9-26 China News Brief - Committee of 100 by pengxiuhui

VIEWS: 115 PAGES: 17

									                                    China News Brief

                                   September 26, 2007


1) 621 food production licenses canceled for safety

BEIJING - Chinese officials have canceled 621 food production licenses from 564
producers in an ongoing campaign to improve food safety, the country's top quality
watchdog said in a statement posted on its website on Tuesday.

----
2) Chinese jurist touts judicial reforms

A top Chinese judicial official has told reporters his country is making significant
progress toward a more just judicial system. Justice Wan Exiang, vice president of the
Supreme People's Court of China, told reporters Monday in Washington that China is
trying to take "something from the Western system that will be useful with China's
judicial reform."
---
3) In China, a Moon Cake Makeover—For Mid-Autumn Festival, Bakers Replace
Traditional Fillings With Trendier Fare

As millions of Chinese buy and exchange moon cakes this week as part of a business
networking ritual, companies are inventing a growing number of nontraditional pastries
to try to keep young people interested in the traditional holiday.

---
4) Lead, Follow or Move Aside

Chinese officials still put their highest priority on growing G.D.P. — their bottom line.
But for the first time, the costs of this breakneck growth are becoming so obvious on
China’s air, glaciers and rivers that the leadership asked for briefings on global warming.
Many Chinese mayors are looking to get clean-technology industries — like wind
turbines and solar — started in their cities
---
5) China concedes Three Gorges dam danger

China’s Three Gorges dam threatens to become an environmental catastrophe if the
government does not act quickly, senior Chinese officials have warned in an unusual
public nod to the massive project’s ecological impact.

---
6) Air China down but not out of dogfight

In the dogfight for China Eastern, the country’s third-largest airline, Cathay Pacific
played loyal wingman to Air China’s flight leader. However, just as the pieces were
falling into place on Monday afternoon, Air China unexpectedly backed out and informed
Cathay not to engage the target. Singapore Airlines (SIA) together with Temasek, the
city-state’s government investment arm, had earlier agreed to buy a 24 per cent stake in
China Eastern for HK$7.2bn ($923m).

---
7) China rates a cut above the US

China, the world's fastest-developing economy, and the United States, the world's largest
economy, are now going in opposite directions in regard to their monetary policy. Interest
rates are expected to continue going down in the US but up in China, in at least the
coming 12 months.
---
8) 3 more foreign news agencies OKed to release financial info, photos in China

BEIJING - Three more foreign news agencies have been authorized to release financial
information or photos in China, the Foreign Information Administration Center (FIAC) of
Xinhua News Agency said on Tuesday.

---
9) Chinese president meets South African deputy president

Chinese President Hu Jintao met on Tuesday in Beijing with South African Deputy
President Phumzile Mlambo-Ngcuka, who is here attending the third meeting of the
China-South Africa Bi-National Commission.
---
10) Execution of Courts’ Judgments Stressed

Institutions, enterprises and individuals who refuse to execute court judgments or defy
enforcements violently may face detention up to 15 days, if the circumstance is serious,
according to a circular released jointly by the Supreme People's Court, Supreme People's
Procuratorate and Ministry of Public Security.

===============================================================
1) 621 food production licenses canceled for safety
Xinhua
26 September 2007

BEIJING - Chinese officials have canceled 621 food production licenses from 564
producers in an ongoing campaign to improve food safety, the country's top quality
watchdog said in a statement posted on its website on Tuesday.

The General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ)
said 355 food makers failed to renew licenses after relocation, restructuring, or their
licenses expired.

The AQSIQ cancelled licenses in another 249 food companies because they went
bankrupt or stopped production.

Production licenses in 17 firms were canceled as their production conditions failed to
meet official standards and the remaining three were revoked for severe offences.

The AQSIQ said the measure was a renewed effort to boost safety supervision and ensure
food safety.

Food safety has become a major public concern in China since a spate of food scares
from parasite-infested snails to ducks and hens that were fed cancer-causing Sudan Red
dye to make their egg yolks red.

To allay concern, the government has taken a series of measures, including a recall
system for unsafe food and clamping down on the illegal use of toxic pesticides and
animal feed additives nationwide.

