cash or the equivalent in shares. He chose the latter. The value of his shares is expected to be $200 million with the company's IPO.

JINLIJIN: In a report, Facebook said that the monthly active users around the globe have reached 845 million, but it appears that it is not content with the number, and it states in its prospectus that it will still strive to enter the Chinese market.

MUMUSHANFENG: How many active users could Facebook have if the website was not blocked in China?

ALL THE INFORMATION IS FROM SINA WEIBO.

Expert says PBOC's plan for deposit insurance system is unnecessary

BEIJING - China is unlikely to liberalize deposit interest rates this year, and the deposit insurance system that the central bank plans to establish isn't necessary for the economy, a senior official told China Daily.

"Deposit insurance is not a must for interest rate liberalization, and it doesn't accord with the real condition of the banking industry in China," said Yang Zaiping, executive vice-president of the China Banking Association and an inspector of the China Banking Regulatory Commission (CBRC).

He made the remarks in an exclusive interview with China Daily.

Yang said the implementation of a deposit insurance system would mean that guarantees from the government would exit, which would be premature given the current development level of financial institutions.

Shang Fulin, chairman of the CBRC, said on Friday at a forum attended by global systemically important banks that an insurance net targeted at a crisis that has already occurred couldn't equate with efficient, preventive regulation.

Deposit insurance is a measure to protect depositors from losses caused by a bank's inability to pay its debts when due. It is believed to be one component of a financial system safety net that promotes financial stability.

The People's Bank of China (PBOC), the central bank, has finished drafting deposit insurance rules and will announce the establishment of the system before gradually implementing detailed policies, the China Securities Journal reported on Friday, citing an anonymous source.

It said a deposit insurance fund would be set up under the PBOC, into which participating commercial lenders would inject capital at a certain percentage of their deposits.

Some other types of financial institutions, such as insurance companies, are also expected to play a role in the system in the long term. Major State-owned lenders would be required to take part, the source said.

The PBOC said in January that it was preparing to establish a deposit insurance system to reduce systemic risks among financial institutions.

Zhou Xiaochuan, the central bank governor, said earlier that the authorities were waiting for the proper time to announce the rules.

In 2011, he said that in the next five years, there would be significant progress on interest rate liberalization.

"The demand for more liberalized interest rates is very urgent at present, and the establishment of a deposit insurance system should occur as soon as possible to secure the interest of depositors and pave the way for market-based interest rates," said Guo Tianyong, director of the Banking Research Center at the Central University of Finance and Economics.

Lu Zhengwei, chief economist with Industrial Bank Co Ltd, said market-oriented interest rates are expected to widen performance gaps among banks and place the interests of depositors at risk.

Facing tighter capital requirements from regulators, Chinese commercial lenders have rushed to raise funds from the capital markets in recent years, even as they continued to register record profits.

As of Monday, all seven banks that had released estimates of their financial performance in 2011 reported net profit growth rates of more than 35 percent year-on-year.

Among these banks, the Shenzhen Development Bank Co Ltd estimated a surge of between 60 and 70 percent.

The Central Huijin Investment Co, the State parent of China's "Big Four" banks, has agreed to cut the dividend payout ratio of Industrial and Commercial Bank of China Ltd, Bank of China Ltd and China Construction Bank Corp this year by 5 percentage points to 35 percent, to ease their capital-adequacy pressure, the 21st Century Business Herald reported on Thursday.

The three banks will get an estimated 26.4 billion yuan ($4.18 billion) in profits to replenish capital as a result of Huijin's move.

Wu Xiaoling, a former central bank deputy governor, said on Saturday that the first step to liberalizing interest rates should not be a loosening of the ceiling on deposit interest rates, because small- and medium-sized financial institutions needed the protection of an assured net interest margin.

"A measure to further lower the baseline of lending interest rates should be considered for this year in particular," she said.

BEIJING - A new regulation will deny welfare subsidies to residents who own assets that require a certain level of income to buy, such as vehicles or real estate.

Under the new rules, which will take effect in June, civil affairs authorities will not only test applicants' family incomes but also factor in the value of their assets to see if they are eligible to receive benefits.

Currently, in an urban Beijing household where each family member's average monthly income is less than 520 yuan ($82), the minimum income standard set by the government for urban households, each member can get a subsidy to make up the difference between the individual's income and the standard. The threshold for rural households is 380 yuan.

In verifying eligibility, authorities will consider an applicant household's income, bank accounts, pension, stocks, securities, unemployment insurance and lottery proceeds.

The regulation limits the amount of assets that can be held by each family member of an applicant household to around 12,500 yuan ($2,000). Rural households are allowed 9,120 yuan in assets per person.

The city's minimum living subsidy covers around 200,000 residents, according to the Beijing News.

Households that have more than one private real estate property or public rental house are not eligible to apply for welfare. Families who own vehicles, such as cars or motorbikes, are also barred from receiving aid, according to the new rules.

Some have doubts about the use of motorcycles in the criteria. Lu Xuejing, a social security expert at the Capital University of Economics and Business, said motorbikes are quite common, especially for residents who live in a place where roads are uneven.

"Motorbikes are necessary for many people in mountainous regions, so it's questionable to list them as a thing to gauge a family's poverty," she said.

In response to a possible public outcry over the inclusion of motorbikes into the qualification criteria, Qi Yu, an officer with the Beijing bureau of civil affairs' social relief department, said in suburban and rural areas, a family can be regarded as rich if they own a motorbike.

"And what's more important, a motorbike could be used as a tool to make money," he said.

Qi said the new regulation would go through a pilot period for a year, and each district and county could make minor adjustments according to their own situations.

The government will require civil affairs, social security, housing and transportation and finance departments to carry out due diligence in assessing eligibility and to ensure equity in the distribution of welfare payments.

Applicants will also be asked to fill in a form to list all family incomes and assets and consent to allow the civil affairs department to check their financial resources.

"Any applicant whose declaration contradicts the facts and wants to cheat the welfare system will not be allowed to apply for the subsidy again for six months and will have a mark on their record in a credit system," according to the rules.

Qi said the new regulations make oversight more effective because authorities will take the totality of an applicant's financial situation into account.

Lu said it is necessary to screen applicants for eligibility, but it is not always easy for authorities to acquire the truth.

"Some people may do some odd jobs to get payments in cash, which authorities have no way of knowing about," she said.

Lu also said it's questionable for the government to check household bank accounts and stock returns.

"The confidentiality of a household's financial situation should be highly respected," she said.

Lu said although it is complicated to tell the difference between people and those who game the system, the new regulation represents progress and are proof of the government's efforts to make its welfare policy and system more efficient.

He Dan contributed to this story.

BEIJING - China is suffering from an increasing number of environmental accidents, mainly triggered by the rapid growth of the chemical industry in the wake of urbanization, a senior environmental official said.

Last year, 542 environmental accidents were handled across the country, statistics from the Ministry of Environmental Protection showed.

"At present, nearly 60 percent of such accidents were triggered by traffic accidents and safety accidents in the process of production," Ling Jiang, deputy director of the department of pollution prevention and control under the Ministry of Environmental Protection, told China Daily on Monday.

In a recent case in January, cadmium pollution in the upper Longjiang River posed a potential threat to the water supply in the downstream city of Liuzhou, which has 3.7 million residents.

Cadmium is a highly toxic heavy metal used in batteries, electroplating and industrial paints. Exposure can lead to fatal liver and kidney damage.

Meanwhile, the number of accidents caused by illegal discharge of waste and other pollutants is quite limited as government authorities have launched strict monitoring measures, Ling said, without giving specific statistics.

Officials said serious water shortages and pollution are now major bottlenecks to the sustainable development of the country. More than 200 million rural residents do not have access to safe drinking water, official figures showed.

To ensure water safety, 178,000 kilometers of key rivers and lakes, as well as 43,000 square meters of reservoirs, had their functions clarified - such as for drinking water and water supplies for agriculture and industry - according to the latest national plan approved by the State Council in December.

Standards on pollution discharges differ according to the water's function.

"Water pollution is very serious in China now. Only about 46 percent of the 178,000 kilometers of key rivers and lakes monitored by the ministry are up to standard on quality," Chen Mingzhong, an official in the Ministry of Water Resources, said on Monday.

Nearly 80 percent of the key rivers and reservoirs with specific usage functions are targeted to reach the standard by 2020, and all will meet the standard by 2030, according to the plan. "Government authorities at all levels are accountable for the task, and they will surely receive strict punishment for areas that exceed their standards on pollution discharge," he said.

SHANGHAI - China's homegrown sports brand Li Ning Co Ltd has announced that it will reduce staff numbers to rein in costs after it had predicted its revenue for 2011 had fallen by 6 to 7 percent year-on-year.

The company, which was founded by the famous Chinese gymnast Li Ning and is listed on the Hong Kong stock exchange, said on its website on Friday that it will streamline the organizational structure of various departments, including those for human resources, information technology and strategic development. That will help it increase its operational efficiency, lower its human resources costs and channel resources into its core business.

The company plans to reduce its human resources costs as a percentage of its sales by 0.5 percent this year, said Demi Luo, who is in charge of Li Ning's public relations. The company's human resources costs as a percentage of its sales were 8.7 percent in the first half of 2011, he said.

The organizational restructuring is part of the company's ongoing strategic reforms and follows an announcement the company made in October.

China Business News reported on Monday that 4,215 employees worked for Li Ning in 2010, and the total cost of salaries and benefits exceeded 710 million yuan ($110 million). Each employee on average could earn 168,500 yuan a year, which is two-thirds more than was earned by their peers at Anta Sports Products Ltd, another Chinese sportswear company.

"The adjustment will be beneficial to the group's long-term development," Zhang Zhiyong, CEO of Li Ning, said.

As competition in the Chinese sporting-goods industry intensifies, and the industry's costs continue to rise, the company will be faced with difficulties, Li Ning, who is also chairman of the brand, said last August. That month, it reported that its net profit for the first half of the year had fallen by 49.5 percent to 293.7 million yuan, according to the company's interim report.

According to the company's "Estimated Results for 2011 and Outlook for 2012" issued in January, the group's revenue had declined by about 6 to 7 percent below what it was in 2010 because of flat growth in orders and the repurchase of a portion of inventory from distributors.

"Because the cost of resources, rent and labor all rose last year, the clothing industry was greatly affected," said Zhu Qinghua, an analyst with the CIC Industry Research Center. "Worse still, most sports brand made a wrong evaluation of the market, which caused high growth in reserves."

Ahead of the EU-China summit scheduled for next Tuesday in Beijing, sources in the European Union said European politicians insist that giving China market economy status is not a "tradable" issue.

The granting of such a status would mean the country has been deemed to have a free market and that the economic information it provides can be taken at face value in trade disputes.

European politicians have also said they will not consider lifting an arms embargo, the sources said. They have taken that position even though Brussels is eager to obtain Beijing's support in dealing with the debt crisis, which is threatening the world economy.

Speculation has arisen in Europe that Beijing and Brussels may put such a deal on the table at the summit, which was originally scheduled for October was delayed because of the worsening situation in Europe.

The source said the timing of acquiring market economy status is "in the hands of China" and that it will be granted once China has met the relevant requirements. Beijing has long asked the EU to grant it such a status but disagreements within the union have prevented that.

The EU and India are now working to negotiate a free-trade arrangement, which will be a priority when the leaders meet this weekend, before the Beijing-Brussels summit.

Instead of discussing these thorny difficulties, Beijing and Brussels are going to be pragmatic next week in exchanging ideas about the economic and financial woes, the sources said.

Although they expect China to invest in its own financial protection, the EU said Beijing intends to use the International Monetary Fund (IMF) to help heavily indebted European countries.

So the global issues, in particular the G20 and climate change, will be high on the agenda, the source said.

"Facing the current world economic situation, Beijing, as a global economic player, will show more firm commitment to stabilizing the situation at the summit," said Jean-Marie Rousseau, director of the Brussels-based consultancy company Initiatives in Territorial Intelligence & Regional Innovation Strategies.

Rousseau said the participants will look at the current rise in trade protectionism, which may further dim the outlook for the global economy, and negotiate a way to increase bilateral trade and investment.

