Japanese Prime Minister Shinzo Abe's failure to show regret for his country's World War II actions is hurting ties with China, says a former Japanese PM who is visiting Australia.

Naoto Kan says Mr Abe's behaviour has so incensed China that it can no longer hold bilateral talks with Japan.

"Mr Abe has not shown sincere regret for the invasion of China and Japan's actions during World War II," Mr Kan told AAP in Brisbane, where he was visiting as part of his anti-nuclear tour of Australia.

"Because this stance is not being expressed, this is leading to the leaders of the two countries not being able to engage in frank dialogue at the moment."

Mr Abe recently honoured more than a thousand war criminals in a message sent to a Japanese shrine.

Last year he prayed at Tokyo's Yasukuni Shrine, which honours Japan's 2.5 million war dead, including many executed war criminals.

Mr Kan said the lack of talks was exacerbating a simmering territorial dispute over islands in the East China Sea.

The Tokyo-controlled islands are known as the Senkaku in Japan and the Diaoyu to China.

The Chinese ambassador to Japan, Cheng Yonghua, on Thursday called for Japan to make a bigger effort to mend ties with his country and work towards a resumption of bilateral talks.

Tensions were rising in Hong Kong days before Beijing is expected to announce how the territory will elect its next leader. Pro-democracy groups scrambled to kick off a long-term protest campaign earlier than planned and the anti-graft watchdog searched the homes of a Beijing critic, his top aide and a pro-democracy lawmaker.

Officials from the Independent Commission Against Corruption arrived at the home of media tycoon Jimmy Lai early Thursday, Mr. Lai told reporters outside his residency. Mr. Lai is the founder of Next Media Ltd., whose widely read Apple Daily newspaper is known for its staunch criticism of Beijing. It is published in both Hong Kong and Taiwan.

His top aide and spokesman, Mark Simon, said ICAC investigators also raided his home around 7 a.m., taking away his daughter's computer.

The home of Lee Cheuk-yan, the chairman of the Labor Party and of an alliance of pro-democracy groups, was also searched. He told reporters that some bank account records were taken away and that the anticorruption investigation was related to political donations he received from Mr. Lai on behalf of his party. He has said all donations have been open and transparent, without any preconditions.

Mr. Lai was under close scrutiny in recent weeks after local media revealed several leaked emails noting he has donated millions of Hong Kong dollars to pro-democracy politicians in Hong Kong including Mr. Lee. He has said he would continue donating money.

The ICAC said the agency searched three residences and the office of a lawmaker, but didn't identify them. "No arrest was made during the operation. The investigation continues," the agency's statement said. It denied that the investigation was motivated by any political consideration, saying it was prompted by complaints that some lawmakers had received unfair advantages.

Mr. Lai declined to comment further on the search of his home. Mr. Simon called the timing of the search, just ahead of the decision in Beijing, "inflammatory," adding, "I don't believe in coincidences."

Beijing's announcement on Sunday is expected to effectively bar any pro-democracy candidates from running for the city's top post in elections scheduled for 2017 by approving a process that allows only prescreened candidates to run. Pro-democracy activists in Hong Kong have demanded a choice of candidates without Beijing's interference and had threatened mass protests in coming weeks if that demand isn't met.

Currently, the chief executive is appointed by the central government via a 1,200-member committee heavy on Beijing backers as well as business leaders, many of whom are wary of the potentially destabilizing fallout of confrontation with mainland China.

The main organizer of the protests, Occupy Central, so named as it aims to paralyze the city's Central business district, said Thursday that the campaign's supporters will gather on Sunday outside the Hong Kong government's headquarters to mark the beginning of the long-term civil disobedience campaign.

Benny Tai, one of Occupy Central's founders, stressed that the protests will remain peaceful. "I will stop the movement if it loses control or turns violent," said Mr. Tai, a constitutional-law professor at the University of Hong Kong.

Student groups said they have approached over 10 higher-learning institutions, expecting thousands of students will join a school boycott in mid-September.

Apple Daily, one of Hong Kong's biggest-selling newspapers, said in June that its website was among several pro-democracy websites in Hong Kong that had been hit by cyberattacks.

In June, Next Media said two major banks, HSBC Holdings PLC and Standard Chartered PLC, pulled millions of dollars in advertising from Apple Daily because of pressure from Beijing. Representatives for the two banks have said the decision to halt ads was a purely commercial one.

