The People’s Bank of China and the China Banking Regulatory Commission have eased mortgage lending restrictions for the first time since the global financial crisis in an effort to boost the ailing property sector, which is regarded as the weakest link in the country’s slowing economy.

People applying for a mortgage to buy a second home may now be eligible to pay less of a down payment and take advantage of lower interest rates.

Some second-home buyers will be able to enjoy the same interest rates and down payment levels that were previously only available to first-home buyers, according to a statement posted on the central bank’s website.

Under China’s existing rules, first home buyers need to pay at least a 30 per cent down payment, but, for people who want to buy a second home, a down payment of 60 per cent is required.

Banks are barred from lending money to people who want to buy third or subsequent property.

Commercial lenders will also now be permitted to offer as much as a 30 per cent discount on the central bank’s benchmark lending rates to eligible home-buyers.

Students have papered the Hong Kong government office in Sydney with messages urging on the pro-democracy "umbrella revolution" protesters overseas.

In an action organised on social media, young Hong Kong natives have surrounded Hong Kong House in Sydney's CBD to build a mosaic of newspaper clippings and Post-It notes bearing messages of solidarity and support.

Yellow ribbons, a symbol of democracy and dissent, have also appeared through the railings outside the building.

"Hong Kong for Hong Kongers! Beijing get lost!" and "Stop the violence against the peaceful protesters" are just some of the messages written on the hundreds of notes stuck to the wall.

"Keep fighting! Supporting the students from Sydney", reads another.

Written in Chinese and English, the notes range from philosophical statements about the "slow march of democracy" to exhortations urging the homeland protesters on.

In the past week, Hong Kong has been rocked by thousands of young people swamping the streets in their push against Beijing's clamp down on elections in the region.

Notes in Sydney also bear the numbers "689", a coded reference to the June 1989 Tiananmen Square student massacres, the memory of which is invoked in these latest student uprisings.

"Remember Tiananmen Square! Stand strong for our rights," reads a note.

Hong Kong House next to Sydney's Town Hall is the defacto Sydney headquarters of the semi-autonomous region, housing the Hong Kong Economic and Trade Office, Trade Development Council and Tourism Board.

Government officials were away on Wednesday celebrating Chinese National Day.

Protesters are due to converge on the Chinese Consulate in Sydney on Wednesday for a midday rally.

East Asia Forum

China is shifting up a gear in its drive towards national emissions trading. Yet, for carbon pricing to be effective, market reform in China’s energy sector will be needed — a big task that will bring benefits not only for the environment but also to the quality of China’s economic growth.

China’s National Development and Reform Commission recently announced that a national emissions trading scheme would start as early as 2016. This surprised many experts who had expected a later start, perhaps around 2020.

This was followed up last week by an announcement that China’s national carbon market will encompass three to four billion tonnes of carbon dioxide by 2020 — twice the size of the EU emissions trading scheme — and that it would expand after 2020.

The statement did not only give numbers for the likely extent of the scheme but also an implicit expected price range: the market would be worth between RMB60–400 billion (about US$10–65 trillion). This implies an average price of RMB20–100, or between US$4–17, per tonne of carbon dioxide at the current exchange rate. So it could be as much as double the current EU trading price.

Any given carbon price can potentially have a much larger effect in the Chinese economy than in Europe or other Western countries. That is because the emissions intensity — the ratio of carbon dioxide to GDP — of China’s economy is three to seven times higher than the emissions intensity of Europe (depending on whether GDP is measured in terms of purchasing power parity or exchange rates).

But an emissions trading scheme will be effective only if markets are allowed to work. If companies can save money and increase profits by cutting emissions, they will have effective incentives to shift to lower carbon energy and to further improve their energy efficiency.

On the other hand, if prices are locked in by regulation, if investments are decided more on political objectives than future earnings potential, and if operation of industrial installations is guided tightly by regulations, then a carbon price will not do much to cut emissions.

Pervasive government direction is still the norm in China’s energy sector, especially in the power sector where much of China’s emissions savings could come from. Electricity prices are fixed, power plants have government-determined annual running times, and investments in new power plants by state owned enterprises are not necessarily optimised for lowest cost and highest returns.

This spells the need for energy sector reform to make emissions trading — or a carbon tax — work properly. Such reforms are right in line with the Chinese leadership’s stated ambition to allow the market to play a more central role in determining economic decisions. And they do not need to be completed before a price tag is put on emissions, the two can proceed in parallel.

Markets will show up what is economical and what is not in China’s energy sector. The benefits are likely to be large indeed. An energy sector that reacts nimbly to changes in prices will find enormous opportunities to save energy and to make better use of the ample investment funding that is available in China.

And most of the changes will benefit the environment. It is a case of less cost and less pollution for the same amount of energy produced, which in turn can power more economic output.

Putting a price tag on emissions could also help improve the quality of China’s economic growth. As Teng Fei of Tsinghua University and I have argued, the benefits of shifting China’s economy to ‘greener’ growth are often ignored in economic analyses.

One benefit is more predictable energy system costs when nuclear power or more renewables are used instead of coal, oil and gas. Another is to help re-orient the economy towards a greater share of high value-added manufacturing and services. A third is the potential for economy-wide productivity gains resulting from greater energy productivity.

Of course, the mere existence of large economic and societal gains from market reform does not guarantee such reform is implemented. The experience in many countries — developed and developing — has been that powerful vested interests or popular opposition stand in the way of energy sector reform, whether to cut carbon emissions or other objectives. Changing energy prices, and changing regulatory and ownership structures can have large effects on established economic interests.

But, despite the difficulties, the present Chinese leadership seems determined to make things happen. Cutting carbon emissions is clearly high on the political agenda. The fact that the central government is pushing hard for a national emissions trading scheme when the seven pilot trading schemes have been in operation for only about a year is a sign of that determination.

Sweeping change could come quickly.

Frank Jotzo is Director of the Centre for Climate Economics and Policy (CCEP), Crawford School of Public Policy, the Australian National University and receives funding from the Australian Research Council.

CCEP is involved in a collaborative research program on China’s climate and energy policy with Tsinghua University. The program is partly funded by an Australian government grant.

Lightly regulated "shadow banking" has grown to huge proportions in the global financial system and increasingly poses a risk to stability, especially in the United States, the IMF says.

More than $US70 trillion ($A75.74 trillion) in assets are handled by shadow banks around the world, Gaston Gelos, chief of the Global Financial Analysis Division at the International Monetary Fund, told journalists in a briefing on Wednesday.

"It's quite large," he said.

"It's very important to understand what's going on there to be able to assess risks."

The sector includes lightly policed institutions like mutual funds, money market funds, wealth management funds in China, and finance companies in emerging economies, that take money from investors and lend it like banks.

They have grown larger in the extremely low interest-rate environment of the past six years, as investors seek higher yields on their money and banks tighten up under tougher post-crisis regulation.

But an IMF report says the risks are high because shadow banking largely depends on short-term funding.

In a scare, it says, the impact of panic withdrawals can snowball into the broader financial system and global economy with outsized impact.

That was seen in the financial crisis in 2008, when US money market funds that were important lenders in Europe faced large redemptions, and with the near-collapse of companies like insurer AIG.

Since the crisis the power of shadow banks has only grown, the IMF report notes.

In the United States, shadow banks have nearly twice as much assets than banks, and in the eurozone their assets have reached 60 per cent of the banks.

In developing countries the figure is close to 60 per cent.

The report said shadow banking serves a good purpose, broadening access to credit, especially in emerging-market economies.

