Der wöchentliche Presserückblick der Schweizer Botschaft in der VR China
The Weekly Press Review of the Swiss Embassy in the People's Republic of China
La revue de presse hebdomadaire de l'Ambassade de Suisse en RP de Chine
  7-12.7.2013, No. 483  
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Table of contents

DPRK and South Korea

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Bilateral Issues

Commentary: Chinese-Swiss FTA, a model for cooperation with EU (Xinhua)
Nearly two months after Chinese Premier Li Keqiang's fruitful visit to Switzerland, a Free Trade Agreement (FTA) between the two countries was finally inked in Beijing on Saturday. It is widely believed the FTA between "the heart of Europe" and the world's second largest economy not only cements a win-win relationship between the two countries, but also serves as a model for economic cooperation between Beijing and Brussels amid flaring anti-dumping tensions. Switzerland has been always at the forefront of economic relations with China. Back in 2007, it became the first European country to recognize China's full market economy status, which later facilitated the signing of the FTA. […] Under the agreement, Switzerland and its competitive industries, including medicine, machinery, watch making and tourism, will undoubtedly benefit more from a large and free Chinese market. China, which differs from Switzerland both geographically and economically, will also benefit from the highly complementary cooperation modes. Zero tariffs and free import channels for cutting-edge technology from Switzerland will satisfy the growing needs of Chinese consumers and help accelerate the country's industrial transformation and upgrading. So far, more than 60 Chinese enterprises have expanded their business in the European market by setting up branches in Switzerland. The number is expected to grow substantially following the FTA. While the Chinese-Swiss agreement offers a great chance for the two sides to unlock their enormous potential and bring more concrete benefits to their peoples, the same opportunity exists for the broader EU. With the debt-ridden continent still trying to get back on its feet and the world economy burdened with uncertainties, closer China-EU collaboration has taken on a new urgency. However, the two economic giants were involved in a series of trade disputes last month after the EU imposed a provisional anti-dumping tariff of 11.8 percent on solar panel imports from China, and China launched anti-dumping probes into EU wines. If an agreement cannot be reached between the EU and China by Aug. 6, the duties on Chinese solar panels, which will rise up to 47.6 percent, could severely damage the European solar value chain and put more than 600,000 jobs at risk. The Chinese-Swiss FTA comes just in time to calm the disputing parties and serves as a model for a win-win trade relationship. China and Europe vary in many aspects, and bilateral trade in large volume cannot be friction-free. However, a healthy partnership should be based on the fact that both parties abandon protectionism and offer a fair environment for all of their trade partners. There is no winner in a trade war. If the opportunity is seized by the EU to rethink the long-term strategic interests of bilateral cooperation instead of immediate gains, the two highly complementary economies can give full play to their respective advantages and share more profits. ^ top ^

Swiss seek offshore yuan trading role (SCMP)
Switzerland wants to become an offshore yuan trading centre in Europe, competing with Frankfurt and London to corner trade in China's currency. […] While no official talks have taken place, Schneider-Ammann said he hoped the idea would become "more serious" in the coming weeks or months. London, the centre of the world's US$4 trillion-a-day market for foreign exchange trading, claims to have the edge in Europe after the Bank of England signed a three-year currency swap line with the People's Bank of China last month. A group representing Frankfurt's financial industry predicted last week that the European Central Bank would get a swap deal that would allow it to exchange euros for as much as 800 billion yuan (HK$1.01 trillion) - four times the size of the Bank of England agreement. To have a trading hub, a central bank must have an agreement with the PBOC to swap its currency for yuan. This gives a central bank access to yuan funds to back up firms doing business with Chinese partners. ^ top ^


Foreign Policy

China, Russia complete first day of actual maneuvers in joint naval drill (Xinhua)
Chinese and Russian warships for the "Joint Sea-2013" drill practiced troop deployment and anchorage defense here on Monday. Naval vessels participating in the drill started departing the dock at 3 p.m. local time (0400 GMT) and sailed to designated sea areas. By 9 p.m. (1000 GMT), troop deployment was completed. The two sides then organized anchorage defense respectively. Chinese naval troops practiced the use of diver detection sonar and the setting-up of watch posts, said Yang Junfei, deputy commander of the North China Sea Fleet. In the following days, the two sides will carry out a variety of exercises including joint air defense, maritime supply, joint escort and the rescue of hijacked vessels. Staged on Wednesday would be joint maritime search and rescue, the use of actual weaponry on the sea and a maritime parade. Chinese naval ships arrived in Russia's Far East port of Vladivostok on Friday for the joint naval drill. Before the start of actual maneuvers, the two sides have conducted careful and detailed preparations and had an open-day event. Seven vessels from China's North Sea Fleet and South Sea Fleet and 12 vessels from Russia's Pacific Fleet are taking part in the week-long exercises. Participating forces also include three fixed-wing aircraft, five ship-borne helicopters and two special operations detachments. ^ top ^

Chinese FM to visit Kyrgyzstan, Uzbekistan, Turkmenistan (Xinhua)
Chinese Foreign Minister Wang Yi will pay an official visit to Kyrgyzstan, Uzbekistan and Turkmenistan at the invitation of his Kyrgyz counterpart Erlan Abdyldaev, Uzbek counterpart Abdulaziz Kamilov and Turkmen counterpart Rashid Meredov, a Foreign Ministry spokeswoman said on Monday. During Wang's visit to Kyrgyzstan, he will also attend a meeting of the Council of Foreign Ministers of the Shanghai Cooperation Organization, spokeswoman Hua Chunying said at a regular press briefing. The entire trip will run from July 12 through July 19. ^ top ^

China's US envoy urges 'cool heads' at summit (SCMP)
China's top envoy to Washington yesterday urged both sides to "keep a cool head" amid high expectations for this week's Sino-US strategic and economic dialogue. The high-level talks - scheduled to start tomorrow in Washington - come just a month after presidents Xi Jinping and Barack Obama promised to build a "new model" for the relationship between the two powers during their first summit in California. Ahead of the talks, Chinese and US officials met in Washington yesterday for the first session of a "cyber working group", which a State Department official said would let the two sides "raise concerns, develop processes for future cooperation and set the tone" on cyberissues, Agence France-Presse reported. In a commentary on the People's Daily website, Ambassador Cui Tiankai said the Sunnyvale talks had begun a new stage in the Sino-US relationship, but cautioned that the various disputes would not be resolved so quickly. "We have to keep a cool head for Sino-US relations," he wrote. "The development path for this bilateral relationship will not be smooth after just one meeting of the two presidents." […] The annual strategic and economic dialogue, the fifth such meeting, will be led by Vice-Premier Wang Yang and State Councillor Yang Jiechi, on the Chinese side, and Secretary of State John Kerry and Treasury Secretary Jacob "Jack" Lew for the US. All four officials are new to their roles, as both nations have undergone cabinet reshuffles. Shi Yinhong, an international relations professor at Renmin University, said Beijing was trying to dampen "inflated expectations for the talks". "The two nations may reach some consensus on North Korea's nuclear programme, but there won't be major outcomes," Shi said. "Chinese officials do not want people to have very high expectations." Former National Security Agency contractor Edward Snowden's disclosures that the US had been hacking into Chinese computer systems had put Washington in an awkward position, observers said. […]. ^ top ^