----
2) Chinese jurist touts judicial reforms
Washington Times
By Rachel Kaufman
26 September 2007

A top Chinese judicial official has told reporters his country is making significant
progress toward a more just judicial system.

Justice Wan Exiang, vice president of the Supreme People's Court of China, told
reporters Monday in Washington that China is trying to take "something from the
Western system that will be useful with China's judicial reform."

China began its first round of judicial reform in 1999, initiating a five-year plan to
revamp the court system. Since then, Justice Wan said, Chinese courts have implemented
elements of cross-examination, juries and the role of precedents.
"Before that," Justice Wan said, "we did not have any law students, so most of the judges
were retired army men," resulting in inconsistent rulings and sentences.

"Even the general people could not tell the difference between prosecutors, policemen
and judges, who were usually in the same family," Justice Wan said.

The first goal under the current plan, Justice Wan said, is to "ensure the judicial neutrality
of the court."

Jeremie Waterman, a China specialist with the U.S. Chamber of Commerce, agreed that
China is making welcome progress toward developing a society based on law. But, he
said, "there is a need for still greater transparency in judicial processes and outcomes.
Training will help, but further systemic reforms are required."

American firms conducting business in China still are plagued by government
interference in court decisions, Mr. Waterman said, particularly when a decision may
harm a domestic commercial interest.

Noting China's recent passage of an anti-monopoly law, he emphasized that many foreign
firms are concerned about the ability of China's system to adjudicate complex antitrust
cases "as well as the impartiality of future enforcement decisions."

"The Communist Party still continues to sit on top of the court system," he said.

Justice Wan said that before the reforms began, "a Chinese court decision was always a
collective one." Now, China is trying to introduce the practice of "one single judge
making a decision."

Mr. Waterman remains skeptical about the neutrality of the judges. He said although
business relations have improved between the two countries, a "question of impartiality
still remains."

Mr. Waterman said he believed the process of making Chinese courts more transparent
could take decades, given the ruling party's clear intention to retain control of the court
system.

Justice Wan also said that the use of the death penalty has decreased and that the number
of executions "will be going down, quickly or slowly, until [the] final destination is
abolishment. ... We have a long way to go, but we're going in the right direction."

Suzanne Wright, a China specialist for Amnesty International U.S.A., said China seems
to be making "a very sincere effort to improve the legislative process insofar as the death
penalty goes. [But] it is very difficult for anyone, particularly outside of the country, to
know how successful it is."
She said while "all of these reforms are viewed in a positive light by Amnesty
International, they do not always seem to be followed at lower levels."
---
3) In China, a Moon Cake Makeover
For Mid-Autumn Festival, Bakers Replace Traditional Fillings With Trendier Fare
Washington Post
By Maureen Fan
26 September 2007

BEIJING, Sept. 25 -- Workers strung red lanterns and spruced up parks across the city for
Tuesday night's celebration of the Mid-Autumn Festival, which for centuries has marked
the end of harvest and the time in the lunar calendar when the moon is at its brightest.

It is a time for family reunions, for moon-gazing and especially for moon cakes, the
round pastries traditionally filled with red bean or lotus seed paste and often containing
an egg yolk to represent the moon.

But just off Peace Avenue in a neighborhood cluttered with Western chain stores,
employees at an ice cream shop were busy packaging hundreds of red boxes of moon
cakes filled with green tea ice cream and Belgian chocolate ice cream. In the fancy shops
of upscale hotels and the stores of the Beijing pastry chain Wei Duo Mei, moon cakes
filled with abalone, dried scallops, pineapple, New Zealand cheese and Japanese coffee
were flying off the shelves, at prices of up to $39 for a box of eight.

As millions of Chinese buy and exchange moon cakes this week as part of a business
networking ritual, companies are inventing a growing number of nontraditional pastries
to try to keep young people interested in the traditional holiday.

"Eating moon cakes is just a tradition for the Mid-Autumn Festival. Actually I don't like
to eat them at all. They're too oily," said Wang Jing, a young office worker who was
picking up moon cakes at Haagen-Daz with her boyfriend on Monday afternoon. "We eat
these moon cakes instead because they're just like eating ice cream."

