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Your daily digest of the biggest business news in China, translated and summarized every day. China Spectator has not verified these stories.

NDRC to promote export of nuclear and rail projects

The top priority of China's peak economic regulator is to promote the export of nuclear and rail projects, according to comments made by Wang Xiaotao, a deputy director of the National Development and Reform Commission (NDRC), at a press conference last Friday.

The official made the remarks after China signed an agreement with Argentina related to the construction of a third-generation heavy water nuclear reactor earlier in the week.

(National Business Daily)

Provincial governments lower investment growth targets 

Of the 28 provincial-level governments that have already issued their political reports for 2015, 19 have lowered their investment growth targets for the year, according to a report in today's Economic Information Daily.

Liaoning province has made the biggest shift, lowering the investment growth target from 18 per cent in 2014 to 6 per cent this year.

Another eight provincial-level regions lowered their investment growth target by more than 5 percentage points.

Another 5 regions -- including Beijing and Shanghai -- did not set a target for investment growth.

(Economic Information Daily)

Almost 80% of individual charitable donations in China go to overseas institutions

Close to 80 per cent of the funds donated by China's top 100 individual donors went abroad, according to a report on Caixin Media's website.

The top 100 individual Chinese donors gave a combined total of just over 30 billion yuan in 2014, more than double the amount donated in 2013.

Of that 30.42 billion yuan total, 24.2 billion or close to 80 per cent of the total, went to overseas institutions.

The report quoted experts as saying that the preference to donate abroad was connected to tax issues and regulations on charitable trusts.

(Caixin

Tax rates for real estate, construction and financial services could increase

More than nine large firms have signed a proposal protesting prosed changes to the tax rates in the real estate, construction, and financial services sectors.

A government source cited by China Times said the letter could postpone the launch of relevant policy documents, which are to be issued on April 1 this year.

China’s current sales tax on real estate and construction industries is 5 per cent and 3 per cent respectively. The planned 11 per cent substitute value-added tax aims at reducing duplicated taxation for corporates, improving their market vitality and therefore optimising industrial reconstruction.

PwC tax expert Hu Genrong said there might be a substantial increase in the tax burden and a greater pressure on cash flows for construction companies.

For instance, a business that paid 400 million yuan in sales tax could pay up to 760 million yuan of value-added tax after the reform, since it is difficult to obtain tax invoices for some of the deductible business expense such as raw materials.

An officer from the Tax Policy Department in the Ministry of Finance said they have been drafting policy documents, but nothing is confirmed.

(China Times)

State-owned companies owe 66 trillion yuan in debt

The outstanding corporate debt held by China’s state-owned enterprises is 66 trillion yuan in 2014, according to data released by the Ministry of Finance.

According to the data, the collective profits for all state-owned companies, both central and local, was 2.4 trillion yuan, up 3.4 per cent from last year. The profits for centrally owned companies went up 3.6 per cent while locally owned companies increased 2.8 per cent.

(Jiemian)

Jilin province will experience negative population growth by 2017

Jilin province will experience negative population growth for the first time in 2017, if the current trends continue.

Since the introduction of the two-child policy in November 2013, the take-up rate among eligible childbearing parents has only been 7.92 per cent, significantly below the government’s forecast. Only 7,000 couples applied to have a second child out a population of 22 million.

Provincial legislators are urging the government to offer subsidies to parents who want to have a second child to ease the cost of child rearing.

(Phoenix New Media)

70 listed firms swept up in anti-corruption inspection storm

Around 70 companies listed on Chinese stock exchanges have been investigated since China’s anti-corruption campaign began, reports the Beijing News.

According to the newspaper, companies in industries ranging from resources, real-estate, financial services, transport and pharmaceutical have been looked into. A fourth of the listed companies are energy-related.

More than 45 executives at PetroChina were being investigated according to the report, in relation to a scandal involving the supplier of the state-owned energy giant, Wison, Kunlun energy and Sichuan Star Cable.

Top domestic miner China Shenhua is also facing bribery allegations by Chinese government’s anti-graft agency and Shanxi Coking Coal has also been named following an investigation.

(Beijing News)

China securities firms fined 468mn yuan in 2014

China's securities regulator fined 55 institutions and 416 individuals for a total of 468 million yuan in 2014, according to official figures.

The China Securities Regulatory Commission (CSRC) announced on Friday that it was cooperating with the courts to ensure the fines were paid.

(Beijing News)

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In J.P. Morgan emails, a tale of China and connections

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Gao Jue did poorly on his job interviews at J.P. Morgan Chase & Co., he messed up his work visa, accidentally sent a sexually explicit email to a human-resources employee and was described by a senior banker as “immature, irresponsible and unreliable,” according to internal bank emails and people familiar with the matter.

Yet the bank hired him, saved him during major job cuts and later was prepared to offer him another position if he had responded to their queries.

Mr. Gao is the son of China’s current commerce minister, who, when his son faced a layoff, said he would be willing to “go extra miles” for the bank if it kept him on, according to a J.P. Morgan executive’s email account of a dinner with the father.

The bank’s decision to hire Mr. Gao was widely understood within J.P. Morgan to have been supported by William Daley, a senior executive at the time, according to the internal bank emails, which were reviewed by The Wall Street Journal. Mr. Daley is a former U.S. commerce secretary and White House chief of staff.

The hiring has drawn scrutiny from U.S. prosecutors and regulators who are investigating the Asian hiring practices of J.P. Morgan and several other banks, according to people briefed on the investigation. Mr. Gao’s name hasn’t previously been reported in connection with the hiring probe, which J.P. Morgan disclosed in a 2013 regulatory filing. Hong Kong authorities have also been investigating Western banks’ hiring practices.

J.P. Morgan hasn’t been accused of wrongdoing in the investigation, which focuses on the Foreign Corrupt Practices Act, a U.S. law that bars giving anything of value to foreign government officials for a business advantage. Federal prosecutors in Brooklyn and Washington view Mr. Gao’s hiring as a potential violation because of indications of some sort of quid pro quo involving his father, combined with indications bankers saw the son as ill-qualified, the people briefed on the investigation said.

The Justice Department and the Securities and Exchange Commission expect to reach a settlement with J.P. Morgan related to the U.S. antibribery law, these people said, likely involving a fine and a required overhaul of hiring practices. Bringing charges against any individuals would be more difficult, the people said.

Spokesmen for the Justice Department and the SEC declined to comment on the investigation, as did a J.P. Morgan spokesman. In the past, the bank said in securities filings it was cooperating and responding to inquiries.

Gao Jue declined to comment through his current employer, Goldman Sachs Group Inc. His father, Gao Hucheng, didn’t respond to questions sent to the Ministry of Commerce. Gao Hucheng, 63 years old, was a vice minister of commerce when his son was hired and was promoted to minister in March 2013 after a career that included a stint as China’s international trade representative.

Mr. Daley, 66, declined to discuss J.P. Morgan’s Asia hiring practices.

Neither Mr. Daley nor either of the Gaos has been accused of wrongdoing.

