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
  5-9.8.2013, No. 487  
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DPRK and South Korea

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Foreign Policy

Philippines seeks 'tranquility' in relations with China (SCMP)
With China's foreign minister wrapping up a two-day trip to Vietnam yesterday, the Philippines becomes the only claimant country in the South China Sea dispute that Wang Yi has not visited. But Philippine Foreign Secretary Albert del Rosario is not giving up. When he met Vietnamese Foreign Minister Pham Binh Minh in Manila on Thursday, Pham told him: "The Chinese foreign minister is coming [to Vietnam]. Do you have a message?" Del Rosario said he told Pham: "Yes. Please, I am waiting for a positive response to my invitation" for the Chinese foreign minister to visit Manila. China's snub highlights the rift between the two previously close countries. Since taking office in March this year, Wang has visited seven of 10 Asean member states. Two of those he hasn't visited - Cambodia and Myanmar - have warm relations with China and receive generous Chinese aid and investments. Del Rosario had extended the invitation to Wang shortly after they both had "a testy exchange", news reports said, during the June 30 Asean meeting in Brunei, which included China. Del Rosario reportedly expressed "serious concern" over China's military build-up in the South China Sea. That, plus the Philippines' unprecedented action to formally file for arbitration before the International Tribunal for the Law of the Sea (ITLOS), has resulted in China's snub. The Foreign Correspondents' Association of the Philippines found a more conciliatory Del Rosario during a meeting with him on Friday. He said: "I am looking for a modus vivendi with China. Some tranquility in terms of our relations." When asked by the South China Morning Post to comment on President Xi Jinping's recent statement that China was open to shelving disputes and carrying out joint development in areas "over which China has sovereign rights", Del Rosario did not bristle. Instead, he recounted his meeting with Xi when the latter was still vice-president. He said Xi brought up the concept of joint development. "The response that I have to your question is the same response I had with [Xi] in my discussions," said Del Rosario. "I said that as long as joint development does not violate Philippine law we are okay with it." He said he had then suggested to Xi: "Sir, why don't we pursue an agreement with your good country so that we can move forward with a major bilateral agenda and abstract contentious issues like the west Philippine Sea? And [Xi] seemed okay with that." He noted that both countries had signed "close to a hundred agreements". One of them specified that contentious issues would be tackled separately from the bilateral agenda. Del Rosario defended his move to seek arbitration before the ITLOS. He said it was "a mechanism in international law [which] the United Nations has declared is not an unfriendly act". "In our heart we believe we did the right thing... win or lose... it will create maritime entitlement, verification. So everybody is clarified," he said, adding that more and more countries were sharing this viewpoint. Del Rosario also praised what he called Brunei's outstanding manner of chairing the Asean meeting. He disclosed that on their very first meeting, Brunei immediately raised the South China Sea issue, saying: "We need to discuss it because it is a very important element in terms of peace and security.". ^ top ^

Chinese FM Wang aims above regional rows (China Daily)
The new leadership is taking positive action to ensure that ties between China and ASEAN countries are not hampered by territorial issues, analysts said on Sunday. Foreign Minister Wang Yi arrived in Vietnam late on Saturday for the last leg of an official visit to countries of the Association of Southeast Asian Nations, his third such visit since he took office in March. "It shows that China is attaching more importance to ties with the Southeast Asian nations," said Jia Xiudong, a senior researcher on international affairs at the China Institute of International Studies. Wang is demonstratChinaing that will not let territorial issues with several ASEAN members hinder overall relations and cooperation between China and ASEAN, Jia said. China is trying to identify points of agreement on the interests of both China and Southeast Asian countries, he added. "Wang's visit sends a signal that China is taking every effort to resolve the South China Sea issue, so that the issue will not harm the general peace and stability in the region," said Jin Canrong, a professor of international affairs with the Renmin University of China. Before arriving in Vietnam, Wang also visited Malaysia, Thailand and Laos, reviewing the achievements in bilateral ties with each country and paving the way for deeper cooperation in the future. At the opening ceremony of the High-Level Forum on the 10th Anniversary of China-ASEAN Strategic Partnership held in Bangkok on Friday, Wang called on ASEAN countries to join hands with China to further deepen and enrich their cooperation. He told officials of ASEAN countries at the forum that relations with ASEAN have always topped China's diplomatic agenda and now is the key moment to make new progress in relations, following 10 years of strategic partnership. Meeting with Surukiat Sathirathai, chairman of the Asia Peace Reconciliation Council and Thailand's former deputy prime minister, Wang proposed three ways to solve the South China Sea disputes, emphasizing the importance of joint exploitation of mineral resources. "It takes time to find a final solution. ^ top ^

US$500 million Chinese-built port for megaships opens in Sri Lanka (SCMP)
A US$500 million Chinese-built port opens today in Sri Lanka, giving Beijing a vital foothold on the busiest international shipping lane as it seeks to secure maritime supply routes. The massive terminal in Colombo is located midway on the lucrative east-west sea route and has facilities on a par with Singapore and Dubai. The Colombo International Container Terminal, which is 85 per cent owned by the state-run China Merchant Holdings International, is designed to handle megaships - a first for Sri Lanka which is aiming to become the region's shipping hub. The involvement of such a large Chinese company appears to conform to a pattern by Beijing after it sealed a deal in January to acquire the Pakistani port of Gwadar at a time when it is also building a US$14 million "dry port" in the Nepalese city of Larcha, near Tibet. Chinese loans and expertise were also instrumental in the construction of a new U$450 million deep-sea port at the southern Sri Lankan city of Hambantota which opened in June 2012. Independent shipping expert, Rohan Masakorala, says the new terminal made economic sense for China to tap in to the growing South Asian container cargo and gave Beijing a foothold along a strategic sea route. "Terminal investments are a good business which can give a very good return," said Masakorala, a former secretary general of the Singapore-based Asian Shippers' Council. "Through this investment, China is also securing the safety and efficiency of their main supply chain." Masakorala, who heads the Shippers' Academy Colombo, said about half of all world sea trade passed through the east-west shipping route and a presence at a midway point along that gives China a commanding position. "For China to maintain economic growth at home, they also need to go out and secure their supply routes. In that sense, coming to Colombo is a strategic commercial investment." The Chinese investment in Sri Lanka, which is under pressure from Western powers and India over its human rights record, has raised fears in New Delhi about Beijing's influence in the neighbourhood. But Priyath Bandu Wickrama, chairman of the state-run Sri Lanka Ports Authority, insisted that India had nothing to fear from the new Colombo port and could in fact be a major beneficiary. "We will not allow any military base at our ports nor will we allow them to be used for any strategic military purpose by anyone," Wickrama said. Wickrama said shippers in India could save up to four days by routing their cargo through Sri Lanka rather than using Singapore or Dubai. "Earlier, Indians along the east coast had to send their cargo to Singapore if they wanted to catch a megaship going West. Now these megaships will be going through Colombo and picking up Indian cargo," he said. "That saves time and a lot of money." The two major ports of south India, Cochin and Tuticorin, are too shallow for megavessels. Saliya Senanayake, of the London-based Chartered Institute of Logistics and Transport, says that "India is about five to six years behind Sri Lanka when it comes to port infrastructure". The Sri Lanka Ports Authority is pouring millions of dollars into infrastructure around the island and says it is on course to increase container handling capacity by 1.6 million containers to 6.4 million by April. It hopes to have a container capacity of 10 million by 2020, while revenue is forecast to triple to US$1 billion by 2020. In April, Colombo's port is due to open another terminal just next to the Chinese-managed terminal. The addition will initially be able to handle about 800,000 containers a year. ^ top ^

Vietnamese PM meets with Chinese FM on ties (Xinhua)
Vietnamese Prime Minister Nguyen Tan Dung met with Chinese Foreign Minister Wang Yi [in Hanoi] on Monday. Vietnam and China are two neighboring countries that share mountains and rivers, and have similarities and common interests, Nguyen said, adding the party and government of Vietnam always bear in mind and appreciate the great help and support rendered by China in the cause of national liberation and national reunification, as well as in the cause of national building. Vietnam is willing to make joint efforts with China to enhance strategic mutual trust, promote practical cooperation and deepen bilateral comprehensive strategic partnership, he said. Wang said that in the light of people's fundamental interests and the two parties' strategic height of fate, both sides should steer the direction of bilateral relations development, properly implement the consensus reached by leaders of the two countries, deepen cooperation and correctly address their differences, as well as promote land and maritime cooperation and provide more benefits for the development of relations between the two countries. On the same day, Wang also met with Nguyen Thien Nhan, deputy prime minister of Vietnam and Vietnamese president of China- Vietnam Bilateral Cooperation Steering Committee. ^ top ^

