Prime Minister Tony Abbott says Australia will speak its mind on China's territorial dispute with Japan, after his foreign minister was accused of finger-pointing over the East China Sea stand-off.

Julie Bishop expressed concern this week over China's moves to impose an air-defence zone over what it calls the Diaoyu Islands, saying the provocative action was done without consultation and could increase tensions in the region.

That strained diplomatic ties with China, which has described her comments as irresponsible.

But the prime minister says while the issue has to be treated reasonably and proportionately, it is important for Australia to speak out when its interests are at stake.

"We believe in freedom of navigation, navigation of the seas, navigation of the air, and I think there is a significant issue here - that's why it was important to call in the Chinese ambassador to put a point of view to him," Mr Abbott told reporters in Canberra on Thursday.

"We're a strong ally of the United States, we're a strong ally of Japan, we have a very strong view that international disputes should be settled peacefully and in accordance with the rule of law and where we think that's not happening, or it's not happening appropriately, we'll speak our mind."

Mr Abbott dismissed suggestions trade relations with China could be damaged.

"China trades with us because it's in China's interests to trade with us," he said.

"I think China fully understands that on some issues we're going to take a different position to them."

Ms Bishop said Australia was not taking sides in the territorial dispute, but pointed out other countries had expressed concerns about China's actions.

"This is a matter of long-standing Australian policy. We've raised it before and the response from China was to be expected," she told Sky News.

"Australia has a key stake in the region and we would oppose action by any side that we believe could add to the tensions or add to the risk of a miscalculation in disputed territorial zones in the region."

Opposition Leader Bill Shorten said the government had a "rocky start" to foreign affairs after China emerged as a new diplomatic hot-spot as it also tried to rebuild trust with Indonesia following spying revelations.

"We accept that they've had a rocky start in foreign affairs, we want them to get it right," he told reporters in Canberra.

Chinese Ambassador to Australia Ma Zhaoxu issued a statement overnight criticising the federal government's "finger-pointing" and defending Beijing's actions.

"The move is aimed at safeguarding national sovereignty and security of territory and territorial airspace and maintaining the order of flight," he said.

"It is not directed against any specific country or target. China does not accept Australia's groundless accusations."

The United States has also criticised Beijing's establishment of the air-defence zone and Vice President Joe Biden will address the controversy during a trip to Beijing next week.

US Defense Secretary Chuck Hagel told Japanese Defence Minister Itsunori Onodera that China's move "is a potentially destabilising action designed to change the status quo in the region, and raises the risk of misunderstanding and miscalculation."

AAP

China's response to US B-52 bombers in its newly-declared air zone was "too slow", state-run media say, fuelling the clamour for Beijing to get tough against Japan and the US.

Beijing's declaration of a new Air Defence Identification Zone (ADIZ) including Tokyo-administered islands at the centre of a tense dispute between the two neighbours has provoked global concern.

The US has a security alliance with Japan and announced that it had sent two US Stratofortress planes into the zone without obeying Beijing's rules, in an unmistakable message ahead of a visit to the region by Vice-President Joe Biden.

China's defence ministry issued a statement 11 hours later saying the military "monitored the entire process" of the B-52 flights, without expressing regret or anger or threatening direct action.

The Global Times, which is close to China's ruling Communist Party and often strikes a nationalist tone, criticised the reaction as "too slow" in an editorial on Thursday.

"We failed in offering a timely and ideal response," it said, adding that Chinese officials needed to react to the "psychological battles" by the US.

The government-run China Daily added that Washington's move risked fuelling Tokyo's "dangerous belligerence" and putting China and the US "on a collision course. Which will prove much more hazardous than sending military aircraft to play chicken in the air."

China's Communist Party uses nationalism as a key part of its claim to a right to rule, tapping into deep-seated popular resentment of Japan for its brutal invasion of China in the early 20th century.

Such passions are quickly aroused, and Chinese social media users called for Beijing to retaliate against Washington.

"The US's bomber wandered around the edge of our ADIZ, I figure we should respond in kind. One good turn deserves another, right?" wrote one poster on Sina Weibo, a Chinese version of Twitter.

Another said the bomber flights "can only be called a provocation".

One suggested that Beijing should cancel Biden's invitation, saying that if it "now announces that it was not the right time for Biden to visit China, would the US military still enter the ADIZ in the future as they like?"

The Chinese ADIZ requires aircraft to provide their flight plan, declare their nationality and maintain two-way radio communication, or face "defensive emergency measures".

The US and Japan accuse China of raising the stakes in the row over islands known as Senkaku in Japan and Diaoyu in China, and senior administration officials in Washington said on Wednesday that Biden plans to raise Washington's "concerns" about the zone during his visit to Beijing next week.

The trip will allow him to "make the broader point that there's an emerging pattern of behaviour by China that is unsettling to China's own neighbours and raising questions about how China operates in international space", an official said.

China's new ADIZ also overlaps South Korea's zone, incorporating a disputed, submerged, Seoul-controlled rock, and the South Korean military said on Thursday one of its planes had flown through it without informing Beijing.

In Tokyo, an official and a report said Japanese military and paramilitary planes had flown through the air zone without any resistance from Chinese jets.

The country's air force went unopposed into the ADIZ, the Asahi Shimbun reported, citing unnamed defence ministry sources.

A ministry official contacted by AFP could not immediately confirm the report, although the well-equipped coastguard said it had also flown in the area over the East China Sea.