It isn’t clear that the clout of either Mr. Daley or Gao Hucheng was what prompted J.P. Morgan to offer a job to the son. Mr. Daley didn’t have an ongoing relationship with either of the Gaos, a person familiar with the matter said. But internal emails show that after a July 2006 meeting between Mr. Daley and Gao Jue’s father, other J.P. Morgan bankers believed that Mr. Daley supported the hiring of Gao Jue.

One J.P. Morgan recruiter was concerned about the young man’s qualifications. But in the emails—some of which contained typos—the recruiter said that Mr. Gao “cam to us from Daley” and “we obviously had to extend him an offer.”

Mr. Daley worked at J.P. Morgan from 2004 to 2010, serving as Chairman of the Midwest and, for his last three years, also as head of corporate social responsibility. He reported to the chief executive, James Dimon .

Mr. Daley had been commerce secretary from 1997 to 2000 in the Clinton administration, where he helped win passage of a trade bill related to China’s entry to the World Trade Organization. After leaving J.P. Morgan he was President Barack Obama ’s chief of staff for a year starting in January 2011. He now heads U.S. operations at Swiss hedge fund Argentière Capital AG.

Gao Jue, who is 32 years old and also goes by Joe Gao, started work at J.P. Morgan in the summer of 2007. Amid broad job cuts nearly a year later, he received a layoff notice.

He ultimately was spared, after appeals that included one from his father.

“The father indicated to me repeatedly that he is willing to go extra miles to help JPM in whatever way we think he can,” wrote Fang Fang, then chief executive of China investment banking for J.P. Morgan, following what he called a Beijing dinner with Gao Hucheng about the son’s job situation.

“And I do have a few cases where I think we can leverage the father’s connection,” Mr. Fang added in the email to his boss, asking for advice on “how to handle the son in NY and leverage the father in China.”

Mr. Fang has since left the bank. Hong Kong and U.S. authorities are looking at his role in J.P. Morgan’s hiring, according to people familiar with the situation.

Mr. Gao left J.P. Morgan after less than two years and went on to work for the firm now called Zurich Insurance Group AG, then for the New York Stock Exchange, BNP Paribas SA, Credit Suisse Group AG and Goldman, according to regulatory filings and people familiar with the matter. There is no evidence those firms received business in exchange or favoritism from China’s commerce ministry.

The commerce ministry isn’t a J.P. Morgan client and doesn’t regulate banking, but it has significant influence over business, asserting a right to rule on mergers among multinationals that do business in China. After Swiss commodity companies Glencore PLC and Xstrata PLC agreed to link up in 2012, the ministry approved the deal on condition the merged company commit to selling copper to Chinese customers at specified prices and sell a large Peruvian mine, which a Chinese consortium bought.

It was in July 2006 that Mr. Daley met with Gao Hucheng. His son Gao Jue was then a student at Purdue University, set to graduate at year-end.

Sherry Liu, a Hong Kong-based J.P. Morgan banker who helped set up the meeting, emailed Mr. Daley beforehand saying that “a good indepth relationship with the Ministry will pave the ground for us in many large and important industries in China....” Ms. Liu didn’t respond to requests for comment.

Mr. Daley later told Ms. Liu he had had “a very good meeting” with Gao Hucheng.

Later that year, J.P. Morgan offered Gao Jue a coveted two-year entry-level analyst position in New York, to start the following summer. With a two-year job in New York, he wouldn’t be part of a separate J.P. Morgan hiring program for well-connected Chinese that was informally called “Sons and Daughters.” It gave mostly temporary positions, largely in Hong Kong and China, to children of bank clients, influential businesspeople and Chinese government officials. The program was designed to screen connected candidates and prevent potentially illegal hires but appears to have instead enabled the type of hiring now under investigation, according to people familiar with it.

A J.P. Morgan recruiter expressed concern about Gao Jue’s qualifications. Danielle Domingue, in an email to colleagues that used abbreviations for managing director and business analyst, wrote: “Jue did very very poorly in interviews—some MDs said he was the worst BA candidate they had ever see—and we obviously had to extend him an offer.” Ms. Domingue has since left the bank.

Mr. Gao started in July 2007. A problem quickly arose. He had let his work visa expire, meaning he couldn’t hold a job in the U.S., according to internal emails. With few options available, the bank helped him apply for an H-3 training visa, emails indicate, even though this visa prohibits “productive employment.” The extent to which his time on the H-3 visa was given to training rather than work is unclear.

The bank later helped Mr. Gao apply for a work visa. But the U.S. economy turned down, and in May 2008 Mr. Gao’s position was among many eliminated at the bank, internal emails show.

Supporters quickly came to his aid. Mr. Fang described an encounter with the elder Mr. Gao: “During this one-on-one dinner with me, the father spent long time explaining to me why it is important for the son to find another position within JPM,” Mr. Fang wrote. It was at this dinner that the elder Mr. Gao repeatedly promised to go “extra miles” for the bank, Mr. Fang wrote to his boss, Asia-Pacific chief Gaby Abdelnour. Mr. Abdelnour didn’t respond to a request for comment.

Mr. Gao’s father wasn’t the only one going to bat for him. The chairman and CEO of WuXi PharmaTech Inc.—a J.P. Morgan client in 2007 and 2008—asked his bank contact if he could find Gao Jue a job in Hong Kong, according to J.P. Morgan emails. A spokeswoman for WuXi said its chairman, Li Ge, “doesn’t recall making any unusual inquiries or efforts on Gao Jue’s behalf with JP Morgan representatives.”

The plea reached Mr. Daley. In an email seeking Mr. Daley’s advice, one banker said the bank’s human-resources department had said Mr. Daley “helped Jue last year to get a permanent position at JPMorgan NY.”

A second J.P. Morgan banker, in an email to a colleague, referred to Gao Jue as a “Bill Daley hire.”

Mr. Daley declined to help save Mr. Gao’s job. “After a year of giving Jue an opportunity I think with all the changes going on it probably is best for him to move on,” Mr. Daley wrote in a May 2008 internal email.

Mr. Fang, the chief of the bank’s China operations, turned to Anil Bhalla, a New York-based senior banker who handled Asia clients. “We need to ask a favor from you,” Mr. Fang wrote, asking Mr. Bhalla to take Gao Jue onto his team of analysts.

Mr. Bhalla responded that “downsizing in the US has been brutal,” and his own son had lost his job at the bank. But he agreed to take Mr. Gao for six months.

“Given current head-count constraints, I will need Gaby’s go-ahead,” Mr. Bhalla later wrote, referring to Mr. Abdelnour, the Asia-Pacific chief.

“Supportive,” Mr. Abdelnour replied, an email shows.

Mr. Bhalla, in a separate email to Mr. Fang, said of Mr. Gao: “You should also know that his performance rating in his previous position was not rated high.”

After Mr. Gao was told he would stay employed, he inadvertently copied a human-resources employee on an email that included inappropriate sexual remarks and was given a warning, according to another internal email. “Jue was given a written (last) warning last Friday and advised that his conduct and activities will be monitored closely and any further violation would lead to termination,” Mr. Bhalla wrote to Mr. Fang.

“That said,” Mr. Bhalla added, “there is general consensus among the seniors in our group as well reports from people in his previous group that he is immature, irresponsible and unreliable.”