But it said authorities need to have more information on the sector to gauge the level of systemic risk, and to regulate where possible.

Australia has urged China to allow the people of Hong Kong "a genuine say" in their elections as protesters refuse to budge in the semi-autonomous territory.

Thousands of pro-democracy demonstrators have been rallying all week in Hong Kong against China's announcement that it would vet candidates in the city's 2017 election.

The protests - dubbed the "umbrella revolution" - are the largest in decades and are tipped to grow during Wednesday as China celebrates its national day.

Protesters have refused calls from Hong Kong's leader - the Beijing-backed Leung Chun-ying - to disperse and there have been clashes with police.

Foreign Minister Julie Bishop urged the protesters to maintain the peace.

"We recognise the right of the people of Hong Kong to protest, but it must be peaceful," she told AAP on Wednesday.

"We certainly urge the Chinese authorities to ensure that the people of Hong Kong can have a genuine say in their elections."

Students in Sydney also joined their Hong Kong counterparts in solidarity, marching on the Chinese consulate to demand free elections.

Hong Kong has been under Chinese control since the 1997 handover from British control.

Swedish carmaker Saab, struggling to resolve serious financial difficulties by attracting new investors, has shed 155 workers, close to a third of its workforce.

The redundancies fell short of a previously announced figure of up to 200 employees.

National Electric Vehicle Sweden (Nevs), the Chinese-owned company created to buy Saab in June 2012 after it filed for bankruptcy, reiterated a previous statement that the decision was "due to lack of work".

Production at the industrial site of Trollhaettan, southwestern Sweden, halted in late May, when Nevs was unable to pay its suppliers.

The company which now employs about 400 people gave no information about the progress in talks with potential new investors, which if successful could lead to a resumption of production.

Swedish media reports have indicated that Nevs - 78-per cent owned by China's National Modern Energy Holdings and 22 per cent by the Chinese city of Qingdao - has been in negotiations with automakers Mahindra (India) and Dongfeng (China).

Since 2000, Saab automobile has had no connection with the defence and aeronautics firm with the same name. It only produces one model today, the electric 9-3 Aero Sedan, mainly targeting the Chinese market.

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The surprise came from the young people of Hong Kong. The Hong Kong Federation of Students last week commenced a week-long student strike which was originally intended as a “curtain-raiser” event to prepare for the “main event”, the formal Occupy Central. The students’ week of action culminated in a protest at government headquarters last Friday night. When a group of students tried to occupy Civic Square at the entrance to the legislative council offices, they were surrounded by police. Larger crowds gathered demanding that the students be released and the square be re-opened to the public.

There was a tense stand-off between crowds and police over the next 24 hours in the streets surrounding the government headquarters as the protesters barricaded their positions in advance of an expected police effort to clear them. This culminated in Occupy Central leader Benny Tai announcing in the early hours of Sunday morning that “Occupy Central” had formally commenced – in Admiralty district rather than in Central, and three days earlier than planned.

A series of miscalculations by the police and the Hong Kong government then caused matters to escalate very quickly.

Their first miscalculation was to cordon off the protest site around government headquarters early on Sunday afternoon to prevent others joining the protest. Crowds flocked to the surrounding area, quickly outnumbering police, and, by late Sunday afternoon, the police had found themselves sandwiched between two groups of protesters. The protesters surrounding the police who were surrounding the initial protesters overwhelmed the roads, brought traffic to a standstill and were soon confronting the police barricade and demanding access to the protest site. At this point police had lost control of the situation.

Their second miscalculation was to resort to disproportionate force too quickly and without provocation. Granted, the protesters were pushing up against a police barricade, but they were armed only with collapsible umbrellas and cling film, no match for riot shields and capsicum spray. We do not know whether it was an official order or a nervous police officer that led to the first rounds of tear gas being fired. It is the kind of thing a commission of enquiry would usually discover, but we are unlikely to get one. What is clear is that the tear gas came without warning, and caused first panic, then shock and then outrage among protesters and citizens watching the protests at home, drawing many more to the protest site.

Their third miscalculation on Sunday night was to continue to deny citizens access to the protest site, leaving them in a position where they continued to block the main highway through Hong Kong. This then led them to attempt to clear the area by forming a line of riot police and vehicles in Central, which was presumably intended to advance down the main road towards the Admiralty protest site, clearing the road and arresting protesters as they advanced. But as they formed their line to prepare their advance, new crowds on the Central side of their line again began to gather, and the police yet again found themselves overwhelmed by crowds on both sides of their defensive line. Even if they had managed to advance on Admiralty, a crowd just as large would have filled in the newly-cleared space behind them. They were left with no choice but to fire more rounds of tear gas, in both directions into the crowds in front and behind them, and under the cover of the gas to beat a hasty retreat.

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Since Monday morning, the Hong Kong authorities have conceded the city to the protesters. There has been almost zero police presence on the streets, and despite this, there have been no public order problems, no vandalism, no looting, no violence.

Since formally announcing their launch on the back of the student occupation on Sunday morning, the “adult” Occupy Central group has not yet managed to “own” this movement. The protesters have been overwhelmingly the youth – university students, high school students, young adults. They are the world’s best-behaved and most community-minded protesters, and have built an almost utopian community on the streets: distributing free water, food and supplies, establishing first aid stations and libraries, collecting rubbish and sorting it for recycling, and still finding time to do their homework.

Even at the press conference on Wednesday evening, when asked what their next steps would be, Occupy Central leaders replied that they would “defer to the students,” as this was now their movement, and Occupy Central saw themselves only as “partners” assisting them. Whether this is respectful due deference, a pragmatic reflection of reality or an abdication of responsibility remains to be seen.

See Antony Dapiran’s photographs of the Occupy Central protests at www.instagram.com/antdhk

Antony Dapiran is a Hong Kong-based lawyer.

Pennsylvania State University has become the second US university in a week to announce it is cutting ties with China's Confucius Institute program, a chain of Chinese language and cultural training centres funded by the Chinese government. 

The closure of the Penn State branch follows a decision by the University of Chicago on Monday to allow a five-year contract with its centre to expire after more than 1000 members of the faculty had complained  the institute was undermining academic integrity.

The university decided to sever the relationship after director-general Xu Lin, who holds the rank of a vice-minister, told the Jiefang Daily that she would not hesitate to end the relationship if it was the wish of the university.

"Several of our goals are not consistent with those of the Office of Chinese Languages Council International, known as the Hanban, which provides support to Confucius Institutes throughout the world," Dr Susan Welch, dean of the College of the Liberal Arts at Penn State, said in a statement on Tuesday.

China opened its first Confucius Institute in 2004 in Seoul and it has since opened more than 400 Confucius Institutes around the world, including a dozen established in Australia and more than 600 Confucius classrooms affiliated with schools. Beijing plans to open another 60 institutes and 350 classrooms by the end of 2015.

In 2013, the University of McMaster in Canada terminated its relationship with Hanban after an institute instructor filed a complaint of discriminatory hiring against the university with the Human Rights Tribunal of Ontario.

The instructor was forced to conceal her affiliation with Falun Gong, which is outlawed in China and its followers persecuted. University of Manitoba also turned down an offer to establish a Confucius Institute, citing potential impact on academic freedom.

Director General Xu Lin was involved in another highly damaging scandal in July at a European Sinology conference in Portugal when she ordered copies of academic conference materials containing information about a Taiwanese research organisation to be seized and the offending pages removed.

