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
  14-20.6.2014, No. 529  
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Foreign Policy

High-level dialogue between China, Vietnam to be held despite tensions (SCMP)
Chinese State Councillor Yang Jiechi will be in Hanoi this week for an annual dialogue on bilateral cooperation amid maritime tensions between the neighbours that look set to overshadow the event, a Vietnamese scholar and a source close to the foreign ministry in Hanoi say. Yang's visit will be the highest-level meeting between the governments since China's deployment of an oil rig in disputed waters off Vietnam's coast on May 1 triggered sea confrontations that almost scuppered bilateral ties. But in a departure from the usual practice of publicising the event well in advance, both foreign ministries have yet to make any announcement. The source, and scholars, said this underscored the trickiness of the meeting's timing; the governments had to address the issues while avoiding a possible backlash from their publics. Yang will be in Hanoi for the latest round of meetings of the China-Vietnam Steering Committee on Cooperation and is expected to hold talks with Vietnamese Deputy Prime Minister and Foreign Minister Pham Binh Minh, according to Dr Tran Truong Thuy, director of the Institute for East Sea Studies at the Diplomatic Academy of Vietnam. "This is a regular meeting on cooperation, but the main topic this time will be focused on issues in the South China Sea," Thuy said. The source close to Vietnam's foreign ministry said the meeting would be on Tuesday. Yang and Minh exchanged sharp words over the telephone on May 6 as the crisis began. Minh denounced China's deployment of the rig in the South China Sea and the accompanying vessels as illegal, while Yang said Vietnam's "harassment of Chinese companies' normal activities" had "severely violated China's sovereignty". Since that conversation, ties between the ideological allies have been on a slide. Vessels from both sides have repeatedly collided with each other and large-scale anti-China protests broke out in several Vietnamese cities. Hanoi has also threatened to take its South China Sea dispute with Beijing to an international court. Beijing is reported to have either rejected or ignored Hanoi's repeated requests for dialogue between higher-ranking officials than Yang and Minh. Thuy said it was not yet clear if Yang would meet officials more senior than Minh during this trip. Established in 2006, the China-Vietnam Steering Committee is supposed to meet annually to discuss key bilateral issues and cooperation projects. Last year, the meeting was held in Beijing, where Yang led a delegation from various ministries and provincial governments to hold talks with Minh's predecessor, Nguyen Thien Nhan. But previous tensions in the South China Sea have disrupted the dialogue. The meeting was postponed in 2007 when tensions spiked after Chinese naval patrol vessels fired on a Vietnamese fishing boat and killed a crewman, said Zhang Mingliang, a Southeast Asian affairs expert at Jinan University in Guangzhou. While the two governments agreed to carry on with the high-level meeting despite recent tensions, Zhang said neither side appeared ready for the talks as no effective solution to the dispute was in sight. "This is not very good timing for such a high-level meeting, but they don't want to cancel it because they have to address the problems," Zhang said. Neither the Chinese nor the Vietnamese foreign ministries would confirm Yang's trip to Vietnam despite repeated requests from the Sunday Morning Post. Zhang said Chinese authorities previously announced the meetings at least a week in advance. The Vietnamese source said Hanoi would only release news of the meeting when Yang was in Vietnam. The source said this was probably to avoid stirring up the Vietnamese public, which was already upset by Defence Minister General Phung Quang Thanh's speech at the Shangri La Dialogue a few weeks ago in which he said "all is fine" in Vietnam's relationship with China. ^ top ^

Li kicks off trip to UK, Greece with trade high on agenda (Global Times)
Chinese Premier Li Keqiang is expected to kick off a six-day visit to the UK and Greece on Monday, his third European visit since taking office, with bilateral trade and investment cooperation expected to be key topics for discussion. Li is scheduled to meet British Prime Minister David Cameron as well as Queen Elizabeth II. The two sides will discuss cooperation in various fields, including nuclear power, high-speed rail, finance and high technology, Vice Foreign Minister Wang Chao said Thursday. Liu Xiaoming, the Chinese ambassador to the UK, said that over 200 Chinese business leaders will join Li's delegation and over 40 business deals, worth at least $30 billion, will be inked. Bilateral trade between China and the UK reached a record $70 billion in 2013. Bilateral trade in the first five months of 2014 increased 22.2 percent year-on-year, which is much higher than the average growth rate of Sino-EU trade, which stood at 11.7 percent in the same period. Cameron visited China in December 2013, which was viewed as an ice-breaking trip after his meeting with the Dalai Lama in 2012. "Sino-UK economic ties have great potential and many areas have not yet been developed enough," Zhao Junjie, a research fellow at the Institute of European Studies at the Chinese Academy of Social Sciences, told the Global Times. Li's trip is also a diplomatic strategy to balance relationships in the EU following Xi's visit to France and Germany earlier this year," Zhao added. Li will also visit Greece and the two countries will sign a variety of agreements covering fields such as infrastructure construction, culture exchanges and maritime resources. "Greece is one of China's best friends in Europe and in the European Union, and has always shown support, understanding and compassion on matters concerning China's core interests," Du Qiwen, the former Chinese ambassador to Greece, was quoted by the Xinhua News Agency as saying. ^ top ^

China pledges deeper media cooperation with Africa (Xinhua)
China will step up media cooperation with Africa as dozens of media ministers from the continent met in Beijing on Monday. The western media dominates world while the voices of developing countries go unheard, said Cai Fuchao, director of the State General Administration of Press, Publication, Radio, Film and Television (SAPPRFT), at the second Forum on China-Africa Media Cooperation. "As long as media in China and Africa increase cooperation and support with each other, there will be a huge impact on the world pattern of public opinion," Cai said. More than 260 delegates from 42 African countries attended the forum, including government ministers and leaders of radio and television organizations. The SAPPRFT said 19 cooperation agreements will be signed during the forum between China and African countries, including authorizing Chinese TV programs with media agencies in Mali and Sudan, among others. China has helped Africans build a digital broadcasting infrastructure and trained personnel for local media agencies. In a relatively weak position with regard to public opinion around the globe, China and African countries are often misrepresented, said Vice Foreign Minister Zhang Ming. As a major partner in the digital migration undertaking in Tanzania, China's private Startimes constructed digital platform and infrastructure for digital terrestrial broadcasting. "These early undertakings enabled Tanzania to be the first African country south of the Sahara to switch off the analogue transmitters. Tanzania has since then played host to a number of African countries for benchmarking their digital migration process," said Tanzanian Minister of Information, Youth, Culture and Sports Fenella Mukangara. ^ top ^

Li set to ink $30b in deals during UK trip (Global Times)
A focus on economic cooperation is expected to dominate Premier Li Keqiang's first visit to the UK since taking office, as British Prime Minister David Cameron attempts to repair a somewhat tarnished relationship. Accompanied by his wife Cheng Hong, Premier Li is scheduled to meet Queen Elizabeth II and hold talks with Cameron during his three-day visit. Li will also speak at a China-Britain economic and financial forum, and give a speech to top British think tanks. In an article in the Monday edition of The Times, Li said the two countries are on a "winning course," and one of his purposes for the visit is to "present the real China so as to change misperceptions and ease misgivings." Li's trip to the UK is seen as a return visit after Cameron's trip to China in December 2013, a move to reinforce the full restoration of diplomatic ties. Relations between China and the UK encountered a major setback in 2012 after Cameron met with the Dalai Lama, which drew strong protests from Beijing. "Before I came here, we used to say, when we talked about Europe, 'Britain, France and Germany.' But unfortunately many opportunities were missed in the past year or so - and we all know the reason behind it - people now start talking about 'Germany, France and Britain,'" Liu Xiaoming, China's ambassador to the UK, told reporters ahead of Li's arrival. Bilateral trade volume between China and the UK hit $70 billion in 2013, and Li's visit to the UK will likely see an increase, with more than 40 business deals worth over $30 billion expected to be inked. "The UK has obvious advantages in 'soft infrastructure' such as medical services and finance while China is experienced in 'hard infrastructure' such as the construction of nuclear power plants. The two economies are complementary to each other, a strong point in Sino-British relations," Wang Yiwei, director of the Institute of International Affairs at the Renmin University of China, Monday told the Global Times. In comparison, China and France have become competitors in many fields, a trend also reflected in the declining bilateral trade volume over the past few years. China-France trade in 2013 reached $49.8 billion, a 2.3 percent drop from 2012. "Britain, as an old imperial power, has a tradition of pragmatism and a global vision. This means that, in comparison to Germany, which is not particularly interested in Chinese investment and from time to time imposes political interference, the UK can be flexible in cooperation," Wang said. China's investment in Britain jumped from $840 million in 2008 to $12.4 billion in 2013, according to Gao Yan, China's vice commerce minister. In comparison, a Bertelsmann Stiftung report said China's investment in Germany reached $626 million in 2012 and the figure is expected to increase to $2 billion in 2020. "The UK is a very open investment destination, a good education provider for China, and of course a major finance center. Beyond this, however, it is a small but rising manufacturing partner," Kerry Brown, professor of Chinese politics and director of the China Studies Centre at the University of Sydney, told the Global Times. Aside from scheduled discussions in various fields, including nuclear power, high-speed rail, finance and high technology, Britain is expected to announce an easing of visa restrictions for Chinese travelers, a long-standing request from China. But differences in ideology, especially the emphasis on China's human rights, could impede the development of Sino-British relations. "The human rights issue is another example of difference in opinions in which both sides need to build trust," said Wang, adding that Sino-British relations still have a lot of potential and could set an example for China's ties with other developed countries. "Because of Hong Kong, the UK has had a long relationship with China. This means the British and the Chinese know each other well - perhaps better than any other European partner. They know the good and bad sides of each other, and this frames their relationship today," said Brown. After the UK trip, Li is scheduled to go to Greece for a three-day visit. ^ top ^

Li meets with Queen Elizabeth II (Global Times)
Chinese Premier Li Keqiang met with Queen Elizabeth II at Windsor Castle on Tuesday, with analysts saying the meeting was a demonstration of the significance the UK attaches to the Sino-UK relationship. The British Queen met former Chinese premiers Zhu Rongji and Wen Jiabao in 1998 and 2004. Meetings with the Queen usually only happen twice each year and the Queen met German Chancellor Angela Merkel in February, which makes the meeting with Li more valuable, analysts noted. "Usually only heads of state can meet with the British Queen and it is another exceptional case for the Chinese premier, which showed how the UK values its relationship with China. It is more valuable considering the Queen's age," Wang Yiwei, director of the Institute of International Affairs at the Renmin University of China, told the Global Times. Yang Fang, a research fellow with the Institute of European Studies at the Chinese Academy of Social Sciences, said that although no political issues will be discussed in the meeting, the UK has proved the significance of bilateral ties through this etiquette and meeting. According to a Times newspaper report, Beijing had stipulated that the meeting was a precondition for the visit and threatened to call the trip off if it was not arranged. Li also held talks with British Prime Minister David Cameron on Tuesday, during which the two sides signed trade deals worth over $28 billion. The British Home Office is also working to facilitate visa applications for Chinese tourists and businessmen. Theresa May, the Home secretary, said that a high priority 24-hour service will be launched in August, which would make the UK the only European country to offer such a service to Chinese citizens. "Last year a pilot scheme which enabled tour operators to operate from a single application form in processing UK and Schengen visa applications proved highly successful. We will be extending it to all Chinese visitors starting this summer with independent travelers," said May. A new joint British/Irish Visa Scheme was also unveiled, which will allow Chinese visitors with an Irish visa to travel to the UK without a separate visa in hand. "The UK is trying to attract more Chinese investors and further open up its market, especially its education market, to China," Yang said. Yang added that the streamlined visa application process was proof of an improving relationship between China and the UK, which has given rise to increasingly frequent personnel exchanges. Liu Xiaoming, China's ambassador to the UK, previously said that visa restrictions, among some other reasons, left Britain at a disadvantage to its European rivals, reported the Financial Times. About 290,000 visitor visas were issued to Chinese nationals in 2013. "There is direct economic value. But there is also enormous value in increasing cultural ties," May said. ^ top ^

