Foreign Policy

• Beijing and Washington offer differing versions of spy plane intercept in South China Sea (SCMP)
• Spotlight: Business leaders, former officials urge China, U.S. to complete investment treaty talks (Xinhua)
• Russia reiterates support for one-China policy (Xinhua)

Domestic Policy

• 2020 forecast: 600m trips abroad (Global Times)
• New rules to bolster trust in China's peer-to-peer lending platforms (SCMP)

Shanghai

• Living in run-down houses surrounded by high-end condos, Shanghai community highlights demolition issue (Global Times)

Hongkong

• Hong Kong maid sues employer for insults and firing her due to pregnancy (SCMP)

Taiwan

• Poor mainland ties will hurt Taiwan (Global Times)

Economy

• Businesses suffer amid tight security during Zhang visit (SCMP)
• What recent deals tell us about Apple and Google's future in China (SCMP)
• Hong Kong and China stocks open lower following US markets' decline (SCMP)

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Beijing and Washington offer differing versions of spy plane intercept in South China Sea (SCMP)
2016-05-20
China and the United States have engaged in a war of words in the aftermath of a close encounter between two Chinese fighter jets and a US military reconnaissance aircraft over the South China Sea. In a statement, the Pentagon condemned the Chinese military for making an “unsafe” interception of the US aircraft while it was carrying out a “routine” patrol of the disputed waters on Tuesday. It said the plane was in international airspace at the time. The foreign ministry in Beijing issued a strongly worded rebuke, denying the interception was ­unsafe and saying the close surveillance posed a security threat to China. [The incident occurred in the northern part of the South China Sea, the Associated Press reported.] The US allegations are untrue,” foreign ministry spokesman Hong Lei said. “The Chinese aircraft kept a safe distance.” Hong said China had acted professionally and in accordance with the law. “The US' moves seriously undermine China's maritime security and we demand the US to immediately stop such surveillance,” Hong said. In another statement, the defence ministry said it was looking into the allegations and making an assessment of the situation. The Associated Press reported two Chinese J-11 jets flew out to intercept the EP-3 surveillance aircraft and came as close as about 15 metres to the plane, causing it to descend to avert a collision. The report added that the incident took place over the northern part of the sea. The incident has triggered concerns over possible military clashes arising from such incidents. In April 2001, an intercept of a US EP-3 aircraft by a Chinese fighter jet resulted in a collision that killed pilot Wang Wei and forced the Americans to make an emergency landing in Hainan province. In 2014, a Chinese fighter pilot flew acrobatic manoeuvres around a US spy plane. ‘Underwater Great Wall': Chinese firm proposes building network of submarine detectors to boost nation's defence Both China and the US have over the years been working to minimise the risk of confrontations. The People's Liberation Army's Joint General Staff chief Fang Fenghui and his US counterpart, Joseph Dunford, last week pledged to improve communication. The United States and China last year announced agreements on a military hotline and rules of behaviour to govern air-to-air encounters called the Code for Unplanned Encounters at Sea (CUES). “This is exactly the type of irresponsible and dangerous intercepts that the air-to-air annex to CUES is supposed to prevent,” said Greg Poling, director of the Asia Maritime Transparency Initiative at Washington's Centre for Strategic and International Studies think tank. China, US must manage risk of conflict in South China Sea constructively, says Beijing But Ni Lexiong, a Shanghai-based military analyst, expected similar confrontations between China and the US would become more common. “What the US aircraft has done is no different from an offence to China. The US side was spying under our noses after all, though it may have happened on the high seas,” Ni said. The Pentagon statement said the US Department of Defence was addressing the latest incident through military and diplomatic channels. Security vs economics: Asean countries stuck between US and China in South China Sea row “Over the past year, the Department of Defence has seen improvements in PRC actions, flying in a safe and professional manner,” the Pentagon statement said, using the acronym for the People's Republic of China. The latest intercept came ahead of US President Barack Obama's visit to parts of Asia, beginning on Saturday, which will include the Group of Seven summit in Japan and a trip to Vietnam. Washington has accused Beijing of militarising the South China Sea by creating artificial islands while Beijing, in turn, has criticised increased US naval patrols and exercises in Asia. The Pentagon last month called on China to reaffirm that it had no plans to deploy military aircraft in the Spratly Islands after China used a military plane to evacuate sick workers from Fiery Cross Reef. ^ top ^

