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
  15-19.7.2013, No. 484  
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DPRK and South Korea


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Bilateral Issues

China, Switzerland pledge closer cooperation (Xinhua)
Chinese President Xi Jinping and Premier Li Keqiang met with visiting Swiss President Ueli Maurer on Thursday respectively, and pledged to boost cooperation between the two countries in an all-around way. During his meeting with Maurer, Xi said the China-Switzerland relationship has been in the vanguard of ties between China and the West. He said Switzerland was not only one of the first western countries that recognized the People's Republic of China (PRC), but also the first continental European country that signed a free trade agreement (FTA) with China. The two countries signed the agreement on July 6 in Beijing after two years of negotiations and legal processes. Xi also briefed Maurer on China's push to achieve its "two 100-year" goals. As 2020 will mark the 100th anniversary of the founding of the Communist Party of China, the first goal is to double the country's gross domestic product and per capita income of its urban and rural residents by 2020 from those in 2010. The second goal is to turn China into a modern socialist country that is prosperous, strong, democratic, culturally advanced and harmonious by the middle of this century, when the PRC celebrates its 100th anniversary. Xi said to achieve those goals, China needs to rely on not only the Chinese people's diligence and innovation, but also the country's adherence to reform and opening-up, peaceful development and cooperation with other nations. China's sustained growth will yield more opportunities for cooperation between the two countries, said the Chinese leader, highlighting investment, environmental protection, urbanization and other sectors. He also proposed the two countries increase communication in international affairs to flesh out the bilateral relationship. "We believe that China-Switzerland ties will advance in a sustained way and become an example of friendly state-to-state cooperation," Xi told the Swiss president. Maurer is in China to attend a global ecological forum to be held from Friday to Sunday in Guiyang, capital city of southwest China's mountainous Guizhou Province. Xi said he is looking forward to more exchanges and closer cooperation between the two countries on ecological progress and development in mountain areas. Maurer praised China's economic achievements and said the Swiss side attaches great importance to the Asian country's role in the world. The stability and development of China makes a great contribution to promoting world peace and sustainable development, said the Swiss president. Maurer said the two nations, both regarding diligence and innovation as driving forces for economic development, have immense potential for cooperation. The signing of the FTA is of great significance to step up the bilateral relationship, Maurer said, adding that the Swiss side is expecting more interaction, deeper mutual understanding and trust, and more extensive cooperation with China as good partners. China is now Switzerland's largest trading partner in Asia, while Switzerland is China's eighth-largest trading partner in Europe. Statistics show that bilateral trade volume between China and Switzerland reached 26.31 billion U.S. dollars in 2012. The figure for the first five months of this year surged to 22.89 billion U.S. dollars, 114.2 percent higher than the same period last year. During his meeting with Maurer, Li said the FTA will "inject vitality" into bilateral relations, and that the Chinese side is ready to accelerate the functioning of the agreement, make joint efforts with the Swiss side to oppose trade protectionism and further advance cooperation in various areas. It is estimated that as much as 99.7 percent of Chinese exports to Switzerland will be immediately exempted from tariffs once the FTA goes into effect, while 84.2 percent of Swiss exports to China will eventually receive zero tariff. The scope of tariff reductions under the deal, which will cover 99.99 percent of Swiss exports to China and 96.5 percent of Chinese exports to Switzerland, exceeded the 90-percent level of an average FTA. Li also briefed Maurer on China's current economic cooperation as well as the plan to upgrade the economy. For his part, Maurer recalled Li's visit to Switzerland in May. It was during Li's visit that the two sides concluded their FTA talks, secured by a Memorandum of Understanding. In Bern, Li and Maurer also witnessed the signing of an agreement to establish a financial dialogue mechanism between the two sides. The two countries also signed agreements on cooperation in human resources, education and other sectors. During Thursday's meeting with Li, Maurer said the Swiss side is ready to be a reliable partner of China in Europe and hopes to further cement the bilateral relationship to benefit the people of the two countries. ^ top ^

China, Switzerland to boost military cooperation (Xinhua)
Defense Minister Chang Wanquan met with Swiss President Ueli Maurer on Thursday to discuss improving cooperation between the two countries' militaries. Chang, also a state councilor, said that with China and Switzerland maintaining high-level military contacts, institutionalized exchanges and specific cooperation between the two militaries have developed smoothly. He said both sides should explore new fields of cooperation in order to promote the progress of military exchanges and cooperation. Maurer said Switzerland attaches importance to developing relations with China and is happy to see China play a more important role in international affairs. More cooperation between the Swiss and Chinese militaries will benefit both sides, he said. Maurer, also head of the Swiss Federal Department of Defense, Civil Protection and Sports, will attend the Eco-Forum Global to be held from Friday to Sunday in Guiyang, capital of southwest China's Guizhou Province. ^ top ^

Xi hails closer cooperation with Switzerland (China Daily)
China's steady economic development will provide more opportunities for cooperation with Switzerland, President Xi Jinping said on Thursday, calling for more cooperation between the two countries in areas including investment, environmental protection, innovation and urbanization. Xi made the remarks as he met visiting Swiss President Ueli Maurer, who also held talks with Premier Li Keqiang. Calling China and Switzerland "close partners of mutual beneficial cooperation", Li said a free-trade agreement between the two, signed earlier this month, has injected new momentum into the bilateral relationship and set up a model for China-Europe cooperation. Li said China is willing to promote the free-trade agreement with Switzerland, fight against trade protectionism and make great strides in bilateral exchanges and cooperation. Maurer said Switzerland highly values the active role China plays in the world, adding that China's stability and development is a great contribution to world peace and means important opportunities for his country and Europe. He said Switzerland is willing to be China's reliable partner in Europe and looks forward to deepening mutual trust and expanding cooperation with China in areas including economic and trade, innovation, finance and environmental protection. After three years of negotiations, China and Switzerland signed the free-trade agreement on July 6 in Beijing, inking China's first such agreement with an economy in continental Europe. China also signed an free-trade agreement with non-EU member Iceland in April. The free-trade agreement will "inject fresh impetus into China-EU business ties, bring tangible benefits to consumers and businesses in both our countries, and contribute to world trade and economic recovery," Li said in a signed article titled Why Switzerland? in Neue Zurcher Zeitung, a German-language Swiss daily ahead of his visit to the European country in May. Switzerland was the first European destination on the list of countries Li visited after becoming China's premier in March. Analysts see great potential in cooperation between the two countries. "Switzerland is a post-industrial country while China is a huge developing economy. The two countries are highly complementary in economy, trade and investment," said Li Gang, head of the Chinese Academy of International Trade and Economic Cooperation, in a recent online interview. The free trade agreement is a win-win deal for both countries, said Xu Tiebing, an expert on international relations with the Communication University of China. "It will be more convenient for Swiss banks and financial institutes to open businesses in China, and it will be easier for Chinese enterprises to enter the European market," Xu said. Last year, China and Switzerland's two-way trade reached $26.3 billion, including $22.8 billion worth of Swiss exports to China. China is Switzerland's third biggest trading partner, after the European Union and the United States. Switzerland is among the first Western countries to have established diplomatic relations with New China, and also one of the first European countries to recognize China's market economy status. The first industrial joint venture China entered after the beginning of reform and opening up was with Switzerland. ^ top ^


Foreign Policy

Chinese FM urges joint efforts to build SCO into community of interest (Xinhua)
Chinese Foreign Minister Wang Yi on Saturday urged members of the Shanghai Cooperation Organization (SCO) to build the regional body into an all-round community of interest. Wang made the appeal while addressing a meeting of SCO foreign ministers at the Kyrgyz resort town of Cholpon-Ata. Over the past year, the SCO stepped up its fight against the "three evil forces" of terrorism, separatism and extremism, as well as drug-trafficking and transnational organized crimes, he said. The SCO, he added, also initiated a number of big projects in such sectors as trade, transportation, telecommunications and finance, and made progress in promoting cooperation in education, technology and disaster relief. These achievements had effectively maintained regional security, and provided concrete help for member nations to develop their economies and improve people's livelihood, Wang added. Wang called on the member states to continue to deepen their mutually beneficial cooperation in various fields, and work hard to build the SCO into a community featuring common interests in political, security, economic and social areas. […] On the situation in Afghanistan, Wang said the organization should push the international community to respect the country's independence, sovereignty and territorial integrity, vigorously support its reconstruction, and offer necessary assistance for its internal reconciliation. Wang said the SCO countries need to deepen their regional economic cooperation, and alleviate the impact on the members from the depressed global economy. He suggested the SCO states maintain regional financial, energy and food security, build up infrastructure to promote interconnectivity, seek new economic growth points via technological innovation, and eliminate the conditions that breed social instability by improving living standards and reducing poverty. The minister also urged the members to promote friendly exchanges between their peoples, and enhance their cooperation in education, health care, technology, disaster relief and environmental protection. He also appealed to all sides to help construct a fairer and more rational world order by expanding cooperation with the SCO's observers, dialogue partners, the UN and other international and regional bodies. […]. ^ top ^

