China, the biggest creditor of the US, has warned US Congress that it must resolve the political impasse over the debt ceiling without delay. The Chinese Vice-foreign Minister, Zhu Guangyao, said that, ‘the clock is ticking.’ He called on them to approve an extension of the national borrowing limit before the federal government is projected to run out of cash on 17th October. In September 2008, China eclipsed Japan to become the single biggest creditor of the US federal government.
The US administration estimates that China holds at least $1.3 trillion of its bonds. The total could be higher because China is known to hold more American debt through intermediaries and in total, the sum could be as high as $3.5 trillion of dollar denominated assets. In the event of a default, this could be hit hard. However economists have criticised the popular idea that China could exert political or economic leverage over Washington by threatening to sell its dollar investments because this would ultimately undermine the paper value of its own investments. (From The Independent 8/10/13)
On the second day of a week-long tour they were asked by students at Peking University, who was ‘in charge’. Boris replied that they were representing their country and it was like a nest of singing birds and its total harmony. Osborne likened their double act to, ‘yin and yang’ and that China and Britain were ready for the next big step in their relationship. He also believed that 160 million Chinese watch ‘Downton Abbey’, and revealed that his 10-year-old daughter was studying Mandarin, demonstrating China's growing impact on the wider world. Not to be outdone, Boris made the point that his daughter was not only learning Mandarin, but coming to China next week. He joked that to put on a firework display at the London Olympics to match that of the Beijing Olympics, we would have had to cancel a couple of aircraft carriers!
Osborne criticised those in the West who still see China as the home of low-cost, low quality manufacturing and suggested that China was in fact nurturing the new giants of the internet age. He cautioned Britain to show more respect to China and stop thinking of it as a ‘sweat shop on the Pearl River.’ He also rejected the view that there was anything fearsome about China's investment in the backbones of British infrastructure such as water and telecoms. (From The Times 15/10/13).
George Osborne has asked one of Britain's top software designers to join a delegation of UK technology start-ups that are touring China with a view to opening up new e-trade routes with the East. Growing links between Britain and China have been highlighted since it was revealed that a Chinese construction company would play a big role in the £800 million Manchester Airport development. In addition, a Chinese group is working to secure a nuclear foothold in the UK in return for rescuing a deal between the Government and EDF Energy. Chinese banks want to expand in London and the Chancellor will offer to help and thus reinforce the City's position as a global renmenbi trading centre.
Osborne said that this business trip could play an important role in changing British attitudes towards Chinese companies. He said that those who think China is just a low-wage, low-tech economy are making a mistake. China is becoming a cutting-edge player in technology industries. The British delegation includes some leading app and game developers who will try to crack the Chinese market. Chinese on-line businesses such as Weibo, Baidu and Tencent are unknown in the UK, but are described as ‘gatekeepers’ to a huge population of increasingly affluent technology users. Technology companies in China are developing at a rapid rate and there are many ways in which British companies can work with them. (From The Times 15/10/13)
Huawei is to open a £135 million research and development centre in Luton which will create more than 200 jobs and Rekoo, a leading social gaming company, is to move into London's Tech City in Shoreditch. Rekoo has more than 15 million daily PC gamers and 10 million smart phones. These announcements were made by George Osborne as he continues his trade mission around China pledging to open up ‘e-trading routes’ to make the most of China's rapidly expanding tech market. (From the London Evening Standard 16/10/13)
Chinese financial institutions could lease more than two million square feet of office space in the city of London in the wake of less stringent conditions announced by George Osborne. A property consultant believed that this could equal half of the City's annual take-up and could take the market back to the days of the ‘bank boom’. Savills said that China's financial sector grew from 472% of GDP in 2008 to 612% in 2011 and is expected to reach almost 800% in 2016. Chinese investment in the West has been speculated to exceed $1 trillion by 2020. China's financial institutions are the largest in the world and demand for office space is anticipated as they become more integrated into the global economy. Top Chinese financial institutions want central locations and seem willing to pay between 30% and 50% over market rates to secure their location.