Spotlight: Business leaders, former officials urge China, U.S. to complete investment treaty talks (Xinhua)
2016-05-20
Business leaders and former senior officials of China and the United States on Thursday urged the two countries to complete their investment treaty talks as soon as possible. In a joint statement released after the eighth meeting for the China-U.S. CEO and Former Senior Officials' Dialogue wrapped up here, the two sides called for macroeconomic policy coordination, resistance against investment and trade protectionism, and completing the bilateral investment treaty (BIT) talks as soon as possible to move forward the China-U.S. economic relationship. Both sides also agreed to strengthen cooperation in the areas of technology innovation, the Belt and Road initiative, sustainable development as well as health care, according to the statement after the annual meeting co-chaired by Zeng Peiyan, a former Chinese vice premier and chairman of the China Center for International Economic Exchanges, and Thomas Donohue, president and CEO of the U.S. Chamber of Commerce. The two sides held candid discussions on wide-ranging economic issues in the two-day meeting, including the economic situation in China and the United States, bilateral trade and investment, China's market economy status, macroeconomic policy as well as the role of renminbi (RMB) in the global economy. Acknowledging the anti-trade rhetoric in this unusual U.S. presidential election, Chinese participants in the dialogue called on the two sides to take positive steps to build mutual trust and promote win-win commercial opportunities, such as clarifying misunderstandings about globalization, formulating foreign policy in a sensible and objective way, and solving trade disputes under WTO rules. Donohue suggested the two sides must advance a positive, constructive and achievable agenda, which includes completing negotiations for a high-standard, comprehensive bilateral investment treaty by the end of this year, expanding commercial cooperation in key industry sectors and strengthening the global trading system. The United States and China should also work together to "give the global economy an immediate boost" at the G20 meeting in Hangzhou, China later this year, which is a great opportunity to advance a WTO agreement to end tariffs on environmental goods, he said. While there are a lot of issues that both countries have to sort out in the BIT talks, China and U.S. officials have repeatedly signaled willingness to finalize a deal before U.S. President Barack Obama leaves the White House in January 2017. Catherine Novelli, U.S. under secretary of state for economic growth, energy and the environment, said Thursday that the United States is still waiting for China to submit a new offer for the so-called "negative list", which outlines sectors closed to foreign investment, to move forward negotiations on the investment treaty. China has expressed interest to submit a new negative list offer "in the near future", but no date has been set yet, Novelli said, adding that it' s not easy to develop a negative list for investment treaty talks. Novelli said it' s not clear whether there will be a third negative list exchange before the upcoming China-U.S. Strategic and Economic Dialogue scheduled early next month in Beijing, but signaled such move would help complete the investment treaty talks under the Obama administration. The last time the two sides exchanged their negative list offers was in early September last year, weeks ahead of Chinese President Xi Jinping's state visit to the United States. A total of 24 rounds of investment treaty talks have been held since negotiations started in 2008 as both countries sought to increase mutual investment, which only accounted for a tiny share of their respective overseas investment. The world' s two largest economies have become more closely connected over the past few years, as China has become a huge and growing market for U.S. businesses and Chinese investment in the United States has rapidly accelerated. The investment treaty is expected to continue to expand two-way trade and investment and cement the foundation of China-U.S. economic ties. The China-U.S. CEO and Former Senior Officials' Dialogue, was initiated in Beijing in March 2011 with an aim to conduct non-governmental exchanges in bilateral economic relations and provide useful policy recommendations for both governments. ^ top ^

Russia reiterates support for one-China policy (Xinhua)
2016-05-20
Russian Foreign Ministry on Thursday reiterated that the country sticks to one-China policy. Speaking at a weekly briefing in the resort town of Sochi, the ministry's spokeswoman Maria Zakharova said Russia is "monitoring the situation" after recent elections in China's Taiwan. "We would like to stress that whoever leads the administration of the island, our position on the Taiwan issue is consistent, firm and unalterable," she said. The Russian side recognizes that there is only one China, that the government of the People's Republic of China is the only legitimate government which represents the whole of China, and that Taiwan is an inalienable part of China, Zakharova said. ^ top ^

