Articles on this Page
- 10/22/14--13:16: _Robb mulls investor...
- 10/22/14--14:51: _The Ticker: Modern ...
- 10/22/14--16:01: _HK protesters, gove...
- 10/22/14--16:08: _Peugeot says sales ...
- 10/22/14--16:28: _How China's richest...
- 10/22/14--17:14: _McDonald’s China ch...
- 10/22/14--18:28: _Miners shovel coal ...
- 10/22/14--18:58: _HSBC Flash China ma...
- 10/23/14--16:35: _Some space for chan...
- 10/23/14--16:54: _China vows to stren...
- 10/23/14--16:58: _China’s plans for D...
- 10/23/14--17:01: _Aust baulks at new ...
- 10/23/14--17:04: _Apple plans more st...
- 10/23/14--17:25: _Gen Y shaking up Ch...
- 10/23/14--18:03: _Gold demand in Chin...
- 10/23/14--18:45: _Alibaba on cloud nine
- 10/23/14--19:15: _All eyes are on the...
- 10/23/14--20:01: _House prices in Chi...
- 10/23/14--23:50: _China open to Austr...
- 10/24/14--03:54: _UN prods China on H...
- 10/22/14--13:16: Robb mulls investor visa overhaul
- 10/22/14--14:51: The Ticker: Modern business life
A primer on Google's latest attempt to revolutionise email
Property clouds on the horizon: Macquarie
What the end of cheques means for business
Sunday is the new cheap flight champion
Red tape isn’t the only thing Abbott is cutting
- Interesting reads from around the web
- 10/22/14--16:01: HK protesters, government hold first talks on future of democracy
- 10/22/14--16:08: Peugeot says sales edge ahead
- 10/22/14--16:28: How China's richest will fund Australian innovation
- 10/22/14--17:14: McDonald’s China challenge: rising competition
- 10/22/14--18:28: Miners shovel coal into flooded market
- 10/22/14--18:58: HSBC Flash China manufacturing PMI lifts in October
- 10/23/14--16:35: Some space for change in Hong Kong negotiations
- 10/23/14--16:54: China vows to strengthen judicial system
- 10/23/14--16:58: China’s plans for Development Bank fall short
- 10/23/14--17:01: Aust baulks at new China bank
- 10/23/14--17:04: Apple plans more stores in China
- 10/23/14--17:25: Gen Y shaking up China's workforce
- 10/23/14--18:03: Gold demand in China and India on the rise
- 10/23/14--18:45: Alibaba on cloud nine
- 10/23/14--19:15: All eyes are on the renminbi's rising cachet
- 10/23/14--20:01: House prices in China fall in Sept
- 10/23/14--23:50: China open to Australian role in Asia bank
- 10/24/14--03:54: UN prods China on HK elections
The federal government has signalled a major overhaul to the significant investor visa program as it looks to divert the billions of dollars raised from the scheme away from low-risk investments such as government bonds into areas such as venture capital and small-cap companies.
The Abbott government also plans to tighten scrutiny surrounding the visa program, as well as the newly announced $15 million premium investor visa scheme, amid concerns some people with criminal links and corrupt officials could be exploiting the program to fast-track their entry into Australia.
Since the significant investor visa program was launched two years ago, close to $2 billion has poured into mostly ultra-safe government bonds, an ASIC-regulated managed fund or shares in blue-chip companies.
But Trade and Investment Minister Andrew Robb believes the money going into low-risk bonds makes no real contribution to Australia’s economic growth.
“If (the funds) are going to government bonds, which could be sold anytime and anywhere at a good price, Australia is getting nothing out of it,” Mr Robb told Business Spectator. “They just park money there for four years and got citizenship. It does not make a lot of sense to me from a public policy point view.”
Instead, the government wants to channel these new funds from wealthy investors — mostly Chinese nationals — into areas where companies are starved of capital such as start-ups, small-cap companies and early-stage exploration companies.
“My view is that we should channel investment into areas of relatively higher risk,” he said.
“In those areas, the few hundred million additional dollars invested into venture capital space, for instance, would be transformational. It could make a real difference.”
The new premium investor visa program, which offers fast-tracked Australian citizenship in 12 months, requires investors to put at least $15m into the economy. So-called sponsorship of the visa applicant becomes the responsibility of the state or territory governments.
Mr Robb said Australian citizenship was highly prized among international investors and the additional risks that they must carry warranted the benefits of becoming an Australian citizen.
“I think what is being offered is a very valuable thing in terms of fast-tracked citizenship,” he said.
“I do feel this warrants investment that makes a material difference to Australia, not just sitting in low-risk accounts for four years, not making any contribution to the country.”
It is the government’s intention to channel investor money into these new areas through existing vehicles that have been tried and tested over time, such as the Early Stage Venture Capital Limited Partnership, which is registered with the Department of Industry as well as the ATO.
“We feel this SIV and PIV could make a very material contribution in terms of lowering costs and getting ventures off the ground,” he said.
Of the 436 people awarded significant investor visas as of last month, 88 per cent were Chinese.
Australia’s investor visa program has been under the spotlight due to its alleged connection to money-laundering as well as potential exploitation by Chinese officials amid a crackdown by Beijing on corruption.
Australian Federal Police has recently announced an unprecedented co-operation with the Chinese law enforcement authorities in tracking down economic fugitives as well as seizing ill-gotten goods and property in Australia. Mr Robb defended the overall integrity of the visa programs, which are administered by the Department of Immigration, saying there had not been a problem with SIV to his knowledge.
“There is co-operation between our two police authorities to try to flush out some of these corrupt officials,” he said.
“We are re-assessing integrity measures.”
The minister also said that the Australian immigration authority would refer cases to Chinese police if any improprieties were discovered during the mandatory security and character screening process.
“If there is any suggestion that a person has accumulated wealth through illegitimate means, all materials are referred to local authorities in the source countries and in the case of China, to the Chinese police,” he said.
The Australian this week reported that one of China’s most wanted officials, Gao Yan, the former head of the nation’s State Grid Corporation and a former senior party official, is thought to be hiding in Australia.
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1.30pm - Shoes that tone your legs while you walk? The ACCC says no
Here’s a US ad for Reebok’s EasyTone shoes. They’re shoes that the company claims tone your legs while you walk. Reebok has been selling them in Australia since 2009.
And here’s what the Australian Competition & Consumer Commission had to say about them.
Remind you of anything? This ruling on Red Bull came down earlier this month.
1pm - A primer on Google’s latest attempt to revolutionise email
The above video really tells you all you need to know about Inbox, Google's new email app. Here's a bit of context from Technology Spectator:
“We think email is really great—it’s open, it’s ubiquitous, you can use it on any device. But the world has changed a lot since it was invented,” said Alex Gawley, the product director of both Gmail and the Inbox app.
“In 2004, when Gmail was launched we were still 3 years away from the first iPhone.” While the world has moved from clam-shells to touchscreens, email hasn’t evolved in step. Inbox is Google’s attempt to bring email up to speed. “We thought, ‘What if we started completely fresh, what if we built a whole new product that was an inbox that really, truly tried to do the work for you?’—an inbox that tried to help you get back to what mattered to you,” Gawley said of Inbox’s inspiration.
And indeed, Inbox does look different than other email apps. It looks more like a social networking feed than a traditional inbox. And that’s the point, said Jason Cornwell, the lead designer on both Gmail and Inbox. “It looks really different than Gmail, but that’s because we’re trying to solve a different problem,” Cornwell said. “We’re trying to be the best place to get back to the things that matter to you.”
11.25am - Property clouds on the horizon: Macquarie
By David Rogers, BusinessNow
Macquarie sees “clouds looming over the domestic property market”, and expects banks to underperform if investor housing cools.