Shares of Next Media were suspended from trading on Thursday after falling as much as 6% in the morning. Its stock had fallen 3.1% Wednesday and will resume trading on Friday.

As Alibaba Group Holding Ltd. courts investors for a highly anticipated public offering next month in the U.S., Wal-Mart Stores Inc. is busy trying to win over online shoppers in the Chinese e-commerce company's backyard.

Wal-Mart's online arm in China--called Yihaodian, meaning No. 1 Store--has recently increased the number of products sold on its site, built up its supply chain and streamlined its mobile site in a push to boost sales. Wal-Mart owns a 54% stake in Yihaodian.

The goal is to achieve the growth that has so far eluded the world's biggest retailer in China's brick-and-mortar retail market. To get there, Yihaodian will have to wrestle China's largest e-commerce company Alibaba, which commanded more than half of China's $46 billion online business-to-consumer market in the second quarter, according to Beijing-based Internet research firm iResearch Consulting Group. Yihaodian, in comparison, had just 1.4% of that market.

Yihaodian carved out its niche by specializing in online grocery before any of its bigger rivals got into that business, and now is trying to build up a position selling consumer products, appliances and apparel.

In a nod to Alibaba's popular marketplace site Tmall, Yihaodian is also elbowing its way into the busy arena with 1-Mall, an online shopping center where companies such as Dell Inc. and Nike Inc. have storefronts. And like Alibaba and Amazon.com Inc., it is moving further into services like payments, marketing and data analysis for its marketplace sellers.

The focus on e-commerce has been a shift for Wal-Mart, which historically had based its overseas strategy on trying to replicate the success it had with discount stores at home. The company initially was slow to adopt e-commerce, but has now become the fourth largest U.S.-based online seller with more than $10 billion in global sales, after Amazon.com Inc., Apple Inc. and Staples Inc.

Aware of the challenges it faces in China, Wal-Mart has come to terms with what could be an extended fight for growth.

"We've taken a long-term view of China," said Neil Ashe, Wal-Mart's head of global e-commerce, in an interview. "It's an awfully big market--it doesn't have to be number one to be a good business."

Yu Gang launched Yihaodian in 2008 with co-founder Liu Junling, both former supply chain executives at Dell. Mr. Yu also worked on global supply chain at Amazon.

Yihaodian notched early wins, dominating product categories like imported milk following a scandal over tainted domestic milk powder in 2008. Last week, it acquired a license as part of a pilot program to sell over-the-counter drugs on the Web.

The online grocer has figured out how to strike the right marketing tone for Chinese consumers, who often shun Western-style advertising and have flocked to Yihaodian promotions like "Auntie's Day"--a celebration of a women's menstrual cycle--for its feminine products.

"We figured grocery was the hardest to do, and if we could excel there, we could expand quickly into other products," Mr. Yu said during an interview at the company's nerve center in suburban Shanghai, where a dozen television screens flash metrics depicting average delivery time and customer orders that change by the second.

Mr. Yu, the company's chairman, is armed with a bachelor's degree in space physics at Wuhan University and a Ph.D. in managerial economics and decision sciences from University of Pennsylvania's Wharton School.

He said Yihaodian's biggest strength is that it has figured out how to deliver fragile goods like bananas and mangoes to customer's homes within hours by using a network of about 20 fulfillment centers and hundreds of delivery stations across the country. Yihaodian now turns over its entire inventory in 18 days, down from 50 days when the company first started.

Speed is everything, says Mr. Yu. "In the U.S., people accept delivery in five to seven days; in China customers are spoiled," he said. "Same-day or next-day delivery is a must."

To get closer to customers and deliver faster than rivals, the company is setting up shipping centers in individual apartment complexes like Shanghai's Zhongyuan Liangwancheng, a gargantuan set of towers housing more than 50,000 people.

"There are more people in that complex than all the residents of Bentonville," Wal-Mart's Mr. Ashe said, referring to the company's Arkansas headquarters.

The chain has also experimented with virtual supermarkets in subway stations, where shoppers use cameras on their mobile phones to scan codes alongside photos of items like diapers and detergent that are plastered across large posters and can be ordered for home delivery.

Speed is a draw for shoppers like Yan Lizhou, the director of a Shanghai-based capital-management fund who lives in the massive Zhongyuan Liangwancheng complex and said he regularly orders household goods and cosmetics for his wife on Yihaodian. "The delivery is fast," said Mr. Yan, adding that the goods are also reliable. "I don't even have to look at the products when they send them."