Australia on Thursday refused to back down from criticism of the new air zone after Canberra summoned China's ambassador earlier this week, prompting a furious response from Beijing.

The Philippines also voiced concern on Thursday that China may extend control of air space over disputed areas of the South China Sea.

FT.com

At first glance, Beijing’s designation of an air defence zone in the East China Sea marks a calibrated escalation of its longstanding dispute with Japan about sovereignty of the Senkaku or, in Chinese, Diaoyu islands. A more worrying, and plausible, interpretation is that Beijing has decided to square up to the US in the western Pacific. East Asia is looking an ever more dangerous place.

When Xi Jinping met Barack Obama in California earlier this year, the Chinese president told his US counterpart the Pacific Ocean was large enough to accommodate two great powers. The inference was that the US and China should divide the spoils. Also implicit in the remark, though, was that China would not accept a status quo that saw the US remain the Pacific’s pre-eminent power. At the summit, Obama sidestepped the issue. Now it seems Xi has decided it is time for China to start grabbing its share.

The Senkaku have been administered by Japan since the late 19th century, apart from a spell of US control after the second world war. China restaked a claim during the early 1970s, but for decades did little to press its case. Since the 2008 Olympics, Beijing has adopted a more assertive approach, making regular incursions into the disputed territory’s sea and air space. This has prompted a US warning that the area is covered by the US-Japan mutual security pact.

This US commitment is now being tested. The question Beijing seems to be asking is how far Obama will go to uphold the existing order. China’s strategic objective is to push the US away from its coastline and establish its suzerainty in the East and South China seas. Does an America exhausted by wars in the Middle East have the political will to risk conflict in Asia in order to defend a few uninhabited rocks? It was probably no accident that Beijing’s timing coincided with one of the most troubled periods of Obama’s presidency.

Washington’s decision to send two B52 bombers into the newly designated “air defence identification zone” - flouting Beijing’s demands that flights be notified and thereby risking “emergency defensive action” - suggests it understands the nature of the challenge.

Chuck Hagel, the US defence secretary, called the Chinese move “a destabilising attempt to alter the status quo in the region”. Other US officials were less diplomatic. Beijing, though, is playing a long game. The $64,000 dollar question in east Asia is whether the US has the staying power to resist a sustained Chinese push for regional hegemony?

The immediate impact of Beijing’s new flight rules is to heighten the already significant risk of an armed clash with Japan over the islands. The Chinese zone overlaps with Toyko’s long-established ADIZ. The danger of miscalculation on both sides is far from negligible. In Shinzo Abe, Japan has a nationalist prime minister determined not to be cowed by his country’s more powerful neighbour - nor to be over-influenced by private US warnings that Tokyo should play its part in lowering the political temperature.

Abe is an unabashed revisionist with a dangerous habit of airbrushing the nasty bits from Japanese history. He is also looking for an excuse to amend Japan’s constitution to provide it with something more than a defensive military capability. A clash, accidental or intended, with China around the Senkaku would provide just such a justification.

This leaves Obama in a distinctly uncomfortable position. The US has to make clear to China that it stands behind Japan in the dispute, but at the same time it wants to avoid giving encouragement to Abe to ratchet up tensions in the region. Each and every one of China’s neighbours is watching closely to see precisely where Washington strikes the balance between these two objectives.

For the US there is much more at stake than its relationship with Japan. Beijing’s stand-off with Tokyo over the Senkaku is one of many territorial disputes between China and its neighbours. The new airspace restrictions overlap with the South Korean zone as well as with Japan’s territorial claims. The Philippines is unhappy with Washington for what it sees as a US failure to give it sufficient support in its dispute with Beijing over a group of islands in the South China Sea. Vietnam has a separate quarrel with China over its maritime borders.

Consciously or otherwise, Beijing has now turned control of the air space around the Senkaku into a litmus test of the US security commitment to east Asia. For Washington to accept the Chinese restrictions would be to send a signal to every other nation in the region that the US cannot be relied on to defend the status quo against Chinese expansionism.

Yet to demonstrate its resolve as a resident east Asian power by constantly patrolling the disputed air space is to accept a new source of friction with Beijing. My guess is that Obama, accused of presiding over a collapse of US power in the Middle East, cannot afford to back down over the Senkaku.

Chinese policy makers are nothing if not assiduous students of history. The rise of Germany at the end of the 19th century has long featured prominently in the curriculum of Beijing’s foreign policy elite. China, these officials tell visitors, will not repeat the Kaiser’s miscalculation in uniting Germany’s neighbours in opposition to its rise to great power status. This attentiveness to the past now seems to be taking second place to China’s determination to assert its power. History’s mistakes are often repeated.

Copyright The Financial Times Limited 2013.

China is the only country in the world that could potentially surpass the United States in total economic size, and whose currency, the renminbi, may one day dethrone the US dollar as the dominant international medium of exchange.

So why doesn’t the United States want to contain China’s rise?

My American friends have different answers to the question.

One says that most Americans simply don’t care about comparing the total GDP or GDP per capita of different countries; they care about human rights and democracy. This means the growth of the Chinese economy is not a threat to US interests in the minds of most Americans.  Another explains how America’s interests can be better served by a growing Chinese economy than by a shrinking one. A third went into the history of US containment, pointing out the fundamental difference between China and the former Soviet Union. The latter threatened the existence of the American way of life, while China does not. Therefore, concerted containment of China is not possible in the context of the American political system and how China relates to it.