Read more: Hard times for China's soft power, China fails the soft power test

HONG KONG--Pro-democracy demonstrations that have gripped Hong Kong could put a brake on some of the crucial, weeklong tourist splurge that China's National Day usually brings to the city.

While official estimates aren't yet available, Ricky Tse Kam-ting, chairman of the Hong Kong Inbound Tour Operators Association, said that normally the industry would cater to 350 tour groups daily from mainland China. Each group has as many as 35 tourists, many of whom flock to the city's high-end boutiques and restaurants.

This year, he said, that figure could be lower by half, he said. "For Hong Kong it is a big problem."

Governments of other countries including the U.S., the U.K, Canada, France, Italy, Germany and Australia, have issued travel warnings regarding Hong Kong, advising tourists to avoid public demonstrations and to follow media reports for updates.

"It is believed that some visitors will postpone or even cancel their plan to visit Hong Kong for the time being," a spokeswoman for the Hong Kong Tourism Board said.

Still, representatives for Hong Kong Airlines, Cathay Pacific Airways and its subsidiary Dragonair said their flights are operating as scheduled.

"There is no obvious change in the number of bookings or cancellations observed in the past days," a spokesman for Cathay Pacific said. Hong Kong Airlines declined to say whether its bookings had been affected.

Jason Wong, general manager of Hong Thai Travel Services and vice chairman of the Travel Industry Council of Hong Kong, said the uncertainty was creating difficulties for hotels, stores, theme parks and catering services as well as tour operators.

"We cannot see the end of this protest, which will certainly be affecting the local travel industry and the impact is going to be bigger and bigger," he said. "Even though it has been carried out peacefully, it's going to spill out to many districts in Hong Kong."

The cancellation on Monday of a fireworks display in Victoria harbor planned for Wednesday night could also affect local tour operators, many of which organize group tours especially for the show, Mr. Wong said.

Outbound travel from Hong Kong may also be affected, he added, given that many travel agencies are located in parts of Causeway Bay and Mong Kok that have been blocked by protesters.

Staff at electronics retailers around Causeway Bay said foot traffic in their stores was sharply down Wednesday due to the nearby protests.

"On one day we would usually serve 80-100 people during Golden Week," said an employee at one Fortress Electronics store. "But today we just have around 12-15 customers."

But in Tsim Sha Tsui, a busy commercial area in Kowloon, protests appeared confined to a short section of Canton Road, a street known for luxury-brand stores. Outlets of Burberry, Fendi and Coach remained open and were still attracting customers, even as hundreds of people gathered on the street.

The most crowded part of the road was between the Burberry and Fendi stores, which face each other. A few protesters with megaphones stood in front of the Burberry store and made speeches. Some shoppers cast curious eyes on the proceedings but most walked briskly by.

Mai Heng, who was visiting Hong Kong with his family from Guangxi province in China, sat on the curb on Canton Road watching the protesters with a haul of boutique shopping bags piled next to him.

"I feel uneasy watching them," said the 36-year-old. "Hong Kong has a reputation as an orderly place, and this will have negative effects."

Nevertheless, he said the protests hadn't overly influenced his travel arrangements, and that his family was still glad for a chance to relax, visit shops, and go to Disneyland.

"Hong Kong society is harmonious, and they have rule of law, so I think this kind of thing isn't necessary. The students here have been brainwashed into coming out after just a few lectures," he added. "If this were to happen in our Guangxi they would all be arrested immediately."

A middle-aged Hong Kong woman passing by responded to Mr. Mai: "True news about Hong Kong is never reported in the mainland, so you don't understand us."

Louis Kuijs, an economist at Royal Bank of Scotland, warned that the protests could hurt the city's economic growth. "Recent political events may challenge the mild recovery we have observed in the third quarter," he said.

Standard & Poor's Ratings Services said that while the near-term threat to Hong Kong's property companies should be limited, sales and rentals could be hurt if the demonstration continues for a prolonged period.

One small-business owner said he was running his business while also managing to attend some protests.

Stanley Yao, 30, who owns a vegetable shop in Sai Ying Pun, several miles west of the main protest area on Hong Kong island, said he hadn't seen foot traffic decline, though he has had to start work earlier.

"The protests have been a bit of an inconvenience--I need to drive an hour earlier to the wholesale markets to get my vegetables in the morning to find new routes. But there is no victory without sacrifice. I protested from 9 p.m.--2 a.m. last night and went to the wholesaler at 5:30 a.m. today. My shop will be open today and I may go back tonight. All of us from Hong Kong need to stand together for what we believe in," he said.

Benny Tai Yiu-ting, associate professor at University of Hong Kong and one of the initiators of Occupy Central with Love and Peace, acknowledged the disruption to business as he walked among the protest crowd in Admiralty district Wednesday morning.

"We must apologize for the inconvenience that we have caused," he said. "We hope what we are fighting for they will enjoy."

HONG KONG—The man caught in the difficult position between pro-democracy demonstrators in Hong Kong and the authoritarian rulers in Beijing is an awkward politician who never gained broad support from his constituents.

Hong Kong Chief Executive Leung Chun-ying has become a divisive character in the nearly weeklong protests that have shut down parts of the city and posed a dramatic challenge to Chinese rule over the former British colony.

On Tuesday the three groups leading the demonstrations told Mr. Leung to respond by midnight to their demands that he resign or face growing masses on the streets. He refused.

Early the next morning, he joined Beijing's top official in Hong Kong and officers of the People's Liberation Army for a toast to commemorate the founding of the People's Republic of China 65 years ago.

The juxtaposition of the two events showed the dilemma that Mr. Leung faces. He has to show loyalty to Beijing as the leader of Hong Kong. Yet he is also the figure that protesters want held accountable for what they view as Beijing's reneged pledges to allow free elections, and for Sunday's tear-gassing of protesters, which swung public support sharply in their favor. And despite being in office for two years, he comes into the crisis still largely unknown as a political entity.

People "have remarked that I'm a hard man to read—that people don't really understand what makes me tick, or where I'm coming from," Mr. Leung said in a speech soon after he took office in 2012.

Lew Mon-hung, who supported Mr. Leung's candidacy, said despite many past meetings and chats, he knows very little about him. He's a "subtle and very reserved man," Mr. Lew said.

A spokesman for Mr. Leung declined a request for an interview. A spokesman at the chief executive's office said Mr. Leung wouldn't comment on others' descriptions of him.

What is clear is that Mr. Leung has long cast his lot with mainland China. A surveyor by training, he assisted mainland authorities in opening up China's property markets in the 1980s. He was rewarded with a series of plum appointments, beginning with membership on a committee tasked with gathering views on the drafting of the Basic Law, Hong Kong's mini-constitution, which went into effect in 1997 after Britain handed Hong Kong back to China.

His close ties to Beijing meant that Mr. Leung "grew up politically in a greenhouse," said Albert Ho, a legislator who finished a distant third against Mr. Leung in the contest for chief executive in 2012. "He was completely sheltered from outside political pressure."

The chief executive's race was Mr. Leung's first political campaign. When he met citizens, he carried three props: a folding stool, a pen and a notebook, meant to signal his willingness to humbly sit and listen to grass-roots views.

In the course of the race, Mr. Leung won the support of some prominent allies, including former Chief Executive Tung Chee-hwa and property magnates Vincent Lo and Henry Cheng. Local media mocked Mr. Leung's backers, referring to them as " Leung Fans, " a homophone in Cantonese for a gelatinous dessert which is shiny, dark and opaque.