Beijing tells Asean to be realistic in hopes for South China Sea code of conduct (SCMP)
All parties with territorial disputes over the South China Sea should have "realistic expectations" and take "a gradual approach" to a proposed code of conduct aimed at defusing maritime tensions in the region, China's foreign minister said in Hanoi yesterday. Wang Yi, who wraps up a six-day visit to four South East Asian countries today, said Beijing was open to dialogue on a Code of Conduct for the South China Sea (CoC), but warned that patience would be needed. "Some countries are looking for a quick fix [to the disputes] and are hoping to thrash out a code in a day; this approach is neither realistic nor serious," Xinhua quoted Wang as saying yesterday. The CoC involved multiple national interests and as such required a "delicate and complex" negotiating process, Wang added. Analysts say Wang was referring to the Philippines's recent bid to take the maritime row to the United Nations in hope of solving it promptly. One analyst believed Beijing did not want Manila to go to the UN. "It would attract too much attention. China would prefer to bind South China Sea claimants into a bureaucratic process that it can control, exploiting Asean disunity," said Alex Neill, a Shangri-la dialogue senior fellow at the International Institute of Strategic Studies. Previous efforts to discuss the CoC failed because of "disturbances" from irrelevant parties, Wang said, in a thinly veiled message to the US, a long-term ally with the Philippines. "Instead of making disturbances, parties should make efforts that are conducive to the process so as to create the necessary conditions and atmosphere," Wang said. Wang stressed that any progress on the new framework would be dependent on countries following a confidence-building "declaration of conduct" agreed upon in 2002, which Beijing accuses Manila of violating. The Philippines and Vietnam have led criticism of what they consider increasingly assertive claims by China in the South China Sea. Top diplomats from both countries agreed last week in Manila to work closely to deal with their territorial disputes with Beijing. Vietnamese Foreign Minister Pham Binh Minh also said that Hanoi supported Manila's move to take the issue of South China Sea disputes to the International Tribunal for the Law of the Sea. "Wang is trying to head off any unity among Asean [the Association of Southeast Asian Nations] members against China ahead of the next Asean summit [in October]," Neill said. While China has been eager to smooth tensions with Vietnam, it has shunned Manila. In May, Wang visited Indonesia, Thailand, Singapore and Brunei in his first official visits since the former ambassador to Japan was appointed foreign minister. The just-concluded trip covers Vietnam, Malaysia, Thailand and Laos. Last month, Beijing blasted Manila for turning to the UN to seek arbitration over their maritime disputes, and accused the country of provoking tensions. "I could see why Wang would've wanted to refer to Manila [in his comments]," said Kerry Brown, professor of political science at the University of Sydney. "China would have lots of reasons to utterly resist the UN being dragged in, as they would argue this is an internal issue, and for the Philippines to try to use this as leverage would seem to them to be theatrical posturing.". ^ top ^

Tokyo, Manila beef up naval fleets amid China island rows (SCMP)
Japan and the Philippines have unveiled major new additions to their warship fleets, amid escalating tensions with China over territorial claims to disputed islands and waters. Tokyo showed off its biggest warship since the second world war at a ceremony in the port city of Yokohama yesterday, the 68th anniversary of the dropping of the atom bomb on Hiroshima. The 248-metre helicopter carrier will be a centrepiece of its naval power. The Japanese-built carrier can accommodate nine helicopters and is expected to play a big role in disaster and rescue missions, as well as defending sea lanes and Japanese territory. It is unclear when it will go into service. Controversially for China, the ship has been dubbed "Izumo", the same name as the armoured cruiser that led naval operations in the Battle for Shanghai during second world war. In Beijing yesterday, the defence ministry accused Tokyo of "constant" military expansion. "We express our concern at Japan's constant expansion of its military equipment. This trend is worthy of high vigilance by Japan's Asian neighbours and the international community," the ministry said. "Japan should learn from history, adhere to its policy of self-defence and abide by its promise of taking the road of peaceful development." Meanwhile, the Philippines yesterday celebrated the arrival of a decommissioned US Coast Guard cutter as its second major warship to challenge China's territorial claims, which Philippine officials say have intruded into their country's potentially oil-rich offshore seas. President Benigno Aquino saluted as the 3,250-tonne white cutter, renamed Philippine navy frigate BRP Ramon Alcaraz, docked at a wharf in Subic Bay Freeport, northwest of Manila. A part of the former US naval base will soon be turned into a Philippine military hub after the government approved a plan to shift its assets closer to the disputed islands in the South China Sea. "It will further intensify our patrolling of the Philippines' exclusive economic zone and our capability to quell any threat and bad elements, respond to search and rescue operations and take care of our marine resources," Aquino told a crowd of dignitaries that included US ambassador Harry Thomas. The arrival of the ship, which was obtained under a US-Philippine military assistance programme, signals the Philippines' resolve to upgrade its antiquated equipment and move away from a reputation of having Asia's weakest military. The acquisitions by Japan and the Philippines point at an arms race by China's neighbours, which have been alarmed by Beijing's assertiveness in claiming vast waters and backing that by deploying new maritime forces and refurbished vessels. Last year, China commissioned its first aircraft carrier, the Liaoning, as part of its military build-up. The Liaoning went into service in September in a symbolic milestone for China's increasingly muscular military. But the vessel still requires a carrier group including destroyers, frigates and submarines, while fighter jet pilots need more training before it is operational, according to navy officials. Yesterday, a leading Chinese foreign-policy thinker warned Manila and Tokyo that they had been mistakenly emboldened by Washington in territorial disputes with his country. Ruan Zongze, vice-president and senior fellow at the China Institute of International Studies, said: "No one in this world will try to contain China and no one in this world is capable of containing China. "Since the US has adopted this new strategy of returning to the Asia-Pacific region, some countries have made the wrong judgment that the US will encourage them to challenge the sovereignty and territorial integrity of China. This is a misjudgment on their part.". ^ top ^

People's Daily continues attack on US constitution (SCMP)
The People's Daily continued its blitz on constitutionalism yesterday, with its overseas edition running another front-page commentary attacking US constitutional governance. The criticism comes amid an escalating debate over which political direction China is heading, ahead of a series of leadership meetings. The article, titled "American constitutional governance is more in name than in reality", said "there is no such thing as democracy and freedom under US constitutional governance". The US constitution ensured the masses were exploited by monopolies that held sway over production, it said. "Such non-existent constitutional governance is not compatible with socialism," it said. It was signed by Ma Zhongcheng, who penned a similar attack on Monday. The article squarely rejects the introduction of constitutional governance, despite some party leaders and scholars endorsing it. President and Communist Party chief Xi Jinping recently said: "No one should be allowed to be above the constitution". Ma said the spread of "constitutional-rule" ideas in China was fostered by foundations affiliated with US intelligence agencies trying to overturn socialism. Analysts said the latest propaganda blitz was clearly an effort by conservatives to jump-start a debate about the party's new direction, and possibly the nation's, as its leaders reportedly meet in the seaside resort of Beidaihe, east of Beijing, to work out their political agenda for the coming decade. The publication of such articles "suggests a deep division over the political direction of the nation between the liberals and conservatives", said Zhang Lifan, a political affairs analyst. ^ top ^

EU delays imposing tariffs on Chinese solar panels (SCMP)
The European Union refrained from imposing preliminary anti-subsidy tariffs on Chinese solar panels, opting to wait four more months to assess whether such levies were warranted in the biggest EU trade fight of its kind. The European Commission waived the right to introduce provisional EU duties to counter alleged trade-distorting government aid to Chinese solar-panel manufacturers. The commission, the 28-nation EU's regulatory arm, will study whether "definitive" anti-subsidy levies should be applied no later than December 8. Five days ago, the commission approved an agreement with China to curb EU imports of solar panels as part of a parallel probe into below-cost sales, a practice known as dumping. The accord, which took effect yesterday, sets a minimum price and a volume limit on EU imports of Chinese solar panels until the end of 2015. Chinese manufacturers that take part are being spared provisional EU anti-dumping duties as high as 67.9 per cent. The European Commission has yet to make public the minimum price, but Bloomberg quoted an unnamed EU trade official as saying that some 7 gigawatts (GW) of panels would be allowed to be sold to the EU at not less than 70 US cents per watt, similar to current prices. Further exports will be subject to an import tariff averaging 47 per cent. Consultancy IHS's Germany-based principal solar research analyst, Stefan de Haan, said he expected the EU to refrain from imposing anti-subsidy tariffs on Chinese producers who stick to the agreed minimum price and import limit. He added that the EU member nations were likely to approve the Sino-EU solar trade agreement early in December. But lawsuits might still be launched by industry groups in Europe to demand anti-dumping and anti-subsidy tariffs on Chinese products, he said. The renewable-energy dumping and subsidy cases cover EU imports of crystalline silicon photovoltaic modules or panels. ^ top ^