The truth is that America has not been containing China. If it had, it would not have agreed to China’s entry into the WTO; it would not have permitted massive US trade with (and investments into) China; it would not permit hundreds of thousands of Chinese students to study in America’s best universities; and it would not have proposed the recent Annenberg meeting between President Obama and President Xi and agreed that a similar meeting should be held in China.

But in the eyes of most Chinese citizens, the United States is trying to contain China. It regularly holds military exercises with South Korea; it recently strengthened its military alliance with Japan and openly committed to the defence of islands whose sovereignty is disputed by China and Japan; and it has expanded military relations with Vietnam and the Philippines.

It is plain to them that America is forming a military containment line around the east and south-east of China. This adds to China’s difficulty in resolving disputes with neighbouring countries.

Is there then an inconsistency in the US policy towards China — economic cooperation but military containment — because the former eventually defeats the latter? Or does its dichotomous policy strategy merely reflect a disconnection between the US public and its military and foreign-policy establishment?

A sophisticated analysis would show that the United States is, in fact, pursuing a hedging strategy towards China. If China turns out to be a prosperous country that cooperates to strengthen the existing international order, then these military alliances around China will not be put to use and all parties will be satisfied. But if China becomes a country like Japan or Germany before World War II, then these military alliances can function to help defeat China.

This raises the all-important question of what kind of country China will become.

It should be clear, I believe, that China will, as its power grows, participate actively in the existing international order to better reflect and protect its own interests. But it will certainly not try to dismantle the existing order, since it is basically a good order. China, like other countries, benefits hugely from it. China will claim its legitimate territorial interests in a forceful way. That is because for a country that has lost so much territory in its modern history, territorial issues have become an emotional national touchstone – even though their economic value tends to be insignificant. If the United States somehow stands in China’s way in resolving these issues, then it will be very dangerous for both countries.

What, then, are the values of an American hedging strategy?

Imagine at some point in the future there is a conflict of some military kind over disputed territories between China and a neighbouring country with which the United States has military relations. Will the United States come to the aid of its partner? Hopefully it will not, because there will not be enough US interest involved.

But wouldn’t these military alliances with countries around China help the United States in its negotiations with China in trade and other areas? Don’t they put at least a certain psychological pressure on China? While these circumstances may be somewhat vexing for China, it should relax and simply view them as an indulgence of elements in the American military and foreign-policy establishment, whose purposes are fuzzy at best.

Dr Xinghai Fang is adjunct professor of strategy at the China Europe International Business School (CEIBS), Shanghai.

AAP

CHINA'S air force is on "high alert" and has sent patrols into its new air defence identification zone in the East China Sea, the Defence Ministry says.

China will remain on "high alert" and will take measures to "deal with diverse air threats" in its air space, People's Liberation Army spokesman Shen Jianke said in a statement posted on the ministry's website on Friday.

The air force sent a patrol of fighter jets and an early warning aircraft on Thursday, Shen said.

An earlier report by the ministry said China began patrols on Saturday, the day it declared the zone.

The patrols were "a defensive measure and in line with international common practice", Shen was quoted as saying.

The air defence identification zone (ADIZ) covers the Japanese-controlled Senkaku islands, which lie near oil and gas reserves and are claimed by China as the Diaoyu and Taiwan as the Tiaoyutai.

China declared that aircraft were required to give notice of their intention to fly through the zone or face possible retaliation.

Japan's Kyodo news agency on Friday said Tang Jiaxuan, a veteran Chinese diplomat, suggested to a group of former and current Japanese MPs on Thursday that the two sides set up a new mechanism aimed at preventing incidents between military aircraft.

"Tang's proposal of setting a new safety mechanism fits well with this Chinese strategy of eroding Japan's control of the Senkaku islands," Kyodo said.

Acceptance of a joint military air safety mechanism could be taken by Beijing to imply that Japan formally recognises China's competing interest in the disputed islands, which analysts say is an immediate goal of Beijing's increasing assertion over the islands in recent years.

Several countries have expressed concern at the Chinese move to declare the ADIZ, including the US, Japan and South Korea.

US defence officials said two B-52 bombers flew "a routine, planned training mission" across the edge of the Chinese zone late on Tuesday, and did not identify themselves to Chinese authorities as demanded.

Japan and South Korea also said its air forces flew planes across the zone this week.

The zone overlaps with an ADIZ controlled and expanded by Japan since the US transferred authority in 1969.

In recent months, Asian investors have stepped up hotel acquisitions in Australia – a country they see as the next big frontier for Chinese tourists.

The thinking is that, while most first-time Chinese tourists visit neighbouring South East and North Asia, they will venture further afield to countries like Australia, which is already a sought-after destination for wealthier Chinese.

Sensing the potential, Chinese airlines have dramatically increased flight frequencies to Australia, building on the strong VFR (visiting friends and relatives) market here – and growing business travel between China and Australia.

According to the World Travel and Tourism Council, the Chinese outbound travel market is expected to reach 200 million a year by 2020 – up from 84 million in 2012.

Offshore groups snapping up Australian hotels come mostly from Singapore, Hong Kong and Thailand – each of which has benefitted from the growth in global tourism.

Collectively, offshore investors accounted for some 80 per cent of the $2.6 billion in sales of Australian hotels since 2012. More deals are pending.

Hotel industry experts estimate that possibly as high as 85 per cent of Australian investment grade hotels, valued by Jones Lang LaSalle Hotels at $38.4 billion at December 2011, are in foreign hands – mostly savvy Asian groups.