US reaction in Asia 'out of proportion', says China envoy (SCMP)
The US military presence in the Asia-Pacific region is out of proportion to the security threat facing the region, China's top envoy to Washington said on the eve of high-level talks between the countries that start today. In an interview with CNN International's Christiane Amanpour, Cui Tiankai said threats in Asia-Pacific centered on North Korea's nuclear programme. But he said the United States should not use the issue to boost its military presence throughout the region. "I don't think the US should overreact to such a threat," Cui said, adding that the strengthening of US military alliances were "not quite in proportion to the real threat", so people in the region had reason to question Washington's intentions. The interview aired ahead of the Sino-US strategic and economic dialogue in Washington, in which top officials will discuss issues, including regional security, that were a source of friction between the two powers. During the talks, the US is expected to urge Beijing to exert pressure on Pyongyang to halt its nuclear programme. Cui said denuclearisation of the Korean peninsula was a national security concern for Beijing. But he argued that maintaining regional stability would be defeated if sides resorted to armed conflict. Cui also sounded dubious about Washington's claims that it has not taken sides in Beijing and Tokyo's dispute over the Diaoyu islands, which Japan calls the Senkakus, in the East China Sea. US officials have said they consider the islands part of the territory covered under its defence pact with Japan. […] Cui said Beijing would seek "some clarification" about allegations by former National Security Agency contractor Edward Snowden that the US had hacked Chinese computer systems. He stressed that the central government had adhered to the "one country, two systems" principle and had not interfered in Hong Kong's decision to allow the US fugitive to leave the city. "It is a matter between Mr Snowden and the US government," Cui said. "It's none of our business." Observers said Cui's remarks showed the extent of Beijing's frustration over Washington's pivot towards Asia as it winds down its military involvement in the Middle East and Afghanistan. […]. ^ top ^

China is trying to change region by force, warns Japan (SCMP)
China is trying to change the regional status quo by force based on claims that contradict international law, Japan said in the first defence white paper to be published under Prime Minister Shinzo Abe's government. The report released yesterday was harshly critical of China's actions in waters near East China Sea islets claimed by both countries and prompted a sharp response from Beijing. A foreign ministry spokeswoman said Japan was exaggerating the so-called "China threat" to "artificially create regional tension and confrontation". The Japanese Defence Ministry said in its annual report: "In cases where China's interests conflict with those of neighbouring countries, including Japan, it has taken measures that have been called high-handed, including trying to change the status quo by force." Ruling party politicians called for the Japanese military to beef up its ability to respond. The report comes as Japan overhauls its midterm defence strategy after Abe increased the defence budget for the first time in 11 years. It said: "China is expanding and increasing its military and security activities, and combined with the lack of transparency, this is a cause for concern in the region and the international community," it said. China announced in March defence spending would rise 10.7 per cent this year to 740.6 billion yuan (HK$928 billion). But Foreign Ministry spokeswoman Hua Chunying said at a briefing in Beijing before the white paper was released: "Japan has been hyping the so-called China threat and creating regional tensions to mislead international opinion. It will not help solve the issue." She added that China was "adhering to the path of peaceful development". Xinhua echoed the sentiment yesterday and accused Abe of "playing with fire" by "making irresponsible remarks". It said: "Since taking office last December, Abe has repeatedly made remarks seen as attempts to whitewash Japan's wartime atrocity and challenge the post-war world order. "By indulging the rightist tilt and engaging in costly territorial disputes with its neighbours, the Japanese government has essentially killed its proclaimed dream of becoming a normal nation." Lian Degui, deputy director of Japanese studies at the Shanghai Institutes for International Studies, commented that Tokyo's criticism of China was a reflection of the bilateral tensions between the two nations in recent years. "Neither side can find common ground to improve their relationship," said Lian. "The Japanese side is trying to play a more important role in international affairs by having a stronger military force, and to realise this goal, it has to highlight the threat of China to intensify the international support." The white paper included a description of Japan's efforts to bolster defence ties with the US military, including through joint training exercises. These included last month's "Dawn Blitz" island defence drill in California. ^ top ^

China, U.S. sign six new EcoPartnership agreements (Xinhua)
China and the United Sates on Thursday expanded their EcoPartnership program with the signing of six new partnerships to reduce greenhouse gases emissions and improve energy efficiency as well as create jobs. The new agreements will add six partnerships to the original group of 18, said Chinese State Councilor Yang Jiechi at a signing ceremony during the fifth round of China-U.S. Strategic and Economic Dialogue in Washington. "Today, another six pairs of Chinese and American institutes will join the partnerships, please accept my warm welcome and hearty congratulations," Yang said. "I'm hopeful and confident that the 24 pairs of EcoPartners will draw on their respective needs and comparative advantages, fully tap into their cooperation potential and constantly innovate on their model of cooperation to maximize the outcomes of the partnerships," he said. At the signing ceremony, U.S. Deputy Secretary of State William Burns said: "The six new EcoPartnerships we are committing to today are the best of the best. Some of you will be working on energy efficiency while others will be creating cutting-edge technologies to use landfill gas, conserve our groundwater resources and create plant-based plastic bottles. Whatever your project, I wish you the vest best in your work together." Under the agreements, China's Yangtze River Delta Circular Economy Technology Research Institute and U.S. giant Coca-Cola will work together to develop a way to use agricultural waste to produce Coke's plastic bottles while Peking University will cooperate with New York Institute of Technology to protect groundwater resources. Tongji University will team up with Stony Brook University to test a suite of cutting-edge landfill-gas-to-liquids technologies. Guizhou International Cooperation Center for Environmental Protection and Raven Ridge Resources will jointly seek to open China's market for draining and utilizing coal mine methane. Beijing Energy Conservation and Environment Protection Center and U.S. Natural Resources Defense Council will partner to improve smart grid's energy efficiency and management, while China's National Center for Climate Change Strategy and International Cooperation will come into partnership with the U.S. Institute for Sustainable Communities in efforts to help translate national- level clean energy policies into local action. The EcoPartnership program was established in December in 2008 under the U.S.-China Ten-Year Framework for Cooperation on Energy and Environment to formally link stakeholders from both countries to work on clean energy and sustainable development. ^ top ^