China's insurers too are expected to have a bigger presence in London after last year's decision by the China Insurance Regulatory Commission to allow its insurance companies to invest directly in overseas assets. For example, this could allow China Life, AIA, China Pacific and Ping An -which have a combined market capitalisation of £225 billion to expand their offshore investment substantially. (From The Times 28/10/13)
China is to unveil a £180 billion anti-pollution package to improve air quality. Zhou Shengxian, the environment minister said a five-year plan would be published in the coming weeks which would include a commitment to pump an additional 100 billion yuan into his ministry's budget each year. Efforts would focus on slashing PM2.5 levels, minute particles that have been linked to heart and lung disease and a host of other ailments. The plan was believed to have been approved by the State Council. It will seek ways to reduce emissions from industry and boost energy efficiency. In addition, it will seek to control pollution from motor vehicles and improve fuel quality. Other plans are to promote a shift away from coal as the main energy source. At £180 billion (1.7 trillion yuan), the expenditure is more than twice the annual defence budget. (From The Telegraph 25/7/13)
Chinese doctors are severing their link with GSK, symposiums sponsored by the company are being cancelled or suspended and sales reps are being prevented from entering hospitals. Little wonder then that GSK is considering its future in China. GSK employs 8,000 staff and has recently invested £320 million in its Shanghai research and development base and in six factories. Negotiations are continuing between the company and the Chinese authorities over allegations that GSK gave £323 million in kickbacks to doctors to win market share. Sources close to the company believe that it is using the threat of withdrawal to negotiate down a fine which could be as high as 20 billion yuan (£2 billion). GSK revenues in China last year were £750 million. GSK could pull out because of the size of the fine and the increasing difficulty of doing business. Other foreign pharmaceutical companies are also being blocked. This has led a boom in Chinese pharmaceutical companies, Sino Biopharmaceutical have risen 12% since the GSK issue started on11 July 2013. (From The Telegraph 7/9/13)
China's Industrial and Commercial Bank of China has emerged as a backer of a deal that will mean the £650 million building of a 160-acre Airport City is cleared for take-off. The deal is for 15-year development of offices, hotels, apartments, stores, leisure facilities and high-tech manufacturing plants. Manchester airport has been granted outline planning permission for Airport City, which has also been granted enterprise zone status with a business hub to the north and a logistics hub to the south. It is proposed that the site will be a stopping point for the HS2 train, if it is ever built. (From The Times 5/10/13)
Pinewood senior managers have been paying visits to China. The Chinese loved the James Bond film, ‘Skyfall,’ and are keen to talk to the people who run the studios where it and ‘The Hobbit’ and Harry Potter films are made. More than twelve new cinema screens are opened in China every day, this year and China is now the second-biggest box-office after the US. In 2011 there were 9,200 screens in China, which have grown to more than 15,500 with the increase in urbanisation. Hollywood and the British Film industry are drooling over the Chinese cinema boom, but there are draw-backs such as the annual quota of 35 foreign films each year and there is a dispute over tax. (From The Times 13/8/13)
George Osborne announced in Beijing a 24-hour processing service and a combined application form for British and continental European visas. A basic British visa costs £80 (a Schengen costs £56), but applicants can use a VIP lounge whilst waiting for an extra £25. Wealthy applicants can pay between £1,000 to £2,000 for a British consular official to visit them at home. Tourist chiefs have set the target of doubling the number of Chinese tourists to the UK from the present 179,000 to 382,000 by 2016, which would generate an annual spend of £600 million. Business leaders believe that a more relaxed visa regime would encourage more inward Chinese investment. (From The Times 15/1013)
The former domestic security chief is at the centre of a corruption scandal. A special police unit is looking into the affairs of executives of state-owned companies and family members close to Zhou Yongkang, who was one of the nine members of the Politburo Standing Committee. He retired in November 2012 and is 72 years old. Some sources say that parallel investigations, some of which are believed to have called on Mr Zhou to provide evidence, have been under way for months. The unfolding scandal relates to the petroleum industry, with which Mr Zhou has close links and where allegations of power abuse on a grand scale have begun to emerge. Another source said that it was extremely unlikely that Mr Zhou himself would be directly pursued. Others commented that if this issue is successfully put through, it will show the extent to which Mr Xi is now in charge and it is possible that it could prelude broad economic reforms. (From The Times 22/10/13)
Ni Zhaoxing, a Chinese billionaire and chairman of the ZhongRong Group real estate investment firm said on Thursday that he plans to spend £500 million rebuilding London's Crystal Palace, the huge glass and steel building built for the Great Exhibition of 1851, but which burned down about 80 years ago. It was originally in Hyde Park before it was moved to South London. Mr Ni wants to build a replica there to the original dimensions of about 500 metres (1,640 ft) long and 50 (167 ft) metres high. London Mayor, Boris Johnson, told reporters that it is not an act of nostalgia; it is forward looking and about adorning London with a world-class structure. If the proposal is approved, it would be another example of Chinese investment in Britain. A Chinese firm recently signed a deal to convert London's Royal Albert Docks into the city's third financial district.