Trophy hotels like the Shangri-la and Park Hyatt in Sydney, Grand Hyatt and Park Hyatt in Melbourne, Westins in Sydney and Melbourne and the Four Seasons Hotel in Sydney are already foreign-owned.

But noone has come with a more ambitious plan than Tony Fung: a $4.2 billion mega resort with nine luxury hotels, casino and apartments to be built outside Cairns, at Yorkey's Nob, close to the Great Barrier Reef in northern Queensland.

Cairns property sources say Fung's proposal fits well with the vision of the Newman government to turn tourism into a major economic driver in northern Queensland.

A spokesperson for Jeff Seeney, Queensland's deputy premier and minister for state development, infrastructure and planning, says the government is treating Fung's proposal as a co-coordinated project, requiring "whole-of-government" assessment.

Another Hong Kong buyer, Benny Wu, recently acquired the 150-room Acacia Court Hotel in Cairns for around $18 million, taking his total portfolio in far north Queensland to $150 million.

And a Chinese company known as Fullshare Group is moving full steam ahead with a $20-million renovation of the dated Mirage Port Douglas.

Fullshare Group backed Melbourne businessman David Marriner in his purchase of the hotel for $35 million in 2011, but local sources say that the Chinese investors have now bought out Marriner's interest.

Cairns was the playground of Japanese tourists in the 1980s. Locals now hope that the Chinese tourists will find their way there in coming years.

They suggest that direct flights operated by Cathay Pacific and two Chinese airlines – China Southern and China Eastern – will pave the way for Chinese tourist dollars to flow their way.

The buying cycle has coincided with an expansion spree by Asian hospitality and other groups.

Some of the new arrivals see Australia as a springboard to a new market, or to establish a hotel management business.

Singapore's SilverNeedle Hospitality recently took over Sydney-based hotel management company, Constellation Hotels, giving it entry to Australia and geographical diversification.

Elsewhere, large Singapore developer, Far East Organisation, formed a $450 million joint venture with major Australian privately-owned hotel company, Toga Group, in May this year, giving it the opportunity to expand its footprint to a new market.

The Singapore government-linked industrial property developer Ascendas bought hotels from Mirvac Group for $340 million last year to seed its Ascendas Hospitality trust, now listed on the Singapore Stock Exchange.

In fact, the allure of Australian hotels as investment assets is not a transient affair.

Back in 1989, Singaporean Khoo Teck Puat paid $540 million for the Southern Pacific Hotel chain of 44 hotels with 6,200 rooms.

That record was broken this year when the Abu Dhabi Investment Authority (ADIA) paid $800 million for Tourism Assets Holdings' hotel assets.

Industry sources say offshore investors, particularly Asian buyers, come with a long-term mindset. They are prepared for the volatility of the global tourism industry, and convinced of capital growth over time.

They have stepped into the void left by Australia's listed owners – Mirvac Group, GPT Group and Stockland – which chose to jettison their hotel operations in the wake of the global financial crisis.

Some hotels, like the Four Seasons in Sydney, were owned by unlisted funds, and were sold to recycle the capital, says Jones Lang LaSalle’s veteran hotel specialist Mark Durran.

Four Seasons Hotel, built by a Japanese group in 1980s, was sold to Korea's Mirae Asset Global Investments for $340 million this year.

Durran sold three Marriott Hotels to the Malaysian conglomerate, YTL Corp, for $415 million this year. They were previously held in an unlisted Colonial First State Global Asset Management fund.

YTL bought the Marriott Hotels to grow its listed Kuala Lumpur-listed Starhill REIT.

Colliers International's managing director hotels Asia Pacific, Stephen Burt, the former chief executive of Mirvac Hotels, says the Australian market is too small for a listed Australian company to have a "scalable" hotel business. By scalable, he means, a portfolio of around $3 billion worth of hotels.

In contrast, offshore buyers are happy to be able to buy a hotel for, say, $200 million to fit into a regional chain, says Burt.

The Singapore-based Robert McIntosh, executive director of CBRE Hotels, Asia Pacific, says returns in Australia are higher than in Asia.

Also, supply is somewhat static in Australia, compared to a country like Singapore, which has a target to increase the number of hotel rooms by 10-15 per cent each year over the next three years.

AAP

US Vice President Joe Biden has headed to Asia amid heightened tensions over China's newly-declared air defence zone.

During a stop in Beijing, Biden will highlight "areas of concern, including regional tensions," the White House said in a statement on Sunday.

More broadly, the trip to Japan, China and South Korea was planned to emphasise Washington's "enduring presence as a Pacific power... and underscore our commitment to re-balancing US foreign policy towards the Asia-Pacific," the statement added.

Biden is set to return to Washington on December 7.

Senior administration officials said this week that Biden plans to convey Washington's "concerns" about China's air defence zone and seek clarity regarding its intentions with the move.

Japanese Prime Minister Shinzo Abe said earlier that he would discuss the issue with Biden in Tokyo, after apparently contradictory responses.

China raised regional tensions with its November 23 declaration of the zone, which covers islands in the East China Sea at the centre of a dispute between Beijing and Tokyo. It demands that all aircraft submit flight plans when traversing the area.

Tokyo has stopped Japanese airlines from handing flight plans to Beijing, but Washington said it generally expected US carriers to follow notification policies issued by foreign countries.