Mixed reviews over Vice-Premier's light-hearted tone (SCMP)
Wang Yang's surprisingly light-hearted tone in Sino-US talks - in which the vice-premier compared the countries' relationship to a "straight" marriage and joked about Americans' "longer" noses - reflects the more direct and personable style of the new Chinese leadership. But the decision to open a high-level economic dialogue on such a humorous note drew mixed reviews at home. Some saw it as a welcome change from the stern image of many Communist Party leaders. Others thought it was inappropriate. Wang's remarks came at a meeting with US Treasury Secretary Jacob Lew to start the strategic and economic dialogue in Washington on Wednesday. The newly installed vice-premier compared his relationship with Lew, who also took office this year, to a new marriage. "In Chinese, when we say a pair of new people, it means a newlywed couple," he said, adding with a joke: "Although US law permits same-sex marriage, this is not what Jacob Lew and I want." But Wang did not stop there. He went on to refer to News Corporation chief Rupert Murdoch's recent divorce filing while explaining how China and the United States were bound together despite the inevitable differences between them. "We cannot go for divorce like Wendi Deng and Rupert Murdoch have done," he said. "It would be too big a price to pay." In another address to kick off the two-day annual meeting, Wang joked that he was not sure what to expect before making his first visit to the US a decade ago. "Well, in the past two days, I can see that the Americans are still taller than the Chinese and still have a stronger body and longer nose than the Chinese," Wang said. "And nothing much has changed, so I feel confident of my visit this time." He made light of the two nations' long cold war estrangement, by way of explaining how far the relationship had come. "The Chinese were calling the Americans imperialists," he said. "I don't know what the Americans were labelling China, maybe a communist bandit. However, this kind of exchange of accusations and abuses failed to settle anything." Wang acknowledged that debates between the countries continued. But he said they often had benefits, citing a metaphor used by President Xi Jinping last month in meeting his US counterpart Barack Obama. "When the rabbit was cornered in a fight with a strong opponent like an eagle, the rabbit would come with some courage to fight back," Wang said. Beijing Foreign Studies University associate professor Qiao Mu said Wang had presented an image in sharp contrast to the "rigid and stern look" of most Chinese leaders. "His style also suits the calls for officials to be more personable at home." Professor Zhan Jiang, a media specialist also with Beijing Foreign Studies University, thought Wang was funny and effective. "At least he has shown some of his character," he said. But some mainland online users said Wang's approach was unbecoming for such a formal setting. "So who's the husband and who's the wife in this marriage?" one blogger wrote. Another one said: "I can't see the humour in such vulgar remarks.". ^ top ^

Sino-US meeting in Washington seals deals on climate reform (SCMP)
Top US and Chinese officials were wrapping up annual strategic and economic talks that were said to have yielded greater co-operation on reducing greenhouse gases, but again exposed Washington's frustration over cybertheft it says emanates from the emerging Asian power. […] In a sign of the importance he attaches to managing ties with China, US President Barack Obama - who generally meets only leaders from other nations - planned to receive the two main Chinese delegates at the White House. […] Washington wants Beijing to speed up economic reforms and reduce state involvement in the economy. US Treasury Secretary Jacob Lew has renewed calls for China to guarantee intellectual property rights and to allow a rise in the value of the yuan. China has its own concerns about the screening of its companies that want to invest in the United States. The most tangible outcome of the talks was an announcement of initiatives to reduce greenhouse gas emissions and air pollution. The two sides agreed to five initiatives to cut carbon output from the largest sources, including heavy duty vehicles, manufacturing and coal-fired plants, the State Department said. The US-China climate change working group, which officials from both countries formed in April, will work with companies and non-governmental groups to develop plans by October to carry out the measures aimed at fighting climate change and cutting pollution. The initiatives are also aimed at improving energy efficiency, collection and management of greenhouse gas data, and promoting electric grids to carry more power from renewable energy. The agreements will concentrate on improving technologies, will not be binding and will not seek to cut emissions by specific volumes. Still, the hope is any co-operation could help lend support to wider international talks on greenhouse gas reductions and help finalise a global treaty to replace the Kyoto Protocol on climate change by 2015. "On the one hand, it's not suddenly going to transform the negotiations, I'm absolutely not saying that, but... it will project something positive that I think will be helpful," said US climate envoy Todd Stern. China and the United States are responsible for about 43 per cent of global greenhouse gas output. Increasing the ability of the two countries to capture carbon emissions from coal-fired plants and to bury them underground was also the focus of one of the agreements. […]. ^ top ^


Domestic Policy

Inside the world of a '10-yuan' sex worker (SCMP)
[…] A skinny man in his 60s slowly zips up his trousers as he walks out of one of the rooms. […] A row of yellow doors, some open, some closed, line the right-hand side of the corridor. There is no need for a reception desk. Only two types of people come here and they know what they want; men seeking cheap sex and women desperate for money. […] The scene is typical of the mainland's 10-yuan shops. These cheap brothels are common in less developed cities and townships, catering for the grass-roots of society, people who can't afford to pay for better. The women are ageing sex workers gone to seed from years of toiling in low-end brothels. Like everything else in the mainland, inflation has taken hold and while the 10-yuan name remains, services are more expensive. Sex costs between 25 and 40 yuan - less than the price of a cinema ticket - with discounts for loyal customers. Shan, a troubled young woman who is approaching 30 years of age, is one of the very few younger workers at one 10-yuan shop in her native Guangxi Zhuang autonomous region. Not pretty enough to earn money in a higher class establishment, she has been working in sex shops for three years. While she occasionally gambles, most of the 50 to 100 yuan she earns from each client goes towards sending 5,000 yuan per month to help pay for her 15-year-old sister's leukaemia treatment. […] Before I started three years ago, I lingered outside over 30 times, not daring to walk in. But I needed to figure out a way to get more money, so I forced myself in. "I cried every time after finishing a shift in my first two weeks. It's not something I could ever get used to, but one must bow to the reality," Shan says. With her health frail, Shan hopes to save enough money to leave the trade and set up an online shop in a few years. The majority of sex workers in 10-yuan shops are aged 40 or over, with some in their 50 and 60s. Uneducated and with little bargaining power, it is estimated that at least 90 per cent carry sexually transmitted diseases, as the use of condoms is negotiable, advocates for sex workers' rights say. "They are less conscious of the risks of HIV/Aids, which means they can easily be pressed into not using protection. Some even thought they could get a government subsidy after contracting Aids," said a rights advocate who asked not to be identified. According to The World Health Organisation and a report by New York-based Human Rights Watch released in May, there are four to six million sex workers on the mainland, although some estimates put the figure as high as 10 to 20 million and say they account for 6 per cent of its gross domestic product. Men outnumber women on the mainland thanks to the distortions of the one-child policy and a preference for male babies. The distorted sex ratio has created enormous demand for cheap sex among hundreds of millions of male migrant workers. A survey in 2009 found about 30 per cent of married male rural migrants had visited a prostitute. […] For a non-local, the hostel is almost impossible to find. One must twist and turn through a wet market where most vendors sell lychees, the local speciality, for 10 yuan per half kilo. […] "No more room is available on the second floor. Check out the third to see if there are vacant ones. I heard a girl just moved in today on the third floor," said one sex worker in her 40s who said she came from the impoverished Guizhou province. […] Ye [an advocate for sex workers' rights] says there are three kinds of sex worker on the mainland. They are classified by "legality" - despite the fact that all kinds of prostitution is officially illegal. Those referred to as "illegal" are the grass-roots workers like Shan, who are often exploited and extorted in police crackdowns because they don't have the income to pay a "bribe for safety". Those who have connections with the police and suffer only occasional raids are considered "semi-legal". "The 'legal' ones are usually beautiful and young women with very high income catering for high-end customers. They drive luxurious cars and carry fancy handbags. It usually takes a while to figure out they are in fact sex workers," Ye said. […] A former owner of a low-end brothel who used to hire six women said she had left the business recently as it was impossible to survive in Bobai without offering "protection money". […] "That evening, she collapsed and cried. She said the police, during the day, were the ones who extorted her. She said she would rather die than get into one of their cars," the owner said. ^ top ^