“Recent announcements around macroprudential regulation represent a significant change in view from the RBA,” the broker says. “Likewise the Government appears about to get serious about foreign buyers.”
“While this is unlikely to result in a ‘train wreck’, international experience points to 2 to 13 per cent underperformance by banking sectors faced with these kinds of interventions.”
“Domestically we believe the sector hasn’t skipped a beat mainly due to ‘dividend harvesting’leading into FY14 results. Investors should be wary though given stocks may give back the dividend and more post results given the headwinds (property and capital) surrounding the sector.”
“We have factored in the mid scenario which sees a 3 per cent reduction in investor credit growth resulting in up to a 1 per cent reduction in cash NPAT and target prices for each of the majors.”
11.15am - What the end of cheques means for business
Is the end of the cheque nigh? Reserve Bank governor Glenn Stevens thinks so. Here’s an excerpt from his speech today on payments. We added the graphs, which are from the Australian Payments Clearing Association’s website.
A more marked decline is evident in the use of cheques. The number of cheques written in Australia peaked around 1995. Since then, the number of cheques written each year per capita has fallen by more than 80 per cent.
Over the same period, the number of electronic payments per capita has risen by more than 400 per cent.
More interesting is the implications of this trend. As Stevens explains:
As the use of cheques has fallen, the per-cheque cost to financial institutions and businesses has generally risen. The market has, and continues to, respond to these pressures by looking for more efficient ways to process cheques, but they are clearly the highest cost payment instrument, as will be confirmed when the Bank releases its payments cost study later this year.
This decline in the use of cheques, a very expensive payment instrument, is one that the private and public sector will have to manage. Part of that will involve the introduction of effective and readily available substitutes for users, and initiatives such as Superstream and eConveyancing are likely to be part of this.
10.30am - Sunday is the new cheap flight champion
By Chris Kohler, BusinessNow
New American research shows the cheapest time to buy flights is on the weekend, according to Scott McCartney of the Wall Street Journal.
It used to be all about tight-arse Tuesdays… but not anymore. The Airlines Reporting Corporation (US) has found that Sunday is the new cheap flight champion and Saturday comes in a close second.
And on a broader note, booking your flights as early as possible isn’t the answer. They key is hitting the cheap-flight sweet spot.
In Australia, experts have said that the best time to buy a domestic flight is between three and 12 weeks before the flight, which lines up with the American research. The US data shows the cheapest time to buy a domestic flight is 57 days before (8 weeks).
10.10am - Red tape isn’t the only thing Abbott is cutting
The Abbott government’s red tape bonfire is about to get even bigger. Yesterday, the government confirmed that it will attempt to save businesses and individuals an additional $1.62 billion in costs with its next ‘Repeal day’. It seems Abbott is pulling out the sheers for this round of cutting, as last ‘Repeal day’ the government less than half of this next event’s ambitious total.
There is nothing wrong cutting red tape, especially if the point is to reduce government duplication of processes. But it’s worthwhile considering the other side of the coin, the government jobs that may be lost as a result of this initiative.
Each year the Australian Public Service Commission releases a statistical bulletin on the size and shape of the public service. The APS has been contracting over the past couple of years, but there has been a noticeable uptick in redundancies this years’ report. Here are five graphs that illustrate this.
1. Public service redundancies are at a 14-year high.
2. There is an exodus of workers who are over 50.
3. The Australian Taxation Office has borne the majority of the cuts.
4. The majority of redundancies are from middle-management.
5. New hiring has also taken a nosedive.
9am - Interesting reads from around the web
Another day, another Ticker. If you missed it, be sure to check out yesterday’s posts onMedibank and the negative gearing debate. Now on to today’s reading list:
She knows how to hit her fan base like an “arrow through the heart”.The genius of Taylor Swift’s PR empire.
The Trans-Pacific Partnership’s missing ingredient?Currency manipulation rules.
Forget Oculus Rift. Meet the cardboard box that can turn your phone into a virtual reality experience machine.
Inside Twitter’s ambitious plan to kill the password.Keep in mind, Facebook and Google are both trying to do the same thing.
The apocalypse is finally bigger than football. The premiere of season five of The Walking Dead outrated the NFL on US cable TV.
Good news for allergy sufferers. A French biotech firm has developed a patch that looks to suppress peanut-based anaphylaxis. Now all it needs is funding.
Oh, and in case you missed it: Jacqui Lambie yesterday suggested that Australia needs to prepare for Ebola-infected suicide bombers. “It’s biological chemical warfare,” she said.
Bottom of Form
HONG KONG—After more than three weeks of protests, student leaders met for the first time with government officials, drawing thousands to the streets but failing to resolve the political standoff.
Despite police fears that the talks could provoke further street clashes, the city’s protest encampments remained peaceful overnight and were quiet Wednesday morning.
After the talks Tuesday night, Hong Kong’s government offered to submit an official report to Beijing that reflects the protesters’ views, but stuck to its line that it wouldn’t ask China’s leadership to revoke its plan to impose limits on how the city’s leader is elected.
The proposal came amid calls to better relay public views on political reform to central authorities in China, which has repeatedly criticized the demonstrations.
“Hong Kong’s young people have already made lots of sacrifices, including their time, and risking arrest and their futures,” said Lester Shum, deputy secretary-general of the Hong Kong Federation of Students, during a two-hour dialogue that was broadcast live. “We only have a small wish—democracy….How can you ask us to leave the streets and accept the current election method?”
The five university student representatives, dressed in black T-shirts that said “Freedom Now,” sat opposite five senior officials dressed in suits in a conference room at a medical college.
The students held fast to their demand that the chief executive of Hong Kong should be publicly nominated in 2017.
Protesters have blamed the Hong Kong government’s failure to adequately convey society’s views to China for the lack of democratic progress in the city.
The government in July submitted an initial report to China’s legislature after a public consultation, a formality to kick-start the political reform process.
In August, the National People’s Congress ruled that candidates running for the top post in Hong Kong must be approved by a nominating committee largely loyal to Beijing.
The talks weren’t expected to yield any substantive results, and didn’t. The student leaders pledged to continue occupying the city’s streets unless the government shows more “sincerity” in talks.
“I’m afraid that we can only agree to disagree,” said Carrie Lam, Hong Kong’s No. 2 official, after the two-hour discussion. She said she didn’t expect to reach an agreement in a single session, and added that the door for talks in the future is “open.”
No further conversations have been scheduled, though student leaders said they would convene Wednesday to decide on their next steps.
During Tuesday’s talks, a sober-faced Ms. Lam said repeatedly that asking Beijing to revoke its decision would be impossible. Students reject that view. Yvonne Leung, a student of government and laws at the University of Hong Kong, accused the Hong Kong government of deflecting responsibility for the political crisis to Beijing.
“The report that [the Hong Kong government submitted to Beijing] wasn’t complete or objective,” said Ms. Leung. Protesters watched a live feed of the talks through giant screens at protest sites, and applauded loudly when the students spoke.
The officials insist that the students’ demand for civic nomination isn’t a majority view in Hong Kong, and said many want the political reform process to move forward.
“We cannot accept the accusation that the report submitted was unfair, so we don’t need to respond by submitting another report,” said Ms. Lam. But the officials also said that the restrictions won’t last forever. One said that civic nomination can be “explored” in the long run, but not for the next chief executive elections in 2017.
A minor concession from the government did come in the form of a pledge to submit a report to Beijing explaining the events in Hong Kong of the past few weeks. The government had previously rejected calls by protesters for a supplementary report to China.
“We cannot deny that over the past month…there was a social movement of a very large scale…so we are willing to submit a report to the central authorities about the events taking place in Hong Kong,” said Ms. Lam.