In addition to meeting with leaders of the three countries, Biden will also speak with civil society representatives.

In Tokyo, he will meet women at a local technology company, and in Seoul, he will commemorate the 60th anniversary of the US alliance with South Korea and deliver a speech at Yonsei University.

President Barack Obama, who spent part of his childhood in Indonesia, pledged in his first term to "pivot" US foreign policy toward Asia.

But he called off a trip to the region in October to negotiate with Republicans who shut down the US government in a failed bid to stop his signature health care reform.

Obama is now slated to visit the region in April.

AFP

New share offerings will resume in China as early as next month, the country's stock regulator said, ending a ban in place for more than a year, after leaders vowed to give private firms a bigger role in the economy.

There are 760 firms lined up for initial public offerings (IPO) in the world's second-largest economy, and about 50 are expected to go to market by the end of January, the China Securities Regulatory Commission (CSRC) said.

Despite a decades-long boom that was triggered by the loosening of state restrictions, China's Communist authorities retain strong controls over much of the economy, including the power to decide which firms can launch IPOs and when.

However, the CSRC issued new guidelines at the weekend to give the market a bigger role in the listing mechanism.

The move was in line with a document issued two weeks ago after a key Communist Party meeting at which Beijing vowed to let market forces play a more "decisive role" in its economic reforms.

China suspended approvals for new IPOs in November last year, just before the country's once-in-a-decade leadership transition, in an effort to stabilise the ailing stock market.

On Monday stocks tumbled as much as 2.16 per cent on worries about the imminent relaunch, but the Shanghai Composite Index recovered to close down 0.59 per cent at 2,207.37.

The guidelines "sparked worries that a flood of IPOs could divert funds from the secondary market", Zheshang Securities analyst Zhang Yanbing told AFP, but added that they "should be positive to the market in the long run".

"The reform of the listing mechanism will help restore the fundraising function, which is the fundamental function of the stock market, and it's beneficial to the long-term healthy development of the market," Zhang said.

Instead of focusing on firms' profitability, the CSRC said it will focus on whether they can meet requirements for information disclosure and let investors and the market assess the value and risks of the IPOs.

But it stressed that government regulation would continue, saying the changes "cannot be understood as the regulator will have no oversight".

"It doesn't mean stock offerings will not be audited or that junk stocks can be easily issued, but rather the auditing system will be reformed," the statement issued on Saturday said.

The CSRC also said it would start a long-awaited trial for companies to issue preferred shares, offering firms a fresh funding channel.

AFP

New share offerings will resume in China as early as next month, the country's stock regulator said, ending a ban in place for more than a year, after leaders vowed to give private firms a bigger role in the economy.

There are 760 firms lined up for initial public offerings (IPO) in the world's second-largest economy, and about 50 are expected to go to market by the end of January, the China Securities Regulatory Commission (CSRC) said.

Despite a decades-long boom that was triggered by the loosening of state restrictions, China's Communist authorities retain strong controls over much of the economy, including the power to decide which firms can launch IPOs and when.

However, the CSRC issued new guidelines at the weekend to give the market a bigger role in the listing mechanism.

The move was in line with a document issued two weeks ago after a key Communist Party meeting at which Beijing vowed to let market forces play a more "decisive role" in its economic reforms.

China suspended approvals for new IPOs in November last year, just before the country's once-in-a-decade leadership transition, in an effort to stabilise the ailing stock market.

On Monday stocks tumbled as much as 2.16 per cent on worries about the imminent relaunch, but the Shanghai Composite Index recovered to close down 0.59 per cent at 2,207.37.

The guidelines "sparked worries that a flood of IPOs could divert funds from the secondary market", Zheshang Securities analyst Zhang Yanbing told AFP, but added that they "should be positive to the market in the long run".

"The reform of the listing mechanism will help restore the fundraising function, which is the fundamental function of the stock market, and it's beneficial to the long-term healthy development of the market," Zhang said.

Instead of focusing on firms' profitability, the CSRC said it will focus on whether they can meet requirements for information disclosure and let investors and the market assess the value and risks of the IPOs.

But it stressed that government regulation would continue, saying the changes "cannot be understood as the regulator will have no oversight".

"It doesn't mean stock offerings will not be audited or that junk stocks can be easily issued, but rather the auditing system will be reformed," the statement issued on Saturday said.

The CSRC also said it would start a long-awaited trial for companies to issue preferred shares, offering firms a fresh funding channel.

AAP

British Prime Minister David Cameron oversaw the signing of agreements in areas from legal assistance to space exploration during an official visit to China that replaces one earlier scrapped by Beijing in retaliation for his meeting with the Dalai Lama.

Cameron was leading Britain's largest-ever trade mission to China, with six government ministers and representatives from business, universities and the health care sector on a three-day visit that started Monday.

Cameron was expected to voice support for a deal to free up trade between China and the European Union, China's largest trading partner. Such a deal could be worth up to STG1.8 billion ($A3.25 billion) a year to the British economy, according to the UK government.

Economic exchanges with Britain were held up after Cameron met last year with the Dalai Lama, Tibet's exiled Buddhist leader, whom China reviles as a separatist. Those exchanges were restored only in October following London's assurances that Cameron had no further plans to meet the 78-year-old cleric.

Cameron met with Chinese Premier Li Keqiang on Monday and oversaw the signing of 10 agreements that included a treaty on legal assistance in criminal matters, a pact on space exploration cooperation, and agreements on enhancing bilateral investment and developing China's use of gas.