China figures in opposition's victory in Bhutan elections (SCMP)
Bhutan's main opposition party, which campaigned on developing stronger ties with neighbour India amid China's growing influence, will take over power in the tiny Himalayan nation after winning a majority of seats in parliamentary elections. The People's Democratic Party won 32 seats in the 47-member National Assembly in Saturday's elections, Chief Election Commissioner Kunzang Wangdi announced yesterday. The ruling Peace and Prosperity Party won 15 seats. The elected members of parliament belonging to the PDP were expected to meet over the next few days to choose their parliamentary leader, with Tshering Tobgay likely to be named prime minister. Tobgay, 47, president of the PDP, has a master's in public administration from Harvard and was opposition leader. The PDP has criticised the government for a recent deterioration of ties with India. It had also sought greater devolution of power to the people, a slogan that proved popular in rural areas. […] [PDP secretary general Sonam Jatsho] reiterated that the new government would be committed to strengthening relations with India. […] Sandwiched between China and India, Bhutan was closed to the world before starting to open up in the 1960s. Foreigners and the international media were first admitted in 1974, and television arrived only in 1999. India has had a special relationship with Bhutan, which over the decades has been the biggest recipient of Indian aid. Thousands of Bhutanese study in India, and New Delhi has helped build several hydropower plants in Bhutan, with the electricity being sold to India. However, India's decision early this month to cut subsidies on cooking gas and kerosene was a major election issue, with media reports saying India cut the subsidies to show its unhappiness over the Bhutanese prime minister's cozying up to China. Bhutanese Prime Minister Jigmi Y. Thinley's meeting with then premier Wen Jiabao at a summit in Brazil last year did not go down well in India. It was Bhutan's second parliamentary vote. The remote nation of about 738,000 held its first election in 2008 after the Bhutanese king voluntarily reduced the monarchy's role in running the country. Wangdi said more than 80 per cent of the nearly 382,000 eligible voters cast ballots. Primaries held in May had eliminated three of five political parties, leaving the Peace and Prosperity Party and the People's Democratic Party. The results showed that many supporters of the three parties who lost backed the PDP. In the primaries, the Peace and Prosperity Party secured 45 per cent of the vote compared to the PDP's 35 per cent. ^ top ^

Japanese move to nationalise isles set to raise tension with China (SCMP)
Japan may nationalise hundreds of unclaimed islands off its coast in a bid to bolster its territorial claims, reports said, in a move that could complicate already simmering relations with China over existing maritime disputes. Quoting government sources, the Yomiuri newspaper reported yesterday that Prime Minister Shinzo Abe's government was planning to set up a multi-agency task force to identify around 400 islands that are not already explicitly identified as Japanese territory and confirm their ownership and the names of the islands. If it was not possible to ascertain ownership, the island would be given an official name and nationalised, the paper said. "This does not come as a surprise really and it's something that the Japanese government had to do sooner or later," Go Ito, a professor of international relations at Tokyo's Meiji University, said. "It's also significant because they are acting now before China can start lodging claims to these islands. Of course, that means that we will again have conflicting claims over the sovereignty of some of these territories, just as we have over the Senkakus now." Ito was referring to the territorial row over the islands known as the Diaoyus in Chinese, which was reignited last September when Tokyo nationalised three islands in the chain in what it said was a mere administrative change of ownership. As well as China, Japan is in dispute with Taiwan, South Korea and Russia over land that it considers to be its own territory. "There is a relatively small number of islands that fall into the category of being potentially claimed by both sides, but it could still cause problems," Ito said. Chinese analysts have otherwise played down the potential impact on Sino-Japanese relations, which are already the lowest they have been in years. "Tokyo is doing this out of fear as it has not sought sovereignty of these islands through a proper legal procedure," said Lian Degui, deputy director of Japanese studies at the Shanghai Institutes for International Studies. "The plan is unlikely to cast a significant impact on the relationship between China and Japan." He said there was no indication the islands Tokyo wanted to nationalise were also claimed by China. Another Japanese affairs expert, Da Zhigang of the Heilongjiang Academy of Social Sciences, said this could be an attempt by Abe to rally support for his Liberal Democratic Party ahead of Sunday's upper house election. A victory would help end six years of parliamentary deadlock. "The Abe administration wants to divert voters' attention from domestic issues to external affairs," Da said. With the geopolitical situation in East Asia changing dramatically and China increasingly looking to exert influence ever further from its shores, Tokyo hopes its new campaign, due to be completed next year, will erase any doubts over sovereignty. As well as legal moves, the Japanese government is improving its military capabilities in areas that are considered at risk. Tokyo is considering deploying a new unit to the Henoko district of Okinawa, where it will train and work closely with the US Marine Corps based at Camp Schwab. The proposal to station an additional unit in Okinawa was first outlined in 2010, when the Mid-term Defence Plan stated the unit would be tasked with conducting rescue operations in the event of a natural disaster, protecting Japanese territory from external threats and hosting support units from other parts of Japan. Three years later, Tokyo considers the threat posed by China to the sovereignty of the Senkaku Islands to have reached a new high and is going ahead with the deployment. In another development, a report on revising the National Defence Programme Guidelines is expected before the end of the month and will place renewed emphasis on amphibious and pre-emptive strike capabilities. One of the key proposals will be the creation of a new branch of the military trained to perform the same tasks as the US Marine Corps. At present, Japan's focus on defence has meant it refrained from developing military units trained to land on enemy-held terrain in advance of a main invasion force. ^ top ^

China, Belarus forge comprehensive strategic partnership (Xinhua)
China and Belarus announced on Tuesday to establish a comprehensive strategic partnership as the heads of the two countries held talks in Beijing. During the talks, Chinese President Xi Jinping and his Belarusian counterpart Alexander Lukashenko reached a high degree of consensus on bilateral relations as well as major international and regional issues. Xi said bilateral relations have a solid foundation and a broad prospect for development. […] He appreciated Belarus's support for issues concerning China's sovereignty and territorial integrity, adding that China will work with Belarus to push for a new development of bilateral relations. Lukashenko said China is a close and reliable friend of Belarus. China's stable development on the path of socialism with Chinese characteristics has great significance to the world. It is also a great inspiration to Belarus, he said. Developing relations with China is a priority in Belarus's foreign policy, Lukashenko said, adding that Belarus hopes to enhance bilateral coordination on major issues. […] The presidents of the two countries decided to establish the China-Belarus comprehensive strategic partnership and formulate development plans to further advance the level of cooperation. The two sides will continue to firmly support each other in political areas. They will firmly support each other's core interests, major concerns, political and social system, development path and economic revitalization. […] In economic areas, the two countries will deepen cooperation in infrastructure, machinery manufacturing, communications, building materials, energy, chemicals, finance and other fields. They will push forward large projects, increase bilateral trade on high value-added and high-tech based products, boost a balanced growth in bilateral trade, expand mutual investment and build joint ventures and the China-Belarus Industrial Park. The two sides will also enhance people-to-people exchanges. China will welcome more Belarusian students. The two sides will jointly establish Confucius Institutes, hold a Culture Day as well as promote local exchanges. China and Belarus will strengthen coordination in international affairs. They will make joint efforts to safeguard the UN Charter and World War II victory results, promote a multipolar world, democratization of international relations as well as world peace, stability and prosperity. After their talks, Xi and Lukashenko signed a joint statement on establishing a bilateral comprehensive strategic partnership and witnessed the signing of a series of bilateral cooperation documents. According to a joint statement, China and Belarus support relevant countries and peoples in West Asia and North Africa to independently explore development paths in line with their national conditions, encourage relevant parties to resolve differences through inclusive political dialogues. The two sides also agreed to enhance communication and coordination on the human rights issue. They hold that different countries should deal with their differences on human rights through dialogue and cooperation rather than confrontation. They oppose to put pressure on other countries and interfere in the internal matters of other nations using human rights as a pretext, said the statement. ^ top ^

