China, France sign agreement on extradition
2007-03-21 Xinhuanet
French Justice Minister Pascal Clement and visiting Chinese Deputy Minister for Foreign Affairs Dai Bingguo signed a bilateral agreement on extradition here on Tuesday. The agreement established a legal foundation for China-France cooperation in the fight against crime, in the mutual interest of the two countries, according to Chinese diplomatic sources. The agreement is of great importance, "particularly for bilateral relations," Clement said in his speech made during the signing ceremony, adding that it will "further strengthen and deepen our judicial cooperation." "The legal security which is established in the process of judicial cooperation will be the basis of confidence of our two countries' judges when they are called upon to work on extradition cases," Clement said.

2007-03-21 SCMP
French Justice Minister Pascal Clement said an extradition treaty signed with China yesterday would not be applied to people accused of political or military crimes. For other crimes that risk the death penalty on the mainland, France would only agree to extradition after the central government gave "sufficient" guarantees that the suspects would not be executed, Mr Clement said. China is the world's leading user of the death penalty; France favours its total abolition. In applying the treaty, China also agreed that arrest warrants must be approved both by its judicial authorities as well as by police, which "amounts to progress with regard to human rights", Mr Clement said. The treaty was signed in Paris by Vice-Foreign Minister Dai Bingguo and Mr Clement, who finalised the negotiations during a trip to Beijing in January. Amnesty International France, the Paris-based League of Human Rights and the International Federation of Human Rights Leagues have urged the French parliament to block the treaty's adoption.

China, US militaries step up exchanges
2007-03-23 China Daily
The People's Liberation Army (PLA) is keeping a close watch on Taiwan secessionists' actions and attempts to seek "independence", the Chief of the General Staff Liang Guanglie said Thursday, March 22 in Beijing. The question of Taiwan concerns the core interests of China and the national feeling of 1.3 billion Chinese people, according to Liang. "We will make our utmost efforts to safeguard the stability of the Taiwan Straits and push for a peaceful reunification of the motherland," he said in a meeting with Marine General Peter Pace, chairman of the US Joint Chiefs of Staff. Pace said the US wants to develop stable relations with China to avoid misunderstandings; and reaffirmed that his country will adhere to the one-China policy and wants a peaceful solution to the Taiwan question. Pace arrived in Beijing on Thursday, March 22 for a four-day visit, which also includes a seminar at the PLA Academy of Military Sciences, and visits to military areas in Shenyang in Northeast China and Nanjing in East China. Pace also had discussions with vice-chairmen of the Central Military Commission General Cao Gangchuan and General Guo Boxiong. Cao, also defense minister, told Pace that China has made great efforts to increase its military transparency and the increase of the military budget is moderate. "China pushes the modernization of national defense on the basis of economic growth, with the aim of adapting to the new military reform and development trend in the world and meeting the demand of safeguarding national security and interests," Cao said. China announced earlier this month a 17.8 percent annual rise in the defense budget to 350.9 billion yuan ($44.94 billion). Guo said that China and US share wide-ranging strategic interests, and the two countries are both "stake-holders" and "constructive cooperators". He urged both sides to treasure the bilateral military relationship, which has witnessed ups and downs in past years. Relations between the Chinese and US armies have been improving since a mid-air collision between a US spy plane and a Chinese fighter jet over the South China Sea in 2001. Guo visited the US in July last year to lift bilateral military ties to a new level, while the former commander of US forces in the Pacific, Admiral William J. Fallon visited China twice last year and invited the PLA to observe military drills. A joint search-and-rescue exercise between the two armies last year was seen as a breakthrough in military exchanges. Most recently, US and Chinese ships joined those from other nations in anti-terrorism drills hosted by Pakistan. Pace told a press conference in Japan on Wednesday that he did not regard China as a threat and hoped to further build military ties. He said he would urge additional joint search-and-rescue exercises and expand contacts between officers, including having junior officers from China and the US attending courses together. "When you get to know each other and know how each other thinks, you build trust and confidence," said Pace at the press conference. "I'm looking for ways to respect China as a nation that deserves respect."

Hu Jintao to make third trip to Russia - Energy, trade and military links top agenda, says diplomat
2007-03-22 SCMP
President Hu Jintao will next week embark on his third trip to Russia, with energy, trade and military co-operation topping his agenda, a senior Beijing diplomat says. Assistant Foreign Minister Li Hui said Mr Hu would hold talks with his Russian counterpart Vladimir Putin and meet other Russian leaders during his three-day visit, beginning on Monday, which marks the 10th anniversary of the Sino-Russian strategic partnership. Mr Hu is set to attend the opening ceremony of Russia's Year of China and the opening of a national exhibition on China in Moscow, the biggest display of Chinese culture and economic development held abroad, according to Mr Li. Warming political, trade and military links between Beijing and Moscow in recent years, featuring regular summits, have stirred great unease in Washington and among some of China's neighbours. Mr Hu and Mr Putin met three times last year and Premier Wen Jiabao is tipped to visit Moscow in November to mark the close of the Year of China, which follows the Year of Russia on the mainland last year. Mr Li said Mr Hu's visit would further improve political, economic and military ties with Russia, with contracts totalling more than US$2 billion expected to be signed, including those by about 100 Chinese enterprises attending the exhibition. The exhibition, one of nearly 200 events planned for the Year of China, will focus on economic and trade co-operation, hi-tech industry and tourism. Bilateral trade hit a record US$33.4 billion last year, up 14.7 per cent. Mr Li confirmed that China's thirst for Russia's oil and gas would be high on Mr Hu's agenda. […] But Mr Li indicated marked progress had not been made in solving disputes over building a direct oil and gas pipeline promised by Moscow […] He said the Ministry of Railways would sign an agreement with its Russian counterpart on increasing rail deliveries of crude oil, the main channel for China's oil imports. A deal would be signed at the end of Mr Hu's visit covering a range of issues, such as border trade, personnel exchanges, development of Russia's Far East and China's northeast rust belt, Mr Li said. He said the countries would hold a military drill later this year. Mr Li also said the military co-operation between Russia and China was not targeted at other nations. […] China imports billions of US dollars worth of arms from Russia every year.