However, Alex Chow, secretary-general of the student federation, asked whether there was any “practical purpose” to the report, such as a clear timetable of electoral changes to come.
The officials made no promises, saying they need to listen to different views in society and balance various interests.
“The government officials have spent a long time saying precisely nothing. They are repeating what they have been saying all the time,” said Margaret Ng, a former pro-democracy lawmaker who was watching the live broadcast at the Admiralty protest site.
Hundreds of protesters also gathered in the Mong Kok protest site to watch the dialogue telecast. “The government sounded like it was just reading from a script. Their words are very hard to understand, and I think most people don’t know what they are talking about when they refer to specific laws,” said Eric Wai, a 31-year-old computer programmer, who watched the talks in Mong Kok.
The student representatives also took advantage of interviews published in Western media with Chief Executive Leung Chun-ying Monday, where he said that in elections with publicly nominated candidates, the city’s poor and working class would dominate the elections.
In his opening remarks, Mr. Chow said Mr. Leung’s comments reflect the injustice of the current electoral system which he contended is skewed toward big business.
Ms. Lam also said she recognized the generally peaceful and orderly behavior of the student protesters, but said nonetheless that the occupation of major roads is still illegal and should cease. She voiced concerns that the outbreak of violence in the Mong Kok protest site over the weekend show that the protests were veering away from their stated peaceful nature.
Ms. Lam’s views echo those of the police, who said that the area was “on the verge of turning into a riot.” Nearly 70 people were injured in clashes in Mong Kok.
The issue of police force dogged the conversation, with Ms. Lam repeating the government’s stance that the police have exercised great restraint and tolerance.
But Mr. Shum asked, “Why do many citizens still come out to protest, even though they get beaten by the police?”
Though neither side has shown a public willingness to compromise, Tuesday night’s talks were seen as an important first step to ease the standoff. The overall mood of the discussions, which was moderated by a university president, was calm and cordial.
“The government didn’t give us any substantive response nor directions” during the meeting, said Yvonne Leung, a member of the student federation who also attended the talks.
“We are very disappointed and we will continue to stay” in the occupied sites, she said.
In a quick rebuttal, Hong Kong government said in a statement late Tuesday it was “disappointed” about the student federation’s comments on a lack of substantive government response. The government said the officials had a meaningful and sincere dialogue with the student representatives in the meeting and gave positive responses.
Peugeot Citroen says strong quarterly sales in China and by its car-parts subsidiary has kept its drive away from crisis on track, despite an overall lacklustre performance.
Europe's second-largest carmaker is pinning much of its recovery strategy on a tie-up agreed this year with Chinese group Dongfeng and on another Chinese venture.
Peugeot's third-quarter sales in China, the biggest auto market in the world, leapt by 44.4 per cent. Its market share widened by 0.7 percentage points to 4.4 per cent.
The biggest underlying factor behind the group's global revenue was growth in its auto-parts subsidiary Faurecia.
Total group sales in terms of vehicle volume rose by 5.4 per cent, but sales in some markets plunged.
Group turnover edged up just 1.6 per cent to 12.29 billion euros ($15.6 billion), but that still beat the consensus of 12.05 billion according to Societe Generale analysts.
Shares in the PSA Peugeot Citroen group ended the day with a gain of 1.09 per cent to 9.47 euros after a rollercoaster day that saw them initially rise 2.5 per cent and then slip into loss twice.
Chief executive Carlos Tavares said the recovery plan was beginning to produce results but that "the road back to a full recovery is still long".
The group held to its main targets under his turnaround plan called "Back in the Race," designed to revive its fortunes after two years of severe financial difficulties.
Sales by Peugeot Citroen in the European market, slowly recovering after five years of downturn, rose 7.0 per cent.
According to data by the European Automobile Manufacturers Association released last week, however, Peugeot Citroen is trailing the overall 6.1 per cent gain in nine-month European sales with an increase of 4.8 per cent.
PSA, ranking second in Europe after the giant German VW group, is trying to accelerate expansion into emerging markets in a bid to diversify beyond the bleak European car market.
PSA said that it expected the European market to grow this year by between four and five per cent, and the Chinese market by about 10.0 per cent.
But in the region which PSA group describes as Eurasia, sales plunged by 62.4 per cent against the backdrop of the crisis in Ukraine and sanctions against Russia.
Sales in South America fell by 38.2 per cent owing to difficult economic conditions in Argentina and Brazil, while in the Middle East and Africa, they fell by 11.3 per cent.
The group said that on these markets it would it was working to rationalise its fixed costs and to adjust the range of vehicles on offer with the aim of breaking even in financial terms in 2017.
The figures from Faurecia showed the importance of this parts division. Its sales grew by 6.5 per cent to 4.36 billion euros.
France is home to two major car-part makers in global terms. The other big French auto parts maker Valeo reported a 10.0-per cent jump in quarterly sales and its shares rose 1.09 per cent to 85.97 euros.
Meanwhile sales by the PSA auto-making division fell by 0.8 per cent to 7.97 billion euros, although this was better than the consensus forecast of 7.85 billion.
In Latin America, it expected the market to shrink by about 10.0 per cent and in Russia by about 15.0 per cent.
Since the introduction of the significant investor visa program in November 2012, close to $2 billion has been invested in Australia. Overseas investors, mostly Chinese nationals, have parked their money in ultra-safe government bonds, blue chip companies as well as real estate, in exchange for their prized Australian residency.
This is a bad deal for Australia. Federal and state governments can sell their bonds easily without this kind of assistance. Australian government bonds have gold-plated credit ratings and offer attractive yields. Similarly, commercial and residential real estate funds and large cap companies also offer good returns and low risk.
“If (the funds) are going to governments, which could be sold anytime and anywhere at a good price, Australia is getting nothing out of it,” Andrew Robb, the Minister for Trade and Investment, told Business Spectator.
“They just park money there for four years and get citizenship. It does not make a lot of sense to me from a public policy point view.”
The Minister is right. Australian citizenship and associated benefits are highly sought after, and channeling investor’s money into mature and low risk areas is a waste of time as well as a lost opportunity for Australia.
The federal government’s new plan is to re-direct these funds from low risk government bonds and real estate trusts to more risky areas such as venture capital and small cap companies that are crying out for capital.
“In those areas, the few hundred million additional dollars invested into venture capital space, for instance, would be transformational. It could make a real difference,” the Minister said.
Australian start-ups have always struggled to get money and many have been forced to seek funding from abroad, including from Silicon Valley. The commercialisation of great Australian inventions like CSIRO’s Wi-Fi, weren’t successful domestically and instead took place abroad.
It is a shame that Australian inventors have to leave the country to make their dreams a reality. The government proposal to channel overseas investors’ funds to the sector is a good move. Canberra is right to capitalise on people’s desire to move to Australia and ask them to contribute to Australia’s economic future by investing in innovation.
I can already hear grumblings from bankers and real estate fund managers about the risks associated with the new proposal. This may turn away some investors with a lower appetite for risk. But the reality is Australia is one of the few wealthy countries in the world that still retains an investor visa program.
Canada and Singapore shelved their programs and the US just has already reached its quota for the year. So there are not many other options available for investors, especially Chinese investors, who simply want security.
Many Chinese investors see Australia as a safe haven during this period of economic and political uncertainty in China. And you can never charge too much for a life insurance policy.
SHANGHAI—Echo Chen, a onetime McNuggets aficionado, represents the growing challenge McDonald’s Corp. faces as it looked to revive its fortunes in China.
The 30-year-old Shanghai native recalls how 10 years ago she felt excited when she went to McDonald’s. “I was young and it was new to me,” she said. But since then, restaurant offerings have proliferated in Shanghai, giving customers choices ranging from Yum Brands Inc. ’s KFC to local chain Zhen Gong Fu.