US naval commander warns Asia on use of force (SCMP)
A top United States naval commander warned yesterday that growing economic power might tempt some Asian countries to settle disputes by force - remarks widely seen as directed at China. The comments by Vice-Admiral Scott Swift, commander of the Japan-based US Seventh Fleet, came amid mounting territorial disputes between China and its neighbours. Yesterday, the Philippines also said a UN arbitration tribunal had convened to examine its conflicting territorial claims in the South China Sea. Swift - speaking at the Lowy Institute for International Policy in Sydney - said the region's economic boom had led nations to improve their military capabilities. The heightened security challenges increased the importance of collaboration between the region's militaries, he said. […] Beijing has been angered by US efforts to increase its regional military presence as part of a strategic "pivot" towards Asia. It fears Washington is using China's territorial disputes with Japan, the Philippines and Vietnam to counter growing Chinese influence in the region. Yue Gang, a retired colonel and Beijing-based military commentator, said Swift's remarks appeared directed at China in an attempt to bring other Asian nations closer to Washington. "It is similar to spreading the China threat theory," Yue said. "Other Asian nations may find it necessary to team up with the US to offset China." Washington has repeatedly denied any cold-war-style containment policy against China, saying it wants only to ensure peaceful development and protect vital trade routes. But Barack Obama warned China against using force or intimidation to settle maritime disputes at the Sino-US strategic and economic dialogue in Washington last week. Swift described the military relationship between China and the US as "collegial" and said Washington welcomed inclusive military relationships. […] The vice-admiral also said he believed a cold war between China and the US was unlikely because today's circumstances were "very different" from the past. He noted that the US was even supportive of a recent Sino-Russia joint naval exercise that ended on Friday. […] Meanwhile, Philippine foreign affairs spokesman Raul Hernandez said a five-member tribunal under the UN Convention on the Law of the Sea convened last week in The Hague and approved a set of rules to look into the legal challenge Manila launched against Beijing in January. ^ top ^

China refutes Philippines' South China Sea accusation (Xinhua)
China on Tuesday hit back at the Philippines' condemnation towards it over the South China Sea issue and reiterated its objection against international arbitration on the matter. Foreign Ministry spokeswoman Hua Chunying said in a written statement that "We regret that the Philippines stated that it has become impossible for it to continue bilateral discussions with China, and are dissatisfied with its refusal to diplomatic negotiation and closure of the door to dialogue." Her comments came after the Philippine Foreign Ministry issued an eight-point statement on July 15, saying that a Chinese statement on Friday was baseless and China's hard line position made it impossible to continue negotiations and led the Philippines to finally resort to international arbitration. Hua said on Friday that the Philippines' claim of having exhausted almost all political and diplomatic avenues for a peaceful settlement of the dispute was completely not true. China is firmly opposed to the Philippines' indifference to China's lawful rights and interests and legitimate concerns as well as its willful act of pushing for international arbitration, Hua said Tuesday when asked to comment on the Philippines' eight-point statement. The Philippines' illegal occupation of some of the islands and reefs of China's Nansha Islands is the direct cause of the South China Sea dispute between the two countries, she said. Hua said China sticks to the longstanding position of safeguarding national territorial sovereignty, which is totally legitimate. Meanwhile, bearing in mind relations between the two nations as well as regional peace and stability, China is committed to solving disputes concerning territorial sovereignty and maritime delimitation through bilateral negotiations in accordance with relevant regulations of international law and the spirit of the Declaration on the Conduct of Parties in the South China Sea (DOC), she added. "This position remains unchanged," Hua said. The spokeswoman said there had been communication and agreement between China and the Philippines on disputes in the South China Sea. The two sides reached the important consensus of carrying out cooperation in a step-by-step manner and resolving bilateral disputes through negotiations, she said. Hua noted there had also been sound cooperation between the two countries. […] "However, it is regrettable that over recent years, the Philippines has changed its attitude and approach in handling the issue, went back on its consensus with China, broke its commitment in the DOC, cast aside the framework of dialogue upheld by a majority of countries, refused to cooperate, aggravated the situation and set off the incident of the Huangyan Island last year by harassing Chinese civilians with warships. This cast a shadow over China-Philippines relations and peace and stability of the South China Sea," the spokeswoman said. The Philippines publicly criticized China during the recently held ASEAN Foreign Ministers' Meetings, regardless of the consensus among ASEAN countries, which reasonably drew refutation from China, Hua said. "It is difficult for China to understand why the Philippines continue to play up the issue of the South China Sea, distort the facts and smear China," she noted. "The overall situation of the South China Sea is stable," Hua said, noting that China and ASEAN countries have consensus on upholding peace and stability of the South China Sea. Hua stressed that China will stay committed to safeguarding peace and stability of the South China Sea with maximum good will and sincerity. China has never closed the door to negotiation and consultation with the Philippines in the hope of improving and developing bilateral relations, she added. China urges the Philippines to correct its erroneous actions, make a positive response to China's suggestions in March 2010 and January 2012 respectively on establishing the Sino-Philippine regular consultation mechanism on maritime issues and resuming the Sino-Philippine mechanism on trust-building measures, and come back to the correct track of resolving disputes through bilateral negotiations, said the spokeswoman. ^ top ^

Shinzo Abe slams Beijing 'provocations' on islands tour (SCMP)
Japanese leader Shinzo Abe warned yesterday of the heightened security risk facing Japan because of "provocations" from Beijing as he inspected two small islets close to the disputed Diaoyu Islands in the East China Sea. In a trip seen as sending a tough signal to Beijing, the prime minister vowed that he would "never make concessions" over the sovereignty of the islets, which Japan calls the Senkakus, and that he would lead Japan to protect its territory. "Japan faces a grim security environment because Chinese vessels are frequently sailing to areas close to our waters, and there are consistent provocations targeted at us." [Abe said]. Abe visited Ishigaki and nearby Miyako, about 300km south of Okinawa, to canvass support for his Liberal Democratic Party in Sunday's Upper House election, but his visit is expected to dismay Beijing as the two islands are barely 160 kilometres from the disputed territory. A report by Asahi Shimbun, quoting Ishigaki officials, said Abe's visit was the first by an incumbent prime minister since the 1972 reversion of Okinawa to Japan. The report said the visit showed that Abe's stance on the territorial dispute would not change after the election. In Beijing, Foreign Ministry spokesman Hua Chunying said that China's sovereignty over the islands was "indisputable". "China will continue taking necessary measures to resolutely protect the sovereignty of the Diaoyu Islands," she said. "We urge Japan to respect history and stop provocative moves that impeach China's territorial sovereignty." Observers said Abe was increasingly resorting to "open confrontation" to boost his standing in Japan, especially after last week's Sino-Russian military drill that saw Chinese military vessels passing through the Soya Strait north of Japan. […] Professor Lin Xiaoguang, a specialist in international relations at the Central Party School, said Abe was soliciting sentiments for amending Japan's pacifist constitution. Other policies under discussion include Tokyo's Self-Defence Forces being able to strike pre-emptively at enemy bases. […]. ^ top ^