Still, most other business leaders supported his main rival. One reason Mr. Leung didn't get the support of many members of the city's powerful, property-based tycoon class was his relatively progressive agenda, which included plans to deal with some of the city's problems such as affordable housing and polluted air.

Ultimately, Mr. Leung was elected by a 1,200-member committee composed of mostly pro-Beijing and pro-business members, but only after the candidate who led for most of the race was hit by late accusations of corruption. Mr. Leung won only with 689 votes in the three-candidate race. A public opinion poll when he first took office showed a slight majority or respondents approved of him.

Among the epithets protesters have flung at Mr. Leung is the nickname "689," a reference to the number of votes he received. Earlier this week, demonstrators in Hong Kong's Mong Kok district plastered signs on an abandoned double-decker bus, renumbering it as "N689," and changing its destination to "hell."

During his tenure, Mr. Leung has earned plaudits for devoting attention to other issues that had gone ignored in the past, notably the environment. Mr. Leung tapped the well-respected and politically liberal Christine Loh to serve as his environmental undersecretary and also pushed to address Hong Kong's air pollution problem. He restarted the city's poverty commission to devote more attention to the plight of the city's poor.

Despite the progressive credentials, Mr. Leung appeared to dismiss the city's wealth gap, one of the biggest in the world, in a 2013 speech. "There's a slight, subtle but important difference between poverty, which we do have, and expressing it as a wealth gap issue," he said.

As throngs of protesters call for Mr. Leung's resignation, few people in Hong Kong seem willing to speak out publicly in his support. Colleagues, past backers, friends and former classmates all declined interview requests. These included Barry Cheung, Mr. Leung's campaign manager in the 2012 election, as well as former colleagues at the property-services company whose Asian-Pacific office was headed by Mr. Leung and still carries his name.

A Chinese government spokesperson said Monday that Beijing had "every confidence and support" for Hong Kong's government but didn't mention Mr. Leung, leading to a wave of speculation that he had lost Beijing's support.

Hong Kong's election system is at the heart of the protests. Beijing has agreed to allow all citizens to vote for the next chief executive in 2017, but only for candidates who are approved by Beijing. Mr. Leung has strongly supported this position, saying Hong Kong can't ask Beijing to reconsider its decision.

Mr. Leung again dug in his heels during a news conference Tuesday night and at a flag-raising ceremony Wednesday morning, saying that he couldn't ask Beijing to revisit its decision and calling for the protesters to go home, a request that fell on deaf ears.

As protests continue, it's unclear whether Beijing would continue to support Mr. Leung.

A half-million people took to the streets on July 1, 2003, to demand the resignation of Mr. Tung, the former chief executive, for supporting an antisubversion law that would have brought broader police powers and harsher penalties to Hong Kong for crimes against the state. Hong Kong's government shelved the legislation to defuse the protests. But Mr. Tung's popularity never revived, nor did the confidence of the Chinese leadership, which replaced Mr. Tung in early 2005.

With no end in sight to the current standoff, many are wondering what Mr. Leung's next steps could be. One person familiar with the government's planning said the current strategy is to wait out the protesters, to allow the demonstrations to continue until the protesters tire or lose support from the wider public. How long that might take is anyone's guess but the plan is to let the protests continue at least through the weekend, given that Wednesday and Thursday are holidays in Hong Kong.

Mr. Leung's office declined comment on the planning.

"I don't think anyone knows what's going on in his head now," said Law Chi Kwong, associate professor at the University of Hong Kong, founding member of the city's Democratic Party, and onetime classmate of Mr. Leung's at prestigious secondary school King's College.

Asked what Mr. Leung was like as a student, "the only thing I can remember is he liked to argue," Mr. Law said.

A Samsung Electronics supplier in China said it has filed a lawsuit against the founder of China Labor Watch and a Chinese group working on behalf of the U.S. nonprofit organization, alleging damage to its reputation after the U.S. group accused the company of using child labour at its facilities.

HEG Technology (Huizhou) Co. said it filed the lawsuit on Tuesday against New York-based activist Li Qiang, founder of China Labor Watch, and a group based in the southern city of Shenzhen that Mr. Li's organization funds to carry out its work in China.

The lawsuit will be heard by a court in the district of Zhongkai in the southern city of Huizhou, where the supplier is based.

HEG, which supplies Samsung with wireless electronic parts, has worked with the South Korean company for six years.

According to court documents, a hearing on the case is set for Nov. 13.

Mr. Li said on Wednesday his group stood by its allegations of child labour at HEG and questioned the legal basis of the lawsuit.

In a emailed statement on Tuesday, HEG said it conducted its own investigation and found the company didn't violate labour laws by using staff under the legal working age of 16.

HEG Human Resources Director Chen Cheng said that the company received about 200 students from a vocational school in the southwestern city of Chengdu in May who worked for 3½ months at the Huizhou facility but that HEG found they were all at least 16 years old.

Samsung, the world's biggest smartphone maker by shipments, relies on hundreds of third-party suppliers in China to assemble and make smartphones, TVs and consumer electronics.

China Labor Watch has accused Samsung's suppliers of alleged labour violations at its facilities in China. Mr. Li said the group maintained that HEG had hired child workers, pointing to the evidence its investigators had collected of lists of workers whose birth dates showed they were under 16 at the time they were employed by HEG.

Mr. Li, who left China 14 years ago, said he found HEG's move to file a suit against him in China perplexing. "I'm in the United States. It's pointless for them to sue me in China. If they really wanted to sue me, they would have done so in America," Mr. Li said.

He also said that although the Chinese organization, Shenzhen Zhuoyue Zhisheng Enterprise Management Inquiry Department, named in HEG's lawsuit was funded by his nonprofit and carried out his group's programs in China, the two were separate legal entities. Mr. Li said this arrangement was necessary to work around the Chinese government's restrictions on the operations of foreign nonprofits in the country.

He said he didn't think anything would result from the lawsuit that would materially affect him or his group.

China Labor Watch said separately it hasn't received notification of the lawsuit yet.

HEG said in the statement it has asked China Labor Watch to retract its accusations and issue an apology.

"HEG must emphasize that China Labor Watch has endangered the very existence of HEG by undermining the confidence of its business partners and employees, as well as the company's reputation, by disseminating false information," it said in the statement. Mr. Chen declined to say if the company was seeking damages.

In a statement on Tuesday, Samsung said it respects the conclusion of HEG's investigation, which has found no evidence of child labour at the company.

In July, Samsung temporarily halted business with another supplier in China after a company investigation indicated that the supplier, Shinyang Electronics Co., had used child labour. Shinyang hasn't denied or admitted wrongdoing.

Lowy Interpreter

Many of us are holding our breath wondering what is going to happen next in Hong Kong. There are concerns that what is happening now might come to the same tragic end as what happened in Tiananmen Square in Beijing in 1989.

Universal suffrage is the ultimate aim in Hong Kong, according to Article 45 of its Basic Law. People are protesting because although China agreed to the universal suffrage clause during handover negotiations with the UK in the 1980s, on 31 August the National People's Congress Standing Committee announced that candidates not approved by Beijing would be screened out of the running.

Many – although not all – in Hong Kong are angry that promises for full suffrage in 2017, while not broken as such, have been cleverly reshaped so that while everyone would be able to vote, they would only be able to vote for Beijing-approved candidates.

While the Hong Kong authorities are already using harsh violence, at this point it has not gone past tear gas and threats of rubber bullets. I think that escalation to another Tiananmen is unlikely, for a number of reasons. One particularly important reason is that individuals count when it comes to decision-making, and Xi Jinping is not Deng Xiaoping.