“There’s much more now,” Ms. Chen said.
The Oakbrook, Ill., burger chain on Tuesday reported its sharpest quarterly profit drop in seven years amid problems in a broad range of businesses and areas. Prominent among them is China, where a scandal at one of its meat suppliers caused a product shortage, limiting menu options and crippling sales in China, Hong Kong and Japan.
McDonald’s doesn’t break out sales by country, but its China problems helped drive its same-store sales down 9.9 per cent in the quarter ended Sept. 30 in its Asia/Pacific, Middle East and Africa region.
Analysts say the food-supply problem was temporary and that McDonald’s and others have bounced back after previous quality issues. But McDonald’s has a bigger problem in China, said Ben Cavender, senior analyst at China Market Research Group: Rising competition, both foreign and domestic.
A decade or two ago, many Chinese consumers were drawn to McDonald’s because it was their first Western dining experience or first time to eat out of the home, Mr. Cavender said. Since then, “the company went from being a cool option to just another choice in the market.”
Rivals are rapidly expanding across China. For instance, Dicos, owned by Taiwanese Ting Hsin International Group, runs more than 2,000 fried chicken stores in China. Guangzhou Real Kungfu Catering Management Co., also known as Zhen Gong Fu, sells individual rice and meat dishes in around 500 stores across China.
In less-developed cities, the American burger chain is facing increased competition from local operators like Hua Lai Shi Catering Management & Service Co., which has opened 3,000 stores selling fried chicken and french fries.
A spokeswoman said McDonald’s remains a top brand in China. The company has launched many initiatives, including new menu items and tie-ups with brands like Hello Kitty and World of Warcraft, she said, declining to comment further.
The company’s immediate goal is to bring back diners like Li Liang, who have opted to eat at home or at Chinese chains rather than going to McDonald’s over the past few months because of the food scandal. “Chinese food is just better for you,” said Mr. Li, a 31-year-old clothing salesman from Hunan province.
To bolster food safety, McDonald’s—which has more than 2,000 outlets in China—said in September that it plans to review surveillance video from meat-production sites in China and to boost audits of suppliers. It also created anonymous hotlines for suppliers and their employees to report unethical or noncompliant practices and the dispatching of quality-control specialists to all of McDonald’s meat-production facilities in China.
Longer term, McDonald’s has said it plans to take steps to overhaul its image and stay fresh in the eyes of consumers. Earlier this year itannounced an overhaul of a number of its stores in Beijing, Shanghai, Guangzhou and elsewhere.
In late July, Chinese authorities accused meat supplier Shanghai Husi Food Co., owned by U.S.-based OSI Group LLC, of intentionally selling expired meat to restaurant companies, following a television report alleging the practice. Six employees of the Shanghai plant were arrested for “selling substandard products.”
Sheldon Lavin, chief executive and owner of OSI, apologized to Chinese consumers in July for the problems and said he would focus on overhauling the company’s China business. The closely held company said in September it has faced financial loss in the market.
Food scares frequently emerge in the news in China, so much that consumers have become numb to them or bounce back quickly, said Mr. Cavender, the analyst.
McDonald’s has been hit by problems before in China, a critical growth market for the chain. Sales were hurt last year by negative publicity tied to avian flu and overuse of antibiotics in chicken. McDonald’s responded in April by announcing store remodeling and an advertising blitz that emphasized safety and health. It also added new local menu items, such as green-tea ice cream and rice dishes.
SYDNEY—Miners are shovelling more metallurgical coal onto a global market already awash with the steelmaking commodity, delaying any recovery in prices that are at multiyear lows.
BHP Billiton Ltd. became the latest company to announce record output of metallurgical coal, after opening new mines that were planned years ago when prices of the commodity were at a peak. The extra supply is far outpacing demand in countries such as China and Japan, which produce much of the world’s steel.
Miners’ willingness to dig up more coal despite lower prices mirrors a similar push in iron ore, in which miners are investing billions of dollars and running operations harder in a bet that efficiencies of scale will allow them to profit. Critics say the strategy risks creating a supply glut of each of the raw materials used to make steel that will take years to clear.
On Wednesday, BHP said it produced a record 12.8 million metric tons of metallurgical coal in the three months through September, up 7 per cent from the previous quarter and 25 per cent above levels of a year earlier. This included output from a new Australian mine called Caval Ridge, which BHP and partner Mitsubishi Corp. opened this year. BHP, in its joint venture with Mitsubishi, is the world’s largest metallurgical-coal exporter.
Anglo American PLC, the world’s No. 3 metallurgical-coal exporter, has also been increasing supply despite easing demand. The company’s metallurgical-coal production from January to June jumped 21 per cent compared with a year earlier.
The supply surge is weighing on prices and forcing analysts to rethink expectations of a recovery. Many companies with unprofitable mines are opting to wait out the downturn rather than shutting production and laying off staff.
The price for Australian premium hard coking coal, a type of metallurgical coal, has tumbled 16 per cent this year to US$110 a ton, according to data provider the Steel Index. That is near its lowest level in more than seven years and well below the US$300 a ton the material fetched in early 2011.
“We are forecasting a surplus again in coking coal in 2015,” said Christopher LaFemina, an analyst at broker Jefferies who estimates the market oversupply will double to 20 million tons in 2015 from 2014. Consequently, the potential for coal prices to rise “is likely to be much more limited than we had previously anticipated,” he said.
Jefferies recently downgraded its price forecasts for Australian hard coking coal by 12 per cent in 2015, to US$115 a ton, and 10 per cent in 2016, to US$117 a ton.
For BHP, the start-up of Caval Ridge was the biggest contributor to increased volumes in its fiscal first quarter. The mine in remote Queensland state is designed to produce 5.5 million tons a year of the fuel. But the company also dug up record amounts of coal at the Daunia and South Walker Creek mines in Queensland, partly because it used its equipment more effectively.
The scale of the jump in output surprised analysts. “The on-quarter performance of metallurgical coal was strong,” said Barclays mining analyst Ephrem Ravi, who argues that BHP’s broad range of assets from coal and copper to petroleum should allow it to ride out economic cycles better than competitors such as Rio Tinto PLC.
RBC Capital Markets said BHP’s metallurgical-coal production was 17 per cent above its own forecasts. In the year through June 2015, BHP said it hopes to increase production of metallurgical coal by 4 per cent, to 47 million tons.
On Tuesday night at 6pm local time, five representatives from Hong Kong's pro-democracy protesters met with five government officials to discuss the protesters' demands. The meeting, broadcast live, was exceedingly polite and civil. But in the end, none of the protesters' demands were met. The meetings were always presented by the Hong Kong Government as a dialogue, not a negotiation, and indeed, while the territory does have considerable freedoms, the Hong Kong Government is in no position to negotiate on decisions made in Beijing.
Protesters have been on the streets in Hong Kong for four weeks, demanding the resignation of the Hong Kong Chief Executive CY Leung, and the rescinding of the 31 August decision by the National People's Congress in Beijing stipulating that candidates for the 2017 elections in Hong Kong would be screened by a committee of 1200 pre-selected people to ensure they 'loved China and loved Hong Kong'.
While these demands seem to be falling on deaf ears, there have been clues dropped by Leung and his deputy Carrie Lam that space might exist for change in the make-up of the Election Committee, and this seems the most likely direction for discussions from here. Hong Kong's Basic Law, a kind of mini-constitution for the Special Administrative Region, states that 'the Chief Executive shall be elected by a broadly representative Election Committee in accordance with this Law and appointed by the Central People's Government.'
In 2012, the 1193 members of the Election Committee decided among three candidates. CY Leung, a pro-Beijing candidate, won 57.4 per cent of the votes, defeating pro-Beijing Henry Tang with 23.8 per cent, and Albert Ho, a pro-democracy candidate, who won only 6.3%.
