Foreign Policy

• Dissident Chen Guangcheng accuses NYU of giving in to Communist Party (SCMP)
• Beijing's 31 ways to win over Taiwan hearts and minds (SCMP)
• China, EU seek trade dispute settlement (Xinhua)
• Build-up on remote Japanese atoll raises strategic questions (SCMP)
• FTA will help ease tensions (China Daily)
• China ramps up Mideast peace efforts (Global Times)
• Philippines sends fresh troops to shoal at centre of dispute with China (SCMP)
• Chinese president meets UN chief (Xinhua)
• China, DPRK hold strategic dialogue (Xinhua)
• Xi Jinping seeks political solution to solve maritime dispute with Vietnam (SCMP)
• Talks establish fishery hotline (China Daily)
• President Xi hints at more assertive foreign policy (SCMP)
• Quantum communications system was used at Party Congress in Beijing (SCMP)

Domestic Policy

• Strange workings in China courts suggest selective leniency (SCMP)
• Xi looks to legacy of Mao for inspiration to solve corruption (SCMP)
• China among world's worst in human trafficking, may lead to US sanctions (SCMP)
• Shenzhou X astronaut gives lecture today (China Daily)
• 4.7-trillion-yuan plan to double mainland road network by 2030 (SCMP)
• Concern at speed of Hainan trial that convicted pair of raping 6 girls (SCMP)

Tibet

• Quarrel led to Tibetan's suicide (Xinhua/Global Times)

Hongkong

• Hongkongers feel less 'Chinese', more 'Hong Kong' as tensions with Beijing rise (SCMP)

Taiwan

• Taiwan, Philippines agree to avoid force in fishing disputes (Global Times)

Economy

• China's interbank rate back to normal level (Xinhua)
• China's PV sector may see reshuffle: experts (Xinhua)
• Sinopec looks north for oil (China Daily)
• PBOC signals no policy loosening (Xinhua)
• China manufacturing slumps to 9-month low as demand falters (SCMP)
• BOC denies monetary default report (Xinhua)

DPRK and South Korea

• US to consult Japan and South Korea after North's latest offer of talks (SCMP)
• North Korea calls US 'kingpin' of rights abuse after surveillance revelations (SCMP)
• Kim Jong-un skirts UN ban with luxury yacht (SCMP)

Mongolia

• A total of 4,248 Mongolian nationals residing abroad have participated in the 2013 Presidential Election of Mongolia (Info Mongolia)
• President of the UN General Assembly to visit Mongolia (news.mn)

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Dissident Chen Guangcheng accuses NYU of giving in to Communist Party (SCMP)
2013-06-17
Chen Guangcheng, the Chinese dissident who fled his home country to become a visiting scholar at New York University, accused the school of asking him to leave because of “unrelenting pressure” from China. NYU denied the claim, saying that it had said last year before the blind dissident arrived that his fellowship would last up to a year and end sometime this summer. [...] In a statement, Chen thanked NYU for its hospitality and “good support”, but accused it of giving in to the Communist Party of China. “In fact, as early as last August and September, the Chinese Communists had already begun to apply great, unrelenting pressure on New York University, so much so that after we had been in the United States just three to four months, NYU was already starting to discuss our departure with us,” he wrote. Chen, who was born blind and taught himself law, was a campaigner for farmers and disabled citizens. He exposed forced abortions in China before he was placed under house arrest in Shandon province. He has continued to be critical of China's human rights record since his arrival in New York in May last year with his wife and two children. [...] John Beckman, an NYU spokesman, described Chen's claims as “both false and contradicted by the well-established facts”. “Mr Chen's fellowship at NYU and its conclusion have had nothing to do with the Chinese government. All fellowships come to an end,” Beckman said in a statement. NYU said Chen had received offers from two other academic institutions. Fordham University Law School in New York said on Friday it was in talks with Chen, and the identity of the second institution has not been made public. Beckman said NYU had started talking with the Chens about changes in living arrangements months ago. The school has provided them services that include housing, food, insurance and healthcare, English lessons and family support, he said. NYU has been building a campus in Shanghai, and received final approval from China's education ministry to begin construction and student recruitment last autumn. ^ top ^

Beijing's 31 ways to win over Taiwan hearts and minds (SCMP)
2013-06-17
Beijing has unveiled a basket of initiatives to deepen economic, cultural and social exchanges across the Taiwan Strait, following a high-profile meeting last week between President Xi Jinping and Wu Poh-hsiung, the honorary chairman of Taiwan's ruling Kuomintang. Wu, who is believed to act as a proxy for Taiwan's President Ma Ying-jeou, also expressed Taiwan's desire to join Asia's Regional Comprehensive Economic Partnership and to participate in other global activities. The director of the mainland's Taiwan Affairs Office, Zhang Zhijun, said yesterday at the opening of a week-long high-level forum on cross-strait exchanges in Xiamen, Fujian province that the mainland would announce 31 measures this week to cultivate cross-strait interactions. Among the six measures that he disclosed was the access that Taiwanese would be given to 10 categories of accreditation tests on the mainland, as well as the establishment of 10 cross-strait cultural exchange centres on the mainland. Further, the mainland's Supreme People's Court will grant legal status to civil arbitration agreements formulated by arbitration committees in Taiwan. The initiatives announced at the Fifth Straits Forum came as the latest attempt to promote people-to-people exchanges across the Taiwan Strait amid deep-rooted distrust. Speaking on behalf of Xi, the chairman of the Chinese Political People's Consultative Conference, Yu Zhengsheng, said the mainland would strive towards consolidating peaceful mainland-Taiwan ties, while welcoming former pro-independence Taiwanese to visit the mainland. "Our new leadership will continue to follow correct policies and dedicate itself to consolidating the political, economic, cultural and social foundations for the peaceful development of cross-strait relations," he said. KMT vice-chairman Lin Fong-cheng and Taicheng Deputy Mayor Cai Bing-kun are among the 1,700 delegates from across the Taiwan Strait attending this week's forum. National Tourism Administration chairman Shao Qiwei also announced 13 more mainland cities where residents may apply for self-guided tours in Taiwan, an extension of a pilot programme introduced a few years ago. In a speech in the United States on Thursday, Su Tseng-chang, chairman of Taiwan's main opposition Democratic Progressive Party (DPP), said his party was not only willing to open up a dialogue with mainland authorities but also looked forward to engaging mainland people, according to the Taiwan-based Want Daily. But he reiterated that his party would never consider Taiwan a part of China and that both sides of the Taiwan Strait should maintain that status quo. Li Jiaquan, a senior researcher specialising in Taiwan affairs at the Chinese Academy of Social Sciences, said the raft of initiatives served to deepen cross-strait exchanges but the process of advancing cross-strait relations would be long and slow because of political distrust and the fact that Taiwan political decisions were driven by voters. But citing the row between Taiwan and the Philippines over the shooting death of a Taiwanese fisherman last month, Li said the Philippines could no longer disregard Taiwan as it used to do because Taiwan now had the mainland's support. "Many Taiwanese might still be reluctant to regard Taiwan and the mainland as one family, but Taiwan is benefiting from the fact that the mainland is behind the island," he said. "But it'll take many, many such initiatives and exchanges to help people in Taiwan realise that.". ^ top ^

China, EU seek trade dispute settlement (Xinhua)
2013-06-18
China and the European Union (EU) will hold a meeting later this week to discuss problems concerning trade and economic cooperation between the two sides, a Chinese ministry spokesman said Tuesday. The current photovoltaic (PV) trade dispute between the two sides is among the issues to be addressed during the dialogues, which are set to take place on Friday, said Shen Danyang, Ministry of Commerce spokesman. Earlier this month, the EU imposed an interim anti-dumping duty of 11.8 percent on imports of all Chinese solar panel products, including panels, cells and wafers. If both sides fail to come to an agreement, the duty will be raised to an average of 47.6 percent two months after it went into effect. Since the EU's preliminary ruling, the Chinese government and PV enterprises have kept close contact with the European Commission on "price undertaking" talks, which are currently progressing in a positive manner, the spokesman said. Shen said the two sides should proceed from the general situation of maintaining China-EU cooperation and take pragmatic attitudes. He added that China and the EU should cherish this opportunity to unite their efforts toward reaching a mutually acceptable agreement. ^ top ^