Domestic Policy

Exclusive: Li Keqiang fought strong opposition for Shanghai free-trade zone plan (SCMP)
Premier Li Keqiang fought open opposition from financial regulators in his bid to push through a landmark plan for a free-trade zone in Shanghai. It is the clearest sign yet that the nation's new leadership is determined to deliver long-delayed economic reforms. Financial industry regulators, including the China Banking Regulatory Commission (CBRC) and China Securities Regulatory Commission (CSRC), openly disagreed with Li's plan to open Shanghai's financial services sector to foreign investors. Three sources with first-hand knowledge of high-level government meetings told the South China Morning Post that Li lost his temper at one closed-door cabinet session. When told of the continuing opposition to his plans, he slammed his fist on the table in frustration. The sources insisted on anonymity due to the sensitive nature of their disclosures. "The feedback opinions are not acceptable," say the minutes from Li's office, summarising his response to a CSRC objection in one meeting. Behind-the-scenes debates inside party headquarters in Zhongnanhai over the Shanghai plan reflect the intense difficulties the new leadership faces in its bid to reform the nation's economic structure. The sources, who reviewed internal cabinet meeting minutes, said disagreements over new policies were not uncommon among ministries. But it was rare for regulators to team up and fight a premier - China's second most powerful man after the president. "He has had to fight a lot on this," said one of the sources. "You know Chinese officials. Rule number one: they don't want to lose face. So Li Keqiang is now definitely very keen to make the Shanghai plan a major achievement for his follow-up economic reforms. He will gain political capital for doing this." Many external analysts believe Beijing's new leadership is anxious to restart a programme of economic reforms considered to have stalled under former president Hu Jintao and ex-premier Wen Jiabao. Some have argued that President Xi Jinping and Premier Li must deliver on economic reform or risk seeing three decades of rising prosperity slip into reverse, sowing the seeds of social discontent that could cause the party to lose its grip on power. But those reforms are not without their own challenges. They will throw long-protected areas of the economy directly into the path of efficient global competitors. The new Shanghai free-trade zone plan, officially announced at the beginning of July, is expected to be the testing ground for major policy reforms. It would promote cross-border commodity and capital flows, with key experiments in freeing foreign exchange markets and liberalising domestic interest rates. […] After Li's trip to Shanghai in late March, his first domestic trip after taking office, he began to float the idea of a free-trade zone to Shanghai officials, who felt "overwhelmingly flattered" said another government source. Li also asked Shanghai officials to provide him a list of the policy changes that the local government believed it would need to attract foreign investments. Dozens of policy initiatives were soon submitted to Li's office. Within two months, Li made an initial proposal covering 21 initiatives, whose details were not officially announced. These included shortcuts for foreign banks to set up subsidiary or joint venture operations and special permission for foreign commodities exchanges to own warehouses in the free-trade zone in Shanghai, the Post learned from the sources. But Li did not expect such fierce opposition from subordinates. For example, Li's proposal called for allowing foreign commodities exchanges to set up their own futures delivery warehouses in the free-trade zone. But the mainland's securities regulator did not support the idea, according to government documents seen by the Post. "At present, the conditions for foreign commodities exchanges to set up futures delivery warehouses in China are not yet well established. The CSRC suggests relevant … information should be taken out of the proposal," the CSRC said in its feedback report on the Shanghai proposal to Li's office, the government documents show. Li's office fought back strongly. "Setting up futures delivery warehouses in the Shanghai free-trade zone can replace the functions of those warehouses in South Korea's Busan and Singapore to a very large extent, and the plan can also reduce the trading costs of Chinese enterprises," said a memo sent from his office in reply. "Commodities trading in the Shanghai free-trade zone will still be considered offshore [trading], so to set up futures delivery warehouses within the zone will not have an impact on domestic futures trading, delivery and pricing system, and it should not have any negative impact on the stability of domestic financial markets," said Li's office in its official reply to the CSRC. […] In the meantime, other mainland cities, facing unemployment and slower growth, are also keen to follow Shanghai's move to lure foreign capital. But Li is not understood to be interested in rushing to copy the Shanghai model for other mainland cities. ^ top ^

Xi Jinping turns to Mao Zedong's thoughts in his efforts to counter corruption (SCMP)
Communist Party chief Xi Jinping has turned to an austerity lesson given by Mao Zedong more than six decades ago to advance his campaign against party corruption. During a visit last week to Xibaipo - the People's Liberation Army's headquarters at the end of the civil war - Xi reminded party members of Mao's so-called six nos, which barred officials from things like hosting birthday parties and exchanging presents. Xi likened party members' efforts to meet the guidelines to a student going through rigid exams - they had failed to shape up. He said his campaign to rid the party of "formalism, bureaucratism and hedonism and extravagance" would help them make the grade. The party secretary's visit to Hebei province was his latest effort to push his year-long "mass line" campaign, which is designed to bolster the party's ties to the people amid growing discontent over corruption. […] The campaign's similarity to Mao's efforts has caused unease. But Sima Nan, a leftist and conservative scholar, said that Xi's mass line campaign was less about leaning to the left, than reaffirming a fundamental party doctrine for the party. Sima said that Xi's mass-line movement was of greater significance because it specifically targeted official corruption, which the public has blamed for widening the wealth gap and pushing rapid development at the expense of the environment. "I have my concerns that such a campaign could become another formality as with some other campaigns because the central authorities might not necessarily bring lower-level authorities on board," Sima said. "They have developed many sophisticated ways of pushing ahead with their own priorities without overtly upsetting higher authorities. […] Beijing-based political commentator Zhang Lifan said Xi's attempt to revive some of Mao's legacy underscored that the party was suffering from a lack of creativity. "It has no other choice but to delve into some of the old doctrines even though they have had little appeal, particularly among the older generations," he said, noting growing disappointment with Xi among those who hoped for change. "That's why we have seen his popularity go down." Zhang said the "mass line" campaign could do little to shake up the party as it lacked support from low-level authorities who would condemn it as another formality. He noted, however, that Xi could still use it as a political tool to purge undesired cadres and consolidate his power base. ^ top ^

Rape victim's mother Tang Hui wins damages over labour camp sentence (SCMP)
The mother of a young girl who was raped and forced into prostitution by at least seven people, including two police officers, won her appeal yesterday in a case against labour camp authorities in Hunan province. Tang Hui was sentenced to 18 months of re-education through labour at a camp in Yongzhou last year. She was released after just over a week when her case sparked public outcry and yesterday received 2,941 yuan (HK$3,688) in compensation. Her daughter was just 11 when she was taken, and Tang saved her three months later from an underground brothel. She was sentenced to the labour camp for her outspokenness against those involved in the abduction, rape and detention. The Hunan Provincial People's High Court said the payout included 1,941 yuan for the loss of Tang's freedom for nine days. The remaining 1,000 yuan was for psychological damage. But the court rejected Tang's demand for a written apology as the local police chief who sentenced her had made a public oral apology. "It's all over," Tang told the South China Morning Post yesterday, calling the ruling a "fairly satisfying result". "I finally won the case after years of petitioning; it was too exhausting." Asked if she still wanted a written apology, Tang said: "I just want to return to life as an ordinary person." She also said the verdict "proves my innocence to the public". A lower court in April dismissed Tang's compensation claim against those who sentenced her to the camp because they claimed she was upsetting social stability. The province's high court agreed to review the case. Tang's detention became an example of how local governments use labour camps to stifle petitioners. It also set off intense debate about the legitimacy of the re-education through labour camp system. Months after Tang's release, Beijing said it would reform the system. But prominent defence lawyer Si Weijiang said Tang's victory should not be seen as a sign of an improving legal system. "Tang Hui has finally won her appeal, but I don't think it shows the government is developing China into a country governed by rule of law," Si said. "The ruling might have been made based on instructions from top leaders rather than the judges, as the case has been in the limelight." Beijing lawyer Wang Peng agreed and said it was only a single case. "The tragedy of Tang could happen to anyone on the mainland if the legal system isn't reformed," he said. "But so far I don't see that anything has particularly changed; the authorities even refused to make a written apology." Two of the girl's abductors were executed, four received life sentences, and one was jailed for 15 years. Tang claims others were involved, but they have not been brought to justice. ^ top ^

China's disabled get limited schooling, Human Rights Watch says (SCMP)
More than a quarter of mainland children with disabilities don't go to school, while many of those who do are prevented from attending mainstream institutions or taught by untrained teachers, a rights group said. A report by New York-based Human Rights Watch said students with disabilities are denied access to regular schools unless they can prove they can adapt to the schools' physical and learning environment, and that there is little or no accommodation for such students. In one example, the group said a mother went to school several times a day to carry her child up and down stairs because the toilet was on a different floor from the classroom. The report sheds light on how the mainland's burgeoning problem of social inequality applies to people with disabilities. There is only a nascent public awareness of the issues that people with disabilities face. Just days before the Human Rights Watch report was released, the Education Ministry issued its own report on the same topic. The ministry's report said that 28 per cent of children with disabilities are not enrolled in compulsory nine-year education. But it said the 72 per cent enrolment rate represented a jump of nearly 10 percentage points from 2008, and that an increasing number of disabled students were in regular schools with proper accommodation. Yang Zhanqing, an independent advocate for people with disabilities, said the Human Rights Watch report was "quite objective" but that the picture would be worse if interviewees from remote, mountainous regions were included in the research. "No Chinese student with disabilities has his or her rights fully protected," said Cheng Yuan of the non-governmental agency Ganzhilu, which helps people with disabilities. In its report, the Education Ministry said both central and local governments have pumped funding into special education. Of all 378,800 students with disabilities in schools, more than half were in regular schools with necessary accommodation, including home tutoring, the ministry said. However, Human Rights Watch said the reality was different. Despite government policies ensuring access for children with disabilities, many of them have in practice been denied admission to mainstream schools or pressured to leave, the report said. Often, teachers have received little training to adjust to the needs of children with disabilities, it said. ^ top ^