Police seize chicken feet in storage since 1967, smuggled from Vietnam (SCMP)
When police raided an illegal food storage site in Nanning, capital of the Guangxi autonomous region, they found decades-old chicken feet waiting to be processed. Some even dated to 1967, during the tumultuous days of the Cultural Revolution. The storage site, raided by police in May, was run by a gang that reportedly smuggled chicken feet, beef tripe and cartilage from Vietnam across the porous border to Guangxi. Some 20 tonnes of meat were seized in the raid, according to Xinhua. The bygone chicken feet, in particular, were brought into China frozen; they would then be processed with bleach and other chemicals to add weight and improve its colouring. Through this process, the group managed to turn 1kg of old chicken feet into 1.5kg of seemingly fresh chicken feet, making up to 16,000 yuan (HK$20,230) profit on each tonne. […]. ^ top ^

Chinese Red Cross denies cash-for-organs accusation (Xinhua)
The Shenzhen branch of the Red Cross Society of China has denied that it only helps arrange organ donations after hospitals pay for them, as claimed in a media report. A report in Monday's Beijing News said local branches of China's Red Cross Society require hospitals requesting organs to donate various amounts of money in order to acquire donator information. The branches do not disclose to the public how they spend the donation. The report cited a hospital employee in Guangzhou, capital of south China's Guangdong Province, as saying an average donation in exchange for an organ is 100,000 yuan (16,320 U.S. dollars). However, the Shenzhen branch issued a statement to Xinhua on Monday to say that it has worked on 25 cases with the General Hospital of Guangzhou Military Area Command, and the latter has so far donated 150,000 yuan to the branch. The branch has provided detailed expense statements to the hospital, according to the statement. There is no 100,000 yuan-per-organ arrangement, and donation usage is always disclosed to hospitals on a regular basis, it said. The General Hospital of Guangzhou Military Area Command responded to Beijing News' report by telling Xinhua that it did not receive an interview from the newspaper. "When it comes to organ donations, our staff always stick to relevant policies and regulations," said the hospital. Li Jingdong from the Guangdong branch of the Red Cross Society said Red Cross branches raise donations to help organ donors and their families, but there is no "donation for resources" arrangement. He added that all organ donation cases were arranged through the China Organ Transplant Response System since its establishment in April 2011. ^ top ^

Fresh concern over Chinese dairy products (SCMP)
A recent comment by the deputy director of dairy management in Guangzhou, saying that half of the city's products are not made from fresh milk, has sparked public concerns over their safety. Wang Dingmian, who is also an executive council member of the Dairy Association of China, said at a symposium on Saturday that the problem was the result of a limited supply of fresh milk. The amount produced from 20,000 cows in Guangzhou plus the milk transported into the city covers just 50 to 60 per cent of local demand, he said. "The gap [between supply and demand] can be filled only with a kind of reconstituted milk that is a mixture of imported milk powder and water," he was quoted as saying by the Guangzhou-based New Express on Monday. "Therefore, the milk we drink is not 100 per cent fresh." After that report, the newspaper said yesterday that it had received a flood of calls from residents asking which brands were made with reconstituted milk. Wang told the newspaper that all three major brands in the city use reconstituted milk. […] Besides pasteurised milk, which must be fresh, Wang said many other products, such as yoghurt, could be made from reconstituted milk. […] The Shanghai Dairy Association's deputy secretary, Cao Mingshi, told the South China Morning Post that it is common practice for dairy brands on the mainland to use reconstituted milk in their products because fresh milk is in such short supply. "It is legal as long as they mark the contents on the labels. Consumers can make own their decision," Cao said. ^ top ^

Xi brings 'mass line' message to home of revolution (SCMP)
President and Communist Party chief Xi Jinping visited the hallowed revolutionary ground of Xibaibo yesterday just three weeks after urging Politburo members to adhere to his "mass line" campaign to bolster public support. In Xibaibo - the headquarters of the People's Liberation Army before its 1949 victory in the civil war - Xi cited the famous "two musts" speech by late party leader Mao Zedong, who developed the mass line leadership doctrine, state media said. Xi reminded cadres of Mao's order to preserve modesty and prudence, while sticking to a plain lifestyle and keeping up the struggle. He said the remarks were Mao's insights on how a new ruling party could maintain a long and peaceful reign. Xi told local officials that "revolutionary history is the best nutrition for communists". He also toured Zhengding county in the northern province of Hebei, where he began his political career as deputy party secretary more than three decades ago. Although the visit was later announced by state media, the first official report came from Hebei's weather bureau. It posted a photograph of Xi waving to onlookers in the street, noting Zhengding's weather "is cool and good for inspection tours". Analysts saw the trip as a well co-ordinated effort to support Xi's year-long mass-line campaign, a revival of Maoist doctrine to strengthen the party's ties with the people. Xi officially launched the campaign after a three-day meeting of the decision-making Politburo last month. "The visit to the rural area in Hebei and Xibaibo is designed to appeal to the conservative wing within the party," said Johnny Lau Yui-siu, a Hong Kong-based commentator. Lau noted that Xi's visit came after his high-profile trip to Guangdong in November, in which the new party chief voiced his commitment to the economic opening under late paramount leader Deng Xiaoping. In contrast, Xi's predecessor, Hu Jintao, picked Xibaibo for the site of his first inspection tour soon after being named party chief in 2002. "The trips with different political symbolism are deliberately designed to appeal for political support from both camps within the party," which also suggested that "the new leader still lacks the confidence to push ahead with his own political agenda". ^ top ^



Liberal Peking University professor threatened with expulsion (SCMP)
A renowned professor has confirmed online rumours that his peers will decide whether he will be expelled from China's most eminent university after he made a series of remarks in favour of free speech and constitutional governance. Economics professor Xia Yeliang of Peking University was told by his department that his fate would be decided by a faculty vote, he told the South China Morning Post on Monday. "They told me it's because of all the things I have said and written," Xia said. "They have threatened me before, but this is the first time they will vote on my expulsion." Over the last years, Xia has been one of the most outspoken liberal voices among Chinese academics. A friend of imprisoned Nobel Peace Prize laureate Liu Xiaobo, he was among the first signatories of Charter 08, the call for personal freedoms that landed Liu in jail. In 2009, Xia wrote an open letter to Liu Yunshan, who until last year headed the Communist Party's propaganda department, calling for an end to censorship. In 2011, when the Arab Spring inspired hope for institutional reforms in China, he was placed under house arrest. Recently, he has been writing critical remarks - on Twitter and Sina Weibo - about party censorship and President Xi Jinping's "Chinese Dream" slogan. Several, at least seven he said, of his Sina Weibo accounts have been deleted in the past. In one post, he wrote that the Chinese Dream was "going against constitutionalism and humanity". Xia said he was told by university officials, whom he declined to identify, that contrary to rumours circulating on microblogs, the vote was not the result of any specific tweet, but of his overall message. Xia said that he would not be allowed to speak to the voting plenum, which is scheduled for September, and that he did not know how many of up to 35 professors would participate in it. While he remained defiant, he said he was not optimistic about his fate. "[Voting professors] can ask for leave," he said. "But they could receive instructions on how to vote from their superiors. They will ask themselves, if they vote for me, what benefits will they get?" He added that he could not remember the last time the faculty voted on expelling a professor. "This is not coming from Peking University, this is coming from the central leadership," he said. "The state of academic freedom is getting worse and worse. Nowadays, you don't have the right to debate anymore. A university is a place that should be free and open." Currently a visiting scholar at Stanford University in California, Xia said he planned to return to Beijing by the end of August. "I have opportunities to stay [in the US], but I want to keep teaching in China," he said. He said he hoped his classes in American economic history and institutional economics would be "helpful for the promotion of civil society. I want to be in China for that. I will fight the expulsion". Peking University's School of Economics could not be reached for comment on Monday. ^ top ^