2020 forecast: 600m trips abroad (Global Times)
2016-05-20
Chinese residents are expected to make a total of over 600 million outbound trips from the country in the coming five years, while some 150 million of those trips will be made to countries along the corridors of the Belt and Road initiative, the country's top tourism administrator said Thursday. Addressing the First World Conference on Tourism for Development in Beijing, Li Jinzao, head of the China National Tourism Administration, said tourism consumption along the Belt and Road countries will reach some $200 billion by 2020, the Xinhua News Agency reported. China has become the world's largest source of outbound tourism since 2012, contributing over 13 percent of global tourism revenue annually, Li said at the 4-day conference inaugurated on Thursday. He added that the country will further ease visa restrictions and exit and entry procedures, and facilitate border tourism. "Authorities can offer more convenient visa policies to boost tourism to Central Asia, but it may be hard to see tourists flooding into the region, as stability and inclusiveness remain many tourists' top priorities when choosing destinations," Zhang Shangzheng, dean of the Tourism Management Department at Anhui University, told the Global Times. In an action plan issued in March 2015, China pledged to organize tourism promotion weeks or months with several nations involved in the Belt and Road initiative to enhance international cooperation, China Tourism News (CTN) reported. China has also vowed to enhance the actual benefits for citizens that tourism development promises, Li said at the conference, pledging to leverage tourism development to lift some 12 million to 14 million people out of poverty. Wang Zhou, a deputy head of the tourism bureau of Guyuan in Northwest China's Ning- xia Hui Autonomous Region, told CTN that as a city with a sizable number of residents struggling below the poverty line, Guyuan aims to seize the opportunity brought by the Belt and Road initiative to boost the local tourism industry in order to help eliminate poverty. "The tourism market in Central and Western China is still immature but promising, and it is already on the rise, as many travel agencies are tapping into their tourism resources," Zhang said. "But it also requires top-level design to improve the transportation and investment environment," he noted. In 2015, China's domestic tourism market saw more than 4.1 billion trips, while outbound trips reached 120 million and inbound trips topped 130 million. The tourism industry contributed 10.8 percent of the country's GDP last year and created 10.2 percent of new jobs, according to Li. China's spending in the tourism sector is likely to triple to 3 trillion yuan by 2020, Li said. Over 1 trillion yuan was invested in the sector in 2015, Xinhua reported. ^ top ^

New rules to bolster trust in China's peer-to-peer lending platforms (SCMP)
2016-05-20
Shanghai has revamped its peer-to-peer platforms information disclosure requirements as the sector is trying to win back investors with more transparency after high-profile frauds impacted public trust on the booming yet under-regulated industry. Market watchers said the requirements, issued by the Association of Shanghai Internet Financial Industry, could set a benchmark for the sector that is trying to shed public doubt and embark on a regulated, sustainable growth model. The organisation said yesterday that member online lending platforms will need to disclose detailed information on shareholders, senior management, staff, 90-day overdue products rate, financing parties, investors, and business partners such as guarantee companies and insurers, in a revamped 49-item, five category information disclosure list. Members are required to disclose the information monthly. Shi Pengfeng, CEO of wdzj.com, a portal that tracks the P2P industry, said the association's call for a transparent information disclosure sets a milestone for the industry and Shanghai is leading in pressing ahead with stricter scrutiny. “In the future, the association may rate such platforms based on their information disclosure in better guiding investors,” Shi said. “The sector, hit by fraud, needs to win back trust from investors.” Swindlers have been taking advantage of the e-financing boom as regulations struggle to catch up. Ezubao, once China's biggest P2P online lending firm, collected more than 58.2 billion yuan (HK$69 billion) from over 900,000 investors in less than two years. The firm, which promised investors big returns, has seen at least 21 executives, including senior company official Ding Ning, arrested. Ding allegedly embezzled over 1.5­ billion yuan, spending lavishly on himself, his wife, lover and staff. In a similar case last year, hundreds of investors protested in Beijing and Shanghai, saying they lost US$6 billion to a Fanya Metals Exchange investment product that promised them up to 14 per cent annual returns and the flexibility of depositing and withdrawing funds at will. Hu Yueting, a China GF Bank wealth management saleswoman, said her business improved as clients returned trickled back amid concerns of fraudulent behaviour. “Investors now prioritise securing principal,” she said. Among mainland banks, the one-year interest rate offered on savings accounts fell to 1.5 per cent after six interest rate cuts since November 2014. Some dubious investments promise annual returns of up to 15 per cent. ^ top ^