Chinese consumers commonly open packages upon delivery to review products and send them back with the courier on the spot if they are unsatisfied.

Getting China right is a big priority for Wal-Mart. The company's international operations account for nearly 30% of its total revenue and have posted regular growth in same-store sales, something that hasn't happened in the U.S. since 2012.

China, however, is a weak spot. Out of Wal-Mart's five foreign markets with more than $10 billion in sales--Mexico, China, U.K., Brazil and Canada--only China reported a drop in comparable-store sales in the quarter that ended July 31. The metric was down 1.6% as the company continues to struggle amid food-safety issues and government regulation in the world's second largest economy. Brazil outshone the rest with sales growth of 9.7%.

Wal-Mart, which has more than 400 stores in China, said store traffic fell 7.9% in the quarter that ended July 31. Last year, the company announced plans to retool its store operations in the country: It would close 25 poor-performing stores but open 100 stores over the next three years.

Yihaodian said it brought in $1.9 billion in sales last year. Wal-Mart, which doesn't break out sales for China, said Yihaodian's sales are based on Chinese accounting rules and include items excluded from Wal-Mart's reported e-commerce sales.

While that is well below the $248 billion in transactions done on Alibaba's online sites last year, Wal-Mart said Yihaodian's sales growth is "in the high double digits," contrasting with a 1.6% decline in comparable sales at its physical stores in the country.

"We're ready to take on our bigger competitors," Mr. Yu said.

The market is getting tougher, though, as rivals start to horn in on the online-grocery business that Yihaodian pioneered.

"Yihaodian faces serious competitive challenges as all the other players go into grocery and it becomes a price-cutting, discounting world," said Shaun Rein, managing director of China Market Research Group.

PetroChina Co., China's biggest listed oil company by capacity, said Thursday its first-half net profit rose 4% from a year earlier after its refining business swung to a profit and its chemicals business narrowed its loss.

Beijing-based PetroChina's refining margins have improved since last year after Beijing implemented fuel-pricing reforms, which linked oil-product prices more closely with international prices. Oversupply and sluggish demand for chemicals weighed on profits in the first quarter, but the second quarter picked up, the company said.

PetroChina's net profit for the six months ended June 30 rose to 68.1 billion yuan (US$11.1 billion) from 65.5 billion yuan a year earlier. Losses in refining and chemicals, which are combined into one segment, narrowed to 3.4 billion yuan from 15.9 billion yuan during the period.

The Chinese oil giant's stronger earnings outperformed smaller rival Cnooc Ltd., which recorded a 2.3% decline in net profit to 33.59 billion yuan for the same period on rising operating costs. PetroChina's results were similar to China Petroleum & Chemical Corp., known as Sinopec, which reported an 8% increase in first-half net profit on Friday. Sinopec, the country's largest refiner, also said an oversupply of chemicals in the domestic market weighed on profits despite improvements in the refining business.

PetroChina said Thursday that operating profit from its natural-gas-and-pipeline business in the first half of the year fell by 81% year-over-year to 4.1 billion yuan, partly because it needed to procure expensive natural-gas imports to meet rising demand. The company has lost billions of dollars from selling imported natural gas at deep discounts in the past few years.

Analysts expect PetroChina to report stronger results in the second half of the year on the back of a natural-gas price increase and potential gains from asset sales. China will raise the price of natural gas sold to businesses by about 18% from Sept. 1. PetroChina said Thursday that the price increase would "improve the group's financial position and operating results in the future."

Speaking at a news conference, Wang Dongjin, the company's vice chairman and president, provided an update on PetroChina's operations in Iraq. PetroChina has interests in four oil fields in the country and operates two of them, but until now hasn't provided a detailed update on how these fields are being affected by recent attacks inside the country by Islamic State extremists.

Mr. Wang said Iraq was expected to contribute about 50 million metric tons, or about one million barrels a day, to PetroChina's overseas output this year. "Amid this turmoil, we have maintained normal production and existing operation of our fields," Mr. Wang said, adding that 1,500 expatriate workers have been evacuated since the fighting began.

Mr. Wang said that moving forward, two of its Iraqi fields--Rumaila and West Qurna-1--will see a "slight decrease" in production this year because of the fighting but that "hopefully production...will pick up in the fourth quarter."

Meanwhile, PetroChina is also in the process of divesting part of its natural-gas pipeline business as part of Beijing's efforts to reform state-owned companies and encourage a mixed-ownership economy. The decision comes after Sinopec announced it would sell as much as 30% of its fuel-marketing business to outside investors.