The decision by Beijing in August to allow full suffrage in Hong Kong to elect the Chief Executive from a pool chosen by the Election Committee does therefore represent a significant step. However, protesters feel that the August decision demonstrated a fundamental misunderstanding of Hong Kongers' sentiments about achieving universal suffrage, a promise central to the handover from the UK to China in 1997. Reflecting this, at the meeting on Tuesday night, Hong Kong Government representatives offered to provide a new report to the Chinese State Council setting out protesters' concerns, as a basis for future considerations of the Basic Law.
The protesters are unlikely to find this satisfactory — the Chinese State Council did not make the initial decision, and it does not have the power to change it. Nor would such a report likely have any impact on the 2017 elections. It could have some influence further down the line, but only insofar as Beijing sees making revisions as best supporting Communist Party interests. In China, the constitution is understood as an instrument to be used by the Communist Party in ruling, rather than an external and apolitical set of norms which governs the Party.
Where there may be some space for change is in the make-up of the Election Committee.
Leung and Lam have both mentioned that it may be possible to reconsider how the Election Committee is chosen, and who is on it. The Election Committee is reviewed every five years, in line with the Chief Executive's term in office. As it stands now, Election Committee members are themselves elected by a small proportion of Hong Kong's population, around 200,000 out of seven million. The Committee is regularly reviewed and changes have been made in the past, so this seems the most likely avenue for addressing protesters' concerns in a way that does not fundamentally challenge existing governance arrangements.
The importance of Tuesday night's meeting should not be underestimated; a publicly broadcast discussion between high-ranking government officials and young protesters is highly unusual in China. However, it does not mean that the pro-democracy protesters are getting any closer to achieving their central demands. Beijing was never going to change its mind on its 31 August decision, but neither does it want to see violent unrest in Hong Kong.
From Beijing's point of view, the protesters need to understand that both aspects of the 'one country, two systems' formulation are equally important. Since the patriotic education campaign launched after the Tiananmen events in 1989, most average mainland Chinese people have internalised the understanding that challenging the Chinese Communist Party's authority is not only futile but ultimately undesirable. It seems the Chinese authorities are presuming that, over time, this will become equally true of Hong Kong.
The question now is whether Tuesday night's discussions, along with the possibility of changes to the Election Committee, will ameliorate tensions in Hong Kong or inspire more dissatisfaction among pro-democracy activists. It will be difficult for protesters to maintain public support for disruption, given the protests have already been underway for four weeks. Additionally, Tuesday night's meeting puts forward an image of a benign and open-minded government that is willing to listen, and thus not an appropriate target of violence or illegal activities. This, combined with the weight of the Chinese Communist Party's narrative of immutability, may yet quietly smother the flames of dissent.
Originally published by The Lowy Institute publication The Interpreter. Republished with permission.
BEIJING—China’s Communist Party vowed to address public frustration with the country’s legal system by making it more independent and professional, even as leaders reasserted their dominance over the courts.
A statement on legal reforms released Thursday by the official Xinhua news agency offered few details on how the party would improve a legal system dogged by allegations of corruption, weak enforcement and a lack of transparency. The statement came at the conclusion of a four-day plenary session of the party’s Central Committee, composed of about 200 of the country’s most senior officials.
In a country where the notion that the ruling elite should be restrained by law has never held sway, few expect the party to allow a truly independent judiciary. The announcement that the theme of the plenum would be about rule of law nonetheless raised expectations that the party would take concrete steps to transfer at least some of its power to the legal system.
“They need a strong judiciary to capture, or to resolve, all the disputes on the streets,” said Fu Hualing, a professor of law at Hong Kong University. “Basically, you’re creating a sphere of autonomy over which you don’t have total control in the end. That’s the sacrifice.”
In past plenums, the party has often followed up initial statements with more details in a broader policy paper a week or so later. For now, Thursday’s communiqué offered few clues as to the party’s seriousness about moving beyond paying lip service to rule of law.
“I was looking for a bit more,” Mr. Fu said. “It’s pretty dry—there’s not much you can squeeze out of it.”
While the meeting, themed “governing the country according to rule of law.” took place against the backdrop of a sweeping anticorruption campaign, Thursday’s statement also provided no updates about a closely watched investigation into elder statesman Zhou Yongkang.
The focus on law demonstrates Chinese President Xi Jinping ’s recognition that the old trade-off that previously defined politics in the country—breakneck economic growth and increasing standards of living in exchange for an unquestioning acceptance of party authority—no longer holds, some analysts said. As the wealth gap grows and disputes proliferate, the Communist Party is under pressure to show that it can govern cleanly and fairly.
The party indirectly acknowledged floundering public confidence in China’s courts, but at the same time it described the party’s continued leadership of the legal system as a “fundamental requirement” and “basic safeguard” of rule of law.
Even the translation of the term at the heart of the meetings—fazhi, composed of characters meaning “law” and “to govern”—has run into ambiguous territory. In official media coverage of the meetings, the phrase in English has been rendered as “rule of law.” However, many China scholars argue it should be translated as “rule by law.”
It is an important distinction in China, where courts, police and prosecutors are controlled by the party and where the constitution—which guarantees freedom of speech and religion, among other liberties—has been shunted aside when it conflicts with party interests.
Steps the party said it would take to improve the credibility of the courts included a new mechanism to prevent official interference in court decisions as well as the separation, on an experimental basis, of judicial decision-making from enforcement. It also set an outline for new types of courts that would appear to take some legal authority away from local politicians.
The statement sets up a framework to begin “compromise between the party intervention and judicial independence,” said Zheng Yongnian, a political scientist at National University of Singapore.
“They are talking about the legal system in a very narrow sense,” said Mr. Zheng. “The goal of course is the continuous survival of the Communist Party.”
China’s civil justice system ranked 79th of 99 nations on an index meant to measure its standards for rule of law, published in March by the World Justice Project, a Washington-based advocacy group.
The legal blueprint set Thursday broadly slots into an anticorruption strategy set by Mr. Xi almost two years ago when he thundered into office with steps that analysts said were aimed at restoring public confidence in the party. He has instituted new behavioral rules for officials that crimp frivolous public spending, such as on travel and entertainment, and backed them up with a wave of arrests.
But the party provided little fresh perspective on corruption on Thursday, and stayed notably silent on the fate of Mr. Zhou, a once-feared Politburo Standing Committee member who was officially put under investigation in July for suspicion of discipline violations, a term that typically refers to corruption. Political analysts say it remains very likely Mr. Zhou, 71 years old, will be ejected from the party. It’s not known where Mr. Zhou is held and he isn’t reachable to comment.
The statement reiterated party findings of suspected corruption by several Central Committee members ousted earlier, many of whom have ties to Mr. Zhou.
More details on Mr. Zhou’s fate could emerge this weekend. Before Thursday’s meeting ended, China’s government flagged plans for a plenary meeting Saturday in Beijing of the party’s secretive antigraft investigative service, the Central Commission for Discipline Inspection.
In terms of reform proposals outlined Thursday, a pledge to introduce public outreach could herald the introduction of traveling circuit courts of the kind used in Imperial China, and could provide an opportunity for the central leadership to hear gripes that might otherwise be snuffed out locally, Mr. Zheng said.
Another proposal for regional courts would link the systems of various provinces and likely make them answerable directly to Beijing, thus preventing local or provincial officials from interfering in decisions, said Mr. Fu of the University of Hong Kong. But another proposed idea, for a prosecutorial agency that would take responsibility for public-interest cases, could represent a setback for rule of law by taking power to sue the government out of the hands of lawyers and nongovernmental organizations, he said.