While allowed to stay on, “he may not be as occupied or busy as any other analyst and we would make it clear to him that his communications and website access will be closely watched/monitored,” Mr. Bhalla wrote.

Mr. Fang replied, “Please also keep a paper trail on written warnings and other incidents so that we can show them to his father when the moment comes.”

Two months later, Mr. Fang emailed that Mr. Gao’s father “keeps sending me sms asking for a meeting when I am next in Beijing. His son’s 6-month temp position in NY is coming to the end, I guess we are not able to extend it?”

“There is no way to extend as we are letting so many people go in NY,” Mr. Abdelnour responded.

Mr. Gao was given notice of termination in March 2009 and left the bank. Mr. Bhalla said in an internal bank email that a human-resources manager suggested timing the dismissal to look as if Mr. Gao had completed a two-year analyst program.

Mr. Gao worked next for what was then called Zurich Financial Services and for the NYSE, both of which declined to comment.

In September 2010, Mr. Gao was again recommended for a job at J.P. Morgan. He was “referred to me by Cnooc chairman Fu,” a J.P. Morgan banker wrote in an internal email.

Former China National Offshore Oil Corp. Chairman Fu Chengyu now leads China Petroleum & Chemical Corp., or Sinopec. A Sinopec spokesman said Mr. Fu didn’t recognize the name Gao Jue.

The referral was for a job in Hong Kong. A junior banker there emailed Mr. Fang indicating the bank would plan on placing Mr. Gao in the program some called Sons and Daughters, and asked if Mr. Fang would sponsor him. “I am supportive,” Mr. Fang replied.

Internal emails show J.P. Morgan was prepared to offer Mr. Gao a one-year position. An administrator sent a coordinating banker a list of compliance questions, including whether the candidate was related to any government official.

Hong Kong bankers reached out to Mr. Gao for an interview. Internal emails show he didn’t respond.

In late 2010 he joined BNP Paribas in Hong Kong, then Credit Suisse less than a year later, and in January 2013 Mr. Gao moved to his current job in Goldman’s natural-resources group in Hong Kong.

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Firm’s firing of son of Chinese government official has drawn scrutiny from U.S. authorities investigating hiring practices of several big banks.

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SEC, big four accounting firms in China settle dispute

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The Chinese affiliates of the Big Four accounting firms agreed to pay $500,000 each to settle a yearslong dispute with the Securities and Exchange Commission over their reluctance to give the agency documents about Chinese companies under investigation.

The settlement also allows the firms to avoid a temporary suspension of their right to audit U.S.-traded firms—a potential outcome of the dispute that would have complicated life for dozens of Chinese companies and many U.S. multinationals with significant operations in China.

Under the $2 million agreement, the Chinese arms of PricewaterhouseCoopers, Deloitte Touche Tohmatsu, KPMG and Ernst & Young also agreed to follow procedures designed to ensure that the SEC is able to obtain audit documents from them in the future.

The settlement follows a judge’s ruling last year that the accounting firms had violated U.S. law when they refused to give the SEC the audit-work papers about some Chinese clients the SEC was investigating. Even though the clients’ securities traded in the U.S., the firms had argued they were prevented from sharing the work papers by strict Chinese laws that treat such documents as akin to state secrets.

Many of the documents were later turned over to the SEC after they were routed from the firms through Chinese regulators. SEC officials said their access to such audit documents is crucial to efforts to protect investors from fraud by Chinese companies, and they said the settlement helps secure their future access to such documents.

The settlement is “a positive step in attempting to preserve the forward momentum,” Andrew Ceresney, the SEC’s enforcement director, told reporters on a conference call.

In a joint statement, the four firms’ Chinese affiliates said they were “pleased” to have reached a settlement.

While some outside experts welcomed the settlement, Paul Gillis, a professor at Peking University’s Guangua School of Management, said it “falls far short of what investors need….The settlement just lets the firms off the hook and kicks the can down the road.”

The dispute stems from the wave of 170-plus U.S.-traded Chinese companies—most of them smaller, not China’s best-known and largest companies —that have faced accounting questions in recent years.

The issues range from allegations of embezzlement and inflated revenues to a lack of proper disclosure to investors.

The SEC has investigated some of these companies and has filed about 25 enforcement cases against Chinese firms and their executives. But the agency was frustrated in some of its investigations because the companies’ China-based auditors refused to give the SEC documents from their audits, contending the Chinese government could throw their auditors in jail if they did. (All of the major accounting firms are international networks made up of individual, freestanding firms in each country where they do business.)

In January 2014, Cameron Elliot, an SEC administrative law judge, sided with the SEC enforcers and ordered the four accounting firms suspended from auditing U.S.-traded companies for six months. That suspension has been on hold while the firms appeal the ruling to the five-member SEC itself.

The settlement requires the firms to follow detailed procedures to give the SEC access to Chinese firms’ audit documents via the China Securities Regulatory Commission, similar to the method in use since 2013. If the firms don’t follow the procedures, the SEC could impose penalties such as suspensions, or it could restart the current enforcement case.

The China Securities Regulatory Commission wasn’t a party to Friday’s settlement, and a spokesman for the CSRC said he had no information on the matter. But Mr. Ceresney said he was hopeful Chinese regulators would maintain their willingness to act as a conduit. In any event, he said, “ultimately in our view it’s the firms who are responsible” to make sure any SEC requests are satisfied. The firms didn’t admit to or deny wrongdoing as part of the settlement, except that they acknowledged they initially didn’t give the documents to the SEC.

The settlement doesn’t address the parallel issue of whether U.S. regulators at the Public Company Accounting Oversight Board will be allowed to inspect the work of Chinese audit firms. The PCAOB conducts regular inspections of global firms that audit U.S.-traded companies, but the Chinese government has blocked the PCAOB’s inspectors from entering China, citing concerns over sovereignty.

PCAOB Chairman James Doty said he was “encouraged” by the SEC settlement, and that the PCAOB continues to work closely with Chinese regulators over the inspection issue.

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Deal over refusal to turn over audit documents lifts threat of suspension.

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Chinese commerce minister maintains lower profile

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Gao Hucheng sits atop China’s Ministry of Commerce, a powerful body that plays a role in reviewing global mergers, and has served as China’s main international trade negotiator. Named to the top job at the ministry in 2013, he has maintained a lower profile than some of his predecessors.

Executives at J.P. Morgan Chase & Co. said Mr. Gao, at a time when he was a vice minister of commerce, offered to help the bank if it continued to employ his son while it made job cuts in 2008, according to internal bank emails reviewed by The Wall Street Journal. The son remained employed for a time but later moved to other firms. His employment at J.P. Morgan is a focus of a U.S. investigation of the bank’s hiring practices, according to people briefed on the probe.

Gao Hucheng didn’t respond to questions faxed to the ministry. His son, Gao Jue, declined to comment through his current employer, Goldman Sachs Group Inc. A J.P. Morgan spokesman declined to comment on the investigation.

Mr. Gao was a vice minister of commerce for a decade before 2013. From 2010 to 2013, he was also China’s international trade representative. The ministry reviews mergers and acquisitions and inbound and outbound investments. It helps formulate trade policies.