State Councillor Yang Jiechi tells Vietnam to stop 'hyping up' oil rig tensions (SCMP)
A senior Chinese official told Hanoi yesterday to stop "hyping up" tensions over an oil rig that Beijing has placed off Vietnam's coast, in remarks indicating that the two countries are still trapped in a diplomatic quagmire over the South China Sea. State Councillor Yang Jiechi was in Hanoi for the highest-level talks between the two countries since the oil rig deployment early last month caused a nosedive in relations. The discussions were seen as an attempt to contain the worst diplomatic crisis between the ideological allies in decades. But analysts said Yang's sharp remarks indicated no progress was made during the one-day trip. In a move that could further stoke tensions, China's Marine Safety Administration announced on its website that another drilling platform, Nanhai No9, would be moved close to Vietnam's coast by tomorrow. Coordinates released by the administration indicate the area is close to the Gulf of Tonkin, where the countries are negotiating on possible joint development projects. It is not clear if the rig will be in disputed waters. During a meeting with Yang, Vietnamese Prime Minister Nguyen Tan Dung urged China to withdraw the rig Haiyang 981 and told Yang that China's behaviour severely violated Vietnam's sovereignty and offended the Vietnamese people, according to the state-run Vietnam News Agency. But in another meeting with Vietnamese Deputy Prime Minister and Foreign Minister Pham Binh Minh, Yang reiterated that oil rig 981 had been operating within an area of Chinese sovereignty and the current difficulty in the bilateral relationship was a result of Vietnam's "illegal disruptions", according to a summary of the meeting posted on the Chinese foreign ministry's website. China would adopt all necessary measures to protect its sovereignty and maritime rights, and Vietnam should stop "illegally" disrupting the Chinese operation, Yang said, indicating the oil rig would remain in the location until August 15 as planned. Vietnam, he added, should stop hyping up the problems and properly handle the aftermath of anti-China riots last month. The oil platform is about 32km from the China-controlled Paracel Islands, which Vietnam also claims, and 278km from the Vietnam coast. Its deployment has badly strained relations and ships of the two countries, both government and civilian, have frequently clashed or collided. Anti-China protests broke out in several Vietnamese cities last month, claiming four lives. Scores of foreign-invested factories were also badly damaged during the demonstrations. Vietnam has threatened to take the maritime dispute with China to international arbitration. It claims the oil rig is within its Exclusive Economic Zone under the United Nations Convention on the Law of the Sea and should be relocated. Minh told Yang Vietnam was willing to improve relations with China and to keep the situation under control, according to the Chinese foreign ministry. It described the meeting as "candid" and "constructive". Zhang Jie, an expert on regional security with the Chinese Academy of Social Sciences, said Yang's remarks indicated the two sides were nowhere near finding a solution to the current impasse. "This indicates that no agreement was achieved and both sides remain unwilling to budge on their stance," Zhang said. Yang is the highest-ranking official in China overseeing foreign affairs. "The majority of Vietnam's politburo still favours accommodation with China," said Carl Thayer, an expert on Vietnam at the Australian Defence Force Academy. "They are stuck with the question of do you get out of this gracefully and then have working relations with China." ^ top ^

Li's Greece trip set to boost business deals (Global Times)
Chinese Premier Li Keqiang's upcoming visit to Greece will boost bilateral cooperation and facilitate various business deals, as the Mediterranean country is ready for more vigor from overseas investment, analysts said. During the second leg of his two-nation trip to Europe, Li will attend a bilateral ocean cooperation forum and visit Greece's biggest port, Piraeus, with his Greek counterpart Antonis Samaras, China's Vice Foreign Minister Wang Chao announced earlier. China's China Ocean Shipping (Group) Company has been operating two container wharfs in Piraeus for four years. It was the first time a Chinese corporation was given a long-term concession to operate a large port in Europe. Hiring over 800 people, with only eight of them from China, the wharf has seen multiplied cargo flows and has brought considerable revenues to Greece, former Chinese ambassador to Greece Du Qiwen said in an interview with the Xinhua News Agency earlier. "The wharf visit shows recognition of the cooperative efforts and indicates further cooperation," Cui Hongjian, a professor of European studies with the China Institute of International Studies, told on Monday. As a major maritime country, Greece takes up 16 to 17 percent of the world's merchant shipping tonnage, Du said, adding that 50 percent of China's major import goods including grain and minerals are carried by Greek merchant ships. Meanwhile, Greek ship owners have also expanded cooperation with Chinese ship building enterprises, he said. Experts said that Li will also take the chance to present China's maritime vision at the ocean cooperation forum and respond to outside doubts over its marine power construction. Li's speech at the forum will show that China's maritime vision is peaceful and sustainable, and he will also elaborate on China's ocean diplomacy, Wang Yiwei, a professor at the Renmin University of China, was quoted as saying by Greece is one of China's best friends in the European Union, according to Du. During the mass evacuation of Chinese nationals from war-affected Libya in 2011, Greece assisted to evacuate 13,000 Chinese nationals within 10 days under strict border policies. China has also been helping Greece as it is trying to recover from the European debt crisis, by increasing imports of Greek goods and promoting investment and tourism to the country, he added. Li's visit comes a year after Samaras' visit to China. He will also meet with Greek President Karolos Papoulias and Speaker of the Hellenic Parliament Evangelos-Vasileios Meimarakis. ^ top ^

As premier vows billions to Britain, China's VP inks US$64m deals with Zambia (SCMP)
Chinese vice-president Li Yuanchao kicked off a three-day visit to Zambia on Wednesday by signing development loan and grant agreements worth US$64 million. Li and his Zambian counterpart, Guy Scott, signed a US$32 million interest-free loan and a grant of similar value for economic and technical aid. Zambia will use the funds to improve its water network system in rural areas, upgrade the country's only international airport in Lusaka and improve education facilities, among a raft of other projects. Today Li is set to hold talks with President Michael Sata, who as an opposition leader railed against the growing Chinese presence in Zambia. Sata has however softened his tone since coming to power in 2011 after realising the importance of Chinese investment to the Zambian economy. Li was also set to meet Zambia's independence hero Kenneth Kaunda today. Local media reported that eight agreements would be penned during Li's visit. China is Zambia's top foreign investor, but relations have occasionally been tense because of China's influence in Africa's copper giant. A Chinese manager was killed during a 2012 riot over wages at a coal mine. Besides their involvement in copper and coal mining, Chinese companies are building roads and revamping Zambia's international airport and stadiums. China's insatiable demand for Zambia's natural resources along with its willingness to grow jobs and fund vital infrastructure projects have meant that the [ruling Patriotic Front] has strengthened economic and diplomatic links since coming to office,” said risk analyst Charles Laurie of London-based Maplecroft. Bilateral trade rose to US$3.8 billion last year, from US$3.4 billion in 2012. China's ambassador to Zambia, Zhou Yuxiao, said the trip is aimed at further boosting “government-to-government and party-to-party relations between our two countries”. Scott announced at the signing ceremony that Zambia would give China 200 hectares of land to be developed into a memorial burial site for 64 Chinese workers who died during the construction of the Tanzania Zambia Railways (Tazara) between 1970 and 1975. The 1,860-kilometre railway line – one of China's most ambitious projects in Africa – runs from Tanzania's major seaport of Dar es Salaam to the heart of Zambia's copper belt. Li, who is accompanied by 21 businessmen and Communist Party officials, is also expected to meet senior Patriotic Front officials before flying out of the country on Saturday. China's clout and investments in the continent has been surging, with China becoming Africa's biggest economic partner. Last month, Premier Li Keqiang told the African Union that trade volume with Africa would double by 2020 to US$400 billion. China will increase credit lines to Africa by US$10 billion and will boost the China-Africa Development Fund by US$2 billion, bringing the latter to a total of US$5 billion, Li had said without giving a time frame. It also promised to help Africa build high-speed railways and other infrastructure. But trips by Chinese leaders to Africa are often marked by big natural resource deals, triggering criticism from some quarters that China is only interested in the continent's resource wealth. ^ top ^

Russia to build gas pipeline to China in August (Xinhua)
Russia's energy giant Gazprom said Wednesday it will start welding seams of its major pipeline for gas supplies to China in August. "We have a clear action plan. We have distributed all duties and we have set tough deadlines," Gazprom said in a statement, citing company CEO Alexei Miller. "Our goal is to weld Power of Siberia's first joint as soon as August," the Itar-Tass news agency quoted Miller as saying. China and Russia signed the China and Russia Purchase and Sales Contract on East Route Gas Project and a memorandum on May 21, and the 30-year contract will see the east route pipeline starting providing China with 38 billion cubic meters of natural gas annually from 2018. Also on Wednesday, vice-president of Gazprom Alexander Medvedev said the company and China National Petroleum Corporation (CNPC) have inked a $25-billion advance payment agreement for gas supply. He said Gazprom will also carry out further negotiations with CNPC on the gas supply of west line and the supply of liquefied natural gas (LNG) in near term. ^ top ^

Space race a security threat to China, warns PLA think tank report (SCMP)
China faced security threats from other nation's advances in space technology, an annual report by a PLA think tank warned yesterday. Some countries had developed all-weather, near real-time, multispectral and high-precision cameras to collect data on China's military, political, economic and technological abilities, said the review by the Centre for National Defence Policy, a part of the PLA's Academy of Military Sciences. "A few countries have speeded up development of spacebased offensive weapons, setting up space combat forces, issuing space war doctrines as well as organising space offensive and defensive drills," the report said, according to China News Service. It said the report also claimed that space superpowers had actively developed space-to-land, space-to-sea and space-to-air attack capabilities using ballistic missiles, near-space aircraft, spacecraft and atmospheric vehicles as well as other new space weapons. These "have caused critical threats to China's space security", the report said. It did not name which nations had challenged China, but military experts say it hinted at the United States. "China feels a great threat from the US, which is increasingly monitoring Beijing through its mature reconnaissance technologies," said Professor He Qisong, an expert on space at Shanghai University of Political Science and Law. These included optical and radar-imaging technologies and satellites that delivered early warnings on missile launches, He said. "The PLA's Academy of Military Sciences highlights so many critical threats in space that Beijing needs to tackle because it wants to call on all military departments to support the ongoing integration of air-space operation, which has been repeatedly urged by President Xi Jinping since early this year," he said. Unlike the US, the PLA Air Force is only responsible for choosing potential astronauts from its pilots, and astronaut training is then passed to the PLA's General Armament Department. "The PLA Air Force neither takes part in satellite launching nor strategic missile development projects," He said. The General Armament Department overseas China's satellite launches, while the Second Artillery Corps takes care of all missile projects. The report also stressed the strategic value of China's scientific research in the Arctic, which it believes will support China's sustainable economic development by allowing new navigation routes and new measures to counter sandstorms and extreme weather in the country. It also said that Japan's worries about China's navy and the overlapping air defence identification zone in the East China Sea would increase risks of accidents. ^ top ^