“They want to strengthen the hand of the government,” he said. “There’s no room for civil society in this vision.”
China plans to launch a US$50 billion infrastructure lender Friday, a move aimed at challenging the hegemony of the U.S.-backed World Bank and Asian Development Bank in channelling capital to poorer nations in Asia.
But many of the countries that China’s government hoped would join the Asian Infrastructure Investment Bank won’t be present at the signing of a preliminary agreement in Beijing.
U.S. officials have attempted to sway countries not to join, publicly raising concerns about China’s ability to ensure international standards of governance at the institution.
No developed countries will be present on Friday, according to an Indian government official. India will sign the agreement—a step toward the later formal establishment of the bank—along with roughly 20 other countries from across Asia, the official said.
Beijing was betting on the participation of Australia, a major trade partner, which relies on Chinese demand for its natural resources and is currently negotiating a trade pact with China. An Australian government official said the country hadn’t decided whether to join and was unaware of the agreement to be signed Friday.
The U.S. has not commented publicly on whether it is interested in joining the bank—but that appears unlikely given recent comments by Obama administration officials.
U.S. Treasury Secretary Jacob Lew , at a conference earlier this month in Washington, raised concerns about whether the bank would adhere to international lending norms such as those followed by the World Bank.
“The critical question is, ‘Do they follow the same kinds of practices that are working to help economies grow and to maintain strong and stable foundations?’” Mr. Lew said.
A Japanese finance ministry official said the country wouldn’t join because it sees no need for an alternative to the Asian Development Bank, which is dominated by Tokyo. Japan also has concerns about governance and transparency issues at the new bank, the official said.
South Korea hasn’t decided whether to join and is still “looking at the governance and decision-making process” as well as the “economic benefit,” a government official said.
Chinese President Xi Jinping announced plans for the bank a year ago. It is part of Beijing’s efforts to challenge the U.S.-dominated global financial system that has existed since World War II. In July, China agreed along with Brazil, Russia, India and South Africa, to set up by 2016 a “Brics” development bank, to be based in Shanghai.
Chinese media has reported that Jin Liqun, who recently stepped down as chairman of China International Capital Corp., a Sino-foreign joint-venture investment bank, will play a senior role in the new infrastructure lender.
The Asian Development Bank estimates Asia needs around $8 trillion in investment by 2020 to improve the region’s battered infrastructure or face slowing economic growth.
The Beijing-backed lender will start with US$50 billion in total capital from member countries, largely China, with an aim to increase this amount over time. The Asian Development Bank, by comparison, had US$175 billion in capital at the end of 2013 and has 67 members, of which two-thirds are from Asia.
Curtis S. Chin, a former U.S. member of the Asian Development Bank’s board, said China’s new bank could shake up other donor banks, forcing them to reduce red tape which often leads to delays in loan disbursements. But he warned that China will need to ensure the bank doesn’t focus on getting money out the door “with limited concerns about environmental and social impacts.”
China’s finance minister, Lou Jiwei , at an Asia-Pacific Economic Cooperation forum media briefing Wednesday, said the new institution will make commercial investments in infrastructure, rather than focusing on poverty alleviation like other donor banks.
He acknowledged that countries have questions about governance. “We will draw on the good practices” of the Asian Development Bank and World Bank, he said. “But the purposes aren’t the same, so the governance structure won’t be the same,” he said, without elaborating.
Mr. Lou said he’s been involved in lobbying on the issue, meeting with the heads of the International Monetary Fund and World Bank. Those institutions, he said, would “be willing to join us” in project financing.
In his comments this month, Mr. Lew said the U.S. had questions about whether the new bank would uphold environmental and labour protections in its lending.
“I’ve made those points clear in bilateral conversations,” Mr. Lew said. “I’ve made it clear in multilateral conversations. And I certainly hope that countries that are choosing to participate are asking the same kinds of questions that we’re asking.”
The future of the bank likely will come up in discussions at the Asia-Pacific Economic Cooperation meetings next month in China, which culminate in a leaders’ summit Nov. 10-11 in Beijing, though the issue isn’t formally on the agenda.
The bank “is part of China saying it wants to lead on infrastructure financing in the region,” said APEC Executive Director Alan Bollard, in an interview. “The governance structure will be very important in terms of how many partners” China is able to sign up.
Australia won't be one of the 21 founding members of a new Asian Infrastructure Investment Bank.
Twenty-one countries including China, India, Sri Lanka, Pakistan, Singapore and Bangladesh are expected to sign a memorandum of understanding in Beijing on Friday to establish the $57 billion bank.
It is estimated the Asian region will need at least $800 billion a year in new infrastructure over the next decade and the bank is seen as a way to fill the funding gap.
A government spokeswoman told AAP on Friday Australia had not yet made a decision on AIIB membership, despite having been involved in talks on its structure and aims.
An Indian finance ministry delegation is in Beijing for the signing ceremony to be attended by Chinese leaders, the Press Trust of India reports.
Australia's efforts have been focused, ahead of the APEC and G20 leaders' summits, on a global "infrastructure hub" which would provide advice on bringing governments and the private sector together on major projects but no funding.
However, China and Southeast Asian nations are concerned existing funders such as the World Bank and Asian Development Bank are not providing enough support for regional infrastructure.
The United States has been urging caution on the bank, with Fairfax Media reporting on Friday that Secretary of State John Kerry personally asked Prime Minister Tony Abbott not to take part in the AIIB.
The US views the AIIB as a rival to the World Bank and Asian Development Bank and fears China could use it strategically.
South Korea initially expressed support but changed its position recently, citing problems with governance and capital structures.
In an interview with Chinese news portal Sina.com, Mr. Cook said the Cupertino, Calif., gadget maker will also increase investment in China by an unspecified amount. “In the future China will become Apple’s biggest revenue contributor,” he said, according to Sina.com. “It’s just a matter of time.”
An Apple spokeswoman confirmed the remarks. Greater China includes Hong Kong and Taiwan.
China is Apple’s third-largest market after the U.S. and Europe and is an important growth driver for the company. Its revenue growth in Greater China, however, slowed sharply in the latest quarter ahead of the release of its new iPhone, which was delayed by regulators in China until this month.
Mr. Cook’s trip is being portrayed by some Chinese media outlets as part of the company’s attempt to assuage concerns the Chinese government or public might have about the security of data stored on its phones. In July, state broadcaster China Central Television called a location-tracking function on the iPhone a “national security concern.” Apple has said it doesn’t keep user data.
The official Xinhua News Agency said Mr. Cook and China’s Vice Premier Ma Kai “exchanged views on protection of users’ information” when they met on Wednesday.
Apple faces intense competition in China from South Korean company Samsung Electronics Co. as well as Chinese manufacturers. Apple ranked No. 6 in China’s smartphone market in the second quarter, according to research firm IDC.
Mr. Cook said Apple currently had 7,000 employees in China serving 750,000 customers a day in 15 Apple-branded stores. “You could say they’re the world’s busiest retail stores,” he said.
The report also cited him as saying on Monday he would meet with Jack Ma , the founder of China’s e-commerce giant Alibaba Group Holding Ltd. , which raised $25 billion in its recent U.S. initial public offering.
The next crop of movers and shakers lining up to feed China's hungry beast economy are struggling with the contradiction of countering gender inequality, while dealing with parental expectations.
For their whole lives, so-called "Asian Tiger parents" have been breathing down their necks spurring them to study, study, study, earn big bucks and bring their family honour.
For many Generation Y youngsters, the weight of expectation can be all-consuming.
The demographic were born under China's one child policy, introduced in the late 1970s, which has led to a lopsided gender ratio.
The imbalance soared because of access to foetal ultrasound exams and sex-selective abortions, peaking in 2008 at 120 male births for every 100 girls.
