Chinese navy performs very well in multinational drill
2007-03-14 People's Daily Online
The second, at-sea phase of AMAN-07, or Peace-07, the multinational maritime military drill hosted by Pakistan, was held between March 8 and 11. Twelve warships from Pakistan, China, Malaysia, Bangladesh, Britain, the US, France and Italy formed a single file on the Indian Ocean, ready for a series of drills. China's "Sanming" and "Lianyungang" frigates lined up in third and fourth place. On the morning of March 8, under the command of US warship "Hawes", three Pakistani speedboats moved to "attack" the fleet. When the main guns were used for a short-distance shooting exercise in the afternoon, the two Chinese vessels hit the two buoy targets, calling an early and successful end to the exercise. According to Senior Captain Qiu Yanpeng who is in charge of the Chinese ships, the fleet participated in drills such as shooting live rounds from the main guns, intercepting fast-moving targets, defending air targets and reviewing troops at sea. The first of these drills was one of the most important as well as the first time that the Chinese navy had used live ammunition in an overseas military drill. The Chinese troops were able to hit their targets because they prepared carefully, underwent strict training and were well organized. The Chinese navy was acclaimed for their excellent performance by Pakistani navy observer Faisal, who watched the drill and praised the Chinese troops for being well equipped and trained.

Wen calls for adoption of convention on outer space
2007-03-16 China Daily
Chinese Premier Wen Jiabao on Friday urged relevant countries in the world to adopt and sign an international convention on peaceful utilization of outer space at the earliest date possible. Wen made this call at a press conference in the Great Hall of the People after the conclusion of the National People's Congress while answering a question raised by the Associated Press concerning China's January experiment to knock down an aging Chinese weather satellite with a missile. Wen said the test is not targeted at any country, nor will it threaten any country, nor does it violate any international treaties. He pledged China will continue to pursue a peaceful development road.[...] The Chinese premier said that China's annual defense budget is much lower than those of some developed countries, even less than some of the developing countries. He also said that China has a long borderline and sealine to be protected.

Beijing pledges technical assistance, aid to St Lucia
2007-03-16 SCMP
More aid and technical assistance has been pledged to St Lucia amid speculation that Taiwan is seeking to re-establish diplomatic ties with the Caribbean island, St Lucia's government said on Wednesday. External Affairs Minister Rufus Bousquet said Beijing's new aid package was under review, but did not disclose details. The proposal came shortly after Taiwanese officials based in St Kitts and Nevis, one of the few Caribbean nations still allied with Taipei, met with St Lucia's prime minister, John Compton. Neither Taiwanese officials based in St Kitts nor Mr Compton, whose party maintained ties with Taiwan for 13 years until it was defeated in the 1996 elections, had any comment about their meeting. But last month, Mr Compton said St Lucia "remains firm" in its relations with the mainland.

China's top legislature adopts landmark property law
2007-03-16 People's Daily Online
It only took less than a minute for the nearly 3,000 NPC lawmakers to pass the much-revised bill, which had gone through a lengthy legislation process of more than 13 years, by an overwhelming majority as the NPC concluded its annual full session in the Great Hall of the People in downtown Beijing. [...] The 247-article law, which is due to come into effect as of Oct. 1, 2007, stipulates that "the property of the state, the collective, the individual and other obligees is protected by law, and no units or individuals may infringe upon it". This is the first time that equal protection to state and private properties has been enshrined in a Chinese law, which analysts say marks a significant step in the country's efforts to further economic reforms and boost social harmony. [...] The draft of the property law was first submitted to the NPC Standing Committee in 2002 and had been reviewed for an unprecedented seven times before it finally reached this year's parliament session for final approval. In response to doubts about equally protecting state and private properties, Vice Chairman of NPC Standing Committee Wang Zhaoguo said that under China's socialist market economy, all players enjoy the same rights, observe the same rules and bear the same responsibilities. If equal protection is not secured, "it will not be possible to develop the socialist market economy, nor will it be possible to uphold and improve the basic economic system of socialism," said Wang, when tabling the bill to lawmakers last Thursday. To address public concerns over fraudulent acquisitions and mergers of state property, the law stipulates that illegal possession, looting, illegal sharing, withholding or destruction of state property is prohibited. Those who cause loss of state property shall bear legal liability, according to the law. In a move to better protect farmers from land seizures, which frequently caused public anger, the law stresses the protection of arable lands, stipulating that the transformation of land for agriculture into land for construction is "strictly restricted". For expropriation of collective-owned land, compensations and subsidies for resettlement must be paid. [...]