Philippines pushes for early S.China Sea UN ruling (Global Times)
The Philippines is pushing for an earlier UN ruling on its appeal regarding Chinese claims in the South China Sea, while China has refused to participate in the proceedings. Manila has directed its lawyers to file a formal request seeking a resolution from the arbitral tribunal on the case within the year or in early 2015, said the country's foreign affairs spokesman Charles Jose, without disclosing when the request would be formally transmitted, AFP reported on Thursday. Filipino Foreign Secretary Albert del Rosario said late Tuesday that a speedier ruling was necessary "because the situation is getting worse by the day in the South China Sea." "The Philippines is hoping to take advantage of a possible favorable earlier ruling to damage China's image," said Zhuang Guotu, dean of the School for Southeast Asian Studies at Xiamen University. Manila lodged an appeal in March with the UN tribunal to rule the claims illegal, but China has resolutely refused to participate in the proceedings. Although China does not accept the arbitration initiated by the Philippines and won't recognize the ruling, the decision will still have an influence on the international community, Zhuang said. He said that China should have brought objections to the UN instead of simply refusing to participate because that could only help shorten the arbitration proceedings. "The Philippines is attempting to legalize its infringements and provocations by dragging China into arbitration proceedings," Wang Min, China's deputy permanent representative to the United Nations said at a UN meeting on June 13. "The Philippines is also trying to gain international sympathy and support through deception. This is what the problem is in essence," he stressed. Zhuang believes that China should play a more active role on this issue by presenting facts and evidence to the world or even related UN agencies about why the tribunal has no jurisdictional power over territorial and maritime disputes in the region. Under the terms of the UN Convention on the Law of the Sea, China made a declaration in 2006, excluding disputes over maritime delimitation and territorial sovereignty from compulsory dispute settlement procedures. ^ top ^


Domestic Policy

Chinese official stresses gov't policy implementation (Xinhua)
Chinese State Councilor Yang Jing on Saturday stressed the importance of implementation of government policies, saying inspection teams from the the State Council, China's cabinet, will be dispatched nationwide to check the implementation in a serious manner. Proposal for punishing the officials who have not fulfilled their duties will be unveiled after the inspection, said Yang. Eight inspection teams will be dispatched to different localities and government departments to evaluate the implementation of government policies, the State Council announced earlier this month. The inspection will last from June 25 to July 5 on policies launched by the State Council since the second half of 2013. Inspection teams should conduct objective assessment of implementation effects of policies by local governments and government departments, find difficulties in implementing the policies and offer suggestions on how to solve them, Yang said. A string of moves has been announced by the central government since last year to stabilize economic growth, deepen reforms, promote economic restructuring and benefit the people. ^ top ^

Artist Chen Guang detained for Tiananmen Square anniversary freed (SCMP)
Soldier-turned-artist Chen Guang was released yesterday, more than a month after he was detained in Beijing ahead of the 25th anniversary of the military crackdown on pro-democracy protests, his friend said. Chen was among those detained by the government bent on preventing any commemoration of the suppression that took place in and around Tiananmen Square on June 3-4, 1989. Beijing does not allow public discussions of the event and even discourages private conversations about it. The government also has tried to deter foreign media from covering the anniversary with threats of unspecified consequences. Moves to control activists were particularly harsh this year, as more people than in previous years were detained, put under house arrest or forced to leave their cities of residence weeks before the anniversary. Most have been released since June 4, although the prominent rights lawyer Pu Zhiqiang was formally arrested on Friday on suspicion of "creating a disturbance" and "illegally obtaining personal information". Pu was seized as he attended a private commemoration. Chen witnessed the crackdown as a soldier in 1989. His detention is believed to be connected to a private art performance, where he whitewashed over walls of painted year numbers from 1989 on. "[This performance is about] what has happened to us, to me, to society," he said in an interview a week before public security officers detained him and seized several of his paintings. "It is meant to be a reflection of why we have not made a correct and fair assessment of what happened 25 years ago." Friend Melanie Wang said he had been freed, although he could not be immediately reached yesterday, and calls to the Tongzhou Detention Centre were unanswered. But his friends shared on social media a photo of Chen, smiling and wearing a V-necked T-shirt as he walked out of the detention centre. Another artist, Guo Jian, was also seized before the anniversary and after a profile of him appeared in the Financial Times newspaper. Guo is expected to be repatriated to Australia, where he is a citizen. ^ top ^

Three sentenced to death as court reveals unseen footage of Tiananmen Square attack (SCMP)
Three people have been sentenced to death for organising the attack in Tiananmen Square last October that left five people dead. A court in Urumqi, Xinjiang convicted the three of organising and leading a terrorist group and endangering public security, Xinhua reported. They were identified as Husanjan Wuxur, Yusup Umarniyaz and Yusup Ahmat. Five other defendants were sentenced to prison terms ranging from five years to life for their part in organising the attack. Meanwhile, 13 people were executed in three cities in Xinjiang after being earlier convicted for "terrorist attacks and violent crimes", state media reported. The incidents dated back to February 2012. The sentences were carried out following a review by the supreme court. On October 28, a car ploughed into tourists near the entrance to the Forbidden City in Beijing and burst into flames. A Chinese visitor and a tourist from the Philippines were killed. The attackers - the driver of the car, his wife and his mother-in-law - also died. The authorities blamed Muslim separatist militants from Xinjiang. The suspects formed a terrorist group in 2011 and plotted violent acts, state television reported. From December 2012 to the following September they acquired firearms and explosives and plotted to go to the capital to set off a deadly explosion. Members of the group travelled to Beijing in October and raised money from supporters to buy the car that would be driven to Tiananmen Square. About 400 people attended the public trial of the suspects, and footage showed Uygur women in tears as they watched the proceedings. Li Wei, a Beijing-based anti-terrorism expert, said the death sentences would do little to deter militants from carrying out future attacks. "Terrorists' minds have long been implanted with extreme thoughts. They understand what consequences they face," Li said. Human rights organisations say curbs on the ethnic group's language, religion and culture have inflamed tensions. The Tiananmen attack was the first of several that the authorities have blamed on Uygur separatists in recent months. These include an attack on an open-air market in Urumqi in which assailants killed 29 people. On Sunday, four people were injured when attackers armed with knives assaulted a chess hall in Hotan, state television reported. Two attackers were killed and another injured after they were subdued by the security forces and people at the scene. President Xi Jinping presided over a two-day meeting of the Central Work Conference last month, where counterterrorism was reaffirmed as a priority. "[We must] push forward the domestic and international front lines in fighting terrorism and strengthen anti-terror cooperation with other countries," Xi told senior officials at the meeting, according to state media. ^ top ^

Beijing deports artist detained in Tiananmen anniversary crackdown (SCMP)
A Chinese-born Australian artist detained in Beijing ahead of the 25th anniversary of the June 4 Tiananmen Square crackdown arrived in Sydney on Tuesday after being deported. The government had said Australian citizen Guo Jian, a former protester in the 1989 pro-democracy movement, had been detained for fraudulently obtaining a visa. Guo told members of the media awaiting his arrival at Sydney Airport on Tuesday he was happy to be home. But he had little else to say. Australia's Department of Foreign Affairs and Trade confirmed that Guo had been deported “reportedly due to visa irregularities” two weeks after he was first detained. The department said it could provide no further details due to privacy reasons. The 52-year-old former soldier was detained by Beijing authorities on June 1 shortly after a profile of him appeared in the Financial Times detailing his participation in the democracy movement. Guo also may have angered authorities by creating a morbid diorama of Tiananmen Square in a Beijing studio as part of his commemoration of the event. Australia's government had said it was told Guo would be detained for 15 days and then deported. Guo's detention was part of a string of prosecutions against artists, lawyers, scholars and journalists ahead of the Tiananmen anniversary amid intense government efforts to deter coverage by international media of its remembrance. Guo was studying art in Beijing when he was swept into the 1989 student protests and witnessed the military crackdown that began on the night of June 3, 1989. Suppression of discussions of the protest and subsequent military crackdown was harsher around the 25th anniversary than in previous years, as police rounded up activists who had received only warnings in the past. ^ top ^

Google block set to continue (Global Times)
Net users in the Chinese mainland are experiencing one of the longest and strictest blocks on Google and associated websites, with analysts predicting that it may continue amid tensions between the US and China over cyber security. According to Google's own data, traffic from the Chinese mainland has slowed considerably since May 30, Reuters reported. One of the founders of censorship watchdog, who asked not to be named, told the Global Times Monday via e-mail that the block on all Google services is the first time this year and is the longest such block in the history of the Chinese mainland Internet. "Google products are critical for users in high-tech industry, especially programmers. Such effects might not be immediate, but over the long-term, the Chinese technology sector will lag behind if the block is permanent," he said. He added that blocking an academically orientated product like Google Scholar is harmful to the development of science and technology in China. Chinese tech blogger William Long told the Global Times Monday that the block would not affect Google's market share, as most users would use a type of virtual private network (VPN) to access the blocked sites, and would not shift to a domestic search engine such as Baidu. This is because people like to stick to websites they usually use. The block on Google has spurred the VPN market in China. An anonymous Chongqing-based VPN retailer said he is dealing with more purchasing inquiries and more deals have been closed in the past week. Such a VPN can cost 98 yuan ($15.7) monthly for a single user. Google pulled out from the Chinese mainland and moved its servers to Hong Kong in 2010 after it refused to comply with China's regulations to filter search terms. Users cannot access either. "The block may not be permanent and can be expected to ease along with improved Sino-US relationships," Long said. A Google spokesperson told the Global Times via e-mail on Monday that the company "has checked extensively and there is nothing wrong on our end." Today, 97 percent of Internet traffic in the Chinese mainland goes to in-country sites, but 3 percent goes to foreign sites. Google remains the most-visited non-Chinese property, according to, the Los Angeles Times reported. "This is more of a business problem rather than a political issue," a local expert in cyber security, who requested anonymity, told the Global Times on Monday. "As a company, Google should act in line with the regular management imposed by local government where it operates. But it left on its own several years ago. Now it just has to face the situation when it can no longer negotiate with authorities or local operators when problems occur," he said. It is irresponsible for Google to shift its responsibility to its users, "who are furious over the situation," the expert added. ^ top ^

Nationwide actions needed against 'naked officials' (Xinhua)
China should sharpen the sword used in its fight against corruption by taking a purge of "naked officials" in one of its southern provinces as inspiration for similar moves nationwide. The political arena of Guangdong Province was shaken up earlier this year when more than 1,000 naked officials, or those whose spouse and children have emigrated overseas, were ferreted out. During the overhaul, those who refused to bring back their families have been penalized with demotions or "position adjustments." Guangdong has completed applying the policy to almost all such personnel. As a result, some 200 public employees have asked their families to return, while 866 agreed to accept demotion, including nine at mayoral level. Public resentment of naked officials has been growing as people wonder how salaried civil servants can afford to have their families living abroad. "Naked officials are considered a high-risk group who are prone to corruption and can easily escape to foreign countries. Police found many of them have transferred large amounts of money overseas and sent families abroad to escape punishment. The existence of naked officials damages the credibility of the government and the ruling Communist Party of China (CPC) and tarnishes their images. Results released by the China Youth Daily on Tuesday after a survey of 27,509 people showed that nearly 93 percent believe the existence of naked officials has dampened their trust in the government, while 95 percent support an overhaul nationwide. To address the problem, the CPC ruled out promotion of naked officials for the first time in a revised regulation on official selection and appointments issued in January. Guangdong's action was carried out within the framework of Party rules and came in response to a warning from a central disciplinary inspection team that there were far too many naked officials in the province. Other parts of the country could next draw lessons from Guangdong and make the move themselves but with reference to their own situations. To stamp out the problem, however, stopping officials from sending their spouse and children abroad is more important than merely cutting off their chances of promotion once they do so. To screen and monitor naked officials more efficiently, sufficient and long-term measures should be introduced. All officials should be required to report information about family members and household property regularly. Special attention should be paid to those whose family members emigrate after their promotion, and measures must be taken to cut fugitive channels once a naked official becomes corrupt. ^ top ^