Chinese ships make longest patrol of disputed waters (SCMP)
China deployed ships to waters near islands disputed with Japan for a record 28 hours, drawing a formal protest as it repeated a strategy of pressing its territorial claims through bolder projections of maritime power. Ships from China's newly formed coastguard remained in the Japanese-controlled waters for the longest time since Japan bought the Diaoyu, or Senkaku, islands last year, Cabinet Secretary Yoshihide Suga said at a briefing in Tokyo yesterday. Japan's Foreign Ministry summoned a Chinese diplomat and "sternly protested", he said. Four China Coast Guard ships spent more than a day in Japanese-controlled waters around the islands, part of the time stationary within five kilometres of the Nan, or Minami, islet, according to the Japan Coast Guard. The ships left the waters around the East China Sea islands at about noon yesterday. "It is clear that the Senkaku Islands are Japan's territory, in terms of history and international law," Suga said. "This incursion into our territorial waters is the longest since our government bought the islands in September. It is extremely regrettable and we cannot accept it." The Chinese ships forced out Japanese "right-wingers" from waters around the disputed islands, the Chinese embassy in Japan said in a statement. The chargé d'affaires filed a diplomatic protest yesterday over the incident and requested that the Japanese ships immediately leave the territory and prevent any future incidents, it said. Shi Yinhong, a regional security expert with Renmin University's School of International Relations, said that the ratcheting up of maritime patrols was a response to the increase in hawkish rhetoric from Japan's ruling Liberal Democratic Party. [...] On Tuesday, Japan unveiled its largest warship since the second world war. The Chinese Defence Ministry said yesterday that the region must be on alert over Japan's defence build-up. Shanghai-based military expert Ni Lexiong said the growing maritime activities in the East China Sea were designed to send message to countries involved in territorial disputes with Beijing in the South China Sea. "China's dispute with Japan over the Diaoyus is always seen as a test of its determination and ability to deal with the territorial disputes with several [Association of Southeast Asian Nations] nations over the Spratlys and other islands in the South China Sea," said Ni, who is director of the Sea Power and Defence Policy Research Institute at the Shanghai University of Political Science and Law. ^ top ^


Domestic Policy

China bars powdered milk from NZ in botulism scare (SCMP)
Beijing has halted all milk powder imports from New Zealand after several major drinks and baby formula companies were found to have used products contaminated with bacteria that could cause botulism. The products were manufactured by Fonterra, the world's biggest dairy exporter. Trade minister Tim Groser told Television New Zealand that Chinese authorities had imposed the ban on all milk powder products from the country, including those shipped through Australia. He said the action was "absolutely appropriate". "It's better to do blanket protection for your people and then wind it back when we … are in a position to give them the confidence and advice that they need before doing that," Groser said. The ban was not officially announced by Chinese authorities. Inquiries to the Ministry of Commerce and the General Administration of Quality Supervision, Inspection and Quarantine were not answered yesterday. China is the largest importer of dairy products from New Zealand, with 80 per cent of China's imported milk powder from the country, Xinhua reported. Professor Wei Ronglu, with the Western Dairy Development Association, said the ban would not have a significant effect on the mainland's dairy industry, as similar products could be imported from Europe. Fonterra said on Friday that three batches of its whey protein had been contaminated with clostridium botulinum, which can cause botulism and affects the muscles. In serious cases, it can cause respiratory failure. About 40 tonnes of the Fonterra products were sold to three Chinese clients. China's General Administration of Quality Supervision, Inspection and Quarantine said four domestic companies may have been affected. They are Shanghai Yanjiu; Dumex Baby Food, a Danone brand; and Wahaha Health Food and Wahaha Import & Export, both of which are under the Chinese food and beverage giant Hangzhou Wahaha. Representatives from Dumex, Hangzhou Wahaha Health Food and Coca-Cola (China), which had purchased some of the imported whey protein from Shanghai Yanjiu, were summoned yesterday to meet the State Food and Drug Administration. The watchdog urged them to stop sales of such products and to recall all goods produced using potentially tainted materials. Dumex, which imported 209 tonnes of whey protein from Fonterra, said 12 batches of baby formula were produced from the problematic raw material, amounting to 664 tonnes. It said some of products had not been distributed, while those that had been distributed - about 420 tonnes - would be recalled and destroyed. Coca-Cola (China) said that nearly five tonnes of imported whey protein had been safety quarantined and that 25kg had been used to produce bottled Minute Maid fruit milk. Coca-Cola is tracking the production and distribution records of affected products for recall. But it said the production process ensured safety, as it involved high-temperature sterilisation. ^ top ^

China Voice: CPC to maintain high pressure on corruption (Xinhua)
For those questioning whether the Communist Party of China (CPC) is serious about its anti-corruption drive, the growing number of officials under punishment has shown the party's zero-tolerance to such wrongdoing. Four court officials in Shanghai were suspended from their posts last week and investigated after alleged hiring of prostitutes at a nightclub. Last month, a township-level CPC official in north China's Hebei Province was fired after an investigation showed he spent 200,000 yuan (about 32,400 U.S. dollars) on a wedding banquet for his daughter, a move deemed unacceptable under China's ongoing anti-extravagance campaign. These cases of low-level officials, or "flies" as they have been labeled, were followed by the the public prosecution of Bo Xilai, former CPC chief of southwest China's Chongqing Municipality. Other high-level officials, or "tigers," including Liu Zhijun, former railways minister, Liu Tienan, former vice minister in charge of the National Development and Reform Commission, and Li Chuncheng, former deputy chief of the CPC's provincial committee of Sichuan, have also had investigations opened against them and, in Liu Zhijun's case, even been sentenced to suspended death penalties. The treatment of these officials is indicative of the CPC's resolve to sniff out every corrupt pheromone, punish every guilty official and constantly eliminate the soil which breeds graft, so as to earn people's trust with actual results. The CPC, representing the fundamental interests of the people, will never be soft on corruption and its vows of "restricting power by the cage of regulations" will not be empty talk. The CPC regards its fight against corruption as necessary for the survival of both the party and the country, as graft has jeopardized social stability and blocked the country's developmental progress. The 25-member Political Bureau of the CPC Central Committee played an exemplary role in June by meeting to relay criticisms and self-criticisms to fight undesirable work styles. Besides the top leadership's efforts, it will be implementation by tens of thousands of local government officials that will ensure victory in the war against corruption. As the world's largest ruling party is looking to ensure stricter discipline, no official should expect to dodge punishment for corruption. The CPC's cracking down upon both "tigers" and "flies" has already been recognized and supported by the Chinese public. Just as the CPC's leadership has vowed to hold any and all violators accountable, a fierce public campaign has also been launched on the Internet. Authorities have investigated online accusations and brought several officials to justice based on submitted evidence. The positive response to the exposure of corruption through new media signifies that the leadership is attaching importance to the public anti-corruption efforts. The party is expected to unveil more specific and long-term measures against corruption to constantly uphold its ethics and keep its members clean and accountable. ^ top ^

Secretariat chief Liu Yunshan's appearance signals start of policy conclave (SCMP)
The chief of the Communist Party's powerful Secretariat held meetings in the resort area of Beidaihe yesterday, effectively confirming that the country's top leaders have begun their secretive summer policy conference. Liu Yunshan was accompanied by two other members of the decision-making Politburo - Vice-Premier Ma Kai and party organisation chief Zhao Leji - as he met scientists, engineers, and other top minds in the Hebei resort area, China Central Television reported. Such a gathering of experts also suggested that the key policy meetings had begun, since leaders often call on such academics to provide advice while discussing policy plans. Leaders use the summit to debate domestic issues ahead formal party meetings in the autumn. This year's conference - the first since President Xi Jinping took office - is expected to feature discussions about major reform proposals. Also likely on the agenda is the case of Bo Xilai, the disgraced former Chongqing party chief expected to face trial for corruption this month in Jinan. Pundits expect Xi and his second-in-command, Premier Li Keqiang, to use the autumn plenary session to unveil a more expansive political and economic agenda. Hopes are high that the new leadership will use the plenum to push forward long-stalled economic and political reforms. Deng Yuwen, a former deputy editor of the Central Party School's Study Times, said he believed politics may be given a backseat. "The economic issue will be the top priority as leaders are more eager to deal with the slowdown in growth rather than with any political issues that they think are not as being imperative as economics," Deng said. An official report last week said that the resort community of Beidaihe had seen tightened security - one of several signs that Communist Party chiefs would soon be arriving. Since 2001, the government has invited leading scientists and experts, as well as model workers, to Beidaihe. ^ top ^