Jiang Li, a 25-year-old software engineer with IBM, said she was sick of the traditional
moon cakes she ate each year when she was growing up. "The new-style moon cakes,
like these with ice cream, are good at creating a romantic feeling, so it's fitting for the
appetite of young people," Jiang said. "Our parents might be thrifty, but young people are
willing to spend money on this, because it gives us the feeling we want."

Many Chinese get moon cakes from their employers and quietly give them to their dog
walkers, nannies and neighbors as a way of currying favor or showing respect. Those
who have to impress clients buy elaborately wrapped boxes of moon cakes, the more
expensive the better.

"It's big business for all the hotels. It has to do with image. Most of our customers are
buying them for clients, so it's all about the name," said Finella Siambun, a spokeswoman
for the Ritz-Carlton Beijing, Financial Street, which was sold out of all of its moon cakes,
including those filled with blueberries, chestnut and corn, raspberries and wine, and
simmered bird's nest, a pricey delicacy among Chinese gourmands.

Two years ago, Wei Duo Mei, the Beijing pastry chain, didn't make any Western-style
moon cakes. Last year the chain began experimenting with fruit and cheese fillings, and
this year a third of its cakes are nontraditional.

"We target young and trendy customers, white-collar workers, people from high-tech
companies or private English schools. They need something new and special. If we give
them the same thing every year, they'll be bored," said Li Changmao, manager of the
company's corporate planning department. The store produced 10,000 gift boxes of six to
eight moon cakes each. By last Friday, all were gone.

"Government departments still prefer traditional moon cakes, with fillings like beef, lian
rong [a paste made from lotus seed], wu ren [made from almond, sesame, walnut, peanut
and sunflower seed] or red bean," Li said.

About 250,000 tons of moon cakes were produced in China last year, bringing in about
$1.42 billion, according to the state-run China Daily newspaper.

This year, Li hired a French chef to teach the staff how to make the outer skin of the
pastry more crispy.

"The French-style moon cakes are experimental. We're targeting the Olympics next year -
- maybe Westerners will prefer to buy the traditional cakes, but I think many of their
Chinese friends will buy the trendier styles."

---
4) Lead, Follow or Move Aside
New York Times
By THOMAS L. FRIEDMAN
26 September 2007

China today is entering a really delicate phase on the climate-energy issue — the phase I
like to call “The Wal-Mart environmental moment.” I wish the same could be said of
America and President Bush.

The “Wal-Mart environmental moment” starts with the C.E.O. adopting a green branding
strategy as a purely defensive, public relations, marketing move. Then an accident
happens — someone in the shipping department takes it seriously and comes up with a
new way to package the latest product and saves $100,000. This gets the attention of the
C.E.O., who turns to his P.R. adviser and says, “Well, isn’t that interesting? Get me a
sustainability expert. Let’s do this some more.”
The company then hires a sustainability officer, and he starts showing how green design,
manufacturing and materials can save money in other areas. Then the really smart
C.E.O.’s realize they have to become their own C.E.O. — chief energy officer — and
they start demanding that energy efficiency become core to everything the company does,
from how its employees travel to how its products are manufactured.

That is the transition that Lee Scott, Wal-Mart’s C.E.O., has presided over in the past few
years.

Last July, Mr. Scott was visiting a Wal-Mart in Las Vegas on a day when the temperature
was more than 100 degrees. He happened to notice that a Wal-Mart staple — inexpensive
Styrofoam coolers — were not being promoted by the store’s associates. As Andrew
Ruben, Wal-Mart’s vice president for sustainability, told me: “Lee walked into the store
and said, ‘It’s 105 degrees. Why aren’t we selling any coolers?’ The associates said, ‘We
don’t want to sell Styrofoam coolers because of their impact on the environment.’ So Lee
called us afterwards and said: ‘We’re going to have to figure this out.’ By that he meant
innovation of a different kind of cooler” that doesn’t come from petroleum-based
Styrofoam, which is not biodegradable and usually not recycled.