Mainland China code seeks to muzzle lawyers who publicise cases through social media (SCMP)
Mainland lawyers are angry about a new code being drafted by the national bar association that restricts what they can say online. The code urges lawyers to exercise extreme caution when commenting about cases on the internet and bans them from revealing case information before court rulings. An association spokesman confirmed yesterday that such a draft was being considered but would not give details. Offenders could receive wide-ranging penalties, from internal warnings to expulsion from the association, the draft says. It is seen as part of efforts to rein in outspoken rights lawyers who use social media and other online platforms to publicise cases that could embarrass the Communist Party. Prominent lawyer Pu Zhiqiang was arrested after an online campaign to abolish labour camps. "The draft is set to disarm the rights lawyers," said Beijing lawyer Zhu Xiaoding, saying social media was for rights lawyers what weapons were for soldiers. Article 85 of the proposed draft code says: "To avoid affecting judicial authorities, lawyers shall not call on or cooperate with others to generate media blitz or put pressure on cases they are involved in. "Lawyers are also not allowed to organise or participate in online activities to gather together, watch and show support." Lawyer Zhang Lei, who has urged lawyers to unite to depose the association president over the draft, said it had shocked him. "It is a regulation that is clearly against freedom of speech … As a member of the association, I think the president should take responsibility and resign," Zhang said. "The draft ignores the reality and blames lawyers for judicial injustice. In fact, lawyers take advantage of the internet only to protect rights and call for justice." Unlike many countries where the public can easily attend public hearings, mainland authorities strictly control trials. In many cases, those allowed in are carefully selected, while the media are excluded. "The country is calling for a judicial opening up - what the lawyers' association has done ignores the general direction," said Wang Cailiang, a lawyer and deputy director of the administrative law committee under the bar association. While the authorities were placing restrictions on lawyers, Wang said, courts and other judicial organs were putting more details online. A court in Shandong provided detailed transcripts during the trial of disgraced party leader Bo Xilai. In the case of Liu Han, a tycoon who was sentenced to death in May, the police revealed extensive details of the case to the state broadcaster. ^ top ^

New directive targeting media graft will also gag investigative reporting, experts say (SCMP)
Mainland journalists are not allowed to undertake "critical reporting" without the approval of their agencies, according to a new directive, prompting fears it could further undermine limited freedom of the press. The instructions, announced yesterday by the State General Administration of Press, Publication, Radio, Film and Television, also stipulated that reporters and regional media bureaus were not allowed to report "cross-industry" stories. The Communist Party's propaganda department announced a similar regulation in 2005 that said specialised industry media were not allowed to expose wrongdoing in other industries, while regional media were banned from reporting on other regions. The directive also said licences would be revoked for media organisations that took bribes to report stories, and the offending journalists' press cards would be cancelled. Responsible parties could be criminally liable. The directive complemented a nationwide campaign to crack down on media corruption, said Zhan Jiang, a professor of journalism at Beijing Foreign Studies University. "It is a regulation with a dual purpose. On the one hand, it was announced to better regulate reporters, including those from state-run media, who were taking bribes to report critical stories," Zhan said. " On the other hand, it could easily become a weapon for authorities to attack the freedom of the press." Zhan said the directive would probably not tackle the problem of media corruption, but it could spell the end of investigative public-interest journalism. The press administration yesterday also named several journalists and media outlets that had allegedly violated media regulations, including resorting to blackmail and fabricating news. One provincial official newspaper was accused of forcing journalists to perform sales and circulation duties. Xinhua said the newspaper was fined 20,000 yuan (HK$25,000). In another case, two journalists were accused of blackmailing companies for 178,000 yuan by threatening to publish negative reports on them. They face trial and have been banned from journalism for life, Xinhua reported. In August, President Xi Jinping said the Communist Party should build "a strong army" to "seize the ground of new media". ^ top ^

Chinese court hands down harsh jail sentences in verdict against three New Citizen movement activists (SCMP)
A court in China's Jiangxi province has sentenced rights activists Liu Ping, Wei Zhongping and Li Sihua to lengthy jail terms on Thursday. The ruling comes amid a continuing clampdown on the New Citizens Movement, a loosely organised group of activists calling for government tranparency and an end to official corruption. Liu and Wei were sentenced to 6.5 years in prison, and Li to 3 years. The Yushui District People's Court in Xinyu found all three defendants guilty of “picking quarrels and provoking trouble”. Liu and Wei were also found guilty of “gathering a crowd to disrupt public order in a public space” and “using an evil cult to undermine law enforcement”. The Xinyu verdicts are the harshest reported so far in a nationwide crackdown on the New Citizens Movement that started last year. The group's co-founder Xu Zhiyong, a university lecturer in Beijing, was sentenced to four years in prison in January, and several other members have also received jail terms. The New Citizen Movement demanded the declaration of assets by the Communist Party and government officials, the respect of rights listed in the Chinese constitution and equal access to education. Over dinner meetings and debates, the movement gathered pace before co-founder Xu was placed under house arrest early last year. Shortly thereafter, the Xinyu activists were detained on charges of “inciting subversion of state power”. The charges against them were changed in September. Local authorities in Xinyu have long considered the three "thorns in their eyes", said Maya Wang, a Hong Kong-based researcher for Human Rights Watch. "The local authorities have essentially used the current crackdown as an opportunity," she said. Pu Zhiqiang, one of the defence lawyers in the case, was himself detained in early May after attending a meeting commemorating the 25th anniversary of the Tiananmen crackdown. He was formally arrested for distrubing public order and "illegally obtaining citizens' personal information" last week. Two supporters who had travelled to Xinyu could not be reached by phone amid reports online that they had been detained. Staffers reached at the Yushui court and at the Xinyu Public Security Department declined to comment. ^ top ^

Chinese Communist Party probes brother of top Hu Jintao aide Ling Jihua (SCMP)
Communist Party authorities are investigating Ling Zhengce, a brother of Ling Jihua - the key aide to former president Hu Jintao accused of covering up a Ferrari crash that killed his son. The move underscores the widening crackdown against corrupt officials in coal-rich Shanxi province and suggests investigators could be closing in on Ling Jihua himself. The party's top anti-graft agency yesterday announced the investigation into Ling Zhengce, a vice-chairman of Shanxi province's political advisory body, and a separate inquiry into Vice-Governor Du Shanxue. Both were suspected of serious violation of law and party rules. Ling Zhengce, 62, is one of the three elder brothers of Ling Jihua. His phone was switched off yesterday. Ling Jihua, once a promising rising star, suffered a serious setback to his career after his suspected involvement in covering up the March 2012 Ferrari crash in Beijing that killed his son and seriously injured two women passengers. He failed to win promotion to the Politburo later that year. Ling was transferred to lead the party's United Front Work Department and was later made vice-chairman of the country's top political advisory body, which some analysts viewed as a political soft landing. But speculation persisted that Ling might eventually fall under the scrutiny of the administration of President Xi Jinping. Zhang Ming, a professor of political science at Renmin University in Beijing, said Ling Zhengce's detention could be the prelude to an investigation into his younger brother. "The final outcome … remains unknown but so far Ling Jihua has been clearly targeted," Zhang said. "No one can survive the party's scrutiny." A Shanxi native, Ling Jihua was said to be a founder of the so-called "Shanxi gang", including officials who worked their way up the ranks in the province. Dozens of Shanxi officials have been detained this year, including Shen Weichen, the former head of the China Association for Science and Technology who was once party chief in Shanxi's capital, Taiyuan. ^ top ^

6,400 officials punished for misbehavior (China Daily)
At least 6,400 government officials have been punished after their misbehavior was exposed by inspectors from China's top anti-graft watchdog. The officials, from six provinces, two ministries and a State-owned enterprise, committed violations of discipline and law, according to a statement released by the Communist Party of China Central Commission for Discipline Inspection. The punishment is a resolute response to the problems discovered by the inspectors dispatched by the country's top anti-graft agency. In October, the CCDI sent 10 teams to the provinces, ministries, SOE and Xinhua News Agency to collect information on corruption. Disciplinary authorities of Hunan province have punished 3,040 officials in the anti-graft campaign - the most among the 10 places that were inspected. Among them, 466 officials, including 18 at the prefecture level and 139 at the county level, were found to be responsible for an election scandal that triggered public outrage last year. An investigation showed that 56 provincial legislators offered 110 million yuan ($17.6 million) in bribes to 518 lawmakers and another 68 staff members in Hengyang, Hunan province. A total of 2,347 officials were punished in Jilin province after the arrival of the inspectors, according to the CCDI statement. The most common problems found by the inspectors were related to the nomination and promotion of officials. For example, Party and government officials in Jilin province nominated 23 deputy secretaries-general to posts that weren't necessary. All of them have since been transferred to other posts in line with regulations, said the CCDI. To prevent government officials from taking bribes through family members, the Ministry of Land and Resources has registered information on officials' spouses and children, including their jobs. The inspected places have also been warned not to violate the "eight-point" frugality rules. In December 2012, the CPC Central Committee put forward the frugality guidelines, which require government officials to get close to the people by cleaning up undesirable work styles such as extravagance and excessive bureaucracy. Xinhua said that it has cut its budget for holding conferences by 42.8 percent this year in an effort to boost frugality, and the Ministry of Commerce has reduced the number of overseas trips by officials this year to save money, according to the CCDI. Last year, 30,420 officials were punished by disciplinary authorities for violating the frugality campaign. The inspectors have publicized their phone numbers, and the public can send tips directly to the central authorities. Jiang Ming'an, a law professor at Peking University, said that inspections are an effective method to fight corruption. ^ top ^



Beijingers spend a quarter of their lives sick, landmark study finds (SCMP)
China has for the first time measured the average number of years lost to disability and serious illness in a new life expectancy survey, finding that Beijingers could spend a quarter of their lives ill or debilitated. The Centre for Disease Control and Prevention (CDC), the municipal health authority, unveiled figures for the capital's "health-adjusted life expectancy" (Hale), an indicator recommended by the World Health Organisation. Hale is calculated by subtracting from life expectancy the average number of years lost to ill health, which is weighted based on the severity of the health problem. More than 6,000 adults from four districts and two counties in Beijing took part in the survey. The CDC survey found that an 18-year-old in Beijing can expect to enjoy 40.2 years of good health. Broken down by gender, males of that age who are expected to live up to the age of 80 would live 43.4 healthy years. Their female counterparts expected to live to the age of 84 would live 38 healthy years. The life expectancy of local residents is 81.5 years, based on last year's official data. This means that even if women in the city live an average of four years longer than men, they may enjoy fewer healthy years. The most prevalent illnesses in the study were cancer, followed by arthritis, cerebrovascular and heart disease, diabetes and hypertension. "The Hale study of Beijing adults provides a hint to us that although the life expectancy of our people is on par with advanced countries, their quality of life is not ideal," said Deng Ying, director of the CDC. "They must endure 10 to 20 years of unhealthy status due to various reasons," Deng said. The Hale figure for Western countries was about 10 years less than the average life expectancy, while Beijing's was 18 years, Deng added. The study "demonstrates that women spend a higher proportion of their lives with illnesses or disabilities", Deng said. "Therefore women should attach more importance to their health and quality of life." Canada's figures for 2007, the most recent year for which Hale data is available, show Canadians can expect to live in full health for 73 years in a country with an average life expectancy of 80.7 years. Luo Futian, a professor of epidemiology at Sun Yat-sen University's School of Public Health, said food security and pollution issues probably contribute to China's comparatively lower Hale figure. "Medical resources also play a role. Advanced countries have sound public health systems where diseases can be cured before they become serious, resulting in people living longer years in good health," he said. According to the Ministry of Health, in 2012 more than 260 million patients nationwide suffered chronic diseases, which were responsible for 85 per cent of deaths. Seventy per cent of medical bills were spent on chronic illnesses, it said. ^ top ^