Separately, an agreement was announced to expand the British Premier League's program to train Chinese coaches and referees and to boost cooperation between it and China's top-flight Super League.

Cameron told Li the delegation was interested in building trade relations.

"We particularly want to explore all the opportunities of economic openness, openness of Britain to Chinese investment, which we've seen huge amounts of in recent months and years, but also the opportunities for further opening our trade relations," Cameron said.

Neither leader mentioned the Dalai Lama meeting in their statements after the signing ceremony, although Li said China appreciated Britain's respect for its "core interests and its major concerns."

Cameron said discussions should include "those issues where we have differences," and said Britain looked forward to holding a human rights dialogue with China early next year.

"We should approach these with mutual respect and understanding, as we did today," Cameron said.

AAP

US Vice President Joe Biden will meet Japanese leaders on Tuesday, with Tokyo hoping for some fulsome backing in its vicious territorial spat with China.

Biden arrived in Tokyo late Monday on the first leg of an Asian tour that will also take him to Beijing and to Seoul.

Tensions in the region are at their highest for years, with China and Japan squaring off over a chain of uninhabited islands in the East China Sea.

"In Tokyo, the Vice President will reaffirm the enduring strength of the US-Japan alliance as a cornerstone of peace and stability in the region," the White House said in a statement.

Last month, Beijing declared an Air Defence Identification Zone, or ADIZ, over the East China Sea, including the disputed chain, in which it warned all aircraft had to obey Chinese orders or face unspecified "defensive emergency measures".

The US, Japan and South Korea, angry at the declaration, have all sent military or paramilitary aircraft into the zone since.

In Washington, senior administration officials said Biden, who is expected to meet Chinese President Xi Jinping in Beijing later this week, plans to convey Washington's "concerns" to China and seek clarity regarding its intentions with the move.

Japanese Prime Minister Shinzo Abe will be looking for Biden to bolster his position that China is being unreasonable and aggressive, said Takehiko Yamamoto, professor of international politics at Waseda University in Tokyo.

"But at the same time, Washington does not want to take the risk of damaging its bilateral ties with China," he said.

"Biden will deliver the message to the Chinese side but may also seek to play a role in mediating," he added.

Analysts point out that Tokyo and Washington appear at odds over instructions to their airline flying over the zone, with Tokyo telling its firms they should not comply and the US advising American companies that they should.

Biden will move to Beijing on Wednesday to hold talks with Xi before flying to Seoul, where he is to meet South Korean President Park Geun-Hye.

By a staff reporter

Qantas has signed a landmark deal with Asia's largest airline China Southern in a bid to increase Chinese tourism, The Australian reports.

According to the newspaper, Qantas customers will be able to book China Southern flights from Sydney, Melbourne, Brisbane and Perth to Guangzhou and four onward destinations in China.

Qantas chief executive Alan Joyce welcomed the addition of a new partner in the world's fastest growing aviation market.

"The Qantas Group presence has never been stronger in Asia. When you factor in our direct passenger and freight services, as well as Jetstar and our codeshare partners, around one sixth of our total revenue now comes from Asia" he said in Guangzhou.

The new arrangement follows Qantas' deal with China Eastern earlier this year.

The Australian reports China Southern plans to boost its Australian capacity to 55 services a week within two years.

By a staff reporter

Citic Pacific has made its first shipment of iron ore concentrate from its Sino Iron project in Western Australia's Pilbara The Australian reports.

The shipment or iron ore concentrate is the first of an expected 40,000 tonnes to be delivered to China's Jiangsu province and comes after four years of delays and a cost blowout of $6.6 billion.

According to the newspaper, only Chinese media were present at the historic event as an attempt to keep it secret from federal MP Clive Palmer.

Mr Palmer is in a legal dispute with Citic Pacific, the operator of his Sino iron project in the Pilbara, over royalty payments.

The Australian reports that Western Australia Premier Colin Barnett attended the ceremony with Citic Pacific chairman Chang Zhenming.

The Sino Iron project is the first Chinese-built mining project in Australia and the biggest investment in Australia's resource sector.

It is expected to yield 24 million tonnes of concentrate per year.

By a staff reporter

Activity in China's non-manufacturing sector slowed in November, bur remained in expansionary territory according to official data released by the country's National Bureau of Statistics.

The non-manufacturing purchasing manager's index (PMI) fell to 56.0 in November from a level of 56.3 in October.

A PMI reading above 50 indicates an expansion, whereas a reading below indicates contraction.

AAP

Business deals worth a total of STG5.6 billion ($A10.12 billion) and creating 1500 jobs in the UK have been struck during the first day of Prime Minister David Cameron's visit to China, according to Downing Street.

They include a STG6 million contract for Manchester-based Sweet Mandarin foods to supply gluten- and monosodium glutamate-free Chinese sauces to China.

The bulk of the value of the deals was covered by a STG4.5 billion agreement secured by Jaguar Land Rover to deliver 100,000 vehicles for sale in China over the next year.

Wiltshire-based Moulton cycles got a 500,000 order with a Chinese distributor to supply a special model created which is only going on sale in China.

And Surrey Satellites signed a STG110 million agreement with a Chinese technology company to work on a new satellite system under the auspices of a memorandum of understanding on UK/China space co-operation signed by the chief executive of the UK Space Agency, David Parker, and his Chinese counterpart.