As events unfold in Hong Kong, decisions about how the leadership should best react are being made from scratch; the direction and result is not preordained. China now is not where it was in 1989 economically, politically, or socially. Under Deng in the reform era, ideological struggle was being subjugated to economic development, and a new social contract that still holds today was being forged. With this new social contract, the people would not oppose or compete with the Party for political power as long as the Party served their economic needs and improved standards of living.

China's role in the world was also fundamentally different. At that time China was becoming increasingly engaged with the rest of the world, so China's pariah status as a result of Tiananmen, at least in the West, had real and tangible domestic implications. This loss of (much) international legitimacy had profound implications for Deng's domestic project, creating an urgent need for the leadership to shore up its side of the domestic social contract, particularly given that social dissatisfaction of various sorts was what had led to the Tiananmen demonstrations in the first place.

Xi Jinping and the current Chinese leadership will be all too aware of the damage Tiananmen caused to China's international status, and, more importantly, the implications for China's domestic development. Given the current circumstances of the Chinese economy, and China's growing role in international affairs, I believe that the Communist Party is very unlikely to choose to use more violence on these protesters in Hong Kong to the extent of that used in Tiananmen. 

Xi Jinping is presiding over an era where maintaining the breakneck economic growth required to maintain the social contract forged in Deng's reform period is neither really desirable nor possible. The Party is already in a very difficult bind as to how to demonstrate its legitimacy and mandate domestically. Messaging around events in Hong Kong is carefully controlled, key search terms such as 'Occupy Central' and even 'Hong Kong' do not come up with anything related to the protests. Reportage of how events are being covered in the mainland can be found here. What coverage does exist describes the protesters as instruments of anti-Chinese forces in the UK and US, "whose hearts belong to colonial rule and who are besotted with 'Western democracy'." 

As such, domestic political and social uprisings on the mainland in response to a more severe crackdown in Hong Kong would not necessarily be the primary deterrent of intensified violence. However, the economic impact of the global loss of legitimacy that would follow another crackdown like Tiananmen would be too high a cost in the current economic climate. 

We should also not underestimate the skill and experience the Chinese Communist Party has when it comes to managing dissent. It has a range of well-honed options at its disposal, which it deploys regularly in protests and demonstrations across the mainland, that we never really see reported in Western media. 

What is happening in Hong Kong now is undeniably a very real challenge to the Chinese authorities, but precisely because of the risks associated with getting it wrong, it will be handled carefully, skilfully, and without recourse to violence anywhere near the level of what was seen in Tiananmen in 1989.

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

East Asia Forum

What does the Australia Network’s closure and the launch of Sky News’ Australia Channel mean for Australian soft power?

Since their inception, Australia’s international media organisations have trodden a fine line between promoting Australia’s interests in the Asia Pacific region and upholding the values of the Fourth Estate which sees critical reporting of government as central to its role.

Initially, this debate surrounded the role of Radio Australia, which was established by the Australian government during WWII as a broadcasting service aimed at countering enemy propaganda, but by 1950, responsibility for Radio Australia was returned to the Australian Broadcasting Corporation (ABC) and declared free from government control. Yet, in that same year, the minister for external affairs, Percy Spender, wrote to ABC Chairman Richard Boyer: ‘I think it is important that Radio Australia be looked at as an instrument of foreign policy’.

This raised the question: can an international broadcasting operation be funded by the Australian government but not necessarily support its aims? The Australian media’s role in Indonesia has been central to this debate.

The Indonesia–Australia relationship is often described as Australia’s most important, and the broadcasting media seen as crucial to enhancing mutual understanding. During Indonesia’s New Order (1965–1998) Radio Australia often broadcast independent and controversial news throughout the archipelago, in particular, critical reports about Indonesian-occupied East Timor. Australian officials often had to placate Indonesian officials by explaining that Radio Australia was funded by the government but not beholden to them.

The debate over Radio Australia’s objectives continued until 1997, when the decision was made by then prime minister John Howard to drastically reduce its funding. That same year, the coalition government outsourced Australia’s international television station, Australia Television (established four years earlier), to the Seven Network — despite its impressive penetration in the region, which a Senate Committee concludedequalled that of CNN and the BBC. But the Asian Financial Crisis of 1997 meant advertising dollars were not there for Seven, and after three years it stopped the service. Australia Network returned to the ABC, continuing to splutter along relatively underfunded, and was largely seen as a service for Australian expatriates to watch national sporting events.

By 2012, an internal ABC International Indonesia Review report stated that Australia ‘has a lack of brand recognition in Indonesia’. A key recommendation was to foster connections with Indonesian media organisations, and, in 2013, ABC International formed impressive and unique partnerships with Indonesian media companies, including Detik.com, Kompas Gramedia, Tempo, Republika Online and, more recently, the television conglomerate MNC Group. ABC provided these companies with Indonesian translations of content at no cost, so that more Australian news would enter the Indonesian media sphere. ABC International CEO Lynley Marshall said this showed ‘a new era of soft diplomacy’.

But in late 2013 relations between Australia and Indonesia reached their lowest point since the East Timor conflict of 1999 as news spread that Australia had tapped the phone of President Susilo Bambang Yudhoyono, his wife and other senior Indonesian officials. As the story initially broke through the ABC, its international arm was able to provide Indonesian news partners with details of the story in the Indonesian language.

This infuriated many Australian government officials and some commentators who believed that ABC International was exacerbating bilateral tensions. Prime Minister Tony Abbott said later on talkback radio that the ABC ‘seemed to delight in broadcasting allegations by a traitor, [Snowden]’.The situation was further exacerbated in January 2014 when the ABC’s Jakarta correspondent reported claims (including photographs) that asylum seekers attempting to come to Australia by boat had possibly had their hands burnt by the Australian Navy. The claims, which were emphatically denied by the head of the navy, were broadcast on Australia Network throughout the region.

It was soon clear that Australia Network’s A$223 million ($US195 million) funding (over 10 years) would be cut from the budget. At the time it was broadcasting in 46 different countries. Foreign Minister Julie Bishop had argued that it was not fulfilling the Australian government’s foreign policy objectives as a ‘tool of public diplomacy’ and questions surrounded ‘whether it is meeting the goal of promoting Australia’s interests overseas’.

Earlier this month, as Australia Network began to shed its staff, it was announced that Sky News (owned by BSkyB and the Seven and Nine Networks) would launch the new Australia Channel. This will be facilitated in conjunction with broadcast provider Globecast Australia. Sky News had missed out on securing Australia Network in 2011, when the then Labor government decided to abort a bungled tender process and leave Australia’s international media arm with the ABC. Sky News is part-owned by Rupert Murdoch, whose newspapers’ support for the Liberal-National Coalition in the 2013 Federal Election was clearly evident. But as Sky News was ‘Australia’s only 24-hour business channel’, it claimed it will ‘help promote Australian culture … [and] showcase Australian industry and Australia as an investment destination’. Its chief executiveAngelos Frangopoulos said ‘it shows good outcomes in the national interest don’t necessarily have to be delivered by a government-funded broadcaster’.

Sadly, arguments that a free and critical media were good for promoting Australia’s national interest in the region largely fell on deaf ears. The similarities between the long-debated role of Radio Australia and the recent culling of Australia Network shows how the precise purpose of Australia’s international broadcasters is unlikely to be resolved while officials believe there is a dichotomy between the Fourth Estate and ‘soft diplomacy’.