Wen, Merkel discuss int'l, bilateral issues by phone
2007-03-19 Xinhuanet
Chinese Premier Wen Jiaobao and his German counterpart Angela Merkel on Monday exchanged views over the phone on bilateral ties as well as international and regional issues of mutual concern.[…] The two countries should build confidence in the political field, boost economic and technological cooperation, and promote cultural exchanges, to elevate Chinese-German relations to a new level, Wen said. Merkel hailed the headway made during the annual session of China's National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) held in Beijing in earlier this month. The German government attaches great importance to China-Germany relations and is willing to beef up bilateral cooperation in fields like trade, environmental protection, mining security and the promotion of clean energy, Merkel said. During the call, Wen and Merkel also exchanged views on major international and regional issues, such as environmental change, the Korean Peninsula nuclear issue, the Iranian nuclear issue and the conflict in the Sudanese region of Darfur.

Japanese, Chinese scholars begin joint history study talks
2007-03-20 People's Daily Online
Scholars from Japan and China met in Tokyo on Monday over joint historical research, aiming to narrow difference between the two countries on historical issues. The Chinese delegation is led by Bu Ping, director of the Institute of Modern History at the Chinese Academy of Social Sciences, while the Japanese team is headed by Shinichi Kitaoka, professor of University of Tokyo. The project involves 10 researchers and scholars from each side. […]The study is aimed to find agreement in each side's perception of history, and analyze the differences, Bu said. He hoped the two sides will work together and submit a research report in June 2008. […]

Rioters take to the streets over plan to merge Jiangxi towns - Reports say 200 protested but witnesses report thousands clashed with police
2007-03-23 SCMP
More than 200 people stormed railway tracks and blocked traffic for hours along a key rail route in Jiangxi province in the latest mass riot.
Waves of residents in Guixi started to invade the town's main railway station on Wednesday morning to protest against a pending merger of their affluent town with a neighbouring poor district. Xinhua also ran a story on the incident, describing it as "instigated by a small group of people" and having been quelled six hours later in the evening. About 200 people were sitting on the railway tracks and the stoppage attracted hundreds of onlookers, it said. Scores of passengers and trains were delayed. Provincial party chief Meng Jianzhu intervened, giving specific instructions on how to pacify the situation, and Governor Wu Xinxiong rushed to the scene to disperse the crowds, Xinhua said. […] China has witnessed an increasing number of protests and riots, often in rural areas, in recent years, fuelled by a widening wealth gap, corruption and official abuse of power. Thousands of protesters clashed with police in the southern province of Hunan last week, as a demonstration over rising public bus fares escalated into a riot.

China outlines space program till 2010
2007-03-19 Xinhuanet
China's space program scientists have published outlines of plans to begin development of a space laboratory and spacewalking by Chinese astronauts by 2010. […] The blueprint states that China will continue to conduct manned space flight and lunar exploration. Other plans include: -- A Moon orbit in 2007 to acquire "three-dimensional pictures". -- Rendezvous and docking of space-craft. -- Development of an hard-X ray modulation telescope for China's first astronomical satellite in 2010 to research black holes. -- The launch of the Shijian (Practice)-10 scientific recoverable satellite in 2009 to conduct micro-gravity and space life experiments. -- Participation in the space environment exploration program and the World Satellite Observatory of Ultra-Violet Radiation project with Russia and the solar burst exploration mini-satellite project with France. -- Further research on a solar telescope and preliminary research on Kuafu project, a comprehensive research project on the sun. Space science is the driving force of science and technology development, officials with the commission said and added these space programs would have deep and important effect.