During November negotiations with the U.S. in Beijing over updating the Information Technology Agreement, or ITA, which eliminates tariffs on high-tech goods, Mr. Gao was able to reach a deal. The negotiations were held on the sidelines of a summit meeting of the Asia- Pacific Economic Cooperation forum. Chinese Communist Party chief Xi Jinping wanted to avoid a failure during APEC, Chinese and U.S. officials said. Mr. Gao made the necessary compromises to get an agreement with the U.S.

But when ITA negotiations continued in Geneva and included dozens of other countries, Mr. Gao wasn’t able to cut a deal with them all, especially South Korea, said trade officials. Mr. Gao is subject to the constraints of Beijing’s consensus-style politics, where a number of ministries have a say on trade issues. The negotiations continue.

Trade experts said they considered Mr. Gao a competent technocrat and tenacious negotiator with a feel for the Chinese political system. “I have a lot of respect for Minister Gao’s direct style and mastery of his brief,” said U.S. Trade Representative Michael Froman.

The commerce ministry gained its global antitrust enforcement powers after a new Chinese antimonopoly law took effect in 2008. The ministry has played an increasingly active role in reviewing, and in some cases altering or nixing, deals by global companies, even when the impact on China was relatively small. A big part of J.P. Morgan’s business is advising companies and helping to fund large cross-border mergers and acquisitions.

Mr. Gao was singled out by the U.S. Chamber of Commerce in a report on China’s efforts to benefit from the acquisition of Switzerland-based mining group Xstrata PLC by Swiss commodity trader Glencore PLC. The ministry said the deal could go through on condition the merged company sign a long-term supply contract for Chinese customers and shed a Peruvian copper mine, which a consortium led by a Chinese state-owned company bought for roughly $5.8 billion in 2014.

“China appears to have used the Glencore/Xstrata merger opportunistically to effectively transfer control of an important foreign mine to Chinese state ownership,” the U.S. Chamber said.

The report by the Chamber quoted Mr. Gao as having said at a 2012 conference that China’s “antitrust system should develop to help address the problem of the gulf between growing demand and a shortage of supply.”

A member of the Communist Party’s Central Committee, the 63-year-old Mr. Gao is two years from a customary retirement age for ministers. So unlike predecessors who used the post as a steppingstone, he is likely at the apex of his career.

Mr. Gao studied and worked in present-day Democratic Republic of the Congo in the 1970s, according to his biography on the ministry’s website. He later worked in France for a Chinese state-owned company and received a doctorate in sociology from Université Paris Diderot in 1985.

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Gao Hucheng sits atop Ministry of Commerce, powerful body that plays role in reviewing global mergers.

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Alibaba invests in Chinese smartphone maker Meizu

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BEIJING—E-commerce giant Alibaba Group Holding Ltd. will pay US$590 million for a minority stake in a Chinese smartphone maker as it looks to expand its presence in mobile technology.

The Hangzhou based company said on Monday it would acquire a stake in Meizu Technology Co., a closely held gadget maker based in the southern Chinese city of Zhuhai. The two companies declined to disclose the size of the stake.

The move comes as Alibaba looks to boost its presence in mobile and continues to pursue its own mobile-operating system. Alibaba and rivals Baidu Inc. and Tencent Holdings Ltd. hold strong positions in each of their own corners of the Chinese Internet but are rushing to secure space on the country’s smartphone and tablet screens.

Meanwhile, the deal could bolster Meizu against larger rivals like Xiaomi Corp. and Lenovo Group Ltd.

Alibaba began a partnership with Meizu last year to make smartphones running its mobile operating system YunOS. Alibaba originally launched YunOS in an effort to drive users to its e-commerce apps and other services, but the company has made limited headway switching major smartphone players from Google Inc. ’s dominant Android mobile-operating software.

Originally a manufacturer of MP3 players in southern China, Zhuhai-based Meizu has transformed itself into a seller of advanced, budget smartphones to Chinese consumers who want iPhone-like devices at a lower price. Like its larger competitor Xiaomi, Meizu uses a business of selling devices that are bargains compared with major brands with similar specs and relying on social media to drive sales.

“The investment in Meizu represents a significant expansion of the Alibaba Group ecosystem and an important step in our overall mobile strategy as we strive to bring users a wider array of mobile offerings and experiences,” said Alibaba Chief Technology Officer Jian Wang in a statement.

Alibaba’s investment marks the largest move so far by a Chinese Web company in smartphones, and comes after similar moves by Internet giants in the West. Amazon.com Inc. unveiled its Fire Phone in June with features that made it easier to shop on its mobile marketplace. Google purchased Motorola Mobility in 2012 to make phones running its Android operating system, although it sold the phone maker to Lenovo in October. In a smaller Chinese deal, Qihoo 360 Technology Co. said in December it would invest $409 million December in a joint venture with Shenzhen-based smartphone maker Coolpad Group Ltd.

The investment also continues a spending spree by Alibaba that includes everything from online video to travel software to entertainment.

Meizu said it aims to sell 20 million smartphones in 2015. China’s three largest domestic smartphone vendors Xiaomi, Lenovo and Huawei Technologies Co. have each announced targets of selling more than 100 million units this year.

China is the world’s largest smartphone market, but sales growth is slowing as the market becomes increasingly saturated.

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Alibaba to pay $590mn for minority stake in Meizu Technology.

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Qualcomm cops $US975m fine

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Qualcomm Inc has agreed to pay $US975 million to Chinese authorities to end a high-profile antitrust investigation of the company’s patent licensing practices in that country’s mobile phone market.

China recently has accounted for roughly half of Qualcomm’s revenue.

The San Diego-based chip maker on Monday also agreed to make several changes to its licensing practices as part of a settlement with China’s National Development and Reform Commission, which has been investigating the company since November 2013.

Among other things, Qualcomm agreed to a licensing formula that may reduce its royalties for some handsets sold in China. The Chinese agency found that Qualcomm violated the country’s antimonopoly law, a finding Qualcomm said it would not contest.

Qualcomm officials expressed disappointment in the legal finding but said that the provisions of the settlement should not hurt the company’s business significantly. In fact, Qualcomm boosted its estimates for profit and revenue in the current fiscal year as a result of the settlement.

“We appreciate the NDRC’s acknowledgment of the value and importance of Qualcomm’s technology and many contributions to China, and look forward to its future support of our business in China,” said Derek Aberle, Qualcomm’s president, in prepared remarks.

The company’s stock rose in early trading Monday following a Reuters report that a settlement in China was imminent. Following the announcement Monday, Qualcomm’s shares rose an additional 1.3 per cent.

Qualcomm is the biggest supplier of chips used in smartphones, by shipments and revenue. But Qualcomm makes the majority of its profit from patent royalties paid by handset makers that use its chips.

Though smaller than some analysts expected, the amount Qualcomm agreed to pay stacks up with some of the largest financial penalties imposed by competition authorities.