Wal-Mart on Monday also announced a partnership with the Carbon Disclosure Project
(C.D.P.) to measure the amount of energy used to create products throughout its supply
chain — many of which come from China.

Said C.D.P. Chief Executive Paul Dickinson: “Wal-Mart will encourage its suppliers to
measure and manage their greenhouse gas emissions, and ultimately reduce the total
carbon footprint of Wal-Mart’s indirect emissions. We look forward to other global
corporations following Wal-Mart’s lead.”

China’s leadership is not where Lee Scott is yet. Chinese officials still put their highest
priority on growing G.D.P. — their bottom line. But for the first time, the costs of this
breakneck growth are becoming so obvious on China’s air, glaciers and rivers that the
leadership asked for briefings on global warming. Many Chinese mayors are looking to
get clean-technology industries — like wind turbines and solar — started in their cities.

At such a key time, if the U.S. government adopted a real carbon-reducing strategy, as
California and Wal-Mart have, rather than the obfuscations of the Bush team, it would
have a huge impact on China and only trigger more innovation in America.

Mr. Bush will be convening his climate photo op — oops, I mean “conference” — in
Washington tomorrow, which will include Chinese and Indian officials. But, as Rob
Watson, the C.E.O. of EcoTech International, which works on environmental issues in
China put it: “The Chinese are not going to take anything we say seriously if we don’t set
an example ourselves.”

David Moskovitz, who directs the Regulatory Assistance Project, a nonprofit that helps
promote green policies in China, was even more blunt: “The most frequent and difficult
question we get in China with every policy initiative we put forward is: ‘If it is so good,
why aren’t you doing it?’ It’s hard to answer — and somewhat embarrassing. So we point
to good examples that some American states, or cities, or companies are implementing —
but not to the federal government. We can’t point to America.”

Too bad. “It was America which put environmentalism on the world’s agenda in the
1970s and

’80s,” recalled Glenn Prickett, a senior vice president for Conservation International.
“But since then, somehow, the wealthiest and most powerful country on the planet has
gone to the back of the line.”

Leadership is about “follow me” not “after you.” Getting our national climate regulations
in order is necessary, but it will not be sufficient to move China. We have to show them
what Wal-Mart is showing its competitors — that green is not just right for the world, it
is better, more profitable, more healthy, more innovative, more efficient, more successful.
If Wal-Mart can lead, and California can lead, why can’t America?

---
5) China concedes Three Gorges dam danger
Financial Times
By Jamil Anderlini in Beijing
26 September 2007

China’s Three Gorges dam threatens to become an environmental catastrophe if the
government does not act quickly, senior Chinese officials have warned in an unusual
public nod to the massive project’s ecological impact.

The comments, carried in state media on Wednesday, mark a rare Chinese admission that
dire predictions of ecological destruction from international experts and domestic
opponents of the world’s largest dam are coming true.

Landslides, silting, and erosion above the dam are creating environmental and safety
hazards that cannot be ignored, Wang Xiaofeng, director of the State Council Three
Gorges Construction Committee, was quoted as saying. “We cannot exchange
environmental destruction for short-term economic gain,” he said.

After 15 years of construction the controversial project has affected a 600km stretch of
the country’s largest river, with local officials complaining of increased landslides and a
profusion of algal blooms along the length of the reservoir.

The flow of the Yangtze above the dam has been reduced from 2 metres per second to 0.2
m/s, causing the sediment in the river’s famously muddy water to settle on the riverbed.

Local governments are faced with huge and growing problems just to keep the dam
operational and warn that increased silting could make parts of the river impassable for
shipping transport, negating one of the main rationales for the dam in the first place,
according to Jean-Louis Chaussade, chief executive of Suez Environment, who met with
local officials in recent months.

Unfettered dumping of industrial wastewater and the submergence of numerous toxic
factories when the dam was first built have added to the problems of a project that
involved the forced relocation of 1.3m people.

“China has no choice, if it doesn’t reduce contamination of its water resources economic
growth will stop,” Mr Chaussade said. “This is understood by the government.”

The administration of President Hu Jintao and Premier Wen Jiabao has made
environmental protection and sustainable economic growth central goals in its populist
campaign to create a “harmonious society”.