Mr Ni declared that London is renowned for its history and culture and that he is tied to Britain through his English-educated daughters and his love of British art. However, a member of the Crystal Palace Residents' Association said that the project is being dressed up as a heritage project, but there is not enough detail and the devil is in the details. She believed the project is a commercial venture and not a cultural one. (From Reuters, via the Internet, 3/10/13)
Six baby formula manufacturers have been find a record 669 million yuan (£71 million) by the Chinese Government for price fixing in the latest major investigation to target wrongdoing by foreign companies. Danone, Fonterra, Mead Johnson, Abbott Laboratories and Friesland were amongst those penalised for fixing the resale price of baby milk and distorting market competition, the National Development and Reform Commission said. Nestle, which with Danone, Mead and Abbott slashed the price of its baby formula by up to 20% after the investigation was announced last month, escaped without a fine because it cooperated, provided important evidence and carried out ‘self-rectification’. Chinese consumers are mistrustful of domestic baby milk manufacturers since the melamine milk scandal of 2008 which killed six infants. This has led to imported products costing three times the price charged in Europe in a $12.4 billion market.
China uses 600 billion cubic metres of water each year or about 400 cubic metres per person. This is about a quarter what the average American uses and is less than half the international definition of water stress. However four fifths of China's water is in the south whilst half the people and two-thirds of the farmland are in the north. This fact is behind the South-North Water Diversion Project to link the Yangzi River with the Yellow River. When finished it will have involved the construction of 3,000 km of tunnels and canals, through mountains, across plains and under rivers.
Three links are planned, the first of which is due to open by the end of this year. This link will pump 14.8 billion cubic metres of water along 1,160 km of canals, using in part the Grand Canal, which was built 1,500 years ago. A midstream link with 1,300 km of canals is planned to open by October 2014. About this time, work will begin on the third link, the most ambitious and controversial. This will be in the Himalayan plateau. The whole project is expected to deliver 45 billion cubic metres of water per year and to cost 486 billion yuan ($79.4 billion). Environmentalists believe that there are potentially enormously harmful consequences of this vast project.