Apart from committing resources to the IMF, Rousseau said: "I think China will respond quickly to increase procurement from European markets after the summit." And in turn, Rousseau said, "China needs Europe to speed up the transfer of technology."

Central and local governments' financial support for the initiative will be greater than last year, the Ministry of Finance said in a statement on its website.

However, the ministry did not provide detailed figures. According to statistics from the Ministry of Housing and Urban-rural Development, from January to the end of November 2011, the country spent 152.2 billion yuan ($24.16 billion) from the central budget on affordable housing construction last year.

Revenue from this year's local government bond sales will be prioritized to support affordable housing projects, while revenue from property taxes, which are now being implemented on a trial basis in the cities of Shanghai and Chongqing, will be earmarked for the initiative.

The ministry said financial authorities should "exert every effort" but also act "according to their capability" when ensuring funds for affordable housing projects.

The government has vowed to build 36 million affordable housing units during the 2011-2015 period in an effort to give more mid- and low-income households access to housing and stabilize runaway property prices, with 10 million units planned for both 2011 and 2012.

In December, 52 cities out of a statistical pool of 70 major Chinese cities saw drops in new home prices from November, compared with 49 cities the previous month.

SHENYANG - China Zhongwang Holdings Ltd, the world's second-largest manufacturer of aluminum extrusion products by volume, has set a goal of increasing the volume of its exports to the United States by fivefold in 2012, indicating the company's ambition to strengthen its overseas business.

Workers at a factory owned by China Zhongwang Holdings Ltd. The manufacturer of aluminum extrusion products is planning to increase its exports to the US market fivefold this year. [Photo/China Daily]

The company will sell up to 50,000 tons of aluminum products overseas this year, mainly to the US, said Chief Financial Officer Vincent Cheung when he spoke to reporters in the city of Liaoyang on Saturday. The percentage of overseas sales in the company's total sales is expected to grow from 2 percent in 2011 to more than 10 percent this year.

"We are now discussing with our US clients how to adjust our product types for the US market, which will help us to avoid anti-dumping and anti-subsidies duties on Chinese aluminum products," said Cheung.

In March 2010, the US Department of Commerce started anti-dumping and anti-subsidies investigations into Chinese aluminum products. The department decided to impose anti-dumping tariffs of 33.28 percent and anti-subsidies tariffs of 374.15 percent on several types of Chinese aluminum exports to the US in March 2011.

The moves have hurt Chinese exports. In 2009, Zhongwang's sales revenue in the US market was 5.66 billion yuan ($897 million), accounting for 40.8 percent of the company's total revenue. The company's sales revenue dropped to 3.07 billion yuan in 2010, a year-on-year decline of 29.1 percent. The shortfall was, in part, a result of the probe.

However, the company moved quickly to adjust its marketing strategies and product types to maintain growth in 2011. According to its report, China Zhongwang had realized revenue of 6.63 billion yuan by the end of the third quarter last year, an increase of 52 percent over the same period in 2010.

In the coming years, the company will concentrate on the domestic market, which will be supplemented by overseas sales, and will increase its efforts to develop high-value-added products, said Lu Changqing, executive deputy-president.

He said flat-rolled aluminum products will be the new growth area for the company.

China Zhongwang will spend $3.8 billion to buy equipment to manufacture flat-rolled products. Commercial production is expected to start in 2014, with an annual production capacity of 1.8 million tons. The company said the location of the production line has already been decided, but didn't disclose further details.

A recent report from Boston Consulting Group said that global consumption of flat-rolled aluminum products will increase from 15.6 million tons in 2009 to 28 million tons in 2020. China, as the world's fastest-growing market for flat-rolled products, will consume 14 million tons of the material in 2020, accounting for as much as half of global consumption.The country used 5.9 million tons in 2009, according to the report.

Flat-rolled aluminum products are mainly used in the manufacture of automobiles and cans. Cheung said China depends largely on imports, with approximately 600,000 tons imported every year, and domestic producers mainly provide low-end products.

"So, Zhongwang will explore this market, and try to replace imports," he said. "In addition to lower prices, we also have other advantages such as advanced equipment and a large customer base in the auto and transport areas compared with foreign producers."

Aluminum Corp of China Ltd, the nation's biggest aluminum producer by volume, is currently the largest manufacturer of flat-rolled aluminum products. Only about five companies in China have a production capacity of more than 100,000 tons, but that is unable to supply the growing domestic demand, especially for high-end products.

The huge investment required is the main obstacle for manufacturers of flat-rolled products, but Zhongwang said it doesn't have any plans to raise funds through equity sales.

BEIJING - Though the Chinese venture capital (VC) and private equity (PE) industries are undergoing adjustments after a phase of rapid development, many global investment institutions are choosing China as a major investment destination for their new funds.

Last month, six Chinese and foreign funds finished new rounds of financing. Five of them announced plans to invest almost $4.3 billion in the Chinese mainland market, up 91.2 percent month-on-month, according to market researcher Zero2IPO Group.

In January, 10 funds were set up, aiming to raise $7 billion, the report said.

Temasek Holdings Pte, Singapore's state-owned investment company, set up a S$2.5-billion ($1.9 billion) fund focusing on North Asia, especially Chinese private and small- and medium-sized enterprises.

The Swiss investment company Adveq Holding AG set up a $300-million fund in January, and more than half of its funds will be invested in China.

Adveq Chairman Bruno Raschle was quoted in media reports as saying that the company would be interested in the key sectors mentioned in the 12th Five-Year Plan (2011-15), such as medicine, logistics and next-generation information technology.

Another new global fund launched in January by the US-based investment institution Vivo Venture LLC will focus on the Chinese market for medicine, vaccines, medical appliances and health.

A dollar-dominated fund of leading Chinese PE company, Hony Capital Ltd, which is focusing on cross-border acquisitions, finished a new round of fundraising of $2.37 billion.

Blackstone also finished a four-year financing programfor its sixth-stage fund, with an overall scale of $16 billion.

Antony Leung, senior managing director and chairman of The Blackstone Group Greater China, told China Daily in June that the company had a strong desire to invest more in China, but was patient. One reason was that China's economy was not short of money then and many deals' valuations were high.

But the fundraising climate in China has tightened.

According to another consultancy, ChinaVenture, 1,084 yuan-denominated PE and VC funds were launched in the past three years, but the country's investor base has shrunk over the past six months.

Some small Chinese shipyards, short of new orders, are on the brink of bankruptcy.

A ship under construction in Taizhou, East China's Zhejiang province. The weakening shipping market has pushed some small shipbuilders to the verge of bankruptcy.[Photo/China Daily]

"We haven't received any orders since last year," said Liu Min, a senior director at Zhejiang Jingang Shipbuilding Co Ltd, which is based in the East China city of Taizhou.

The company started operations in 2006 with a capacity of 500,000 deadweight tons. But under pressure from difficult market conditions, it produced only 150,000 tons last year.

"Our orders in hand will be finished in July. Then we have no work to do," said Liu.

Yang Zhonghua, executive deputy general manager of another shipyard in Zhejiang province, had a similar story to tell.

Rising costs for materials and labor, amid dull market conditions, have worsened the situation for small shipping companies and shipyards, Yang said.

Some Zhejiang-based shipping companies have suspended business and dismissed their employees, he added.

Facing bankruptcy, "we have considered investing in other businesses. But that means all the money we put into equipment and facilities will be wasted," said Liu.

Industry losses are widespread. According to the China Association of the National Shipbuilding Industry (CANSI), the volume of new orders in 2011 fell 52 percent.

More than 30 percent of the country's small shipyards are likely to go bankrupt this year, industry insiders said.

Freight rates are also depressed. The Baltic Dry Index, a measure of commodity shipping costs, dropped to 651 on Feb 2, the lowest reading since Aug 27, 1986, according to the Baltic Exchange. The last time the industry saw such a dip was during the 2008 global downturn.

But these developments don't mean the shipbuilding industry will founder as a whole, thanks to a high level of rationalization, analysts said.

Small shipyards, though many in number, accounted for no more than 20 percent of the country's vessel production, said Zhang Guangqin, head of CANSI.

"This year will be very difficult for the industry. But the large shipbuilders are unlikely to be affected to the point of going bankrupt," he said.

The large State-owned companies have had some difficulty in attracting new orders. "We have seen a considerable decline in new orders since last year," said Wang Liang, director of the production and management department at China Shipbuilding Industry Corp, a major shipbuilding conglomerate.

But according to Wang, the declining new orders were those for basic, mainstream vessels. "Demand for more sophisticated ships remains buoyant," he said.

With technological advantages, "we have confidence in competing for orders (of more sophisticated vessels) in the international market", Wang added.

BEIJING - Chinese people will buy more than half their acquisition of luxury goods on the mainland in 2014 rather than overseas, as is the case now, business research and consulting firm Frost & Sullivan said in its latest survey.

A woman trying on gold rings in a Chow Tai Fook Jewellery Group store in Hong Kong. Chinese people spent $7.2 billion overseas on luxuries during the Spring Festival holiday last month, according to the World Luxury Association.[Photo/China Daily]

The United States-based company said 53 percent of high-end brands purchased by the Chinese will be from the mainland in 2014, rising to 55 percent in 2015. In 2011, 52 percent of luxury goods bought by the Chinese were from abroad, the survey said.

Zhu Yue, a consulting director with Frost & Sullivan, said the tax on designer goods is expected to be lowered in 2012, which would attract more customers.

"The retail price of luxury goods keeps rising in overseas markets, even faster than in the domestic market," Zhu said, adding that buyers would begin to notice the price gap narrowing.

Wealthy Chinese bought more than 100 billion yuan ($16 billion) of luxuries in the mainland market last year, with a year-on-year increase of at least 25 percent, management consultants Bain & Co said in its latest report on the 2011 Chinese high-end market.

China is expected to surpass Japan as the world's largest luxury market this year, according to the consultants.

Chinese shoppers are in the limelight in the global market. Every single coin they spend on high-end brands attracts the attention of global market researchers, including the World Luxury Association, Frost & Sullivan, Bain & Co, Price Waterhouse Coopers and iResearch Consulting Group.

Just three days after the Spring Festival holiday, the World Luxury Association announced in a report that Chinese travelers spent $7.2 billion abroad on luxury goods during the week-long holiday, up nearly 29 percent from the $5.6 billion during the 2011 Spring Festival holiday, making the Chinese the most powerful purchasing group.

About 72 percent of Chinese people interviewed believed that luxury goods overseas are cheaper than at home. A total of 69 percent travel because of the wider choice available and 45 percent enjoy the products' authenticity and the service at overseas outlets.

The report also said most money was spent on luxury watches, leather bags, designer clothes, perfumes and cosmetics.

Over the past few years, demand for finer products has maintained a strong growth momentum in China despite a plunging luxury market in many developed nations as a result of the effects of the global financial crisis.

According to the 2012 Outlook for the Retail and Consumer Products Sector in Asia released by Price Waterhouse Coopers, China will be the top contributor to global growth in luxury sales and Chinese tourists are fueling demand in key global cities, accounting for 56 percent of China's spending on high-end brands.

Chinese customers are expected to buy a total of 570 billion yuan of high-end products in domestic and overseas markets by 2015, according to another report released in December by Frost & Sullivan.

The researcher recorded a growing demand by Chinese consumers for luxury goods.

Among the most desired items are handbags and leather accessories, which have experienced a particularly high level of growth in sales, the report said.

Chinese people spent about 14 billion yuan on designer handbags in 2010, compared with about 12 billion yuan for leather accessories, in the domestic market, with compound annual growth rates of 30 percent and 37 percent respectively over the 2006 level, according to the report.

Zhu of Frost & Sullivan linked the surging demand for quality branded handbags and small leather goods with the fledgling luxury market on the Chinese mainland and "immature" domestic consumers.

"The prices of these durable items are acceptable," Zhu said, adding that many Chinese buyers sport high-end products in order to show off their status and identity and to be noticed.