In the past, officials have argued that the environmental benefits of hydroelectric power
outweigh its costs. The Three Gorges dam is now producing enough electricity each year
to replace 50m tonnes of thermal coal and reduce China’s CO2 emissions by 100m
tonnes. According to some experts, China this year overtook the US as the world’s largest
carbon emitter.

The unusual criticism of such a symbolic project could be politically motivated in the
lead-up to the 17th Communist Party Congress, a five-yearly event in which senior
officials jockey for power before the top ranks of the party are decided.

In his published remarks, Mr Wang quoted Premier Wen telling China’s cabinet recently
that “the environmental cost is the most pressing of the serious problems facing the Three
Gorges project.”

The dam was the brainchild of Mao Zedong but construction began under the government
of former President Jiang Zemin, who still exercises residual influence in the current
government even three years after he relinquished his last official post.

Former Premier Li Peng, the man widely believed to be responsible for sending in troops
to quell the 1989 Tiananmen Square student movement, is the official most closely
associated with the Three Gorges project.
---
6) Air China down but not out of dogfight
Financial Times
By Tom Mitchell and Raphael Minder
26 September 2007

In the dogfight for China Eastern, the country’s third-largest airline, Cathay Pacific
played loyal wingman to Air China’s flight leader.
However, just as the pieces were falling into place on Monday afternoon, Air China
unexpectedly backed out and informed Cathay not to engage the target. Singapore
Airlines (SIA) together with Temasek, the city-state’s government investment arm, had
earlier agreed to buy a 24 per cent stake in China Eastern for HK$7.2bn ($923m).

Instead, Cathay declared late on Monday evening that the proposed counter-offer for the
Shanghai-based carrier by itself and Air China’s parent, China National Aviation
Holding, “will not now proceed”.

The aborted takeover surprised people involved, who assumed Air China and its
chairman, Li Jiaxiang, had done their homework and brought to a close months of
political jockeying in China’s aviation sector.

“Bear in mind that Air China is the national carrier and the guys who run it are very
astute politically,” one person involved said just before the Air China group’s
countermove fell apart. “They are not going to launch something like this if there is not at
least a neutral view in [the Chinese] government.

“There are two schools of thought in Beijing,” he added. “One that is looking for a super-
carrier, with Air China swallowing up the competition, and the two or three-carrier model
which is obviously favoured by China Eastern.”

A successful counter-offer by Cathay and CNAH would have advanced Air China’s long-
term goal of merging with China Eastern and ultimately forming an “international super-
carrier”.

“It was an Air China initiative that Cathay was backing as a supportive shareholder –
they were really only just tagging along,” said one person close to the deal.

Last year, Cathay, ultimately controlled by John Swire & Sons of the UK, and Air China
concluded a complex cross-shareholding and strategic co-operation deal.

Air China’s manoeuvring began in earnest on August 29, just three days before China
Eastern signed its initial agreement with SIA and Temasek. China Eastern’s Hong Kong-
traded H-shares had been suspended for more than three months as it thrashed out the
deal with Singapore.

Speaking to reporters in Hong Kong at the time, Cai Jianjiang, Air China president, said
the airline might consider a merger with one of its domestic rivals.

The following day, Air China denied it had any such intentions, in a retraction that left all
but the bankers close to the fast-developing situation baffled as to the company’s real
goal.
“Rest assured that the merger suggestion was not a slip-up,” said one Hong Kong
investment banker. “It was a way to both spoil the party [for Singapore] and test the
waters.”

If there were any doubts of its intentions, CNAH duly bought up 11 per cent of China
Eastern’s Hong Kong-traded H-shares on the open market.

When Air China did dive in three weeks later, China Eastern, SIA and Temasek still
appeared to be caught off-guard.

“Nobody saw this coming,” said a person close to the carriers. “When you have the vice-
premier’s signature on the [agreement] document, you normally can’t undo that.”

By threatening to trigger the first big corporate tussle in China’s aviation sector, Air
China has signalled its determination to remain the country’s dominant airline and raised
the stakes for foreign carriers trying to gain entry into one of the world’s fastest-growing
transport markets.