An automotive company by the name of Chang-An has announced that it will base its STG60 million new European research and development centre in the West Midlands, creating 250 jobs by 2017.

Rolls-Royce aero-engines have sealed a STG70 million contract to get involved in supplying infrastructure for a power systems company.

The Peel Group has announced plans to build an international trade centre in The Wirral with the hope of attracting 300 Chinese businesses.

London-based SolaQuaGen is to invest in desalination plants to provide clean drinking water in China, in a deal valued at STG225 million and expected to create more than 750 jobs in Britain.

AAP

Intelligence and security agencies are reportedly investigating a suspected industrial espionage case at Australia's top scientific organisation, the CSIRO.

Federal police and intelligence officials are looking into the activities of a Chinese national who until last week worked in the CSIRO's highly sensitive nanotechnology laboratory in Melbourne, Fairfax Media reports.

It says the post-doctoral student is being investigated for allegedly accessing sensitive CSIRO data and a focus of the probe is determining whether the man sent CSIRO information to a foreign power.

The CSIRO's nanotechnology area works closely with Australia's Defence Science and Technology Organisation.

A CSIRO spokesman told Fairfax Media a matter relating to the possible unauthorised access and use of a section of CSIRO IT infrastructure by a CSIRO employee had been referred to Australian Federal Police.

The man's alleged activities are understood to have been detected last week by the agency's internal security.

AAP

Britain should recognise it is not a big power but "just an old European country apt for travel and study", Chinese state-run media has snapped as Prime Minister David Cameron visited.

"China won't fall for Cameron's 'sincerity'," the headline of the sharply-written editorial in the Global Times newspaper said on Tuesday, after Beijing was outraged by Cameron's meeting with the Dalai Lama last year.

The meeting had led to a diplomatic deep-freeze between the two nations.

But on Monday the British prime minister met Chinese Premier Li Keqiang in Beijing where he signed a series of trade deals, before holding talks with President Xi Jinping.

On Tuesday, Cameron continued what embassy officials said was the largest ever British trade mission to China with a visit to the commercial hub Shanghai.

The prime minister has taken more than 100 businesspeople with him to China, including the heads of Jaguar Land Rover, Rolls Royce and Royal Dutch Shell and the chief executive of the London Stock Exchange.

The prime minister met with Jack Ma, founder of China's leading e-commerce firm Alibaba and the eighth richest man in the country, and Li Shifu, the chairman of Geely, one of China's biggest car makers.

Earlier this year Geely bought the makers of the London taxi, Manganese Bronze Holdings, after acquiring Sweden's Volvo in 2010.

Cameron posted pictures of himself online meeting Li next to one of the distinctive cars.

"Making me feel at home - black cabs are becoming a big feature here," he tweeted, soon after posting another Tweet saying: "A successful day in Shanghai promoting British exports."

Cameron has kept human rights firmly on the sidelines during his time in China, but the Global Times said his three-day visit "can hardly be the end of the conflict between China and the UK".

"Beijing needs to speed up the pace of turning its strength into diplomatic resources and make London pay the price for when it intrudes into the interests of China," the editorial said.

China denounces the Dalai Lama - who says he only wants greater autonomy for Tibetans - as a dangerous separatist.

"The Chinese government will surely show courtesy to Cameron. But the public does not forget his stance on certain issues," the paper added.

The editorial also criticised what it called London's interference in the "transition process" of Hong Kong, a British colony before its reversion to China in 1997. It is due to adopt universal suffrage to choose its chief executive in four years' time.

The paper warned that "Sino-British ties can be halted again" over the issue.

"The Cameron administration should acknowledge that the UK is not a big power in the eyes of the Chinese," it added.

"It is just an old European country apt for travel and study."

The Global Times has close ties to the ruling Communist Party and often takes a nationalist stance.

Asked if Cameron was disappointed by the remarks, his spokesman in London pointed to his positive meetings with Premier Li Keqiang and President Xi Jinping a day earlier.

AAP

US vice-president Joe Biden has held talks in Tokyo saying the United States is "deeply concerned" about a new Chinese air zone that has provoked fury in Japan.

The Japanese government said it was confident it would get US backing for its opposition to what it called an "extremely dangerous" move by Beijing, which asserted rights to control aircraft over a swathe of the East China Sea, including disputed islands.

"We remain deeply concerned by the announcement of a new Air Defence Identification Zone (ADIZ)," Biden told the Asahi Shimbun on Tuesday ahead of his tour of northeast Asia, which will also take in China and South Korea.

"I believe this latest incident underscores the need for agreement between China and Japan to establish crisis management and confidence-building measures to lower tensions.

"I will reaffirm the strength of our alliance commitments and emphasise the importance of avoiding actions that could undermine peace, security and prosperity in the region," Biden told the paper.

Tensions in the region are their highest in years with China and Japan squaring off over a chain of uninhabited islands in a feud that has some observers warning of the danger of an armed confrontation.

Nerves are particularly frayed after Beijing's proclamation of the ADIZ, in which it says all aircraft must obey its orders or risk unspecified "defensive emergency measures".

"China's declaration of an air defence identification zone is an attempt to unilaterally change the status quo, which can invite unexpected situations and is an extremely dangerous act," Japan's Chief Cabinet Secretary Yoshihide Suga told reporters ahead of Biden's one-on-one with Prime Minister Shinzo Abe.

"Japan and the United States share the position that China's ADIZ is unacceptable.... I think (Biden) will head to China to discuss various issues including this, with his understanding of Japan's position," Suga said.