The international standard is between 103-107 boys for every 100 girls.
Traditionally in Chinese culture sons were considered more valuable because of their potential to work as labourers.
Late last year, in an attempt to help counter China's ageing population, the central government relaxed the policy.
But it's effect on the economy will be felt for a long time to come.
Some studies estimate there are a whopping 32 million more males aged under 20 than females in China.
Remarkably at the Asia-Australia Business College, at Liaoning University in Shenyang, gender stereotypes in this traditionally male field of study are being challenged.
Young ladies outnumber their male counterparts by two thirds at the school in China's north-east, which has a partnership with Victoria University in Melbourne.
Senior student Li Ting, 21, is on a path towards post-graduate studies at the illustrious Peking University in Beijing and dreams of landing a consultant gig with strategic management firm McKinsey.
But she's realistic about the challenges that lie ahead and knows she'll have to work much harder because of her gender.
"It's a man's world," she says.
"I would like to compete, but will take it step by step."
Confidence and ambition can sometimes only get you so far, Ms Li admits. For example, many companies still advertise positions exclusively for men.
In China, such job advertisements are legal and not viewed as discrimination.
There's also not many cracks in the glass ceiling and perhaps a lack of potential role models.
Although China has the second highest number of female chief executive officers in the world, proportionally the number isn't huge.
Another factor holding back young talented Chinese women from racing up the career ladder is parental demands for grandchildren.
Unlike in the west, it's seen as highly abnormal to delay child birth for career progression until one's mid-30s.
"Age 30 - that's the deadline for babies," she says.
"For men it doesn't matter."
Ms Li's already decided what kind of mother she'll be.
"I want them to be happy rather than have high expectations for them," she says.
Fellow student Steiner Ding, 20, says young Chinese men are also under lots of family and societal pressure - to find their Mrs Right and contemplate home ownership as a potential bread-winner in the country's rapidly overheating property market.
Mr Ding will study in Australia in 2015 before doing a masters degree in America.
For him, career achievement is not the be all and end all.
"I have no such professional ambitions," he says.
"My final goal ... is to raise a dog."
China and India are driving a significant amount of physical gold demand in recent days as buyers take advantage of low prices.
According to trade data cited by the Wall Street Journal, Switzerland exported 95 tonnes of gold to mainland China, Hong Kong and India in September.
Exports to China had been averaging around three tonnes is pervious months before spiking to 12 tonnes in September.
Analysts say Chinese demand for gold rose sharply once the price fell under US$1200 an ounce this month.
India’s Diwali festival which was celebrated Thursday, saw demand for gold rise around a third from last year.
Meanwhile, gold futures retreated on Thursday as upbeat economic data pushed US equities higher, reanimating investor appetite for risk and damping interest in haven assets.
The most actively traded contract, for December delivery, fell $US16.40, or 1.3 per cent, to settle at $US1,229.10 a troy ounce on the Comex division of the New York Mercantile Exchange.
This was the lowest settlement since October 10, when futures closed at $US1,221.70 an ounce.
Gold and other haven assets gave way to pressure from upbeat economic data. Manufacturing activity in China and Europe improved in October, while US economic activity grew at above-historic trend.
"As the fear comes out of the market, the investment comes out of gold," said Frank McGhee, head precious metals dealer with Integrated Brokerage Services LLC in Chicago.
Investors tend to hoard protective assets like gold, Treasurys and the yen during periods of uncertainty, but cut back on such holdings in favour of stocks and other investments that benefit from economic growth when the outlook brightens.
The shift away from gold comes as the US stock market continues to recover from a swift downdraft that saw equities post four straight weeks of declines and the Dow Jones Industrial Average erase its gains for the year.
AliCloud operates data centers: facilities that house computing equipment such as servers. Companies pay fees to AliCloud to gain access to its data centers and take advantage of its computing resources. The businesses are charged based on how much computing power they consume, much like paying utility bills. Those fees are the main source of revenue for AliCloud, which is a business division of Alibaba.
“We are like the road, and businesses that use our infrastructure are the cars that drive on the road,” said Alibaba Chief Technology Officer Wang Jian, on the sidelines of the conference.
Wang declined to disclose revenue or earnings figures for AliCloud, and wouldn’t say whether the business is profitable — describing it only as “very sustainable.”
Wang said AliCloud now has about 1,000 employees — a small part of Alibaba’s 20,000-strong work force.
Wang said that AliCloud is not involved in the management and analysis of the masses of data collected by Taobao and Tmall, or Alibaba’s other units — nor are there concrete plans to increase collaboration with AliCloud.
AliCloud also has no access to the data being collected by businesses using its cloud-computing resources, Wang said.
Representatives of some of those businesses were among the 10,000 attendees at the AliCloud conference.
One such business was 12308 Network Technology, which runs an online bus-ticket booking service that gathers information from bus terminals across China to help passengers plan their trips more efficiently.
Other than its data center offerings, AliCloud also develops its own operating systems for data centers, smartphones, smart televisions and other devices.
AliCloud’s smartphone OS, called Yun OS, faced challenges in 2012 when Google didn’t allow personal computer maker Acer to launch a new handset using it because it was “non-compatible” with Google 's Android system. Acer is a member of Android’s open handset alliance, which doesn’t allow members to work with an OS that is only partially compatible with Android.
At the conference Friday, Dutch electronics maker Philips showcased a new smartphone powered by Yun OS.
But Yun OS will likely need a lot more than the new Philips phone to make a breakthrough in the market. Philips is a minor player in smartphones, even though it is known for home appliances.
On Friday, Wang declined to comment on the outlook for Yun OS, saying that the company will hold another event soon to provide updates on the mobile OS business.
Over the past several decades, we have seen how China’s high economic growth and increasing economic integration with other countries have led to a dramatic increase in its clout in global output and trade.
Just look at the facts. China is now the world’s second largest economy, accounting for 12 per cent of global gross domestic product in 2013. It is also the world’s largest exporter and second largest importer, accounting for about 12 per cent of world trade in 2013. Attracting more than $US110 billion in FDI in 2013, the PRC is the world’s largest developing-country recipient of FDI inflows. It is also the world’s largest holder of foreign exchange reserves, with a total of $US3.8 trillion in reserves at the end of 2013.
The PRC may be a globally significant economic and trading power, but the market share of its currency, the renminbi, lags well behind the US dollar and the euro.
To align the renminbi with its growing global stature, the PRC has embarked on a strategy to internationalise the renminbi. Typically, it is taking a gradual approach. In this, it has embarked on a number of initiatives designed to encourage the wider use of the renminbi and raise its status in the international monetary system.
These measures include allowing foreign investors access to domestic capital markets, through programs like the Qualified Foreign Institutional Investor and the RMB Qualified Foreign Institutional Investor. It has also increased flexibility of the exchange rate: the renminbi trading band has been widened to plus or minus 2 per cent. Also, through the use of renminbi as a settlement currency for cross-border trades, the PRC has been gradually expanding the use of renminbi in bilateral trade settlement agreements.
There are other steps being taken, such as the development of renminbi deposit accounts and the opening of the offshore renminbi market. The PRC has also opened offshore renminbi centres, such as in Hong Kong, Singapore and London.
The result has been the emergence of the RMB in the international monetary system. For example, the RMB is beginning to play a role in international trade transactions. In December 2013, the RMB overtook the euro to become the second most used currency in global trade finance after the US dollar. China’s international trade has also grown at a compound annual growth rate of 19.1 per cent between 2001 and 2013.
The rapid expansion of RMB trade settlement together with other policy and regulatory steps have bolstered the growth of the renminbi bond market in Hong Kong (also known as the dim sum bond market). From only 10 billion yuan ($US1.6bn) in 2007 -- the year when the first dim sum bond was issued -- renminbi-denominated bond issuance in Hong Kong significantly increased, to 372.1 billion yuan ($US60.7bn) in 2013. In the first three months of 2014, bond issuance reached 338.8bn yuan ($US55.2bn).