Whistle-blower accuses China Resources chief of corruption (SCMP)
A mainland journalist working for a newspaper controlled by Xinhua yesterday accused the head of a key state-owned conglomerate of corruption and wrongdoing that "led to the loss of billions in state-owned assets". In a letter posted on his weibo microblog, Wang Wenzhi, a principal reporter with the Economic Information Daily, accused China Resources (Holdings) chairman Song Lin and other senior managers of intentionally overpaying for a 2010 acquisition. China Resources (Holdings), a Hong Kong-registered conglomerate, issued a statement last night saying that the weibo posting and reports about it carried by some news outlets were libellous, and had negatively affected the company and the image of its management. It said it reserved the right to sue and claim damages. "I'm levelling allegations against Song Lin because he is the chief culprit," Wang told the South China Morning Post yesterday. "He's the mastermind behind many shady decisions. "I received the relevant material from someone and decided to take it into my own hands. I spent about half a year investigating it, including several visits to Shanxi." Wang accused Song of intentionally buying "poor-quality coal assets" in Shanxi province at an "incredibly" high price and paying the money in advance at irregular intervals, a practice he said may have caused the group to suffer billions of yuan in losses. Subsidiary China Resources Power (CRP) was part of a joint venture that paid 7.9 billion yuan (HK$9.9 billion) for an 80 per cent stake in the Shanxi Jinye Coal coking group that another party valued at half that price months before the deal, Wang said on weibo. […] China Resources - ranked 187th on Fortune magazine's Global 500 list this year - operates in sectors including retail, property, finance, gas, construction materials and electricity. It reports to the central government, which mainland media said made Song's position equivalent to that of a vice-minister. The letter, posted on Weibo at 1.30am, attracted thousands of comments, both approving and critical, before it was taken down at about 4pm. Wang said he had not removed it. Several mainland news websites, including those of Xinhua and the Communist Party mouthpiece People's Daily, carried reports on the posting but later took them down. Wang said he had posted the letter during a business trip to Guangzhou and the paper had summoned him back yesterday to discuss the matter. He said he had reported the case to the party's anti-graft watchdog, the Central Commission for Discipline Inspection, but had not heard back from it. Luo Guojun, the paper's deputy editor-in-chief, said posting the letter was Wang's personal decision and had nothing to do with the newspaper. […] The shares of all five Hong Kong-listed companies under China Resources fell yesterday, with CRP's share price plunging 10 per cent to HK$17.98, wiping HK$10.6 billion off its market capitalization. It said yesterday that its board was not aware of any matter relevant to the share price fall or any inside information that should be announced. A group of minority CRP shareholders filed a lawsuit earlier this month against 20 past and present company directors over related issues. The case will be heard on August 5. ^ top ^

Struck-off lawyer expects 'light' sentence for Bo Xilai (SCMP)
Detained former Chongqing party chief Bo Xilai may face trial in September and possibly receive lenient punishment, says a former Beijing-based lawyer who made his name defending an alleged triad boss in the southwestern municipality during Bo's heyday. "He will probably get a light sentence," Li Zhuang said in Hong Kong yesterday when asked to comment on Bo's case. Li spent 18 months in prison and had his law licence revoked for fabricating evidence while he defended Gong Gangmo, a billionaire gangster in Chongqing, in late 2009. […] "Unlike Liu Zhijun, the disgraced former railways minister who simply took 60 million yuan (HK$75 million) or so in bribes, Bo - aside from his corruption - actually sabotaged the country's rule of law in his four years of fascist-style rule over Chongqing," Li said, adding that he had no idea whether such political wrongdoings would be included in Bo's indictment. […] As a prominent criminal defence lawyer, Li was considered well-informed and close to numerous "princelings" - the offspring of party veteran revolutionaries - including Fu Yang, his former boss who was the son of former top legislator Peng Zhen, whose original name was Fu Maogong. Meanwhile, a Chongqing-based source close to the municipal government said yesterday that Bo could be prosecuted for taking bribes of up to eight million yuan, and be jailed for between 10 and 20 years. ^ top ^

Activist Xu Zhiyong's arrest prompts new crackdown fears (SCMP)
Beijing police have taken prominent activist and legal scholar Xu Zhiyong into custody, his lawyer said yesterday, sparking fears that the government is escalating its crackdown on activists who have called on officials to publically declare their assets. Lawyer Liu Weiguo said Xu was taken on Tuesday from his home, where he had been confined since April 12 under extralegal detention. His wife, who is several months pregnant, received a notification that night saying Xu was being held at a police detention centre on a charge of "gathering a crowd to disturb order in public places", Liu said. "It is difficult to imagine how a man without freedom could be accused of this." The charge carries a maximum jail term of seven years. Xu has been detained or placed under house arrest without charge numerous times since 2009 for his civil rights campaigns. His most recent confinement began in April, days after four activists were detained for staging a protest in central Beijing calling on senior party officials to disclose their assets. The detained activists, along with dozens of others in the broader accountability campaign, were members of the New Citizen social initiative founded by Xu. Liu believed Xu's detention was related to the campaign. According to Liu, Xu said officials had called him in several times recently and told him to give up his activism. Beijing's Public Security Bureau did not respond to requests for comment. Xu's close friend, legal scholar Teng Biao, said Xu's detention was the latest arrest in a round-up of more than 40 activists across the country who had been involved in the campaign for official accountability. Teng said other rights campaigns that Xu led in recent years had made him a target for police. The nationwide New Citizen social initiative has pushed for democracy, rule of law and basic civil rights. Xu has also called for equal education rights for migrant children in Beijing. Teng feared that Xu, his former classmate at law school, would be sent to jail. […] Speaking under house arrest last year, Xu told the South China Morning Post that he was not afraid of jail. "If the world is to become a better place, then someone has to pay a price," he said. "I think it's a glorious thing to sacrifice for the sake of social progress and fighting injustice." In 2009 authorities closed Xu's non-profit legal aid centre, the Open Constitution Initiative, and detained Xu for nearly a month. When he was released, Xu was barred from returning to teaching at the Beijing University of Posts and Telecommunications. Since launching the New Citizen initiative in May last year, Xu has complained of rising police surveillance and interference. ^ top ^

Foreign NGO registration rules eased (China Daily)
International NGOs will find it much easier to become registered in China, as registration approval power has been handed over by the Ministry of Civil Affairs to provincial civil affairs authorities. The move is part of the reforms the ministry has initiated to make NGO operations in China easier. Other measures include preferential taxation, financial support for domestic organizations and a new management system that will loosen the requirements for international NGOs operating in China, said Wang Jianjun, director of the non-governmental organizations department under the Ministry of Civil Affairs. He was speaking at a forum on Thursday in Kunming, capital of Yunnan province. As of the end of last year, 499,000 NGOs had registered with civil affairs authorities at different levels. They employ more than 12 million people, according to Li Liguo, minister of civil affairs. Under the new framework, international NGOs are allowed to register with provincial civil affairs authorities instead of applying to the ministry as before, said Wang. […] As early as 2006, the provincial government in Yunnan launched a trial to open its arms to international NGOs. Each of the institutions recorded with the provincial government will be given an ID number and receive help on taxation registration, residence permits for foreign employees and foreign exchange accounts, according to Qin Guangrong, Party chief of Yunnan. Thirty-nine international NGOs have been included on the provincial government's records and they are running 268 charity programs, Qin said. Under Yunnan's pilot system, the heads of international NGOs routinely meet the officials in charge. […] As a border province with about 10 million poverty-stricken people, Yunnan is a hotspot for NGOs, the Party chief said. More than 100 international NGOs are helping locals in Yunnan, and there is an urgent need to establish a sound management system, Qin said. An official working for the provincial government's inter-national affairs office, who declined to be named, said Yunnan's pilot program gives international NGOs a legal identity. […] "One obvious difference is that an NGO that is on the records is able to advertise in newspapers and on television to recruit workers.... However, it was impossible before," the official added. Wang Zhenyao, director of the China Philanthropy Research Institute at Beijing Normal University, said international NGOs have long been regarded by many as a threat to the government and had difficulty in registration. […] Wang Ming, president of the Nongovernmental Organization Research Institute at Tsinghua University, said Yunnan's way of dealing with international NGOs could be seen as an important trial for the nationwide reform. "Other provinces and regions could learn from Yunnan to better manage international charities and NGOs," Wang said. […] Greenpeace, the international environmental organization that entered China in 2002, can only register as an international corporation, as most other NGOs do. Yong Rong, the organization's media officer in Beijng, said the major obstacle for being registered is that it is hard to find a supervising department as required. She said Greenpeace carried out projects that involved several ministries. "All these ministries could supervise us, but none were willing to do so," said Yong. She hopes the new regulation will make registration easier. Wang Chao, chief operating officer at the World Wildlife Fund, said that allowing provincial authorities to oversee registration and supervision will help NGOs to better carry out projects in different provinces. ^ top ^