Top political advisor stresses stability in Tibetan region (Xinhua)
Top political advisor Yu Zhengsheng has called for lasting prosperity and stability of the Tibetan region in China by accelerating the improvement of locals' livelihoods and fighting against the 14th Dalai Lama clique. The Dalai Lama has long been engaged in secessionist activities, which runs against both the common interests of people of various ethnic groups and the traditions of Tibetan Buddhism, said Yu, a member of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee. The Dalai Lama's "middle way," aimed at achieving so-called "high-degree autonomy" in "Greater Tibet," is completely opposite to China's Constitution and the country's system of regional ethnic autonomy, Yu said. He urged for an absolute fight against the Dalai clique in order to realize national unification and the Tibetan region's development and stability. Tibetan Buddhists should politically draw a clear line with the Dalai Lama and firmly oppose any secessionist act that sabotages the CPC's rule and the socialist system, Yu said. The policies of the CPC Central Committee toward the Dalai Lama are "consistent and clear," he said. "Only when the Dalai Lama publicly announces that Tibet is an inalienable part of China since ancient time, gives up the stance of 'Tibet independence' and stops his secessionist activities, can his relations with the CPC Central Committee possibly be improved," Yu said. In Gannan Tibetan Autonomous Prefecture in southern Gansu Province, Yu visited herders, saying that development is the priority of the region, which includes Tibet Autonomous Region and parts of Qinghai, Gansu and Sichuan provinces in western China, so as to improve the living conditions of farmers and herders. "Only when people's lives have been improved can they be better united with the CPC and become a reliable basis for maintaining stability," said Yu. ^ top ^

Ethnic affairs chief calls for 'absolute fight against Dalai Lama clique' (SCMP)
Amid reports that police opened fire on a Tibetan gathering in Sichuan province, the country's top ethnic affairs official has called for "an absolute fight against the Dalai Lama clique". Yu Zhengsheng, who heads the nation's top political advisory body and is a member of the Politburo's Standing Committee, made his remarks during an inspection tour of the Gannan Tibetan prefecture in Gansu province on Sunday and Monday, Xinhua reported. "For the sake of national unity and the development of stability in Tibetan regions, we must take a clear-cut stand and deepen the struggle against the Dalai clique," Yu was quoted as saying. He reiterated Beijing's demand that the Dalai Lama openly recognise Tibet has been part of China since ancient times and abandon any separatist activities, Xinhua said. His visit coincided with reports from overseas Tibetan rights activists that police had opened fire on a group of monks and others while they gathered to mark the Dalai Lama's 78th birthday in a Tibetan part of Sichuan. Two Tibetan monks were in critical condition after being shot numerous times in the head at the traditional celebration in Ganzi prefecture on Saturday, according to the US-based International Campaign for Tibet (ICT) and the Tibetan government-in-exile in Dharamsala, India. Rights activists said hundreds of Tibetans from Tawu township, including many monks and nuns, had gathered at the base of a sacred mountain near the Nyitsu Monastery, when security forces arrived, began shooting and firing tear gas. At least 10 participants - eight monks, a nun and a layman - were confirmed injured, ICT and the government-in-exile said. One of the injured monks, who is in hospital in Chengdu, was said to have suffered as many as eight gunshots to the head. The official website of Ganzi prefecture appeared to be down yesterday and an official from the local government said he was not aware of the incident. The Foreign Ministry said it was unaware of the reports, but the Dalai Lama was using the occasion of his birthday to promote a separatist agenda. "We hope that people can see clearly the true nature of this," ministry spokeswoman Hua Chunying told a press briefing. The reports of violence undercut a recent flurry of speculation over whether the new leadership was softening its stance on Tibet. While military control in the Tibetan regions remain tight, especially during holidays, shootings are extremely rare. "This does not have a precedent, and may well be the first shooting at a cultural gathering," said Robert Barnett, director of Columbia University's Modern Tibetan Studies Programme. "The big question is what went wrong here? This is a dramatic escalation and very serious.". ^ top ^



[Commentary:] Fate of disturbed Xinjiang lies in choices that its people must now make (Global Times)
On June 26, a violent attack took place in Shanshan county, Xinjiang Uyghur Autonomous Region, killing 35 people. Upon hearing the news, I was astonished, because no violence has occurred in the east of Xinjiang, where Shanshan is situated, in recent years. If the attackers are from outside Shanshan, it means they are changing their strategy and shifting from key areas, where the government pays special attention, to non-key areas. If they are local Shanshan people, it means violent activities bred from extremism have taken root here. The Shanshan attack took place two months after the Bachu attack and generated more casualties. But even before the government and the public recover from the latest incident, another group attack took place in Hotan. Beijing can no longer wait. It deployed special forces in many parts of Xinjiang with the aim of deterring violent attackers and to ease the public's anxieties. Near to the fourth anniversary of the July 5 riots in Xinjiang, the situation seems to be spiraling out of control and a turbulent period seems to be on the horizon. Some experts say this is an organized activity led by hostile foreign forces. I don't agree. There is no organizational connection between each case. If there's anything linking them, it is that they all took place under the influence of religious extremism, which is the biggest threat to Xinjiang's security. The main fault of the government this time is that it underestimated the influence of social media tools in this Internet era. Widespread rumors online created social panic. Meanwhile, the case once more exposes the shortcomings of Xinjiang's current anti-terrorism system. Problems exist in personnel deployment, police capability and training and arms equipment. To guard against violence and terrorism, Xinjiang needs a well-trained, grass-roots police network that covers a wide range of duties and can respond flexibly rather than a number of special police units. After the Bachu incident, I said that Xinjiang's anti-terrorism situation would improve as people of all ethnic groups would take the initiative to maintain Xinjiang's stability. The latest incident is the evidence. The development of new media makes us see ordinary people's willingness to express their demands during this special period. Soon after the incidents, local people posted real situations of their communities on social media and asked others not to believe or spread rumors. They also called for different ethnic groups to unite against violence and terrorism. Violent activities won't be eliminated in the near future. It is possible that their intensity may even rise. But this won't change the overall stable situation of Xinjiang. This is because Xinjiang people have shown growing resentment toward violent activities and are more willing to participate in anti-violence campaigns. The choice of its people determines the direction of Xinjiang's development. The author is an associate research fellow of the Sociology Institute with the Xinjiang Academy of Social Sciences. ^ top ^