Gov't says most regions can meet growth target (Xinhua)
China's top economic planner said on Tuesday that most regions can achieve their growth target this year if macro-policies remain basically stable, in the latest words of reassurance about the slowdown of the world's second-largest economy. China's regional development is generally stable, and favorable factors have remained for the second half of the year despite many difficulties facing the economy, the National Development and Reform Commission (NDRC) said in an online statement. The NDRC statement came as China's economy has been stuck in a protracted slowdown. Growth eased to 7.5 percent in the second quarter from 7.7 percent in the first three months. The commission called for deeper reforms and further opening-up in the more affluent eastern regions, including accelerating construction of new experimental zones and pilot reforms in major areas to offer experience to the broader economy. It also pledged more support to the central, western and northeastern regions. Central government investment will lean toward major infrastructure and social projects in central and west China to make sure they are not affected by the slowing economy, the NDRC said, adding it is also mulling a policy document to revitalize old industrial bases in the northeast. China's regional development is heavily imbalanced, with the coastal regions in the east and south leading the country's dazzling growth story, whereas most central and west areas lag far behind. ^ top ^

Commission sets no timetable for family planning update (China Daily)
The National Health and Family Planning Commission moved on Tuesday to allay concerns in media reports last week that China will relax its family planning policy by 2015 to allow more couples to have two children. The commission said no timetable has yet been determined and instead said the new plan will be carried out "at the proper time". The commission, however, did confirm media reports that an update is on its way. In the new plan, couples will be allowed to have a second child if at least one parent has no siblings. Currently, the policy permits couples to have two children if both parents are the only children in their families. It is one of several exceptions to the rule in which most couples have been restricted to just one child since the late 1970s. In most rural areas, for example, families can apply to have a second child if their first-born is a daughter. An update to the policy makes economic sense, because allowing more couples to have a second child could stem potential labor shortages in the future. In last week's media reports, the policy update would first be implemented in Heilongjiang and Zhejiang provinces and later in Beijing and Shanghai. Commission spokesman Mao Qun'an said on Friday that the new plan was still under consideration by the central government and that the country would stick to its family planning policy over the long run. He made clear that researching reform plans primarily concerned with the number of children a couple is allowed to have is a major priority on the commission's working agenda. But Lu Jiehua, a professor of social demographics at Peking University who has done research for the commission, said that the "proper time" is probably coming this year. "Regions with a relatively higher proportion of (families with only one child) and a higher urbanization level are most likely to introduce the relaxation first," he said. He added that the family planning policy has thus far been implemented effectively. Preparatory procedures, including revisions to regional family planning rules, will first be carried out ahead of the nationwide update, said Professor Mu Guangzong of the Population Research Institute of Peking University. Lu said the opinions of provincial governments will be considered in implementing procedures. Over the long term, he said, "decisions surrounding child-bearing, such as the size of the family, will not be determined by the family". Feng Yonglin, a middle school teacher in Beijing, said she couldn't wait for the government to relax the policy. Feng, an only child born in 1977 and the mother of a 6-year-old girl, said, "At my age, it will be harder to conceive a baby, and I hope I'll still be able to". But Lu noted that the government is researching measures to avert a sudden baby boom over a short period of time, which could create tighter competition in future jobs or for university admission. He also urged the government to create more policies and measures in favor of families who abide by the current family planning policy. The National Health and Family Planning Commission also announced on Tuesday that there will be favorable measures for families that adhere to the current policy in respect to elderly care and medical care services. ^ top ^

China issues record anti-trust fines to formula firms (Xinhua)
China has issued record fines of 670 million yuan (108 million U.S. dollars) to six baby formula companies on the mainland following an anti-trust probe, the country's top economic planner announced Wednesday. The six companies are Biostime, Mead Johnson, Dumex, Abbott, Friesland and Fonterra, said the National Development and Reform Commission (NDRC). Biostime was fined 163 million yuan, or 6 percent of its sales revenue in 2012, as it "seriously violated the anti-monopoly law and failed to actively take corrective action," said Xu Kunlin, chief of the Price Department of the NDRC. Mead Johnson was fined 204 million yuan, or 4 percent of its revenue last year, because it "did not actively cooperate with the investigation but did take active self-rectification measures," said Xu. Dumex, Abbott, Friesland and Fonterra each received a fine equal to 3 percent of their 2012 revenue. They were fined 172 million yuan, 77 million yuan, 48 million yuan and 4 million yuan, respectively. Xu said these four companies cooperated in the probe and actively moved to correct their improper practices. Three other companies, including Wyeth, Beingmate and Meiji, were exempt from punishment, because they cooperated with the government investigation, provided important evidence and actively took self-rectification measures, said Xu. Xu said that in the probe into these nine companies initiated in March, the NDRC found the involved formula producers set minimum resale prices for distributors. The distributors who sold their products at a price lower than the fixed minimum price were punished. Xu said the practice maintained milk powder prices at a high level, restricted competition in the market and harmed the interests of consumers. ^ top ^

Hopes for one-child policy fix tempered (SCMP)
The health commission has attempted to tamp down expectations for a relaxation of the one-child policy, after a policy paper and media reports excited hopes for change. National Health and Family Planning Commission spokesman Mao Qunan told the Beijing Morning Post that the commission was not necessarily referring to the number of children a couple can have when it alluded to policy changes in an action plan released on Tuesday. Among other public health initiatives, the action plan mentioned the issuance of "a revised scheme at an appropriate time to improve the country's family-planning policy". "It is incorrect to interpret 'improving the family-planning policy' as a renewed sign of relaxing the policy to allow for a second child," Mao was quoted as saying. "Whether to allow couples to have two children … is a different matter from the family-planning policy revision." Currently, the family-planning policy only allows urban couples who are both single children to have two children. However, on Friday, the 21st Century Business Herald cited sources close to the commission as saying that authorities would relax the birth control policy by early next year and allow couples to have two children if either the mother or father is a single child. And by 2015, the mainland would move to a two-child policy, the paper reported. Several media outlets followed up with similar reports. After the Friday report, Mao said Beijing needed to make long-term family planning a fundamental national policy, which he conceded would be a major task of the newly formed health commission. Some mainland population experts expressed surprise at the spokesman's remarks. "As far as I know, support for changing the one-child policy also has a consensus among many high-ranking officials from the [commission]," said Huang Rongqing, a demographer with the Institute of Population Economics at Capital University of Economics and Business. "But only China's top leadership has the final say." Professor Lu Jiehua, with Peking University's Institute of Population Research, noted that "the central government's 12th five-year plan [2010-15] pledged to make revisions to the one-child policy by 2015". The most practical way to do that was to allow couples to have two children, he said. To avoid a population boom, the mainland has implemented strict birth-control measures since 1980, including the one-child policy, which has often been attacked as a violation of human rights. Mainland population experts say that less than two-thirds of the population - those living in cities - are actually affected by the one-child policy. Rural couples, who account for more than half of the population, are allowed a second child if their firstborn is a girl. The rest are ethnic minorities who can have two or more children. The government credits the policy with reducing the country's birth rate to 1.8 in 2010 from 5.8 in 1970. However, the policy has increasingly been questioned by academics because of its many social and economic side effects, including an ageing population and gender imbalance. "The birth rate has been extremely low in many areas due to social problems such as the soaring cost of living," said Ye Tingfang, a population expert at the Chinese Academy of Social Sciences. He noted that people over 60 will account for 40 per cent of Shanghai's population by 2030. ^ top ^