China's income inequality slowly improving, survey finds (SCMP)
Wealth inequality in China is still high compared with most developed countries but the gap is slowly narrowing, a new survey has found. China's Gini coefficient of income inequality was 0.49 last year, slightly down from 0.51 in 2010, according to the China Development Report on People's Livelihood 2013 based on the China Family Panel Studies. This is a research project of the Institute of Social Science Survey at Peking University. The study's researchers interviewed 14,960 households representing 57,155 people. The Gini coefficient is a measure of income inequality. A figure of 0 represents perfect equality and 1, perfect inequality. A reading above 0.4 is seen as a warning sign of inequality. "Two reasons contribute to China's improving Gini index," Ren Qiang, an author of the report, said. "One is the faster increase in household income in rural areas compared with the cities, and the second is the faster income rise of the middle class. "China's Gini index is higher than most developed countries like the US or Europe, but we are still better than countries in Latin America and Africa." But Gini index estimates vary among different sources. In January, the National Bureau of Statistics released index figures for the past decade: in 2010 it stood at 0.481, and last year it was 0.474. The World Bank put the 2009 figure at 0.421. Another survey released in December by the Survey and Research Centre for China Household Finance at the Southwestern University of Finance and Economics estimated China's Gini index for 2010 to be an alarming 0.61. "We reached many wealthy families in our survey and our refusal rate was quite low," said Ma Shuang, a researcher on the Southwestern University survey, when asked to explain its higher Gini index reading. Despite a softening Gini index, the China Family Panel Studies figure also confirmed a staggering income gap, with the top 5 per cent of households' income last year being 234 times that of the lowest 5 per cent, whose annual per capita income was about 1,000 yuan (HK$1,250). The survey also found that 87.4 per cent of households owned or had equity in housing properties and that nearly 80 per cent owned at least one house or flat. More than 10 per cent owned more than one property. "China's ratio of private housing ownership is higher than many other countries, but this might not be a good trend," Ren said. "China should introduce property taxes and other measures to discourage people using property as their major investment vehicle.". ^ top ^



Urumqi residents hand in weapons after attack (China Daily)
500 bullets have been turned in to police in Urumqi, capital of the Xinjiang Uygur autonomous region, since July 2, when the region began offering rewards for long knives, guns and other dangerous weapons. "Many people contacted us about turning in restricted items after the notice was issued," said Lin Hao, an officer with Urumqi's public security bureau's security detachment, on Sunday. […] The main purpose of the notice was to clear people's doubts about punishment for having them. Xinjiang police issued the notice after a June 26 terrorist attack involving long knives in Lukqun township, Turpan prefecture. Thirty-five people were killed in the incident. The notice said those who handed in "restricted knives" — those with blades more than 15 cm long — would get market value for the weapons, while the compensation for guns would be 100 yuan ($16.30) to 200 yuan. Firearms possession in Xinjiang has a historical precedent, Lin said. "In the past, many people in Urumqi, especially herdsmen, had shotguns for protection against wild animals. Also, security guards of big factories were all armed in the 1950s and 1960s and might have kept the weapons due to management loopholes," Lin said. "As long as people can explain why they have guns and bullets, they won't be punished." Police of Shayibake district, under the jurisdiction of the Urumqi public security authority, said last week that they had taken in 2,395 knives and 43 guns from July 1 to 8. On July 10, police in Kuitun, in the Ily Kazak autonomous prefecture, gave 2,356 yuan to a resident who handed in three pistols and 413 bullets. The guns and bullets had been collected by his father-in-law, who had been in the military and died in 2011. The resident found the pistols and bullets while cleaning the basement of a house. […] He added that the department also got a tip on terror-related activates that led to two arrests but declined to elaborate because the case is still being investigated. The Xinjiang Public Security Department also issued a notice on July 1 offering rewards of 50,000 to 100,000 yuan for tips that help solve cases involving violence and terrorism. Yisakjon Asan, 29, a police officer with the Nanguan station, has been posting the notices around the communities and explaining the reward to residents. "People have some specific questions such as if the length of a restricted knife includes the handle. Recently, a resident of Shanxixiang community handed in more than 150 restricted knives to us," he said. The Nanguan police station is in charge of the Erdaoqiao area of Urumqi, which is like the Tian'anmen area of central Beijing, said Yu Xinhong, deputy director of the police station. "It's a must-visit place for people all over Xinjiang, so the daily population could reach 100,000, while the number of permanent residents is about 32,000. The area's stability is crucial to Urumqi," Yu said. The area has more than 100 knife vendors, he added. Lin said most of the restricted knives sold in the market are made in Zhejiang province, and the crackdown on restricted knives won't affect the sales of small handcrafted knives, which are a Uygur tradition and a favorite souvenir. "People should also know the danger of selling restricted knives because they could also be the victims of violent crimes. The crackdown is for the safety of everyone," Lin said. ^ top ^



No firewall for Macao's new campus (Global Times)
The campus of the University of Macau on the Chinese mainland will be exempt from the restrictions of the Great Firewall, the university's media officer confirmed to the Global Times Wednesday. The Internet services on the new campus will be provided by Macao companies, the media officer, surnamed Fok, told the Global Times in an email. The university is moving its campus from the special administrative region to Hengqin Island, Zhuhai, Guangdong Province, and the new campus will be available in September with more than 10,000 students to be relocated. "Anything students can access on the Macao campus will be accessible in the new one," Fok said. Fang Binxing, the Great Firewall's founder, said he was not informed of this. An insider told the Global Times since the university is under the administration of Macao and Hengqin is a special economic zone, it is reasonable to follow Macao rules. A student from the university also said it would be inconvenient for his graduate dissertation if students could not browse certain websites. Construction of the campus started in December 2009 and it will be 20 times larger than its headquarters in Macao. ^ top ^



China's Q2 GDP growth slows to 7.5% (Xinhua)
China's gross domestic product growth slowed to 7.5 percent in the second quarter, down from 7.7 percent in the first quarter, the National Bureau of Statistics announced on Monday. The country's economic growth eased to 7.8 percent last year, the slowest annual growth since 1999. ^ top ^

Economic slowdown 'due to rebalancing' (China Daily)
China's economy grew by 7.6 percent year-on-year in the first half, a marked slowdown in comparison with near double-digit growth recorded two years ago. A government spokesman said that reducing the growth rate is aimed at making room for rebalancing the economy. The nation is capable of keeping growth momentum steady for the rest of the year, even though the economic environment is expected to remain grim and complicated, he added. The government's yearly GDP growth target for 2013, set earlier this year, is 7.5 percent. Sheng Laiyun, spokesman for the National Bureau of Statistics, said that despite the slowdown, China's growth is still higher than that in other major economies. The nation saw economic growth fall to 7.5 percent in the second quarter, from 7.7 percent in the first and 7.9 percent in the fourth quarter of 2012. Investment was the biggest growth driver in the first half of the year, contributing 4.1 percentage points to the 7.6 percent rate, while consumption contributed 3.4 percentage points and net exports 0.1 percentage point, the bureau said. Industrial output in the first six months grew by 9.3 percent from a year earlier, compared with a 10.5 percent increase in the first half of 2012. Annual growth of fixed-asset investment in the first half lost some steam, rising 20.1 percent year-on-year, down from 20.9 percent. Meanwhile, consumer goods retail sales rose by 12.7 percent, 1.7 percentage points lower than in the first two quarters of 2012. The slowdown was caused by the weak global economic recovery and measures taken by the new leadership, Sheng said. Jonathan Holslag, a research fellow at the Brussels Institute of Contemporary China Studies, said the figures send a very strong signal that the central government is making efforts to rebalance the economy. "The growth rate is still optimistic when considering the scale of China's economy and is still contributing a lot to the global economy," said Holslag. But he said this year will be very challenging for the country to restructure the economy against a backdrop of global hardship. Holslag stressed that the risks the government faces come from the banking sector and the stock market. Wang Jun, a senior economist at the China Center for International Economic Exchanges, a government think tank in Beijing, said China still faces pressure from downside risks in the second half. "It may push the government to take measures... to further expand domestic demand. Otherwise, difficulties may arise from tight local government financing and increasing unemployment," Wang said. He denied that a large stimulus package will be needed, as the new leadership may tolerate a growth rate of no less than 7 percent. After the statistics bureau released the first-half growth figures, JPMorgan Chase downgraded its forecast for the year's growth to 7.4 percent from 7.6 percent, saying manufacturing investment and overseas demand remain weak. "A slowdown of GDP growth to 7.5 percent will not trigger a change in policy stance," said Zhu Haibin, chief economist in China with the US bank. "The new government made it clear that it is willing to tolerate slower growth for better quality of growth. Economic restructuring is the priority task going ahead." Zhu said. On Monday, Nomura Securities said it will keep its GDP growth forecast for this year at 7.5 percent, but lower it to 6.9 percent for 2014. "We expect growth to bottom in the second quarter of 2014 at 6.5 percent," said Zhang Zhiwei, the chief economist in China for the company. "We now expect the central bank to cut the reserve requirement ratio by 50 basis points in each quarter from the third quarter of this year to the second in 2014," Zhang said. He does not view this cut as a policy easing measure, but as a measure to react to liquidity outflows. ^ top ^