In Europe, Microsoft Corp. ’s antitrust battles over more than a decade have resulted in more than $2.5 billion in fines. Intel Corp. , one of Qualcomm’s key rivals, has been going through years of appeals trying to reverse about $1.5 billion in fines from regulators in Brussels in connection with its business practices in the microprocessor market.

But some analysts that track Qualcomm worried about changes that could significantly weaken its lucrative business model, which has helped build a market capitalisation that currently stands at around $US110 billion. Qualcomm reported about $US7.5 billion in revenues from licensing patents and other intellectual property in the fiscal year ended in September.

The changes Qualcomm agreed to accept include a different formula for calculating patent royalties on devices sold in China. Qualcomm ordinarily charged a singular percentage, which hasn't been disclosed, of the wholesale price of a handset for all of its patents.

As part of the changes announced Monday, Qualcomm said licensees will pay 3.5 per cent for devices using its fourth-generation cellular patents and 5 per cent for 3G devices. The royalty, instead of the total wholesale price of the handset, will be based on 65 per cent of the net selling price of a device, Qualcomm said.

Qualcomm said it sees taking a charge of 58 cents a share from the fine.

The chip maker also updated its guidance for its fiscal year ending September 27. The company said it now expects revenue between $US26.3 billion and $US28 billion, raising the lower end from $US26 billion, and per-share earnings—excluding certain costs, such as the fine—of $US4.85 to $US5.05, increasing the lower end by a dime from $US4.75.

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Deal ends investigation into chip maker’s licensing practices by Chinese authorities

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China CPI hits five-year low

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China’s consumer price index (CPI) -- a main gauge of inflation -- plunged to 0.8 per cent year-on-year in January, its lowest level since November 2009.

The rise in the CPI was sharply down from the 1.5 per cent recorded in December, according to figures provided by the National Bureau of Statistics.

The producer price index (PPI) -- a measure of costs for goods at the factory gate -- fell to -4.3 per cent year-on-year, compared to -3.3 per cent previously.

The drop in the PPI figure marked the 35th straight month of declines.

ANZ Bank's chief Greater China economist Liu Li-Gang said the weak figures suggest that deflation has "become a real risk for China".

Mr Liu said further monetary policy easing would help "facilitate the undergoing de-leveraging process as well".

“Indeed, China’s central bank cut the reserve requirement ratio (RRR) last week and conducted a large amount of reverse repos before the Chinese New Year, indicating that the central bank has engaged into aggressive easing to head off the deflation risk," he said.

Mr Liu said that market interest rates have remained elevated while the RMB exchange rate weakened -- an indication of capital outflows from the onshore market.

“The balance of payment data suggest that China saw $US91.2 billion deficit under capital and financial account in Q4 2014, which could be owing to fears of economic slowdown."

Mr Liu expects China’s central bank to lower the deposit rate by 25 basis points in the first quarter, followed by another 50 basis points RRR cut in the second quarter. 

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China's main gauge of inflation drops to lowest point since Nov 2009, PPI declines for 35th month.

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Chinese rare earth exports plunge in 2014

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China exported 1457 tonnes of rare earths in January, down 49 percent from a year earlier reports the Beijing Times

The report, citing a source at the General Administration of Customs, notes that the total value of rare earth exports in the month totalled 124 million yuan, down 49.5 per cent from a year earlier.

According to previously released data from Hohhot customs in Inner Mongolia, China exported a total of 28,000 tonnes of rare earth in 2014, an increase of 27.3 per cent.

Despite the increase in exports, the total value was 2.3 billion yuan, down 35.6 per cent. 

Inner Mongolia is home to China's most productive rare earth mine and accounts for about 87 per cent of total global rare earth reserves.

China ended a decade-old quota system limiting exports of rare-earth minerals in January. The quota system had been at the center of a World Trade Organisation dispute which the country lost in 2013.

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Exports down 49 percent from a year earlier: report.

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More Chinese provinces lower GDP targets for 2015

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Three more provincial governments have lowered their GDP targets for 2015 following the lead of 26 other provinces in a country-wide push to move towards a more balanced economy.

Jilin, Guandong and Hainan provinces announced on Monday that their GDP growth targets would be 1.5, 1 and 2 per cent respectively, reports the Global Times.

All provinces have lowered their GDP targets except for Shanghai and Tibet. Shanghai’s government has completely removed its GDP target. Tibet's GDP target remains level with the previous year.

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SO far, all provinces have lowered their GDP targets except for Shanghai and Tibet.

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Stock price of brokerages takes off as China launches stock options

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The stock price of brokerage firms surged as China launched its first stock options on the Shanghai Stock Exchange yesterday.     

The launch of the new instrument helped to lift the Shanghai index during afternoon trade, according to a report in today's Beijing News.

The options are based on the exchange-trade fund (ETF) and offer investors a new hedging tool for trading in the 50 most heavily weighted stocks on Shanghai's main board.

The paper quoted unnamed analysts as saying that the launch of options will benefit the stock price of listed securities firms but will have limited impact on the broader market.

The securities segment of the Shanghai stockmarket rose close to 5 per cent yesterday. Trading in the stocks of Western Securities was halted after it exceeded the limit of daily price movements of 10 per cent.

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Analysts says launch of options will have limited impact beyond securities firms.

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China to overhaul IPO approval process in June: report

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A new IPO approval process will be introduced in June, according to a report carried yesterday afternoon by Phoenix.

As part of the revised approval regulations, companies looking to float on Chinese stock markets will no longer require regulatory approval from a separate commission under China Securities Regulatory Commission (CSRC) but will seek approval directly from the exchanges.

The report cites unnamed individuals whom attended a meeting with one of CSRC's deputy directors last Wednesday.

According to those who attended the meeting, the new rules are set to come into effect on June 1 this year.

The move is part of broader reforms to the way China's stock markets are regulated and will also include a further loosening of rules related to refinancing.  

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Reforms may also include a further loosening of rules related to refinancing.

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SASAC: SOE executive pay to be tied to performance

The way that some of China's largest and most powerful state-owned enterprises are evaluated is set for a shake up, according to an announcement made by China's state-owned assets regulator yesterday.

According to the directive, executives at the 100-odd centrally-controlled SOEs under SASACs control will need to meet specific performance targets in order to qualify for a pay rise.

Companies are also expected to lift economic efficiencies and profit targets should be set at a level higher than those achieved last year.

Performance goals related to overall salaries and financial affairs at the central SOEs will also be set this year.

If a certain company manages to reach all its performance targets but fails to lift the overall value of profits or economic value-added on the previous year, that company can not be categorised in the 'A' category.

SASAC grades central SOEs every year based on certain key performance indicators, firms receive and overall mark from A to E, though SASAC often doesn't publish which companies receive the lowest grades. 

On Jan 30, the listed arm of the state-owned aluminium conglomerate Chinalco forecast losses of 16.3 billion yuan in 2014, the largest loss ever recorded by a company listed on China's stock exchange.

(Beijing News)

CSRC to overhaul IPO approval process in June

A new IPO approval process will be introduced in June, according to a report carried yesterday afternoon by Phoenix.

As part of the revised approval regulations, companies looking to float on Chinese stock markets will no longer require regulatory approval from a separate commission under China Securities Regulatory Commission (CSRC) but will seek approval directly from the exchanges.