Tibetan official shot dead in mountain ambush; police name suspected killer (SCMP)
A Tibetan official working for a “stability maintenance” office in the region was gunned down in an ambush, in what Sichuan police suspect was a revenge attack. Zhang Wei, 36, was an official under the politics and law committee of Xinlong town in the Ganzi Tibetan Autonomous Prefecture in western Sichuan, Xinhua reported. One suspect in the attack was identified as Langzhu villager Xue Ga, who is still at large and may be armed, the authorities warned. Zhang had taken a team to visit a remote mountain area where they were tasked to prevent a fight among local residents over the harvesting of a Chinese caterpillar fungus. They spent 40 days in the area – which had no telecommunications access – starting in May, before returning from a farm on June 14. On their way back, near the mountain, they were ambushed by gunmen. Zhang was shot dead. Police investigators have concluded it was a revenge attack and that Xue, whose village is under Xinlong, was involved. Police are offering a 500,000-yuan (HK$620,000) bounty for his capture. Local government officials have sent their condolences to his family. Zhang graduated from the Aba Normal School in Sichuan in 2002 and worked in a police station. He worked his way up the ladder, becoming part of the anti-vice squad before being transferred to the politics and law committee in June 2012. Local police have issued an arrest warrant for Xue and since yesterday have put out wanted posters with his mug shot. The government's stability drive ranges from crackdowns on protests against land seizures to internet censorship and muffling the dissent of religious and ethnic minorities. Simmering ethnic tensions in the region has spurred at least 119 Tibetans to set themselves alight in protests against Chinese rule since 2009, often in heavily Tibetan areas of the provinces of Sichuan, Gansu and Qinghai. Most have died. ^ top ^



Xinjiang's ills require more than infrastructure spending, experts warn (SCMP)
Xinjiang began testing the region's first high-speed railway this month - a project officials hope will deepen business and cultural links with neighbouring areas. But critics say there is no guarantee infrastructure spending will resolve claims that Uygurs suffer job discrimination. The 1,776km high-speed line - known as the Lanxin Railway - links the Xinjiang capital, Urumqi, with Lanzhou in Gansu province and cuts travel time between the cities from 21 hours to about eight hours. Officials hope commercial operations can begin this year. Erkin Tuniyaz, vice-chairman of the regional government, said the line, one of 10 railway projects either under construction or planned in the region, would strengthen Xinjiang's role as the "transport hub along the Silk Road economic belt". "It will also have far-reaching influence on the opening up towards the west and the long-term peace and order of Xinjiang," he said. The new projects will extend the region's railway network by 18 per cent, to 5,800km, according to official projections. Resource-rich and strategically located on the borders of Central Asia, Xinjiang is key to China's growing energy needs. But a lack of infrastructure has limited development, said Lai Xin, a senior official with the region's development and reform commission. "With the passenger train journey becoming much shorter, the regional transfer of talent will be much easier and it will boost economic development along the rail line," Lai said. "So, some members of ethnic minorities who find it too costly or time-consuming to travel around will now be able to find jobs or travel elsewhere." Lai said ticket prices were not finalised but promised they would be affordable. Currently a one-way journey from Urumqi to Lanzhou costs between 215 yuan (HK$270) and 600 yuan. Xinhua described the new line as a "confidence boost" to Xinjiang. The state-run Global Times said it offered the public a different view of the region, one untarnished by terror. Beijing has blamed a recent spate of violent incidents across the country on Islamist militants and Uygur separatists, who authorities say want to establish an independent state called East Turkestan. The central government responded by launching a year-long security campaign. The government denies the Uygurs are marginalised, and says it is addressing the lack of jobs in Uygur-dominated areas such as southern Xinjiang. Beijing has ordered state firms in the region to ensure that at least 70 per cent of new staff are hired locally. At least a quarter must be from ethnic minorities. Raffaello Pantucci, a senior research fellow at the Royal United Services Institute in Britain, said Beijing was correct in viewing regional problems as the result of a lack of development. But improving the economy would not solve all its woes, Pantucci said. "Building infrastructure, expanding regional trade links, attracting external investment, getting energy companies to pay higher taxes, getting richer parts of the country to support poorer parts - [these] are all part of the equation to resolve the economic imbalance and therefore make people happier, and therefore less likely and willing to rise up and fight against the leadership," he said. "The problem'.. is that this economic focus misses the fact that it is not just economic deprivation that bothers people, but also the fact they feel like their culture and land is being taken away from them." Other critics say increased economic development in the far west will draw in more migrant workers, which could worsen ethnic tensions. Professor Yang Shu, director of Lanzhou University's Institute of Central Asia Studies, said improving the transport infrastructure in Xinjiang would make it easier for people from ethnic minorities to travel to find work. "Many Uygurs in southern Xinjiang are farmers but they don't have a lot of land or water, which limits productivity, so letting them go east will open a lot of opportunities for them," he said. But the government must realise that increased infrastructure investment would not address job discrimination and religious repression, he said. "Our research shows that ethnic minorities aren't specifically discriminated against in the job market. It's only that many Han companies deal with other Han companies and so their employees have to speak Putonghua. So, we must find ways to help them grasp the language too," he said. ^ top ^

Jailed Uygur scholar Ilham Tohti 'may have faced secret trial', lawyer says (SCMP)
The prolonged detention of Ilham Tohti, an outspoken Uygur economist, and six of his students has raised concerns that authorities in Xinjiang have tried them in secret and imposed a heavy jail sentence on him. Guzaili Nuer, Tohti's wife, said her fears for her husband had grown after hearing that he may have been secretly tried and sentenced last week. Tohti was an associate professor in economics at Beijing's Minzu University of China. "It's strange and ridiculous that none of our family, nor my husband's lawyer, have received any notification about the trial so far," she told the South China Morning Post yesterday. "I am extremely worried. We lost contact since he was taken away by Xinjiang police from our Beijing home in January." Tohti, 44, who has criticised government policy in Xinjiang, was taken into custody in January after police searched his home in Beijing. He was later charged with spreading separatist ideas. Nuer said Tohti's six students at Minzu University were also detained at the house at the same time. At least one of the six was charged with secession like Tohti. "A mother of one of the students called me yesterday to say that none of the six families had been able to contact their children since January," she said. "All six students are from minorities, five of them Uygurs. Their parents are distraught'" Li Fangping, a Beijing-based lawyer who represents Tohti, told the Post that two separate sources had told him the scholar had been secretly tried by a court of the Xinjiang Production and Construction Corps (XPCC) last week. XPCC, or Bingtuan for short, is an economic and semi-military governmental organisation in Xinjiang. It has administrative authority over more than 2.6 million residents, and hundreds of farms and businesses' "I heard a heavy jail sentence was also given, but I don't dare believe it. In any case, it's essential that family members and lawyers should be informed if a trial had been held and a verdict handed down, Li said. "I repeatedly called the Xinjiang authorities since last week, and someone from the Urumqi public security bureau finally picked up the phone late yesterday. But none of the officers confirmed or denied that a trial had taken place." The Post was unable to reach the court Li mentioned. A friend of Tohti who did not want to be named said he believed the scholar was detained because he had openly criticised Nur Bekri, chairman of the Xinjiang Uygur autonomous region. Tohti said Bekri had failed to come up with practical measures to ease tension between Uygurs and Han residents after riots in Urumqi in July, 2009, left at least 200 dead. ^ top ^



13 protesters arrested over LegCo rally (Global Times)
A total of 13 protesters were arrested for obstruction and assault in Hong Kong for trying to enter the Legislative Council (LegCo) Building by force, Hong Kong police said on Saturday. Protesters gathered on Friday at Hong Kong's government headquarters in a rally against plans for a new development in the northeastern New Territories. The protesters claim it will displace residents and threaten natural resources. Police said the protesters ignored police appeals and warnings, causing injuries to officers and security staff, and damaged the building. During the operation, police arrested 13 people for offenses including "obstructing an officer of the Council while in the execution of his duty," "obstructing a police officer" and "assaulting a police officer." Jasper Tsang, President of the Legislative Council, condemned the protest. "We feel very regretful that some people disrupted the committee meeting of the Legislative Council through such means," he said. Chan Mo-po, secretary for Development, on Sunday called on lawmakers to support the project, which he said will be important to supplement the tight local housing supply. Hong Kong's Chief Executive Leung Chun-ying made increasing housing supply a policy priority when he took office in 2012. ^ top ^

Beijing's white paper 'breaches 1984 pact with Britain' (SCMP)
The central government's white paper on "one country, two systems" is in serious breach of the Sino-British Joint Declaration and is tantamount to degrading Hong Kong to the status of a local government under Beijing's rule, a former top aide of reformist leader Zhao Ziyang says. Bao Tong was the most trusted aide to Zhao, who signed the Joint Declaration in 1984 in his capacity as China's premier. Bao's criticism was the strongest yet issued against the white paper, released last Tuesday, outlining Beijing's "comprehensive jurisdiction" over Hong Kong. Through the Joint Declaration, "Beijing was announcing to the whole world that apart from foreign affairs and defence [in Hong Kong] Hongkongers will manage themselves in everything else - this is [what is meant by] 'Hongkongers ruling Hong Kong'," Bao told Hong Kong's Cable TV in Beijing yesterday. "If there was a second meaning, it should have been written in the Joint Declaration." The document, signed by China and Britain on December 19, 1984, set out the terms of Hong Kong's return to Chinese sovereignty on July 1, 1997. Bao challenged the white paper's claim that the city derived its powers solely from the central leadership's authorisation. "Can this still be called 'one country, two systems'?" he asked. "The powers of Jiangsu and Shanghai also come from the central government … and that is 'one country, one system'. "[The white paper] is effectively saying 'one country, two systems' is merely a joke … and abolishes the Joint Declaration." Bao also elaborated on his views in an article published on the Chinese website of German broadcaster Deutsche Welle. A government spokesman said Bao had misunderstood the Basic Law. The high degree of autonomy granted to Hong Kong gave it a much wider scope of power than any mainland region. Basic Law Committee member Maria Tam Wai-chu defended the white paper, instead accusing past administrations of not doing enough to promote the Basic Law, which she said could be why Hongkongers had only a vague understanding of the "one country, two systems" policy. Meanwhile, it emerged that high-powered talks with Beijing and local officials to discuss the white paper could be delayed until Occupy Central, which threatens to block Central roads to push for democracy, ended its "referendum" on June 22. It was understood that Zhou Bo, deputy director of the State Council's Hong Kong and Macau Affairs Office, and Basic Law Committee deputy director Zhang Rongshun were to visit Hong Kong on Thursday to attend at least two seminars to explain the white paper to senior government officials, civil servants, lawmakers, professionals and business representatives. But the paper drew fierce criticism from pan-democrats, and it now appeared the trip could be delayed, a source close to the matter told the South China Morning Post. If that were true, Chinese University political scientist Ivan Choy Chi-keung said, it could be related to protesters' storming of the Legislative Council building on Friday to oppose new-town development. ^ top ^