Supreme People's Court approves 4 death sentences
2007-03-19 Xinhuanet
China's Supreme People's Court has approved four death sentences since the court retrieved the right to review all death penalties from Jan. 1. The four cases were: -- Yu Maoge, who was sentenced to death by a Shanghai court for killing a taxi driver on Nov. 14, 2005. -- Zhao Guiyong, who kidnapped and killed a ten-year-old boy in June 2006 and was sentenced to death by a court in east China's Jiangxi Province. -- Liu Shilin, sentenced to death for raping two women, and killed one woman and injuring a girl in east China's Jiangsu Province in 2005 and 2006. -- Li Shumu, who set fire to a house, killing a man and a woman in southeast China's Fujian Province on Dec. 7, 2005, and was sentenced to death by local court. The Supreme People's Court has organized collegiate benches to review the cases and approved the original verdicts of the four cases, said a judge. Last year, the Supreme People's Court announced it would review all death penalty rulings made by lower courts from this year, ending 24 years of lower courts issuing death sentences and conducting executions without the approval of the supreme court. Under the new procedure, convicted criminals must not be executed without the approval of the supreme court. If the supreme court approves the death penalty, they will be executed within seven days of local courts receiving the notice of the supreme court. During the review process, the supreme court has also found cases lacking evidence, and returned them to lower courts for further inquiries, said the judge. He would not say how many death sentences had been reviewed by the supreme court so far. […] The reform has been viewed as an effective way to reduce the number of executions and miscarriages of justice.

State Council gives go-ahead to develop large passenger jets
2007-03-18 Xinhuanet
China's plan to design and build airplanes that can carry more than 150 passengers, and compete with Airbus and Boeing, has been given the official green light from the State Council, China's cabinet, said sources close to the project on Sunday. Chinese Premier Wen Jiabao presided over a State Council Executive Committee meeting on Feb. 26 to hear the feasibility report of a team of specialists on the new plane program. The committee approved in principle the plan to develop the new aircraft which is set to begin as soon as possible. Developing its own large aircraft is a priority of China's longer-term scientific and technological development strategy. […] China has already built its own regional jet. The ARJ, which will carry 78 to 105 passengers, is scheduled to have its maiden flight in March 2008. Seventy orders for the ARJ have already been placed.

Central government adopts five-year health plan
2007-03-22 Xinhuanet
China's State Council, the cabinet, adopted a five-year plan to further develop the country's public health system on Wednesday. China will establish a basic medical and healthcare network covering all urban and rural residents by the end of 2010, according to the plan, passed in principle at an executive meeting of the State Council. […] The network includes a public health service system, a rural cooperative medical care system, an urban community medical service system and drug management and public hospital management systems. The meeting urged deepening reform of medicine management and healthcare system, increasing investment in the public health sector, attaching equal importance to western and traditional Chinese medicine, and inviting individuals and non-government organizations to participate in health and medical services. […]

Draft law on organ transplants passed
2007-03-23 SCMP - The mainland has moved closer to introducing a long-awaited law to regulate human organ transplants, tackling a controversial issue that has cast a shadow over the country's human rights record. The State Council, chaired by Premier Wen Jiabao, passed a draft regulation on Wednesday banning trade in human organs and tightening controls on transplants. The regulation will be implemented after further amendment. Experts said the regulation had been discussed for more than three years because it covered a broad spectrum of concerns ranging from medical matters to ethical issues. "This is the first regulation introduced by the central government [on organ transplants] and this marks a big step forward for the country's medical practices," said Chen Zhonghua, from the Transplantation Institute of Tongji Hospital in Wuhan, who was consulted on the regulation. China has carried out organ transplants for more than 20 years and has the second-highest number of transplants in the world. But the programme has been plagued by concerns about illegal organ trading and doubts about whether donations from executed prisoners, who contribute most of the organs transplanted, are made voluntarily. Professor Chen said the draft regulation would reinforce technical guidelines that the Ministry of Health issued in March last year that require written consent be obtained from all donors. Every transplant must be approved by two-thirds of an ethics committee set up in the respective medical institution, he added. "Whether the regulation will be effective will depend on the strength of enforcement," Professor Chen said. Xinhua reported that the draft would also forbid the use of organs from live donors under the age of 18, standardise and step up supervision of transplant procedures and specify offences in illegal organ transplant activities.

China cracks down on illegal surveying, mapping
2007-03-22 Xinhuanet
China will continue cracking down on illegal surveying and mapping and investigate and punish leaks of state secrets, said an official from the State Bureau of Survey and Mapping on Thursday. […]He said a total of 759 cases of illegal surveying and mapping were found in 2006, and many of the cases involved foreign organizations and individuals. […] "Some top geographical information is significant to national security. If the information is disclosed, national security will be endangered," said the official. […] A new regulation restricting surveying and mapping by foreigners came into effect on March 1. Foreign organizations and individuals who intend to engage in surveying and mapping must obtain approval from the central government and be supervised by local governments, according to the regulation. […]According to the State Bureau of Survey and Mapping, foreigners who illegally survey, gather and publish geographical information on China will be severely punished. Chinese partners and translators will be fined if they fail to stop illegal mapping activities.

China lags far behind in four major scientific fields
2007-03-21 People's Daily Online
Despite some major breakthroughs and advances in recent years, the overall level of China's scientific and technological competitiveness is still much lower than that of developed countries, said Bai Chunli, vice president of the China Association for Science and Technology and deputy president of the Chinese Academy of Sciences, at the Association's 2007 press briefing on academic improvement held in Beijing on March 20. China still largely lacks the capacity to independently innovate, and the general environment for it is not very desirable, said Bai, especially in the following fields: In geology, more work is done verifying Western hypotheses and theories than putting forward some of China's own; more closed research on a single subject is done than on real interdisciplinary and integrated studies; and more work on imitative research is done than on breakthrough research. In the area of mechanical engineering, China lacks the capacity to independently manufacture high-end digitally-controlled equipment and large heavy-load equipment, which means that the market for medium or high-level digitally-controlled systems is dominated by foreign brands. Our precision manufacturing lags behind, as does technology related to precision casting, precision and extra-precision processing. China has made progress in some metallurgical engineering technologies but these cannot be called world class as a whole. China is also catching up in terms of aeronautical engineering expertise, technology and research. Even the J10 fighter, which has just won a national scientific award, is technologically outdated compared to the US' F-22s and F-35s. On top of that, our research into space is only at the beginning, trial stage.