The Chinese spent 16.9 billion yuan on cosmetics, perfume and healthcare products, followed by 15.5 billion yuan on watches, the report by Bain & Co showed. The report also said that suppliers of high-end products earned 68.4 billion yuan from wealthy Chinese in 2010.

The Frost & Sullivan report attributed the growing demand for branded quality to the "increasing number of wealthy individuals" in China.

In China, the number of wealthy individuals with a disposable income of more than 100,000 yuan, increased to 21.7 million in 2010 from 8.7 million in 2006, according to the report. It forecast the number would hit 54 million by 2015. "The group is a potential for future growth in demand for luxury goods," the report added.

Government policies to spur domestic consumption are another factor contributing to the growing luxury retail market, the report said.

During the financial crisis in 2009, the Chinese government unveiled a 4 trillion yuan investment package to reduce its over-reliance on exports and stimulate domestic demand.

"Increasing living standards, a growing urban population and anti-piracy laws and regulations" also contributed to the increasing demand for luxuries, the report said, predicting second- and third-tier cities will become markets for the expansion of top brands.

Zhu said that although the growth of the high-end market in lower-tier cities outpaced that in first-tier cities, markets in Beijing and Shanghai could still maintain double-digit growth.

Another report released by the Research Center for Luxury Goods and Services at the University of International Business and Economics (UIBE) in Beijing also saw potential growth for markets in lower-tier cities.

Cities such as Hangzhou, Shenyang, Chengdu and Qingdao would become the main markets for competition in the luxury brand sector, said the UIBE report, predicting sales in Hangzhou will reach 8 percent of the domestic sales volume, followed by 6 percent in Shenyang, 5 percent in Chengdu and 3 percent in Qingdao.

"Markets in first-tier cities such as Beijing and Shanghai are highly mature," said the UIBE report, adding that in lower-tier cities, the limited marketing and promotional activities and sales channels would challenge the expansion of designer brands.

"But e-commerce services for the brands would make up the gap," it added.

On the Chinese mainland, the online transaction volume of luxury goods was 6.36 billion yuan in 2010, said a report published by iResearch Consulting Group. It expected it to reach 10.73 billion yuan in 2011 and 21.32 billion yuan by 2013.

Because of limited sales channels, limited brands and choices available, Chinese people prefer purchasing luxury goods in overseas markets, causing a huge imbalance in buying volumes between domestic and overseas markets, said the Frost & Sullivan report.

It said wealthy Chinese bought 123 billion yuan of luxury goods in overseas markets in 2010 compared with 95 billion yuan in the domestic market.

However, it expects the purchasing of luxury goods on the Chinese mainland - 46 percent of global consumption last year - to surpass that in overseas markets by 2014.

According to industry insiders, the imbalance is mainly driven by the huge price gap of luxury items between domestic and overseas markets, with much higher taxes imposed on high-end goods creating higher prices on the Chinese mainland.

According to Ouyang Kun, chief of the World Luxury Association's China office, many other countries do not impose tax on luxury goods, so the prices were lower there.

Chen Keyu contributed to this story.

China will continue to impose the same anti-dumping duty rates set last year on imported potato starch before the review ends on February 6, 2013, the MOC said in a statement on its website.

Potato starch imports from the EU are subject to anti-subsidy duties ranging from 7.5 to 12.4 percent, according to an MOC ruling dating back to September last year.

The MOC launched an anti-subsidy probe into EU potato starch exports on August 30, 2010 at the request of the China Starch Industry Association.

Shenzhen company takes on tech giant over use of iPad brand name

SHENZHEN - A Shenzhen-based enterprise has accused technology giant Apple of infringing on its iPad trademark - a trademark over which both companies claim ownership.

The Pudong district court in Shanghai will hear the case on Feb 22, a lawyer for the Chinese company told China Daily on Monday.

A fine of 240 million yuan ($38 million) against Apple over the infringement is also pending from the market administrative authority in Beijing.

"We are asking the court to order Apple to stop selling and marketing the iPad in China. We also demand an apology," said Xie Xianghui, a lawyer representing the Chinese company.

The company, Proview Technology Shenzhen, also took two authorized Apple resellers for iPad - Gome Electrical Appliances and the Sundan Electronic Store - to courts in Guangdong province over similar infringements.

No financial compensation has been demanded by Proview Shenzhen at this stage of the trials.

Verdicts are pending.

Proview Shenzhen registered the iPad trademark in China in 2001, nine years before Apple launched its iPad products in 2010, Xie said.

Proview Taiwan, a company associated with, but not legally representing, the Shenzhen company, sold the Chinese trademark - along with others for use in other countries - to the UK-based IP Application Development Limited for 35,000 British pounds ($55,000) in 2009, according to a report by Nanfang Daily.

The UK company then resold the brand to Apple for 10 pounds before Apple's launch of iPad in 2010, the report said.

Apple applied to transfer the trademark from Proview Shenzhen on the Chinese mainland in 2010, but the application was turned down by China's trademark administrative authorities, the report said.

Apple then sued Proview Shenzhen in 2011 to gain legal entitlement as exclusive user of the iPad name - but lost the lawsuit in a Guangdong court.

The higher court in Guangdong province accepted Apple's appeal.

The general office of the Xicheng district branch of Beijing Administration for Industry and Commerce told China Daily it is "investigating the cases", but refused to verify or comment on the bill on Monday.

An insider who refused to be named told China Daily that law enforcement officials from other branches of the Beijing administration had listened to Xicheng's report on the case.

"But many of us hold different opinions on whether it is Apple breaching Proview Shenzhen's rights or Proview Shenzhen dishonestly demanding compensation. We didn't reach consensus on the fine as well."

The public relations office of Apple China did not respond to China Daily's interview request by press time on Monday.

Liu Yinliang, an associate law professor at Peking University, said if the trademark management authority had not approved such an intellectual property transfer, then the trademark deal had not yet become valid in China.

BEIJING - Urban and rural income surveys will be standardized amid plans to publish an internationally accepted measure of how wealth is distributed, a leading statistician said.

"The nationwide survey, which will provide basic data for China's Gini coefficient calculation, will cover about 140,000 urban and rural households, and the gathering and use of data will conform to international standards," Xie Hongguang, deputy chief of the National Bureau of Statistics (NBS), said.

The integrated urban-rural income data is scheduled to be published in 2013 to pave the way for the publication of a national Gini coefficient that can measure income inequality, Xie said.

The survey will be part of the Sino-Canadian statistics cooperative program. Statistics Canada has shared its experiences in collecting and processing data, Xie said.

Since 2000 the NBS has published a Gini coefficient that focused on rural income and that stood at 0.3897 in 2011.

The coefficient measures income distribution on a scale of zero to one. A reading of zero means perfect equality, everyone earning the same amount, while one represents the greatest inequality.

A reading of between 0.3 and 0.4 indicates a relatively reasonable income gap while an index between 0.4 and 0.5, signals a larger income gap.

Ma Jiantang, NBS chief, last month cited incomplete data on high-income groups as the main reason for the failure to provide a national coefficient.

China had 960,000 millionaires with more than 10 million yuan ($1.58 million) in personal wealth in 2010, a rise of 9.7 percent over the previous year, the Hurun Research Institute and GroupM Knowledge reported in 2011.

Income surveys for urban and rural residents are currently carried out separately. The urban survey covers 66,000 households while the rural one covers 74,000 families.

The per capita disposable income of urban households last year was 21,810 yuan, while the per capita net income of rural households was 6,977 yuan.

The World Bank estimated that China's Gini coefficient had reached 0.47 in 2009, higher than the internationally accepted threshold of 0.4, which indicates income inequality may threaten social stability.

Yi Xianrong, a researcher with the Institute of Finance and Banking under the Chinese Academy of Social Sciences, suggested that the government introduce regulations to ensure the transparency of income information.

"The public have a right to know the Gini coefficient," Yi said.

Wu Muluan, a researcher with the City University of Hong Kong, said that more high-quality statistical data can "help enhance rational decision-making and achieve the maximum welfare of society".

More projects

Another international project that the NBS is involved in is the International Comparison Program (ICP) that started last year, Xie said.

The ICP collects prices of goods and services to calculate the purchasing power of different currencies. It helps compare the output of economies and the welfare of their inhabitants in real terms allowing adjustment for different price levels.

"This is the first time that China officially joined the ICP. We have the capacity to collect and process data according to ICP requirements," Xie said.

"So far it is going well and the results are expected to come out in 2013."

In addition, the NBS plans to start more cooperative programs with the Federal Statistical Office of Germany to improve the gathering of industrial statistics.

"We will also improve communication with statistical institutions in emerging countries, including Russia, India and Brazil," Xie said.

The NBS provides regular data, including figures on population, energy and consumer prices, to more than 20 global institutions.

"As China is playing an increasingly important role in the world's economy, many international organizations are paying more attention to our economic statistics," Xie said.

BEIJING / HONG KONG - Retailers in the Chinese mainland may be in a long, cold winter, as a depressed stock market and gloomy predictions for the global economy dampened consumer enthusiasm, analysts said.

During the nation's seven-day Lunar New Year holiday at the end of January, the value of sales for large retail and catering companies rose to about 470 billion yuan ($74.46 billion) from a year earlier, an increase of 16.2 percent, compared with a growth rate of about 19 percent in 2011, according to data released by the Ministry of Commerce (MOC).

This pace of growth was the lowest since 2009, when the financial crisis hit retailers.

"In the first half of this year, the growth in consumer spending may cool to a record low, and some retail companies may register losses," said Kuang Zhenxing, deputy president of the Beijing Modern Plaza shopping mall.

The weak gains and negativity in the stock market have restrained consumer spending on high-end goods and services. "Their pessimistic investment expectations have led people to deposit money in banks or buy into safe havens, such as gold," said Kuang.

"I know that the number of new stores was increasing in January, but the profits of individual retailers were rising at a slower pace," Kuang said.

A report from the research company Bain & Company Inc showed that luxury goods retailer may suffer this year as a result of the economic downturn.

Some luxury brands decided to slow the expansion of their businesses in the mainland last year, and concentrated on maintaining high sales volumes in their existing stores, the report said.

The growth of luxury sales on the mainland is slowing, said Ouyang Kun, chief executive officer of the World Luxury Association's China office.

He said that high prices, restricted choice and poor quality have driven an increasing number of consumers to the overseas markets to purchase luxury goods.

Retailers in Hong Kong also have low expectations.

"Sales of jewelry and expensive watches during the Lunar New Year were quite disappointing," said Caroline Mak, chairman of the Hong Kong Retail Management Association, according to Bloomberg News. "Sales growth of more than 30 percent last year is unsustainable against a worsening macroeconomic backdrop."

Some members have reported that customers are buying smaller diamonds than previously, said Mak.

The Hong Kong-based cosmetics retailer Sa Sa International Holdings Ltd, which generates a large chunk of its sales from mainland visitors, said that sales in its Hong Kong and Macao stores rose by 17 percent during the Lunar New Year holiday compared with the previous year, falling short of the company's expectation.

"Though mainland tourist spending in our Hong Kong and Macao outlets registered double-digit growth, the growth rate is below our expectations. This may be due to the fact that the arrival of mainland tourists has been spread more evenly throughout the year as the development of the infrastructure has allowed mainland tourists to visit the city with greater ease than before," said Sa Sa's Chairman, Simon Kwok, in a statement.

In 2011, China's total retail sales of consumer goods was 18.12 trillion yuan, a growth of 11.6 percent from a year earlier, according to the National Bureau of Statistics. Growth was 2.2 percentage points lower than the increase in 2010. This year, the government is expected to take preferential measures to boost domestic consumption to maintain a moderate growth rate amid weaker demand for exports and a cooling real estate market.

However, Zhu Haibin, chief economist with JP Morgan in China, said that retail sales might maintain steady growth in 2012, although both internal and external headwinds may add pressure. Zhu predicted GDP growth of 8.4 percent this year, compared with 9.2 percent in 2011. Consumption may contribute about 4 percentage points of the increase in GDP, he said.

Carbon emissions scheme hits turbulence as opposition grows

BEIJING - Domestic airlines have been banned from complying with the European Union's scheme to impose charges on carbon emissions from flights to and from Europe, the civil aviation authority said on Monday.

