International Business Machines Corp. in 2013 began offering its technology for other companies for use in their own chips and computers. Now some tech firms in China are taking Big Blue up on it.

China’s Suzhou PowerCore Technology Co. said it would offer its own variant of the IBM Power8 microprocessor, the first chip to emerge from the program, which is known as OpenPower. The CP1, as the Chinese chip is called, is expected to be used initially by another Chinese company called Zoom Netcom in a new line of servers called RedPower.

An array of hardware based on Power8 technology was on display at an event in Silicon Valley this week, including prototype circuit boards by Google Inc. and Rackspace Hosting Inc. and servers by China’s Inspur Group Co. The terms of IBM’s OpenPower licensing haven't been disclosed.

For IBM’s partners, a key motivator is the desire to foster competition amid Intel Corp.’s near-total lock on the market for microprocessor chips used in servers, particularly the varieties used by big Web companies and other cloud-

style facilities.

In China, government officials have nurtured local chip makers for reasons that include fears that foreign intelligence agencies could find ways to exploit non-Chinese components. Taking part in IBM’s OpenPower program doesn’t address such concerns, but IBM is encouraging licensees in China and elsewhere to add custom features that they control.

“What we do is we develop based on key industries’ needs,” said Adam Zhu, Suzhou PowerCore’s chairman, in an interview Tuesday on the eve of an OpenPower event in San Jose, Calif.

Mr. Zhu said his company is in discussions with a range of potential customers in China about using the Power8 technology, including communications carriers and power companies. He expects the chip to be ready in June.

Ken King, IBM’s general manager for OpenPower alliances, said Chinese officials endorsed the program last fall, helping to spur demand in the country. “It’s a local China pull versus an IBM push,” he said.

IBM, which has been reducing its reliance on revenue from selling hardware, uses its Power microprocessor line, of which Power8 is the latest, in one of two remaining computer lines. The Power8 is known for extremely high performance.

But the IBM server business that uses the chip line has been shrinking, as the x86 technology used by Intel and Advanced Micro Devices Inc. has become ubiquitous. So Big Blue opted to change its tactics to reach cloud-based services, which have been the most active server buyers lately.

Such customers often favor commodity-style servers and components that are available from many suppliers. So one of IBM’s thrusts is to sell its own Power8 chips to makers of such hardware.

The first is Taiwan’s Tyan Computer Corp., a server supplier that is a unit of MiTAC International Corp. IBM recently said its cloud services unit SoftLayer would offer the Tyan systems as an option.

Other cloud companies have expressed interest in non-x86 servers. Google was an initial member of the OpenPower Foundation; one of the Web giant’s executives, Gordon MacKean, chairs the foundation. The company hasn’t spelled out any plans for deploying Power8 in its own data centers.

Rackspace didn’t initially publicize its involvement with the effort. But the cloud service, besides developing a prototype Power-based server design, says it plans to deploy such systems as an option in addition to servers based on Intel Xeon x86 chips.

Changing hardware technologies can translate into a lot of work for the software developers who patronize cloud services. But Aaron Sullivan, a Rackspace senior director who also holds the title distinguished engineer, said shifting to Power-based hardware has become a lot easier with recent versions of the Linux operating system and other developments.

And the shift could pay off big in many cases, he said. “You can get 10 to 20 times performance gains” from technologies enabled by OpenPower than traditional x86 systems, Mr. Sullivan said.

Intel isn't standing still, offering frequent upgrades to its Xeon line and customizing chips for big cloud customers. The company has been battling not only Power8 but also new chips based on technology licensed by ARM Holdings PLC, the chip design used in most smartphones.

Mark Miller, an Intel spokesman, dismissed the notion that Power8 offers major technical benefits, noting that Xeon sales have risen steadily as IBM’s volumes have fallen.

“Regardless of claims, Intel architecture has demonstrated the best balance of performance, cost efficiency and reliability across the broadest set of workloads,” Mr. Miller said.

Tencent Holdings Ltd. posted a 50 per cent rise in fourth-quarter profit, as the Chinese Internet company continued to draw the bulk of its sales from online games. Now, a big challenge for Tencent is how to build new sources of revenue through its WeChat and QQ messaging and social-networking services.

Investors and analysts see a potential gold mine in WeChat and QQ, which have hundreds of millions of active users in China, where U.S. services such as Facebook Inc. and Twitter Inc. are blocked. So far, Tencent has been generating some of its revenue by offering mobile games through WeChat and QQ, and has added new advertising features to those social platforms.

Still, Tencent’s profit for the three months through December, which came in a little below analyst expectations, was a reminder that the company still has a long way to go to cash in on the popularity of WeChat and QQ.

The company, based in Shenzhen, China, said Wednesday its net profit rose to 5.86 billion yuan ($937 million) from 3.91 billion yuan a year earlier. Its revenue rose 24 per cent to 20.98 billion yuan from 16.97 billion yuan.

The number of users for Tencent’s social platforms continued to grow. QQ’s active users on smartphones and tablet computers increased to 576 million in December from 542 million in September, the company said, while active users of WeChat, which is called Weixin in mainland China, grew to 500 million from 468 million.

Tencent’s revenue from online games, including those played on personal computers as well as smartphones and tablets, rose 41 per cent to 11.96 billion yuan in the quarter. Mobile games offered through WeChat and QQ generated 2.9 billion yuan in revenue, rising from 2.6 billion yuan in the third quarter but at a slower rate of growth than some analysts had projected. Other than the social platforms, Tencent also distributes mobile games through app stores.

At a news conference Wednesday, Tencent executives said China’s mobile-games market is still developing.

“If you look at the number of players for mobile games, it’s actually much higher than players of PC games…but the percentage of people who pay is actually still quite small compared to PCs,” Tencent President Martin Lau said. “There’s still quite a bit of head room to grow.”