The number of bond issuances has likewise climbed steeply from just 5 in 2007 to 891 in 2012 and 1,160 in 2013, while the number of bond issuers increased from just 3 in 2007 to 132 in 2013. From January through May 2014, 890 bonds were issued by 107 issuers.
While the bulk of renminbi bond issuances still originate from companies based in the PRC and Hong Kong, issuances from other economies have also grown through the years. In 2010, issuances by firms outside PRC and Hong Kong accounted for only 5.4bn yuan ($US880m). By 2013, their renminbi bond issuances amounted to 76.1 billion yuan ($US12.4bn). As a share of total renminbi bond issuance, their share has varied from about 13–35 per cent.
Trade settlements have contributed to the rise of the renminbi as a global currency. According to the Society for Worldwide Interbank Financial Telecommunications, the renminbi only had a 0.31 per cent share in world currency payments in 2011. In March 2014, however, its share had increased to 1.62 per cent. The renminbi’s ranking in world currency payments has also increased. In October 2011, it was ranked 17th in terms of usage but by March 2014, its ranking had shifted to 7th position. Indeed, the renminbi is gaining on the Canadian dollar (which held a share of 1.83 per cent, ranking 6th) and the Australian dollar (with a share of 1.84 per cent and 5th in rank).
So while good progress has been made, there is plenty of work still to be done. Trade settlements and bond issuances have increased, but from a low base. There have been some relaxation in restrictions on capital flows, but the capital account is still largely controlled. The exchange rate is still controlled.
There is a positive trend in renminbi as a reserve holding, but it is still small compared to other global currencies. Financial markets are still not as deep and liquid as those in developed countries, and are much less than those with global currencies. While the accomplishment is impressive, the renminbi is still far from being a full-fledged international currency.
The PRC is moving in the right direction with these measures and producing positive results. But these developments with the renminbi are more a result of the PRC opening up its capital account and deepening its financial markets rather than the pursuit of specific policy goals. All these trends will develop a critical mass over time and have the potential to start transforming the global monetary system.
Thierry de Longuemar is the Vice President (Finance and Risk Management) of the Asian Development Bank.
This article was originally published here and reproduced with permission from East Asia Forum.
The average price of new homes in 70 Chinese cities fell year over year in September for the first time in nearly two years, as property developers continue to cut prices to lure home buyers.
The drop is yet another signal of a flagging property market, which poses one of the biggest risks to China's slowing economy.
The average price of new homes declined 1.1 per cent in September compared with a 0.5 per cent gain in August.
The reading marks the first drop since December 2012 when prices fell 0.1 per cent. On a month over month basis, prices in September continued to fall for the fifth straight month, down 1 per cent compared with a 1.1 per cent fall in August, according to calculations by The Wall Street Journal.
Many economists and investors are concerned that a worsening slump in the property market could cause a sharper-than-expected slowdown in the world's second largest economy.
Analysts estimate that real estate accounts for nearly one-quarter of gross domestic product, factoring in construction, cement, steel, chemicals, furniture and other related industries. China's economy grew 7.3 per cent in the third quarter this year, its slowest pace in five years.
Excluding public housing, private-sector home prices fell in 58 of the 70 cities in September from a year earlier, up from the 19 cities that posted declines in August. On a month-over-month basis, home prices fell in 69 of the 70 cities in September.
In recent weeks, the authorities have introduced measures to prop up the housing market. The central bank in late September loosened mortgage restrictions by extending qualification for first-time buyers' preferential rates and terms to existing homeowners.
Housing transactions have picked up in September, the start of the traditional peak season, compared with August. Analysts noted more favorable home buyer terms would likely boost sales in the coming weeks, but that those measures wouldn't quickly solve the longer-term issues of excess inventory and rising leverage.
China is open to Australia playing a role in the establishment of the Asian Infrastructure Investment Bank, even though it is not a founding member.
Australia was not represented on Friday when 21 countries including China, India, Malaysia, Thailand, Pakistan and Singapore inked a memorandum of understanding in Beijing to set up the $57 billion bank.
It is estimated the Asian region will need at least $800 billion a year in new infrastructure during the next decade, and the bank is seen as a way to fill the funding gap.
A Chinese foreign affairs department spokesman told AAP on Friday the government welcomed Australia "playing a role in different forms".
"Even if Australia is not a founding member of this bank, we welcome any form of participation," the spokesman said.
China will provide up to half the bank's funding.
Australia's efforts have been focused, before the APEC and G20 leaders' summits, on a global "infrastructure hub" that would provide advice on bringing governments and the private sector together on major projects.
An Abbott government spokeswoman told AAP Australia had not yet made a decision on AIIB membership, despite having been involved in talks about its structure and aims.
China and Southeast Asian nations are concerned existing funders such as the World Bank and Asian Development Bank are not providing enough support for regional infrastructure.
The United States has urged caution. Fairfax Media reported on Friday that Secretary of State John Kerry personally asked Prime Minister Tony Abbott not to take part in the AIIB.
However, a State Department spokeswoman said the idea of an Asian infrastructure bank was welcome, but it must meet international standards of governance and transparency.
South Korea, which has also been involved in talks regarding the bank, has sought more details on governance and capital structures.
The United Nations Human Rights Committee, at a Thursday session in Geneva, asked for more information on China's plan for elections in Hong Kong and said the city's residents' should have the right to both vote and stand for elections, according to a statement on Friday.
The statement comes amid a four-week run of protests in the city over Beijing's decision on August 31 that candidates for Hong Kong chief executive must be prescreened by a nominating committee. Protesters are calling for direct nominations.
The committee, made up of 18 independent experts who monitor the implementation of the International Covenant on Civil and Political Rights, plans to send a letter to the Hong Kong government requesting information about how Hong Kong plans to elect its next chief executive.
The purpose is to see whether the Beijing plan for Hong Kong's 2017 election would comply with the treaty, according to an audio recording of the meeting. Hong Kong has been a party to the nonbinding treaty since British rule. China has signed the treaty, but the government has never ratified it.
Asked about the committee's move, Hua Chunying, a Chinese Foreign Ministry spokeswoman, said, "Since the return of Hong Kong to Chinese rule, the basic rights and freedoms of its residents have been fully guaranteed in accordance with the Basic Law," Hong Kong's de facto constitution.
Ms Hua said Beijing's decision on August 31 was taken "with full consideration of views garnered from across the social spectrum, and is in line with actual conditions in Hong Kong. It's the basis for electing Hong Kong's chief executive, and has unshakable legal status and effectiveness."
The Hong Kong government said Friday that it will implement universal suffrage for the chief executive in 2017 strictly in accordance with the Basic Law and China's decision and "will consult the public on the specific method" for selecting the city's leader at an appropriate juncture.
Ms Hua noted that China isn't a party state to the treaty. She added the covenant "isn't a benchmark for assessing Hong Kong's political development."
The committee's recommendations aren't legally binding, but could lend momentum to the student-led protest movement in Hong Kong that calls for citizens to be able to choose their own candidates for the election of the city's next leader in 2017.
In the latest report that the Hong Kong government submitted to the UN Human Rights Committee earlier this month, it said the selection of the chief executive by popular vote upon nomination by "a broadly representative" nominating committee is in accordance with the "democratic process" and has its origin in Hong Kong's Basic Law, its de facto constitution.
"Because the committee has spoken, it should be a reason for everyone to calm down and say we will revisit the issue," said Emily Lau, the chairwoman of the Democratic Party in Hong Kong, who attended the meeting in Geneva.