The charges are opposed by more than two dozen countries, including the United States, Russia and India.

The Civil Aviation Administration of China issued a directive, authorized by the State Council, to notify all domestic airlines of the ban.

"Without the approval of relevant government departments all airlines in China are prohibited from participating in the EU's emissions trading scheme (ETS)," said a statement on the State Council website.

The statement also said that airlines were barred from using the ETS to increase fares or other passenger charges.

"China will consider adopting necessary measures to protect the interests of Chinese individuals and companies, pending developments," the statement said.

Under the ETS, airlines must buy additional allowances for their emissions beyond a set level or face fines.

The ETS, which took effect on Jan 1, could see around 4,000 airlines paying the EU for their carbon emissions.

Chai Haibo, deputy secretary-general of the China Air Transport Association, said the EU's decision has provoked wide opposition.

Earlier, the US industry group, the Air Transport Association of America, and the International Air Transport Association tried to challenge the move in EU courts, arguing that the ETS infringes on national sovereignty and violates international aviation treaties. But the EU Court of Justice dismissed the arguments in December.

Following the failure in court, the US Congress is expected to pass a bill in the coming weeks to formally oppose the EU law on aircraft emissions.

Chai said he believed the directive issued by China's civil aviation authority is similar to the bill to be passed by the US.

"Both are clear expressions of opposition to the EU law from the governments," he said, adding that domestic airlines now must abide by the directive.

The directive came as some foreign airlines announced new ticket fees since the ETS came into force.

US carrier Delta, one of the world's biggest airlines, added a $6 surcharge for return flights between the US and Europe.

Germany's Lufthansa indicated it would raise its fuel surcharge, following Belgian carrier Brussels Airlines, which increased it by 10 euros ($13) to 135 euros for international flights and by 3 euros to 39 euros for EU routes, AFP reported.

No Chinese airlines have cited the EU tax to increase fares. Chinese carriers, including China Southern Airlines, China Eastern Airlines and Hainan Airlines, have said they will follow the ban.

Luo Zhuping, secretary of the board of China Eastern Airlines, said the order is good news for passengers because airlines are forbidden to raise prices for the carbon tax.

Chinese airlines are estimated to need to pay 800 million yuan ($125 million) this year as required by the EU scheme. The payout could be almost four times higher by 2020 as Chinese flights to and from Europe increase.

"We hope that the EU understands the global negative response to its scheme and cancels or revises its plan," Chai said.

But the EU ambassador to China, Markus Ederer, said at a news conference on Monday that with free credits taken into account, the added cost per passenger on a flight from Beijing to Brussels would be only 17.5 yuan or 1.9 euros.

"I leave it to you to make a judgment on whether this is too much for saving the Earth, combating climate change and making headway together," he said.

As for calls to solve the issue under a multilateral framework, such as the UN International Civil Aviation Organization, Ederer said that Europe is in ongoing discussions with related organizations to seek an international resolution before collecting money.

"We are ready to engage in a discussion on recognizing the equivalent measures which would then exempt airlines of those countries from the necessary dues that would have to be paid," he said.

But if conflict over the charges finally happens, it may go to court, he said.

Zhang Min, an expert on European studies at the Chinese Academy of Social Sciences, said that if China and the EU fail to reach an agreement, China may adopt countermeasures against the EU.

Chai agreed. "China does not want this to end antagonistically. But if the EU sticks to its guns it is hard to predict what countermeasures the Chinese government will take."

Some analysts said that Chinese airlines may actually pay the carbon tax to avoid damaging their business in Europe. Li Lei, an aviation analyst with CITIC Securities, said that Chinese airlines are "in a dilemma".

"They have to meet the EU's demand unless they stop flights. As negotiations take time they might end up paying the tax during the negotiating period to keep their routes to and from Europe open," he said.

The Chinese government is trying its best in the interests of the carriers but the final solution may be a trade-off, he said.

IMF also downgrades prospects for global economy because of euro crisis

BEIJING - The International Monetary Fund (IMF) has cut its forecast for China's 2012 economic growth to 8.25 percent from the 9 percent projected in September, and it warned that exports would be a significant drag on expansion in the coming two years.

Containers being loaded at a dock in Haikou, capital city of Hainan province. IMF officials say some modest financial support for the Chinese economy is warranted in light of the risk of a global downturn. [Photo/China Daily]

The IMF has downgraded the prospects for global economic growth in 2012 to 3.25 percent from 4 percent, largely because the eurozone economy is expected to go into a recession this year.

"The risks to China from Europe are large and tangible," said Murtaza Syed, resident representative of the IMF's Beijing office, at a seminar on Monday.

China's economic growth, which came in at 9.2 percent last year, could fall by as much as 4 percentage points if the euro area experiences the IMF's downside scenario, which would see global growth falling by 1.75 percentage points.

But even in this worst-case scenario, China has room for a countervailing fiscal response, he said.

Given the uncertain global outlook, some modest fiscal support to the economy is warranted, he said. In particular, a general government deficit of about 2 percent of GDP should be targeted.

The IMF urged policymakers to provide fresh stimulus through the budget rather than the banking system, since the large credit stimulus in 2009 and 2010 has increased risks in the banking system.

"China needs some time to digest the side effects of the surge of credit unleashed in the wake of the global crisis," he said.

However, China is not heading for a hard landing and will remain a bright spot for global growth in the coming years. The IMF projects China's economy will grow 8.75 percent in 2013.

Both investment and consumption have been strong despite weakening external demand. Also, the government's efforts to calm the property market have been effective, and underlying investment remains healthy due to government efforts to expand the supply of subsidized housing.

Inflation is coming down to more comfortable levels, which should allow the authorities to fine-tune monetary conditions and supply the economy with modest additional credit, Syed said.

Upward pressure on the Chinese currency has diminished recently and the pace of reserve accumulation has fallen, partly due to a smaller trade surplus and valuation effects associated with a stronger US dollar.

Last week, after talks with German Chancellor Angela Merkel, Premier Wen Jiabao said China was investigating and evaluating ways to become more involved in solving Europe's debt problem.

Il Houng Lee, senior resident representative of the IMF's Beijing office, didn't give a timeframe for the discussion, saying that the earlier, the better it would be to establish a strong bailout fund to counter possible risks.

The European Union has long been the biggest trading partner for China and a major market for China's exports.

The EU's ambassador to China said on Monday that China could become Europe's biggest export market this year, overtaking the United States.

"There are indications that in 2012, China may become Europe's biggest export market," Markus Ederer told reporters in Beijing.

This year the EU-China interdependence will grow, he said, adding that European exports were increasing at a faster pace than European imports from China.

Custom-designed by the British royal family, the porcelain items, including bone china plates printed with the Queen's portrait and white porcelain milk cups, were produced in the city of Tangshan and have a total value of $337,500, according to the Hebei Provincial Entry-Exit Inspection and Quarantine Bureau.

The city of Tangshan, known as "porcelain capital in north China," is famous for the production of high-grade bone china. Items manufactured in the city have been exported to the US, Britain and Australia.

The business will encompass both retail and commercial cards, and is expected to be launched sometime in 2012.

Citi and Shanghai Pudong Development Bank (SPDB) have mutually agreed that SPDB will continue to be responsible for its credit card venture, which started in 2003. Currently Citi is the fourth shareholder of SPDB, keeping 2.71 percent of shares. Cooperation between the two sides on credit card business since 2003 was viewed as a move to avoid restriction on foreign banks issuing credit cards.

Guo Shuqing, chairman of the China Securities Regulatory Commission and Dai Xianglong, head of the National Council for Social Security Fund, have publicly said several times since last December that China would actively boost the pension fund to invest in the stock market.

Allowing the pension fund entering the stock market by certain ratio and according to certain standards is in itself helpful for the development of the stock market, Guo said.

China's soical basic pension fund managed by local governments totaled 1.8 trillion yuan by the end of 2011, said the report. 

Wen Zongyu, a senior researcher in SOE studies at the Institute for Fiscal Science, an organization affiliated with the Ministry of Finance, said maintaining value should be the top priority for the pension fund's investment in the stock market.

The wholly owned subsidiary, DBS Bank (Taiwan), demonstrates the bank's intent to continue its growth momentum in the market, and underlines its Greater China strategy, which is to intermediate the increasing business, trade and investment flows between Taiwan, Hong Kong and the Chinese mainland, according to a bank spokesman.

To achieve its ambition of becoming the Asian bank of choice across Asia, the bank unveiled a nine-point strategic roadmap in February 2010, which includes entrenching its leadership in Singapore, re-energising Hong Kong and re-balancing the geographic mix of its franchise.

The lender is also focused on strengthening its regional wealth management business, small and medium-sized enterprises (SME), Treasury & Markets and Global Transaction Services business.

"One of DBS' strengths is that we have a growing footprint in the three key axes of growth, namely Southeast Asia, South Asia and Greater China. In Greater China, we are the only Singapore bank with a sizable footprint in Hong Kong, Taiwan, and the Chinese mainland. This allows us to offer seamless regional connectivity to our customers," said Peter Seah, DBS chairman.

In 2008, DBS acquired assets of Bowa Commercial Bank in Taiwan. The acquisition turned profitable in 2009 and bolstered the lender's presence in Taiwan from a single branch to 40 branches.

Between 2007 and 2011, DBS Bank (Taiwan)'s total revenues have grown about four times to NTD 4.7 billion ($158.77 million). Total loans rose by three times to NTD 158 billion and total deposits expanded by 18 times to NTD 172 billion. Staff headcount has surged to over 1,400.

The March contract dropped 0.37 percent to 2,515.4. The June contract weakened 0.22 percent to 2,538.4 points, while the September contract shed 0.14 percent to finish at 2,558.6 points.

The stock-index contracts, agreements to buy or sell the Hushen 300 Index at a preset value on an agreed date, are designed to allow investors to bet on and profit from gains or declines in the market.

The index futures was launched at the China Financial Futures Exchange (CFFEX) and started trading from April 16, 2010. The CFFEX has set the base value for all the four contracts at 3,399 points.

The index, together with the Shenzhen Component Index and the Shenzhen SME (small and medium-sized enterprises) Board Index, makes up the three core indices reflecting the performance of China's stocks listed on the Shenzhen Stock Exchange.

The ChiNext Board, which started trading on Oct 30, 2009, mainly lists high-tech companies and those with high growth potential.

The front of a Mercedes-Benz 2013 SL-Class automobile is shown during the launch at the North American International Auto Show in Detroit, Michigan, Jan 8, 2012. [Agencies]

Germany's Daimler said sales growth of its Mercedes-Benz car brand slowed to 5.1 percent in January from a rate of 15.1 percent in December, reaching 86,921 vehicles as it sold fewer cars in China.

"Due to the excellent sales performance in December 2011 as well as the capacity expansion at BBAC (joint venture Beijing Benz Automotive Co Ltd) and the associated production downtime, in China some models were just partially available in January," Daimler said in a statement on Feb 3.

Vehicle sales of its Mercedes-Benz Cars division, which includes the Mercedes-Benz, smart and Maybach brands, rose 5.8 percent in January.

A Saab logo covered with rain drops is seen on a vehicle in Zurich in this June 24, 2011 file photo. [Agencies]

Chinese group Zhejiang Youngman Lotus Automobile has made a fresh bid for Swedish carmaker Saab, which went bust in December, Swedish radio reported on Feb 2, citing sources.

Saab, one of Sweden's best-known brands, shut down production early last year after running out of money and was finally declared bankrupt after protracted rescue efforts by owner Swedish Automobile.

The public broadcaster said Youngman's offer was worth several billion Swedish crowns, and the Chinese firm, which had wanted to invest in Saab before the bankruptcy, would under the new proposed deal produce cars at Saab's factory in Trollhattan in the southwest of Sweden.

Saab's receivers declined to comment on the report. A Youngman representant was not immediately available for comment.

A key stumbling block that led to Saab's bankruptcy was the refusal of its former owner General Motors to allow its technology, which underpins Saab cars, to fall into Youngman's hands.