In addition to typical mobile games that are basic and easy to play, Tencent is offering more sophisticated, engaging titles such as shooting games that could get more people to spend money while playing, Chief Strategy Officer James Mitchell said.

Investors are hoping that Tencent will keep developing new sources of revenue on top of mobile games.

“Mobile games’ growth is already priced in. The upside [for Tencent shares] will likely depend on advertising revenue,” Jefferies analyst Cynthia Meng said earlier this week.

In the fourth quarter, 82 per cent of Tencent’s revenue came from the business segment that consists mainly of online games, while advertising revenue accounted for only 13 per cent.

Tencent has been gradually adding more advertising features to WeChat and QQ. In January, in mainland China, the company added sponsored posts to WeChat’s “moments” section, a Facebook-like section where users share photos and other status updates.

Last year, Tencent launched a service in China in which companies that have WeChat accounts can pay fees to place ads on other corporate WeChat pages.

“Facebook has been able to build a very large advertising business on a social network,” Mr. Lau said, adding that the factors that make Facebook’s advertising successful also apply to Tencent’s social networks in China. “Advertising will be a major contributor to our revenue.”

Mr. Lau said the company will have to find the right balance to increase its ad revenue without sacrificing user experience.

Carine Chu, a 28-year-old consultant in Beijing who uses WeChat to talk to friends, colleagues and clients, said she started noticing sponsored feeds on WeChat about a month ago. “I don’t really find them annoying. I just ignore them,” she said.

In a note to clients last week, Barclays analyst Alicia Yap projected that revenue from WeChat’s sponsored feeds would reach about 1.89 billion yuan this year and increase sharply next year to 10.2 billion yuan to account for 42 per cent of Tencent’s total advertising revenue.

Another challenge for Tencent is intensifying competition from other Internet companies in China. Tencent, e-commerce company Alibaba Group Holding Ltd. and search provider Baidu Inc. are expanding their businesses through acquisitions and stepping into each other’s turf.

Still, Tencent recently shook hands with Alibaba when rival Chinese taxi-hailing companies Didi Dache and Kuaidi Dache, separately backed by Tencent and Alibaba, agreed last month to merge in a rare deal that brought together the two Internet giants.

“We are competitors, and at the same time, we can be partners,” Tencent Chief Executive Pony Ma said Wednesday. In some areas Tencent can work with its competitors, and “there are many such areas,” he said.

Things are starting to look up for Australia's tourism industry, thanks to the lower exchange rate and steady stream of Chinese travellers, the Reserve Bank says.

Conditions in the industry appear to have improved last year after several challenging years, when the high Australian dollar encouraged Australians to travel overseas instead of domestically.

Although the exchange rate remains high relative to history, its decline since 2013 saw the number of Australians travelling overseas fall in 2013/14, for the first time in at least eight years, the RBA said.

In its quarterly bulletin on Thursday, RBA analysts Corrine Dobson and Karen Hooper said the falling Australian dollar was lifting the spirits of tourism-related businesses.

Cheap petrol was another beacon of hope for the industry, encouraging Australians to do road trips at home, while slow wages growth, courtesy of the sluggish economy, could also see more people travelling domestically rather than embarking on more costly overseas trips, the analysts said.

"In short, the fundamental conditions for domestic leisure tourism appear more favourable than they have been for some time," they said.

Meanwhile, the influx of Chinese tourists which bolstered the industry during its rough patch would continue to strengthen, as incomes and living standards in the world's second largest economy continued to rise, the analysts said.

They said China had displaced the UK as Australia's most valuable market for leisure travel exports, after generating $1.9 billion in 2013/14.

By 2022/23, China would displace New Zealand as Australia's largest source of visitor arrivals.

Tourism is Australia's third most valuable export after iron ore and coal, reaping $18 billion in 2013/14, the RBA said.

But the wind-down of the mining investment boom could continue to weigh on business travel in resource-exposed regions of Queensland, Western Australia and New South Wales, they said.

Japanese brokerage house Nomura believes the Chinese economy will grow at 6.8 per cent this year.

The firm’s chief China economist Zhao Yang believes rapidly cooling investment, which declined from a 20 per cent increase to 10.5 per cent in 2014, is the key headwind against the economy.

Zhao believes China’s economy will face considerable pressure in the next three to five years. However, he argues this painful period of adjustment will be good for structural change and in enabling the release of new dynamic market forces.

90 per cent of all coal-mines in China are making losses, according to an estimate from the state-sponsored China Coal Industry Association.

According to data from the Chinese Bureau of Statistics, profit margins for the industry are at a 10-year low.

At the beginning of 2015, the association predicted production of coal would drop 2.5 per cent, the first time in the last 14 years. Industry analyst Liu Dongna told Chinese media the average profit for coal was 5 to 20 yuan per tonne.

For small and medium sized coal miners, some are even willing to sell at cost to maintain production. The industry is also under pressure from the government to reduce emissions and increase more clean coal production. 

China Mobile, the world’s largest mobile operator by subscribers, saw its net profits plunge 10.2 per cent in 2014 despite fast growth in the number of its 4G customers.

The company earned 641 billion yuan in revenue, up 1.8 per cent from 2013. However, its net profit dropped to 109 billion yuan, its worst decline since 1999. The disappointing result wiped US$9 billion from its market share.

China Mobile has enjoyed strong growth recently due to its first mover advantage in building the world’s largest network of 4G stations. The company built 720,000 4G base stations as of the end of 2014, covering one billion people.

Despite strong growth in mobile subscriber numbers, the company is facing a dilemma of growing without a corresponding increase in profits. Over the top operators like Tencent are taking advantage of ever cheaper and faster telecommunications infrastructure, with its net profits surging 54 per cent. 