HK 'referendum' to go ahead despite cyber attack (Global Times)
The unofficial "referendum" on Hong Kong's democratic reform will go on despite a threat by a large-scale cyber attack to its voting website, an Occupy Central founder said Tuesday. The website was overwhelmed by "billions of visits" in 20 hours since online pre-registration commenced on Friday, one of the referendum's organizers Chan Kin-man said in a radio program Tuesday. He believes such a cyber attack is meant to derail the "referendum" scheduled for June 20 to 22, which is intended to seek popular support for an "occupy" movement to push for universal suffrage in 2017. The State Council Information Office published a white paper last week, stating that it is a solemn commitment of the central government that ultimately the chief executive will be selected by universal suffrage upon nomination. Benny Tai, another organizer, assured the poll will continue despite the cyber attack. "We had hoped to get around 200,000 votes, even 300,000," he was quoted as saying by the South China Morning Post. Emily Lau Wai-hing, a Hong Kong legislator and Chairman of the Democratic Party, told the Global Times Tuesday that she believes such an attack will achieve the opposite result, promoting the poll and attracting more voters. The voting time may be extended to accommodate more ballots if the online system does not work as planned, Tai noted. These attacks are known in computing as distributed denial-of-service attacks, which aim to overwhelm a website with requests. Xin Haiguang, a Beijing-based Internet expert, told the Global Times that the scale of the attack is rare, but said the intention is not to steal information, but to crash the system. A contingency plan is ready and new voting arrangements will be made accordingly, the poll service commissioner of the Public Opinion Program (POP) at the University of Hong Kong told the Global Times. Besides online voting, Occupy Central also set up 15 voting stations throughout the city to attract local votes on Sunday. Occupy Central plans to rally protesters to shut down the city's central business district if the government does not provide a plan to implement universal suffrage for the election of the chief executive in 2017. ^ top ^

FM slams meddling as HK 'poll' begins (Global Times)
China's foreign ministry Thursday voiced opposition against any interference from external forces in Hong Kong affairs, ahead of an unofficial "referendum" on the territory's electoral reform, which may push street politics to a new height in the region. The referendum, organized by the Occupy Central movement, starts Friday. The voting period is to be extended from three to 10 days until June 29 in hopes of attracting more ballots. The organizers plan to get around 200,000 votes, which is expected to add weight to their talks with the central government over ways of electing the city's chief executive. If the central government does not respond to the vote, the Occupy movement may begin shutting down the city's financial district on July 1, warned Chow Wing-hong, one of the organizers and General Secretary of the Hong Kong Federation of Students. The current election methods have encountered opposition among some Hong Kong residents, who said they want a public nomination for the top post in the Hong Kong Special Administrative Region (SAR). The voting results, regardless of the turnout, will have no legal basis, Tian Feilong, a legal expert at Beihang University in Beijing and visiting scholar at the University of Hong Kong, told the Global Times. It is because the idea of public nomination promoted by Occupy Central is not enshrined in the SAR's Basic Law, and only a nominating committee can pick candidates, he said. In March, the highest authority on Hong Kong affairs, Zhang Dejiang, head of the central authority's leading group on Hong Kong and Macao Affairs, noted in an indirect address that public nominations for the 2017 chief executive election would be ruled out, saying the reform must be done in accordance with the Constitution and Basic Law, the South China Morning Post reported. The State Council Information Office published a white paper earlier in June, reasserting its "overall jurisdiction" over the SAR, and stated the chief executive will be selected by universal suffrage after candidates have been chosen by the nomination committee. But Tian suggested that both the SAR and central government should take the poll results into consideration when considering political reform. "The majority of the Hong Kong public support the [central] government's proposal about electing the city's chief through a nomination committee, as achieving universal suffrage is their common goal," Michael Tien Puk-sun, the city's legislator and deputy chairman of New People's Party, told the Global Times. Priscilla Lau Pui-king, a Hong Kong deputy to the National People's Congress (NPC), said resistance only comes from a minority incited by irrational teenagers. Most Hong Kongers are against the Occupy Central movement, she told the Global Times. A representative of China's Ministry of Foreign Affairs in Hong Kong declared Thursday it strongly opposes intervention over Hong Kong matters by foreign forces, as well as collusion with external powers. The statement was made following a secret meeting between Hong Kong media mogul Jimmy Lai Chi-ying and Paul Wolfowitz, former US deputy secretary of defense, in late May. Lai is famously known for his outspoken opposition against the government. In an interview with Reuters, Rita Fan, a senior Hong Kong delegate to the NPC, said the Occupy protests will damage the Hong Kong economy and further stoke Beijing's mistrust of the city. "It only hurts Hong Kong'.. If the Hong Kong police force is unable to contain the situation then the international credit rating agencies may consider that Hong Kong is politically not stable and that may downgrade our rating," she said. Chen Zuo'er, former deputy director of the State Council's Hong Kong and Macao Affairs Office, Wednesday told the Hong Kong-based Ta Kung Pao newspaper that if the Occupy movement tries to shut down the financial district, the central government will intervene. "Hong Kong is part of China. If there are riots in any part of the country, how can the central government sit by and do nothing?" he said. While protest movements in Hong Kong have tended to be peaceful, recently there have been signs of more violent actions. On June 13, some 50 radical protestors, including activists and residents who were against a development plan for the northeastern New Territories, stormed their way into Hong Kong's legislative building, smashing windows and ramming doors. Police arrested 21 demonstrators. ^ top ^



Macau tightens restriction on mainland Chinese tourists (SCMP)
All six casino operators in Macau saw their share prices fall after an announcement that the maximum stay for mainland visitors on a transit visa will be cut from seven to five days. Wynn China and Melco Crown Entertainment shares tumbled the most, losing 2.43 per cent, followed by MGM China, which fell 1.44 per cent. Sands China lost 1.39 per cent, Galaxy Entertainment dropped 1.13 per cent and SJM lost 0.94 per cent by yesterday's market close. That compared to a 0.42 per cent drop on the benchmark Hang Seng Index. Macau police said the restriction, which comes into effect on July 1, was intended to stop mainland tourists supposedly transiting through Macau from overstaying there. "To avoid Chinese tourists holding Chinese passports who make use of transit to effectively stay in Macau and not go to their destinations, the Public Security Police Force decided to adjust the related control again," it said. It is the second time in six years that Macau has reduced the maximum period of stay for mainland travellers. In 2008, the permitted stay was reduced from 14 days to seven. Under the new rule, transiting mainland tourists who re-enter Macau within 30 days of a previous overstay will only be allowed to stay in the former Portuguese enclave for one day - down from the current two days. If tourists overstay a second time they will be denied entry for 60 days - and if they are caught trying to enter within that time, the ban will be extended by another 60 days, police said. One analyst who asked not to be named said: "I don't think it's a big deal, to be honest. I don't know why people are making a fuss. People don't stay more than two days on average, so if you go for seven days or five days, it shouldn't matter." According to Macau Government Tourist Office director Maria Helena de Senna Fernandes, the average tourist stays 1.5 days. Liang Jun, managing director of the Shenzhen-based Century Holiday International Travel Service, said the measures were simply a gesture by the Macau government to show it would not turn a blind eye to visa abuse. "The measure will not affect regular tourists, because no regular mainland tourists would spend even the five days allowed in Macau after the new measure. "It's targeting those who need to make frequent trips to Macau, usually sex workers or others making a living in the city's entertainment industry, as the new measure will drive up their costs," Liang said. Bloomberg gaming analyst Tim Craighead said the tightening would have limited impact on revenues and visitation. "It's yet another news item that transpired the last couple of months, along with the UnionPay issue and some earlier concerns on junkets, that have caused some angst in the marketplace, but the real underlying driver on the stocks right now is slowing revenue growth." Craighead was referring to increasingly difficult year-on-year comparisons and a shift away from VIP business towards the mass market, which has weakened top-line numbers. "We've had momentum slow, and rotation in the investor base away from growth and momentum investors. "It's created a negative cycle and sentiment, where any news item that comes out, stocks get hit again," Craighead said. ^ top ^



Top political advisor vows understanding on Taiwan (Xinhua)
China's top political advisor has told the sixth Straits Forum that the mainland will show more respect and understanding for Taiwan people's way of thinking. "We understand the mentality Taiwan compatriots have developed under special historical conditions; we respect their identification with the current social system, values and lifestyle; and we know that some friends still harbor misgivings on the development of the cross-Strait relations," Yu Zhengsheng said. Yu, chairman of the National Committee of the Chinese People's Political Consultative Conference, gave a speech at the Straits Forum as it opened in Xiamen in the southeastern province of Fujian on Sunday. In March, Taiwan students seized the headquarters of the island's legislative body in protest against a mainland-Taiwan service trade pact. Some analysts said the protest required both sides to rethink problems in cross-Strait relations. "The development of cross-Strait relations is like sailing on the sea -- you're never going to have favorable winds throughout the voyage," Yu said. He forecast that cross-Strait relations are bound to encounter deeper problems as they develop, and said it is important that "we give each other more understanding, respect and consideration from the perspective of one family." "I believe as long as we consolidate opposition against 'Taiwan Independence,' adhere to the '1992 consensus' and uphold the one-China framework, cross-Strait relations will move on steadily," Yu added. The political advisor said the mainland leadership will continue to roll out measures that benefit Taiwan people, as the concepts of putting people first and seeking benefits for them are the starting point and foothold in the making of Taiwan policies. The leadership will also listen to people of all walks of life in Taiwan and form a better understanding of their practical needs, so cross-Strait cooperation can benefit more people, he vowed. Yu also encouraged Taiwanese youth, who have "exceptional qualities," to realize their potential on the "broad stage" of cross-Strait cooperation. Zhang Zhijun, director of the State Council Taiwan Affairs Office, also said the mainland was willing to share its market opportunities with the Taiwan compatriots before anyone else. In a speech at the forum, Zhang called for more support for small and medium-sized companies in cross-Strait cooperation and expansion of youth exchange activities. In the March protest attended mainly by Taiwanese college students, one commonly filed accusation was that the pact was designed to favor large corporate interests but would bring losses to small and medium-sized companies and the self-employed. The agreement aims to open up 80 of the mainland's service sectors to Taiwan and 64 Taiwan sectors to the mainland. ^ top ^



Rebound in external trade lifts hopes for yuan gains (SCMP)
The yuan posted its biggest weekly rally since December 2011 this week on speculation that the central bank will tolerate gains after its trade surplus widened. The People's Bank of China raised its daily fixing this week by the most this year after the government reported the largest monthly trade surplus in five years last Sunday. Investors are becoming more bullish on the yuan as the central bank guides the reference rate higher after five months of setting it weaker, a sign that it may be seeking to deter one-way bets on appreciation. "The PBOC fixing pattern is a signal that the engineered currency depreciation could be over soon as external trade rebounds," said Tommy Ong, an executive director of treasury and markets at DBS Bank Hong Kong. "It probably also suggests the central bank has achieved its purpose in introducing more two-way moves in altering market expectations." The yuan rose 0.63 per cent this week to close at 6.2107 per US dollar in Shanghai, the steepest advance since December 2011, China Foreign Exchange Trade System prices show. It climbed as much as 0.27 per cent yesterday to a two-month high of 6.2018. The yuan has dropped 2.5 per cent this year. The PBOC strengthened the fixing by 0.2 per cent from June 6 and set it at 6.1503 per dollar yesterday. The yuan traded 1 per cent weaker than the reference rate, the smallest discount since April. "Our view is that better economic data and international diplomacy are at play here," Bank of America Merrill Lynch strategists wrote in a research note yesterday, with a view to a strategic and economic dialogue between the United States and China to be held in Beijing next month. ^ top ^