Australia Network’s closure impacts the reach of Australia’s international news service, and comes at a time when larger international broadcasting organisations are partnering with Indonesian media companies. For example, CNN partners with local media conglomerate TransCorp, while Bloomberg partners with VisiNews Asia. Other well-funded international broadcasters such as the BBC, Deutsche Welle and Al Jazeera continue to increase their Indonesian language services. Australia Channel has stated they are not a replacement for Australia Network and is focusing initially on providing a service to Australian expatriates to gain subscriber fees.

But, if they are Australia’s sole international broadcasting channel, do they plan to go to the government for financial assistance in the future? And, if so, has the line between the role of soft diplomacy and a free and critical media been blurred even further?

Dr Ross Tapsell is a lecturer at the School of Culture, History and Language, College of Asia and the Pacific, the Australian National University.

This article originally appeared on the East Asia Forum. Republished with permission.

Student leaders whose pro-democracy protests have gripped Hong Kong have agreed to meet the government to discuss their demands, but have also vowed to continue occupying the streets until their goal of universal suffrage is achieved.

"The Hong Kong Federation of Students (HKFS) is going to have a public meeting with the Chief Secretary for Administration Ms Carrie Lam," the group said early on Friday.

Their statement came after Chief Executive Leung Chun-ying extended the offer ahead of a Thursday midnight deadline to stand down.

However, the group said Mr Leung's resignation was "a matter of time", blasting his decision to allow police to use tear gas on peaceful demonstrators in tumultuous scenes earlier in the week.

"CY Leung has already lost all his integrity and betrayed people's trust in him. Not only has he denied the people of a genuine political reform, but also ordered a violent crackdown on peaceful protesters with tear gas. His resignation is only a matter of time," HKFS said.

"Hong Kong people shall continue (their) occupying movement until genuine universal suffrage comes to light."

The HKFS is one of several groups driving the protest movement dubbed the "Umbrella Revolution" after brollies were used by demonstrators to shield against sun, rain and tear gas, with other groups including Occupy Central and Scholarism.

The Conversation.

The Chinese government claims the Xinjiang Uyghur Autonomous Region is an example of multi-ethnic harmony and stability. Yet China’s repeated attempts to silence foreign reporting of Uyghur issues – as we saw this week, when officials tried to censor coverage of Xinjiang on ABC TV’s Foreign Correspondent– suggest it has something to hide.

Since annexing Xinjiang in 1949, government-sponsored Han migration to the north-west Chinese province has radically altered its ethnic ratio. With the Han Chinese population growing rapidly, the Turkish-speaking Sunni Muslim Uyghurs and other regional ethnic groups have been swamped.

Urumqi, the capital of Xinjiang province, where deadly race riots broke out in 2009.

Religious suppression is well-documented, as are brutal crackdowns on regional uprisings.

Life expectancy for Uyghurs is 10 years less than their Han Chinese counterparts. Employers routinely advertise positions for ‘Hans only’.

Uyghurs are also far more likely to contract HIV. Xinjiang has long had one of the highest provincial rates of HIV/AIDS in China.

In addition, the life sentence handed down to moderate Uyghur academic Ilham Tohti this week, after a closed trial, highlights how serious the consequences can be for those advocating on behalf of the Uyghur minority.

Censorship backfiring

However, when clumsy officials attempt to censor coverage of Xinjiang in Australia, these issues become glaringly obvious. It is also clear that Chinese authorities still do not understand that their efforts to impede free speech simply do not work outside China.

As the flood of tweets during and after this week’s ABC TV’s Foreign Correspondent showed, China’s attempts to stop people talking about China’s Uyghurs drew a wider audience for the program.

Ratings for the Crackdown story reached 623,000 in the five-city metropolitan areas of Melbourne, Sydney, Adelaide, Brisbane and Perth. It out-rated previous weeks' episodes, picking up approximately 38,500 more viewers. In September, it was beaten only by Eric Campbell’s report on a Tibetan refugee returning to Tibet– another sensitive topic for China.

The Crackdown story showed gutsy journalism by Stephen McDonell and Wayne McAllistair in the face of ever-present surveillance and interference, bordering on intimidation, by Chinese authorities.

It has been reported by the ABC and other news organisations that in a meeting held two weeks ago, Chinese embassy officials warned the ABC that broadcasting the story would have “wider implications” for the ABC, potentially referring to its business links with Shanghai Media Group and CCTV.

Race riots and the Melbourne Film Festival

This is not the first time that China has tried to stop information on Xinjiang from reaching the Australian public.

In 2009, deadly race riots broke out in Urumqi, the capital of Xinjiang. In this incident, 197 people were killed when Uyghur and Han Chinese civilians clashed on the streets. These riots were, in part, sparked by the beating deaths of at least two Uyghur toy factory workers by their Han Chinese counterparts in the coastal Guangdong Province.

Less than one month later, Rebiya Kadeer, the world-recognised leader of the Uyghur community living in exile, applied for an Australian visa. She planned to travel to Australia to visit Uyghur communities. She was also scheduled to attend the screening of Jeff Daniel’s documentary about her life, The Ten Conditions of Love, which was screening at the Melbourne International Film Festival.

Senior officials from the Chinese embassy pressured the government to deny Kadeer a visa. The issue was even debated in parliament, with then foreign minister Stephen Smith responding to the then opposition that there “was no basis for denying her entry to Australia”. He also stated that the government had stood up to China on this issue.

Following this defeat, the Chinese officials then attempted to have the documentary pulled from the Melbourne International Film Festival. They made protestations to both the festival organisers and the Melbourne Lord Mayor to effectively censor the film. Like their attempts to prevent Kadeer from receiving a visa, these attempts were unsuccessful.

Not happy with this outcome, a number of Chinese films were pulled from the festival in protest. In addition, the festival’s website was subject to a number of cyber-attacks and organisers received a barrage of email complaints about the film screening. In the end, these tactics attracted more attention to the film and it was screened to a much larger audience than originally anticipated.

Unperturbed, the officials made one more attempt at censorship. Kadeer was scheduled to speak at the National Press Club and Chinese officials attempted to have her appearance cancelled. Despite the pressure applied, this attempt also failed.

During her address, Kadeer jokingly thanked the Chinese government for the high level of publicity they had attracted to her visit and to the documentary screening.

Silencing dissent

Australia is not alone in experiencing these attempts to censor discussion of the Uyghurs. Following her visit to Australia, Kadeer’s scheduled seminar at the University of Auckland in New Zealand came perilously close to being cancelled after Chinese authorities pressured university leaders on the matter. After a significant backlash from students and academics, the seminar went ahead.

But the Chinese have had some success in their battle to censor news on Xinjiang and the Uyghurs. In 2010, Taiwanese authorities imposed a three-year ban on Kadeer’s entry to this outlying province of China. The Kadeer ban is interesting as Taiwan also has a troubled relationship with the mainland, and segments of its population also desire full independence from mainland China.

China’s repeated efforts to censor reporting of the Uyghurs and Xinjiang, and the fact that those efforts regularly backfire, demonstrate there is a problem in how China perceives its ability to control coverage of its internal affairs beyond its borders.

But it also demonstrates there are real problems in Xinjiang – which the Chinese authorities would rather have kept out of sight from the world.

Anna Hayes does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

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

Lowy Interpreter

The ongoing student-led demonstrations in Hong Kong, which oppose China's undemocratic framework for the 'selection of the Chief Executive by universal suffrage', are similar in cause, focus and likely outcome as the 2003 mass demonstrations against the then attempts to implement Article 23 of the Basic law.