"The results are slightly below my expectations for both sales and net," Ricky Lai, a Hong Kong based analyst with Guotai Junan International Holdings told Bloomberg.

"The company had to launch incentive programs to migrate 2G subscribers to its 4G network," Lai said.

It comes despite a 5.1 per cent increase in customers to over 800 million, it said in a filing to the Hong Kong stock exchange, where it is listed.

"We started up 720,000 4G base stations and established the world's largest quality 4G network covering a population of more than one billion people," it said in the filing, adding that it was "facing severe challenges from intensified competition".

In 2013, China Mobile saw its first full year decline since 1999, in what they described as a "crucial year of transformation" and in the face of fierce competition in a saturated market.

High-level officials at China's banking regulator believe that non-performing loans continue to pose financial risks to the economy, according to a Caixin report.

At a recent meeting of China's Banking Regulatory Commission, high-level officials said that regulators needed to be adequately prepared to deal with the potential dangers that have accompanied the build up of bad loans.

The value of non-performing loans at China's commercial banks has risen consecutively for the past 12 quarters, according to the article, and as of the start of December 2014, aggregate NPLs at China's commercial banks totalled 843.6 billion yuan.

Senior management at the CBRC stressed that preventing and controlling financial risk was a perennial task for bank managers and encouraged banks to write-off bad loans in a timely fashion.

Lowy Interpreter

'Always predict disaster', a shrewd academic economist told me some years ago. 'If it happens, you are proved right. And if it doesn't, then catastrophe was avoided by people heeding your wise and timely advice!' Dystopia is, as least for those foreseeing it, a win-win game.

David Shambaugh is a seasoned China expert, and even he admits in his recent essay for the Wall Street Journal that predictions of demise in China have often been made. He refers to the 1989 Tiananmen Square massacre, which caused many to lose faith in the system, saying it would ignominiously collapse as other communist countries did that year and the next. The pessimists were proven wrong. From 1992, China entered a second phase of economic liberalisation, though only under firm unified political control.

Shambaugh knows that the Chinese Communist Party looked long and hard at the reasons behind the collapse of the USSR. He wrote a book about it in 2008. His view then was that the Party could adapt and transform. Evidently he has changed his mind. 

The five reasons he gives for China's imminent political revolution have been exhaustively discussed over the years.

His first refers to capital flight, with officials or members of the elite trying to set themselves up inside and outside China. But this started in the 1980s, almost from the moment some Chinese started to get wealthy. And the political elite were always up to it. Deng Xiaoping's son studied in the US. Hu Jintao's daughter lived there for a while. Non-convertibility of the Chinese currency means movement of their assets is more 'visible' as it goes out of China. Unlike the nomadic super elites elsewhere who can hide the shifts of their capital and assets around the globe easily, Chinese can't. But this doesn't portend impending Armageddon because of a collapse of confidence in the political system. It just means people in China are richer and more of them can do these things now. 

Shambaugh is probably right in saying that Xi Jinping and his hardline war on corruption has made some enemies. But in fact, Xi is using this campaign to edge China towards pragmatic structural changes along the same lines Shambaugh indicates would create better governance in China. He is making officials more accountable and, for all the fear it has created in the administration, the campaign has been popular on the street.

Among the property owning, investment seeking middle class of urban China who will be the warriors that create the country's service-orientated future, the anti-corruption campaign is welcome. For them, the language of stronger property rights and more financial stability in banks and investment vehicles, at least as it is laid out in the Fourth Plenum held last year, is appealing. These are the people Xi and his colleagues have to keep on side, not fat cats in the Party creaming off vast illicit profits for their networks in the state enterprise system. 

Shambaugh is probably right in saying that the game being played out in China now is one of high stakes. It could go horribly wrong. Christopher Coker from LSE delivered a similar warning against complacency in a book on scenarios for conflict between China and the US. 'The best way to avoid war,' he says, 'is to prepare for it.'

Similarly, the best way for China to avoid regime collapse is to prepare for it. The government seems to be permanently in crisis mode. The ugly crackdown on dissidents and activists (including five female ones earlier this month on International Women's Day), as Shambaughrightly says, shows a lack of political imagination. It is almost as if the government is picking on the same old list of easy victims and soft targets. Bashing up dissidents and activists should be stopped. They are the wrong targets.

But Xi, to his credit, has also struck against one of the most unpleasant members of the old elite generation, Zhou Yongkang. This was not an arbitrary strike. There was political logic to it. So far, for all its sprawling, messy character, the anti-corruption campaign does make sense.

Finally there is the biggest question, and one that hovers over much of Shambaugh's article. Beyond shrill nationalism, what precisely does the Chinese Communist Party offer as a belief system and national vision to its people and the world in the 21st century? We know what it doesn't want; some of these things are spelt out in documents like the No. 9 edict Shambaugh refers to from 2013. But beyond national rejuvenation and addressing historic resentments, what is the great China vision which the country and the world can buy into in the coming decades?

If the Party can capture the emotional life and convictions of the Chinese people, then anything is possible. But its message at the moment is one where idealism is mixed with fear and coercion. There needs to be an historic reset, something like a renegotiation of the social contract between the Chinese people and their government. I am not as pessimistic as Shambaugh about the outcomes of this, but I do agree something needs to be done.

The fundamental problem is that this intensely internal issue will have immense implications for the stability and prosperity of the world – and yet the best that foreigners are likely to manage is a bystander seat. 

This article was first published by Lowy Interpreter and is reproduced here with permission.

China's growth, while on track to hit its target this year, could subsequently fall faster than expected if the government falters in enacting necessary structural overhauls, the Organisation for Economic Cooperation and Development said. 