Number of illegal land grabs soars - Official admits 17pc growth shows problem is rebounding
2007-03-22 SCMP
The number of illegal land-grab cases on the mainland rose 17.3 per cent last year to 131,000, according to the Ministry of Land and Resources. In a statement on its website yesterday, it said the cases involved nearly 100,000 hectares of land, up 76 per cent on 2005, with 43,000 hectares of farmland affected. It said 3,593 people were punished, with two provincial officials being subjected to party disciplinary measures. "It demonstrates the government has strengthened the crackdown on illegal activities in the field of land management," the People's Daily quoted Zhang Xinbao, the director of the ministry's law enforcement and supervision bureau, as saying. But he admitted that the substantial increase in cases showed the problem was rebounding. "Despite repeated crackdowns, the continued violations in land management are mainly supported by local governments," Mr Zhang said. "It's not common for local governments to violate land rules publicly, but it remains a rampant problem of them secretly backing illegal land grabs for the purpose of attracting investment and gaining better [economic] performance." Rural land is often expropriated by officials for industry and real estate development at the expense of the rights of farmers, who often get little or no compensation and are left with no way to make a living. Land disputes are common around the nation, especially in coastal provinces where rapid economic development has seen the value of land soar and they have also triggered large riots. At the recently concluded annual session of the National People's Congress, Premier Wen Jiabao promised to tackle the issue. The Property Law passed at the end of the session seeks to protect farmers' rights and strictly control the conversion of farm land for residential and industrial development. But Hu Xingdou, a Beijing-based sociologist, said illegal land grabs were the result of a systemic problem and would exist for a long time. "China is a big country with various places having different specialities - some provinces are good at agriculture while some may not be," he said. "But the central government has imposed strict uniformity in land management, which inevitably causes land-grab cases in places that are weak in agriculture but strong in industry and business. "To better protect farmers' rights, the central government has stepped up efforts to crack down on illegal land grabs, but local governments can use various means to cheat the central government to ensure revenue growth." Professor Hu said the problem could be solved in the long run if local governments were given more power and the central government implemented strict controls on land conversions in agricultural provinces.

Buyers urged to boycott mainland's dirty 20
2007-03-22 SCMP
Consumers have been urged to boycott products made by 20 companies in a ground-breaking attempt to exert pressure on the firms to reduce their discharges of water pollutants. The companies, including some subsidiaries of multinationals producing food, cars and electronic goods, are on the "Green Choice" campaign blacklist, which was hailed by a senior official with the State Environmental Protection Administration as "a timely move". […] The firms are among nearly 5,000 polluting companies listed by China Water Pollution Map, a website run by Mr Ma. It is based on information from environmental authorities and media reports over the past three years. "We only chose some big, well-known enterprises which produce goods that we buy or use almost every day," Mr Ma said. "We believe the companies are capable of controlling pollution under pressure from the public. But our efforts should not be interpreted as being deliberately against those firms." Mu Guangfeng, who is in charge of Sepa's environmental assessments, said the campaign would complement the government's efforts by tracking down polluting firms and increasing awareness. "The government has decided to enhance supervision of local authorities and enterprises during the 11th five-year plan and the campaign is a splendid move in this direction," he said. Mr Ma said environmental groups had tried to contact the listed firms and had received some positive responses. "Some promised to take immediate action and urged us not to put them on the blacklist," he said.

Free media for Games = media free of bad news, one city says
2007-03-20 SCMP
While the central government's new regulations lift restrictions on foreign media ahead of the Olympic Games, a local government in Shandong province has issued a document urging cadres to sweep negative stories under the carpet. In a document issued by the city government of Pingdu on Friday, all departments, organisations and officials were urged to prepare for the challenge brought by the lifting of restrictions on foreign media. The document said they should "use all measures to downsize the impact of negative reporting to a minimum level", adding that end-of-year appraisals would look at success in blocking negative news. They were also told to report to the city publicity department before giving interviews. Other measures include controlling leaks and "blocking malicious information that might intensify social conflicts and uneasiness". The Beijing Organising Committee for the Olympic Games has assured the International Olympic Committee that it will respect media freedom and foreign reporters will be able to cover the Games in the same way they covered the Athens and Sydney events. Investigative reporter Wang Keqin said the Pingdu document showed local officials were scared of the increased transparency brought by a more open media environment because "only bad things need covering up, and only guilty officials fear publicity". "These measures are a long-standing practice by local officials to deal with reporters, but it's funny to see them stated in writing and aimed at foreign reporters," Wang said. Former Bingdian Weekly editor Li Datong said the measures went against Beijing's efforts to boost transparency and assist foreign media ahead of the Olympics and showed that "local government officials are obsessed with safeguarding their position by blocking bad news and cheating the public". "There have been many documents like this in the past to show officials how to combat Chinese reporters," he said. "Reporters cannot expect full transparency ... officials have to suppress the spreading of negative news ... which might endanger their positions." Positive spin: Cadres have been told: Keep negative news to a minimum and highlight good news; Handle the media like they handle petitioners' complaints; Identify potential "bad news" every month and "nip it in the bud"; Avoid getting too cosy with reporters; Stop rumour-mongering on the internet; Poor handling will count against them in annual appraisals.