Build-up on remote Japanese atoll raises strategic questions (SCMP)
2013-06-19
In a lonely corner of the Pacific, 1,740 kilometres south of Tokyo, a tiny but potentially crucial piece of Japanese territory is now rising from the waves. Photographs emerged this week showing that construction of a 160-metre dock on the atoll of Okinotorishima is well under way. The costly piece of infrastructure, which will dwarf the uninhabited land mass that it is designed to serve, is likely intended to help Japan argue for the extension of its exclusive economic zone a further 200 nautical miles into the Pacific. China is not disputing that the territory is Japanese. The concrete dock is being constructed just outside the coral reef off the western end of Okinotorishima and will be used to unload fuel, water, construction materials and other supplies as development of the atoll continues. Japan insists that Okinotorishima, halfway between Taiwan and Guam, is already an island. China says it is nothing more than a reef; it has only nine square metres of dry land. The Tokyo metropolitan government, which administers Okinotorishima, announced in early 2010 that it would improve its infrastructure, constructing a lighthouse and navigational facilities. Meanwhile, efforts have been under way for several years to grow more coral within the lagoon to make the atoll grow into an unambiguous island. China, however, swiftly denounced the proposals as a breach of international maritime law. According to Beijing, the United Nations Convention on the Law of the Sea makes it clear that Okinotorishima is merely a reef that cannot be used by Tokyo to extend its continental shelf or EEZ. That has not dissuaded Tokyo, however, and the national government is sinking 75 billion yen (HK$6.1 billion) into the development plan. The next phase will be the building of a road to link the dock with Kita-Kojima, one of the two pinpricks of land above the high-water mark. The reason they do not disappear beneath the waves is because they are protected by concrete embankments and blocks. Officials in Tokyo confirmed yesterday that no new objections to the work on Okinotorishima have been raised by Chinese officials. "That is probably not surprising as Beijing is making claims on pieces of real estate in the South China Sea that look suspiciously similar to Okinotorishima," said Jun Okumura, an international relations analyst with the Eurasia Group. "China is not disputing that the territory is Japanese so they don't really care what we do with it; they are making the point that by international law, no matter how much concrete you pour it will never be an island," he added. If it remains merely an atoll, that means that Chinese fishing boats will be able to operate in the surrounding waters and, theoretically, Chinese companies will be able to exploit any natural resources that can be dredged up from the seabed around the atoll. Experts believe that a crust of manganese coats the ocean floor around Okinotorishima and would be a source of nickel, cobalt, platinum and a range of other elements. Another consideration for Japan, said Robert Dujarric, director of the Institute of Contemporary Asian Studies at the Japan campus of Temple University, are "naval concerns". With tensions rising between China and Japan over other islands in the Pacific, it is not inconceivable that Japan's Maritime Self-Defence Forces might consider a permanent presence on Okinotorishima, Dujarric said. ^ top ^

FTA will help ease tensions (China Daily)
2013-06-19
The free trade talks involving China, Japan and South Korea must be accelerated to help ease political tensions and meet challenges from other FTAs, officials said on Tuesday. "Whatever the political relations, the FTA will go on as the three sides pursue win-win-win results and mutual economic benefits," Shin Bong-kil, secretary-general of the Trilateral Cooperation Secretariat, told China Daily. The secretariat was established on Sept 1, 2011, to promote peace and common prosperity among the three countries. Negotiators had their first round of talks on a free trade agreement in Seoul in March despite turbulent political relations in East Asia. Once established, the FTA will forge a common market of 1.5 billion people with a combined GDP of $15 trillion to become the world's third-largest regional market, following the North American FTA and the European Union. Yu Jianhua, China's deputy international trade negotiator at the Ministry of Commerce, said at a seminar in Weihai, Shandong province, on Tuesday that the second round of negotiations will be held at the end of July in Shanghai and the third will be held in Japan at the end of this year. The FTA will act as a stepping stone for economic integration in East Asia, he said. Shin noted that relations among the three countries are undergoing turbulence and political tensions, but upon economic interdependency there is "a growing demand for a free, open and rule-based multilateral trading system to boost the economic welfare of the three countries". […]The three major economies in East Asia are aiming at a comprehensive and high-level agreement, covering not only trade in goods, services and investment, but also areas such as intellectual property, transparency, e-commerce and environment, said Woo Tae-hee, assistant minister for trade of South Korea. "How to properly handle sensitive areas will be the challenge and difficulty for future negotiations and will demand great efforts to overcome domestic obstacles," Yu said. Experts and academics said earlier that these obstacles may include agriculture, manufacturing and state sectors. […] Shin said strong political will and adherence to a win-win-win result are essential to the success of consensus building in sensitive areas. In addition to political tensions and obstacles from sensitive areas in each country, the FTA is also subject to pressure from other trade agreements. Before the start of the G8 summit in Lough Erne, Northern Ireland, the EU and the United States on Monday launched formal negotiations on a vast trade pact, which could be the biggest bilateral deal in history, and the first round of negotiations would take place in Washington next month. […] Exporters in Japan and South Korea will also be affected as the EU and the US are the final destinations for many Japanese and South Korean exports, even though they are manufactured in China, she said. The FTA involving China, Japan and South Korea will probably be concluded after the Trans-Pacific Partnership Agreement — the US-led trade pact in the Asia Pacific region — which is set to be finished at the end of this year, according to Shin. China and South Korea are not covered by the TPP. ^ top ^

China ramps up Mideast peace efforts (Global Times)
2013-06-19
China's point man on Middle East affairs Tuesday said the country's new administration is adopting an active approach in supporting the Palestine-Israel peace process, but has no desire to compete with the US for influence in the region. Wu Sike, China's special envoy to the Middle East, made the remarks on the sidelines of the UN International Meeting In Support of Israeli-Palestinian Peace in Beijing. It was the first time China has hosted such a meeting, which came on the heels of simultaneous visits to the country by Palestinian President Mahmoud Abbas and Israeli Prime Minister Benjamin Netanyahu last month and a four-point proposal for a solution to the Palestine question proposed by President Xi Jinping. Although the two visiting leaders did not hold talks in the Chinese capital, it left the world to wonder how great a role Beijing could play in brokering peace in one of the world's longest continuous conflicts. Addressing the opening ceremony of the two-day conference, Abdou Salam Diallo, chairman of the UN Committee on the Exercise of the Inalienable Rights of the Palestinian People, cited China's economic, diplomatic and political weight, its status as a UN Security Council permanent member and the friendly ties with both parties. […] Wu, who has been making visits to the Middle East, said China has put a lot of effort into pushing for peace, and the new government is consistent in its policy, but has exhibited a more open approach. […] In fact, convening the meeting in China was a choice by the Palestinians to find alternatives to the US-dominated diplomatic endeavor in the region. Bassam al-Salhi, a representative for Palestine to the meeting and head of the Palestinian People's Party, told the Global Times that China should be added to the Quartet, namely the US, UN, EU and Russia, to mediate, as the US has failed to find a path to peace. Ahmad Tibi, deputy speaker of the Israeli Knesset and leader of the Arab Movement for Change, an Arab party in the Jewish state, told the Global Times that China should have a "more tangible and active role" to push both parties to implement the vision of a two-State solution, while calling on the global community to pressure the Netanyahu government. Responding to claims that China's growing engagement in the Israeli-Palestinian conflict aims to replace the US, Wu said China doesn't have the capability or the desire to exclude others and China hopes to work with other parties to facilitate the resumption of peace talks. […] In recent months, US Secretary of State John Kerry paid several visits to the Middle East in a bid to revive peace talks following a four-year deadlock. Arab leaders also made positive signals by reaffirming the Arab Peace Initiative. In a keynote speech to the meeting, Oscar Fernandez-Taranco, UN assistant secretary-general for political affairs, regarded the coming weeks as "critical and difficult," warning against missing the current window of opportunity. The UN official noted tensions mounting in the West Bank over the expansion of settlements, which saw a 176 percent hike year-on-year in the first quarter of 2013, and Palestinian prisoners in Israeli jails. Diallo said the ball is now in the Israeli court. The Israeli embassy in China said to the Global Times that the peace process could be achieved "only through direct dialogue between the two leaderships without any preconditions to the negotiations." Diplomats from over 50 embassies in Beijing, experts and delegates from international organizations attended the meeting. The Israeli embassy did not send a representative to the event, even though it had been sent an invitation. ^ top ^