China's parliament adopts enterprise income tax law
2007-03-16 People's Daily Online
China's parliament, the National People's Congress, adopted the enterprise income tax law Friday morning with 2,826 votes for and 37 against, and 22 abstentions, a key signal of a phase-in end of superior treatments to foreign investors for two decades. [...] Experts say the law marks an adjustment of China's policies toward foreign investment in the current times. The law, which sets unified income tax rate for domestic and foreign companies at 25 percent, came after years of criticism that the original dual income tax mechanism is unfair to domestic enterprises. Currently, the actual average income tax burden on Chinese companies is 25 percent, while that on foreign enterprises is 15 percent. Many people think such a policy forces domestic businesses to face tougher competition since China's accession to the World Trade Organization (WTO) in 2001. [...] Apart from increased income tax, foreign companies will also be wiped from some other tax incentives, including pre-tax reduction and tax rebate for re-investment, in the future, insiders say. China is gradually taking back preferential policies toward overseas-funded businesses, which has been levied the same tax as their domestic counterparts in the use of urban land from Jan. 1 this year.

China's parliament endorses government work report
2007-03-16 People's Daily Online
China's parliament, the National People's Congress (NPC), on Friday endorsed the government work report delivered by Premier Wen Jiabao that underlines the people's livelihood and sets the economic growth target at about 8 percent for this year. [...]Wen said in the report that the most important task of the government this year is to promote sound and fast economic development, with the growth of gross domestic product (GDP) projected at 8 percent, lower than the staggering 10.7 percent in 2006, which analyst say would be conducive to healthy economic development in the country. [...]The Chinese government promised to spend 391.7 billion yuan (50.25 billion U.S. dollars) on agriculture, rural areas and farmers this year, as it vows to develop modern agriculture and build a new countryside. [...] The premier reiterated that the government will meet the energy saving and pollution control targets between 2006 and 2010 despite last year's setback. The government set the goal of reducing energy consumption per unit of GDP by 20 percent and major pollutants discharge by 10 percent in the country's 11th Five-Year Plan for the 2006-2010 period. A major task of the government to improve the people's livelihood is to promote medical services in rural areas. To energetically promote the new type of rural cooperative medical care system, the government will expand the trial of the services "cover over 80 percent of all counties, county-level cities and city districts in China," the premier said. For this purpose, the government will allocate a total of 10.1 billion yuan (1.3 billion U.S. dollars) this year, 5.8 billion yuan (750 million U.S. dollars) more than last year. [...]In the government work report, which covers every facet of the country's economic and social development, Wen said "building a solid national defence system and a powerful people's army is a strategic task in socialist modernization." According the draft 2007 budget, which was also passed along with the annual plan for economic and social development, defense budget of China will increase by 17.8 percent to 350.92 billion yuan (44.94 billion U.S. dollars). [...]

President Hu urges intensive training of armed forces
2007-03-12 Xinhuanet
Chinese President and Chairman of the Central Military Commission Hu Jintao on Monday urged the armed forces to keep conducting military trainings so as to provide strong security support for building a well-off and harmonious society. The armed forces, which used to depend on mechanical equipment, should actively blend its military drills with the features of information age, said the Chinese top leader, who is also general secretary of the Communist Party of China (CPC) Central Committee, at a meeting participated by deputies from the People's Liberation Army (PLA) during the ongoing parliamentary session. The armed forces should improve their capacity for actual warfare in the information era through carrying out strict and hard military trainings, said Hu, calling for renovation in the contents and methods of military trainings. Hu stressed that the military authorities should promote reforms in a step-by-step manner to improve the capability of troops and make the armed forces well prepared for military fighting. The PLA should keep a close eye on the changes of both domestic and international situation, further heighten its awareness of crises and tasks, and fulfill its new missions in the new century, and provide strong security support for building a prosperous and harmonious society, said Hu. He also required the armed forces to be well disciplined and obey the command of the CPC Central Committee and the Central Military Commission on any occasions.