7.75% growth possible for 2013: IMF (China Daily)
Growth of 7.75 percent in China's gross domestic product this year is possible, the International Monetary Fund said on Wednesday. But the global organization said this hinges on decisive measures being taken to re-energize reform efforts in view of doubts posed by external and domestic downside risks. It predicts the nation's economy will pick up moderately from the third quarter, as the lagged impact of strong growth in total social financing takes hold, in line with a projected mild recovery in the global economy. Meanwhile, inflation will remain subdued this year, the organization's report said. The IMF's economic growth expectation is higher than the government's target of 7.5 percent this year and also more optimistic than most global financial institutions' predictions, which range from 7.4 to 7.6 percent. Last week, the IMF cut its forecast for China's economic growth this year to 7.8 percent from 8.1 percent and downgraded its GDP prediction for 2014 to 7.7 percent from 8.3 percent. The National Bureau of Statistics reported lower-than-expected 7.5 percent growth in the second quarter, compared with 7.7 percent in the first three months, showing a deepening slowdown. Premier Li Keqiang said on Tuesday that the policy stance should not change because of temporary fluctuations in the economic indicators. Economists speculated that Li is signaling that the government is comfortable with the current pace of growth and will tolerate a moderate decline in the second half. Zhang Zhiwei, chief China economist at Nomura Securities, said the authorities are prepared to take action and fine-tune policy if growth slows more sharply. Zhu Haibin, chief China economist at JPMorgan, said tolerance of slower growth is not unlimited, as otherwise it will trigger financial risks in the economy and may cause a hard landing, disrupting social stability. The IMF report said, "If growth were to slow too sharply below the authorities' target, on-budget fiscal stimulus should be used in a manner that supports rebalancing and helps protect vulnerable groups." To unleash new sources of growth, China needs to stick to structural reform and leave more room for market forces, while preventing a financial crisis and moving toward a consumer-based, inclusive and sustainable growth path, the report said. Overdependence on investment and fiscal spending, which was preferred after the global financial crisis, is unsustainable and the reform effort requires a revamp of local government finances, increasing State-owned enterprises' dividend payments to the budget and continuing tax reforms, it added. "With a successful transition, China will grow at a healthy pace for years to come... a growth trajectory that will also be good for the global economy," the report adds. Paul De Grauwe, former economic adviser to the European Commission president, said, "The slowdown in China may also continue, as overcapacity needs to be assimilated and economic restructuring is underway." He agrees that a double-digit growth rate, mainly driven by investment and exports, is unsustainable. "The world should get used to the slower pace of economic growth in China," he said, adding that a 5 to 7 percent rate annually is still acceptable. Walter Vermeeren, president of Belgium-based NOVA Group, said China's growth, although less than expected, is still remarkable and Europe can only be jealous about it. But he said China should continue to support development of its small and medium-sized enterprises, which provide most jobs. ^ top ^


DPRK and South Korea

South Korea blames North Korea for cyberattack (SCMP)
North Korea is to blame for last month's cyberattacks on the websites of South Korean media companies and the president and prime minister's offices, a South Korean investigation concluded on Tuesday. South Korea's ministry of science said it was blaming North Korea based on analysis of codes, internet addresses and personal computers used to launch the attacks. The attacks occurred June 25, the 63rd anniversary of the beginning of the Korean war. It is the latest of several cyberattacks in recent years that Seoul blames on North Korea. Pyongyang has denied previous claims and has accused the US and South Korea of a cyberattack in March that shut down its own websites for two days. The South Korean government-led team of investigators said the online assaults were planned for several months, and the attackers hacked file-sharing websites in South Korea to find security weaknesses. An investigator told reporters that the attackers tried to steal personal information from the websites targeted in the June 25 cyberattacks, but it was not clear when the attempt took place. Local media reported that the personal information of millions of people was stolen from the presidential office's website and the ruling party. Investigators managed to recover data on the hard drives that the attackers destroyed June 25 and found an internet protocol address that was used by North Korea. They also found that the codes used in the June attacks had the same features as the codes used in the larger March 20 cyberattacks that shut down tens of thousands of computers at South Korean broadcasters and banks. The attackers in June tried to hide their identities by destroying hard drives and disguising the internet protocol addresses they used, the ministry said. The attackers also tried to misguide investigators by using the picture of the Anonymous group, the ministry said. Local media reported in June that the attack was done by a global hacking collective called Anonymous. But a South Korean government official said at the time that the attackers could not be confirmed at the moment. The ministry said the June 25 attacks hit 69 government and private companies' websites and servers. Earlier this month, cybersecurity firms said the hackers behind the March attacks also have been trying to steal South Korean and US military secrets with a malicious set of codes they've been sending through the Internet for years. They did not specifically blame North Korea. Researchers at Santa Clara, California-based McAfee Labs said the malware was designed to find and upload information referring to US forces in South Korea, joint exercises or even the word “secret”. McAfee said versions of the malware have infected many websites in an ongoing attack that it calls Operation Troy because the code is peppered with references to the ancient city. McAfee said that in 2009, malware was implanted into a social media website used by military personnel in South Korea. ^ top ^

Panama finds 'missile equipment' aboard DPRK ship (China Daily)
Panama's president said on Monday that the captain of a ship from the Democratic People's Republic of Korea tried to kill himself after the vessel was stopped en route from Cuba and found to have suspected missile material on board. President Ricardo Martinelli said the ship was targeted by drug enforcement officials as it approached the Panama Canal and was taken into port, but a search revealed cargo of far greater concern. The estimated 35-man crew also rioted when police boarded the ship, according to Martinelli, who said the suspicious goods were found hidden in a consignment of sugar. The ship was intercepted near the port of Manzanillo on the Atlantic side of the canal. "We're going to keep unloading the ship and figure out exactly what was inside," Martinelli told Panamanian television late on Monday. Martinelli said the captain of the vessel tried to commit suicide after the ship was stopped. Panamanian authorities have detained the crew members. "The world needs to sit up and take note: You cannot go around shipping undeclared weapons of war through the Panama Canal," he said on Radio Panama. "We had suspected this ship, which was coming from Cuba and headed to the DPRK, might have drugs aboard, so it was brought into port for search and inspection." Initial reports said the ship was boarded on Friday. "When we started to unload the shipment of sugar, we located containers that we believe to be sophisticated missile equipment, and that is not allowed," Martinelli said. The ship, named Chong Chon Gang, is being held, as are the crew, who not only resisted the approach from the Panamanian authorities, but attempted to sabotage the search, he said. The boat was headed back to the DPRK when it was stopped and taken to Manzanillo, east of the Atlantic opening of the Panama Canal. The vessel "aroused suspicion by the violent reaction of the captain and the crew from Friday afternoon", Panama's Security Minister Jose Raul Mulino told the radio station. And Javier Caraballo, an anti-drugs enforcement official, said: "Until now, we have not found drugs in the boat; we found military equipment." Presidential spokesman Luis Eduardo Camacho said later that "at first glance" the cargo appeared to include missiles, but an examination of the ship by specialists may take as long as a week. UN sanctions bar the transport of all weapons to or from the DPRK apart from small arms. Several of the country's ships have been searched in recent years. ^ top ^

ROK-DPRK talks on biz zone reopening fail (Xinhua)
The Republic of Korea (ROK) and the Democratic People's Republic of Korea (DPRK) failed once again to agree on reopening the Kaesong industrial complex that has been suspended for more than three months. Three-member delegations from both sides on Wednesday held three top-delegate talks and a 50-minute plenary session in the morning, but they ended the fourth round of working-level talks without any agreement reached. Instead, Seoul and Pyongyang agreed to resume talks on July 22 at the Kaesong industrial zone, another round of working-level dialogue. "Our side said a material question about (adopting) the statement of agreement lies in an assurance of recurrence prevention, but the stance of the North side (DPRK) failed to make headway," Kim Kiwoong, Seoul's top delegate and director-general of the Unification Ministry's inter-Korean district support directorate, told reporters at a briefing. Kim said that big gaps remained between Seoul and Pyongyang over institutional assurances to normalize the Kaesong industrial park in a productive way. The ROK wants measures that would prevent any future unilateral shutdown of the industrial park. ^ top ^