The report cites unnamed individuals whom attended a meeting with one of CSRC's deputy directors last Wednesday.

According to those who attended the meeting, the new rules are set to come into effect on June 1 this year.

The move is part of broader reforms to the way China's stock markets are regulated and will also include a further loosening of rules related to refinancing.  

(Phoenix)

Stock price of brokerages takes off as China launches stock options

The stock price of brokerage firms surged as China launched its first stock options on the Shanghai Stock Exchange yesterday.     

The launch of the new instrument helped to lift the Shanghai index during afternoon trade, according to a report in today's Beijing News.

The options are based on the exchange-trade fund (ETF) and offer investors a new hedging tool for trading in the 50 most heavily weighted stocks on Shanghai's main board.

The paper quoted unnamed analysts as saying that the launch of options will benefit the stock price of listed securities firms but will have limited impact on the broader market.

The securities segment of the Shanghai stockmarket rose close to 5 per cent yesterday. Trading in the stocks of Western Securities was halted after it exceeded the limit of daily price movements of 10 per cent.

(Beijing News)

More provinces lower GDP targets for 2015

Three more provincial governments have lowered their GDP targets for 2015 following the lead of 26 other provinces in a country-wide push to move towards a more balanced economy.

Jilin, Guandong and Hainan provinces announced on Monday that their GDP growth targets would be 1.5, 1 and 2 per cent respectively, reports Global Times.

All provinces have lowered their GDP targets except for Shanghai and Tibet. Shanghai’s government has completely removed its GDP target. Tibet's GDP target remains level with the previous year.

(Global Times

Chinese rare earth exports plunge in 2014

China exported 1457 tonnes of rare earths in January, down 49 percent from a year earlier reports the Beijing Times

The report, citing a source at the General Administration of Customs, notes that the total value of rare earth exports in the month totalled 124 million yuan, down 49.5 per cent from a year earlier.

According to previously released data from Hohhot customs in Inner Mongolia, China exported a total of 28,000 tonnes of rare earth in 2014, an increase of 27.3 per cent.

Despite the increase in exports, the total value was 2.3 billion yuan, down 35.6 per cent. 

Inner Mongolia is home to China's most productive rare earth mine and accounts for about 87 per cent of total global rare earth reserves.

China ended a decade-old quota system limiting exports of rare-earth minerals in January. The quota system had been at the center of a World Trade Organisation dispute which the country lost in 2013.

(Beijing Times)

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Stock price of brokerages takes off as China launches stock options and rare earth exports plunge in 2014.

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Former Chinese premier's daughter had HSBC stash

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Li Xiaolin, daughter of a former Chinese premier, held as much as $US2.48 million ($A3.17 million) in a secret HSBC account in Switzerland, the International Consortium of Investigative Journalists has found.

The revelation, gleaned from a cache of leaked files that have been dubbed "Swiss Leaks," adds to the list of families of Chinese senior politicians who amassed huge wealth in the past couple of decades and stashed some of it in overseas accounts that can help them avoid detection by authorities back home.

Li did not respond to requests by the ICIJ for comments.

Despite the Chinese Communist Party's roots in socialism, party officials have leveraged their power to place family and friends in key positions of major industries such as energy, communications and banking, providing tremendous payoffs in what critics say comes at the expense of improving lives of the working masses.

In 2012, Bloomberg reported that the relatives of Chinese President Xi Jinping held investments in companies with total assets of $US376 million, an 18 per cent indirect stake in a rare-earths company with $US1.73 billion in assets, and a $US20.2 million holding in a publicly traded technology company, although no assets were traced to Xi himself, his wife or their daughter.

Also in 2012, The New York Times reported that relatives of former Chinese Premier Wen Jiabao had controlled assets worth at least $US2.7 billion.

Last year, the ICIJ found through leaked documents that children of Chinese senior officials, known as the princelings or the Red Aristocracy, had stashed away wealth in offshore companies and accounts. Among them, Li Xiaolin was the director of two British Virgin Islands companies registered in 2005, according to the ICIJ.

The ruling party's own anti-corruption campaign launched by Xi after he took control of the party in late 2012 has uncovered numerous cases involving millions of dollars by party officials, their family members and associates. Allegedly corrupt cadres have been charged with taking bribes as well as using their positions to seek huge benefits for others.

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Li Xiaolin held as much as $US2.48 million ($A3.17 million) in a secret HSBC account in Switzerland, the ICIJ has found.

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FIRB to probe more land purchases

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Purchases of agricultural land of over $15 million will now be subject to Foreign Investment Review Board scrutiny, the government has announced.

In addition, Prime Minister Tony Abbott said this morning that the Australian Taxation Office will conduct a "stocktake" to provide a “complete register of foreign agricultural landholdings in Australia."

"This is not saying that we don't want foreign investment. We do want foreign investment but it's got to be the right investment, the right investment that serves our purposes” Mr Abbott said.

Treasurer Joe Hockey said the $15m threshold is not just for a single purchase but would be cumulative.

“So anyone that holds, for example, $10m of investment now and then wants to purchase another $5m or $6m of agricultural land that will be brought into the net for further approval,” he said.

The Treasurer said the move was to promote integrity and transparency in the system.

“We want to know what the true state of foreign investment is in Australian land and particularly in agricultural land,” he said.

The government said it was still mulling the recommendations of the Parliamentary Committee inquiry led by Kelly O’Dwyer regarding foreign investment in residential real estate.

"There does need to be better enforcement of the rules for foreign purchases of existing homes so that young people are not priced out of the market," Mr Abbott said. 

The government expects to announce details of the reforms to foreign investment in residential real estate in coming weeks.

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Agricultural land buys of over $15m to attract scrutiny under foreign investment changes.

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China's medical insurance fund unsustainable: report

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China's medical insurance fund is in danger of collapsing, according to a new report into the country’s medical and health industry released yesterday.

The report, jointly published by Huazhong University of Science and Technology and the People's Publishing House, found that funds raised by urban workers in 2017 won’t cover the amount of payments made in the same year.

By 2024, the fund will have accumulated debts in excess of 735 billion yuan, according to the authors of the report.

The report also covers the disparity in live expectancy between different parts of China, noting that as of 2010, those living in more developed coastal areas can expect to live over 78 years, whereas the life expectancy of those living in the far west of the country in regions like Xinjiang, Qinghai and Yunnan was less than 70 years.

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Funds raised by urban workers in 2017 won’t cover the amount of payments made in the same year: report.

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China's one-child policy lives on

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The Conversation

After 35 years of consistently strict government control over family size, China’s so-called “one child policy” seems to be winding down – at least for some. Recent headlines quote the authorities in Shanghai going so far as to plead with their residents to “have more children”.

To the policy’s many critics, this is long overdue: China faces an ageing population, epitomised by the four grandparent, two parent, one child family, and couples all over the country are simultaneously looking after their child and two sets of elderly parents.

Preference for male offspring, combined with birth restrictions, is blamed by many for leaving China’s population with an astonishingly skewed gender ratio: nowadays, there are 33m more men than women. Sex-selective abortions, although officially illegal, are often blamed.