Ambitious space program unveiled
2007-03-12 China Daily
The government has unveiled an ambitious blueprint for developing space science that includes the launch of the country's first astronomy satellite and more extensive international cooperation. The astronomical satellite will carry a "hard X-ray modulation telescope," which is being developed by Chinese scientists for launch in 2010, according to the Space Science Development Plan. The plan was released by the Commission of Science, Technology and Industry for National Defence for the 11th Five-Year Plan (2006-10) over the weekend. The project will help Chinese scientists make breakthroughs in research of black hole physics and other fields, as hard X-rays originate mostly from regions close to black holes, experts said. The telescope would be preceded by Shijian-10, a recoverable satellite to be sent in 2009 for scientific experiments, according to the plan. The document singles out three international cooperative projects to be implemented in the current Five-Year Plan period. They include a joint unmanned mission to Mars with Russia, which will not only bring samples back to Earth but also land on one of the red planet's tiny moons, Ye Peijian, a leading scientist at the Chinese Research Institute of Space Technology, said last August. China and Russia will also work on the World Satellite Observatory of Ultra-Violet. Another international cooperation project is the Small Explorer for Solar Eruptions (SMESE), a Chinese-French mission to observe solar flares and Coronal Mass Ejections for the next Solar Maximum in about 2011. The plan does not specify a timetable for the three projects. It says China will focus on innovation and sustainability of space science development to better serve the national economy and security, and help build China into an "innovative country". The government will set up a system to ensure scientific projects are chosen in an "open and fair" fashion, and "multiple sources" are encouraged to fund such projects, it says. The release of the development blueprint coincides with the ongoing sessions of the country's top legislature and political advisory body in Beijing. Last week, Huang Chunping and Qi Faren, both members of the National Committee of the Chinese People's Political Consultative Conference, said the country would launch a moon orbiter "some time" this year and stage a space walk in 2008.

Top court: review of death penalty cautious, strict
2007-03-13 Xinhuanet
The review of death penalty would be carried out in a cautious and strict way, said an official with China's Supreme People's Court on Tuesday. According to the official who asked not to be identified, the review shall be made by a panel of three judges, who would examine written files and make inquests from defendants in person if necessary. In some cases the judges shall make investigations in a crime scene. [...] While enforcing its crackdown on crimes, China is becoming more prudent while exercising death penalty and retrieved the right of its review since this January. [...] On occasions when a crime is committed with a fault of the victim, or when an offender surrenders himself to police or contributes to cracking the case, punishment on the offender shall be alleviated, according to the official. However, the official noted that defendants in serious economic crimes involving graft and bribery must be severely punished. He also talked about mis-conviction. "A wrong verdict is resulted from procedure loopholes and it is the responsibility of the court to avoid such mistakes," he said. The loopholes boil down to human factor, said the official, adding that Supreme People's Court shall raise the sense of responsibility of judges and enhance their capability via various channels, so as to ensure the quality of verdicts. China's Top Judge Xiao Yang revealed that last year 889,042 people were convicted by courts at all levels across the country, and 153,724 people received sentences of longer than five years, including life imprisonment and death penalty.

NPC & CPPCC - Court chief pledges to crack down on graft in judiciary
2007-03-14 SCMP
Supreme People's Court president Xiao Yang yesterday took responsibility for corruption and lack of professionalism in the judiciary, pledging to clean up the system and provide better training this year to judges and court officials. Delivering his work report to the National People's Congress, Mr Xiao admitted the court system needed to improve because corruption and judicial misconduct remained rampant. [...] "The Supreme People's Court is responsible for these problems. We did not give [local courts] clear guidance. Our supervision is not strong enough and our co-ordination and administration is not effective." The credibility of the judicial system was compromised by several high-profile court corruption cases last year - including one in Shenzhen in which five judges were held for the biggest court-corruption scandal in the city's history. Mr Xiao said 292 court officials were investigated last year for corruption, and charges were laid against 109 of them. "We must strengthen the supervision of judges, particularly the court chiefs. We must take stern and effective measures against any sort of misbehaviour," Mr Xiao said. [...]