Sources have said the Chinese group remained interested and was preparing an offer.

Saab's PhoeniX platform, expected to be the base of future models, relies very little on GM technology, but any buyer would have to invest heavily to complete the development of PhoeniX.

Any buyer would also have to get permission from defence and security company Saab AB and truck maker Scania to use the Saab name, as they still own the rights to the brand.

Last week, Sweden's Debt Office said it had paid back loans the European Investment Bank had made to Saab, simplifying the approvals process for any buyer.

Other companies that have been named in the media as considering bids for Saab assets include Indian utility vehicle maker Mahindra and Mahindra Ltd and Turkish investment firm Brightwell Holdings and Swedish engineering firm Semcon.

According to the NDRC's statement, Air China was approved to borrow $1.96 billion for purchasing 28 airplanes. It also gave a green light to China Southern to borrow $954 million for buying 14 craft.

The Air Transport Association predicted the aviation industry would continue to worsen in 2012. The gloomy market is considered by industry insiders as a good time to purchase airplanes.

It takes three to five years from placing an order to delivering the airplanes, so it is uncertain if the market will be out of the downturn by then, the report said.

Markus Ederer said at a press conference in Beijing that the conclusion was based on the current trade trends. EU is the biggest importer of Chinese goods as well as China's biggest technology supplier, he said.

Ederer stressed that the EU had set no barriers for Chinese investment in the market and treats all companies equally.

The EU welcomes China's investment and the country's "constructive approach" towards the EU debt crisis, Ederer said, commenting on German Chancellor Angela Merkel's visit to China.

The benchmark Shanghai Composite Index was almost unchanged to close at 2,331.14, up 0.73 points. The index once hit a two-month high of 2,341.58 shortly after trading resumed from the morning break.

The Shenzhen Component Index added 0.12 percent, or 11.65 points, to finish at 9,448.64.

BEIJING - The Chinese mainland still lags behind Taiwan, South Korea, Japan and some other economies in Web use despite recent official statistics showing it already has more than 500 million netizens.

A man in a car using a smartphone to browse online stock information. The mobile Internet sector is expected to be a major engine in the development of the country's Web industry in the years to come.[Photo/China Daily]

The China Internet Network Information Center (CNNIC) reported last month the mainland's Internet population reached 513 million in 2011, although the rate of increase was at a decade low.

The mobile Internet sector is expected to be a major engine in the development of the mainland's Web industry in the years to come, according to CNNIC.

A little fewer than 40 percent of people on the Chinese mainland were connected to the World Wide Web as of December, up by 4 percentage points compared with 2010's figure.

Although the penetration rate has beaten the Asian average of 24 percent, the figure still lagged behind many economies, such as Japan, South Korea, Singapore and Taiwan, said Miniwatts Marketing Group, a global Internet analysis company.

The mainland added 55.8 million new Internet users over the past year, the smallest annual increment since 2006.

The half billion users could be a "plateau" for the mainland's Internet industry, said CNNIC, a government-supported organization that monitors the mainland's Internet industry. The number of Internet users had soared both in 2008 and 2009 with nearly 90 million new users added each year, it added.

CNNIC worried that the country may find itself harder to enlarge the Internet population in the coming years because almost everyone with the education and appropriate income to meet the basic requirements of surfing the Web has already become an Internet user.

Mobile Internet

The number of mainland mobile Internet users reached 356 million as of December, up by 17.5 percent year-on-year, according to CNNIC, which added that the rate of increase was lower than in the previous two years.

"The telecommunication carriers' strategy to lower traffic charges in order to get a larger market share in the industry contributed to a boom in user numbers in 2009 and 2010," said CNNIC. The carriers' focus has shifted to promoting smartphones to mid- and high-income buyers, a move that has "very limited" effect on boosting Internet user numbers, it added.

As few as 36.5 percent of Chinese cell phone owners are using their mobile devices to connect to the Internet.

CNNIC estimated that the next round of fast growth in China's mobile Internet sector is foreseeable as more major online service providers invest more in the market and develop more diversified products for customers with different demands.

Micro-blogging

Users of micro blogs witnessed a rapid surge in the past year.

CNNIC estimated that the mainland had 250 million micro blog users as of December, a figure that was four times 2010's number of 63 million. Some in the industry said the figure was too conservative.

Cao Guowei, chief executive officer and president of Sina Corp, said there were more than 250 million account holders on Sina Weibo. "There are nearly 100 million tweets on Sina Weibo every day," he said.

Tencent Holdings Ltd, another micro blog operator, claimed in November that there were 310 million users on its platform, t.qq.com, an amount that could easily cover half of the country's entire Internet population.

But the report also pointed out that the explosive increase in account numbers came to an end in the first half of 2011, when the growth rate of new accounts dropped to 28.2 percent half-year-on-half-year, the report said.

E-commerce

A total of 194 million Internet users are online purchasers, making up 37.8 percent of total Internet users, said CNNIC, adding that this amount has surged by more than 20 percent year-on-year.

The user number in the group purchasing sector saw a rapid increase regardless of the fact critics say group purchasing needs a better profit model to survive. More than 64 million Internet users participated in group purchasing activities in 2011, covering more than 12 percent of the total Internet population, CNNIC estimated.

The number of the mainland's group purchasing websites dropped to 3,897 in December from more than 5,000 at the beginning of 2011, said a report released by group purchasing navigation website tuan800.com.

Although industry integration buffeted the nation's group purchasing sector in the first half of 2011, the websites were able to find themselves a more specific market in which to run their businesses in the second half, said CNNIC.

"The rapid development in group buying, online payment and online travel booking sectors will enable China's e-commerce industry to keep growing in 2012," it said.

In 2011, the mainland's online shopping market generated 773.5 billion yuan in trading volume, according to a separate report released by Internet research company iResearch Consulting Group on Jan 12.

The British luxury brand, owned by India's Tata Motors Ltd, said in May it had shortlisted potential Chinese partners without providing details, as it looks to tap soaring luxury car demand in the world's second-largest economy.

The deal is yet to be finalized and could be announced at the Beijing Auto Show in April, the report said, citing two unnamed people with knowledge of the matter.

"There is nothing new to say on this matter," a spokesman for Tata Motors told Reuters. "Jaguar Land Rover is looking at a manufacturing partnership in China, and have been for two years. Beyond that, there is nothing to say."

A spokesman for Chery told Reuters he had "no information".

JLR has previously explored cooperations with other Chinese automakers such as Great Wall Motor Co.

JLR agreed to develop a luxury car based on its Jaguar models for Chery that may carry the Chinese company's badge, a Chinese newspaper said in December, in a move to win the Chinese government's approval for a manufacturing venture.

China's National Development and Reform Commission has the power to approve or block major foreign joint venture projects.

Tata bought JLR in 2008 for $2.3 billion.

To broaden the source of funding, income of bonds issued by local government, as well as pilot property taxes, was urged to be focused towards affordable housing projects, the ministry said.

Local governments are encouraged to make appropriate arrangements in their fiscal budget to support renovation of shantytowns, and allocate funds to improve the supporting facilities around affordable housing communities.

Such projects will also receive discount on loans from commercial banks, with a degree of 2 percentage points, and a maximum period of 15 years, the ministry said.

There will be 7 million units of affordable housing starting construction in 2012, and another 4 million to see completion. The 2012 target is much lower than the 2011 goal of 10 million units.

As Valentine's Festival approaches, apples with affectionate images and phrases like "I love you" and "perpetual love" have become a hot sell, especially among young people at a supermarket in Nanjing, East China's Jiangsu province, Feb 5, 2012. The phrases and images were created through special bags put on apples during their growing period. [Photo/CFP]

As Valentine's Festival approaches, apples with affectionate images and phrases like "I love you" and "perpetual love" have become a hot sell, especially among young people at a supermarket in Nanjing, East China's Jiangsu province, Feb 5, 2012. The phrases and images were created through special bags put on apples during their growing period. [Photo/CFP]

As Valentine's Festival approaches, apples with affectionate images and phrases like "I love you" and "perpetual love" have become a hot sell, especially among young people at a supermarket in Nanjing, East China's Jiangsu province, Feb 5, 2012. The phrases and images were created through special bags put on apples during their growing period. [Photo/CFP]

As Valentine's Festival approaches, apples with affectionate images and phrases like "I love you" and "perpetual love" have become a hot sell, especially among young people at a supermarket in Nanjing, East China's Jiangsu province, Feb 5, 2012. The phrases and images were created through special bags put on apples during their growing period. [Photo/CFP]

According to the regulation, manufacturers must cease producing, selling or importing defective vehicles and recall them upon identifying problems.

They are also obliged to take prompt remedies, such as providing repair, exchange and refund services.

Furthermore, manufacturers should keep records of sold automobiles and their first-hand buyers for at least 10 years.

Should defects be found in spare tires provided in the original packages, it is the obligation of manufacturers to recall, under the draft regulation.

It also provides that the nation's quality watchdogs, mainly the General Administration of Quality Supervision, Inspection and Quarantine, should disclose to the public information on defective cars and corresponding recalls.

CNPC sold a record 110 million tons of oil products last year and retail sales accounted for 85 million tons, Liu Hongbin, a vice president of PetroChina, was quoted as saying in an interview with the company newspaper.

CNPC runs its key domestic businesses including oil and gas production, processing and sales via PetroChina, its main listed arm.

Volvo's CEO Olof Persson smiles after presenting fourth-quarter results during a news conference in Stockholm Feb 3, 2012. [Agencies]

Net sales of the Swedish Volvo group in 2011 reached a record high level of 310.3 billion Swedish kronor ($46 billion), up 17.2 percent compared to 2010, said the company in its annual fiscal report on Friday.

Volvo's income after taxes last year rose to 18.1 billion Swedish kronor, up 61.6 percent from the year before, while the company registered the highest net sales, operating income and margin, said the report.

In the fourth quarter of 2011, the company's net sales increased by 18 percent year on year to 86.5 billion Swedish kronor, higher than what analysts had earlier estimated.

Meanwhile, the income after taxes of the fourth quarter amounted to 4.8 billion Swedish kronor, a 40.5 percent rise from the same period in 2010, according to the report.

Volvo CEO Olof Persson highlighted increased profitability in the truck business as he commented on the fiscal report.

According to him, truck deliveries worldwide rose 21 percent in the fourth quarter of 2011 year-on-year, and the truck brands of Volvo group has gained some 26 percent in the European market.

However, since autumn last year, there was a decline in demand for trucks in Europe. "With the uncertainty in the European economy, it is difficult to forecast demand for trucks in 2012," said Persson.

Customers' needs to replace old trucks with new ones and stricter emission standards which will come into force in 2014 will, however, contribute to a gradual improvement in 2012, Persson said.

The bank, a branch of the Leshan Commercial Bank, was established last August in Meishan, a major pickle production base in Southwest China's Sichuan province. It offers loans to micro- and small pickle enterprises that otherwise would have trouble obtaining bank loans.

Hu Mingqian, owner of a local pickle producer, used to find it hard getting bank loans and had to turn to private lenders despite higher interest rates.

"Back then, we had few valuable assets but pickle jars to pledge, and banks wouldn't take them as collateral. Besides, their loan approval process was slow," he said.

Last August, Hu's firm received a credit guarantee valued at 1.5 million yuan ($238,000) from the "pickle bank." The bank required three other MSEs to cosign the loan in order to reduce the risk of default.

Hu Mingqian used the money to buy 2,000 tons of mustard plants to make Sichuan pickles. The firm's pickle sales for 2011 hit 30 million yuan, with a net profit of 3.2 million yuan.

In the seasonal pickle industry, cash flow is tightest when vegetables are purchased for pickle production. But because of the rigid process of evaluating micro- and small borrowers' collateral, banks usually have difficulty meeting the seasonal demand for loans, said Wen Weihu, an official with the Sichuan Provincial Banking Regulatory Bureau.

"Lack of fixed assets as collateral makes it hard for the micro- and small enterprises (MSEs) to get bank loans," he said.