Beijing's announcement of the ADIZ provoked anger in Tokyo, Seoul and Washington, who all sent military or paramilitary planes into the zone in defiance of Chinese orders.

In Washington, senior administration officials said Biden, who is expected to meet Chinese President Xi Jinping in Beijing later this week, plans to convey Washington's "concerns" to China and seek clarity regarding its intentions.

Analysts are divided over whether it was a clever long-term move by Beijing in its bid to undermine Japan's claims to control the disputed islands, or an over-reach by an administration that does not fully appreciate its impact.

Abe will be looking for Biden to bolster his position that China is being unreasonable and aggressive, said Takehiko Yamamoto, professor of international politics at Waseda University in Tokyo.

"But at the same time, Washington does not want to take the risk of damaging its bilateral ties with China," he said.

"Biden will deliver the message to the Chinese side but may also seek to play a role in mediating," he added.

Analysts point out that Tokyo and Washington appear at odds over instructions to their airlines flying through the zone, with Japan telling its carriers they should not comply and the US advising American companies that they should.

After a morning coffee with Irish premier Enda Kenny, who is staying at the same hotel on a five-day visit to Japan, Biden went to the US embassy where he met with new ambassador Caroline Kennedy and Japanese Deputy Prime Minister Taro Aso.

He is expected to meet Crown Prince Naruhito later in the day before a formal meeting and dinner with Abe.

Biden will move to Beijing on Wednesday to hold talks with Xi before flying to Seoul, where he is to meet South Korean President Park Geun-Hye.

By a staff reporter

Activity in China's services sector expanded in November, but at a slightly slower rate than in the previous month.

The HSBC China Services Purchasing Managers’ Index (PMI) printed at 52.5 in November, down from 52.6 in October.

A reading above 50 signals expansion, while a reading below signal contraction.

HSBC head of Asian economic research Hongbin Qu said service sectors maintained a steady pace of growth in November, "translating into the third consecutive month of employment expansion".

"However, the moderation of new business and prices-charged growth implies that the underlying growth momentum started to soften," he said.

All those western market analysts who are worried and reacting negatively to the ‘slowdown’ in China perhaps need a lesson in reading Chinese economic tea leaves. The tea leaf reading also needs to include an understanding that China is reformatting its economy with the intent of shifting from dominance on state-owned business to reliance on small and medium enterprises.

I had such a lesson in Macau last week attending the International Small Business Pan-Asia Congress.

Speakers from Hong Kong, Macau, Taiwan, Korea, Japan, Indonesia and Malaysia discussed how their region, under the shadow of the colossus of China, is surging economically, dominating global growth now and set to do so throughout this Century.  

Li Zhi Bin, chairman of the China Association of Small and Medium Enterprises, brought to the forefront the scale of this economic surge, describing in some detail the significance of the Chinese Communist Party’s recent Congress and the Plenary Session held last month.

He described the series of announcements and papers from these peak CCP events as being the most significant in 35 years, since that of the opening up of China by Deng Xiaoping.

The aim of the CCP is for China to be a fully-fledged market economy by 2050, being "wealthy, democratic and socialist." While ‘wealthy and socialist’ may be easy concepts for China to grasp, we don’t yet know what the idea of ‘democratic’ means within the framework of CCP thinking.

The CCP has accepted that the dominance of the government sector and government commercial enterprises is interfering in its goal of a market economy and that it is suppressing innovation. One of the six pillars of this CCP reform program is to rebalance government with the market in China, Zhi Bin said. This means small and medium enterprises (SMEs) will be put at the centre of economic activity.

SMEs make up more than 90 per cent of private companies in China, Zhi Bin said. These 35 million registered businesses contribute 60 per cent of GDP, 50 per cent of tax revenue, hold 65 per cent of patents and produce 80 per cent of all new products. And they are recognised as the most significant of social stablisers because they employ 80 per cent of the workforce.

A little while ago an associate of mine, who has more than 30 years of doing continuous business in China, made an important observation: he said that the CCP knows its hold on power is dependent on delivering continuous economic growth and prosperity in China.

If that’s so, the new CCP economic reform program can be understood within a CCP self-interested political motivation. Big business, particularly government owned and controlled business, concentrates wealth. Small business is both the major driver of economic growth and broad wealth distribution in any society. Conceptually, the CCP must both enable economic growth and ensure wealth is spread throughout the Chinese population. Enabling small business is becoming critical to the CCP.

This message seemed to come through (by implication) in Zhi Bin’s comments. SMEs are key to the rebalancing of the private sector with state-owned enterprises, he said. Reforms are to proceed in areas of legal treatment, access to resources, particularly finance, approvals processes and much more.

Specifically these reforms include the creation of SME-syndicated loans and bond arrangements, a third party credit rating system, an SME development index and the central government working with local governments to ease regulation burdens.

These specifics reveal that even with the massive growth of China over the last few decades, its transformation from a closed communist state to a functioning market economy continues as a significant journey. China still doesn’t have many of the institutional supports for business that are normal in market economies.

Some China observers treat such ‘blue sky’ statements with caution, claiming the CCP has a history of overstating and under-delivering. Still, close attention should be paid; Xiaoping’s statements of reform 35 years ago were probably treated with skepticism. Certainly over time the CCP has delivered for China what was promised.

Ken Phillips is executive director of Independent Contractors Australia and author of Independence and the Death of Employment.