In a note on Tuesday, the Centre for Asia Pacific Aviation said that although Air China
had announced that the mooted transaction would not be revived for at least three months
– giving China Eastern and its Singapore partners time to formally conclude their deal –
“there are still many rounds ahead”.

“Control of the key [China] hubs is a prize that will overshadow all else, and Cathay
Pacific and SIA have committed themselves to play a leading role,” the Sydney-based
aviation consultancy added. “But questions remain over the intentions of Air France-
KLM, Lufthansa, Korean Air, Emirates, Qantas and a host of other carriers. Surely they
too will be drawn into battle soon.”

Ally Ma, the Citigroup analyst who last week issued a research note predicting Air
China’s gambit, agrees. “It is a mistake to say that [Air China’s counterbid] has fallen
apart ... The intention is still there.”

Additional reporting by Robin Kwong in Hong Kong and Jamil Anderlini in Beijing

Bid misfire sends airline shares into sharp descent

Chinese airline stocks fell sharply on Tuesday after Cathay Pacific and Air China said
they would not proceed with a plan to buy shares in rival China Eastern Airlines.

Cathay suspended its shares last Friday and Air China did the same on Monday as the
two prepared to forge a tighter relationship with China Eastern.

The move could have derailed a $918m acquisition of a 24 per cent stake in China
Eastern by Singapore Airlines and Temasek, Singapore’s state investment vehicle.
Cathay and Air China have had a cross-shareholding relationship since last June.

The expectation of a bidding war between Cathay and Singapore Airlines over China
Eastern and the prospect of Air China leading a consolidation in China’s aviation
industry helped boost shares in Chinese airline stocks last week.

Shares in China Eastern, Cathay and China Airlines all hit record highs.

China Eastern shares rose 50 per cent last week.

But on Tuesday Cathay shares shed 4.62 per cent to HK$21.65.

China Eastern dropped nearly 15 per cent to HK$7.42, and Air China fell by the 10 per
cent daily trading limit in Shanghai to Rmb24.92 and 11.6 per cent to HK$10.46 in Hong
Kong.

---
7) China rates a cut above the US
Asia Times Online
By Zhou Jiangong
26 September 2007

SHANGHAI - China, the world's fastest-developing economy, and the United States, the
world's largest economy, are now going in opposite directions in regard to their monetary
policy. Interest rates are expected to continue going down in the US but up in China, in at
least the coming 12 months.

This trend will worsen the structural problems facing the Chinese economy, making it
more difficult for Beijing to rein in the country's overheating economy and inflation with
its so-called macroeconomic control policies.

In an unprecedented move, the People's Bank of China (PBoC) - the country's central
bank - raised the benchmark interest rates twice in 25 days, with the one-year deposit rate
and loan interest rate going up 0.27 percentage point respectively each time. It is almost a
knee-jerk response to the looming inflation for August: the year-on-year 6.5% increase in
the Consumer Price Index is the highest in a decade.

What will complicate the Chinese government's headache on its breathtaking growth is
that the Federal Reserve of the United States cut the Federal Funds rate by half a
percentage point from 5.25% to 4.75%, a move that surprised the market. A deep concern
for a spreading credit crunch due to the subprime-mortgage crisis caused the aggressive
turnaround of the monetary policy by Fed chairman Ben Bernanke. It is widely expected
the Fed will cut the rates again next month.

Under the accumulating pressure of inflation, the PBoC is widely expected to be on the
track of faster rate hikes. The rates are likely to be raised several times in the coming
months. Currently, the one-year deposit rate is 3.87% and one-year loan rate 7.29%.

A slowdown or even a recession in the US economy would help China cool down its
white-hot growth. Declining housing prices, together with interest-rate hikes, in the US
and other Western countries have triggered the subprime-mortgage crisis that entails a
credit crunch and increases the possibility of recession.