Living in run-down houses surrounded by high-end condos, Shanghai community highlights demolition issue (Global Times)
2016-05-20
While the high-class condos that loom over them are gleaming and modern, the homes of the long-time residents of Guangfuli in Shanghai are crumbling. Their community is only a wall apart from another world. The surrounding condos cost an average of 78,000 yuan ($11,926) per square meter, and each apartment costs more than 10 million yuan, but the old-timers live in squalor. Developers and the Shanghai government have been trying to move them for 16 years. But some of the people who have lived in this area for generations have been refusing to move as they don't feel they've been offered a fair compensation deal. This kind of situation isn't unusual. In fact, it has happened so often that there is a name for the homes that remain after all their neighbors have left - "nail houses." Often residents are being asked to move because of new developments, be they commercial housing, airports or highways. Guangfuli is near Shanghai's city center, while Jiading district lies 30 kilometers to the north and is actually closer to Kunshan, a city in adjacent Jiangsu Province. They argue that the relocation stipend given to them by the developer is not enough to cover their costs. Many of the residents here are blue-collar workers and cannot afford to pay much for housing. Right now many of the area's old houses have been rented to migrant workers. There is nobody in charge of managing the community and it has become dilapidated. The houses are separated by narrow alleys, only wide enough for one person at a time. "Do not defecate here" is written on one alleyway's wall. The electric wires are like a tangled mess of jungle vines. Residents grow vegetables in plastic boxes between shattered bricks and garbage. Many buildings don't have windows and the walls are discolored. Their resistance has come at a time in which Shanghai's property prices are skyrocketing. By March, the city's average rent had increased by 25 percent compared to the beginning of the year, according to media reports. Move or be demolished Guangfuli is far from the only nail house community in China. In fact, the media have reported on dozens of nail house incidents. In most cases, such incidents end either in compromise or forced demolitions. A famous case came to light in 2009, when a post circulated on the Internet, titled "the most powerful nail house in history." The post had one picture on it, a two-story house standing in the middle of the foundations for a skyscraper in Chongqing, in Southwest China. When a Yangtze Evening News reporter visited the scene in March 2009, the occupants, Yang Wu and his wife Wu Ping flew the Chinese flag over the house and moved more furniture and living necessities inside the house, such as bottled water, food and a wok. The area was in Jiulongpo district, Chongqing Municipality and the district people's court had demanded they move out by March 22, 2007. But the couple decided to defend their house. "It's unlawful for the court to give that order," they told the Yangtze Evening News. On the other side, the local land bureau claimed that the residents had no legal proof of their ownership or that the house was legally constructed and that it posed a danger to the neighborhood even before demolition started. But if the demolished party files administrative litigation within the time limit, forced demolition can be avoided. However, there are many parties that do things illegally. Lawyers suggest residents who are involved in such matters should learn the law and seek help if needed. "It's okay to not sign a contract if you think the compensation is not reasonable, but if you don't seek legal help and only wait, the only result would be forced demolition," he told sina.com. "The legal-minded would go through legal process for forced demolition, but some choose a more violent way." ^ top ^

Hong Kong maid sues employer for insults and firing her due to pregnancy (SCMP)
2016-05-20
An Indonesian domestic helper is suing her employer for subjecting her to verbal insults and firing her after she became pregnant. The helper, Riyanti, claimed her employer, Wong Po-chu, a nurse at Yan Chai Hospital, hurled abuse at her just moments after she found out the helper was pregnant, a District Court writ said. “You are a Muslim. Why are you with this man and got pregnant? This man is dirty,” Riyanti was allegedly told. Wong also allegedly called Riyanti “a dog” and other names. Hong Kong woman who abused Indonesian maid Erwiana tells court she was bullied in jail. The writ said the allegations followed what happened after Riyanti was discharged from the Princess Margaret Hospital for treatment on an abscess in April this year. The episode took place on April 8, when the helper was discharged with a medical report. Wong found out about the helper's pregnancy when she forcefully snatched the report from her, the writ said. In the following days, the writ continued, the helper was taken reluctantly to a clinic to check for HIV and sexually transmitted diseases. Riyanti is now suing under the Employment Ordinance and Sex Discrimination Ordinance and is claiming HK$121,233 for breach of her contract, as well as other damages to be accessed by the District Court. The writ said Riyanti began to work for Wong in 2010, but the helper experienced the first setback when she was denied permission to visit home, after her husband passed away four months into her employment. Man admits battering ex-girlfriend and attacking her face with a key after finding sex tape on phone She renewed her contract three times with Wong, but was never given the statutory holidays required between each transition. She was paid compensation for some, though, the writ said. Six years later, on the day Riyanti was discharged from the Princess Margaret Hospital, she was allegedly verbally humiliated on two occasions. The writ said she was made to copy a resignation letter Wong prepared and signed later that day. Yet she continued to work the following day and was verbally assaulted again when Wong took her to her employment agency, the writ said. The helper was sent home on April 10, which the writ argued amounted a termination of employment. The writ alleged that the employer had breach her duty by causing physical and psychological harm to the helper. ^ top ^