So on the surface, the announcements in Shanghai and beyond seem to herald the Chinese state’s retreat from the domain of birth control. But this is misleading. Once we look beyond the narrow confines of a few global cities and the central government, it’s clear that state control over births is simply being retooled and reworked, not discontinued.

Town and country

The most significant recent changes to state birthing policies took place in 2013, particularly at the Third Plenum, the meeting of the 18th Central Committee of the Chinese Communist Party, which saw the announcement that the one child policy would be officially relaxed to allow families two children if one parent is an only child.

But even at a legislative level, the new “relaxation” is mostly applicable only to urban couples.

By law, rural citizens are already able to have a second child if their first is a girl, and many others have had a second child without permission. So most rural couples will be under the same regulations as before – while single women are still not permitted to have a child outside of wedlock.

Procreation preferences in cities have already been radically influenced by the Chinese state. Nowadays, most urban couples want one child; for them, the cost of living is rising, and many grew up without siblings themselves anyway. After 35 years of restrictions on births, it will take some time for the state to undo the work of its highly effective one child propaganda.

A baby hatch in Heilongjiang.EPA/Wu Hong

Any effective state incentive of births will need more than a relaxation of regulations. The state will need to complement legislative easing with state subsidies on education, childcare and other child related services, so parents can afford to have more than one child.

But Shanghai and a few other first-tier cities do not a country make.

The majority of Chinese citizens still do want more than just one child. That much is can be inferred by the first girl rural policy. Without this exception, leaders feared the “one child policy” would be impossible to implement.

There fears obviously proved well-founded. Some 13m children were recorded as lacking birth registration in the 2010 census meaning many parents illegally had children without permission, and did not register their children because they feared punishment.

So the Chinese state is clearly trying to stimulate childbirth in some cities, such as Shanghai, where couples have fewer children. But in other parts of the country, many couples still have to pay a heavy price for having more than one child.

Dire consequences

There are good reasons why many of China’s regional administrations want to keep the one child mechanisms in place. Local governments still get a significant revenue stream from “social compensation fees,” fines to parents who have had a child without permission. With this revenue, the Population and Family Planning Commission still holds a strong influence over local politics in many areas – so it’s understandable that local governments have declined to relax their birthing policies.

The influence of the commission is amplified in the countryside. Although the merger of the Health and Population and Family Planning Commission took place in the national and provincial governments, the two bodies have not merged in county governments and below. In many rural areas they have separate domains of duty, and separate spheres of influence.

Meanwhile, abandoning birth restrictions would immediately rob many people still have livelihoods linked to institutions controlling childbirth of their jobs. In Henan alone the Population and Family Planning Commission employs 17,000 administrators and 22,000 nursing and technical staff. Support organisations boast a total membership of 9.6m volunteers, tasked with everything from spreading propaganda to monitoring menstrual cycles.

And for those living outside the major cities, the consequences of violating the policy remain dire.

In my own research, speaking to people who have been punished by the one child policy, I found many parents are still being charged fines varying from £3,000 to £33,000 for having a second child. Mothers still face state imposed controls over their contraceptive choices: those with one child should use an IUD, while those with two children should be sterilised.

The central government knows well that institutions as deeply ingrained as this one cannot disappear overnight, and especially not when money is involved. It is therefore allowing only gradual reform, so as to balance the needs of changing demographics with the demands of squeezed local governments.

But we should be cautious in interpreting the latest headlines as the government reducing control over births. Rather, the state’s control continues in a new era: stimulating births in cities, maintaining restrictions in the countryside.

The Conversation

This article was originally published on The Conversation. Read the original article.

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China's cities need more babies, but one child policy still rules the provinces.

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Chinese President accepts US invitation

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Chinese President Xi Jinping has accepted an invitation to visit the United States this year, state media reports.

According to the Xinhua report, President Xi will go to the United States in September on a state visit.

US President Barack Obama also extended an invitation to Japan's Prime Minister Shinzo Abe last week.

The United States will also welcome South Korean President Park Geun-hye and Indonesian President Joko Widodo to the White House this year.

President Xi previously visited the United States for a summit in 2013.

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Xi Jinping accepts invitation from Obama for a state visit in September.

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Thailand is stuck in a US-China tug of war

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Lowy Interpreter

As many analysts have cautioned, Thailand has swung closer to China's orbit since the junta took control in May 2014. This wasn't Nostradamus-level foresight. The US was always going to have a tough time publicly maintaining relations with a military government, particularly with so much riding on Myanmar's democratic transition next door (ie. Hillary Clinton's presidential campaign).

The depth of ties between the US and Thailand, Washington's closest and oldest ally in the region, has made it difficult to take a step back. The knowledge that Beijing would happily pick up the slack left by any weakening of US-Thai relations complicated things further. But as we approach a year since the military seized power, and with no elections in sight this year, the US has upped the rhetoric in the past month to serious effect.

Last month, the US Charge d'Affaires in Bangkok, Patrick Murphy, said in a speech that Thailand should lift the martial law that has been in place since May 2014, adding that the trial of former prime minister Yingluck Shinawatra was 'politically driven'. Bangkok wasn't impressed. The head of the military government, Prayuth Chan-Ocha, rebuked Murphy, explaining that 'Thai democracy will never die, because I'm a soldier with a democratic heart. I have taken over the power because I want democracy to live on.' Bangkok summoned Washington's top diplomat in East Asia to caution that the US should stay out of Thai politics. As Murphy noted this week, US-Thailand relations are going through 'challenging' times.

That euphemism was further highlighted in the past week, when the US followed through with its October promise of a scaled-down version of its annual joint military exercise. Cobra Gold, which began yesterday, is (usually) the world's largest annual multinational military exercise. This year it is smaller. Washington cut the number of troops it sent compared to lat year by nearly a quarter, to 3600. It stopped short of scrapping the event altogether, as this would have had wide-ranging implications across the region. 

Bangkok then played some strong-arm diplomacy of its own. On Friday, during a two-day visit by China's Defence Minister, Chang Wanquan, China and Thailand agreed to boost military ties over the next five years. The agreement includes, among other things, intelligence sharing, cooperation on transnational crime, and increased joint military exercises. 

This US-Thailand-China interplay could further hurt Southeast Asian views of the US 'pivot'. Many in the region will be watching how both the US military and Thai military respond in coming weeks. Any further unstitching of the relationship could unravel confidence in the pivot in Southeast Asia. That could encourage Beijing to boost military-to-military ties with willing Southeast Asian states.

Originally published by The Lowy Institute publication The Interpreter. Republished with permission.

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Baidu launches stock analysis app

Chinese search engine company Baidu has begun beta testing an app for analysing the stock market as interest in local bourses booms.

The app, called "Baidu Gushitong”, draws on daily news, real time stock quotes and ‘data mining of politics and economics’ to provide users with stock picks.

Chinese stock markets were among the world's best-performing in 2014, are down this year. The Shanghai Composite is down 2.9 per cent for the year.

(Leifeng Wang

China’s outstanding TSF up 14.3% in 2014

China’s outstanding total social financing (TSF), rose to 122.86 trillion yuan at the end of 2014, up 14.3 per cent from a year earlier, the central bank said on Tuesday.