Mr. Wang said that selling the pipeline business was "much more complicated" than selling the fuel-marketing business and that the company was still internally assessing the quality of the assets and seeking internal and government-regulatory approval. He declined to provide a timetable for the sale.

China’s top judge has announced that the country will allow foreigners to enter Chinese courts and listen to cases, according to state media reports this week.

Zhou Qiang, the head of China’s Supreme People’s Court, is reported to have made the announcement to ambassadors and officials from 20 countries and regions at an “open court day”.

"We've realized the need to invite ambassadors and foreign professionals when we tackle foreign-related disputes and provide legal aid for foreign litigants," Zhou reportedly said.

"More foreigners will be allowed to visit our court and listen to trials and cases involving foreign companies or citizens.”

High-profile probes into alleged violations by a range of foreign firms in a range of different sectors including automobile, pharmaceuticals, and technology, have been launched in recent months.

Earlier this month the European Chamber of Commerce publicly criticised Beijing’s anti-trust probe into foreign companies for lack of transparency and impartiality.

China’s local governments will be allowed to apply for cheaper municipal bonds to help refinance high-cost debt, Finance Minister Lou Jiwei said this week.

Lou said the central government will control the quotas within which local governments can borrow money in a speech to the standing committee of the National People’s Congress on Wednesday.

The move may help to ease concerns about the amount of debt in the country and its potential impact on the world’s second largest economy.

The latest estimate by the National Audit Office of local government debt and contingent liabilities in mid-2013 was 17.9 trillion yuan ($A3.3 trillion).

The Chinese financial services industry is one of the least open sectors in the country: foreign banks account for about 2 per cent of total market share. But it is a huge market, with 1.3 billion customers and trillions of dollars in savings and assets that no bank can afford to ignore.

Australia and New Zealand Banking Group has been in China since 1987 and sees the country as an integral part of the bank’s supra-regional strategy. Its chief executive Mike Smith talks about China at every opportunity. China Spectator recently interviewed the bank’s outgoing China chief executive Charles Li, who will leave the bank today after three years of service.

Li says ANZ has already moved beyond being a bank that facilitates trade and investment between Asia, Australia and New Zealand. It is becoming an increasingly important player in intra-regional trade and investment flows, which includes helping Chinese companies invest or trade with Indonesians, or Singaporeans businesses doing deals in Jakarta.

"Over times, investors and analysts will have a better appreciation of ANZ’s supra-regional strategy as we grow our business in the Asia Pacific region," he says. China is expected to be a linchpin in this strategy as the world’s largest trading country and an increasingly important player in foreign investment.

“As a regional bank, we have not only intimate knowledge of home markets like Australia and New Zealand but also countries around the region. For example, Chinese companies are interested in fisheries and natural resources in the Pacific Island countries, tin mines in Indonesia, infrastructure projects in Laos and Cambodia,” he says.

“Chinese companies are not only building infrastructure but also selling capital equipment like electricity generators. We can get involved in many aspects of their transactions.” 

Though the bank does not break down its revenue at a country level, Li says China is by far the largest referrer of businesses to other branches in the region and accounts for half of all referral businesses.  

Despite recent slumps in commodity prices, Li is still reasonably optimistic about the future demand for Australian resources. “I believe China’s urbanisation will continue to drive demand for resources. The commodity price was artificially high before on the back of China’s four trillion yuan stimulus package,” he says.

China’s steel industry, which accounts more than half of the world’s total production, is the largest buyer of Australian iron ore. But the industry has been dogged by excess capacity, low-grade production and environmental pollution. 

Li points out there are a mismatch between supply and demand. On one hand, Chinese steel mills are producing a lot of low-grade steel and iron, which causes pollution and overcapacity. However, there is a shortage of supply of high quality steel that is needed for sectors such as manufacturing.

“The Chinese steel industry needs to undergo significant restructuring,” he says. “China still needs high-grade steel for building high-speed railways and expressways. I think China will still rely on Australia to supply high-quality iron ore. I am quite positive about this,” he says.

Small and medium-sized Chinese companies struggle to get credit in China and some of them are paying as much as 30 per cent interest on their loans. China Spectator asked Li whether he sees this area as a potential opportunity for foreign banks like ANZ.

He explains this problem is due to deep structural issues in the Chinese financial system. People are willing to lend to state-owned enterprises because there is an assumption that the state would clean up the mess if there are problems.