Philippines sends fresh troops to shoal at centre of dispute with China (SCMP)
2013-06-19
The Philippines has deployed a fresh batch of marines and supplies to a shoal in the disputed South China Sea, where a Chinese warship and surveillance vessels appeared last month and triggered a new standoff in the strategic waters, the Philippine defence secretary said on Wednesday. The new contingent of Filipino marines replaced troops at the Second Thomas Shoal, where the arrival last month of Chinese ships sparked diplomatic protests from the Philippines. Defence Secretary Voltaire Gazmin said that the shoal lies within the Philippines' internationally recognised 200-nautical mile (370-kilometre) exclusive economic zone. China claims almost the entire South China Sea as its own and last year took control of another shoal in the Philippines' economic zone, prompting Manila to seek UN arbitration. The Filipino marines at the Second Thomas, locally known as Ayungin Shoal, have been stationed in a decrepit military hospital ship that ran aground in 1999 on the shallow coral outcrop and has since become an awkward symbol of Philippine sovereignty. Gazmin said he had discussed the fresh Philippine deployment with Chinese Ambassador Ma Keqing recently. Ma raised concerns that the Philippines was planning to erect concrete structures at the shoal to reinforce its territorial claim, but Gazmin said he had assured her there was no such plan. Gazmin said that he discussed the issue with Ma to prevent a possible confrontation between Chinese and Filipino forces, but stressed that the Philippines was free to undertake any activity in the shoal without notifying China. “It's ours,” Gazmin said by telephone. He said he has discussed the tense situation at the shoal with visiting US security officials, including Secretary of the Navy Ray Mabus, at a Manila meeting on Tuesday. “They're really concerned and want to be sure that this will be resolved without use of force,” Gazmin said. The Second Thomas Shoal lies near the Spratlys, a chain of resource-rich islands, islets and reefs contested by China along with Brunei, Malaysia, the Philippines, Taiwan and Vietnam. China and the Philippines figured in a months-long standoff over another territory, the Scarborough Shoal, which lies north of the Spratlys in April last year. Philippine ships later backed off from Scarborough, giving China effective control of the shoal. China published a new map in January that included for the first time more than 130 islands and islets in the vast waters that were not featured in its previous maps, according to the official Xinhua News Agency. ^ top ^

Chinese president meets UN chief (Xinhua)
2013-06-19
President Xi Jinping on Wednesday met with UN Secretary-General Ban Ki-moon. Xi said people around the world have pinned their hopes on the UN on multiple occasions, as it has conducted a number of important missions. Profound and complicated global changes require all UN members to work together to address difficulties and challenges, Xi said. Xi called for the UN to uphold peace and development, adhere to fairness and justice and play a bigger role in promoting cooperation and common prosperity. Xi briefed Ban on China's development goals, saying China and the UN need each other. Xi underscored the importance China has placed on the UN, pledging to firmly support the UN. As a permanent member of the UN Security Council, China has heavy responsibilities to assume and has the capability to assume them, Xi said. China will step up its efforts to promote the peaceful settlement of international disputes, support the UN's millennium development goals, work with other parties to tackle climate change and make more contributions toward world peace and human development, Xi said. The UN appreciates China's support and participation in UN peacekeeping missions, as well as its efforts to help attain the UN's millennium development goals, Ban said. Ban also congratulated China on the successful launch of the Shenzhou-10 spacecraft. Ban called for China to play a bigger role in global and regional issues. Xi and Ban also exchanged views on the Syrian issue and the situation on the Korean Peninsula. Foreign Minister Wang Yi also held talks with Ban on Wednesday. Wang described the UN as an international organization with significant representation and authoritativeness, saying China will participate more actively in the UN. Ban lauded China's leading role in dealing with international issues and called for stronger UN-China cooperation in efforts to tackle global challenges. Ban arrived in Beijing on Tuesday for a four-day visit. ^ top ^

China, DPRK hold strategic dialogue (Xinhua)
2013-06-19
Chinese Vice Foreign Minister Zhang Yesui said on Wednesday that denuclearization on the Korean Peninsula conforms to the interests of all concerned parties. Zhang made the comments at a strategic dialogue between foreign ministries of China and the Democratic People's Republic of Korea (DPRK), which he co-chaired with his DPRK counterpart Kim Kye Gwan in Beijing. Zhang said China attaches great importance to bilateral relations and is ready to work with the DPRK to promote the long-term, sound and stable development of these relations. He said it is in the interests of all parties concerned to realize denuclearization on the Korean Peninsula, safeguard its peace and stability and resolve relevant issues through dialogue and consultation. China supports dialogues among parties concerned and hopes to resume the six-party talks at an early date, he said. Kim said the DPRK values the bilateral friendship and is willing to work with China to advance friendly cooperation. It is the wish of the deceased DPRK leader Kim Il Sung and Kim Jong Il to realize denuclearization on the Korean Peninsula, he said. The DPRK is willing to hold dialogues with all related parties, he said, adding that the country is also ready to join in any form of talks, including the six-party talks, in order to resolve the nuclear issue through peaceful negotiations. ^ top ^

Xi Jinping seeks political solution to solve maritime dispute with Vietnam (SCMP)
2013-06-20
President Xi Jinping told his Vietnamese counterpart, Truong Tan Sang, that both sides should demonstrate their determination to forge a political solution to their territorial dispute in the South China Sea. Xi said the two countries should ensure their relationship does not veer off the right track. "China and Vietnam must both act in a spirit of responsibility towards history and their people, put the broader picture of Sino-Vietnam friendship and bilateral development first, make up their minds to... push for a political resolution to the South China Sea issue and prevent it from affecting ties," Xinhua quoted Xi as saying. It was their first meeting since Xi became president in March. Xi said Beijing would work with Hanoi in pushing their negotiation progress over demarcating waters outside the Gulf of Tonkin. But he reiterated China's stance that disputes in the South China Sea should be resolved directly between the claimants and rejected outside involvement. Sang said both countries should work together in maintaining maritime peace and stability, so that it would not affect bilateral relations. "The two countries have a deep traditional friendship, and this is a treasure for the two peoples [to cherish]." After their meeting, both sides signed several agreements, including one strengthening strategic co-operation and another on Chinese banks providing low-interest loans to Vietnamese firms. The Associated Press said the countries' agriculture ministers also signed an agreement to set up a hotline to resolve fishing incidents in the South China Sea. Sang's delegation, which includes Deputy Prime Minister Nguyen Thien Nhan, is also planning a visit to Guangdong. Professor Mark Thompson, director of the University of Hong Kong's Southeast Asia Research Centre, said Vietnam was in a dilemma. "On the one hand, the leadership wants to be close to China, but on the other hand they're worried about the reaction of their domestic audience." If the leadership was perceived as being too appeasing towards Beijing, popular discontent and protests might pose a threat to the Vietnamese regime, Thompson said. But Hanoi might also be looking to China for a developmental role model for its own industrialisation. Dr Yang Danzhi, a researcher at the Chinese Academy of Social Sciences' Institute of Asia-Pacific Studies, said he believed Vietnam might be part of a larger geopolitical balancing act. "We should understand China-Vietnam relations under the context of great power relations," Yang said. "Many countries are waiting for middle powers like Vietnam to adjust their policies accordingly. It's a domino effect.". ^ top ^

Talks establish fishery hotline (China Daily)
2013-06-20
Agricultural authorities from Beijing and Hanoi agreed on Wednesday to establish a fishery emergency hotline, as the leaders of the two countries vowed to prevent disputes from derailing ties. On his first official trip to China, Vietnamese President Truong Tan Sang and President Xi Jinping also witnessed the signing of another nine agreements in areas including defense, economy and public diplomacy. Analysts said there were concrete results for both leaders, which laid a sound foundation for bilateral ties and an early resolution of disputes. […] "With the establishment of the fishery hotline, each side should be informed of any detainment or treatment by the other side involving fishermen or fishing boats within 48 hours," said Wang Ying, director of the Department of International Cooperation at the Ministry of Agriculture. The agreement did not mention territorial issues, and "it aims to facilitate working practices and is conducive for dealing with emergencies", Wang said. China and Vietnam have seen their ties overshadowed by accidental maritime confrontations, which in some cases were not reported in a timely manner to the other side. "The agreement is a promise, which needs a good implementation," Wang said. Observers said the overall relationship between the two neighbors is expanding, the only exception being the South China Sea issue — in which both sides are endeavoring to make progress. […] In 2011, Beijing and Vietnam signed the Agreement on Basic Principles Guiding the Settlement of Maritime Issues, laying a foundation for friendly consultation on and a proper solution to the maritime issues. ^ top ^