Some analysts believe that improvements in recycling and management of water are critical, as at present only 40% of industrial water is recycled. Water is still quite cheap in most cities and the water infra-structure is being neglected, leading to wastage of water. Environmentalist also highlight the pollution in China's rivers. For example, a government agency, examining the Yellow River and its tributaries found that a third of the water is unfit, even for agricultural purposes. Despite the present water shortages, China is building 450 new coal-fired power stations and exploring shale-gas production, all of which consume large amounts of water. (From The Economist 12/10/13)
Cyprus is trying to rebuild itself after the financial crisis in which it received a 10 billion euro international bailout. It has overhauled its visa process to woo wealthy investors and anyone buying a house worth 300,000 euros (£260,000) can gain a permanent residency permit in Cyprus, provided they have no criminal record and can deposit 30,000 euros in a local bank for a minimum of three years. Over the past year, 1,000 Chinese have bought properties with 80% of them settling in Paphos. Last month, China Glory National Investment, based in Hong Kong, announced a 290 million euro investment in a 1.5 billion euro golf resort. (From The Sunday Times 4/8/13)
Ed Davey, the energy secretary will travel to Beijing this month to lay the groundwork for a partnership that could lead to Chinese-designed nuclear reactors being built in Britain. This trip is the latest attempt to find backers for the government's troubled £200 billion low-carbon overhaul of the British energy industry. Last week, Davey's assistant, Michael Fallon signed a memorandum of understanding with Rostom, the Russian state nuclear monopoly. Davey's talks are believed to be aimed at a deeper relationship, which could be formalised by the end of the year. (From The Sunday Times 8/9/13)
Chancellor George Osborne signed a memorandum of understanding on 'civil nuclear collaboration' during a trip to Beijing that went further than many expected. The Treasury said that while it was likely that China would initially take only minority stakes in new plants, holdings in subsequent new power stations could be majority stakes. The deal paves the way for China General Nuclear Power Company to come in as a minority investor in a joint venture with French state-backed EDF Energy to build the £14 billion Hinckley Point C station in Somerset. The two companies are already building a new plant at Taishan in southern China. The Government is expected to give the green light after an agreement on the price a consumer would be expected to pay over a 35 year contract, expected to be £92-£93 per megawatt hour, which is about twice the current wholesale price. Britain is also keen to attract two other Chinese nuclear companies: State Nuclear Power Technology Corporation and China National Nuclear Corporation. (From The Telegraph 18/10/13)
An economic policymaker who is said to have amassed more than £20 million in cash, gold and diamonds has been expelled from the Communist Party and sacked from his government posts after his corruption was exposed on Sina Weibo, the Chinese equivalent of Twitter. Liu Tienan is the most senior official to be brought down by the web site. The Central Commission for Discipline Inspection described him as ‘morally degenerate’ after a three-month inquiry. Weibo users erupted at the news of this ‘prized scalp’, prompting some to predict that corrupt officials everywhere would have to mend their ways. (From The Times 10/8/13)
China reduced the budget for its 12th National Games from £388 million to £86 million and the opening ceremony will be held in daylight to save on the cost of floodlighting and fireworks. He Min, the deputy governor of Liaoning province, in which is the host city of Shenyang explained how the budget would be met, by a series of economy measures. The decision to be frugal is a change from before, for example the Beijing Olympics. Recent economic data has raised fears that China's growth may be sliding into an era of slow growth. There is a mountain of public debt; the money was used to build infrastructure and other projects, such as sports stadiums. Local government debt in China is thought to have climbed to 30% of GDP, around £1.6 trillion. The scale of the National Games is being reduced. The number of sports being contested will be cut from 33 to 31 and 1,500 fewer athletes will compete compared to the 2009 National Games. The torch relay that would normally pass through most of China's provinces will be restricted to Liaoning. (From The Times 12/7/13)
The number of rich Asians looking to emigrate have tended to focus on the US, New Zealand, Canada and Australia. Over the past few years, America's investor visa programme, EB-5 has seen a surge in investment from Chinese applicants. The programme grants a green card to any foreigner who invests at least $500,000 in a business that creates 10 new jobs in the US.
In 2006, 63 applications were received, in 2010 there were 772, but in 2011, this had grown to 2,408. This has helped make China one of the fastest-growing sources of international buyers for US real estate. It is believed that some are buying property because they have children who will go to school there. (From The Financial Times 19/10/13)
Chinese police are hunting for suspects from Xinjiang after what has been described by witnesses as a suicide attack. At least five people were killed and 38 injured when a four-wheel drive ploughed into tourists on Monday and then exploded in flames underneath Chairman Mao's portrait. One source said that it was not an accident and the three occupants of the vehicle had no plans to flee from the scene. (From The Telegraph 30/10/13)
Tesco signed a merger agreement with China Resources Enterprise, a state-backed retailer. Tesco will pay £185 million and will take a 20% stake in the entity, meaning that its Chinese business's losses of £100 million in the past year will not be included in its results. The deal may lead to the Tesco brand all but disappearing from China. Philip Clarke, the chief executive, said the brand name may continue or may not and this is something which will have to be worked out over the next six to twelve months. (From The Times 3/10/13)
There are now more than five million vehicles on Beijing's roads and this figure could rise to six million by 2017. The objective is to limit the total number of cars at this level. Figures show that vehicle emission account for 22.2% of PM 2.5 particles, 58% of Nitric Oxide and 40% of volatile organic compounds. There are steps being taken to limit the number of new cars and to switch buses, taxis, post vehicles and sanitation trucks to new cleaner energy engines. By the end of 2017, 65% of buses will be clean energy vehicles and Beijing has plans to launch 2,000 electric vehicles for rent and thousands of charging stations. A congestion charge is likely for the central area.