Prominent Bo Xilai supporter detained ahead of trial (SCMP)
Chinese police have detained a prominent leftist supporter of disgraced high-flying politician Bo Xilai who had urged people to protest against Bo's upcoming trial, underlining government nervousness about the case. Song Yangbiao, a reporter for the magazine The Time Weekly, was detained on Sunday on charges of “picking quarrels and causing trouble”, according to friends and supporters, apparently after using his Sina Weibo microblog to denounce the trial and call for an uprising to oppose it. Bo was dramatically sacked last year as Communist Party chief of the southwestern city of Chongqing following lurid accusations of corruption and abuse of power. His trial is expected to begin this month in the eastern city of Jinan. While Song's Weibo account has now been deleted, records kept on, run by the anti-China censorship site, showed that Song had made his plea on Saturday for people to protest against Bo's trial. “All members of the Chinese Communist Party should rise up together to oppose the illegal trial in Jinan,” Song wrote, according to Friend Lu Qi said police informed the family on Monday of Song's detention, though he was unable to confirm a direct connection with any posts about Bo. “There's a lot of speculation about this on the internet at the moment, but I'd personally not seen anything on his Weibo about this,” Lu said. Wu Danhong, a Beijing law professor and controversial leftist blogger who writes under the pen name Wu Fatian, said he had been told by a family member that Song had been detained “because of something to do with Weibo”. “He is no threat to society,” Wu said by telephone, adding he had offered Song his legal services. A policeman who answered the telephone at the police station in the eastern Beijing suburb of Tongzhou, where Song is being held, said he could neither confirm nor deny the detention. Song has been a well-known and sometimes outspoken supporter of leftist policies, and of Bo, who is certain to be found guilty at his trial and given a long jail sentence, or possibly the death penalty. After his appointment as party chief of Chongqing in 2007, Bo turned it into a showcase of revolution-inspired “red” culture and his policies for egalitarian, state-led growth. He also won national attention with a crackdown on organised crime. His brash self-promotion irked some leaders. But his populist ways and crime clean-up were welcomed by many of Chongqing's 30 million residents, as well as others who hoped that Bo could take his leftist-shaded policies nationwide. However, while Bo still has many sympathisers within the party, his case is unlikely to cause a major schism, though it may overshadow and slow President Xi Jinping's efforts to push economic reforms. State media has issued calls for the country to rally behind the party in the prosecution of Bo, but the government has also heavily censored microblogs to prevent discussion of the case and blocked far leftist websites which support Bo.". ^ top ^

Critical artist Dai Hua released on bail (SCMP)
Beijing-based artist Dai Hua was released on bail on Wednesday after spending two weeks in detention for "causing trouble". "Eight state security officials and four local policemen picked me up at the Heiqiao studio on July 23, just because I made a small animated cartoon," he said in a microblog post on Wednesday announcing his release. The artist, known for his animations, some of which poke fun at China's political system and the Communist Party's legacy, created an animation in which the stars on China's flag were fighting with each other, said a friend. News of his fate comes amid a series of similar arrests. On Wednesday, news emerged that Song Yangbiao, an outspoken leftist, had been arrested on the same charge on Sunday. In July, independent filmmaker Du Bin was released on bail after spending five weeks in a detention centre on the same charge. A conviction based on a charge of picking a quarrel and provoking trouble can lead to a sentence of up to five years in prison in China. ^ top ^

China kicks off emergency response to drought (Xinhua)
China's National Commission for Disaster Reduction and the Ministry of Civil Affairs (MCA) kicked off a level-four emergency response to severe drought in central Jiangxi and Hubei provinces on Thursday evening. According to local civil affairs authorities' reports, as of Thursday, lingering drought had impacted 11.53 million people across the two provinces, leaving 2.9 million people short of drinking water. The drought has caused direct economic losses of 4.7 billion yuan (760 million U.S. dollars) and affected about 1.15 million hectares of farmland, meaning nearly 114,000 hectares will bear no harvests, according to the MCA. Governments of Jiangxi and Hubei have earmarked a total of eight million yuan to help alleviate the shortage of drinking water. ^ top ^

Activist Xu Zhiyong smuggles video speech out of detention centre (SCMP)
The detained activist and legal scholar Xu Zhiyong said he was willing to exchange his freedom for a China with "liberty, justice and love" in a brief video apparently shot and smuggled out of police detention last week. The 40-year-old lecturer at Beijing University of Posts and Telecommunications was detained by Beijing police more than two weeks ago on a charge of "gathering a crowd to disturb order in public places". Appearing in the video in handcuffs and an orange jail vest, Xu said the real reason he was being detained was his advocacy for ordinary citizens to exercise their constitutional rights and responsibilities, his push for equal education rights for migrant children and his call for officials to declare their assets. Xu founded the New Citizen social initiative last year, which pushes for democracy, rule of law and basic civil rights. Xu has said previously that he estimates the movement has thousands of supporters across the county. "In this ludicrous day and age, these are my three major crimes," he said. But, he added, no matter how "rotten and absurd this society is", the country needed courageous citizens to stand up for their beliefs. "For society to progress, someone has to pay a price. I am willing to pay that price for the sake of my belief in freedom, justice and love," he said in the video which lasts less than 90 seconds. He called on his supporters to respect their rights and responsibilities as citizens to fight for democracy. [...] In a phone interview with the South China Morning Post in December during house arrest, Xu that he was not afraid of jail. It's not clear who shot the video but only lawyers normally have access to people held in custody. Xu is at the Beijing No3 police detention centre. The video has been available online since Wednesday. Although liberals were heartened by President Xi Jinping's rhetoric on constitutional rule in December shortly after he assumed the party leadership, the detention of Xu and others campaigning for official accountability has raised fears that the government still has little tolerance for its critics. As of Wednesday, 2,675 people had signed an online petition for the release of Xu and other activists detained for demanding officials disclose their assets. One of the initiators of the petition, journalist Xiao Shu, was himself detained by police for two days last week. Xu has been held in custody or placed under house arrest without charge numerous times since 2009, after authorities closed his non-profit legal aid centre, called Gongmeng, or the Open Constitution Initiative, and detained him for nearly a month. He has been barred from teaching at his university since then. Xu's close friend, legal scholar Teng Biao, said earlier Xu's detention was the latest in a crackdown on dozens of activists across the country who were involved in the campaign for official accountability. ^ top ^

Lawyer Gu Yushu says not allowed to represent Bo Xilai (SCMP)
A lawyer appointed to represent disgraced Chinese politician Bo Xilai in his corruption case said on Thursday he has been denied permission to act on his behalf, a move likely to reinforce belief that Bo's conviction is a foregone conclusion. Gu Yushu, a lawyer appointed by Bo's sister, Bo Jieying, said he would not be allowed to represent Bo during his trial, which is likely to open this month, as authorities attempt to close the door on China's biggest political scandal in decades. “We did not receive approval, so it's over with the client,” Gu said by telephone. When asked for the reason why, he said: “It's not convenient to talk about this.” Prosecutors charged Bo with bribery, abuse of power and corruption in late July, capping the country's biggest political scandal since the 1976 downfall of the Gang of Four at the end of the Cultural Revolution. His wife, Gu Kailai, and his former police chief, Wang Lijun, have both been convicted and jailed over the scandal, which stems from the murder of British businessman Neil Heywood in the southwestern city of Chongqing, where Bo was Communist Party chief until his sacking early last year.Bo Xilai, Neil Heywood and Gu Kailai. Photo: Reuters Bo will be represented by two lawyers, Li Guifang and Wang Zhaofeng. Li had said that he was appointed by Bo. But the state-owned Global Times newspaper later reported that Li had been “assigned” by the government-run Beijing Legal Aid Centre. Li could not be reached for comment. Gu declined to say whether Bo would plead guilty, when the trial would start or whether he had seen Bo, saying he could not provide any details “given the sensitivity of the matter”. The news of Bo being denied his sister's choice of legal representation comes as Chinese police have detained a leftist supporter of Bo who had urged people to protest against the upcoming trial, underlining government nervousness about the case. Analysts say Bo's trial will be a test case for the prospects of legal reform in China. But Bo is certain to be found guilty as China's prosecutors and courts come under Communist Party control and they are unlikely to challenge the Party's accusations against Bo. “For such kinds of cases, who will act as lawyers are all arranged by the higher ups,” said He Weifang, a law professor from Peking University who has followed the Bo case. “Whoever acts as the lawyer will not affect the outcome of the trial.” Two lawyers previously hired by Bo's family, Li Xiaolin and Shen Zhigeng, said last year they had not been given permission to either see Bo or represent him. Bo has not been seen in public for about 17 months and has not been able to respond to the accusations against him. At a news conference days before his dismissal, Bo scorned as nonsense unspecified accusations of misdeeds by his wife and said people were pouring “filth on my family”. Gu Kailai and Zhang Xiaojun, an aide to the Bo family, were both denied their choice of lawyers at their trials last year and had to accept government-appointed lawyers. Zhang was also jailed. ^ top ^