Uygurs hit with prayer and fasting restrictions during Ramadan (SCMP)
Rights groups are calling on the central government to lift restrictions that they say have been preventing Uygurs in the region of Xinjiang from observing Ramadan since the Muslim holy month began on Tuesday. They say Beijing's security crackdowns after recent outbreaks of violence in the restive region have discouraged Muslims from praying at mosques and interfered with their requisite daytime fasting. World Uygur Congress spokesman Dilxadi Rexiti said yesterday that government officials had entered Uygur homes to provide them with fruit and drinks during daylight hours, when Muslims were supposed to abstain from food, drink and sexual activity. Meanwhile, authorities have banned organised study of religious texts and placed religious venues under close watch, including an "around-the-clock" monitoring of mosques in the northern city of Karamay, the Karamay Daily reported. [...] Xinjiang Autonomous Region spokesman Luo Fuyong denied yesterday that the government had imposed restrictions on Ramadan observations. "We respect [Uygur] religious beliefs and customs - we're very clear on this," Luo said. However, he acknowledged that Uygur pupils, especially those in elementary school, "are discouraged from fasting during Ramadan" for health concerns. In the USCIRF's annual report, Uygur Muslims continue to serve prison terms for engaging in independent religious activity and government employees, professors and students are fined if they observe the fast. Another report by the Washington-based Uygur American Association (UAA) in April cited a Uygur restaurant owner from Hotan as saying while Ramadan is an opportunity for Muslims to handle repairs and redecoration in their businesses, any restaurant closing for repairs during the month may be fined. "The extremely aggressive and intrusive religious restrictions even into the private lives of Uygurs by the Chinese state will only further provoke the anger of the Uygur people," UAA president Alim Seytoff said. "Violence may erupt again due to such systematic repressive measures." Dr Reza Hasmath, an Oxford researcher with a focus on China's ethnic minorities, said that struggle with the government over religious freedoms had become a symbol of the Uygur identity. "These measures will only solidify the distance between the ethnicities in Xinjiang," he said. [...]. ^ top ^



France rolls out red carpet for Chinese (China Daily)
No foreign business delegation was ever offered such a high-profile reception at the Elysee Palace as a group of Chinese entrepreneurs received recently. French President Francois Hollande rolled out the red carpet for the first time for a group of 40 of China's wealthiest entrepreneurs who were on a week-long visit to France to explore business opportunities. The VIP treatment was no surprise given the delegation's economic clout. It comprised members of the China Entrepreneur Club, an influential private association whose member companies have combined revenues in excess of 2 trillion yuan ($326 billion), or about 4 percent of China's GDP. The entrepreneurs included Liu Chuanzhi, founder of China's largest PC maker Lenovo Group, Cao Guowei, chairman and CEO of, Yu Minhong, president of New Oriental Education & Technology Group, and Guo Guangchang, chairman of the Fosun Group. The arrival of Chinese entrepreneurs was seen as timely in France as the country is fighting an uphill battle against recession and an unemployment rate that has reached a 14-year high of 10.8 percent. The visit also took place amid the trade dispute between China and Europe over solar panel exports that many feared could trigger a much wider trade war between two of the world's biggest trading blocs. In a speech to the visiting entrepreneurs, Hollande reiterated France's willingness to attract more Chinese investment, which could help improve the French job market and enable its companies to expand in the global market. "I want to create all the conditions to ensure Chinese companies can invest more in Europe, and particularly in France," he said. China was the eighth-largest foreign investor in France last year, with 31 investment projects creating 645 jobs. However, Chinese investment in France represents only 4 percent of the total foreign investment in the country, far behind the United States (23 percent) and Germany (16 percent), according to Invest in France Agency, a government body that facilitates foreign investment in the country. To balance investment and trade relations with China, Hollande mentioned several areas, including food, health and urban development, where China and France could increase cooperation. "Europe needs China for its own growth and China needs Europe to develop its business and to gain access to the technology of tomorrow," Hollande said. "The current rebalancing of Chinese growth in favor of domestic demand, and measures taken to increase the flexibility of its foreign exchange system, are in the interests of both China and Europe." The Chinese business leaders agreed with these views and said they hoped their visit to France could help to create substantial business partnerships. "Chinese entrepreneurs are interested in areas that are closely related to Chinese markets and consumers, such as retail, healthcare, agriculture and consumer products," said Lenovo's Liu, the head of the business delegation. ^ top ^

Beijing eases entry for foreign banks in milestone plan (SCMP)
Premier Li Keqiang has approved a milestone plan to allow foreign banks to directly set up wholly owned subsidiaries in Shanghai's new free-trade zone in a move designed to accelerate the opening of its financial services sector to global players, sources told the South China Morning Post. Foreign banks will be permitted to set up shop directly in the free-trade zone in the Pudong New Area. They will also be allowed to establish joint-venture banks with mainland partners, either state-backed or from the private sector. The overseas partner can own the majority stake. The move potentially cuts years from the time foreign banks must otherwise spend following a step-by-step regulatory roadmap before opening branches or subsidiaries on the mainland and is being seen as a sign of renewed effort to kick-start financial reform, the sources said. "Li is keen to accelerate financial industry reforms. Allowing foreign banks to skip the previously required long approval process to directly set up business units in the free-trade zone shows his determination to bring in more competition to domestic banks," said one source, who declined to be identified because of the sensitivity of the information being disclosed. The government would also encourage domestic private firms and foreign enterprises to set up financial services companies, such as accounting and rating agencies, in the zone, widely expected to be a testing ground for major policy reforms to free up cross-border commodity and capital flows, said another source. Normally, a foreign bank needs to first set up a representative office, which will be used for communication and consulting purposes. It can apply to the China Banking Regulatory Commission to upgrade the office to a full-scale bank branch after two years, provided it has not breached any financial rules. If the foreign bank wants to set up more branches, particularly to expand into new cities, or establish a wholly owned unit, it has to undergo a long approval process involving the banking regulator and relevant government bodies, such as the tax department. Foreign banks including HSBC and Citigroup already have branches and wholly owned units on the mainland, but the short cut to set up units in the free-trade zone in Shanghai is expected to attract more international banks keen to secure a foothold in the world's second-largest economy. The new rules and changes are part of Beijing's bid to create the mainland's first free-trade zone in Shanghai, the latest policy initiative to promote the city's ambitions as a global business hub and international financial centre. "The biggest hurdle to Shanghai becoming a regional financial centre is to allow foreign banks to set up subsidiaries and enter the market freely," said a source with close ties to the State Information Centre, the think tank affiliated to the powerful National Development and Reform Commission. "In allowing foreign banks to provide clearing services for financial transactions, this would also help further develop the international use of the yuan. It could be a major advantage for Shanghai, especially as there is still some insecurity in Beijing about Hong Kong being the major offshore yuan centre," the source added. Of the about one trillion yuan (HK$1.26 trillion) in deposits outside the mainland, about 700 billion yuan is in Hong Kong, making it the world's most important yuan market. Beijing has been actively encouraging offshore use of the yuan in a bid to break the dominance of the US dollar as the de facto currency of global trade given that China is now nominally the world's biggest exporter. Getting more businesses to use the yuan for trade settlement increases China's influence in the global economy despite the strict controls on the country's capital account that prevent the yuan from being freely convertible. On July 3, the State Council issued a statement after a meeting chaired by Li that the free-trade zone in Shanghai would be a snapshot of an "upgraded Chinese economy". More details about Beijing's landmark plan for the trade zone would be released officially in the coming days, the sources said. ^ top ^