In order to limit the risk of bad loans, the "pickle bank" uses the Meishan Food Association to help evaluate the creditworthiness of MSEs. One role of the association is to make sure firms in the industry meet official production standards, otherwise they can't legally operate. So the association is familiar with the pickle companies.

"We know each local pickle producer very well, such as their business structure, credit history and cash flow. Thus, we give credit guarantees to those with good business prospects," said Liao Xinrong, head of the association.

Liao also said prospective borrowers must find other MSEs to share the loan. In this way, the risk becomes manageable even without collateral.

Gou Limei, head of the "pickle bank," said the bank has lent a total of 60 million yuan to 28 pickle MSEs over the past few months. No bad loans have been reported so far.

"Our bank also has cooperation with the local fruit association, vegetable cooperative and even peasants. In addition to offering loans, we have also revamped the entire pickle production chain," Gou said.

Nowadays Sichuan pickles are exported to more than 20 countries and regions, including the United States, Canada and Japan. Last year Meishan alone produced over a million tons of pickles, valued at more than 6 billion yuan, according to government statistics.

"The latest ten to twelve years demonstrated that the potential is huge, and lots have been realized. The liberalization that has occurred has allowed the trade flow to increase dramatically in this direction," Nicholas Lardy, a senior fellow at Peterson Institute for International Economics told Xinhua in a recent interview.

Trade between China and the United States has a solid development base. China's trade with the United States, the country's second largest trade partner, rose to $446.7 billion in 2011, a 15.9-percent growth over 2010 and a sharp increase from the 80.5 billion ten years ago.

Lardy said that while the global economy is facing intensified downside risks, it is of great importance for China and United States, the two biggest economies in the world, to further expand bilateral economic cooperation.

The two sides need more coordination as they act "in parallel" against the risks, he said, adding that both China and the United States should adopt appropriate policies to sustain economic growth to help the world economy mitigate the negative impact of the eurozone sovereign debt crisis.

Lardy also argued that the economic cooperation should be more "market oriented" rather than government-promoted. The increase of US exports to China was mainly driven by market, Lardy said, "because China is growing so fast, its demand is high, some of the demand is satisfied by imports."

"Let the market play the role," he stressed, because "when this happens, the trade expands."

China is currently the third largest exporting market for the United States. China's import from the US surged to 122.1 billion in 2011, up 19.6 percent from a year earlier, despite the faltering world economy.

Talking about the US plan to double its exports by the end of 2014 from the basis of 2009, Lardy said his country should export more high-tech products to China.

Lardy has done a long-time research on China's economy and is called "everybody's guru on China" by US National Journal. He has written or edited a number of books on China.

In his latest book, which is entitled "Sustaining China's Economic Growth After the Global Financial Crisis", Lardy said China has emerged successfully from the global financial and economic crisis but must undertake fundamental reforms to sustain its economic growth and help the rest of the world recover.

During the interview, Lardy noted that China needs a consumption-based, rather than an export-led model of growth. "China needs to encourage other growth sources than exports," he said.

He suggested Chinese policymakers increase expenditure on social welfare programs to stimulate domestic demand. "The potential for generating more growth from consumption is enormous for China," he added.

A driver drives the latest version of "MyCar", an electric car made by the Hong Kong Polytechnic University, inside the university campus in Hong Kong Jan 30, 2012. [Agencies]

The biggest oil companies in the world have calculated that few, if any, of today's drivers will see electric cars outnumber gasoline and diesel models in their lifetimes.

While politicians and green lobby groups insist the future of transport is electric, in the past two months BP and Exxon have released data which points to electric cars making up only 4-5 percent of all cars globally in 20-30 years.

Meanwhile some governments are targeting as much as a 60 percent market share for electric vehicles over a similar period.

The oil company forecasts may appear self-serving, but if they are widely accepted could provoke a policy shift that offers greater incentives for electric cars to end our addiction to oil.

And unlike more optimistic predictions from consultants like McKinsey, these forecast are backed by cash. They guide tens of billions of dollars in long-term investment in oil production and refining and it is oil that stands to lose if they get it wrong.

They don't, of course, take into account a major breakthrough in battery technology that could give electric cars a cost and performance edge over the internal combustion engine.

In its Energy Outlook for 2030, released earlier this month, BP predicted that electric vehicles and plug-in hybrids, will make up only 4 percent of the global fleet of 1.6 billion commercial and passenger vehicles in 2030.

"Oil will remain the dominant transport fuel and we expect 87 percent of transport fuel in 2030 will still be petroleum based," BP Chief Executive Bob Dudley said as he unveiled the BP statistics on Jan 18.

The balance is seen coming from biofuels, natural gas and electricity.

Plug-in hybrids can be powered from the mains and only rely on their small gasoline engines when the battery dies.

Standard hybrids are principally driven by an internal combustion engine whose efficiency is boosted by the recycling of energy generated from braking.

Exxon Mobil, the biggest oil and gas company in the world, says the continued high cost of electric vehicles compared to petroleum cars, means take-up won't even increase much during the 2030s.

In its 2040 Energy Outlook, released in December, the Texas-based company said electric vehicles, plug-in hybrids and vehicles that run on natural gas would make up only 5 percent of the fleet by 2040.

Peter Voser, Chief Executive of Royal Dutch Shell, the industry number two, sees a rosier future for electric vehicles. He predicts they will account for up to 40 percent of the worldwide car fleet, although only by 2050.

A $50b-a-year opinion

The statistics published by Exxon and BP, Europe's second-largest oil company by market value, are perhaps the most detailed long-term forecasts on electric vehicle take-up.

These Energy Outlooks guide how the oil groups allocate their annual investment budgets - among the biggest in the world, at over $50 billion combined for BP and Exxon.

The expected continued dominance of petroleum partly explains the scaling back in BP and Shell's solar, hydrogen and wind power ambitions in recent years, and Exxon's continued reluctance to get involved in renewable energy.

Insofar as the companies are active in green energy, it is mainly in the production and blending of biofuels. This is driven by US and European governments' insistence that a percentage of motor fuels sold must come from plant-based sources.

If the oil companies are wrong about electric cars they will find their investments in big and expensive new oil production projects, which increasingly need crude prices around $80 per barrel to be profitable, not paying off.

The companies do see an easing in the addiction to oil, though.

Despite increased car ownership in China and India, Exxon predicts "global demand for fuel for personal vehicles will soon peak" due to an increase in average fuel efficiency.

BP expects the efficiency of combustion engines to double by 2030, with a third of vehicles on the road being hybrids.

This trend will be driven by more stringent fuel economy standards in the US, CO2 reduction legislation in Europe and an end to oil subsidies in developing countries.

Increased airline and commercial vehicle traffic will counterbalance some of the efficiency gains from cars but BP predicts that, helped by increased use of biofuels, demand for oil for transport overall will plateau in the mid-2020s.

Greens fume, politicians see quicker adoption

Green groups reacted with suspicion to the oil industry forecasts.

"Exxon would say that, wouldn't they. A big take-up of electric cars is not something they would like to see," said Jos Dings, director of Brussels-based sustainable transport campaign group, Transport and Environment.

"The future for petrol and diesel doesn't look good," he countered.

Nonetheless, environmentalists like Dings fear political complacency about improving vehicle efficiency could prompt governments to ease targets to cut vehicle emissions, which could in turn delay the electrification of transport.

Big Oil's pessimistic outlook for electric cars is at odds with many governments' plans.

Electric vehicles barely register on the statistics of car sales at the moment. Nonetheless, China is targeting 5 million electric vehicles on its roads by 2020, according to media reports. This would represent around 3 percent of its predicted fleet.

The Australian government's main energy adviser, the Australian Energy Market Commission, has predicted electric vehicles will make up 20 percent of new car sales in Australia by 2020 and 45 percent by 2030.

The UK's Committee on Climate, which advises the government, has predicted electric vehicles will reach around 60 percent of new cars and vans by 2030. And New Zealand hopes to get to 60 percent by 2040.

The US has more muted ambitions. President Barack Obama said he wants to put 1 million electric vehicles on US roads by 2015, a figure that would represent less than half of one percent of the total fleet.

Many US experts and officials predict a tipping point in the uptake in electric vehicles in the latter part of this decade, as technology improves, economies of scale kick in and consumer fears about being stranded when their batteries run flat, or "range anxiety," eases.

However, data compiled by the US Energy Information Administration may explain the lack of an official US target. Last week, the agency released an 'abridged version' of its Annual Energy Outlook 2012, due to be released in full in the Spring.

Tables used in formulating the outlook show electric vehicles and plug in hybrids are expected to account for only 1.3 percent of the US fleet in 2030.

Furthermore, the agency predicts that neither consumers, nor carmakers, will get over 'range anxiety'. By 2035, the agency sees few, if any, electric vehicles on US roads that can travel for 200 miles without recharging.

Carmaker enthusiasm cools

A potential customer looks at a black 2012 Chevrolet Volt electric vehicle in the showroom of George Matick Chevrolet auto sales in Redford, Michigan, Jan 31, 2012. [Agencies]

Many of the headlines out of autoshows in the past couple of years have been captured by the launch of electric cars such as Nissan's Leaf, the Tesla sports car, plug-ins like General Motors' Chevrolet Volt, and the latest incarnation of the Toyota Prius.

Other manufacturers including BMW, Rolls-Royce and Porsche have presented electric-powered prototypes.

On the basis of this, one could be forgiven for thinking the auto industry is betting big on electric power.

Yet few auto executives share the optimism of Renault and Nissan chief executive Carlos Ghosn who has repeatedly said he sees electric vehicles making up 10 percent of all sales in 2020.

Carlos Ghosn, chairman and chief executive officer of French carmaker Renault, poses next to a Renault Zoe preview electric car after a news conference to present the company's 2010 annual results and their business plan "Drive the change" in Boulogne-Billancourt near Paris in this Feb 10, 2011 file photo. [Agencies]

A survey of 200 auto industry executives conducted by KPMG released earlier this month gave an average forecast for electric vehicles to account for 6-10 percent of global auto sales in 2025 - more bullish than Exxon and BP but hardly a revolution.

"Certainly a year ago or so, you could have gotten the impression from reading the press that everyone is driving electric cars in two years time," Daimler CEO Dieter Zetsche said at a roundtable at the sidelines of the Detroit auto show last month.

Zetsche said he did not see "an explosion of demand for this product."

Echoing comments from the oil companies, Gerd Kleinert, CEO of KSPG, the automotive parts business belonging to German group Rheinmetall, says take-up of electric cars will be curtailed until batteries can store energy using as little weight as gasoline does, and can be recharged as quickly as refilling a fuel tank.

"When that world exists, then we will all be driving electric cars starting tomorrow. But I personally don't see that happening, not even a hundred years from now."

Metals companies that refuse to move out of town would be shut down, Liao Jincheng, director of the development and reform commission of Hechi city in Guangxi Zhuang autonomous region, told Xinhua on Sunday.

Cadmium pollution was first detected in the Longjiang River on January 15 in Hechi, and it later spread to the downstream Liujiang River, threatening water security in Liuzhou, a city with 1.5 million permanent residents.

Investigations found two factories, one producing a dye product called lithopone without a license, and the other a metallurgical chemical plant, to be responsible for the incident. They had illegally discharged highly contaminated sewage.

Liao said that Hechi, a city with 145 heavy metals companies, had been mulling to moving out those near downtown before the spill and plans for relocation were already written in the city's five-year plan starting 2012.

The mills will be relocated to two industrial parks dozens of miles away from downtown, said Liao.

Liao said that centralized production would make it easier for environmental monitoring and it would cut pollution treatment costs for companies as well.

Small smelting companies with annual production value of lower than 20 million yuan ($3.17 million) would be the first ones to move, Liao said, adding they would be closed if refused to go by the end of this year.

It's an increasingly common sight: Chinese consumers turning to local fast-food alternatives to the long-dominant pair in China -- Yum Brands Inc's KFC and McDonalds Corp.

Twenty-five years after Yum introduced China to American-style fast food with its first fried chicken store, the two US giants are facing a plethora of Chinese and Asian eatery chains that are steadily munching away at their market share.