The anti-sedition act aimed at fulfilling Article 23, which was withdrawn after the 1 July 2003 marches, states that 'The Hong Kong Special Administrative Region shall enact laws on its own to prohibit any act of treason, secession, sedition, subversion against the Central People's Government…'.

As in 2003, the present attempt to fulfil the conditions of the Basic Law under the 'one country, two systems' formula has led to hundreds of thousands of supposedly non-political Hong Kongers to protest in the centre of the city. Also similar to 2003, the primary and existential cause was Hong Kongese fears that the Central Government in Beijing was deepening the 'one country' part of this formula and eroding the two systems, by restricting Hong Kong's freedoms and undercutting its liberal tenets. Tenets that find expression in the acceptance of peaceful political protest.

The 2003 demonstrators focused their political voice against the deeply unpopular Chief Executive Tung Chee-hwa, whose support for the anti-sedition law was seen as capitulating to, or conniving with, Beijing to make Hong Kong a region more closely administered by authoritarian China. The current Chief Executive, the equally unpopular Leung Chun-ying, is feeling the brunt of the present student-led demonstrations and the earlier 'Occupy Central with Love and Peace'. This is mainly because of Leung's endorsement of China's plans to ensure that the nominating committee for the election of the Chief Executive by universal suffrage is neither broadly representative nor reflective of democratic principles.

The 2003 demonstrations, the loss of Tung Chee Hwa's legitimacy in Hong Kong and his utility in Beijing were key factors in his resignation in early 2005. The present demonstrations could well see Leung Chun-ying not finish his five-year term that ends in 2017 for similar reasons. However, unlike in 2003 when the anti-sedition law was withdrawn, Beijing is not likely to withdraw its framework for ensuring that Hong Kong's Chief Executive will be chosen from a very short list of Beijing-approved candidates.

The similarities between the present demonstrations and those in 2003 show that the 'two political systems in the one country' formula is unworkable. One is a liberal system seeking true democracy and one is authoritarian where liberal thought and democracy are anathema.

Unfortunately for Hong Kong, the system that hundreds of thousands came out to defend in 2003, and today, will likely continue to be eroded. As for China's plans to uphold the one-country two system model for democratic Taiwan, the likely outcome of the ongoing demonstrations are another nail in an already very well sealed coffin.

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

Hong Kong’s chief executive Leung Chun-ying says he won’t resign, amid escalating calls from student protesters that he step down.

At a news conference shortly before the protesters’ midnight deadline last night for his resignation, Mr Leung said that constitutional reforms slated for 2017 would only take place within restrictions outlined by Beijing.

Mr Leung also announced that he has appointed the chief secretary, Carrie Lam, to meet with protesters to discuss Hong Kong’s constitutional development.

“I hope that students meeting with Carrie Lam can solve the problem,” Mr Leung said, stressing that police would continue to exercise restraint.

Earlier on Thursday, Ms Lam had met with pro-democracy and pro-Beijing lawmakers in her official residence. Student protestors had requested a public meeting with Hong Kong leaders but Lam said she hoped they would be flexible.

In his address the chief executive repeatedly called the protests “illegal” and said they had “already seriously affected Hong Kong’s economy and government functioning” and that they could not continue.

“All this time the government and the police has used the greatest degree of tolerance to allow them (protesters) to hold different types of assemblies to express their demands and concerns,” Mr Leung said.

“In any other place in the world, if there are protesters surrounding government buildings ... then the problem and the result would be severe,” he added.

Mr Leung stressed that his conciliatory move was not because students had threatened to storm government buildings.

Last night, some protestors issued an ultimatum to Mr Leung -- “You have until the end of the day Thursday to resign”, or they would occupy government buildings.

In response, Hong Kong police have warned the protestors that any such escalation would be met with “decisive enforcement.”

Tensions were ratcheted up even further when reports emerged that police were seen unloading boxes of tear gas and rubber bullets close to the city’s besieged government headquarters.

In a front-page editorial in the party mouthpiece People’s Daily, China said it fully supported the Hong Kong leader and warned of “unimaginable consequences” if demonstrations by pro-democracy campaigners continue.

Earlier yesterday, in Washington DC, the Chinese Foreign Minister Wang Yi slammed the protests as an illegal gathering that had severely disrupted the social order in Hong Kong.

But even as the rhetoric on both sides has intensified, many observers believe a compromise of sorts must be reached.

China’s leaders are already facing a number of formidable challenges as it is, without having to worry about instability in the former British colony.

Following the press conference, scores of protesters called for calm and linked arms in an attempt to stop other protesters from blocking street traffic.

Earlier in the evening, student leader Joshua Wong urged demonstrators not to block street traffic or rush police barricades.

“Tonight we do not want to get into the government areas,” Mr Wong said. “I do not want to see anyone injured in this revolution.”

As the week has progressed, both sides have steadily hardened their positions, rather than find common ground for compromise.

By declaring that he has no intention of stepping down and that reform must take place within the strictures laid out by Beijing, Leung has left little to talk about.

He is no doubt hoping that enough time will pass for the student movement to fracture and ultimately run out of steam.

At the very least, his last-minute press conference has preserved the possibility, however slim, for a peaceful resolution to the impasse.

Hong Kong’s Chief Executive CY Leung says he won’t resign, amid escalating calls from student protesters that he step down.
 
At a news conference shortly before the protesters' midnight deadline for his resignation, Mr Leung said that constitutional reforms slated for 2017 would only take place within restrictions outlined by Beijing.
 
Leung also announced that he he has appointed chief secretary Carrie Lam to meet with protesters to discuss Hong Kong's constitutional development.
 
"I hope that students' meeting with Carrie Lam can solve the problems,” Leung said, stressing that police would continue to exercise restraint.
 
Earlier on Thursday, Lam had met with pro-democracy and pro-Beijing lawmakers in her official residence. Student protestors had requested a public meeting with Hong Kong leaders but Lam said she hoped they would be flexible.
 
In his address the Chief Executive repeatedly called the protests “illegal" and said they had "already serious affected Hong Kong's economy and government functioning” and that they could not continue.

"All this time the government and the police has used the greatest degree of tolerance to allow them (protesters) to hold different types of assemblies to express their demands and concerns," Leung said.

"In any other place in the world, if there are protesters surrounding government buildings ... then the problem and the result would be severe," he added.

Leung stressed that his conciliatory move was not because students had threatened to storm government buildings.
 
On Thursday, some protestors issued an ultimatum to the island’s Chief Executive C.Y. Leung – You have until the end of the day Thursday to resign or they would occupy government buildings.
 
In response, Hong Kong police have warned the protestors that any such escalation would be met with “decisive enforcement.”
 
Tensions were ratcheted up even further when reports that police were seen unloading boxes of tear gas and rubber bullets close to the city's besieged government headquarters.
 
In a front-page editorial in the party mouthpiece People’s Daily, China said it fully supported the Hong Kong leader and warned of “unimaginable consequences” if demonstrations by pro-democracy campaigners in continue.
 
Earlier Thursday in Washington DC, Chinese Foreign minister Wang Yi slammed the protests as an illegal gathering that has severely disrupted the social order in Hong Kong.

Read more: Hong Kong's lingering hope for a peaceful resolution

The United States is to partially lift a four-decade-old arms embargo against its former foe Vietnam, the State Department says, in a landmark decision set to infuriate China.

Secretary of State John Kerry informed his Vietnamese counterpart Pham Binh Min during talks on Thursday that Washington was adjusting its current policy "in order to allow the transfer of defence equipment, including lethal defence equipment, for maritime security purposes only," a senior State Department official said.