President Xi hints at more assertive foreign policy (SCMP)
2013-06-21
When President Xi Jinping held talks with UN secretary-general Ban Ki-moon in Beijing on Wednesday he urged the United Nations to be "fair and just", indicating that Beijing would like to play a more prominent role in international affairs. Xi and Ban discussed the conflict in Syria and North Korea's nuclear programme, but Xi also outlined China's expectations of the UN, calling on its members to scrap the "zero-sum mindset". The UN should "uphold the principles of impartiality and righteousness" and "speak in a fair manner", Xinhua quoted Xi as saying. In remarks that showed China's growing assertiveness in foreign policy, Xi said China bore heavy responsibilities as a permanent member of the UN Security Council, but the nation "has the capability" to fulfil the mission. China would step up its efforts to promote peaceful settlement of international disputes, and work with other nations to tackle climate change, Xi added. Observers said Xi's remarks signalled a shift in China's diplomatic tactics, with his predecessors having always stressed that China was still a developing country and was reluctant to take on more responsibilities. "The remarks indicated that China does not want to be the supporting actor in global affairs, and it wants to be in leading positions," said Zhao Junjie, an international relations specialist at the Chinese Academy of Social Sciences. China has been calling for a multipolar world order, arguing that the existing international governance structure is dominated by major powers. Beijing also showed frustration when it was condemned, along with Russia, last year for vetoing UN Security Council resolutions against Syria. "Beijing believes its voice and that of the developing nations are not heard enough in the UN and wants it to reform," Zhao said. Jin Canrong, a specialist in international relations at Renmin University, said China wanted a bigger voice in the UN because it had more power and money. "Xi has a more straightforward personality, and he feels confident and proactive in terms of foreign policy," he said. "China's foreign policy used to be reactive but now it's becoming more proactive - regionally as well as globally." Mathieu Duchâtel, head of the China and International Peace and Security Project at the Stockholm International Peace Research Institute, said Xi's remarks were consistent with his heightened focus on foreign policy. "China prioritises making sure the UN Security Council does not function as an instrument for the US and European countries to promote their own interests," he said. Duchâtel said China wanted the UN to be the main player in international affairs, to balance the US-led North Atlantic Treaty Organisation. ^ top ^

Quantum communications system was used at Party Congress in Beijing (SCMP)
2013-06-21
Beijing was so worried about cyberspies during last autumn's party congress that it turned to a secret, state-of-the-art telecommunications network to handle sensitive information. Use of the next-generation quantum encryption technology at the once-in-a-decade leadership transition was revealed in a passing remark reported last week in People's Daily. Chinese scientists are well aware of how vulnerable data can be when it is being transmitted, describing it as the weakest link in their security. Revelations by whistle-blower Edward Snowden that the US is targeting "network backbones" - through which huge amounts of data are transmitted - confirmed their fears. Now all major countries are pouring resources into developing large-scale quantum networks. China came late into the game, but it is now the subject of a major national project. And Beijing plans to launch the world's first quantum communications satellite in 2016, a top mainland researcher told the South China Morning Post. In quantum mechanics, connections are made between two points when photons of light become entangled. This creates an encryption key that can be used to send the message through normal channels. But if somebody tries to spy on that quantum communication, the connection is so fragile it disrupts the entanglement - letting both the sender and the receiver of the message know someone is snooping. For years, Beijing has prohibited key government institutes and agencies from handling sensitive information by connection to the global internet. […]. Even before the Snowden incident, Beijing leaders had used prototype quantum networks on critical occasions. The latest example was during the party congress last year, which saw Xi Jinping succeed Hu Jintao as party chief. In the days leading up to the congress, intense horse-trading and negotiations among political leaders required an absolutely safe channel for communication. But scientists still have one serious hurdle to overcome before they can apply the technology on a larger scale. Professor Bao Xiaohui, a quantum information expert with the National Laboratory for Physical Sciences at the Microscale in Hefei, said most quantum communications networks in use today can operate over a maximum distance of only about 50 kilometres. […] To achieve long-distance quantum communication, Bao's team is building what is expected to be the world's first quantum communications satellite. Because photons can travel long distances in the open, especially in space, they could carry the quantum information between two locations thousands of kilometres apart with uplink and downlink to the satellite. Detailed information on the satellite is classified, but Bao says it will look completely different from communications satellites today that rely on microwaves. […] Bao says the quantum satellite's signals cannot be intercepted. Unlike radio waves that would propagate as they travelled, the photons would aim precisely at a specific receiving station. Any attempted interception would be detected. But it is difficult to judge when quantum communication will become available for use by ordinary people. Existing encryption and protection methods are still good enough for the public, Bao says. Tang Wei, cybersecurity engineer with mainland anti-virus company Rising, says that security technology, no matter how advanced it is, can only be as good as the person handling it. "No technology is absolutely safe because all technology is used by humans," he said. "With an insider, you can get into the most heavily guarded system without even touching a keyboard.". ^ top ^

Strange workings in China courts suggest selective leniency (SCMP)
2013-06-18
Three recent news stories conjure up a messy picture of the mainland's rule of law. Liu Hui, brother-in-law of jailed Nobel peace laureate Liu Xiaobo, received an 11-year jail term on June 9 after being found guilty of defrauding his business partners of 3 million yuan (HK$3.8 million). The criminal investigation was dropped last autumn and the money returned, but the case was reopened in February. According to the defence lawyer, the private dispute should have been dealt with in a civil court. His sister Liu Xia, the wife of Liu Xiaobo who has been forced to live in isolation since her husband's Nobel prize award, described the sentence as blatant "political persecution". In her open letter to President Xi Jinping, she demanded an explanation for her continued detention. "Maybe in this country, being Liu Xiaobo's wife is a kind of crime," she wrote. On the same day Liu Zhijun, who as railways minister at the time had overseen the rapid but accident-prone development of the high-speed railway network on the mainland, stood trial for numerous counts of corruption committed between 1986 and 2011 involving 64.6 million yuan. According to Article 383 of the Chinese Criminal Code, a state official who has pocketed more than 100,000 yuan in bribes faces more than 10 years of fixed-term or life imprisonment, or, in especially serious cases, the death penalty. Thus, few would doubt the "seriousness" of the former minister's transgressions. Yet, his lawyer told reporters that the prosecution was seeking a lighter sentence because of Liu's full confession and the return of most of his ill-gotten riches. He said: "The prosecutors asked the judges to treat Liu with leniency even before I asked for it." Such official compassion has evaded an outspoken 60-year-old professor, Ai Xiaoming, who bared her chest for a cause. After a string of revelations in which teachers and principals were found to have sexually assaulted primary school girls, Ye Haiyan, a rights activist, posted an online picture of her holding a placard reading: "Principal, call me if you'd like to get a room; leave the pupils alone." The photo soon went viral, but Ye's home was later raided by a mob, and she was detained and assaulted by public security officials. That prompted Ai to post a photo of herself online with words written across her bare chest in support of Ye and the silent victims of child sexual abuse. Ai soon had her means of communication cut and her home surrounded by security guards. She has also been banned from lecturing and from leaving the country. "In an era when we are forbidden even to use placards to express our views, I can make a statement only with my body," she said. "My body and privacy are nothing in the face of such evil," Ai added, referring to local authorities' heavy-handed approach to silencing the victims' parents. These three stories belie any talk of rule of law on the mainland. In the latter case, courts were ordered to get tough on child sex abusers. Yet, ordinary citizens - parents and activists - were intimidated into silence. The contrasting fates of the two Mr Lius demonstrate the mystical art of official leniency in mainland courts. Ai's sacrifice has not been for nothing. Her online supporters are growing. Let's hope we don't end up with a situation where "we can count on only the internet for China's justice", as one of them suggested. [Editors note: The author, Dr Karen Lee, is an assistant professor with Shue Yan University's Department of Law and Business]. ^ top ^