China's growing mountain of debt (SCMP)
In the coming years, China's government will have to confront significant challenges to achieve stable, inclusive and sustainable economic growth. But, with mounting fiscal and financial risks threatening to derail its efforts, policymakers must act quickly to design and implement prudent policies. The most significant medium- and long-term threat lies in the system of implicit guarantees that Beijing has established for local-government debt. In the wake of the global financial crisis, local governments borrowed heavily from banks to support China's massive stimulus programme, amassing 10.7 trillion yuan (about HK$12.5 trillion using exchange rates then) worth of debt by the end of 2010. China's leaders hope to control potential risks stemming from local-government investment vehicles by limiting bank lending. The balance of bank loans to these vehicles increased only slightly last year, to 9.3 trillion yuan (HK$11.6 trillion), from 9.1 trillion yuan in 2011. And the China Banking Regulatory Commission has called on banks to retain last year's loan quotas for this year, and to ensure that the overall balance of loans to such instruments does not exceed the 2011 year-end total. But these financing vehicles obtained a massive amount of financing last year by issuing bonds and trust loans. This includes 250 billion yuan in local-government bonds, 636.8 billion yuan in urban-investment bonds, and technical co-operation trust-fund projects totaling 501.6 billion yuan, representing year-on-year increases of 50 billion, 380.6 billion and 247.9 billion yuan, respectively. Even with these funds, however, local governments have struggled to make ends meet. Tax reforms have caused their share of national fiscal revenue to decline steadily, from 78 per cent in 1993 to 52 per cent in 2011. Over the same period, however, their share of total government expenditure rose from 72 per cent to 85 per cent. The need to fill the gap has forced local governments to depend on land sales. But land-related income has plummeted over the past two years, from 32 per cent of total revenue in 2010 to 20 per cent last year. Measures mandated by Beijing to control surging real estate prices will continue to reinforce this trend, increasing pressure on local-government revenues. The risk stemming from local-government debt is exacerbated further by massive amounts of non-explicit debt acquired through arrears, credits and guarantees. When a local government is no longer able to service its debt, the central government will have to place its own fiscal capacity at risk by assuming the responsibility. China's financial stability is also under threat, as lenders turn to unofficial channels to circumvent tighter regulations on the formal banking system. Perhaps the biggest risks stem from China's rapidly growing shadow banking system. Shadow banking can be conducted through trust loans (extended by trust companies), entrusted loans (company-to-company credits brokered by financial institutions), bank acceptances (company-issued drafts or bills that are endorsed by banks), and corporate bonds (debt securities issued by companies directly to investors). These instruments' combined worth reached 5.9 trillion yuan last year, led by corporate bonds (2.3 trillion yuan). New lending by trust companies - which rose by more than 400 per cent last year - is generating significant solvency risk in China, given that it is frequently extended to higher-risk entities, including real-estate developers and local-government investment vehicles. A spike in defaults could destabilise the entire financial system and trigger an economic downturn. And trust loans tied to these financing vehicles ultimately enjoy the same implicit guarantee from the central government as official bank loans. Regular banks, too, are trying to evade new regulations by ramping up off-balance-sheet lending. Indeed, it is increasingly common for banks' off-balance-sheet lending to exceed newly issued balance-sheet credit. In 2011-2012, such lending grew by 1.1 trillion yuan, reaching 3.6 trillion yuan (23 per cent of total bank financing), while balance-sheet lending increased by only 732 billion yuan. But the former is usually implicit and uncertain, making it vulnerable to default. More generally, the rapid expansion of credit risks is increasing inflationary pressure and fuelling the formation of asset bubbles. But when the monetary authority tightens credit too quickly, asset prices become more volatile, resulting in more non-performing loans and triggering economic shocks. China's government must implement prudent macroeconomic policies now to minimise escalation of these risks. Long-term fiscal stability will require policies that account for the growing disparity between fiscal revenues, which are suffering from slowing growth in gross domestic product, and expenditure, which will be driven up by structural tax cuts and increased social-welfare spending. In order to manage growing pressure on public finances, China must establish highly efficient public-budget and fiscal-restraint systems. To this end, the government must tighten financial supervision, improve budgetary management and enhance the operational efficiency of fiscal policies. China also needs a new financing model for infrastructure projects. The current system relies heavily on these local-government investment vehicles and fiscal expenditures. But local governments cannot continue to rely on revenue from land sales to repay their debts or support current spending. More stable financing channels and stronger enforcement of operating standards are essential to support rapid urbanisation. As prudent fiscal and financial policies gradually stabilise China's economy, monetary policy must remain neutral. Loosening monetary policy would increase significantly the risks stemming from local-government debt and shadow banking, while tightening monetary policy would fully expose those risks, posing a serious systemic threat. With the right balance of vision and caution, China's leaders can tackle the build-up of fiscal and financial risk. If they fail to act decisively, China's leadership of the future global economy will hang in the balance. ^ top ^

18% of foreign home buyers in US are Chinese (China Daily)
Chinese buyers, closely behind Canadian buyers, spent $12.3 billion on US real estate over the 12 months ending March 31, according to statistics from the National Association of Realtors (NAR). During the past year, Chinese accounted for 18% of the $68.2 billion that foreigners spent on homes in the US. The median price of homes purchased by Chinese was $425,000, higher than that of other foreign buyers, which was $276,000. Almost 70% of the Chinese purchase was made in cash. Chinese homebuyers are flooding the US housing market with large amounts of cash, CNN Money reports. Total international sales of US housing over the past year declined from the previous year, by about $14 billion. "Foreign buyers are experiencing hurdles not only abroad, but also here in the US when it comes to purchasing property," said NAR President Gary Thomas in a report. Despite the decline, America is still regarded by Chinese buyers as a good place for investment and children's education. "The uptick in sales to Chinese buyers started several years ago, but it has increased dramatically lately," Sally Forster Jones, an agent at Coldwell Banker International, told CNN Money. According to NAR, the most popular destination to buy houses in America for Chinese buyers is California, where half of the international sales are made by Chinese. Many Chinese are buying homes through the EB-5 Immigrant Investor Program, which is a quick way to get a green card. According to the statistics from the US government, almost 80 percent of EB-5 visas went to Chinese nationals in 2012. ^ top ^