Activist jailed six years for subversive articles
2007-03-20 SCMP
Activist Zhang Jianhong, accused of posting subversive articles on the internet, was jailed for six years for defaming the government, Xinhua reported yesterday. It said the sentence was handed down by the Intermediate People's Court in Ningbo, Zhejiang province . The news agency said Zhang was the former editor-in-chief of a Chinese website called "Aiqinhai", or "Aegean Sea", and had written articles that defamed the government and amounted to agitation aimed at toppling it. Xinhua said Zhang had slandered the government and social system in more than 60 articles published on overseas websites. It said the court had showed leniency towards him because he showed remorse. He was involved with the 1989 pro-democracy movement and spent 18 months in a labour camp for writing "counter-revolutionary propaganda", Reporters Without Borders said earlier.

Six face charges over beating death at mine
2007-03-21 SCMP
Six people will face prosecution for the death of a reporter who was beaten by thugs at an illegal coalmine in Shanxi province, police said yesterday. A Public Security Bureau staff member in Datong, who did not give his name, said police had completed their investigation into the death of Lan Chengzhang, an employee of the China Trade News, although one suspect was still at large. Those arrested were transferred last Thursday to the prosecutor's office in Hunyuan county, where 35-year-old Lan was attacked on January 10 and died from a brain haemorrhage the following day. The Hunyuan prosecutor's office said the case had been handed to the Datong office on Friday and would probably go to trial next month. But both the police and prosecutor's office said it was unclear what charges the six, who include the owner of the coal mine, would be facing. "The charges should be related to actions resulting in death," said a staff member from the Hunyuan prosecutor's office. A police investigation concluded mine operator Hou Zhenrun was suspected of hiring eight thugs to beat up Lan, fellow reporter Chang Hanwen and a driver from the Shanxi bureau of the China Trade News. Kang Quanming, a driver hired by the coal mine, was still on the run, police said. Hou ordered the attack because he believed Lan was a fake reporter without a licence. The China Trade News said Lan had yet to receive a reporter's licence because he was still on probation. Police said Lan was carrying out an investigation into the mine in an attempt to extort money by threatening to expose its irregularities. Four newspaper officials have been punished for their roles in Lan's death.

Taiwan opposition party firmly against "second republic constitution"
2007-03-21 Xinhuanet
Taiwan's main opposition party, the Kuomintang (KMT), has announced it strongly opposes a draft of the "second republic constitution" proposed by a professor from Taiwan University, according to reports of Taiwan media. The proposal for a "second republic constitution" aims to seek "Taiwan independence" and is a part of the Democratic Progressive Party platform for the Taiwan leader election in 2008, according to the KMT announcement issued on Tuesday. Yang Tu, director of the KMT publicity department, was quoted as saying that a public opinion poll showed that only 20 percent of Taiwan people support Taiwan leader Chen Shui-bian. Such a government has no public support for any amendment to the "constitution". The basic principle of the "second republic constitution" is to seek "Taiwan independence", which will damage Taiwan's safety and bring about a risk of war, said Yang. Taiwan University Professor Chen Ming-tong and other scholars made public a draft of the "second republic constitution" on March 18. The draft states Taiwan's jurisdiction "covers Taiwan, Penghu, Kinmen, Matsu and offshore islands." It also claims that "any change to the political relationship between the Republic of China and the People's Republic of China must be decided by negotiations between the two sides based on equality and peace, pending the approval of Taiwanese." The draft has sparked fierce disputes in Taiwan. The People First Party members said on Tuesday that the draft damages the current cross-Straits situation and structure, and it is equal to the "de jure Taiwan independence" and will certainly cause turbulence in the relations across the Taiwan Straits.

Japan, China, S. Korea to hold trilateral investment talks
2007-03-19 People's Daily Online
Foreign trade officials from Japan, China and South Korea will gather in Tokyo from Thursday for the first round of negotiations on a trilateral investment agreement, Japan's foreign ministry said Monday. The two-day negotiation is a result of agreement reached by the leaders of the three countries on the sidelines of the East Asia Summit in Cebu, the Philippines, in January. […]

China holds consultations with U.S., Mexico over subsidies
2007-03-21Xinhuanet
China held consultations with the United States and Mexico on Tuesday over their complaint about so-called Chinese industrial subsidies, the Chinese Mission to the World Trade Organization (WTO) said. The consultations, held at the WTO headquarters in Geneva, "proved to be helpful and contributed to the better understanding of the concerns of all parties concerned," said the mission in a statement. […] "It is evident from the consultations that the complaining parties have misunderstandings toward Chinese foreign investment and taxation regimes," it said. As a matter of fact, certain so-called "subsidies" programs do not exist or apply any more in China, it added. According to the Chinese Mission, China is also taking active measures to reform its enterprises income taxation regime, including some "subsidies" programs complained particularly by the United States. It cited the new Enterprise Income Law, which was passed last week by the National People's Congress, as a good example. […] This was the first round of consultations held since the United States brought the Chinese subsidies case to the WTO in early February and was later joined by Mexico in the complaint. The EU, Japan and Australia also participated in Tuesday's consultations as third parties. The consultation process is the first stage of WTO's dispute settlement procedure. If the consultations fail in the end, the complaining parties can request a WTO panel of experts to investigate and rule on the dispute.