There are plans to cut coal consumption by 13 million tons in the 2012 - 2017 period and to slash the production capacity of cement and oil refineries. Four hundred and forty thousand residents of the central Dongcheng and Xicheng districts will be switched from coal fired to electric heating by the end of 2015 and a further 210,000 by the end of 2017. Further steps will shut down all coal-fired boilers in the six central districts of Beijing by the end of 2015 and all coal-fired power plants will close by the end of 2017. These all are part of the 1.7 trillion yuan plan to fight air-pollution in China over the next five years. (From China Watch supplement in The Telegraph 23/10/13)
China and the UK agreed on 15 October to build London into a major offshore market for yuan trading. This underlines the strong financial ties developing between the two counties and will make London the most active yuan centre in the world outside China. To boost London's market status, China will give investors based in the city 80 billion yuan ($13.12 billion) worth of stocks, bonds and money market instruments issued by financial institutions on the Chinese mainland through a regime called RQFII, or Renminbi Qualified Foreign Institutional investor.
The extension of RQFII will deepen China's financial markets and strengthen yuan activity off-shore. Both sides agreed to support further yuan bond insurance in the UK by Chinese as well as international firms and also to develop London as an offshore yuan debt insurance centre. (From Beijing Review 24/10/13)
Higher education is changing fast and is expanding. A decade ago roughly one million college students graduated every year; this year it is almost seven million. In addition, the quality of teaching has improved significantly over the last twelve years or so. A massive increase in government funding is largely responsible for this. Project 211, initiated at the end of the 1990s, saw 100 leading universities receive a total of 36.8 billion yuan (at the time about £25 billion) to build physical plant. Shortly afterwards, Project 985 sought to create world-class universities out of 39 institutions and Peking University alone received $ 360 million. The nine leading universities from these 39 received further cash injections with the formation of the C9 League - which will become China's ‘Ivy League.’ In addition to the top-flight universities, in May the government unveiled plans to grant $1.62 billion between 2012 and 2015 into 100 higher institutions in central and west China.
The ranking of China's universities has risen dramatically in recent years. A decade ago, Peking and Tsinghua University were the only two Chinese universities to be listed in international university rankings. In August this year there were 42 Chinese institutions in the world's top 500, according to the Academic Ranking issued by Shanghai Jiaotong University. This puts China second only to the USA (149 universities) and ahead of Germany (37 universities). The list issued by Shanghai Jiaotong is considered one of the three most influential rankings of universities in the world.
N.B. Tsinghua University, this year, received a $300 million endowment from the US Blackstone Group, founder Stephen A Schwarzman who wishes to provide scholarships for tens of thousands of ‘future leaders’. (From China Today, October 2013).