Xi looks to legacy of Mao for inspiration to solve corruption (SCMP)
2013-06-19
The Communist Party, under new general secretary Xi Jinping, is delving deeper into the legacy of the late Mao Zedong for inspiration to help clean up its ranks amid rising disillusionment over widespread official corruption, analysts said. The party held a teleconference in Beijing yesterday to kick-start a clean-up campaign to reinforce the "mass line" of its 80 million members. The mass line is a party policy aimed at broadening and cultivating contacts with the masses. Xi, who became party leader seven months ago, said the year-long campaign would be a "thorough clean-up" of undesirable work styles such as formalism, bureaucracy, hedonism and extravagance, Xinhua reported. "Winning or losing public support is an issue that concerns the party's survival or extinction," Xi said. The new campaign is an addition to an ongoing anti-corruption campaign Xi launched when he became party leader in November, which is targeting mediocrity, laziness and extravagance amid rising public dismay over rampant official corruption and a widening wealth gap. Tuesday's conference was also attended by the other six members of the party's all-powerful Politburo Standing Committee. Beijing Institute of Technology political economist Professor Hu Xingdou said Xi's new mass line campaign had some similarities with Mao's tactics, but was as far as the Xi administration could go in tackling corruption without introducing genuine political reform. Hu said the legitimacy of party rule appeared to have been weakened by the central authorities' failure to rein in lower-level agencies where official corruption was rife. "Such a campaign is still of significance at a time when vested interests are getting in the way of political reform," he said. "But officials could fundamentally make themselves accountable to the masses via a democratic system under which the masses could decide their fate." Renmin University political scientist Zhang Ming said that with such a campaign, the central authorities were demonstrating their willingness to heed public grievances, but they had stopped short of offering concrete measures. Zhang said the revival of Mao's mass line campaign underscored the sense of anxiety among the new leadership due to an ideological void. "The new leadership is still caught between a political regime largely reminiscent of a feudal monarch and the temptation of a democratic system, which will continue to cause trouble for the party in the future," he said. ^ top ^

China among world's worst in human trafficking, may lead to US sanctions (SCMP)
2013-06-20
An annual US State Department report on Wednesday cited China and Russia among the world's worst offenders in fighting forced labour and sex trafficking, which could lead to US sanctions. The US designation drops China and Russia, which already often are at odds with Washington, in the same category as North Korea and Iran. The State Department ranks countries according to the efforts they make to fight human trafficking and China, Russia and Uzbekistan all fell to the lowest level, Tier 3, in the new report. The Chinese government did not demonstrate significant efforts to comprehensively prohibit and punish all forms of trafficking and to prosecute traffickers. While the Chinese government has taken some steps to address the problem, such as vowing to work with international organisations and increasing public awareness, it also has continued to perpetuate the problem in hundreds of its own institutions, the State Department report said. “Despite these modest signs of interest in anti-trafficking reforms, the Chinese government did not demonstrate significant efforts to comprehensively prohibit and punish all forms of trafficking and to prosecute traffickers,” US officials wrote. The report said China's one-child policy and preference for sons has led to fewer women in the country, thus increasing demand for women as brides or prostitutes. In Russia, the government “had not established any concrete system for the identification or care of trafficking victims, lacking any formal victim identification and referral mechanism”, although there were some “ad hoc efforts”, the report said. The citation is likely to further strain the complicated relations between the United States and the two countries, which already have been strained by the handling of the civil war in Syria and cybersecurity, among other issues. While it was not immediately clear what the Obama administration might do given the downgrade, human rights advocates and some US lawmakers urged strong steps such as imposing sanctions or withholding foreign aid. They also called on the Chinese and Russian governments to take action. […] Under US law, Tier 3 countries may face sanctions that do not effect trade or humanitarian assistance, such as educational funding or culture programmes. John Sifton, Asia advocacy director for Human Rights Watch, said China and Russia have been given several chances to improve their effort to combat such trafficking and protect victims. […] Despite pledges to combat such crimes, countries have failed to identify tens of millions of victims, according to the report, which ranked 188 countries and territories based on their efforts. Just 40,000 victims of so-called modern slavery were identified last year among the estimated 27 million men, women and children who are held against their will globally, the report said. “Despite a growing body of knowledge about victims and their needs, finding them remains a tremendous challenge,” department officials wrote in their 2013 Trafficking in Persons report. Among the millions of victims, most are women and girls, although many men and boys are also affected, the report said. Human trafficking can take many forms – from prostitution to forced labour such as migrant work or domestic servitude – and children also can be victims. Perpetrators are difficult to track and largely circulate in the private economy, although cases can involve rebel groups or national authorities. Among perpetrators, 7,705 were prosecuted last year, leading to 4,746 convictions, a slight increase from the prior year, US officials said. In 2011, there were 7,206 prosecutions and 4,239 convictions. Overall, there were far more countries downgraded than cited as improving, Sifton said. “This is a much more negative report than years past,” he said. “Russia and China rightly deserve attention but many other countries have very serious trafficking and forced labour problems.” Countries that did show improvement in fighting human trafficking include the Republic of Congo, Iraq and Azerbaijan, Sifton said. ^ top ^

Shenzhou X astronaut gives lecture today (China Daily)
2013-06-20
A special lecture began Thursday morning, given by a teacher aboard China's space module Tiangong-1 to students on Earth. Female astronaut Wang Yaping, one of the three crew members of Shenzhou-10 spacecraft, greeted about 330 primary and middle school students at a Beijing high school, through a live video feed system. More than 60 million students and teachers at about 80,000 middle schools across the country are watching the live broadcast on TV. Wang will teach about motion in a microgravity environment, the surface tension of liquid, and help students understand the concepts of weight and mass and Newton's Laws. Born in east China's Shandong Province, the hometown of China's most famous educationist Confucius (551-479 BC), the 33-year-old Wang is the second Chinese female astronaut after Liu Yang, who entered the record books in the Shenzhou-9 mission in June last year. [...] The lesson is aimed at making space more popular, as well as inspiring enthusiasm for the universe and science, according to Zhou Jianping, designer-in-chief of China's manned space program, who added that the lesson will also accumulate experience for similar larger activities. "The spirit of science of the youth is an important drive for the progress of mankind," said Zhou. "Space activities can help them build up the spirit of seeking science and facing challenges.". ^ top ^

4.7-trillion-yuan plan to double mainland road network by 2030 (SCMP)
2013-06-21
The mainland will spend 4.7 trillion yuan (HK$5.9 trillion) in the next 17 years to more than double its network of major roads, top transport officials said yesterday. Dai Dongchang, chief planner with the Ministry of Transport's general planning department, told a press conference that a recently approved blueprint for road expansion included 50,000 kilometres of toll highways and 160,000 kilometres of toll-free "national trunk ways", which are narrower and have slower top speeds. The mainland has 173,000 kilometres of the two kinds of road at present and the plan approved by the State Council last month says that should rise to 400,000 kilometres by 2030. By then, toll-free trunk ways should connect all counties, Dai said, while highways should connect all cities with populations of more than 200,000, as well as important transport junctions and border ports. Huang Min, head of the National Development and Reform Commission's basic industry department, said 18 cities of more than 200,000 lacked highway links at present, while more than 900 counties were not connected to national trunk ways. The new highways would include two north-south routes in the nation's west, Huang said, with many of the 900 counties expecting new trunk ways also located in the west. The mainland now had about 110 million private vehicles, 60 times the number in 1981, when the plan for the existing road system was drafted, he said. Dai said the volume of goods carried on mainland roads was 3.7 times the volume carried on United States' roads and was expected to at least double by 2030, along with the number of passenger vehicles. He said China had previously paid more attention to the construction of highways and small roads in the countryside, leading to sluggish development and poor maintenance of trunk ways. The blueprint forecasts a total of 5.8 million kilometres of roads on the mainland by 2030 - 84 per cent countryside roads, 9 per cent provincial roads and 7 per cent highways and trunk ways. Dai said that "in the long run", the authorities planned to keep the percentage of toll roads at about 3 per cent. He did not give the existing percentage. High tolls on mainland highways have been a major source of public dissatisfaction in recent years. ^ top ^