Poor mainland ties will hurt Taiwan (Global Times)
2016-05-20
A troubled Taiwan economy cannot afford the possible souring of cross-Straits relations, analysts said ahead of Friday's inauguration of pro-independence Taiwan leader Tsai Ing-wen. "If Tsai failed to maintain stable relations with the mainland, it would add more difficulties to Taiwan's future economic development," Chen I-hsin, a political science professor at Taiwan's Tamkang University, told the Global Times. According to Taiwan's "Ministry of Finance," Taiwan exports dropped in April for the 15th straight month, a streak even longer than the one during the global financial crisis in 2008 and 2009, Taipei-based Central News Agency (CNA) reported earlier this month. On Wednesday, outgoing Taiwan leader Ma Ying-jeou underscored the role of the mainland market in Taiwan's export-oriented economy, the Xinhua News Agency reported. Over the past eight years, Taiwan has seen an average annual surplus of about $70 billion in trade with the mainland, compared with its annual trade surplus of $30 billion globally, Ma noted. "Chances are that Tsai's economic policies, such as shifting its focus to Southeast Asian countries, would not pay off if she fails to properly handle cross-Straits relations," as Taiwan's economy relies on the mainland's economic support, Ni Yongjie, vice director of the Shanghai Institute for Taiwan Studies, told the Global Times. Taiwan could find vast space and opportunities for development by joining the Belt and Road initiative, Ni said, noting that "the close cooperation between the mainland and the Association of Southeast Asian Nations under the initiative would squeeze Taiwan's development space in this region." On Thursday, Kuomintang Party leader Hung Hsiu-chu said she hopes the new Taiwan government will handle cross-Straits relations "carefully and seriously" for the sake of the Taiwan people, CNA reported. In a commentary published Wednesday in The Diplomat magazine, it was also pointed out that Tsai's plans to "kick-start a stagnant economy" cannot "easily offset the negative impact should economic ties with the Chinese mainland sour as a result of a deteriorating political environment." Tsai's policies to promote Taiwan's "foreign relations" with countries like the US and Japan, including joining the Trans-Pacific Partnership, would "irritate" the mainland and "affect the development of cross-Straits relations," Ni said. The 1992 Consensus endorsing the one-China principle has been the foundation for the peaceful development of cross-Straits ties since 2008 and is an important part of the cross-Straits status quo, Ma Xiaoguang, spokesperson for the State Council Taiwan Affairs Office, stressed at a press conference last week. During the annual session of the National People's Congress in March, President Xi Jinping said only by accepting the 1992 Consensus and recognizing its core implications can the two sides have a common political foundation and maintain good interactions. ^ top ^