Overseas banks ready for yuan service
2007-03-21 China Daily
China has granted final approval for four overseas banks to incorporate locally, paving the way for them to offer renminbi retail business. HSBC Bank (China) Co Ltd, Standard Chartered Bank (China) Ltd, Bank of East Asia (China) Ltd, and Citibank (China) Co Ltd, have secured the nod to commence operations as locally incorporated companies, the China Banking Regulatory Commission (CBRC) said. China is well on its way to become the third Asian nation to join the Inter-American Development Bank (IADB) after Japan and the Republic of Korea. The four lenders can officially launch renminbi as well as foreign exchange services after completing the commercial registration process, which they expect to do by next month. Overseas banks operating in China must incorporate locally to offer the same services as local banks, according to rules that took effect on December 11, when the country removed all geographic and business restrictions on overseas banks in line with its WTO commitments. […] According to CBRC officials, in addition to the four lenders, eight overseas banks have been approved to start preparatory work for local incorporation. Hang Seng Bank, Mizuho Corporate Bank, Bank of Tokyo-Mitsubishi UFJ Ltd, DBS Bank, ABN AMRO and Oversea-Chinese Banking Corp are preparing to register their local subsidiaries in Shanghai. JPMorgan Chase Bank will be incorporated in Beijing and Wing Hang Bank in Shenzhen. The CBRC is also reviewing the local incorporation applications of three other banks Nanyang Commercial Bank, CITIC Ka Wah Bank and United Overseas Bank. Overseas banks have achieved rapid growth since China entered the WTO. They generated a combined before-tax profit of $350 million last year, an annual jump of 31.62 percent.

Planner in call for new direction on growth - Forum told the country has become too reliant on energy-intensive industries
2007-03-19 SCMP
China's economic growth model was too reliant on energy-intensive industries and the country had to find a more sustainable basis for development, its top economic planner told a high-level government forum yesterday. Ma Kai, head of the powerful National Development and Reform Commission, challenged an audience of government ministers and international experts attending the opening day of the China Development Forum to come up with fresh ideas for restructuring the economy. The mainland accounted for 15 per cent of world energy use, but only 5.5 per cent of global gross domestic product, Mr Ma said, adding that its role as a global base for low-cost manufacturing helped explain the consumption rate. Offsetting the cost of poor energy efficiency, both for financial and environmental reasons, is a top priority for the nation's leadership. China's bill for imported crude oil last year was the world's second-highest after the United States, and the mainland's reliance on coal for its basic energy needs will make it the world's biggest emitter of carbon dioxide next year. Meeting government targets to cut energy consumption by 20 per cent by 2010 looks increasingly unlikely. The amount of energy used to generate one unit of GDP fell by a little over 1 per cent last year, far short of the official 4 per cent target. […]

China stocks hit new high on investment fever
2007-03-22 China Daily
China's main stock index Thursday hit new highs for the second day in a row on bullish investor sentiment and strong corporate earnings. The benchmark Shanghai Composite Index closed up 13.84 points, or 0.45 percent, at 3,071.23, an all-time closing high, extending a record high of 3,057.38 in the previous session. The Shenzhen Composite gained 0.36 percent at 808.56 while the Shanghai and Shenzhen 300 Index of major companies went up 0.31 percent to 2711.10. […]The rise came as listed companies posted strong earnings. A 60.46 percent jump in after-tax profits was reported by the 386 companies that have released their annual report for the past year, compared with the 15.18 percent rise in the previous year, reports said. The repeated hitting of new highs also found strength from the bullish sentiment of the Chinese investors who threw themselves into lines to open accounts at securities firms. […]

Measure adopted to cool stock market
2007-03-20 China Daily
Regulators, worried about by China's red-hot stock market fever, are taking a new measure to cool it by banning listed firms, flush with new share sale proceeds, from investing it in securities. The listed companies are also banned from buying derivatives and convertible bonds with the proceeds, the China Securities Regulatory Commission, China's stock market watchdog, said in a statement seen on its website on Tuesday. The regulator said it will monitor companies more closely. Prime Minister Wen Jiabao said at a press conference in Beijing on Friday that his administration wants to see to a healthy stock market in China. He promised closer look into companies' books. "Companies should not directly or indirectly use newly acquired funds to buy stocks or derivatives or convertible company bonds," the regulator said in a statement. Firms must use the proceeds from share sales for the intended purposes, it said. If the enterprises intend to spend more than 10 percent of the raised capital on items that the share sale was not originally aimed at funding, they must get board approval and arrange an online shareholder vote, it said. […] Beijing wants to curb speculation in the real estate and stock markets to break boom-bust cycles fueled by 33.5 trillion yuan (US$4.3 trillion) of household and corporate deposits. The speculative activity has driven equity prices up by around 150 percent in the last 15 months. China's central bank, the People's Bank of China, announced over the weekend that it was raising interest rates by 27 basic points, but it has failed to damp the feverish stock market, which rose both Monday and Tuesday. The frenzy has prompted officials to repeatedly warn that a major bubble had formed and that investors, especially inexperienced retail punters, stood to lose everything if the markets crashed. […]