Legal loopholes prompt China to delay Shanghai free-trade zone rules (SCMP)
Beijing has delayed the announcement of new rules for its planned free-trade zone in Shanghai as government lawyers attempt to close potential legal loopholes. The central government had planned to unveil the rules late last month, but policymakers put the lawyers back to work out of concern the legal framework needed tightening, to reduce the risk of legal disputes involving foreign investors, government sources familiar with the matter said. The ambitious plan for Shanghai is known to have been opposed by some financial regulators, prompting speculation among some sources that the cited legal concerns may be a pretext for some regulators to try to retain their grip on the financial sector. "Now we have met with the so-called 'legal loopholes' and I don't know if these are just excuses for some regulators to keep their tight control over China's financial industry," a government source said. The proposed set of rules could contain as many as 21 initiatives to attract foreign investment, covering sectors as diverse as financial services to commodities trading and culture-based businesses. Senior officials in Beijing, after consulting government legal experts, realised some of the rules drafted for the free-trade zone were not in line with current mainland financial regulations and relevant laws, one of the sources said. "Among the 21 points [of new policy initiatives], some now look very tricky. If you announce them and soon begin to implement those new initiatives, there will be a risk that someday the government may be in trouble if a dispute happens between a foreign investor and its Chinese partner," the source said. [...] The Shanghai free-trade zone is expected to be a testing ground for major policy reforms. Details of the plan, which was officially announced at the start of last month, remain unclear. It emerged that the lead-up to the announcement of the free trade zone was marked by an unusual degree of behind-the-scenes division at the highest levels of government and policymaking agencies. While the Shanghai plan won strong support from Premier Li Keqiang, he had to stare down opposition from financial industry regulators, including the China Banking Regulatory Commission and China Securities Regulatory Commission. Senior regulators disagreed with Li's plan to open Shanghai's financial services sector to foreign investors, the sources said, adding that the policymaking process had been "extremely difficult since the very beginning". [...] "It seems Premier Li's job is not easy at all. He met with strong opposition from the financial regulators. He fought back and insisted that China urgently needed the Shanghai free-trade zone as part of his efforts to restructure the economy," said [a] government source of the latest obstacle in the form of the legal concerns.. ^ top ^

Shanghai sweats out hottest day in history (Xinhua)
East China's Shanghai experienced its hottest day in history on Wednesday, with temperatures of 40.8 degrees Celsius breaking the record of 40.6 degrees Celsius set on July 26. Wednesday marked the most sweltering point since the business hub's meteorological records began 140 years ago, according to the city's meteorological center. Shanghai on Wednesday issued its fifth red alert this year for high temperatures. So far, the city has had 33 days of high temperatures, including 19 days with temperatures of 37 degrees Celsius or above, and three days of temperatures higher than 40 degrees Celsius. Weather forecasters said the hot weather will continue in Shanghai, with temperatures of about 40 degrees Celsius on Thursday and Friday. "It's really hot. I am sweating all over and have drunk five or six bottles of water," said a mail carrier surnamed Zhang on a road in Shanghai. "There are so few people on the streets in such a hot day. How can my beverages sell well?" said a saleswoman named Wang in a small shop in the metropolis. Prolonged scorching weather has swept many parts of east and central China. Heatstroke has left at least 10 people dead in Shanghai. Central China's Hunan Province and southwestern Chongqing Municipality have each reported three deaths from the condition. Chinese meteorologists have attributed the extremely hot weather to a number of factors, including strong, stable subtropical high pressure, the absence of typhoons and global warming. ^ top ^



Development key to address Tibet issues: Yu Zhengsheng (Xinhua)
Top political advisor Yu Zhengsheng said development remains "fundamental and key" to addressing all issues related to Tibet. Yu, chairman of the National Committee of the Chinese People's Political Consultative Conference, made the comments during a six-day tour of Tibet Autonomous Region that started on Aug. 1. During the tour, Yu promoted efforts to rule Tibet by law and seek a regional development path with Chinese and local characteristics. He called for efforts to "achieve leapfrog economic and social development in Tibet and long-term stability" in the region. During his talks with Buddhist monks and religious officials, he said the Dalai Lama's so-called "high-degree autonomy" in "Greater Tibet" has "run counter to China's Constitution, the law, and the fundamental interests of Tibetan Buddhism." Yu urged the Tibetan Buddhist circle to "have a clear understanding of the secessionist nature of the Dalai Lama clique and resolutely safeguard national unification, ethnic unity and Tibet's harmony and stability." The official said it was important to "comprehensively implement the ethnic and religious policies of the Communist Party of China and actively guide religions so they adapt to a socialist society." Yu urged authorities to scientifically develop ideas for the development of Tibet, strengthen infrastructure construction and cultivate industries. He also called for efforts to advance ecological and environmental protection, boost economic and social development and improve local people's well-being. Sectors related to people's well-being will always be the primary targets in assistance programs, Yu said. ^ top ^



China plans cross-strait highways (SCMP)
The mainland government has recently approved a national road project that includes two cross-strait highways linking both sides of the Taiwan Strait. If completed, the project would be a literal and figurative bridge between the mainland and Taiwan and would mark a major milestone in cross-strait relations. However, Taiwan's Mainland Affairs Council, the island's top cross-strait policy planning body, told the South China Morning Post the project had been "unilaterally worked out by mainland authorities". "Based on national security concerns and cross-strait interactions, we have not planned anything with such high political sensitivity and complexity," the council said, spelling out the island's political and security concerns. The mainland's State Council approved the National Highway Network Plan (2013-30) in June after it was proposed by the transport ministry, according to state media. The China Daily reported last week that one of the proposed highways would start from Beijing and pass through Tianjin, Hebei, Shandong, Jiangsu, Anhui, Zhejiang and Fujian. Another highway would start in Chengdu and pass through Hunan, Jiangxi and Fujian before crossing the strait and ending in Kaohsiung, in southern Taiwan. It was unclear whether a bridge or undersea tunnel would be built to span the strait, but some analysts said a tunnel would be a better option. The proposal reportedly claims a 122-kilometre tunnel between Pingtan county, Fuzhou, and Hsinchu in northern Taiwan would provide for safe and efficient travel. The tunnel would also be more than twice the length of the Channel Tunnel linking Britain and France - currently the world's longest undersea tunnel. [...] A road link between the two sides would likely not only have political implications, but it would save money on transport, compared with the high price of sea and air freights, economists said. But what the economists dubbed a cross-strait economic zone would not come cheap. The proposal estimates that a tunnel could cost at least NT$2 trillion (HK$518 billion). And despite the relatively warmer ties in recent years, Beijing still considers Taiwan a breakaway province that must eventually be reunified with the motherland. This has drawn the ire of the island's pro-independence camp, led by the main opposition Democratic Progressive Party, which has rejected the proposed road link, saying it would create easier access to the island for mainland military forces. [...].. ^ top ^

Philippine coastguards face homicide charges over death of Taiwan fisherman (SCMP)
Philippine authorities said yesterday they had recommended homicide charges against eight coastguards for the fatal shooting of a Taiwanese fisherman in disputed waters. Taiwan's foreign ministry welcomed the move as a "constructive response" in a dispute that severely strained relations, and said it would recommend that the island's government lift sanctions against Manila. The Philippine Justice Department announcement follows weeks of tensions between Taipei and Manila, after Philippine coastguard chiefs initially insisted the fishing vessel had tried to ram the coastguard boat and their personnel had fired in self-defence. "The NBI (National Bureau of Investigation) report recommends that criminal charges of homicide be filed against these eight Philippine Coast Guard personnel," said NBI head Nonnatus Rojas. Commanding officer Arnold dela Cruz and seaman first class Edrano Aguila, who was found to have fired the M14 rifle that killed the fisherman, are among those whom the report recommends should be charged. However, since all eight coastguards admitted firing their guns, they would all face the same charge under the principle that they acted in "conspiracy", Rojas said. Nine other coastguards who were on the same vessel, as well as three fisheries bureau personnel, will not be charged. The May 9 incident occurred in waters near an island in the Philippines' extreme north, which Taiwan also claims as part of its economic zone. A 65-year-old Taiwanese fisherman was killed when the coastguards opened fire on the small vessel he was crewing with his son and two others. Rojas said a video filmed by one of the coastguards "failed to prove the attempted ramming." He added that coastguard rules of engagement only allowed the use of firearms in self-defence or to disable a vessel. A criminal complaint will now be lodged with the state prosecutor's office. The prosecutor will determine whether there is enough evidence to take the case to court. If convicted, the eight could face 12 to 20 years in jail for homicide, Rojas said. ^ top ^