NPC & CPPCC - Corruption war has not improved justice system - Higher conviction rates no cause for celebration, say officials
2007-03-14 SCMP
Beijing's intensified war on corruption has so far failed to yield marked improvements in the justice system, according to top judicial and prosecutorial authorities. This despite an expanded list of senior government officials investigated and convicted last year. While courts handled 23,733 cases of official corruption last year, about the same as in the previous two years, a record nine ministerial-level officials were convicted, according to reports by the Supreme People's Court and Supreme People's Procuratorate. [...] But both Procurator-General Jia Chunwang and Supreme People's Court President Xiao Yang admitted yesterday the figures were no cause for celebration. "Judicial injustice and law enforcement problems, about which the public have complained the most, have not been effectively scrutinised and addressed," Mr Jia told more than 2,700 National People's Congress delegates. The court's statistics represent only a fraction of those investigated and charged by the procuratorate. In his report, Mr Jia said prosecutors filed more than 33,000 corruption cases last year, including 623 bribery and embezzlement cases each involving more than 1 million yuan. Of 2,736 officials above county level investigated, six were of ministerial rank or above, including disgraced former Shanghai party chief Chen Liangyu and former Beijing vice-mayor Liu Zhihua . A total of 3,878 rural cadres were investigated for embezzling funds earmarked for poverty reduction and disaster relief, while more than 10,000 employees of state-owned enterprises were investigated for misappropriation of state assets. Prosecutors also investigated 930 government officials on charges of illegal detention and torture of detainees. Beijing's efforts to chase down corrupt cadres on the run have resulted in a soaring number of officials captured. The procuratorate tracked down 1,670 corrupt officials last year, up more than 137 per cent over the previous year. Prosecutors also focused on cracking down on rampant economic crimes, with stress on bribery, a key source of collusion between officials and businesses. [...]

China's top advisory body concludes annual session, calling to oppose "de jure independence of Taiwan"
2007-03-15 Xinhuanet
China's top advisory body concluded its annual session Thursday morning after adopting a political resolution that calls for more effort for social harmony and firm opposition against the secessionist activities in any form to seek "de jure independence of Taiwan". As year 2007 is of great importance in the country's drive of building a harmonious socialist society, all the advisors should earnestly perform their duty in political consultation, democratic supervision and participation in and discussion of state affairs to make contributions for social development in all fields, said the resolution passed at the closing meeting of the annual session of the Chinese People's Political Consultative Conference (CPPCC) National Committee. [...] The CPPCC members should pay more attention to people's welfare and should raise more high-quality proposals by carrying out in-depth investigations to find out the needs of the public, said the resolution. [...] The resolution also called to promote the peaceful development of mainland-Taiwan relations and firmly oppose to the secessionist activities to seek "de jure independence of Taiwan" through so-called constitutional reform. [...] "We shall actively expand exchanges and cooperation across the Strait, promote direct mail, transport and trade links and seek peace, development and welfare for the compatriots on the both sides of the Strait with our greatest sincerity," said the resolution. [...] The CPPCC members fully support the government work report by Premier Wen Jiabao, reports on the work of the Supreme People's Court and the Supreme People's Procuratorate, and the draft property right law and the draft enterprise income tax law, according to the resolution. [...] Founded in 1949, the CPPCC consists of elite members of the Chinese society who are willing to serve as the think tank for the government and for the country's legislative and judicial organs. As an open forum where the ruling Communist Party, the non-Communist parties of China and people with no party affiliations discuss state affairs freely and on an equal footing, the CPPCC National Committee has been the manifestation of China's socialist democracy.The advisory body participates in state affairs mainly through making proposals to government departments on various issues concerning China's economic and social development.