Interest rate up to check lending rise
2007-03-19 China Daily
The central bank yesterday raised the interest rate for the third time in less than a year to check surging loan growth. The rise, announced on Saturday, led to 27-basis-point increase in both one-year deposit and lending rates. The benchmark one-year deposit rate now stands at 2.79 percent and the one-year lending rate at 6.39 percent. The adjustment followed the release of figures last week that indicated surprisingly high credit growth during the first two months of the year. Financial institutions issued loans worth 981.4 billion yuan ($127 billion) during the two months, equal to 30 percent of all loans extended for the whole of last year, according to the People's Bank of China. […]China has been struggling with rapid investment growth and a sizzling real estate market since 2003. Annual fixed asset investment growth inched down from 26 percent in 2005 to 24 percent last year. But the fast loan growth in the first two months triggered fears that funds are still being channelled to support new excessive investments. Ha said the rate rise is justified also for rectifying the negative real interest rate, which has been lingering below zero since the consumer price index (CPI) growth jumped to 2.8 percent in December. The CPI, the key barometer of inflation, stood at 2.7 percent in February; and the one-year deposit rate before the rate hike was 2.52 percent. Ha said the central bank may need to consider using other tools such as raising reserve requirements for commercial banks or central bank bills if further tightening is needed. […]The renminbi's interest rate has been lower than the US dollar. Shrinking the difference between interest rates of the yuan and the greenback could prompt an influx of more hot money into China seeking profits from the renminbi

China leads world in nonferrous metals output
2007-03-22 Xinhuanet
China has led the world in nonferrous metals output for five years in a row, said sources with the China Nonferrous Metals Industry Association (CNMIA) on Thursday. The country's output of ten main nonferrous metals, including copper, aluminum, nickel, lead, zinc and magnesium, surged 17.48 percent year-on-year to 19.17 million tons in 2006. […] Output of nine nonferrous metals - excluding nickel - topped the world. Profits of the country's main nonferrous metals companies soared 99.5 percent to 110 billion yuan (14.1 billion U.S. dollars) last year. In 2007, the country's nonferrous metals output will increase rapidly, with prices remaining at a high level due to rising demand, said Kang Yi, the CNMIA chairman.

China to loosen limits on individual financial investment overseas
2007-03-19 Xinhuanet
The Chinese government will loosen limits on individual investment abroad this year, according to Li Dongrong, vice director of the State Administration of Foreign Exchange (SAFE). […]The report quoted analysts as saying the move indicated a major breakthrough in allowing Chinese individuals to buy overseas financial assets. Currently, Chinese individuals can only buy investment products provided by banks and fund management companies if they want to invest abroad under a Qualified Domestic Institutional Investor (QDII) scheme. The SAFE granted 15 banks overseas investment quotas totaling 13.4 billion U.S. dollars in 2006. Meanwhile, 15 insurance companies were granted overseas investment quotas of 5.17 billion U.S. dollars and one fund management company was given a quota of 500 million U.S. dollars. The meeting also heard that the government would also increase the number of QDIIs and the value of their investment quotas, but no details of quotas were available.[…]

Fresh round six-party nuclear talks launched
2007-03-19 Xinhuanet
The sixth round negotiation of the six-party talks on the Korean Peninsula nuclear issue started here Monday morning after the Democratic People's Republic of Korea (DPRK) and the United States reached an understanding on a frozen fund issue. The United States agreed to transfer the DPRK-related frozen fund at Macao-based Banco Delta Asia (BDA) to a Chinese bank in Beijing, said U.S. Deputy Assistant Treasury Secretary Daniel Glaser Monday morning before the nuclear talks started. […] The DPRK has proposed the transfer of the roughly 25 million U.S. dollars into an account held by DPRK's Foreign Trade Bank at the Bank of China in Beijing, the statement said. […] "We believe this resolves the issue of the DPRK-related frozen funds," Glaser said. China's chief negotiator Wu Dawei said at the opening ceremony of the nuclear talks that based on the agreements the concerned parties have reached, this meeting will focus on three issues. "The first is to listen to the reports of all working groups; the second is to discuss the specific steps for the implementation of the initial actions; the third is to carry out preliminary discussion about the steps or actions that all parties are prepared to take or should take in the next phase," Wu said. […]