Businesses suffer amid tight security during Zhang visit (SCMP)
2016-05-20
Beijing's third highest-ranking official, Zhang Dejiang, was given a warm welcome by the city's top officials during the three-day visit, but shops and restaurants near his hotel in Wan Chai felt the chill. Some shops and restaurants inside Hong Kong Convention and Exhibition Centre were forced to suspend services for a day when the state leader gave a 20-minute keynote speech at a forum on Wednesday. Two trade fairs – which were scheduled to take place at same venue as Zhang's speech – were relocated to AsiaWorld-Expo, next to the airport on Lantau. Hold that construction: Hong Kong officials to halt works in Wan Chai for Zhang Dejiang's visit Other retailers in Wan Chai also saw a significant drop in sales during the three days as key roads were sealed off for security purposes, with a book retailer describing the situation as being as bad as it was during the Occupy movement in 2014. Construction work at two sites near the exhibition centre for the Sha Tin-Central rail link and Wan Chai bypass, were suspended for four days from Monday, with the MTR saying any cost incurred would be borne by the government and that the workers involved were deployed to other construction sites. It is not known if shops will be compensated, as the venue operator Hong Kong Convention and Exhibition Centre Limited as well as the forum organiser Hong Kong Trade Development Council and Commerce and Economic Development Bureau all declined to disclose whether they were responsible. A spokesman at Trade Development Council – the associate organiser of the Belt and Road Summit– said the Hong Kong government was responsible for the summit. However, the government told the Post that the closure of some shops during Zhang's visit were part of police's security operation, and placed responsibility with the police. Police said it was“not appropriate to disclose” any operational details. A spokeswoman at the exhibition centre said all the restaurants in the centre were closed on Wednesday due to “private functions” and said “commercial information cannot be disclosed”. Three frontline employees at the shops affected told the Post the closure was due to “private purposes”, and refused to answer further questions. Business operators in Wan Chai saw fewer customers from May 17 to 19, as many roads were temporarily suspended by the police. Maximum security: elite police teams inspect Wan Chai neighbourhood ahead of Zhang Dejiang's visit Liza Lai, shop manager at a traditional Chinese restaurant, Super Star, in Wan Chai said it lost one-third of its business during the three days when Zhang was in town. “We lost at least tens of thousands dollars,” Lai said. “Some clients cancelled reservations because it would take a while for them to get here.” She said police officers were checking ID cards of people in the area and asked them to take a detour to enter the building. Book Zine, a bookstore at Shui On Centre, across the road from the Grand Hyatt hotel where Zhang was staying, said its sales went down around 60 per cent compared to ordinary days. “[The situation] was as bad as the time during the Occupy Central,” said a shop staff member, Irma. She said her only customers were mainly those who worked at the office building during the three days, as some entrances were blocked by police. “People who came from outside did not know how to enter the building,” said Irma. Shop manager Susana Law at florist Flowers at the Square, said at least one-third fewer people visited her shop during Zhang's visit and she had to postpone deliveries. “It was the first time that I experienced such a thing,” said Law, who opened the shop three years ago. She said the management office of the building had notified her about blocking certain entrances, but it did not mention anything about compensation. By contrast, the Grand Hyatt, the hotel where Zhang stayed in Hong Kong, appeared to have experienced a business boom. A spokeswoman at the hotel said rooms were fully booked and tables in its restaurants were also reserved for “private activities” on both Tuesday and Wednesday. The spokesperson declined to disclose the identity of clients involved, but she said there were available rooms for Friday, the same day Zhang left Hong Kong. ^ top ^