Officials blame riot on bus firm
2007-03-15 SCMP
The mainland's official media responded for the first time yesterday to a mass riot in Hunan province which started last week, giving an account at odds with those of witnesses who described at least one death and dozens of injuries. The official Hunan government website ran a short report yesterday emphasising the role of the local government in restoring order in Zhushan village, where some 20,000 farmers took to the streets to protest against bus fare increases [...] A domestic news blackout had been imposed on the bloody clash between protesting farmers and local police - a standard practice for mainland authorities concerned about the ripple effect of mass demonstrations. Witnesses said local police were confiscating cameras and smashing digital video recorders in an apparent effort to block reports of the unrest spreading at a time when the province's top leaders are in Beijing for the National People's Congress and are discussing the building of "a harmonious society" with delegates from other provinces. A human rights activist who witnessed the clash from beginning to end said he had been questioned by provincial security agents, who warned him against speaking to the media. [...] The official report blamed the rioting on local bus company, Anda, whose doubling of bus fees over the Lunar New Year sparked the protest. But witnesses said the protest was peaceful until local police started randomly attacking protesters with batons and electric prods. Angry farmers defended themselves with bricks, rocks and pipes, smashing and burning more than 15 police vehicles and buses. "China's leaders are showing that they are afraid of the views and voices of their own people," said Brad Adams, the Hong Kong-based Asia director for Human Rights Watch, a New York-based organisation. "If they were confident that they had popular legitimacy, they would not resort to such heavy-handed tactics." Violent demonstrations are becoming increasingly difficult to suppress, with economic growth exacerbating frustration at corruption, environmental destruction and the growing gap between rich and poor.

80,000 villagers without safe water for a month - Chemical factories have contaminated supplies from taps
2007-03-14 SCMP
More than 80,000 villagers in Yixing , Jiangsu province , have been without safe drinking water for about a month because of chemically contaminated tap supplies. The crisis coincides with Premier Wen Jiabao's vows to the NPC and CPPCC to curb environmental pollution. Weng Yufu , from Yixing's Xinjian township, said villagers had noticed a strong smell coming from the tap water since the Lunar New Year. "We know the water is toxic because fish died when we put them in the water for just three minutes," Mr Weng said. "We can't use it to take a bath either because the water makes us itch." [...] But Jiangsu environmental protection department supervisor Ling Jing said the quality of tap water in Xinjian and the other towns returned to normal days ago. "The problem has been solved. Tap water supply has returned to normal and it has been safe to drink for several days," Mr Ling said. "You overseas media had better not report it because it is of no news value." But Tai Lake environmental activist Wu Lihong said water contamination had never improved in the area. [...] There were 1,685 chemical factories in Yixing at the end of last year, generating about 75 per cent of the city's income, according to the municipal environmental protection office.

Book publishers wage a battle of wits with censors
2007-03-13 SCMP
In the three months since the mainland's publication watchdog banned eight allegedly subversive domestic titles, there has been a storm of self-criticism at the Hainan Publishing House. Dozens of editors were sent home to pen essays detailing their failings for publishing I Object, a book on China's first independent election candidate, which irritated senior National People's Congress officials and prompted the General Administration of Press and Publication (Gapp) to penalise the company. The accused were ordered to read their confessions at internal meetings and convince others of the sincerity of their words before being allowed back to their desks. Officials were also summoned to Beijing to explain their actions to censors and publication officials. I Object was recalled and pulped, and the publishing house had its publication quota slashed. But for all the activity, not a word about it reached the public - the Hainan editors, like many of their counterparts at other penalised publishing houses - were ordered to keep quiet. There were to be no disclosures of the penalties and no complaints I Object was one of eight books banned by Gapp for overstepping lines on content determined by the administration, the Central Publicity Department and various administrative agencies. Despite the apparent silence of the publishing industry, the long-standing game of cat and mouse between censors and publishers has continued behind the scenes. [...]

A long journey from harassment at home to world recognition
2007-03-16 SCMP
Gao Yaojie was treated like a celebrity during her visit to the US capital, where she was honoured by America's most powerful people, including senator and presidential candidate Hillary Rodham Clinton. It was a far cry from the harassment she has had to endure in her native Henan province. During a star-studded gala at the John F. Kennedy Centre for the Performing Arts on Wednesday night, Dr Gao received the Human Rights Award from US women's group Vital Voices for her work on behalf of Aids victims in China. Senator Clinton hosted the event, with members of the Washington establishment in the audience, including Senator Chuck Hagel and former Hewlett-Packard chief executive Carly Fiorina. [...] When it was reported that Henan officials had placed Dr Gao under house arrest to prevent her from visiting the US, the senator wrote to President Hu Jintao and Vice-Premier Wu Yi urging them to intervene. The ceremony was the highlight of Dr Gao's visit to Washington, during which she has been busy meeting dignitaries and granting interviews to Chinese and international media. [...]