Theoretically, a recession in one of the largest markets for China's exports would be a
healthy development for its economy: slowing down growth in exports and trade surplus,
and slowing down growth of the country's foreign-exchange reserves to enable a
slowdown in money supply and reduce excessive liquidity - the "original sin" of all of the
current economic problems facing China.
Now the US economy seems to be refueled by the aggressive rate cut. If the cut will
prolong (or even boost) US economic expansion, it will continue to fuel China's gigantic
exporting engine. And the trend of hiking China's interest rates as well as the lowering of
US interest rates will strengthen the expectation of accelerated yuan appreciation, which
could lead to more money pouring into China's market chasing after investment-worthy
assets.

If the half-percentage-point cut in the US is a strong signal of a turn toward more rate-
cutting, the PBoC's rate-raising policy, considering the current rigid currency-exchange
regime, will be self-defeating. The higher interest rate for the yuan compared with the US
dollar's and the higher expectation of more yuan appreciation and of more money pouring
into China resulting in more excessive liquidity will put more upward pressure on prices.

So far, Beijing's macroeconomic adjustment and control measures have largely been
nullified by diehard structural problems. The government has used every weapon
available: monetary policies, fiscal policies, administrative means, and environmental
protection measures. Still, inflation is looming.

The situation casts more doubts on the effectiveness of Beijing's macroeconomic control
policy that has been put into effect over past more than four years. In fact, the strong
impulse to overheat the economy is deeply embedded in the structure of the China's
politico-economic structure, and the current tightening policies from monetary, fiscal,
and industrial fronts do no more than deal with short-term issues.

The National People's Congress has become impatient with the ineffectiveness of the
four-year belt-tightening policies. During a meeting aimed at reviewing the macro-
regulation policy held by the NPC Standing Committee, a member said: "This round of
macroeconomic control has continued for four years, and while a number of policies have
been carried out by a relevant departments of the central government, the effect is not
evident."

The legislators also suggested that the State Council evaluate the effectiveness and the
role of the policies and measures. The idiom of only treating the symptoms of the disease
rather than tackling the disease itself has been used to criticize the current policy as
passive, only focusing on short-term issues and then doing so in a haphazard way.

What worries the legislators is that the growth is unsustainable but virtually unstoppable.
The myth of China's robust growth has recently been decoded by more and more
economists inside and outside China. Pieter Bottelier, professor of China economy at
Johns Hopkins University, points out that China's economy can be described as four
imbalances: investment-consumption imbalance, energy-demand imbalance, social
imbalances, and growth-environment imbalance.

But the Chinese government seems likely to give priority to popular issues, such as
housing prices. In fact, the government failed to contain soaring housing prices in cities
from the coastal area to inland China simply because it implemented policies that gave
the market a strong signal that the prices will continue to rise. In China, housing prices
can be more of a social issue or a political issue than an economic one.

In fact, local governments have been making use of local economic development and
urban sprawl as means to boost their revenues (and to enrich local officials in some
cases). Collusion between property developers and local-government officials has often
occurred, with profits in housing projects shared among them. No local officials are
really keen on in providing affordable housing to residents.

Both the central and local governments appear to be awash in cash. But the overhaul of
China's social programs - pillars for the "harmonious society" - is long overdue and the
programs are poorly funded. Beijing policymakers think a sound social-security system
would help people reduce precautionary savings and boost consumption. But that good
intention has been distorted as social-security funds are easily embezzled by local-
government officials to pursue local growth in gross domestic product.

The NPC Standing Committee suggested that the central government allocate "sufficient
funds and precious resources" for the weak links in China's society and economy:
education, health care, social security, affordable housing, and rural development.

The short-term complication of China's economic environment and the long-term
politico-economy structural issues will be put to a test at the 17th National Congress of
the Chinese Communist Party in mid-October. Although the guidelines of "scientific
development and harmonious society" are in the right direction, how to implement them
remains a big challenge for the party.
---

8) 3 more foreign news agencies OKed to release financial info, photos in China
Xinhua
26 September 2007

BEIJING - Three more foreign news agencies have been authorized to release financial
information or photos in China, the Foreign Information Administration Center (FIAC) of
Xinhua News Agency said on Tuesday.
The three agencies are RIA Novosti of Russia, Sipa Press of France and Gamma of
Eyedea, also a French company, a spokesman of the FIAC said.

"They have entered into agency agreements with the China Economic Information
Service (CEIS), an agent designated by Xinhua, to release financial information or news
photos as well as to develop subscribers in China," he said.