Six-party talks to be extended amid stalemate on DPRK frozen funds
2007-03-22 Xinhuanet
The six-party talks aiming at resolving the Korean Peninsula nuclear issue will be extended, Chinese Foreign Ministry spokesman Qin Gang said Wednesday evening. […] The announcement came amid the stalemate over the frozen funds of the Democratic People's Republic of Korea(DPRK) at a Macao bank. Japan's top negotiator Kenichiro Sasae confirmed late Wednesday the talks will be extended for one or two days. "As far as I know, the Bank of China refuses to accept the transfer of the frozen funds from the Macao-based Banco Delta Asia (BDA)," Russian representative Alexander Losyukov said at his hotel. The U.S. Deputy Assistant Treasury Secretary Daniel Glaser said on Monday that the DPRK's 25 million U.S. dollars frozen funds at BDA would be transferred to a DPRK account at the Bank of China. […] The talks have remained stalled since Tuesday as the DPRK refused to attend the talks until its frozen funds at a Macao bank are fully released. The ROK will not provide energy assistance to the DPRK unless the DPRK announces the time it shuts down its nuclear facilities and accepts the personnel of UN's International Atomic Energy Agency (IAEA), top ROK negotiator Chun Yung Woo said Wednesday afternoon. […] Losyukov said no progress came out of Wednesday's negotiations, which involved a series of one-on-one talks and a chief negotiators' meeting.[…]

Roundup: Six-party talks recess, to restart soon
2007-03-23 People's Daily Online
Top Chinese envoy to the six-party talks Wu Dawei said Thursday in Beijing that the current round of talks had recessed and would restart soon. Wu made the remarks at a press briefing after a just-concluded chief delegates meeting. He said in a Chairman's Statement that the parties listened to reports by the five working groups, and conducted discussions on implementing the initial actions and an action plan for the next phase. The parties agreed that they will continue to advance the process of the six-party talks, and reaffirmed that they will faithfully carry out their commitments in the Sept. 19 joint statement and the Feb. 13 joint document, the statement said. According to the Feb. 13 deal, the Democratic People's Republic of Korea (DPRK) shall shut down its nuclear facilities while the other parties shall provide emergency energy assistance to it and the shipment will commence within the next 60 days. The statement said the parties will resume the talks at the earliest opportunity to continue to discuss and formulate an action plan for the next phase. As for the frozen funds issue, which is a major block for the current round of talks, Wu said the transfer of DPRK's funds is an unexpected problem, and all sides are striving to find a solution. The current problem is who will handle the money, he said, adding the Chinese government has to discuss with the Bank of China (BOC) whether the bank will take it. The BOC has its own concerns and the government should help it solve them, he said. The United States on March 19 agreed to transfer DPRK's 25 million U.S. dollars frozen at Macao-based Banco Delta Asia (BDA) to a DPRK account at the BOC in Beijing. Chun Yung Woo, chief negotiator of the Republic of Korea (ROK), told reporters that the funds issue will not impose influence on the parties' implementation of the two joint documents, since knot of the funds issue is in technical sphere instead of political sphere. The six parties settled the framework of solution to the funds issue during the discussion, but to solve the technical problems would still take time, he said. A 50-minute chief envoy meeting was held Thursday afternoon, in which the DPRK said it will implement the Feb. 13 deal if the funds issue is solved, Chun said. US chief delegate Christopher Hill was cautiously optimistic about the prospect, saying the talks process was still on track. However, he wanted to see "much more in-depth discussion in the next phase". He said he hoped the declaration and disablement of DPRK's nuclear facilities could be done by the end of 2007 and there could be a precise timing on the disablement of the facilities. "Even with the delay of the technical banking issue, it is our strong view that there is still long schedule to meet all the 60-day requirements," Hill said. He will leave Beijing on Friday. Hill said he believed all sides could arrange a time schedule for the next round of talks.

Tax Controversy Traps Finance Minister
2007-03-14 UB Post
Around 3,500 families have not enjoyed their financial rights as was granted by the law on freedom from Value Added Tax (VAT) for construction materials, equipments, vehicles, production, work and service for construction, as Prime Minister M. Enkhbold and the Minister of Finance N. Bayartsaikhan have not fully implemented the provisions of the law, thinks the National Soyombo Movement (NSM), at a press conference on March 13. According to the law, construction materials, equipments, work and production are free from VAT in order to reduce expensive house prices. The law was approved in 2005 and since August 2006 the construction companies have enjoyed the discount of the tax but subsequently they sold the houses at a high price with VAT to people. The NSM civil movement submitted official documents to the General Taxation Office and Ministry of Finance concerning how citizens could claim back the VAT. Unfortunately, the Ministry of Finance replied to the civil society movement that the citizens do not have enough grounds on which they could take back the VAT since the companies have no clear documents that they bought the houses with VAT. The NSM calculates that roughly 3,500 families should be claiming back around US$11 million, apportioning a share of US$4-5,000 to each family. B. Lkhagvajav, Member of the NSM declared that the law should serve all people equally, both builders and owners. The explanation of the Minister of Finance is that though the construction companies could claim a discount under the law, the people who bought the apartments have no right to enjoy this discount. .By saying this he is breaking the law, charges the NSM. And if the Minister of Finance continues to refuse the tax discount to these people we will submit a petition to the Constitutional Court (Tsets) on the minister for not fully realizing the law.

News in brief
2007-03-14 Mongol Messenger
The Minister of Foreign Affairs N. Enkhbold and the U.S Ambassador to Mongolia Mr Mark Minton signed a protocol to exchange instruments of ratification on Counsel Convention concluded by the Governments of Mongolia and the USA, on March 6. The ratification is an important step toward protecting the interests of Mongolians residing in the USA. The protocols come into effect on April 5.

Gautier Chiarini
Embassy of Switzerland