Barring unforeseen developments, Beijing's 7 per cent economic growth target for 2015 is "sustainable and appropriate,"Ángel Gurria, secretary-general of the Paris-based group, told reporters Friday. 

To maintain that approximate rate in coming years, China would need "unwavering commitment to structural reforms," and adherence to the rule of law to transform an economy heavily reliant on investment and manufacturing to one driven by consumption and services, the OECD said in an annual survey of the world's second-largest economy. 

Economic fault lines that could sink growth included a sharp drop in the property market, disorderly corporate defaults and insufficient monetary and fiscal stimulus, and the impact would be felt world-wide, the survey said. 

"Risks are mostly on the downside, and a sharper than projected slowdown of the Chinese economy would have global spillovers both directly through trade and investment channels but possibly also via confidence effects," the organization said. 

China's government is trying to keep the slowing economy from decelerating too quickly and wants to maintain the targeted 7 per cent rate, a pullback from last year's 7.4 per cent, its slowest pace in nearly a quarter century. A key challenge for the government is working through a housing glut, industrial overcapacity and high levels of corporate and local government debt. 

While there was little immediate risk of a systemic real-estate or debt crisis, the slowdown after decades of double-digit expansion might signal a more "deep-seated deceleration," the OECD said. 

Among potential downside risks was an overly sharp slowdown in investment as companies and households pull back, undermining efforts to stimulate growth, the group said. The yuan's loose peg to the US dollar also means the Chinese currency is strengthening along with the dollar, potentially hurting export competitiveness. China also must avoid overly abrupt adjustments that "might trigger a crisis," the report said. 

The OECD, founded in 1960 to promote economic growth and world trade, includes many of the world's most economically developed nations among its 34 members. China is making gains in reaching the economic status of average OECD member economies, though the progress has slowed lately in line with the economy. 

The report devotes considerable attention to China's education shortfalls, citing the gap between the quality of graduates that Chinese schools turn out and the economy's need for more creative, technologically savvy labor. The country's productivity is decelerating and this needs to be reversed given that the population is aging rapidly, the group said. 

"The knowledge taught and skills nurtured at school don't sufficiently match labour market needs," the OECD said, calling for more and better vocational education. 

Many Chinese politicians have tried to learn from Singapore's example. What did the nation's late founding father have to say about China's future?

China will realise yuan capital-account convertibility this year, according to remarks made by Zhou Xiaochuan, the head of China's central bank, at the 2015 China Development Forum in Beijing yesterday.

The central banker noted that China had made capital-account convertibility a goal of its 12th 5-year plan and is committed to finalise it in 2015.

Zhou Xiaochuan said the government was currently working on three fronts to push ahead with yuan capital-account convertibility.

The first was to promote ways of making it more convenient for individuals, both in China and abroad, to invest. The central bank governor said that they had already made preparations to make it easier for domestic Chinese residents to invest in overseas stock markets and other financial products. Likewise, Zhou noted that the current mechanisms through which foreign residents could invest in China's financial products could also be made more convenient and flexible. The central banker noted that China planned to release a series of related policies and trials this year.

The second area in which China planned to make progress in liberalising capital account controls was in relation to a further opening up of capital markets. So those institutions choosing to issue bonds or shares would have greater freedom in terms of setting the currency in which these issuances were denominated and whether they took place in China or abroad.

The third area of reform relates to plans to amend the "Regulations on the Foreign Exchange System".

Malcolm Fraser confounded many, not least those from the party he formerly led.

Liberal deputy leader and Foreign Minister Julie Bishop summed it up in parliament this morning, saying: “I found Malcolm Fraser, as I suspect many Australians did, to be an enigmatic and complex political figure”. 

For many on the left, Fraser went from being intensely disliked to a leading light of the progressive movement.

When I interviewed Fraser in late 2013, his admiration for Paul Keating was enough to make one think his political views had done a complete U-turn. Just a week earlier, Keating had given an address at the Australian War Memorial in which he argued World War 1 had been a war devoid of virtue that arose from the quagmire of European tribalism.

“I agree with Paul Keating, I think it was a good speech of his,” Fraser said. “There's something about Paul, the depths of the man: how he taught himself, how he learned from other people.”

What then, had he thought of Keating’s view of ‘the dismissal’? Only last week, Keating wrote that he’d like to think if Fraser had his time over, he would have let the 1974 parliament run its course.

But when I put it to Fraser back in 2013, he put down his cup of tea and biscuit, leaned across the table and said that Whitlam only ever had two options: to recommend an election or recommend somebody else form a government.

“He wouldn't do either of those things, simply because he knew he was going to get beaten to hell.”

Fraser had changed, but there were some things about him that were forever.

On China too, Fraser changed dramatically in some ways, but in others stayed the same.

At the start of his political career, communist China was a principal threat to Australia’s freedom. In a radio address to his electorate in May 1949, Fraser fretted about China’s invasion of Tibet -- likening it to the Soviet invasion of Hungary three years earlier.

But just a few weeks earlier, in another radio broadcast, Fraser lamented that Australians knew little of Asia. Australia should look to at Asia “from the point of view of an Asian, because if our customs, our manners and our skin are Western, our geographic position is Asian and this makes us Asian,” he said.

In his years in the political wilderness before becoming Prime Minster, Fraser’s attitude to China slowly evolved. No longer was China simply part of a greater Soviet monolith, it was a country with its “own past and often tragic history”.

 “I always thought that China's leaders had great ability and also a very significant capacity to manage affairs, but I was surprised at the pace of reform and the rate of growth in China's economy, certainly in the early days. After a little while I think we came to accept it as the norm,” he told China Spectator.