TSF is a broad measure of liquidity designed to also capture some lending outside of traditional banking. It was the first time the Chinese government has released such figures.

According to the bank, total stock grew 19.3 per cent on average a year, making outstanding TSF at the end of 2014 8.27 times the amount at the end of 2002.

(The Beijing News

Military launches year-long audit of books

A year-long investigation into the finances of China's armed forces is about to begin, according to a document published by the office of China's Central Military Commission yesterday.

The document says that the financing of all programs during 2013 and 2014 will be investigated in order to expose any irregularities or violations.

(Beijing Times)

Report warns that China's medical insurance fund is unsustainable

China's medical insurance fund is in danger of collapsing, according to a new report in to China's medical and health industry jointly published by Huazhong University of Science and Technology and the People's Publishing House that was released yesterday.

The amount of payments made by urban workers into China's medical insurance fund in 2017 will not be enough to cover the amount of payments made in the same year, according to data contained in the report.

By 2024, the fund will have accumulated debts in excess of 735 billion yuan, according to the authors of the report.

The report also notes on the disparity in live expectancy between different parts of China, noting that as of 2010, those who living in the more developed coastal areas can expect to live over 78 years, whereas the life expectancy of those living in the far west of the country in regions like Xinjiang, Qinghai and Yunnan was less than 70 years.

(Legal Evening News)

SOE debt ratio drops for first time in 7 years

The asset-liability ratio for Chinese state-owned enterprises has declined for the first time since 2008 reports Xinhua.

Citing a source at the State-owned Assets Supervision and Administration Commission (SASAC), Xinhua reports that the asset-liability ratio up to November 2014 cam in at 63.3 per cent , a drop of 0.2 per cent from the previous year.

According to the report, SOEs made a combined profit of 1.28 trillion yuan in the period, an increase of 5 .2 per cent.

(Xinhua)

Anti-corruption investigators accuse SOEs of corruption

China’s anti-graft watchdog has found evidence of corruption in four main state-owned enterprises, state media reports.

According to the report, evidence of wrongdoing has been found in All-China Federation of Industry and Commerce (ACFIC), Southern Airlines, Ministry of Culture and Ministry of Environmental Protection.

In its feedback, China's Central Commission for Discipline Inspection (CCDI) pointed out a variety of instances of suspected corruption in each of the four enterprises. Southern Airlines has “various issues of corruption in its marketing and sales” says the report. Enterprises connected to the Ministry of Culture had been managed “horribly”, and environmental impact reports made by the Ministry of Environmental Protection were brought into question. According to the report, ACFIC had “loosened standards and abused its power when selecting staff”.

CCDI has given feedback to 13 state-owned enterprises so far and is urging all firms to introduce internal reforms.

(CCTV)

Xi Jinping chairs meeting of Leading Group for Financial and Economic Affairs

The Chinese President made remarks about the progress of China's economic reforms during a speech at a meeting of the Leading Group for Financial and Economic Affairs on Tuesday morning in Beijing.

Xi noted that leaders needed to be sure that the plans they had agreed to were being properly implemented and were having the desired effect, that the party's thoughts on economic reform were clear and that the pace of reform was in keeping with demands.

The President emphasised that the most important task of the urbanisation push is to encourage those people who people who are able to hold down a stable job in a city to become residents in an orderly fashion. The President also stressed that there is great potential for investing in infrastructure in the countryside and that the country needs to hasten the reform and innovation of financing mechanisms.

Xi also noted that officials need keep a close watch on recent changes in the international resources market and pick up the pace of efforts to improve the country's strategic oil reserves and push ahead with resource pricing reform. 

In addition to Xi's speech, members of the small group also listened reports on the situation in regard to the implementation of key economic programs, according to a report on the meeting carried by the Xinhua News Agency.

The areas discussed included the new urbanisation plan, the need to ensure the 'security' of staple crops, water and resources, the innovation-driven development strategy

, the establishment of the Asian Infrastructure Investment Bank (AIIB) and the launch of the "Silk Road Fund".

The also discussed the outline of the cooperative development plan for the greater economic region that includes Beijing, Tianjin and Hebei. The front page headline of today's Beijing News picked up on Xi's comments that Beijing needs to be relieved of its "non-capital" functions.

The Leading Group for Financial and Economic Affairs is a 20-odd member party body that sets the direction for economic policy in China. 

In addition to China's President and Premier, members of the Politburo, the head of the PBOC, State Councillors, key central government ministers and other party officials are members of the body.

(Xinhua News Agency

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China injects funds into financial system

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SHANGHAI—China added funds to the financial system on Tuesday as Beijing seeks to ease a seasonal cash squeeze and cope with a slowing economy and capital outflows.

The People’s Bank of China injected a net 45 billion yuan ($7.2 billion) into the money market, in what is shaping up to be the longest streak of pump priming since July with seven straight weeks of injections and counting.

Other efforts by the government to juice up growth included a move last week to relax the amount of reserves banks are required to hold, effectively freeing up $100 billion for loans.

The central bank conducts liquidity operations every Tuesday and Thursday. The latest injection was higher than the average of 39.3 billion yuan a week the PBOC has added to the system over the past seven weeks.

“The PBOC’s latest streak of liquidity injections were mainly aimed at coping with the seasonal surge in demand for cash ahead of the Lunar New Year holiday,” said Gu Ying, interest-rate strategist at J.P. Morgan Chase & Co. He estimates that extra funds needed for the holiday, when demand for cash jumps as consumers spend on travel and gifts for family, amounts to 1 trillion to 1.2 trillion yuan. The holiday begins Feb. 19.

Concerns, though, are lingering that cash is being sucked out of the banking system as Chinese companies go abroad for acquisitions, and as the economy grows at the slowest rate in more than two decades.

“At the same time, the PBOC’s recent moves also reflect concerns about the flight of capital and slowing economic growth,” said Steve Wang, research director at Reorient Financial Markets, a Hong Kong-based research firm.

The PBOC and Chinese commercial banks recorded net foreign-exchange outflows of 118.4 billion yuan in December, after net inflows of 2.17 billion yuan in November.

In a fresh sign of a weakening economy inflation in China fell to a five-year low of 0.8 per cent in January, down from an already low 1.5 per cent year-over-year rise in December. Tuesday’s data on anemic prices are the latest set of figures depicting a Chinese economy that is sliding, despite an interest-rate cut in November and other measures by Beijing to recharge growth.

“I think the policy-easing measures implemented by other countries have also put pressure on Beijing to make monetary conditions more accommodative,” said Mr. Wang.

However, the PBOC still appears somewhat reluctant to loosen policy aggressively, preferring to keep borrowing costs relatively high to rein in reckless lending and excessive investment.

And despite the series of fund injections, the 4.1 per cent interest rate that the PBOC charges banks for 14-day reverse repos looks fairly high in the context of declining inflation, Mr. Gu said. “But with a slowing economy, it is a question how long the current policy stance will stay,” he said.

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China pumps US$7.2bn into financial system; adding to 7 straight weeks of injections.

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