Concern at speed of Hainan trial that convicted pair of raping 6 girls (SCMP)
2013-06-21
A Hainan court sentenced two men yesterday to 13-1/2 and 11-1/2 years in jail for raping six primary schoolgirls last month, bringing a swift close to the high-profile trial, state broadcaster CCTV reported. The verdict was handed down on the case's first day in the No 1 Intermediate People's Court in Haikou, sparking criticism by the public and legal sector that the verdict seemed rushed for such a high-profile and severe criminal case. Many people, including parents of the victims, said the sentences were too light. Former school principal Chen Zaipeng and a government official, Feng Xiaosong, were convicted of raping the six girls, aged 11 to 14. Chen, who was principal of Wanning No 2 Primary School, a different school from where the girls were enrolled, received 13-1/2 years. Feng, a former clerk with the city's property administration bureau, received 11-1/2 years. Feng sought to appeal against the verdict, while Chen said he was considering whether to appeal, Xinhua reported. One of the three parents allowed into the courtroom said they would seek an appeal against what they considered light sentences "within 10 days". "They should at least be sentenced to no less than 15 years," he said, declining to be named. "We send our girls to schools for education, not to get raped." The two men were arrested on May 15 on charges of child molestation, a week after the six girls at Wanning Houlang Primary School went missing after failing to show up for school. A search launched by parents and teachers found two of the girls in Wanning and four in Haikou, and all were in a groggy state. Surveillance video confirmed they had been in different hotel rooms with the headmaster and the official. The sentences were not well received among some in the legal sector. Wang Yu, a Beijing-based lawyer, said she suspected the court rushed the verdict to maintain social stability. [...] Deng Shulin, a lawyer based in Zhuhai, Guangdong, who said he was one of the seven lawyers initially hired by the victims' parents before the provincial government forced the families to use different lawyers, criticised the court's sentencing as too lenient. "Recently, an official from Henan province was executed for raping 11 girls," Deng said. "Sentencing these two men to 13 and 11 years was way too light, especially since the principal posed a far bigger threat to schoolgirls because of his role as an educator." Deng also said that only three parents were allowed into yesterday's hearing. [...]. ^ top ^

Quarrel led to Tibetan's suicide (Xinhua/Global Times)
2013-06-19
The Tibetan herdsman who burnt himself to death in Qumarleb county, the Yushu Tibetan Autonomous Prefecture in Qinghai Province, was due to a personal dispute with his girlfriend, local authorities said. The 33-year-old divorced herdsman committed suicide by burning himself to death with gasoline on May 27 after quarreling with his girlfriend on May 15, local authorities said, adding that a 25-year-old Tibetan monk took a photo of his body and sent it to another monk now based in India. The photo then went viral on those overseas websites clamoring for the independence of Tibet, along with inflammatory and distorted wording. The Tibetan monk has been arrested. ^ top ^

Hongkongers feel less 'Chinese', more 'Hong Kong' as tensions with Beijing rise (SCMP)
2013-06-19
Hongkongers' sense of Chinese identity has fallen to a 14-year low, a poll revealed yesterday. The survey, carried out under the University of Hong Kong's Popular Opinion Programme, also found that nearly four in 10 respondents described themselves distinctly as "Hongkongers", a rise of 11 percentage points from last December, and showed a cooling of sentiment towards the mainland in recent months. The twice-yearly poll asked 1,055 Hongkongers to rate how strongly they associated themselves with a range of identities - including Hongkongers, Chinese, Asians and "global citizens" - on a scale of 1 to 10. Respondents' average connection with the Hongkonger identity was the highest, at 8.13 points, despite being 0.3 points lower than six months ago. The Chinese identity scored an average of 6.80 points - 0.67 points lower than in December and just a whisker above June 1999's record low. The 1999 survey was completed amid an intense debate over the city's judicial independence, triggered by the local government's decision to seek Beijing's interpretation of the Basic Law over right of abode matters. In the latest survey, respondents were also asked to choose which of four identities they most preferred - Hongkonger, Chinese, Chinese Hongkonger or Hong Kong Chinese. Hongkonger was the preferred designation for 38 per cent of respondents, almost double the score of the Chinese designation, which 23 per cent of respondents opted for - a 2 percentage-point rise since the last poll but within the margin of error. Chinese Hongkonger or Hong Kong Chinese was chosen by 36 per cent, 13 percentage points down from December. The findings have underlined tensions between Hong Kong and the mainland in recent months, including nativists' criticisms that prompted organisers of the annual candlelight vigil commemorating the 1989 Tiananmen Square crackdown to drop the slogan "Love the country, love the people" last month. After the last poll, Hao Tiechuan, director general of publicity, cultural and sports affairs at the central government's liaison office, said the questions were "illogical" and "unscientific". But Dr Robert Chung Ting-yiu, head of the university's public opinion programme, said: "His comments were merely from a political point of view.". ^ top ^

Taiwan, Philippines agree to avoid force in fishing disputes (Global Times)
2013-06-17
Taiwan and the Philippines have pledged not to use force in fishing disputes, officials said, as they tackle a row over the killing of a Taiwanese fisherman by Filipino coastguards. The agreement was reached during their first preparatory meeting on fishery cooperation held in Manila on Friday, Taiwan's "foreign ministry" said in a statement released late Saturday. It said the agreement was aimed at avoiding a recurrence of incidents such as the death of 65-year-old Hung Shih-cheng who died after his boat was fired upon by the Philippine coast guard while operating in a sea area located 160 nautical miles southeast of Taiwan. "Both sides have guaranteed to avoid the use of armed force or violence in the implementation of fisheries laws," it said. The two sides agreed to share their maritime law enforcement procedures and establish means for notifying each other without delay whenever actions are taken against vessels and crews of the other party, it said. They also agreed to develop a mechanism for the prompt release of detained fishing vessels and their crews, in line with international practice. Further meetings would be held on fisheries cooperation including management and conservation schemes, it said. Philippine investigators on Thursday said that they had recommended that criminal charges be filed against coastguards involved in the fatal shooting after coastguard chiefs in Manila initially insisted the fishing vessel had tried to ram the coastguard boat and their personnel had fired in self-defense. The killing caused outrage in Taiwan, with Taiwan leader Ma Ying-jeou describing it as "cold-blooded murder.". ^ top ^

China's interbank rate back to normal level (Xinhua)
2013-06-17
China's borrowing costs between banks plummeted on Monday, returning to normal levels after rising to about 9 percent last week. The Shanghai Interbank Offered Rate overnight dropped 215.50 base points to 4.81 percent, suggesting eased cash flow among China's financial institutions. However, the fixing repo rate 7-day, another gauge of borrowing costs in China, rose 8 base points to 6.89 percent by 11 a.m. Monday. "Cash flow may not be as tight as last month. It all depends on the central bank's open market operations," said Song Qiuhong, a fixed-income analyst at Shunde Rural Commerce Bank. ^ top ^

China's PV sector may see reshuffle: experts (Xinhua)
2013-06-17
Experts said China's photovoltaic (PV) sector may experience a new round of reshuffling amid fresh trade tensions with the European Union. Zhang Shuai, an analyst with Sinolink Securities, said Monday that if the EU ends up imposing high duties on Chinese solar products, the PV sector will face a new round of reshuffling and the elimination of excessive production capacity. "This will be conducive to the sector's medium- and long-term development, although the sector's recovery will be impeded," Zhang said. Earlier this month, the EU imposed an interim anti-dumping duty of 11.8 percent on imports of all Chinese solar panel products, including panels, cells and wafers. If both sides fail to come to an agreement, the duty will be raised to an average of 47.6 percent in two months. Cai Jibo, president of Phono Solar Technology Co, a leading solar manufacturer, agreed that the sector will see more drastic reshuffling due to excessive capacity. Cai said the PV sector cannot wait for policy support from the government, but instead needs to eliminate weak companies in order to consolidate the industry. The Chinese government will use a series of measures to boost the sagging PV sector due to subdued overseas demand, including promoting distributed PV power projects and offering financial support, according to an executive meeting of the State Council on Friday. ^ top ^