“I certainly didn't envisage it being the economic power -- and financial power -- that it has in fact become. But it was clearly an important power and it was one that had had significant disputes, arguments with the Soviet Union, which was still regarded as a considerable risk, as an outward thrusting aggressive force. And the politics of the Cold War made it highly desirable to establish a much better relationship with China, to see how far the differences with the Soviet Union went.”

While it had been Whitlam who had opened the door to China, Fraser ensured that engagement with a rising China was to be a bi-partisan approach in Australian foreign policy.

And it was Fraser who, as Prime Minister, was the first to cotton on that post-Mao China would not support communist insurgencies in the region, instead opting to build relationships with other governments.

When Fraser communicated this to Henry Kissinger, his views were met with concern. The Chinese were ‘the most cold-blooded balance of power specialists in the world,’ Kissinger told him. Their aim was to use Australia to place pressure on the US, Kissinger said.

“Well, Henry Kissinger today would say that there must be cooperation, there must be space for China, that competition with China, for power or position or status, he would say is the wrong policy for America. That China must be given space. And he would clearly want to negotiate that -- and I'd agree with that. ” he Fraser told China Spectator in 2013.

Fraser believed it was crucial for all Australians to be open-minded to China’s history and culture and championed the teaching of Asian history, culture and languages in Australian schools. His program was scrapped under the more conservative John Howard.

It was decisions like this that soon had Fraser worried the country was being put on the wrong track. On a visit to China in 1998, Premier Zhu Rongji seemed to echo those concerns.

In conversation with Fraser, Zhu said: “Malcolm, as an old friend of China, I can ask you this. Tell me about Pauline Hanson. Why doesn’t Howard condemn her?”

Fraser eventually concluded that Howard, through the Tampa election, had “let the genie out of the bottle” – and had considered leaving the Liberal party at the time.

“One of the areas where we've gone backwards over the last 20 years is that people have got very red-neck views of those who are not like themselves" he told China Spectator.

“They've been taught that their views are respectable. In the old days, we'd figuratively take a baseball bat to them and make sure that their heads went down the burrow again.” 

International Monetary Fund head Christine Lagarde has welcomed Beijing's creation of a new infrastructure bank.

Lagarde made the comments as she wrapped up a five-day visit to China and after a host of European countries announced their intention to sign up for the China-led Asian Infrastructure Investment Bank (AIIB).

Moves by Britain, Germany, France, Italy and others have caused consternation in the United States and Japan, which lead the World Bank and the Manila-based Asian Development Bank respectively.

Some view the new bank as a competitor to the two institutions.

In a statement issued after Lagarde met Premier Li Keqiang, she hailed Beijing's "impressive efforts" to reform in areas including combating corruption, controlling pollution and "clearing the path to even more engagement with the world".

"I welcomed China's various initiatives in this area, including through the newly established Asian Infrastructure Investment Bank," she said.

Lagarde said the IMF would be "delighted" to co-operate with the new bank, according to China's official Xinhua news agency.

World Bank Managing Director Sri Mulyani Indrawati has also hailed the AIIB, telling Xinhua: "Any new initiative that will mobilise funding in order to fill the infrastructure gap is certainly welcome".

China has embraced the European eagerness to take part in the new body, with state media claiming that the US risks being sidelined.

Beijing touts the $US50 billion ($A64.24 billion) institution as a tool to help meet gaps in financing needs for regional development in Asia.

But US officials have expressed caution amid worries the institution could undermine the World Bank.

China offered to forgo veto power at a new Beijing-led development bank in a proposal that helped attract major European countries despite US concerns. 

Chinese negotiators presented the no-veto position to some of the US's staunchest allies in Europe in the past few weeks, according to individuals involved in setting up the bank. 

The offer proved critical in getting first the UK and then France, Germany and Italy to break with Washington and line up as founding members of Beijing's Asian Infrastructure Investment Bank, these people said. 

In proposing that no single country dictate decision-making at the new bank, Beijing is making a sharp departure from the long-standing practice at the International Monetary Fund. The US has a lock on some big decisions there despite holding less than 20 per cent of the voting shares, a structure that for years has drawn complaints from the rest of the world. 

The progress China has made so far marks a rare victory for Beijing on the world stage, officials from both inside and outside China said, and the careful planning by Beijing is making the new bank a more serious challenge to US dominance of the international economic system in place since the end of the World War II. 

"China is playing the long game effectively," Cornell University economist Eswar Prasad, a former senior China official at the IMF, said. "They are in absolutely no rush. They know other countries will come to them." 

US Treasury officials declined to comment on the effect of China's no-veto pledge. 

Beyond giving up a veto, Beijing is also trying to address concerns from the US and elsewhere about the institution's transparency and governance. 

Jin Liqun, a Chinese official picked by Beijing to set up the bank, has been lining up retired World Bank staffers in Washington to help them work out governance issues and to build up the new bank's credibility with Western countries. One of his first recruits is Natalie Lichtenstein, a former World Bank lawyer. Ms Lichtenstein declined to comment on her role at the new China-led bank. 

Negotiations are still taking place over how the bank will be run and how its board will be structured. Beijing is likely to have the upper hand, if not veto power, over major decisions, said individuals involved in the discussions. That is likely to fuel concerns -- expressed by the US, India and others -- that the bank will ultimately be a tool of Chinese foreign policy. 

Still, Mr Jin, interim chief of the new bank, said over the weekend that more than 35 countries will join as the bank's founding members by the end of this month. South Korea and Australia, key US allies in the Asia-Pacific region, are also expected to come on board by then, according to Chinese officials involved in the effort. 

Meanwhile, the bank is on track to reach its target of $US100 billion ($A127bn) in registered capital, up from the $US50bn initially announced and that China is providing, according to Chinese and Western officials. 

The Obama administration, with little leverage over the Chinese-led bank, is now proposing that the new entity do joint projects with Washington-backed institutions such as the World Bank, which use US-approved rules. 