Minister says Taiwan has not made a policy U-turn
2007-03-15 SCMP
Taiwan's foreign minister said yesterday there had been no U-turn in government policy, despite recent pro-independence rhetoric by Taiwanese President Chen Shui-bian. Addressing foreign journalists based in Taipei, after the United States once again warned the island against making any move that could escalate cross-strait tension, Foreign Affairs Minister James Huang Chih-fang said Mr Chen's remarks to an overseas-based, pro-independence group earlier this month had not represented a policy shift, nor a plan by the government to change the island's status quo. "It's just an aspiration of the president, which is in line with what he has said about Taiwan-centric consciousness in the past two years," Mr Huang said, referring to the so-called "four imperatives" Mr Chen listed in a speech on March 4. [...] Yesterday, Thomas Hodges, the new spokesman for the American Institute in Taiwan (AIT), which represents US interests in Taipei in the absence of formal relations, reiterated that Washington wanted no cross-strait tension. He said: "We are opposed to unilateral attempts to change the status quo that can cause cross-strait tensions to rise." Mr Huang said: "When the president said it was imperative for Taiwan to be independent, he was referring to the fact that Taiwan is an independent sovereign country and that Taiwan's sovereignty is independent from the People's Republic of China."

Former Taipei mayor to go on trial next month
2007-03-14 China Daily
The trial of Ma Ying-jeou, former Taipei mayor, will begin on April 3, Xinhua news agency reported, citing a Taipei local court spokesman. Taiwan prosecutors indicted Ma on charges of corruption on February 13, accusing him of diverting 11 million New Taiwan dollars (US$333,000) from Taipei's special allowance funds to his private account during his tenure as Taipei mayor. Ma immediately resigned as chairman of Taiwan's main opposition party Kuomintang but declared for the first time that he would run for the 2008 Taiwan leader election. Taipei local prosecutors handed over files of Ma's case to the local court yesterday, which has drawn lots to decide the chief justice and magistrate.

Minister warns against US protectionism
2007-03-14 China Daily
Commerce Minister Bo Xilai on Monday fired a warning at lawmakers in the US seeking to impose protectionist measures against Chinese goods, calling them "destructive" to "healthy bilateral trade relations". The moves, he said at a press conference during the annual parliamentary session, "run completely against WTO (World Trade Organization) principles". Referring to a proposal by some US lawmakers to raise tariffs on Chinese imports by 27.5 percent, he said: "If the Bill goes ahead, it could damage the currently sound Sino-US trade and will be disastrous to both Chinese and American businesses, which have benefited from each other. "If this policy is adopted, it is not only protectionism, but also trade hegemonism." Last month, the US announced a trade deficit of $232.5 billion with China last year - its largest imbalance ever recorded with a single trading partner. Washington has since increased pressure on Beijing to let the yuan rise faster, saying that its current currency regime makes Chinese goods more affordable than those from elsewhere. The US had also lodged a complaint against China at the WTO last month, alleging that the world's fourth-largest economy unfairly subsidises industries such as steel, wood products and information technology, making these already competitively priced goods cheaper still.

Minister: U.S., Europe need to cut agriculture subsidy for successful Doha talks
2007-03-12 Xinhuanet
Bo Xilai, China's Minister of Commerce, on Monday urged the United States and Europe to slash their domestic agriculture subsidy in a bid to ensure a successful Doha round of the World Trade Organization (WTO) talks. The major obstacle to the Doha Round lies in the inaction of the U.S. and Europe, the world's largest trading partners, to substantially cut their tariffs on farm produce imports and cut the huge subsidies for agriculture, said Bo at a press conference on the sidelines of the National People's Congress. He said China is a responsible and enthusiastic player in global trade and will make further efforts along with other major trading partners to push for a successful conclusion of the Doha Round. [...] The minister also urged Japan to reduce its farm produce tariff which stands at 41.8 percent, saying it is much higher than China's 15.2 percent. He said that China has made marked progress in reducing its import duties and further opening up its market to the outside world considering the nation's actual situation. China's average tariff stands at 9.9 percent on the whole, about one fourth of the world average of 39 percent, while its tariff on farm produce averages 15 percent, compared with the average of 60 percent in the world. "China has also shown great courage in opening up 100 of the 160 service sectors which the WTO calls for opening to foreign competition," Bo said, adding the developing countries opened up an average of 54, while the U.S. opened 101.