China needs to upgrade economy: Premier (Xinhua)
China is in a phase when it must rely on economic transformation and upgrading to maintain continuous and healthy development, said Premier Li Keqiang on Tuesday. "It is very important to plan as a whole the need to stabilize growth, promote economic restructuring and advance reform at this stage," Li said while presiding over an economic meeting in south China's Guangxi Zhuang Autonomous Region. Through stabilizing growth, we can create room and conditions for restructuring, while restructuring in turn unleashes potential for economic growth. The two will receive an added impetus from reform as it will help clear obstacles, Li said. During the meeting, Li called for more efforts to promote the integration of industrialization and information technology application, and promote new-type urbanization that puts people first. The country should strengthen its restructuring efforts through developing the service industry, eliminating backward production capacity and renovation, Li added. He said that China must quicken its reform in the areas of administration, taxation, finance and pricing with the aim to let the market mechanism play a better role, make private investment more active and the market more vigorous. More support will be channeled to the central and western part of the country, especially the poverty-stricken areas, Li said, adding that the more affluent eastern part should strive for development at a higher level through economic transformation and upgrading. Regardless of their differences, the country's east, west and central areas should all prioritize the improvement of people's livelihood and welfare in their pursuit of development as development means to satisfy and bring benefits to the people, Li said. ^ top ^


DPRK and South Korea

Koreas reach deal on Kaesong (Global Times)
North and South Korea on Sunday made a crucial step forward in winding down months of high tension, agreeing to reopen a joint industrial zone seen as the last remaining symbol of cross-border reconciliation. The deal follows months of friction and threats of war by Pyongyang after its February nuclear test attracted tougher UN sanctions, further squeezing its struggling economy. At the end of a grueling 15-hour talk, the two sides said in a joint statement that they had agreed to let South Korean firms restart their shuttered plants at the Kaesong complex near the border when conditions are ripe. "The South and the North will let business companies at Kaesong resume operation when (they are) ready to do so," said the joint statement. The two sides will meet again on Wednesday at the Kaesong industrial zone to discuss details over reopening the zone, including a demand from Seoul that the North guarantees it will never again unilaterally shut down the estate. The North, however, will likely find it hard to accept such a demand as it would amount to Pyongyang accepting full responsibility for the suspension. The complex, built in 2004 about 10 kilometers north of the border as a rare symbol of inter-Korea cooperation, had previously remained largely resilient to turbulence in relations. But the North, citing military tensions and Seoul's hostility, pulled out all its 53,000 workers from the 123 Seoul-owned factories in April, prompting the South to withdraw the managers of around 120 companies in early May. After signing the agreement, Suh Ho, Seoul's chief delegate for the latest talks, said the North's officials had appeared "very enthusiastic" in negotiations to rescue the complex, a valuable source of hard currency for the impoverished state. Neither side declared the complex officially closed, instead referring to a temporary shutdown, while blaming each other for its suspension. "I've got an impression that the North was making very active efforts to solve the issue of the Kaesong complex," Suh told journalists. Under the agreement Seoul businessmen will be allowed to cross the border to check on their facilities at Kaesong from Wednesday. The news was warmly welcomed by the South Korean firms at Kaesong. "I was overcome with emotions and shed tears for a while," said Moon Chang-seop, a top representative of the 123 companies. But other businessmen expressed concern that it would be difficult for them to solicit buyers who have left them during the past three months of suspension. ^ top ^

Constructive Kaesong normalization boosted by working-level talks (Global Times)
Working-level talks held last weekend between Seoul and Pyongyang advanced the process of normalizing the Kaesong industrial complex in a constructive way, South Korea's Unification Ministry said Monday. "In terms of the Kaesong industrial zone, the talks provided an opportunity for the constructive normalization," Kim Hyung-seok, spokesman at the Ministry of Unification, told reporters at a regular briefing. South Korea and the Democratic People's Republic of Korea (DPRK) agreed in principle early on Sunday to reopen the joint industrial park following about 16 hours of talks at Tongil House on the north side of Panmunjom truce village. Under the agreement, the two Koreas will allow companies with factories at Kaesong to "reactivate" facilities "in accordance with preparations" by both sides. Kim noted that the phrase of "in accordance with preparations" meant the concurrence on the reopening was "an agreement in principle," saying that the word "preparations" implied various conditions for the normalization such as the prevention of recurrence of sudden stoppage by the DPRK's unilateral action. The industrial park, where 123 South Korean companies run factories, was suspended in April after Pyongyang banned about 53,000 of its workers from reporting to work amid high tension on the Korean Peninsula. Seoul also withdrew its personnel after the DPRK rejected talks. South Korea and the DPRK agreed to hold follow-up talks on Wednesday at the DPRK's border town of Kaesong to discuss how to prevent recurrence of unilateral shutdown of the complex. Both sides also agreed to allow South Korean businessmen to inspect their factories at Kaesong on Wednesday, maintain facilities to diminish damages during the rainy season, and bring back finished products and materials out of the industrial zone. ^ top ^

Kaesong complex to reopen (China Daily)
The Republic of Korea and the Democratic People's Republic of Korea agreed to reopen the Kaesong Industrial Complex on Sunday, in a move seen as a temporary abatement of the tensions simmering on the Korean Peninsula. Work in Kaesong, in the DPRK but home to a number of ROK companies, has been suspended for the past three months after the DPRK tested missiles and issued threats of nuclear attacks. After grueling 15-hour talks, the ROK and the DPRK said in a joint statement that they had agreed to let ROK companies restart their plants at Kaesong, near the border between the two countries "when (they are) ready to do so". Under the agreement, ROK businessmen will be allowed to cross the border to check on their facilities at Kaesong beginning on Wednesday. The agreement shows a favorable trend for ROK-DPRK ties, said Li Qinggong, deputy secretary-general of the China Council for National Security Policy Studies. "With the agreement, the possibility of direct talks between high-ranking officials from the two sides is increasing," he said. Gong Yuzhen, a professor of international affairs at Peking University, sees the operation of the industrial park as a barometer for ties between the two nations and the situation on the peninsula. "The agreement indicates that the tensions on the peninsula are further reduced and Pyongyang's attitude toward its neighbor is becoming milder," Gong said. But people should remember that the DPRK's attitude toward Seoul and its own foreign policy are likely to swing, he said. […] The news was warmly welcomed by Kaesong-based ROK companies. "I was overcome with emotion and shed tears for a while," said Moon Chang-seop, a top representative of the 123 companies, in an AFP report. But other businessmen expressed concern that it would be difficult for them to solicit buyers who have left them during the past three months. […] The ROK and the DPRK pledged to meet again on Wednesday at Kaesong to discuss details over reopening the zone, including a demand from Seoul that the DPRK guarantee it will never again unilaterally shut down the complex, AFP reported. It is hard for the DPRK to accept such demands because it will not easily give up the initiative it has gained, Gong from Peking University said. "Whether the two countries will reach a new agreement on Wednesday is not so important, since the slated agreement could also be broken," Gong said. "It is more important for the two sides to find practical ways to deepen their trust." As for the expected discussion on reopening details, Li said Seoul should be practical and not expect too much of Pyongyang. […]. ^ top ^


Andrin Eichin
Embassy of Switzerland

The Press review is a random selection of political and social related news gathered from various media and news services located in the PRC, edited or translated by the Embassy of Switzerland in Beijing and distributed among Swiss Government Offices. The Embassy does not accept responsibility for accuracy of quotes or truthfulness of content. Additionally the contents of the selected news mustn't correspond to the opinion of the Embassy.
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