Japan, meanwhile, has maintained a cautious stance about taking part in the bank right away, Japanese officials said, though Tokyo hasn't ruled out the possibility. 

Beijing's painstaking planning underscores the stakes for Chinese leaders as they try to chart a bigger role for China in world affairs. Just as the World Bank and the IMF has carried Washington's influence to far-flung regions in the past six decades, the new bank has the prospect of doing the same for Beijing, according to Chinese and Western officials. 

President Xi Jinping proposed the new bank in late 2013 to finance infrastructure projects in Asia, where the need far outstrips funds provided by the IMF, the World Bank and the Asian Development Bank. Beijing estimates that between now and 2020 about $US730bn would be needed annually to fund infrastructure spending in Asia. 

Over the past year, however, the US has urged its allies not to sign up for the bank, saying it would be an instrument of Beijing's foreign policy and that without proper governing rules it could contribute to debt and corruption in borrowing nations. 

China has whittled away at the US arguments by convincing Washington's allies that it is serious about meeting global standards for development banks and giving Western firms the opportunity to get involved in new infrastructure projects, according to the Chinese and Western officials. 

"China won't bully other members but will work together with them to reach consensus in all the decisions we make," Mr Jin, the Chinese official setting up the bank, said at a gathering of international business and political leaders on Sunday. "China won't brandish its majority shareholder status," he said. 

At the same time, the Obama administration has been unable to get Congress to pass additional funding for the IMF, leaving on hold a revision of voting rights that would give China and other emerging economies more of a say in decision-making. The lack of progress by the US over the IMF has given China an opening to recruit members to its new bank, said development experts. 

"We have made a complete and total hash of this," Ted Truman, a former Obama Treasury official who is now a scholar at the Peterson Institute for International Economics, said. 

Putting together a governance structure absent a veto is a help to Beijing, according to individuals involved in discussions with Beijing, because it blunts criticism that the bank would be a Chinese preserve used to funnel construction contracts to firms battered by the real-estate downturn within China. 

"It's a smart play to encourage other major economies to join," David Dollar, the US Treasury's former representative in Beijing, who is now a scholar at the Brookings Institution in Washington, said. 

The next formal meeting of chief negotiators is set for the end of this month in Kazakhstan. Beijing hopes to put together the Articles of Agreement -- the basic rules governing the bank -- by the end of June and to get the bank up and running by the end of this year. 

Chief among the unresolved issue is how the voting shares will be split among the bank's founding members. One option is for the bank's 27 or so Asian members to have 75 per cent of the voting shares, with the right of each of those members potentially depending on the size of its gross domestic product. The remaining 25 per cent of the voting shares would then go to non-Asian members, according to those individuals. 

With such a split and voting shares potentially awarded according to GDP, Beijing could round up a majority vote without much difficulty, one of the individuals said. 

Another pending issue is how to structure the board of directors at the new bank. In the World Bank and the IMF, countries are represented by resident directors who are actively involved in the institutions and vote on new projects, programs and policies. Those representatives act as a check on management.

The US has been pushing the Chinese to adopt the same structure, according to those involved in the discussions, but Beijing is resisting. Instead, it wants the bank's management, which will likely mean Chinese officials, to have a more powerful position. 

"I can understand why [the US] or other advanced countries prefer the resident board in this case," Mr Truman, the former Treasury official, said. "We do not trust the likely management." 

Other development experts say resident boards are anachronistic and slow down decision-making. The World Bank is starting a "a fundamental review" of how its governed, said Scott Morris, a former Obama Treasury official who is now a researcher at the Center for Global Development, a Washington think tank. 

"To say that [the new Asian bank] should aim for the 'highest standards' or 'best practices' is kind of an empty target," he said in an email response. 

What’s Antarctica got to do with the price of fish in China?

Unless you’ve been stuck on a remote ice cap, you will know that rising wealth in China is bringing with it an unprecedented surge in demand for protein.

Fish consumption alone in China is forecast by the World Bank to rise 30 per cent in the two decades to 2030 as per capita GDP accelerates 177 per cent. The Chinese are expected to eat 41 kilograms of fish a year, each, compared with 26kg in North America and 17kg in Europe and Central Asia.

This is clearly a big issue for Beijing, which is busy preparing to build a fifth research station and airfield on Antarctica, and is stepping up activity in the frozen territory so the nation’s 1.4 billion can “benefit more” from the region's natural resources, China Daily reports.

China’s largest state-owned agricultural group plans to expand Antarctic fishing operations, focusing on krill, which offers high quality protein that can be processed into food and medicine. It has invested heavily in fishing and processing operations in the Antarctic, spending more than $100 million on its largest fishing boat, and processing 20,000 metric tons of krill products so far.

“The Antarctic is a treasure house for all human beings, and China should go there and share,” said Liu Shenli, chairman of the China National Agricultural Development Group, according to the China Daily article.

The fishing of krill, a minute crustacean on which whales, penguins, seals and sea birds depend, has been limited since 1982 following two decades of unregulated krill fishing in the Antarctic, mainly by the former Soviet Union.

Such limits will dent Beijing’s ability to provide protein to increasingly well off Chinese, who are already the single largest market for seafood in the world.

Source: “Fish to 2030”, World Bank

Liu claims the Antarctic could provide almost 100 million metric tons of krill products annually, equal to the world's current fishing output, and that China should aim to harvest up to two million tonnes a year, up from around 32,000 tonnes now.

Antarctica is recognised as holding about a third of the world’s hydrocarbon reserves as well as oil, gas, coal and iron ore.

China would have to get approval from the Commission for the Conservation of Antarctic Marine Living Resources to ramp up its krill harvests, and an international treaty protects Antarctica from militarisation and mining.