What recent deals tell us about Apple and Google's future in China (SCMP)
2016-05-20
Google and Apple, two of the world's most powerful technology giants, respectively unveiled deals with major Chinese technology companies Xiaomi and Didi Chuxing in the past week, fuelling speculation about their China market strategy - or, in the case of Google, China market comeback strategy. The two respective giants controlling the Android and iOS mobile operating systems are in a hurry to find the next growth drivers, as China, the world's largest smartphone market saturates, with handset sales slowing. Apple has to wrestle with falling iPhone sales, while Google needs to first find its way back into China since pulling out in 2010. [A visitor experiences virtual reality goggles of Google Cardboard at the 2016 Global Mobile Internet Conference at the National Convention Center in Beijing on April 26, 2016. Photo: EPA] Google's search business could return via Sogou, the mainland's third largest search engine company, which is owned by Sohu.com, according to a person with knowledge of the matter, who asked not to be named The two companies have discussed a partnership where Google would perform some of the searches and Sogou would conduct the results screening. “So that way neither ‘loses face',” the source said. The person did not provide a time frame for a possible tie up, but said some other Google functions, such as Google Play and Google Map, are expected to return in the form of Google being a third-party support provider. Sogou on Thursday announced a partnership deal with Microsoft's search engine Bing, which would provide it with English-language and academic search results. A spokeswoman for Sogou declined to comment on the possibility of a similar deal with Google, but said the Microsoft partnership does not exclude Sogou from partnering with another search engine. Google did not immediately respond to a request for comment. A partial return to mainland China via its Google Play app store is most likely to happen this year. Supporting key Android users such as Xiaomi and Huawei are at the core of Google's strategy to grow the China market before a full-on return, industry insiders say. Kitty Fok, managing director of market intelligence firm IDC China, said Google's return to China hinges on Beijing. [People walk past logos of Google at an exhibition stage during the 4th China (Shanghai) International Technology Fair 2016 in Shanghai on April 21, 2016. Photo: Reuters] “The Chinese government has a different policy regarding censorship, and it is a matter of whether Google can comply or offer something different [in the Chinese market than elsewhere],” she said. Google's introduction on Thursday of Xiaomi's TV set-top box Mi Box to US consumers through Android TV is seen by analysts as a much bigger deal for Xiaomi's international push than it is for Google's way back to China. Meanwhile Apple's US$1 billion investment in car-hailing app Didi Chuxing is seen as a win-win deal that would help Apple score new growth in China. Travis Wu, a Beijing-based vice president and research director at market research firm Forrester, said investing in Didi, which is backed by both Tencent and Alibaba, can help Apple collaborate with Chinese internet giants. It can also help Apple understand China's sharing economy, internet business model, and the car market it is seeking to enter, possibly with Apple Car. “Apple Pay, which has only had lukewarm success in China, can leverage this partnership to boost its market share in China,” Wu said. [Workers prepare for the opening of an Apple store in Hangzhou, Zhejiang province on January 23, 2015. Photo: Reuters] IDC's Fok also said that the deal would allow Apple to gain consumer behaviour insights, especially on well-heeled Didi users who often hail private cars - the kind of consumers Apple is targeting. Some market commentators, however, warned against reading too much in these recent investments. “I don't think the deal has any immediate implications for Apple or Didi.... This is not going to garner goodwill with the Chinese government...and this deal is not going to grow Apple's business in China,” said Jeffrey Towson, professor of Investment at Peking University Guanghua. Towson said a minority share in a car-hailing app is not going to change the competitive landscape for Apple in its core business. He also said the size of the investment is small for Apple, given its US$233 billion cash balance, and negligible for China's overall mergers and acquisitions, which totalled US$733 billion last year. Didi's own complicated relationship with the government - with its business still in a regulatory grey area - means Apple is not going to win favours with Beijing with this investment, he said. This “simple, no-risk deal” was merely a way for the two companies to start exchanging complimentary expertise and “begin a relationship”, Towson said. What comes next is likely to be more interesting, he said. ^ top ^

Hong Kong and China stocks open lower following US markets' decline (SCMP)
2016-05-20
Hong Kong and Chinese stocks began the Friday morning session lower as they followed declines on US markets. The Hang Seng Index opened down 0.32 per cent, or 62.62 points, at 19,631.71 and the Hang Seng China Enterprises index opened unchanged at 8,242.12. The Shanghai Composite Index shed 0.72 per cent to 2,786.66 and the CSI 300 — which tracks the large companies listed in Shanghai and Shenzhen — was down 0.63 per cent at 3,043.27. The Shenzhen Composite Index declined 1.12 per cent to 1,756.07 while the Nasdaq style ChiNext was up 1.15 per cent to 2,013.97. Increased expectations that the Federal Reserve, the US central bank, will increase interest rates has driven the country's stock markets lower for three straight days. The benchmark S&P 500 fell to a seven-week low of 2,040.04. The Fed's next interest-rate rise may come as early as June, which may further burden a struggling global economy. The Dow Jones industrial average dropped 91.22 points, or 0.52 per cent, to 17,435.40 and the Nasdaq Composite was down 26.59 points, or 0.56 per cent, at 4,712.53. In Asian trade on Friday morning, Tokyo's Nikkei 225 erased morning losses to gain 0.2 per cent to 16,680.54 and Australia's benchmark index expanded its early rise to 0.33 per cent. Almost all Hong Kong-listed companies with American depository receipts (ADRs) traded in the US closed lower than their equivalent Hong Kong closing prices on Thursday after conversion into the local currency. HSBC's ADR closed 0.93 per cent lower at HK$48.79 from HK$49.2 at the Hong Kong close. The People's Bank of China on Friday set the yuan reference point against the US dollar at 6.5510, 21 basis points or 0.03 per cent stronger than on Thursday. Dealers are allowed to trade up to 2 per cent either side of the reference point for the day. ^ top ^

Mr. Tiziano Flavio Lavizzari
Embassy of Switzerland