Taiwan lifts sanctions after Manila envoy apologises (SCMP)
Taiwan lifted its sanctions against the Philippines yesterday after Manila apologised for the fatal shooting of a Taiwanese fisherman, an incident which had severely strained relations. Amadeo Perez"The government of the Republic of China [Taiwan's official name] announces that the sanction against the Philippines is removed immediately after the Filipino side has displayed apology and goodwill in written statements and action," the foreign ministry said. The move came after Amadeo Perez, chairman of the Manila Economic and Cultural Office, which handles relations in the absence of diplomatic ties, travelled to the small southern port of Hsiaoliuchiu to meet the family of fisherman Hung Shih-cheng. Perez, in televised comments, said he wished to convey "the Philippine people's deep regret and apology to the family of Mr Hung Shih-cheng over this unfortunate loss of life of their beloved one". "May I respectfully present our official letter of apology to the family of Mr Hung on behalf of our president and our people," he told Hung's widow, before giving her the letter and shaking her hands. Taiwan's foreign ministry said the Hung family and the Philippine government had reached a settlement on compensation, without specifying its content. It said Manila had also agreed to hold further talks on a proposed fisheries agreement as part of their efforts to avoid another tragedy while handling disputes. On Wednesday, Philippine authorities said they had recommended murder charges against eight coastguard crew for the fatal shooting. [...] Commanding officer Arnold dela Cruz and seaman first class Edrano Aguila, who was found to have fired the M-14 rifle that killed the fisherman, are among those whom the report recommends should be charged. Tensions between Taipei and Manila rose sharply after the 65-year-old fisherman was shot dead by Filipino coastguard crew on May 9 in waters near an island in the Philippines' extreme north, which Taiwan also claims as part of its economic zone. Taiwan rejected earlier apologies by Manila as inadequate and imposed a series of sanctions, including a ban on hiring new Filipino workers, an advisory urging Taiwanese not to visit the Philippines and the suspension of trade and academic exchanges. ^ top ^



Commerce minister: trade performance outstanding (China Daily)
Although GDP growth slowed to an annual 7.5 percent in the second quarter, Commerce Minister Gao Hucheng maintains his bullishness on the country's economic outlook. Like it or not, China's foreign trade with its major partners fell in the first half of the year, sparking concerns that the country's economy may face more challenges. But Commerce Minister Gao Hucheng shares a different opinion. "Our foreign trade volume reached an 8.6 percent increase year on year in the first six months, faster than the country's economic growth. And for the first time, the export volume totalled more than $1 trillion in the first half. Considering the global economic situation, our performance is outstanding." Gao Hucheng said. Gao explains that the change in the foreign trade pattern has contributed to the steady growth. More than 60 percent of exports go to destinations other than the US, the EU and Japan, offsetting the soft demand from developed countries. And companies from China's inner regions have also shown stronger performance, taking up nearly 15 percent of the country's total export volumes. In a bid to further boost exports, the country is aiming to reshape its trade model and push for more cross-border e-commerce. Gao also said the Chinese government wants to turn private consumption into another growth engine. "During the first half, consumption growth in rural areas has overtaken the one in urban areas, and the rise in non-durable goods has surpassed the one of durable goods. This means that our consumption has shifted to service-based from production-based. And I am confident about the outlook for the consumption driven-economy." Gao Hucheng said. Gao also says the capital flows into and out of China have seen a surge. More than 50 percent of foreign investment focused on the service sector, reaching $30 billion in the first six months. Meanwhile, China's overseas investment has seen a double-digit jump over the same period. ^ top ^

China's economy finds firmer ground as pace picks up (SCMP)
The mainland's economic slowdown may be stabilising after official manufacturing and services surveys showed faster expansion and gauges of business expectations rose. The non-manufacturing Purchasing Managers' Index showed the first acceleration since March, government data released at the weekend showed, following an unexpected gain in a manufacturing PMI last week. A services index from HSBC and Markit Economics was unchanged last month, a separate report showed yesterday. The reports may bolster confidence that Premier Li Keqiang's policies are helping prevent a deeper slowdown in growth, allowing him to pursue reforms that will secure more sustainable longer-term expansion. The economic-planning agency said on Sunday that the construction of transport-related infrastructure projects would be accelerated, adding to efforts to boost domestic demand that have included tax-system changes and help for small companies. "The PMI is supposed to be a leading indicator, so we are witnessing a stabilisation and a sign the economy isn't slowing down at a faster rate," said Steve Wang, Hong Kong-based chief China economist with Reorient Financial Markets. "A lot of economy-boosting measures have been put in place since the beginning of the year and there's a time lag for those to kick in, so we should see a bit of a rebound in the fourth quarter." The mainland economy grew 7.5 per cent from a year earlier in the April-June period, slowing for a second quarter and extending the longest streak of sub-8 per cent expansion in at least two decades. Wang says he expects second-half growth of 7.6 per cent, the same as the pace in the first six months. The government set an expansion target of 7.5 per cent for this year after gross domestic product rose 7.8 per cent last year, the least since 1999. The country's potential growth rate had fallen to a range of 7 per cent to 8 per cent, the State Council Information Office said last week, pledging not to allow economic growth to decelerate outside a "reasonable zone". The State Council has indicated it will refrain from implementing a stimulus package of the scale unleashed during the 2008 global crisis. Instead, it has issued targeted policies including tax breaks, support for infrastructure investment and for small companies while curbing industrial overcapacity and reining in financial risks to aid economic restructuring. The National Development and Reform Commission said on Sunday that 10 transport-related projects should begin in the second half of the year and work on a new airport for Beijing may start early. ^ top ^

Strengthening yuan signals more currency flexibility on the way (SCMP)
The yuan rose to its strongest level against the US dollar in nearly two decades yesterday, highlighting Beijing's determination to roll out more reforms to make its currency more flexible despite the short-term headwinds to exports. The renminbi has been trading near the upper limit of its daily trading band from February till June this year. Since June, the gap between the spot rate and the daily reference rate - which is set by the central bank as the middle point of the permissible trading band - has narrowed as expectations of yuan appreciation cooled following disappointing economic data from Beijing. But since late last month, the currency regained upward momentum as the government kept setting a stronger daily reference rate, at odds with data signalling a further slowdown that would logically prompt a weakening of the currency. The yuan closed at 6.1192 against the US dollar in Shanghai yesterday, marking the strongest level since the end of 1993. That was again near the top of the 1 per cent range in which the currency is allowed to deviate from the daily reference rate. Economists, however, said room for yuan appreciation from the current level was limited in the second half of this year and into 2014 as Beijing battled to keep economic growth around the 7.5 per cent mark - no mean feat given the relative loss of currency competitiveness seen since 2005 when the yuan's peg to the dollar was broken. It has strengthened by more than 30 per cent since and has gained 1.8 per cent so far this year. "China has a domestic crisis now. The regulators want to hold money in the country … to prevent capital flight," said Andy Xie, an independent economist, who expected the currency to trade around the current level till the end of this year. In the offshore non-deliverable forwards market, which many analysts say gives the clearest view of where foreign investors believe the currency is headed, the yuan on a 12-month view has been trading at a discount of about 2.5 per cent to the onshore spot rate. The government kept the currency stable in 2008 in a bid to counter the global financial crisis. Now, said Xie, the regulators should continue to do so to counter a domestic economic slowdown. Some economists believe the central bank wants to send a signal by setting the reference rate at a strong level. "It could be a signal that Beijing wants to widen the trading band, as it mentioned earlier this year," said Liu Ligang, an economist at ANZ bank. "By pushing the currency to an unsustainable strong side, the PBOC intends to see it overshoot to the weak side pushed by market forces. It appears this policy move could be imminent," he said. The central bank increased the trading band to 1 per cent of either side of the reference rate from 0.5 per cent last year and the market has been expecting a further widening after a Communist Party plenary meeting in October. ^ top ^