Xinhua News Agency was empowered by the government to promulgate the Measures
for Administering the Release of News and Information in China by Foreign News
Agencies in September last year, in continuation of its old practice authorized by the
government in 1996.

Three weeks after Gamma of Eyedea signed an agency agreement, the CEIS had
promoted Gamma's photos to more than 1,000 potential subscribers across China, and
had reported progress, the spokesman said.

Meanwhile, Sipa Press posted revenue growth in the China market in the first half, after it
signed an agency agreement with CEIS, he said.

"This demonstrates that companies that abide by the Measures will benefit," he said.
"Foreign news agencies will see their legitimate rights protected as long as they strictly
comply with Chinese laws and regulations."

Earlier this year, four other overseas news agencies -- Reuters Asia/Pacific Limited, JiJi
Press of Japan, ET Net Limited of Hong Kong and NNA China Limited -- were
authorized to release news and information after they passed an annual assessment in line
with the Measures.

The Measures are aimed at regulating the release of news and information in China by
foreign news agencies as well as the subscription of such news and information by
domestic users, safeguarding the foreign companies' legitimate rights and interest, and
promoting the dissemination of news and information in a sound and orderly manner,
said the spokesman.

Foreign news agencies who wish to release news and information in China are subject to
approval by Xinhua News Agency, and must have entities designated by Xinhua act as
their agents.

---
9) Chinese president meets South African deputy president
Xinhua
26 September 2007

Chinese President Hu Jintao met on Tuesday in Beijing with South African Deputy
President Phumzile Mlambo-Ngcuka, who is here attending the third meeting of the
China-South Africa Bi-National Commission.
Hu said under the new circumstance, it was the natural choice for the two countries to
push forward the strategic partnership, and this conformed to the interest of the two
countries and peoples.

Hu proposed three-point proposal to further Sino-South African relations.

First, the two sides should maintain the frequent exchange of high-level visits and
strengthen the dialogue and consultation on the major issues; Second, the two sides
should realize the agreements and promote the human resource and agricultural
cooperation; Third, the two sides should take advantage of the China-South Africa Bi-
National Commission to explore new areas for cooperation.

Mlambo-Ngcuka said South Africa attaches importance to the relations with China, and
hopes to expand the cooperation in trade and investment.

She reaffirmed the South African government's adherence to the one-China policy.
---
10) Execution of Courts’ Judgments Stressed
china.org.cn
By Huang Shan
26 September 2007

Institutions, enterprises and individuals who refuse to execute court judgments or defy
enforcements violently may face detention up to 15 days, if the circumstance is serious,
according to a circular released jointly by the Supreme People's Court, Supreme People's
Procuratorate and Ministry of Public Security.

According to a source inside China's top court, some local institutions, departments,
enterprises and individuals turn a deaf ear to compulsory executions of judgments handed
down by the courts at different levels. Some even violently defy enforcement. The
circular says they may be criminally charged for refusing to execute judgments made by
People's Court and for obstructing the performance of official duties. Apart from being
detained, public security departments may investigate them.

The circular defines the following obstructions of court judgments and/or orders as
serious:

The person against whom the judgment or order is executed hides, transfers or
intentionally damages the property in question or assigns the property in question for free
or for a unreasonably low price; the guarantors or the person against whom the judgment
or order is executed handle the property in question, which has been provided to the
People's Court as warranty, in a way mentioned above; the person obliged to assist in
enforcement refuses to do so after receiving a notice from the People's Court to assist in
enforcement; relevant people conspire with state functionaries to take advantage of the
powers of the state employees to hamper the execution.
Some practices fall in the category of obstruction of justice regarding the performance of
official duties, including impeding execution by besieging, detaining or assaulting
executors or inciting riots at the execution spot. Whoever snatches and damages
execution materials, vehicles, or certificates also face criminal charges.

The circular also clarifies the jurisdiction of such cases. It also promotes cooperation and
interaction among government departments such as public security bureaus,
procuratorates and courts.

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The China News Brief is a daily electronic news resource prepared by Williams Mullen
Strategies

								
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