Chinese President Xi Jinping pledged to keep Antarctica free from mineral exploitation and military activity while in Hobart last year.

But the Antarctic Treaty, which underpins Australia’s claim to 43 per cent of Antarctica, is up for renewal in 2048, and members with a larger presence are likely to be more influential.

China signed the treaty in 1983, and may eventually try to overthrow the system, Labor’s David Feeney has warned. Developing nations such as China and India were rapidly boosting their Antarctic presence while Australia was retreating to the fringes, increasing the vulnerability of its claim to the territory.

Feeney wants Australia to improve its air links, build a new base and boost its scientific presence, warning Australia appears in real danger of losing its leadership status in a submission to an ­inquiry into Australia’s Antarctic strategic plan.

Continued underinvestment could impact Australia’s diplomatic standing in Antarctic affairs and potentially threaten the ­viability of its Antarctic claim, he said.

Other countries such as Russia and India have noted Antarctica’s mineral potential, and experts say the economic forces are likely to forge a new polar power group that could override the existing treaty.

While Joe Hockey is busy getting the Foreign Investment Review Board to investigate suspicious house purchases across Australia, notably the $39m Point Piper mansion forced sale after foreign investment rules were breached, a much tougher wrangle over land rights lies ahead over Australia’s claim to the frozen bounty of Antarctica. 

China offered to forgo veto power at a new Beijing-led development bank in a proposal that helped attract major European countries despite US concerns. 

Chinese negotiators presented the no-veto position to some of the US's staunchest allies in Europe in the past few weeks, according to individuals involved in setting up the bank. 

The offer proved critical in getting first the UK and then France, Germany and Italy to break with Washington and line up as founding members of Beijing's Asian Infrastructure Investment Bank, these people said. 

In proposing that no single country dictate decision-making at the new bank, Beijing is making a sharp departure from the long-standing practice at the International Monetary Fund. The US has a lock on some big decisions there despite holding less than 20 per cent of the voting shares, a structure that for years has drawn complaints from the rest of the world. 

The progress China has made so far marks a rare victory for Beijing on the world stage, officials from both inside and outside China said, and the careful planning by Beijing is making the new bank a more serious challenge to US dominance of the international economic system in place since the end of the World War II. 

"China is playing the long game effectively," Cornell University economist Eswar Prasad, a former senior China official at the IMF, said. "They are in absolutely no rush. They know other countries will come to them." 

US Treasury officials declined to comment on the effect of China's no-veto pledge. 

Beyond giving up a veto, Beijing is also trying to address concerns from the US and elsewhere about the institution's transparency and governance. 

Jin Liqun, a Chinese official picked by Beijing to set up the bank, has been lining up retired World Bank staffers in Washington to help them work out governance issues and to build up the new bank's credibility with Western countries. One of his first recruits is Natalie Lichtenstein, a former World Bank lawyer. Ms Lichtenstein declined to comment on her role at the new China-led bank. 

Negotiations are still taking place over how the bank will be run and how its board will be structured. Beijing is likely to have the upper hand, if not veto power, over major decisions, said individuals involved in the discussions. That is likely to fuel concerns -- expressed by the US, India and others -- that the bank will ultimately be a tool of Chinese foreign policy. 

Still, Mr Jin, interim chief of the new bank, said over the weekend that more than 35 countries will join as the bank's founding members by the end of this month. South Korea and Australia, key US allies in the Asia-Pacific region, are also expected to come on board by then, according to Chinese officials involved in the effort. 

Meanwhile, the bank is on track to reach its target of $100 billion in registered capital, up from the $50 billion initially announced and that China is providing, according to Chinese and Western officials. 

The Obama administration, with little leverage over the Chinese-led bank, is now proposing that the new entity do joint projects with Washington-backed institutions such as the World Bank, which use US-approved rules. 

Japan, meanwhile, has maintained a cautious stance about taking part in the bank right away, Japanese officials said, though Tokyo hasn't ruled out the possibility. 

Beijing's painstaking planning underscores the stakes for Chinese leaders as they try to chart a bigger role for China in world affairs. Just as the World Bank and the IMF has carried Washington's influence to far-flung regions in the past six decades, the new bank has the prospect of doing the same for Beijing, according to Chinese and Western officials. 

President Xi Jinping proposed the new bank in late 2013 to finance infrastructure projects in Asia, where the need far outstrips funds provided by the IMF, the World Bank and the Asian Development Bank. Beijing estimates that between now and 2020 about $730 billion would be needed annually to fund infrastructure spending in Asia. 

Over the past year, however, the US has urged its allies not to sign up for the bank, saying it would be an instrument of Beijing's foreign policy and that without proper governing rules it could contribute to debt and corruption in borrowing nations. 

China has whittled away at the US arguments by convincing Washington's allies that it is serious about meeting global standards for development banks and giving Western firms the opportunity to get involved in new infrastructure projects, according to the Chinese and Western officials. 

"China won't bully other members but will work together with them to reach consensus in all the decisions we make," Mr. Jin said at a gathering of international business and political leaders on Sunday. "China won't brandish its majority shareholder status," he said. 

At the same time, the Obama administration has been unable to get Congress to pass additional funding for the IMF, leaving on hold a revision of voting rights that would give China and other emerging economies more of a say in decision-making. The lack of progress by the US over the IMF has given China an opening to recruit members to its new bank, said development experts. 

"We have made a complete and total hash of this," Ted Truman, a former Obama Treasury official who is now a scholar at the Peterson Institute for International Economics, said. 

Putting together a governance structure absent a veto is a help to Beijing, according to individuals involved in discussions with Beijing, because it blunts criticism that the bank would be a Chinese preserve used to funnel construction contracts to firms battered by the real-estate downturn within China. 