The US ban on selling lethal weapons to Hanoi was being changed "because of our broader strategic interests in helping the countries of the region boost their ability to know what's going on in the maritime environment and to have a presence," he added.

The ban has been in place since the end of the Vietnam War in 1975.

However, a prohibition on sales of other kinds of lethal weapons would stay in place as Washington pushes Hanoi to improve its human rights situation.

US officials denied the policy change was "anti-China," saying it was for defensive purposes because of "a lack of maritime capacity" in the region. But it comes amid months of tensions over disputed islands in the South China and East China Seas.

Although the United States has not taken sides in the territorial disputes, it has warned Beijing against "destabilising actions" in the South China Sea.

The sea is claimed in part by Vietnam, Taiwan, Brunei and Malaysia as well as China and the Philippines.

China has been involved in a string of tense maritime incidents with rival claimants in the sea. Earlier this year it placed an oil rig in waters also claimed by Vietnam, sparking deadly riots in the Southeast Asian nation.

Australian producers are missing huge and growing opportunities in China because they simply do not understand the transformational impact that China-based e-commerce and social media platforms have had in the past several years.

It seems extraordinary that Australians can be so backwards about these opportunities. We are, after all, a nation of technology-loving, early-adopting, smartphone-using, Facebook-procrastinating, eCommerce-buying, technophiles.

Australians happily live by a new and fast-changing set of digital market rules. We love this stuff.

So why, when these same rules are applied to a different market - albeit one where a billion locals speak with a double-byte tongue - do we have such difficulty comprehending?

China is a giant blind-spot for many Australians. Unless you work in the resources industry, or in niche pockets of the financial services sector, China is in the too-hard basket. This really is quite negligent.

Australians’ US-centric focus works against us at times, and this is one them. Occasionally it's necessary to look at the world outside of the Googlesphere to find out what’s really going on. And let’s face it, China is far, far beyond the Google sphere of extraordinary influence.

Google search is great but what about Weibo?

Australian marketers spend huge amounts of time and energy digging through the algorithmic entrails of Google search (or Facebook, or Twitter, or eBay or Amazon) without giving a second thought to the algorithms that make Baidu tick. Or Weibo, WeChat, or Alibaba.

Anyone with half an eye on the marketing or IT sectors can tell you what Baidu, Weibo or T-Mall are and what they do. But almost none of them can tell you how to use them effectively.

This lack of understanding is costing us big time. With a Free Trade Agreement on the horizon (and likely to be signed by the end of the year), it is past time for Australian businesses get an understanding of the online platforms that are at their disposal.

Sam Clohessy a co-founder of the Beijing-based online marketing and e-commerce services outfit called Web Presence In China (WPIC), and has returned to Perth as managing director of its recently established Australian operation.

Clohessy lived in Beijing from 2008, and started the business with an American and a Canadian (the company now has offices in Beijing, Shanghai, Vancouver and Perth.)The business partners founded WPIC as demand for quality foreign goods has surged in recent years.

It is not just the fast-growing numbers of wealthy mainland Chinese that is changing it consumer habits in China, but the proliferation of e-commerce engines like Baidu and Alibaba as well.

Clohessy’s company is a full-service marketing, technology, logistics outfit. He is focused in Australia in recruiting food producers, encouraging them to establish new B2C routes directly to the dinner plates of China’s new wealth. His personal interest is in food, because that’s where immediate opportunities apply.

But the digital rules are the same, whether you are trying to sell pre-paid abalone from Tasmania or tourist destination services in Cairns, he says.

And Australians are far behind our rivals. We are neophytes compared to the Americans and the European engine rooms. And we are nowhere near as good at this stuff as our kiwi cousins who have been killing it through B2C channels for quality food products, assisted by the incredibly effective Pure New Zealand branding.

Same rules but different

I spoke to Clohessy about what it takes to succeed in selling online in China. It turns out the rules are pretty much the same as here. But different. Here are the highlights.

Findability is everything. Well, almost everything. If people can’t find you online, then they can’t buy your products or services. Just like the real world. But to be found in China, you need to forget everything you know about search and learn a new way.

In order to be found, your website needs to be hosted in China. And you need to forget Google (it’s market share is teeny tiny.) All that ridiculously expensive SEO consulting you have paid for will count for precisely zero. To repeat, in order to be found, your website needs to be hosted in China. You need ICP registration (Internet Content Provider). This is not difficult.

You website needs to be in Chinese. It needs to be professionally translated. Messaging needs to be adapted. Just like the Australian who laughs at the Chinglish translations of a Chinese company new to Australia, your poorly translated web site will be laughed at.

Don’t bother translating portions of your existing website into Chinese, because you won’t get found (because your existing website is not hosted in China!) Your China website must be at least 95 per cent Chinese language, or it won’t get found (even if it hosted in China!)

You will want your website in at least 95 per cent Chinese language for two reasons. First, so Chinese consumers can read it (a common misconception in Australia is that most Chinese people can read and write english. No, they can’t.) Secondly, you want Chinese search engines to find it.

Forget language buttons on your website that offer bilingual pages. They don’t for work for search in China (doubly so if hosted offshore) meaning the consumer will need to search for you in english. And they won’t.

Investigate e-commerce shopfronts. Alibaba’s TMall is a great example. The cost less than you think. But be professional. Spend the money to get your local language messaging right. That includes the local language branding and product look and feel.

And finally, be premium. If there has been a single overarching theme in China in the past five years, it has been the growing demand for among affluent Chinese for quality foreign products.

This is especially true of food products. Australia is already branded as a clean, green producer of safe, quality food products. There is huge demand for Chinese consumers to buy direct from Australian food manufacturers. They are less interested in having that food handled by China-based wholesalers. Food safety issues are a big and growing concern for Chinese middle-class consumers.

The China’s food bowl fantasy

There remains incredible scope for Australian food producers to take hold of the premium foods market - especially on the back of the Free Trade Agreement. But Clohessy advises that premium sellers should take advantage of China’s sophisticated ecommerce platforms, and take the margin that Chinese handlers would ordinarily take.

New Zealand food producers have been incredibly effective in this area. The Pure New Zealand brand in the past two years has made great inroads in the China B2C e-commerce markets, particularly in fresh dairy, and premium meats and seafoods.

Clohessy is critical of the Australian Government’s trade representatives in China for not giving better advice about these online channels.

One problem in relation to China is that Australians generally don’t fully understand scale. They think they do, Clohessy says. But they don’t. So talk of Australian agricultural as becoming China’s food bowl is a fantasy.

If Australia just focused on the Shanghai-Zhejiang-Jiangsu areas on the east coast (which boast 15 of the 20 richest cities in China (including Hangzhou and Nanjing) it could quadruple production and still not meet demand. Which means the smart money will be at the premium end of the market.

Clohessy says Australians should add a zero to their ambitions. When Tourism Australia boast about its 350,000 Weibo followers, it needs to get things in perspective. Ryan Griffiths, an Australian soccer player who helped Beijing Guoan FC win a title a few years back has more than 700,000 Weibo followers and only joined the network in recent times.

In 2000, there were 94 million internet users in China. In 2004, there are 640 million users, and that number will pass one billion in the next several years. The Chinese are prolific eCommerce buyers, and China has sophisticated eCommerce platforms and distribution networks.

Australian businesses should do the math, and take China out of the too hard basket.

James Riley has covered technology and innovation issues in Australia and Asia as a writer and commentator for 25 years. Read more from James Riley atwww.InnovationAus.com or follow him @888riley on Twitter.