DPRK demands Panama free seized ship carrying arms (China Daily)
Democratic People's Republic of Kore demanded on Thursday the release of its ship held in Panama with what appear to be missile radar and other weapons loaded in Cuba, saying it was sailing under a legitimate deal and calling the initial suspicion of drugs on board "a fiction." "The Panamanian investigation authorities rashly attacked and detained the captain and crewmen of the ship on the plea of 'drug investigation' and searched its cargo but did not discover any drug," DPRK's Foreign Ministry spokesman said. "This cargo is nothing but aging weapons which are to send back to Cuba after overhauling them according to a legitimate contract," the spokesman was quoted as saying by the official KCNA news agency. "The Panamanian authorities should take a step to let the apprehended crewmen and ship leave without delay. Panamanian authorities seized the DPRK freighter and found what appeared to be components for Soviet-era missile radar system under sacks of brown sugar. The ship was stopped last week as it headed into the Panama Canal and authorities arrested the crew on Monday after finding undeclared missile-shaped objects, a potential violation of UN sanctions linked to the DPRK's nuclear and missile programmes. Panama said on Wednesday that it had asked the United Nations to determine the legality of the cargo. Cuba, which has close diplomatic ties with DPRK, said the cargo contained "obsolete defensive weaponry" being sent back to DPRK for repairs and included anti-aircraft missile batteries, disassembled rockets and fighter jet parts. Security experts said there was a possibility DPRK was trying to import the equipment and the explanation about repairing the items may be a disguise. Britain's ambassador to the United Nations said the ship appears to have violated UN arms embargo on DPRK. DPRK has been under wide-ranging sanctions under Security Council resolutions since 2006 that ban trade of most types of weapons after conducting missile and nuclear tests in defiance of international condemnation. It tested a nuclear device for the third time in February that led to the adoption of the latest Security Council resolution that tightened the sanctions regime. ^ top ^



Oyu Tolgoi launches copper concentrate export (UB Post)
Yesterday, Oyu Tolgoi launched the export of its copper concentrate and sent its first ever shift of 40,000 tons of copper concentrate. Oyu Tolgoi, the third biggest copper deposit in the world, now enters circulation in the marketplace. The export launch is a very big step for both Oyu Tolgoi and Mongolia for creating a secure and sustainable mining sector. Minister of Mining, D.Gankhuyag, talked about the two delays of the export, “There is no problem concerning the sales contract. The issue the two parties were arguing about is now solved. Sales Income of Oyu Tolgoi will be transferred to Mongolia and Oyu Tolgoi's account.” Oyu Tolgoi plans to export approximately 300,000 tons of copper concentrate this year and according to its estimate, it will earn a profit of two billion USD in 2013. Once operating under full capacity, Oyu Tolgoi could potentially export one million tons of copper concentrate per year. A line of 16 trucks with loads of 576 tons of copper concentrate each, set off to Gashuun Sukhait port. The first shift of copper concentrate is 5,800 tons and the remaining product will be delivered after the observance of Naadam. President and CEO at Oyu Tolgoi, Cameron McRae, expressed his delight in witnessing the shipment. Currently, Oyu Tolgoi's copper concentrate is being produced from ore extracted from an open mine at the Oyu Tolgoi deposit. Current manufacturing will bring profit to the Mongolian Government as mineral resource exploitation fees and taxes are collected. ^ top ^

Sukhbaatar Square to be renamed after Chinggis Khaan (
The Capital City Citizens" Representative"s Khural was held on Monday July 15th. During the meeting the head of the Ulaanbaatar city Governor`s office, Yo.Gerelchuluun, introduced a draft resolution to change the names of streets and squares in Ulaanbaatar city to members of the the Capital City Citizens" Representative"s Khural, or City Council. The majority of members agreed to rename Sukhbaatar Square after Chinggis Khaan whose name has travelled 800 years from the founding of the Great Mongol Empire and is now every Mongolian`s pride and idol. The Capital City Citizens" Representative"s Khural announced that scientific institutes, researchers, civilians and NGOs have requested to name the square after Chinggis Khaan numerous times. Members discussed the issue upon their request. The name of the square is to be changed but the statue of the hero of the Mongolian People`s Revolution, Sukhbaatar, is expected to remain. ^ top ^

SouthGobi Resources announces its new President and Executive Director of SouthGobi Sands LLC (Info Mongolia)
On July 16, 2013, the SouthGobi Resources Ltd announced the appointment of Sengee ENKH-AMGALAN as new President and Executive Director of SouthGobi Sands LLC (“SGS”), the SouthGobi Resources' wholly-owned subsidiary, effective July 15, 2013. S.Enkh-Amgalan joins SGS from Clean Energy LLC, a subsidiary of Newcom Group, where he was CEO and led the successful development of the first commercial scale "Salkhit" wind farm in Mongolia. Prior to this, he gained extensive experience in the extractive industry through a number of senior management positions at the MCS Group of Companies. Most recently this included Chief Executive Officer of Nordstar Resources LLC and MCS Petro Mongolia LLC. Before this, he was Vice President, Corporate Development at Mongolian Mining Corporation. Mr. Ross Tromans, President and CEO of SouthGobi said: “I am extremely pleased to welcome Enkh-Amgalan as SGS's new President and Executive Director and a member of the senior executive team. Enkh-Amgalan is not only a seasoned executive with extensive management skills, but he also brings with him in-depth knowledge of the Mongolian energy and mining industries. All of us at SouthGobi look forward to working with and benefiting from Enkh-Amgalan's strong leadership and experience as we focus on strengthening the Company's core business performance and realizing its production potential". ^ top ^

Mongolia officially registers its 2,900,000th citizen (UB Post)
The Bureau of Population and Housing Census (BPHC) of the National Statistical Office (NSO) has officially announced that Mongolia's population reached 2,900,000 on July 10. Chief of BPHC, A.Amarbal, said, “The Ministry of Health sends monthly data of mortality and birth rates to the NSO and according to the statistics, Mongolia welcomes a new citizen every seven minutes and 36 seconds, while one Mongolian citizen dies every 28 minutes and 36 seconds. Projections of population growth are made based on a population's mortality and birth rate. Likewise, the NSO has started running a ‘Population Clock' which estimated the birth on July 10. As of the first half of 2013, the birth rate had already exceeded 38,000, the same birth rate of the 1980s, when Mongolia's birth rate had reached its peak.”. ^ top ^

Ex-President N.Enkhbayar's home was searched and his assets were frozen (Info Mongolia)
On July 17, 2013, a home of former President N.Enkhbayar, Head of the Mongolian People's Revolutionary Party (MPRP), who is imprisoned for corruption cases but currently being treated at the Second General Hospital in Ulaanbaatar, was searched and his assets were frozen by Independent Authority Against Corruption of Mongolia (IAAC). Meanwhile, N.Enkhbayar's spouse, O.Tsolmon, was questioned, moreover his son, Deputy Governor of the Central Bank of Mongolia E.Batshugar's father-in-law's (S.Tumur) apartment was also inspected during the investigation. Some members of the MPRP and the Parliament had gathered outside N.Enkhbayar's house, demanding an explanation, but the Authority officials denied giving any details. In conjunction with N.Enkhbayar's corruption case, the IAAC arrested former Chairman of Ulaanbaatar City Council T.Bilegt before the National Naadam Festival on July 06, 2013. T.Bilegt had arrived in Ulaanbaatar at “Chinggis Khaan” International Airport by “Korean Air” on July 05, but was arrested from his home on the following day, Saturday morning and was taken to Detention Center No.461 for questioning. The IAAC is investigating T.Bilegt who is suspected as an abettor to the ex-President N.Enkhbayar on the illegal privatization of “Urguu” hotel and defrauding a publishing house “Ulaanbaatar Times”. However T.Bilegt is under investigation in Mongolia, but he is still among the list of Wanted Persons at INTERPOL website. According to IACC Senior Commissar E.Amarbat, T.Bilegt used to live in the United States of America for over past 2 years and while living in the US, he had requested to immigrate into the country. The legal investigation period for T.Bilegt expires on July 19, 2013. ^ 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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