"No short-term solutions to trade imbalance"
2007-03-13 Xinhuanet
It will take time to adjust the trade imbalance between China and some of its trade partners, two high-level officials said Monday. "China wants to reduce its trade surplus, but we cannot imagine the issue being solved in the short term or by measures solely in the trade sector," said Commerce Minister Bo Xilai at a press conference on the sidelines of the annual session of the National People's Congress. "The surplus does not come solely or mainly from trade, but is caused by the overall structure of the industrial sector and international economy." China registered a trade surplus of 23.8 billion U.S. dollars in February, according to customs figures released yesterday. [...] Zhou Xiaochuan, governor of the People's Bank of China, the central bank, said the most effective approach to addressing the imbalance would be to adjust the structure of the country's economy. Some domestic measures that have been floated include expanding consumption and developing the country's service industry. Other steps include increasing imports and encouraging Chinese companies to invest overseas, he said at the same press conference. [...] As an auxiliary tool, modifying the country's exchange rate policy could also have some effect in adjusting the balance between exports and imports, he said. The country's trade surplus has been the source of friction between China and its trading partners. Bo said that last year 37 percent of the anti-dumping cases in the world targeted China.

NPC & CPPCC - Bubble still there, economist warns - Beware of blind optimism, top official tells investors
2007-03-14 SCMP
A bubble still exists in the mainland's stock market despite last month's adjustment, the top National People's Congress official whose warning helped spark the correction has said. NPC Standing Committee vice-chairman Cheng Siwei warned investors yesterday against "blind optimism" in the relatively underdeveloped capital markets. "The bubble has become a bit smaller, but we cannot say there is no such thing at the moment," Mr Cheng said on the sidelines of the annual NPC session. "It is good the market has fallen somewhat, which reduced the risk of the bubble bursting." Mr Cheng does not have any real authority over financial matters. But with a rank parallel to a vice-premier and as a leading economist, he has been known to speak on a range of economic subjects. His earlier warning, in an interview with the London-based Financial Times, helped spark the one-day plunge of almost 9 per cent in mainland stock prices last month, which also caused markets to tumble around the world. [...]

China to form state forex investment company in 2007
2007-03-12 Xinhuanet
China plans to build the state foreign exchange investment company in 2007, Shanghai Securities News reported on Monday. The company will be established on the basis of operating Central Huijin Investment, which is owned by the People's Bank of China, the central bank. The major aim of the planned company is to improve management of China's huge foreign exchange reserves and generate as more as possible returns on the reserves under the preconditions of security. Zhou Xiaochuan, governor of the People's Bank of China, has confirmed that Lou Jiwei is heading the preparatory leading group for the establishment of the company, the newspaper reported. [...]The investment company will issue 200 billion to 250 billion U.S. dollars of RMB-denominated bonds. Money to be raised will be firstly used as strategic investment for energy enterprises like CNOOC, according to the report. Hu Xiaolian, head of the State Administration of Foreign Exchange, was quoted by the newspaper as saying on Sunday that the planned state foreign exchange investment company will be launched within the year, and preparations are now well underway. [...] It is reported that Central Huijin will pump another 25 billion to 30 billion U.S. dollars into the Agricultural Bank of China to help improve its balance sheet before the bank is ready to go public.