Sinopec looks north for oil (China Daily)
2013-06-18
China is increasing its presence in the resource-rich Arctic, with its second-largest domestic oil company acknowledging ongoing involvement in oil exploration and development in the far north. A source from Sinopec Group, Asia's top refiner, confirmed to China Daily on Monday that the company is holding preliminary talks with Iceland over oil exploration off the northeast coast of the Nordic country. The source said the talks are being held between the Icelandic government and Sinopec Star Petroleum Co Ltd, a clean energy subsidiary wholly owned by the group, but the person declined to release more details. However, the source said that since there has been cooperation between Sinopec and Iceland in the geothermal energy sector, it is very likely that the two parties will cooperate further in oil and natural gas. In April 2012, Fu Chengyu, the chairman of Sinopec, signed a framework agreement on the expansion of geothermal development and cooperation with Haukur Harearson, chairman of Orka Energy Holding Ehf, witnessed by then-premier Wen Jiabao and Icelandic Prime Minister Johanna Sigurdardottir. The two companies formed a joint venture named Sinopec Green Energy Geothermal Development Co Ltd in 2006. CNOOC Ltd, the biggest offshore oil producer in China, was the first Chinese oil company to gain a foothold in the Arctic region through a partnership with Iceland-based Eykon Energy to bid for an exploration license. On May 15, China secured observer status on the Arctic Council, an eight-member regional decision-making body. Observers have no voting rights, but they do have the right to propose and finance policies. A Sinopec source who declined to be identified said the company's overseas acquisition targets were formerly in the Middle East and then shifted to Russia and Africa. Now, the source said, the company is broadening its view in terms of the location of opportunities. However, experts said the exploration costs in Iceland will be extremely high, and the work will require advanced technology, which will pose major obstacles for the Chinese explorers. Besides, it is very likely that they will face objections by environmental groups once work on projects begins. Andy Brogan, global oil and gas leader with Ernst & Young, told China Daily on Monday that the Icelandic government will be sensitive about environmental protection in the area. But he added that the country is also very pragmatic about the economic benefits of energy exploration. "It is still too early to predict how successful the deals can be," he said. Heavily indebted Iceland is hungry for foreign investment. The country was severely hit by the financial crisis that erupted in 2008. Its financial sector, with a balance sheet 10 times that of the country's economy, collapsed. The Arctic, the area north of the Arctic Circle, is thought to contain 13 percent of the world's undiscovered oil and 30 percent of its undiscovered natural gas, according to a report by Ernst & Young released on Monday. Figures from the United States Geological Survey show that oil reserves in the Arctic stand at about 90 billion barrels. As China's oil consumption is increasingly depending on foreign supply, it is clear that top oil and gas players in the country are moving faster to find and exploit resources overseas. Sinopec has moved overseas a little slower than the other two big oil companies, CNOOC and China National Petroleum Corp, the country's largest oil and gas producer, which took their first steps abroad in 1993. Sinopec only began to participate in the global natural resources market in 2009 by acquiring Addax Petroleum. "Chinese oil companies have tended to invest in overseas resources in stable regions rather than high-risk areas in recent years," said K.C. Yau, partner with Ernst & Young. ^ top ^

PBOC signals no policy loosening (Xinhua)
2013-06-18
People's Bank of China Tuesday drained 2 billion yuan ($326 million) from the money market despite banks' reported call for cash injection, suggesting regulators are keen to keep liquidity tight amid growing jitters of China's financial risks. The 2-billion 91-day bills, though tiny by amount, were viewed as the central bank's commitment to squeezing out excessive funding. Shanghai Interbank Offered Rate (SHIBOR) overnight rate rose 78.30 base points to 5.596 percent as of 11:30 am, Tuesday. Traders in the interbank market said the cash crunch would continue for the next few weeks. Foreign capital inflows are dwindling and a huge amount of wealth management products sold by banks are due at the end of June, according to a report of Guotai Junan Securities. Wall Street Journal Tuesday quoted a senior executive at one of China's big four banks that they were hoping for an reserve-requirement ratio cut by the end of Wednesday. Borrowing costs between Chinese banks soared last week with SHIBOR overnight rate shooting up to 9 percent. UBS said the spike in rates may have been caused by a significant drop in foreign exchange inflows, under-estimated holiday and unseasonal liquidity demand, and market's misperception of the central bank's policy intention. "The PBoC has made it clear in the past 10 days that overly-rapid credit expansion would not be accommodated and banks may have to scale down their credit growth plans and manage their own liquidity more prudently," said Wang Tao, chief China economist at UBS. Total social financing, a gauge of China's credit expansion, surged 52.08 percent during the first five months than the same period last year.Analysts said much of the funding stayed "circulating" in the financial system instead of propping up the real economy. While liquidity is abundant, UBS warned accidents could happen in the process of changing liquidity provision or cleaning up interbank activities. "Therefore, the central bank and other regulators must tread very carefully in the coming months in managing the process to try to minimize the risk of unexpected break in the liquidity chain or unwanted credit crunch," Wang said. ^ top ^

China manufacturing slumps to 9-month low as demand falters (SCMP)
2013-06-20
Activity in China's vast manufacturing sector weakened further in June to a 9-month low as new orders faltered, a preliminary survey of purchasing managers showed on Thursday, reinforcing signs of tepid economic growth in the second quarter. The flash HSBC Purchasing Managers' Index fell to 48.3 in June from May's final reading of 49.2, drifting further away from the 50-point level demarcating expansion from contraction. It was the weakest level since September. “Manufacturing sectors are weighed down by deteriorating external demand, moderating domestic demand and rising destocking pressures,” said Qu Hongbin, chief China economist at HSBC. “Beijing prefers to use reforms rather than stimulus to sustain growth. While reforms can boost long-term growth prospects, they will have a limited impact in the short term. As such we expect slightly weaker growth in 2Q.” A sub-index measuring overall new orders dropped to 47.1 in June, the lowest reading in 10 months, suggesting demand is weakening both at home and abroad. The survey, compiled by British-based Markit Group Ltd, showed new export orders weakened further in June, pointing to persistent global headwinds as the US recovery remains patchy while Europe's economy remains shackled by the debt crisis. An employment sub-index also eased in June - broadly in line with signs of softening demand for migrant workers in Chinese cities - even though the overall job market is holding up as the government tries to improve social safety nets. China's economy grew at its slowest pace for 13 years last year and so far this year economic data has underwhelmed, bringing warnings from some analysts that the country could miss its growth target of 7.5 per cent for this year. Most analysts expect annual economic growth in the second quarter to weaken slightly from the 7.7 per cent annual pace in the first quarter. Growth in the first three months had slowed from 7.9 per cent in the previous quarter despite a credit boom. Weak data in April and May has prompted many analysts to cut their forecasts for China's this year economic growth. Barclays Capital, which expects annual economic growth to slow to 7.5 per cent in the second quarter, has cut its forecast on the full-year growth rate 7.4 per cent from 7.9 per cent. HSBC has cut its this year growth forecast to 7.4 per cent from 8.2 per cent and its next year outlook to 7.4 per cent from 8.4 per cent. Economists at ANZ said in a research note published on Tuesday that a rapid cooling of inflation and weaker domestic demand meant the time was right for the central bank to cut interest rates to revive the economy. But the central bank, which last cut rates in July last year, looks to be treading cautiously in easing policy that could inflate a property bubble even as consumer inflation cools. China's consumer inflation slowed to 2.1 per cent in May, the lowest in three months, but data on Tuesday showed that home prices rose at their fastest pace this year. The chances of fresh stimulus appear slim given that China's new leaders have adopted a greater tolerance for a slowing economy than their predecessors as they focus on economic reforms rather than short-term boosts. Government economists told Reuters that the new leadership of President Xi Jinping and Premier Li Keqiang would tolerate quarterly growth slipping as far as 7 per cent year-on-year before looking to jumpstart the economy. Beijing is still nursing the hangover from its 4 trillion yuan ($652.7 billion) stimulus package implemented during the depths of the global crisis in 2008-09, which fuelled a property bubble and saddled local governments with a pile of debt. ^ top ^

BOC denies monetary default report (Xinhua)
2013-06-21
Bank of China (BOC), the country's leading commercial bank, on Thursday evening denied a media report claiming the bank had defaulted earlier in the day. The BOC statement came after the official Sina Weibo account for 21st Century Business Herald said the bank had defaulted on Thursday afternoon, deferring transactions for half an hour due to a fund shortage, citing anonymous sources. BOC responded in a post on its official Sina Weibo that it has never had monetary defaults and had timely completed all outbound payments on Thursday. BOC also said that the rumors are "seriously unfounded" and the bank reserves the right to pursue legal action against those who started the rumors out of malicious intent. Recent interest rate increases in China's inter-bank market have raised market concerns over a liquidity crunch. The Shanghai Interbank Offered Rate (SHIBOR) overnight rate surged 578.40 base points to 13.44 percent on Thursday, and fixing Repo 7-day, another gauge of interbank interest, gained 292.9 base points to 11 percent. However, the central bank issued three-month bank bills worth 2 billion yuan ($324 million) on Tuesday and Thursday, respectively, missing market expectation over large-scale liquidity injection. The State Council, or China's Cabinet, said at a meeting on Wednesday that the government will maintain a prudent monetary policy with reasonable scale of monetary aggregates. ^ top ^