China July trade data eases pessimism as exports jump (SCMP)
The mainland's economy is showing signs of stabilising after last month's trade figures showed stronger-than-expected growth in exports and imports on the back of a global recovery. Exports rose 5.1 per cent from July last year to 1.15 trillion yuan (HK$1.5 trillion), while imports grew 10.9 per cent to 1.04 trillion yuan, the General Administration of Customs said yesterday. Recovering from a 3.1 per cent year-on-year decline in June, the growth in exports beat market expectations for a 2 per cent rise. The trade surplus dropped 29.6 per cent month on month to 109.8 billion yuan. "Although we still can't confirm a turnaround in trade, confidence in the mainland's economy has stabilised," said Zhao Xijun, a finance professor at Renmin University. A recovery in global markets and the government's measures to support export-oriented factories would foster trade growth, Zhao added, predicting that the momentum would be sustained over the next two months. An improved economic outlook boosted trade last month, Bank of America Merrill Lynch economist Lu Ting said in a research note. The official purchasing managers' index rose to 50.3 last month from 50.1 in June. A reading of above 50 indicates expansion. Li Huiyong, the chief economist at Shenyin Wanguo Securities, said the rebound in imports from a 0.7 per cent drop in June showed a recovery in confidence in the economy. Li said the growth in trade should reach 8 per cent this year and that the government's economic growth target of 7.5 per cent could be met. Marco Chan, a manager at lingerie maker Xirong Underwear Industry, said the company expected sales to grow 10 per cent this year if the economic recovery in the United States continued. The firm's business had been hit hard by the downturn in US economy since 2011, Chan said, adding that the firm exported 40 per cent of its products to the US. "We have also pinned hopes on new markets," he said. "We are now expanding into the Russian market, where the style is similar to China's." The company runs two plants factories in Shantou, employing 180 staff. Chan said the operating environment remained tough because foreign buyers were placing fewer orders due to economic weakness in their own countries and the appreciation of the yuan. "The rise in the yuan could squeeze profits, posing a challenge for exporters," Zhao said. The mainland, the world's largest exporter, suffered its first fall in exports in 17 months in June. That prompted analysts to then say that weakness was testing Beijing's appetite for slower but better-quality growth. ^ top ^

China's inflation rises 2.7% in July (Xinhua)
China's consumer price index (CPI), a main gauge of inflation, grew 2.7 percent year on year in July, staying flat from the figure for June, the National Bureau of Statistics (NBS) announced on Friday. The figure was lower than market expectations of an increase of 2.8 percent, and remained well below the government's full year target of 3.5 percent. The NBS attributed the inflation growth mainly to rises in food prices on a year-on-year basis, which went up 5 percent in July. Food prices weigh about one third in calculation of the CPI. Yu Qiumei, a senior statistician with the NBS, said China's consumer prices have stayed relatively stable. "Compared on a monthly basis, the July CPI grew 0.1 percent from June, and food prices in July also stayed flat from a month ago," Yu said. The data also showed China's producer price index (PPI), which measures inflation at the wholesale level, fell 2.3 percent year on year in July. The figure, down 0.3 percent from June, marked the 17th straight month of decline. China's economy has been stuck in a protracted weak recovery, easing to 7.5 percent growth in the second quarter from 7.7 percent in the first three months and 7.9 percent in the final quarter of 2012. China's producer price index (PPI) fell 2.3 percent year-on-year in July, indicating weak market demand amid a protracted economic slowdown, according to data on Friday. The PPI, which measures inflation at wholesale level, has been in negative territory for 17 months, the National Bureau of Statistics said. ^ top ^


DPRK and South Korea

Seoul presses China over status of North Korean defectors (SCMP)
China is caught in a diplomatic quandary over how to treat North Korean defector Kim Kwang-ho and his family, who were arrested in the northeastern city of Yanji last month. What complicates Kim's case is the fact that he and his wife originally defected from the North in August 2009 and settled in South Korea in March 2010. Chinese authorities are trying to determine whether Kim, his wife, Kim Ok-sil, and their one-year-old daughter should be treated as North Korean citizens or as South Koreans. Kim's daughter was born in South Korea and the family had been living in the southwestern city of Mokpo until last October, the South Korean daily Chosun Ilbo reported. South Korean media reported that Kim returned to North Korea in October last year to help bring his sister- and brother-in-law to the South. He decided to go himself instead of hiring brokers, who are commonly employed to help would-be defectors leave North Korea, in order to save money, according to the reports. But in January this year, Kim and his wife and daughter were seen at a press conference aired by North Korea's state-run Korean Central News Agency, criticising South Korea. Nothing was known about them till the family was arrested in China on July 14 along with Kim's sister- and brother-in-law. South Korea last month officially requested a face-to-face meeting with Kim, his wife and his daughter - all of whom are South Korean citizens - and asked Beijing to treat Kim's sister- and brother-in-law in a humanitarian manner. Chinese authorities have yet to respond to the request. Last week, a spokesman for South Korea's foreign ministry, Cho Tai-young, said: "The Republic of Korea government deems it regrettable that the issue still remains unresolved. However, please understand that I cannot give you more details about it." A spokesman at the Chinese foreign ministry told the South China Morning Post yesterday that there was no further information available. The treatment of North Korean refugees is a sensitive issue between the foreign ministries of China and South Korea. Beijing - against the wishes of Seoul - routinely repatriates North Korean defectors who have been detained in China. When South Korean President Park Geun-hye visited China in June, she asked Beijing to take a humanitarian approach in its treatment of North Korean defectors. ^ top ^

Seoul sends North Korea US$6m in aid despite talks deadlock (SCMP)
South Korea has approved US$6 million in government aid for vaccines, medical care and food for North Korean children, the first such humanitarian aid for Pyongyang since South Korean President Park Geun-hye took office in February. Seoul will send the UN Children's Fund the money today, and it will be used over the next year, the South Korean Unification Ministry, which is responsible for ties with North Korea, said. Seoul last provided aid through the UN agency in 2011. Park took office after five years of high tensions between the authoritarian government in Pyongyang and conservative South Korean President Lee Myung-bak. Seoul blames North Korea for attacks in 2010 that killed 50 South Koreans. Park has vowed a tough response to any North Korean provocations but has also supported a policy meant to build trust and encourage dialogue with Pyongyang. The South Korean ministry also approved about US$700,000 for a project allowing people in the South to leave video messages for family members in the North they were separated from because of the 1950-1953 Korean war. Many elderly people fear they'll die before reuniting with their loved ones. The announcement of the US$6 million in aid comes as the two Koreas remain deadlocked over efforts to restart a jointly run factory park in North Korea that has been shut since Pyongyang withdrew its workers in April. North Korea unleashed a torrent of threats in March and April, including vows of nuclear strikes on Washington and Seoul. Pyongyang said it was responding to annual US-South Korean military drills and UN sanctions over Pyongyang's February nuclear test. The rival Koreas have had six unsuccessful rounds of talks meant to restart the Kaesong industrial complex, which was the last symbol of inter-Korean cooperation. But Pyongyang hasn't responded to a call by Seoul for another round of talks. ^ top ^

North Korea offers South guarantees to reopen Kaesong industrial zone (SCMP)
Impoverished North Korea said it was reopening the troubled Kaesong industrial zone jointly run with the wealthy South just minutes after Seoul signalled its willingness to let it close for good. The North's Committee for the Peaceful Reunification of Korea, which handles Pyongyang's ties with Seoul, yesterday proposed talks aimed at normalising the project and said the safety of South Koreans visiting the factory park would be guaranteed. The committee was "prompted by its desire to bring about a new phase of reconciliation, cooperation, peace, reunification and prosperity by normalising operation in the Kaesong zone", it said in unusually conciliatory remarks. The comments were carried by the North's official KCNA news agency about 90 minutes after South Korea announced steps to pay US$250 million compensation to its firms that operate factories in Kaesong for losses - a step widely seen as a move towards shutting down the rivals' last symbol of co-operation. The decision to pay 109 South Korean small and medium-sized manufacturers from a government insurance fund came after the North went for 10 days without responding to what Seoul said was its "final offer" for talks aimed at reopening the project. Representatives of the South Korean firms with plants in the complex had earlier held a rally near the border, urging both Seoul and Pyongyang to find a way out of the impasse. The South welcomed the North's change of heart and accepted the proposal for talks to be held on August 14 in Kaesong. "We hope that a rational solution can be found... for the normalisation of the Kaesong industrial zone," South Korean Unification Ministry spokesman Kim Hyung-suk said. It was not immediately clear if the South really wanted to end the project, which would have dealt a huge blow to relations, but this was the toughest it had talked since the Kaesong crisis began. North Korea shut down the factories, a few kilometres from the border, in April, pulling out all 53,000 of its workers and banning South Korean firms from crossing the border with supplies at the height of nuclear tensions. The Kaesong project generated roughly US$90 million annually in wages paid to the North's state agency that manages the zone. The companies had no oversight on how much was paid to workers, most of them women on assembly lines.[...] Yesterday's statement from North Korea accepted no direct responsibility for the suspension of operations at Kaesong, and stressed that preventing any recurrence was the joint duty of "North and South". [...]. ^ 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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