People pass a KFC billboard in Shanghai, June 30, 2011. [Photo / Asianewsphoto]

As Yum prepares to announce fourth-quarter earnings on Monday, some investors are eyeing its China operations warily. Last week saw a flurry of put options on Yum after McDonalds reported earnings and said foreign exchange fluctuations and other factors could eat into profits in 2012.

But Yum's China business seems robust. The company said on December 5 that it expects a benefit of $40 million this year from yuan-dollar exchange rates, while operating profit in China is expected to grow 15 percent. It plans to open 600 more locations in China in 2012 at a pace of more than one every day.

China accounted for 36 percent of Yum's global revenue in 2010 and is estimated to be 44 percent in 2011 and 50 percent in 2012, according to Credit Suisse.

Yum's biggest challenge comes from a rising torrent of competition as Chinese consumers increasingly have more money to spend and more places to spend it, which could mean slowing growth rates for Yum in the future.

At the Ajisen outlet, stacked above a Starbucks coffee shop and a Burger King restaurant, shoppers headed in and out all afternoon.

"We were just browsing, and stopped here by chance to eat," said Sun Haihao, 30, an engineer from Sichuan province who was visiting Beijing.

He's been to Ajisen, a Japanese-style restaurant run by Ajisen (China) holdings Ltd and KFC in Mianyang city where he lives. "KFC can be too oily," Sun said. "Ajisen is Asian, so we're used to it."

Growth outpaces China's GDP

A recent Reuters poll showed that economists expect China's GDP to grow 8.4 percent this year, down from 9.2 percent in 2011. Meanwhile the quick-service restaurant industry is expected to grow around 15 percent, meaning further revenue growth for Yum and McDonalds, even as their market share declines, according to market research firm Mintel. "KFC and McDonalds are growing outlet numbers, but so are domestic and foreign chains plus independents," says Paul French, Mintel's chief China analyst. "The pie is bigger, but the number of players wanting and getting a slice of it are bigger too. A rising tide does not necessarily raise all boats."

Ajisen is among the legion of upstarts, which include fellow Japanese entrant Yoshinoya; Burger King, Dairy Queen and Papa John's Pizza from the United States; South Korean-owned Paris Baguette and Tous Les Jours bakeries; and a host of Chinese chains such as Golden Jaguar, Yonghe King, Country Style Cooking, Dico's restaurants and 85 Degrees Bakery.

Many are growing fast, albeit from a smaller base. Ajisen (China) reported a boost in first-half restaurant income last August of 40.8 percent to HK$1.6 billion ($206 million).

Country Style Cooking, a family-style chain offering casual cuisine and focused on western China, increased its locations by 63 percent in 2011, according to China Market Research. Meanwhile, the number of all of Yum brand restaurants in China last year grew 13 percent.

Success story

Louisville, Kentucky-based Yum, whose restaurants in China also include Pizza Hut, East Dawning and a stake in Little Sheep, plus Taco Bell and others in the United States, has had remarkable success in China.

It was the first foreign fast-food restaurant chain to set up business here, opening a fried chicken outlet in Beijing in 1987. Today it is by far the largest with nearly 3,500 KFC locations across China, and more than 4,200 restaurants in all, well ahead of McDonalds' 1,400 locations.

"KFC restaurants are more profitable than any of its competitors and generate about four times as much revenue per restaurant as its US locations," says James Roy, senior analyst at China Market Research, a Shanghai-based consultancy.

"No other competitor can come close to adding the number of restaurants per year it can," Roy said.

Yum itself said at the end of the third quarter, "We consider China to be the greatest restaurant opportunity of the 21st century."

Yum executives were not available to comment further because of the regulatory quiet period before the earnings announcement.

Yum's 2011 China revenue to be announced on Monday is expected to rise 23.3 percent, a slower pace from 32.6 percent a year before, according to Credit Suisse.

But China is Yum's growth engine. The company's chief executive, David Novak, said in December that he expects China to lead global profit gains, projected to be up 13 percent for 2011 "despite our disappointing US results" and up 10 percent for 2012, excepting special items.

Rising affluence of the Chinese consumer is behind China's flourishing casual dining market, according to Yuval Atsmon, a Shanghai-based consultant with McKinsey & Co.

"Look at the population of the upper middle class with an income of more than 100,000 RMB ($15,800) a year. It's now 15-20 million households, but it will be over 75 million households in five years," Atsmon says.

Industrial & Commercial Bank of China Ltd (ICBC), China Construction Bank Corp (CCB) and Bank of China Ltd (BOC) will see dividends cut by 5 percentage points to 35 percent of 2011 profit, Central Huijin said in a statement on its website. The ratio for Agricultural Bank of China Ltd (ABC) will be unchanged at 35 percent, according to the statement.

The above-mentioned four banks are China's biggest lenders. Central Huijin is a unit of China Investment Corp, which operates the nation's sovereign wealth fund that totaled $409.6 billion at the end of 2010.

The 21st Century Business Herald first reported the news on Feb 2. The reduction may add a combined 20 billion yuan ($3.17 billion) to the capital of ICBC and CCB, according to the newspaper.

Central Huijin, set up to hold the government's stakes in the lenders, owned 35.43 percent of ICBC and 67.6 percent of BOC, according to statements from the two banks on Jan 5. Central Huijin owns 44.22 percent of ABC, according to data compiled by Bloomberg, and 57 percent of CCB, according to that lender’s third-quarter report.

The CAAC said in a statement that it had been authorized by the State Council, China's Cabinet, to notify the ban to all domestic airlines.

The statement said the EU's decision to charge flights into and out of EU airports for carbon emission "runs contrary to relevant principles of the United Nations Framework Convention on Climate Change and the international civil aviation regulations."

The EU's Emissions Trading Scheme, which has taken effect on January 1, is one of the widest-reaching measures adopted by any country or regional bloc to regulate emissions of greenhouse gases blamed for climate change. It is estimated that around 4,000 airlines will pay the EU for their carbon emissions.

"China objects to the EU's decision to impose the scheme on non-EU airlines, and has expressed its concerns over the scheme through various channels," the statement said.

"China will consider adopting necessary measures to protect interests of Chinese individuals and companies, pending the development of the issue," the statement said.

It added that China hopes the EU can find proper solutions to the issue with considerations of the overall bilateral relations, the two sides' combined efforts to combat climate change as well as the sustainable development of the international airline industry.

China is now entering an urban age. According to the National Bureau of Statistics, China's urban population reached 690 million in 2011, accounting for 51.27 percent of the total population. Now, more than half of China's population lives in cities and towns. The country has reached a profound historical milestone; it has bid farewell to traditional rural society and joined the urban world.

China's urbanization is an event of global significance not only because the scale and pace of urban expansion is unprecedented in world history, but also because the process of urbanization is deeply embedded in the global economy. China's urbanization is becoming the engine of global economic growth.

Unlike the flocking of farmers into the slums of "third world cities", a process known as "pseudo-urbanization", the swelling of China's urban population is driven by the jobs created in cities in association with the "factory of the world". The pace of urbanization has been determined by the world demand for Chinese workers and the products they make.

China's urbanization is accompanied by substantial industrialization. The intertwined processes of urban growth and industrial development mean that China's urbanization is productive - it is a process of wealth creation.

But the driving force building the world factory has also led to incomplete urbanization. Rural migrants flow into the cities and become urban workers. However, they have not been truly integrated into urban society as urban dwellers or citizens. Rural migrants are uprooted from rural society and become "sojourners" in the cities. The sense of placeless of the migrant population is a profound challenge for Chinese society, which has previously been rooted to the soil.

In the building of cities, local governments get incentives from land revenue, which has fostered the pace of urbanization. Building larger cities is becoming a slogan for economic growth. Large stretches of rural land are being converted into residential areas, attracting speculative investors. Some are becoming ghost towns.

In contrast to unoccupied formal housing, informal housing in "urban villages" is a major source of shelter for millions of rural migrants. Despite under-serviced and low-quality housing, migrants are not necessarily unhappy about their housing conditions in the cities. Although they prefer strongly to stay in cities, their sense of attachment to them is low. The sense of alienation among second-generation migrants is especially strong. And social exclusion is creating a new dualism in cities.

Seeing "urban villages" as the "cancer of cities" and "anomalies of modern society", local governments are keen to improve the image of the cities. The demolition of "urban villages" has thus become a de facto tactic to modernize Chinese cities, without recognizing that informal housing is the only affordable option for rural migrants.

So what went wrong with Chinese urbanization? The problem is the idea of taking a city as a place for production rather than a community of people. We have seen the urbanization of land and jobs, but not the urbanization of people. Ultimately, it is the urbanization of people that should be regarded as the genuine and progressive transition toward the urban world.

Despite their dilapidated appearance, Chinese "urban villages" are not "slums of despair". Most of the people who live there have jobs and work hard to earn a living. Because of convenient locations, in "urban villages" there are usually many shops, restaurants, markets, barbers, and real estate and job agents, targeting the low-income migrant population. What are lacking perhaps are adequate toilets, kindergartens, schools, clinics and other social service facilities.

Forcing informal housing to upgrade into high-standard market housing inevitably dispels the residents to move to places further away where the rent is more affordable. The conditions in "urban villages" may not be ideal but at least they accommodate the normal family life, better than the more orderly and cleaner factory dormitories. "Urban villages" as migrant enclaves serve as a more human environment than the outsider might perceive.

To reduce the resistance toward village redevelopment, the current practice of demolishing villages is aimed at compensating more generously the original villagers, whereas the living conditions of rural migrant renters is hardly considered. To balance the cost of compensation, developers are usually allowed a much higher plot ratio, namely selling additional space in high-rises to generate profit. This approach will eventually turn low-rise village housing upward into a "vertical urban village".

While affordable housing in "urban villages" is disappearing, local governments often choose suburbs or even exurbs to build large-scale affordable housing projects. These projects create a huge financial pressure on local fiscal budget and can potentially lead to the long-term problem of "council estates" or "tower blocks" seen in Western countries. The large scale of concentrated public housing built in the 1960s in these economies has led to high concentration of social deprivation.

Nowadays, many so-called eco-cities are built in suburbs. But developing these places is hardly eco-friendly because of the need for long-distance commuting. Rather, many "urban villages", because of their convenient locations, spontaneously evolve into popular housing markets and densely populated communities. They are close to workplaces and services. Public transport is the norm rather than exception for "urban village" dwellers. So are we missing an opportunity to turn "urban villages" into genuine sustainable and eco-friendly places by demolishing them?

In short, the urban age is full of promises and challenges. For a socially and ecologically sustainable urban future, we must remember that urbanization is ultimately about people and their changing ways of life.

The author is Bartlett Professor of Planning at University College London.

On Jan 30, the World Trade Organization Appellate Body released its reports on China's appeal against a WTO Panel report on its exports of raw materials on July 5, 2011.

The Appellate Body's reports supported some of China's appeals by declaring moot and of no legal effect several Panel claims concerning export quota administration and allocation, export licensing requirements, and a minimum export price requirement. But it upheld the key part of the previous ruling, namely that China's restrictions on exports of key raw materials broke WTO trade rules.

The ruling, if it comes into effect, will put great pressure on China's production and export management of such raw materials as bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorous and zinc.

However, the ruling is not justified. Since the WTO claims it respects the principle of environmental protection, it should allow its members to take measures for that purpose. China, as the world's factory for high-energy consuming and high-polluting products, has long served overseas consumers at the cost of its environment, and it has the right to change this situation.

Of all relevant measures, export restrictions and tariffs are the most direct and efficient means of cutting the production of these materials, as they prevent many uncertainties and unwanted side effects. Of course, taxing the production of raw materials would have the same effect, but this would require complicated supervision and would thus be extremely costly.

The WTO ruling pressures China to abandon the former, leaving it hardly any choice but to adopt the latter.

But even if China accepts the ruling, the "critical shortage" of raw materials claimed by the suing countries, including the United States, will not be relieved.

Besides, we also need to consider the possibility of Western countries once again changing their attitude towards the issue, as their policies have too many times vacillated under the influence of interest groups. Since they sued China for restricting raw material exports during the bull market, they can naturally ask China to restrict such exports when the market turns bear.