Working group on denuclearization of Korean Peninsula to hold 1st meeting
2007-03-13 Xinhuanet
The working group on the denuclearization of the Korean Peninsula will hold its first meeting on March 17 in Beijing, said Chinese Foreign Ministry spokesman Qin Gang here on Tuesday. The meeting will precede the sixth round of the six-party talks which will begin on March 19, Qin said. Chinese Vice Foreign Minister Wu Dawei will head the working group, said Qin at a regular press conference. During the last round of talks, the six parties adopted a joint statement, and later reached consensus on the initial steps to implement the joint statement. The steps included establishing five working groups, which will discuss the denuclearization on the Korean Peninsula, DPRK-U.S. relations, DPRK-Japan relations, the economic and energy resources cooperation, and peace and security of northeast Asia. Qin said, he hoped all the working groups will report to the meeting of chief envoys on March 19. Some issues may be submitted for discussion during the meeting of chief envoys from the six participating countries which are China, the Democratic People's Republic of Korea (DPRK), the United States, the Republic of Korea, Russia and Japan, Qin added. The time frame for the new round of the six-party talks will depend on the progress being made, Qin said, adding that no detailed arrangements have been made for the upcoming talks. Qin said Chinese Vice Foreign Minister Wu Dawei met United Nations' chief nuclear inspector to Pyongyang, Mohamed El Baradei, on March 12 and briefed him on recent developments. Qin said Baradei's visit to the DPRK is an important step for the DPRK and the IAEA and he hopes Baradei's visit will achieve positive results.

US paves way for Macau to unblock Korean accounts
2007-03-15 SCMP
The US Treasury announced steps yesterday that could enable the release of North Korean assets frozen in Macau's Banco Delta Asia - meeting one of Pyongyang's demands in talks on its nuclear disarmament. In a two-step decision, the Treasury said it was severing ties between the bank and the US financial system because of its alleged money laundering for North Korea, but would provide guidance to help Macau regulators identify the highest-risk account holders and those who pose a lower risk. This risk assessment could be used by Macau to release some North Korean money that has been frozen and is being held by the bank. Banco Delta Asia holds roughly US$24 million in frozen North Korean assets. Macau authorities could release between US$8 million and US$12 million, although it may take weeks to do so. [...] The freezing of the accounts angered North Korea so that it refused for more than a year to participate in six-nation talks on ending its nuclear programme. It only returned to the table in December. A deal on the nuclear issue was struck on February 13, in part because of an agreement to resolve the dispute over the frozen funds within 30 days. [...]

Tax Controversy Traps Finance Minister
2007-03-14 UB Post
Around 3,500 families have not enjoyed their financial rights as was granted by the law on freedom from Value Added Tax (VAT) for construction materials, equipments, vehicles, production, work and service for construction, as Prime Minister M. Enkhbold and the Minister of Finance N. Bayartsaikhan have not fully implemented the provisions of the law, thinks the National Soyombo Movement (NSM), at a press conference on March 13. According to the law, construction materials, equipments, work and production are free from VAT in order to reduce expensive house prices. The law was approved in 2005 and since August 2006 the construction companies have enjoyed the discount of the tax but subsequently they sold the houses at a high price with VAT to people. The NSM civil movement submitted official documents to the General Taxation Office and Ministry of Finance concerning how citizens could claim back the VAT. Unfortunately, the Ministry of Finance replied to the civil society movement that the citizens do not have enough grounds on which they could take back the VAT since the companies have no clear documents that they bought the houses with VAT. The NSM calculates that roughly 3,500 families should be claiming back around US$11 million, apportioning a share of US$4-5,000 to each family. B. Lkhagvajav, Member of the NSM declared that the law should serve all people equally, both builders and owners. The explanation of the Minister of Finance is that though the construction companies could claim a discount under the law, the people who bought the apartments have no right to enjoy this discount. .By saying this he is breaking the law, charges the NSM. And if the Minister of Finance continues to refuse the tax discount to these people we will submit a petition to the Constitutional Court (Tsets) on the minister for not fully realizing the law.

News in brief
2007-03-14 Mongol Messenger
The Minister of Foreign Affairs N. Enkhbold and the U.S Ambassador to Mongolia Mr Mark Minton signed a protocol to exchange instruments of ratification on Counsel Convention concluded by the Governments of Mongolia and the USA, on March 6. The ratification is an important step toward protecting the interests of Mongolians residing in the USA. The protocols come into effect on April 5.

Mirjam Müller
Embassy of Switzerland