South-west China, Tibet Autonomous Region is expected to reduce its population living in poverty by 45% compared to 2010 by the end of this year. The number of people living below the national poverty line of 2,300 yuan ($375) annual per-capita income should be reduced to 457,000 by the end of 2013, which is 55% of 2010 levels. Up to now, central and regional governments have pumped in 3.9 billion yuan ($640 million) in poverty alleviation funds. Much of the success in boosting livelihood levels has come from improved agriculture. (From Beijing Review 24/10/13)
China's unmanned autonomous submersible Qianlong-1 successfully operated for a combined 18.5 hours during two night dives. The vessel was developed by Chinese scientists, can dive to a depth of up to 6,000 metres underwater and is tasked with exploring the sea bed and collecting hydrological data. The Qianlong-1 is operating in the eastern Pacific Ocean and has accomplished 30 hours in total since the first on 6 October. The vehicle is on trial runs and is the first time a Chinese autonomous underwater craft has been used for a scientific expedition. (From Beijing Review 24/10/13)
Prime Minister Li Keqiang has decreed that all government departments above county level must include the building and management of urban drainage and sewage treatment facilities into their economic and social development plan. The decree comes into effect on 1 January 2014. Flooding and water pollution have become an increasing problem during China's rapid urbanisation. (From Beijing Review 24/10/13)
On 26 June 2013, Henry Kissinger visited the Temple of Heaven with his daughter-in-law and grandson. It was his 15th visit there out of more than 80 trips to Beijing. His last trip was to the Beijing Olympics and he then said how fond he was of the country and wrote that a country with a great past will have a great future. Forty-two years have passed since he came on 9 July 1971 on a secret trip to re-open the door between China and the US. Kissinger, now 90 years old travels often to China and feels at home in a country that was once a beautiful, but mysterious place to him.
In 2011 he published his book, ‘On China’ in which he approved of Chinese Characteristics. He personally knows four generations of China's leaders and believes a new type of inter-power relationship should be established between China and the US. However, the Chinese people have suffered great pain and difficulties in the past 150 to 200 years and therefore it is important to foster the concept of the Chinese Dream.
Both the Chinese Dream and the American Dream share the same vision; a more peaceful, prosperous and cooperative world. (From China Today, September 2013)
On 13 June 2013, China organised a training class on hybrid rice production for developing countries. Yuan Longping, known as ‘the father of hybrid rice’, spoke on hybrid rice production and related agricultural technology to 22 officials from developing countries. The yield of China's hybrid rice has exceeded 13.5 tons per hectare and over the last decade China has exported the technology to many countries, lifting over one billion people out of hunger. Hybrid rice development has significantly increased the yield per area of land. (From China Today, September 2013)
A new book will be launched by New World Press and is written by a team of top international communication experts. It will explain the difference between the Chinese Dream and the American Dream and how long it will take for Chinese people to make their dreams come true. It will be a valuable resource for anyone who wants to get a better understanding of China and its people. The Chinese Dream describes countless possibilities for shared growth and prosperity on both national and international levels. The book is in Chinese, with an English edition to follow. (From China Daily 24/9/13)
A Chinese-Finnish company has opened a shopping and leisure centre in St Petersburg, in Russia. This is a first in the region. The $187 million Pearl Plaza development is a joint venture between Shanghai Industrial Investment (Holding) Co. Ltd and the Finnish SRV Group. The 96,000 square metre shopping centre also houses a cinema and other service and leisure facilities.
In addition a group of Shanghai-based companies have embarked on the Baltic Pearl Project, which is a large-scale residential and business development in St Petersburg. It will provide more than one million square metres of residential housing and a comprehensive range of commercial and community facilities. Accommodation for over 30,000 people is anticipated together with shopping. (From Beijing Review 5/9/13)
On 27 August China signed a multilateral convention by the G20 nations to combat tax evasion. China became the 56th signatory to the agreement to facilitate international cooperation amongst tax authorities to fight tax evasion. The convention was developed by the Organisation for Economic Cooperation and Development, which has its headquarters in Paris, in 1988. (From Beijing Review 5/9/13)
China's Chang'e-3 lunar probe is scheduled to be launched at the end of this year for a moon landing mission. The Chang'e-3 mission is part of the second phase of China's lunar exploration, which will include orbiting before landing on the moon and then returning to Earth. This mission follows the successful first two, which included a high-resolution, full-coverage lunar map. (From Beijing Review 5/9/13)
There are now 1.6 lawyers on average for every 10,000 persons. The most per capita is Beijing, with Tibet having the lowest. This is an important indicator of development in the legal industry, said the report released by the All China Lawyers Association. As of 2012, China had a total of 232,384 lawyers and the total is growing annually at 9.1%. Of these 26.6% are women. China has a total of 19,361 law firms, which is increasing at 6% annually. (From Beijing Review 5/9/13)
SinoFile is compiled by Walter Fung.
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