On Oct 24 2006, the EU Trade Committee issued a report in which they blamed China for restricting raw material exports; one or two years later they decided to change their stance and threatened to take anti-dumping measures against China's exports of raw materials.

Today they have gone back to pressuring China to export more, but as the bull market has already shown some indications of ending, especially since May 2011, no one can be sure they will not change their attitude yet again. So China should be prepared.

Almost immediately after the WTO ruling came out, Karel de Gucht, the EU trade commissioner, said it would force China to drop its export restrictions on the materials named in the case as well as rare earth elements. But the suing countries should notice that their actions might invoke a chain reaction contrary to their own measures.

A widely recognized fact in the international market is that the US and Europe have the strictest export restrictions. Ever since 1949, the US has not only set up a wide-ranging, strict and stubborn restriction mechanism against China, it has also pressured its allies to follow suit. Even after the Cold War it has maintained export restrictions against China, and pushed the Wassenaar Arrangement, to which all signatories restrict exports of technology to China.

The Western countries are pressuring China on its export restrictions but show no intention of easing their own.

The author is a senior researcher at the Ministry of Commerce's Chinese Academy of International Trade and Economic Cooperation.

Zhang made the remarks during his visit to local bases of the SOEs in central Hubei province from Feb 1 to Feb 3.

He said that SOEs has overcome difficulties and achieved steady and rapid growth in 2011, making a good start for economic development of the next five years.

"China's SOEs will be envisaged with arduous conditions to continue economic growth as the global economic situation will be severe and complicated in 2012." Zhang said.

In order to complete the economic tasks in 2012, Zhang reiterated that the SOEs should strengthen strategic plans and awareness of potential dangers, encouraging SOEs to expand both domestic and international cooperation.

He also urged SOEs to continue structure reform with more investment in innovation and to make efforts to solve the problems in management mechanism in order to make progress.

Premier Wen Jiabao made clear the Chinese government's stance on the European debt crisis during German Chancellor Angela Merkel's fifth official visit to China since taking office.

Wen expressed the urgency and importance of solving Europe's debt crisis and said China is considering "involving itself more deeply in" efforts to address the debt issue.

Europe's debt crisis has been fermenting for more than two years. However, due to its complicated causes, it is very difficult to find a solution that can address both short-term and long-term interests and satisfy all the parties concerned.

At present, Germany's proposal for dealing with the crisis has the upper hand, as it has gradually gained the support of France, another important country in the eurozone. The two have decided to work together to promote the financial integration of the eurozone.

At the summit of the European Union leaders held on Jan 30, all the EU member states, except for the United Kingdom and the Czech Republic, signed a new fiscal treaty designed to ensure tighter deficit and debt discipline, and a consensus was reached on launching the European Stability Mechanism in July.

This is the result of concerted collaboration between Germany and France, suggesting that the EU has the political will to overcome the current crisis, and is willing to make every effort to sustain the eurozone.

With its current heightened debt burden, a policy of austerity is necessary for the EU, but this is far from enough to form a fundamental and effective solution to the debt crisis in Europe. The EU must find ways to promote economic growth.

On January 13, Standard & Poor's downgraded the debt ratings of nine eurozone countries, partly because the eurozone was focusing on budget austerity while ignoring measures to promote economic growth.

The growth prospects for the European economy this year are grim. The Organization for Economic Cooperation and Development has forecasted that economic growth in the 17 countries using the euro will slow to 0.2 percent in 2012, and the 27 members of the EU will register a growth of only 0.6 percent.

The European Commission has put forward the Europe 2020 Strategy in a bid to get out of the crisis and prepare a sustainable and inclusive EU economy for the next decade. Some politicians in Europe have also advocated continuing to explore the potential of the single market, increasing investment in energy and infrastructure, and expanding international trade, and so forth.

There are a number of ways China can help EU countries escape the quagmire of the debt crisis.

At a joint press conference with visiting Chancellor Merkel, Premier Wen said Europeans' own efforts should play a vital and fundamental role in resolving the crisis, and the EU, as a whole, should continually push forward systematic, structural and fundamental fiscal and financial reforms in addition to adopting emergency bailout measures, and feed the international community with more uniform and defined ideas to solve the problem

On the other hand, he said Chinese authorities are studying and assessing more proactive efforts to resolve Europe's debt issue by financing the IMF and through the European Financial Stability Fund, the European Stability Mechanism and other channels.

Without doubt, China's offer of bailout funds and the purchase of European bonds are what European countries want most. But this is not the only way that China can lend a hand. For many European countries, including Germany, the expansion of international trade is essential to maintain economic growth.

In 2010, the Sino-German bilateral trade volume reached $142.4 billion, comprising nearly 30 percent of China's total trade volume with the EU. It is worth noting that German exports to China increased by 34.9 percent. The strong growth momentum of its exports of automobiles, machinery and chemical products to China strongly fueled Germany's economic growth. Last year, the bilateral trade volume reached a record $169.1 billion.

At a Sino-German business meeting with the participation of a number of German and Chinese entrepreneurs in Guangzhou, Premier Wen and Chancellor Merkel discussed initiatives to further promote bilateral economic and trade relations.

Merkel said that Germany welcomes Chinese companies increasing their investment in the country. But in return China wants Germany to open up its technology market, and Germany and other European countries to improve their investment environment, and refrain from politicizing economic behavior.

Overall, Sino-EU relations have witnessed healthy development in recent years. As two of the world's most important economies, strengthening economic cooperation will also have a significant impact on world economic growth.

The author is the director of the Institute of European Studies at the China Institutes of Contemporary International Relations.

In its 2012 working points promulgated late Friday, the State Administration of Work Safety (SAWS) called for the application of high-tech devices such as information platforms and satellite positioning equipment in order to prevent deadly accidents.

"Governments and enterprises should establish as soon as possible a comprehensive information platform which tracks hidden dangers in the workplace... Transport authorities should boost the installation of satellite positioning equipment on long-distance coaches, vehicles carrying dangerous chemicals and school buses," said the document released on the SAWS' website.

This year will witness the 18th National Congress of the Communist Party of China (CPC). The CPC leadership has called for outstanding economic and social progress to pave the way for a successful CPC congress.

Official data showed workplace accidents claimed a total of 75,572 lives in China last year. The calculation included traffic accidents arousing much public attention.

Last July, a high-speed train collision in eastern Zhejiang province killed 40 passengers and injured 172 others. Design flaws and mismanagement were blamed for the disastrous crash.

In December, a school bus overturned and fell into a ditch in East China's Jiangsu province, killing 15. Another school bus accident in the western Gansu province killed 21 people in November.

According to the administration's figures, 2,433 miners were killed in coal mine accidents in China in 2010, compared with 2,631 in 2009. Figures for 2011 are so far not available.

"Despite the decrease in colliery accidents, local authorities must have a clear understanding of the extreme importance of coal mine safety, especially ahead of the coming two sessions," said Zhao Tiechui, deputy director of the SAWS on Friday.

The two annual sessions of the National People's Congress and the National Committee of the Chinese People's Political Consultative Conference are typically held in March.

The State Council, or Cabinet, admitted at a meeting in September that the country faces an arduous task in improving work safety, as rapid industrialization and urbanization have made workplace accidents more commonplace.

By 2015, companies across the country should improve their ability to prevent accidents, while government departments should improve their ability to supervise these companies, the cabinet said in a statement released after the September meeting.

Tubtantanpel (left) is all smiles during the party at his new home in Shelrong village, the Tibet autonomous region. The 74-year-old and his family received a subsidy of 88,000 yuan from the government to build the two-story house (right), which was designed to blend traditional Tibetan style and modern convenience. [Photo / China Daily]

New homes and roads bring more opportunities to farmers, herders

LHASA - As each guest came through his front door on Tuesday, Tubtantanpel filled his glass with homemade barley liquor, made a toast and then drained it in one.

For the 74-year-old and his family, it was a time for celebration.

Not only was it a lucky day on the traditional Tibetan calendar, but they were also hosting more than 100 neighbors for a house-warming party.

"Thanks to the government's housing project, we've been able to move from a small, adobe house to this 200-square-meter, two-story home," said the smiling pensioner, who like most Tibetans uses only his given name.

Along with a government subsidy of 88,000 yuan ($14,000), the family spent 30,000 yuan in savings to construct their new home in Shelrong village.

They also invested 20,000 yuan to buy furniture in time for Losar, the Tibetan New Year, which falls on Feb 22.

Tubtantanpel's village is in Quxu county, on the outskirts of Lhasa, capital of the Tibet autonomous region. As of Tuesday, all but one of the 22 households that live here are in new homes.

"The last one is finished and the family is just waiting for a date to move in," said Tashi, the village head, during the party.

He added that all the houses were carefully designed to blend Tibetan style and modern convenience.

"It has helped reduce the health risks that are caused by poor living conditions, such as when people used to live under the same roof as their livestock," said the 52-year-old. "Fire hazards are also reduced, as people no longer store fodder randomly and electrical wires aren't dangerously intertwined anymore."

New highways have helped connect the village to the outside world, while most families now have cable TV receivers provided by the government.

An expressway linking Lhasa's suburbs with its airport in Gonggar was completed in July, and a railway line from the city to Xigaze has been under construction since September 2010.

"With the improved living environment and transport links, people have greater opportunities," Tashi said.

And the farmers and herdsmen of Quxu are making sure they take them.

Like many others, Tubtantanpel accepted the local authority's offer to borrow 100,000 yuan at a low interest rate. Along with 300,000 yuan in savings, he used the money to buy a truck and began transporting sand and gravel to construction sites.

Last year, the family earned 300,000 yuan from the business. They also run a convenience store from their home and farm a hectare of land.

When work resumes after Losar, Tubtantanpel said he expects to be able to pay back the government loan with interest within just a few months.

"I have no worries about the future," said Dawa, Tubtantanpel's 63-year-old wife. "I only hope my family will stay healthy and safe, and that the country maintains its peace and stability."

Grain harvests in Quxu in recent years have been abundant, with the family reaping 4,760 kilograms of grain last year. They sold 4,200 kg to buy new furniture, but still have two rooms stocked with 6,000 kg of barley, wheat, peas and rapeseed in nylon bags, enough to last them two years.

Traditional decor

Tubtantanpel and Dawa live with their son, daughter-in-law and two grandchildren. Their eldest daughter lives and works in downtown Lhasa, while their youngest son's home is about 160 kilometers away in Shannan.

Loyeshi, the couple's nephew, who is a Living Buddha at a monastery in Shannan, returned for the party with three other monks.

The family uses a room on the top floor as a Buddhist pray room, complete with a Buddha statue, colorful thangka (scroll paintings) and shimmering butter-oil lamps.

Their spacious living room is decorated with ornaments of vibrant colors and delicate designs, while on display are also eight objects related to Tibetan Buddhism, including a lotus flower, prayer wheel and a pair of goldfish.

Yangjan, one of two women who helped give out barley liquor at the party, said the hosts had prepared eight barrels of wine, each containing 50 kg, and many cases of beer. It ensured guests were kept in good spirits as they chatted and played cards or mahjong.

A buffet of 32 dishes was offered, including ginseng cooked with twi (a desert made of butter, cheese and brown sugar), spicy beef paste and Nepali lamb curry, as well as cuisines from Sichuan and Hunan provinces.

The meal ended with a toasting ceremony in which young women in Tibetan dress offered wine in silver bowls. Each guest held a bowl with the right hand and used the middle finger of the left to splash drops of wine into the air three times, a gesture to honor Buddha, Buddhist dharma and the monks, and to bring good luck to the hosts.

Gyaltsan, 24, came to the party in a modern outfit of a down jacket, jeans and hiking shoes, but topped it off with a traditional Tibetan hat.

"I have prepared gifts and a khata (Tibetan scarf) for the many parties we will have during this time, from Spring Festival to Tibetan New Year, right until the busy farming season begins," he said.

Toward the end of the party, Tubtantanpel added: "Tibetan farmers lead a peaceful and happy life, and better yet is to come, so long as there are no natural or man-made disasters."