"It's a smart play to encourage other major economies to join," David Dollar, the US Treasury's former representative in Beijing, who is now a scholar at the Brookings Institution in Washington, said. 

The next formal meeting of chief negotiators is set for the end of this month in Kazakhstan. Beijing hopes to put together the Articles of Agreement--the basic rules governing the bank--by the end of June and to get the bank up and running by the end of this year. 

Chief among the unresolved issue is how the voting shares will be split among the bank's founding members. One option is for the bank's 27 or so Asian members to have 75 per cent of the voting shares, with the right of each of those members potentially depending on the size of its gross domestic product. The remaining 25 per cent of the voting shares would then go to non-Asian members, according to those individuals. 

With such a split and voting shares potentially awarded according to GDP, Beijing could round up a majority vote without much difficulty, one of the individuals said. 

Another pending issue is how to structure the board of directors at the new bank. In the World Bank and the IMF, countries are represented by resident directors who are actively involved in the institutions and vote on new projects, programs and policies. Those representatives act as a check on management. The US has been pushing the Chinese to adopt the same structure, according to those involved in the discussions, but Beijing is resisting. Instead, it wants the bank's management, which will likely mean Chinese officials, to have a more powerful position. 

"I can understand why [the US] or other advanced countries prefer the resident board in this case," Mr Truman said. "We do not trust the likely management." 

Other development experts say resident boards are anachronistic and slow down decision-making. The World Bank is starting a "a fundamental review" of how its governed, Scott Morris, a former Obama Treasury official who is now a researcher at the Center for Global Development, said. 

"To say that [the new Asian bank] should aim for the 'highest standards' or 'best practices' is kind of an empty target," he said in an email response. 

French energy company Total is seeking the equivalent of up to $US15 billion ($A19.27 billion) from Chinese investors to finance its part of the development of a giant gas field in Russia due to US sanctions, the Wall Street Journal reports.

With US sanctions on Russia over its role in the Ukraine crisis blocking investments there in dollars, Total chief executive Patrick Pouyanne told the newspaper it was looking at Chinese investors to help finance its part of the $US27 billion Yamal liquefied-natural gas project in the Russian Arctic.

"You have a strong willingness to build the project financing" from the Chinese financial institutions, the Wall Street Journal quoted him as saying on Monday.

"It's not an easy task, to be clear. We would have preferred to do it with dollars."

Pouyanne said he hoped to have the $US10 billion to $US15 billion in financing, which may be in euros and yuan, secured by the middle of 2015. He did not cite which institutions may be involved.

The Wall Street Journal said the deal could become the largest reported private corporate deal that Chinese banks have taken part in, beating the $US12 billion syndicated loan to Daimler AG in 2013 in which two of the 34 banks were Chinese.

China is already involved in the Yamal project as China National Petroleum Corp (CNPC) has a 20 per cent stake, the same as Total.

Private Russian company Novatek, which holds the majority 60 per cent stake, aims to begin shipping LNG from the Russian far north in a couple of years.

Pouyanne also announced that exploration for shale oil in the Bazhenov area of western Siberia, which was supposed to get underway in 2014 with Russian oil company Lukoil, had been put on hold due to European sanctions.

Shares in Total were down 1.77 per cent to 46.79 euros in morning trading while the Paris CAC 40 index shed 0.83 per cent overall.

Air China will soon fly direct between Melbourne and Beijing four times a week.

Australia's only non-stop service between the two cities begins on June 1.

China is one of Australia's largest trading partners and also brings the largest number of students and international visitors to the country.

From toy-shaped cigarette lighters to a short-circuting plush rabbit that catches fire, a European safety watchdog has warned of a growing number of dangerous products for sale, with most coming from China.

The watchdog on Monday said it had issued 2435 notifications of unsafe products ranging from children's playthings to clothing and appliances in 2014, which was three per cent more than in 2013.

Sixty-four per cent of the dangerous goods were made in China, including Hong Kong, the same figure as 2013, said the Rapid Alert System (RAPEX), which includes the 28 EU states as well as Norway, Iceland and Liechtenstein.

"For me, as a mother and already a grandmother, the high number of harmful products among toys is alarming, so please beware of what you give your children to play with," said Vera Jourova, the European commissioner for consumer affairs.

"It was also surprising how high a number of harmful products comes to the European market from China," she told a press conference in Brussels.

Toys topped the list of products stopped before they entered European markets or were seized afterwards, at 28 per cent, followed by clothing (23 per cent), electrical appliances (nine per cent) and motor vehicles (eight per cent).

They included soft toys with stuffing that could come loose and choke a child or those with detachable pieces that could be swallowed by them.

In particular there were lighters that resembled toys such as model bicycles and basketballs.

Shoes and leather articles for example may be tainted with allergenic Chromium VI, while fashion jewellery may contain harmful heavy metals.

Just 14 per cent of the dangerous products came from European countries, seven per cent from unknown origins and two per cent from Turkey, according to the watchdog.

Activity in China's manufacturing sector has slipped to an 11-month low in March, according to a private survey.

The HSBC China Manufacturing PMI dropped to 49.2 in March, down from 50.7 in February.

A reading below 50 on the survey indicates contraction, while a reading above 50 on the survey points to expansion.

Analysts had expected the PMI to slip to 50.5 in the month.

Economist at Markit, Annabel Fiddes, said the reading signalled a slight deterioration in the health of China’s manufacturing sector.

"A renewed fall in total new business contributed to a weaker expansion of output, while companies continued to trim their workforce numbers,” Ms Fiddes said.

"Meanwhile, manufacturing companies continued to benefit from falling input costs, stemming from the recent global oil price decline."

"However, relatively muted client demand has led firms to pass on savings in a bid to boost new work, and cut their selling prices at a similarly sharp rate.”