US to consult Japan and South Korea after North's latest offer of talks (SCMP)
2013-06-17
The United States will meet with South Korea and Japan in Washington tomorrow and Wednesday to discuss North Korea's new offer to hold high-level talks, a senior US official said yesterday. […] The White House says it wants "credible negotiations" with Pyongyang that will lead to a nuclear-free North Korea. White House Chief of Staff Denis McDonough told CBS News' Face the Nation that any talks "have to be based on them living up to their obligations" on proliferation, nuclear weapons, smuggling and other issues. The administration of US President Barack Obama is responding to a proposal by Pyongyang's top governing body for high-level nuclear and security talks with Washington. US National Security Council spokeswoman Caitlin Hayden says North Korea must live up to "its obligations to the world", including complying with UN resolutions […] North Korea proposed the high-level talks with the US just days after it abruptly cancelled a rare meeting with the South. The proposal comes as the North is under increasing pressure to abandon its atomic arsenal and belligerent behaviour, not only from the US and South Korea, but also from the reclusive nation's sole major ally, China. "We propose senior-level talks between … [North Korea] and the US to defuse tensions on the Korean peninsula, and ensure peace and security in the region," Pyongyang's powerful National Defence Commission said. The North is willing to have "broad and in-depth discussions" on issues such as the building of "a world without nuclear weapons" being promoted by Obama, the commission said, inviting the US to set the time and venue for the meeting. "If the US has true intent on defusing tensions on the Korean peninsula, and ensuring peace and security in the US mainland and the region, it should not raise preconditions for dialogue and contact," it added. North Korea said in the statement that it was committed to denuclearisation of the peninsula, but defended its atomic arsenal as "self-defence" against what it called military and nuclear threats from the US. "The legitimate status of the [North] as a nuclear weapons state will go on … [until] the nuclear threats from outside are put to a final end," it said, urging the US to also scrap all sanctions against it. President Xi Jinping, who agreed with Obama last weekend that the North must give up its nuclear arsenal, will meet South Korean counterpart Park Geun-hye on June 27. "The North is hard-pressed to show some kind of reconciliatory gestures to avoid being further isolated in this dynamic, especially by China," said Kim Yong-hyun, a North Korea expert at Dongguk University in Seoul. ^ top ^

North Korea calls US 'kingpin' of rights abuse after surveillance revelations (SCMP)
2013-06-19
North Korea rushed to the defence of American civil liberties on Tuesday, saying revelations of mass surveillance operations showed the United States was the “kingpin” of rights abuse. [...] A commentary in the state newspaper Minju Joson said allegations of monitoring of telephones and emails by former CIA contractor Edward Snowden meant Americans and foreigners alike had been “subject to the espionage that has been applied indiscriminately by the US intelligence institution”. “...This clearly proves once again the US is a kingpin of human rights abuses as it puts the world under its watch network and has conducted espionage against mankind,” said the commentary, cited by the official KCNA news agency. “Each individual is entitled to live and develop with dignity as a social being,” it said. “But in American society, where the jungle law prevails, only the strong men's rights over the weak men are recognised.” It said that explanations by US officials that the programmes sought to prevent terrorism were “just a lame excuse to cover up (the) crime”. Snowden, believed to be in hiding in Hong Kong, hit back on Monday at critics who denounce him as a traitor for revealing the operations. He said he made his disclosures to counter “a litany of lies” by senior officials to US Congress. The United Nations has launched an investigation into alleged crimes against humanity in North Korea. Authorities in Pyongyang deny the existence of prison camps and say they will not cooperate with the UN probe. In March, as tensions between North Korea and the United States soared over Pyongyang's nuclear programme, with the North threatening nuclear strikes against the United States and South Korea, KCNA declared the North free of rights abuses saying “they cannot exist”. It accused the United States and South Korea of launching “a desperate effort to evade a shameful defeat in the nuclear standoff with (North Korea) and invent a pretext for invasion and pressure”. North Korea is also believed to be running a large corps of computer experts aimed at hacking into the networks of governments and financial institutions, most notably blamed for the 2011 shutdown of a South Korean commercial bank. ^ top ^

Kim Jong-un skirts UN ban with luxury yacht (SCMP)
2013-06-20
The incongruous appearance of a multimillion-dollar yacht at a North Korean fishery station is being cited as evidence that Kim Jong-un has inherited his late father's taste for the trappings of wealth, and that he's found a way to get around UN sanctions to satisfy them. Spotted in the background of photos of Kim published by the state-run KCNA news agency, the vessel was identified by the NK News web site on Tuesday as a 29-metre Princess 95MY. Built by British-based Princess Yachts, the 95MY is a slightly earlier version of the 98MY that the company presently sells for US$8.7 million - but is no less sumptuous. Secondhand versions of the 95MY go for up to US$7 million. The vessel has four double berths, three with en-suite bathrooms, as well as accommodation for at least three other passengers. Princess PR images show leather sofas, a flat-screen television, discreet lighting and a dining table large enough to seat eight people. [...] Kim's father, Kim Jong-il, was thwarted in his attempts to purchase luxury yachts as a result of the 2006 UN Security Council decision - Resolution 1718 - to ban the sale of luxury goods to North Korea. In 2009, Italy intervened to halt the export of two Azimut yachts that were believed to be bound for the Kim family compound in Wonsan, on the east coast of the Korean peninsula. His son appears to have circumnavigated the ban. Satellite images obtained by NK News show a large, newly built boat shed at the Wonsan compound, which Kim reportedly used as his base for a 10-day tour of facilities on North Korea's East Coast last month. In photos of the tour, he is pictured surrounded by military officers as he inspects the "August 25th Fishery Station". A corner of the yacht is caught in the background of one photo, allowing an expert quoted by NK News to identify it. The question is how the yacht slipped under the radar of UN agencies that monitor shipments to North Korea. Princess Yachts has distributors in both South Korea and Japan, although it is considered unlikely that either would have sold a vessel directly to the North Korean regime. "My company has not sold any vessels to North Korea," a spokesman for Princess Yachts North China, based in Dalian, told the South China Morning Post. "I have heard of this story, but there are lots of other dealers in the region." The yacht may instead have been purchased in a private deal with an owner. The company is carrying out an internal investigation into how their yacht ended up in North Korea, NK News reported. [...] Before sanctions began to bite, North Korea imported more than US$100 million of top-quality wines and liquor, cars and other luxury goods a year, according to a report in South Korea's Chosun newspaper. Kim Jong-il reportedly adored pedigree dogs and bought dozens of German shepherds, shih tzus and other breeds from France and Switzerland every year. The paper said he also purchased expensive foreign dog food, shampoo and other pet products, as well as bringing foreign vets to Pyongyang to care for them. In its latest report on North Korea, the UN World Food Programme said that a two-year, US$200 million programme would begin in July to fight malnutrition among 2.4 million women and children deemed most at risk. ^ top ^

A total of 4,248 Mongolian nationals residing abroad have participated in the 2013 Presidential Election of Mongolia (Info Mongolia)
2013-06-17
The 2013 Presidential Election for Mongolian nationals residing abroad has been concluded that was organized between Friday, June 14 and Sunday, June 16 at the 39 Diplomatic Offices of Mongolia. According to summary issued by the Ministry of Foreign Affairs of Mongolia on June 17, 2013, a total of 4,248 citizens have participated in the voting out of validated 6,233 eligible citizens. Due to time differences the last voting has been finished at the San Francisco, US polling station at 01:00 pm by Ulaanbaatar time today. Now, the 2013 Presidential Election in Mongolia is scheduled to take place on Wednesday, June 26, 2013, where 1,856,190 eligible citizens were registered as of June 16th according to the General Election Commission. As of today, 385 observers from 34 counties have been registered and received their cards to monitor the Election. ^ top ^

President of the UN General Assembly to visit Mongolia (news.mn)
2013-06-20
The President of the UN General Assembly for the 67th session Vuk Jeremić will visit Mongolia on June 21st. Previously the Secretary-General and executive directors have paid official visits to Mongolia but this is the first visit for the President of the UN General Assembly. The General Assembly is one of five principal sections of the United Nations such as the Security Council, the Economic and Social Council (ECOSOC), the Secretariat, and the International Court of Justice. Serbian politician, Vuk Jeremić rose to the office of the President of the United Nations General Assembly for the 67th session since September 2012. The General Assembly has passed 268 resolutions during his term. Palestine was granted non-member observer state status by the United Nations General Assembly resolution 67/19 under his watch. At the 67th session of the United Nations General Assembly in 2012, draft resolutions on Mongolia"s international security and nuclear-weapon-free status and education for democracy was passed. Mr. Jeremić`s efforts and assistance played a large role in the passing of two draft resolutions that are significant for Security and the International reputation of Mongolia. Mr Jeremić is expected to meet President Ts.Elbegdorj and the Speaker of Parliament Z.Enkhbold during his official visit to Mongolia. ^ top ^

Andrin Eichin
Embassy of Switzerland