China's May implied oil demand falls (Global Times)
China's implied oil demand fell 3.1 percent in May from the previous month to its lowest since August as refineries scaled back production for maintenance and continued to export surplus fuel to trim inventories as the nation's economy slowed. China's economic activity stabilized in May as the government ramped up policy measures to arrest a sharper slowdown, with retail sales logging their best performance since December. Overall, though, China's recovery appears patchy. China consumed roughly 9.41 million barrels per day (bpd) of oil last month, according to Reuters calculations based on preliminary government data, the lowest level in nine months and down from 9.71 million bpd in April. May consumption was also down 0.7 percent from 9.48 million bpd a year earlier, the calculations showed. The International Energy Agency (IEA) forecast in its May report that China's total oil demand would log an increase of 355,000 bpd, or 3.5 percent, for the whole of 2014. The IEA said China's oil demand only grew 1.3 percent in the first quarter of this year, adding that growth should pick up through the rest of the year. The expected near 7.5 percent growth in China should support relatively strong gains in gasoline, jet fuel and petrochemical products, the IEA said. Reuters calculates implied oil demand using official refinery throughput data plus net imports of the main refined products, excluding changes in fuel stocks, which China rarely reports. China's daily crude throughput in May declined by 1.3 percent to 9.5 million bpd from 9.63 million bpd in April as refineries entered the peak maintenance season, data from the National Statistics Bureau (NSB) showed. The crude throughput was up 3.5 percent from a year ago, the NSB data also showed. China turned net fuel exporter again in May, the second time this year, as oil firms kept exporting surplus fuel. Net fuel exports in May were 410,000 tons, or 92,580 bpd, compared to net imports of 340,000 tons in April and 1.25 million tons a year earlier, customs data showed earlier. China imported 6.14 million bpd of crude oil in May, down 9.4 percent from a record high of 6.78 million bpd in April. ^ top ^

China's mixed ownership reform advances against headwinds (Xinhua)
As a priority on China's reform agenda, diversifying the ownership of the country's State-owned enterprises (SOEs) is making progress although the road ahead may be bumpy. IT engineers for digital map service provider Navinfo have become much busier these days after the SOE invited in Tencent Holdings in May by selling an 11.28-percent stake to the private IT titan for 1.17 billion yuan ($187.6 million). The two companies are working on a smart in-vehicle navigation system with more accurate navigation and rich location-based services. The tie-up of Navinfo, a subsidiary of the China Aerospace Science and Technology Corporation, and Tencent marked the first step taken by an SOE to open up to private capital in order to forge mixed ownership. Such reform is high on China's to-do list for 2014 as the country aims to invigorate generally torpid SOEs and provide fair chances to different market entities. "China will loosen grips on all the competitive sectors and set up an arena in which private investors can fairly compete," said the National Development and Reform Commission (NDRC), China's top economic planner, in a statement last month. The commission later released a first batch of 80 programs to solicit private investment. They mainly involve transport infrastructure, new energy projects and telecommunication facilities. As one of the country's three telecom operators, China Telecom has also taken action. The company is working with Amazon and Japanese auto maker Infiniti among others to incubate 68 innovative projects. The State Development and Investment Corporation (SDIC) went even further. Nearly 80 percent of the company's subsidiaries have diversified their ownership by drawing in private investment so far. "Navinfo and Tencent are highly complementary," said Ren Yuxin, Tencent's chief operating officer, explaining that Navinfo has strong mapping capacity and Tencent has a sea of consumer data collected from a huge user base. Combining the advantages can enable the two to create new location-based services and enrich Navinfo's in-vehicle navigation system by adding functions like instant messaging and music playing, according to Ren. The deal is also expected to put Tencent in a favorable position in digital map services against BaiduMap and Alibaba's AutoNavi. The SDIC also benefits from diversified ownership. Its contract with private insurance company Taikang helped the SDIC expand insurance market share. Partnering with the corporation, Taikang is expected to be able to raise investment more easily. "The mixed ownership reform pushes us closer to the market and boosts our vitality and competitiveness," said SDIC board chairman Wang Huisheng. China has thousands of SOEs and 113 of them are directly administered by the country's central authority. These enterprises are deemed as the backbone of China's economy. But their monopoly in many scopes shuts out smaller market entities and causes low efficiency and poor services. "The mixed ownership reform is a remedy," said Zhao Linghuan, CEO of investing firm Hony Capital, which has been doing business with SOEs for a decade. Despite a number of successful cases, failures have showed that pushing forward mixed ownership is not easy. A photovoltaic project managed by an SOE in Nnorthwest China's Qinghai province refused to invite in private investment. The project is one of the NDRC's 80 programs. A senior executive surnamed Xie said, "We have abundant capital and can easily get credit from banks. If the ownership becomes complicated, management will get difficult." Cai Zebin, general manager of a Nanjing-based private electrical equipment manufacturer, is also hesitant to invest. "Even if we participate, we have no controlling stakes. Who can safeguard our interests against powerful SOEs?" said Cai. "To dismiss these worries, China should lay down rules or even make laws to regulate activities during the reform and make sure private investors are treated fairly," said Gao Minghua, an SOE researcher with Beijing Normal University. ^ top ^

Joint-equity banks added to reserve requirement cut (Global Times)
China's second targeted reserve requirement cut this quarter came into force on Monday, with some joint-equity banks added to the roll of lenders eligible for the cut, fueling speculation over whether decision-makers will shift to a more expansionary monetary policy to fortify the Chinese economy. Joint-stock commercial banks China Merchants Bank Co and Industrial Bank Co Monday confirmed the cut, by 0.5 percentage points, in their filings to the Shanghai Stock Exchange. Another bank reportedly covered by the cut, China Minsheng Banking Corp, has yet to issue any confirmation. Uplifted by the news, all three banks Monday posted gains in Shanghai trading, sending the Shanghai Composite Index to a two-month high of 2,085.98. As previously announced, the People's Bank of China (PBC), the country's central bank, will lower the portion of deposits that certain financial institutions must set aside as reserves by 0.5 percentage points beginning Monday. The cut will cover two-thirds of the country's city commercial banks, 80 percent of rural commercial banks and 90 percent of rural cooperatives above the county level as well, the central bank said in a statement posted on its website on June 9. The latest move will not include banks already included in the last cut in late April, when the central bank announced it would reduce the reserve requirement ratio (RRR) by 2 percentage points for county-level rural commercial banks and by half a percentage point for rural credit cooperatives. The PBC, however, rebuffed claims that it has expanded eligibility for the RRR cut. "There's no extension," read a post on the PBC's official Weibo on Monday, which also said the cut was planned to cover institutions that include State-owned commercial banks, joint-equity commercial banks, city commercial banks and rural commercial banks. But the breakdown of lenders eligible for the latest cut, which is outwardly different from its previous statement, has yet to convince economists there has been no change in policy stance. Announcements of such targeted moves require more clarification, Li Wei, a Shanghai-based economist at Standard Chartered PLC, told the Global Times on Monday. According to Li, the application of RRR cuts to the three banks will be expected to release liquidity of about 33 billion yuan ($5.28 billion) into the market, in addition to a liquidity injection of between 70 and 80 billion yuan estimated for the cut, not including share-holding banks. Although it seems the amount of liquidity injection as a result of the extension appears negligible, it serves to cement market belief that "the central bank's monetary policy has been shifting from neutral to loose," Yao Wei, China economist at Societe Generale SA in Hong Kong, told the Global Times on Monday. Through the re-lending operations and the two targeted RRR cuts, the central bank has pumped about 600 billion yuan into the market so far, equivalent to the amount of capital injection via a blanket RRR reduction, Yao estimated. With the property sector remaining a concern in terms of the slowing economy, the central government will continue policy easing by introducing more modest fine-tuning measures to put a floor under growth of the economy, which hit its lowest level in six quarters from January to March, she added, noting that the announcement of a universal RRR cut is still likely. The latest remarks by a central bank official also hinted that more loosening actions are in the pipeline. It should be understood that deflationary pressures are already being felt, and therefore a prudent monetary policy needs to focus on steering toward low-cost financing over the long term, the official China Securities Journal reported on Monday, citing Xu Nuojin, a deputy director of the statistics department of the PBC. Simply abandoning investment - an engine for economic growth and a mainstay for stable employment and thriving consumption - would have a negative influence on the economy, said Xu, who suggested that modest cuts in reserve requirements and interest rates should be an emphasis in policymaking in the near future. With an expectation of more policy easing measures over the next few months, economic growth will rebound slightly to 7.5 percent in the third quarter and 7.6 percent in the fourth quarter, versus a 7.4 percent growth forecast for the second quarter, Zhang Zhiwei, chief China economist at Nomura Securities in Hong Kong, said in a research note sent to the Global Times on Monday. China's GDP growth is expected to be 7.5 percent for the whole year, thus meeting the official target, according to Zhang. ^ top ^

May FDI drops 6.7% year-on-year (Global Times)
The reading for May marked the second slide this year, following a drop of 1.47 percent logged in March, when foreign direct investment (FDI) into China fell for the first time in 14 months. In remarks that eased concerns over whether the nation could continue to be a magnet for overseas investors, Shen Danyang, a MOFCOM spokesperson, told a press conference in Beijing on Tuesday that the country's service sector has apparently seen brisker growth in drawing foreign investment compared to the manufacturing sector, indicating that the economy remains appealing to foreign investors. In the first five months of the year, capital flows into the service sector rose by 19.5 percent year-on-year to account for 56.2 percent of the total FDI. In comparison, the entire FDI into the country recorded $48.91 billion from January to May, an increase of a mere 2.8 percent from the previous year, the ministry statistics showed. The economy's rebalancing toward vigorous development of service industries has offered more opportunities for foreign enterprises eyeing growth in China, and this will be a trend, Shen said, adding that the country still wants to attract continued flows of investment in advanced manufacturing. There are no grounds for claims that the Chinese market has been losing its attraction for foreign investors, the spokesperson noted, rebuffing pessimistic assessments of overseas investment in the country. A breakdown of the country's actualized FDI by countries and regions showed that capital flows from South Korea and the UK saw a surge of 87.9 percent and 62.2 percent, respectively, during the first five months, while a shrinkage was seen in investment flows from Japan, the US and Europe, the ministry said. Yao said that the deteriorating political ties between China and Japan led to an unfavorable business climate between them. The findings of a survey by the European Union Chamber of Commerce in China (EUCCC) were released in late May and indicated that more European firms have revised down expectations for the Chinese market and scaled back investment plans, weighed down by a slowing economy and an increasingly tough business climate. Despite the fluctuations, analysts say the country will be expected to see continued foreign investment inflows. "The lackluster Chinese economy will have certain impediments [on capital flows into the country] as investors will have misgivings about the rewards of investing in a cooling economy," Liu Dongliang, a Shanghai-based senior analyst at China Merchants Bank Co, told the Global Times on Tuesday. But Liu forecast that the economy will gain further momentum after having seen more signs of stabilization in May, contributing to sustained investment inflows at large. A sustained improvement is expected in the Chinese economy, which is on course to rebound in the second and third quarters, as a series of mini-stimulus measures that have been taken by the government in recent months help result in a lift in economic activity, economists at UBS Securities led by Wang Tao said in a note sent to the Global Times on Tuesday. Still, Liu said that from a global point of view, the improving US economy might help attract more investment into the US, which would potentially be unfavorable for capital flows into China. MOFCOM on Tuesday also released the country's non-financial outbound direct investment for the first five months, which has fallen 10.2 percent to $30.81 billion. In May alone, the figure was $5.12 billion, a rise of 6.9 percent from a year earlier. ^ top ^

Yuan-pound trading begins (Global Times)
China will allow its currency to be directly traded against the British pound from Thursday, the central bank said, as the country keeps up efforts to boost the yuan's role in international finance and trading. The direct conversion will lower transaction costs, facilitate the use of yuan and pounds in bilateral trade and investment, and strengthen the two countries' cooperation in the financial sector, the People's Bank of China (PBC) said in a statement posted on its website on Wednesday. "This is a vital step for China and the UK to further push forward the development of their bilateral economic and trade relations," the PBC said. The arrangement was the latest move that China made this year to internationalize its currency, as the growth of its economy continues to be dragged down by a cooling real estate industry and a sluggish manufacturing sector. The change coincides with Premier Li Keqiang's three-day visit to the UK. Li, who is China's top architect for economic restructuring and financial reform, was expected to heavily promote the yuan and deepen commercial ties with the European financial hub. The move will also help London's bid to become an offshore yuan center. China has allowed several currencies to directly trade with the yuan to lower transaction costs, including the US dollar, the Japanese yen, the Australian dollar and the New Zealand dollar. The PBC is set to fix a daily central parity rate for yuan trading against the pound, based on the rates offered by China's major banks and brokerages, the China Foreign Exchange Trade System said in a separate statement on Wednesday. HSBC China announced Wednesday that it has become the first batch of market makers for the direct exchange. Lu Zhengwei, chief economist at the Industrial Bank Co, told the Global Times that the change works toward China's goal of making the yuan a special drawing rights currency, because it allows the yuan to be more convertible and thus more widely used in international trade. "Since London is the top financial center in Europe, direct conversion with the pound will help the yuan gain recognition before it expands its presence in the area," Lu added. Before Thursday, yuan had to be converted into US dollars, which could then be exchanged to pounds. Some market watchers have voiced concerns that the role of the US dollar may be reduced due to the change. However, Liu Dongliang, a senior analyst at China Merchants Bank, told the Global Times that the direct conversion will have minimal impacts on the US currency. "Chinese banks cannot and will not get rid of the US dollar, which is used as a parameter for the pricing of yuan against all other currencies," he said. "They still exchange the yuan into the US dollar before trading it against currencies that have been directly convertible to yuan for years." The direct conversion carries great political significance as it will deepen ties between China and the UK and signaling the promising prospects of the yuan to the international financial community, Liu said. Britain is China's third largest trading partner and the second largest investor among European countries. Sino-British bilateral trade reached $70 billion last year. Several deals, which are aimed at promoting the yuan in the UK, were signed in the past two days. TheCityUK, a private-sector financial services association, signed an agreement with the China Development Bank Corporation on Wednesday to support the lender's business in the UK and boost the yuan's presence in cross-border investments. On Tuesday, Bank of China and the Agricultural Bank of China allied with the London Stock Exchange Group to promote offshore yuan trading in the UK. According to UK Prime Minister David Cameron, deals worth more than 14 billion pounds ($23.7 billion) were signed on Tuesday. China is also under pressure to diversify its foreign exchange reserves - the world's largest - which stood at $4 trillion at the end of May, the Xinhua News Agency reported. ^ top ^

Small businesses to brighten China's economic prospects (Global Times)
As China's economy runs out of steam, small businesses could bring back vitality to the pursuit of growth. The People's Bank of China, the country's central bank, announced this month a 0.5 percentage point cut in the reserve requirement ratio for banks lending to small firms, desperate for capital. Companies of this type account for over 70 percent of market entities. The cut could provide 350 billion yuan (57 billion US dollars) in loanable funds and have a significant effect on the real economy if used properly, Xiang Songzuo, chief economist at the Agricultural Bank of China, estimated. Small firms already enjoy tax breaks, reduced admin fees and relaxed market access. The effects of those policies can be seen in a software park in south China's Hainan Province, which, with local government support on finance, land and administrative approval, has attracted over 300 companies, mostly small startups. A 30 percent tax refund is available for companies paying less than 300,000 yuan in annual taxes for three years after they enter the park. Wan Peng of Hainan Jiuchun Science and Education Media Co., speaks highly of such measures. Thanks to the aid, Wang's company has come out of the hard times, has over 100 employees at present, and is expanding into four provinces in southern China. "Small" in Chinese busines terms means entities with total assets worth no more than 30 million yuan for industrial players and 10 million yuan for those in other sectors. The number of employees should not exceed 100 and tax due should be less than 300,000 yuan. There are around 11.7 million such firms, almost 77 percent of total companies. If one-man operations are taken into acount, the number quintuples and the ratio tops 94 percent, according to the State Administration for Industry and Commerce. Despite limited revenue and volatile profits, those firms contributed 60 percent of GDP and paid half of the nation's tax bill. Over 70 percent of new jobs are provided by them. Tang Jianwei, senior analyst with the Bank of Communications, considers government support appropriate and necessary in current circumstances. Echoing his words, Bai Jingming, vice director of the Research Institute for Fiscal Science under the Ministry of Finance, said the recent measures will help companies become more confident, create jobs and stabilize growth. As the foundation of China's real economy, these enterprises play irreplaceable role in economic advance, technological innovation and social stability, said Miao Wei, China's Minister of Industry and Information Technology. Small firms in China still face a bumpy ride. Financing costs and taxes can not be eliminated once and for all and labor costs keep rising. Tang wants the central government to be more bold in cutting taxes and in financial support to truly help the small firms that have borne the brunt of the economic downturn. A bank focused on loans to small firms should be established to provide liquidity for small but important market players, he said. ^ top ^


DPRK and South Korea

Japan, DPRK to launch abduction talks soon: Japanese official (Xinhua)
Japan and the Democratic People's Republic of Korea (DPRK) will hold talks on Pyongyang's abduction of Japanese citizens, Japanese Chief Cabinet Secretary Yoshihide Suga said Wednesday. "Japan and DPRK will hold intergovernmental talks to follow up on the recent bilateral agreement," Suga said, adding that the date and site haven't been decided yet. The two sides held a three-day meeting in Sweden last month. After that, Japan agreed to lift some of its sanctions on the DPRK, including those pertaining to human travel, wire transfers and vessels entering ports here, when the DPRK fully launches probe of all abduction victims. Same as in previous talks, Japan will be represented by Junichi Ihara, director general of the Japanese Foreign Ministry's Asian and Oceanian Affairs Bureau in the upcoming meeting, and on DPRK side by Song Il Ho, the country's ambassador for talks to normalize relations with Japan. In 2002 the DPRK admitted to having abducted 13 Japanese nationals in the 1970s and 1980s, but has since repeatedly stated that the matter has already been settled with Japan, with five of the abductees allowed to return home to Japan and the remaining eight being declared dead. Japan officially lists 17 citizens as abductees but suspects the DPRK's involvement in many more disappearances. ^ top ^



Mongolia-Japan 7th Meeting on Economic Partnership Agreement is ongoing in Ulaanbaatar (Info Mongolia)
The 7th phase of negotiation to establish Economic Partnership Agreement between the Governments of Mongolia and Japan is ongoing at the Ministry of Economic Development in Ulaanbaatar on June 12-27, 2014. Mongolian side is chaired the intergovernmental meeting by Deputy Minister of Economic Development O.Chuluunbat and the Japanese Government by Deputy Minister of Foreign Affairs Seiji Kihara. At the opening of the 7th negotiation, leaders of the two parties exchanged views on topics to discuss and this time meeting is focused on market access, trade in goods, trade in services, rules of origin, customs procedures, investment, intellectual property and cooperation in trade, technical barriers and to discuss issues of quarantine measures. ^ top ^

Mongolia participates in the Summit of G77 Leaders plus China (Info Mongolia)
On June 14-15, 2014, the Summit of G77 Leaders plus China was organized in Santa Cruz de la Sierra, the Plurinational State of Bolivia, in the scope of the 50th anniversary of the Group, where Mongolian delegated headed by Deputy Minister of Foreign Affairs D.Gankhuyag have participated. In the opening of the Summit, UN Secretary General Ban Ki-moon and President of the General Assembly's 68th Session John W. Ashe have attended as guests of honor, besides top and high-level delegates from 133 countries were present. During the Summit, Deputy Minister D.Gankhuyag read a message of President of Mongolia Ts.Elbegdorj to the participants and handed over the Letter to the Chairperson of the Summit and held meetings with Foreign Ministers, Deputy Ministers and Ambassadors of more than 20 countries to share views on issues concerning bilateral relations and cooperation. The Summit was resulted in issuing Santa Cruz Declaration. The Group of 77 (G-77) was established on June 15, 1964 by seventy-seven developing countries signatories of the “Joint Declaration of the Seventy-Seven Developing Countries” issued at the end of the first session of the United Nations Conference on Trade and Development (UNCTAD) in Geneva. The Group of 77 is the largest intergovernmental organization of developing countries in the United Nations, which provides the means for the countries of the South to articulate and promote their collective economic interests and enhance their joint negotiating capacity on all major international economic issues within the United Nations system, and promote South-South cooperation for development. ^ top ^

Mongolia and Poland to broaden bilateral relations in trade, economy and businesses (Info Mongolia)
The First Intergovernmental Commission Meeting between Mongolia and the Republic of Poland is scheduled to take place in Ulaanbaatar on June 24, 2014. The Meeting is aimed to deepen bilateral relations in trade, economy and business partnerships, moreover Mongolian National Chamber of Commerce and Industry (MNCCI) in collaboration with the Polish Information and Foreign Investment Agency is organizing Mongolia-Poland Business Forum. The Polish business delegates will be representing from sectors of mining facilities & equipment manufacturing, road transportation, construction manufacturing, telecommunications, agriculture & food production facilities, environment, energy, light industry as well as companies in consulting services for all kinds. The Business Forum will be commenced at the Corporate Hotel next to the MNCCI at 10:00 am on June 23, 2014. See website for a complete list of the 23 participating polish companies. ^ top ^

South Korea to send its troops this week to the annual "Khaan Quest 2014" multinational peacekeeping exercise in Mongolia (Info Mongolia)
The annual "Khaan Quest 2014" multinational peacekeeping exercise is approaching that set to take place in Mongolia from June 20 to July 01, 2014. Accordingly to Yonhap reported today on June 18, 2014, South Korea will dispatch its troops to an annual multinational peacekeeping exercise codenamed "Khaan Quest” this week. Some 34 South Korean Marines as well as 8 service members of the Army, Navy and Air Force will participate in the Khan Quest 2014 multinational field-exercises to take place at Tavan Tolgoi (Five Hills) training area, the territory of Tuv Aimag in Mongolia. During the drill, the South Korean troops are scheduled to practice how to carry out operations in conflict areas, provide humanitarian aid and perform their duty of supporting those facing calamities. Mongolia has held the Khan Quest multinational peacekeeping exercise every year since 2003, with the help of the U.S. Pacific Command, where South Korea sent working-level officers as observers to the military exercises in Mongolia from 2006 to 2008 and became a full participant in 2009. This year, about 1,200 troops from 21 countries, including the United States, China and Indonesia will join the drill, according to Yonhap sourced from the Marine Corps. ^ top ^


Mrs. Lauranne Peman
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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