“Foreign banks only account for 2 per cent of total assets in China. I think it is unrealistic to expect foreign banks to fill that funding gap. Our core competitiveness lies in cross-border investment and trade flows. If state-owned banks don’t change their risk assessment strategy, it is hard to solve the problem of funding private enterprises in China,” he says.

One of the highlights of the comprehensive reform package introduced by the new Chinese administration under Xi Jinping is financial sector reform. The Chinese central bank promises to liberalise the interest rate within two years, which has been tightly controlled. Beijing is also gradually opening up the sector to private firms.

“Financial sector reform is not going to happen overnight and I think it will take a long time for that to happen,” he says, “We can already see some changes such as private capital in banking sector, partial liberalisation of interest rate and internationalisation of the renminbi. I think there is likely to be a qualitative change within next three to five years.” 

East Asia Forum

In July, Shanghai’s Dragon TV exposed illegal food handling practices by Shanghai Husi Food Co., a major meat supplier to multinational corporations such as McDonald’s and KFC. The story, which was the result of months of undercover investigative journalism and concealed video recording, showed footage of numerous violations including mixing expired meat with usable product as well as deliberately deceiving a regular inspection group from McDonald’s. Six Husi staff members were swiftly arrested. It is believed that such behaviour had been going on for years, though Husi’s senior management claimed this was an isolated incident.

While food in China is generally safe, repeated food safety incidents make a mockery out of serious reform efforts. In all likelihood, only a small number of people violate food safety laws. But they have become China’s Achilles heel, remaining elusive and making it hard to clarify the scope of the problem.

The media, in partnership with whistleblowers, has been increasingly successful in exposing violators. The latest case is indicative of their approach.

Dragon TV justified their undercover assignment based on ‘reports coming out of the factory’. The background is complex, and draws attention to certain features of whistleblowers in China. Husi’s exposure stems from the unsuccessful resolution of concerns regarding workplace safety, conditions and practices raised previously by their employees. Two employees are central to the case. The first employee, from the quality control department, tried to sue Husi in July 2013. He sought approximately 40,000 yuan (US$6500) in compensation, claiming Husi’s work conditions were unsafe, overtime was excessive and they regularly mislabelled product expiry dates. The court repealed the case in Husi’s favour. Another employee, who tried similarly without success, finally decided to approach Dragon TV, leading to the story that made headlines.

Until investigations are complete, it is impossible to know what really happened or if this is indeed only an isolated incident. It is even harder to ascertain a motive. The video footage captured one factory worker claiming that while food at McDonald’s and KFC might taste different, ‘what the eye doesn’t see the heart doesn’t worry about’, suggesting they did not perceive any safety threat or moral issue in their behaviour. Potential health risks of the case have not been discussed, with coverage instead focusing on the illegal behaviour.

Wu Heng, a well-known food safety activist and author based in Shanghai, speculates that the motivation for food safety violations often comes down to money: someone, somewhere, is profiting from this. Kai Kottenstede, a Chinese food safety regulations researcher, notes that Shanghai city is a leader in food safety, while both McDonald’s and KFC have learnt from experience to be extra cautious in China. Yet this latest case demonstrates that no one is immune. Also, whistleblowers might be bolder at firms with foreign affiliations, sensing their chances of success are higher. But Kottenstede believes this incident distracts attention from more important food safety topics, such as gutter oil and other hygiene issues that pose a proven threat to public health.

Still, whistleblowers in China are increasing, encouraged by recent anti-corruption initiatives led by President Xi Jinping. For example, in 2013 alone the Central Commission for Discipline Inspection conducted over 170,000 investigations across government departments and businesses based on internal and external tip-offs. An increase in whistleblower lawyers — allowing for anonymity — has also contributed to this increase. Yet when official and legal options fail, as they did at Husi, the media can become a powerful ally for whistleblowers.

Recent analysis in the Chinese media suggests that over 50 per cent of food safety violations become public knowledge through investigative journalism, compared with 23 per cent via government sources. By publishing violations, the media can increase chances of punitive government action. This also reduces the chances of backroom deals, which may only involve symbolic penalties. But, despite protection laws, ensuring the safety of whistleblowers is difficult. Data from the Supreme People’s Procurator, a central judiciary body in China, indicates that up to 70 per cent of whistleblowers experience some form of retaliation.

Whistleblowing is not a long-term solution for food safety in China. While it has proven effective in exposing violations, it does not resolve fundamental issues nor clarify the scope of the problem, and Chinese citizens are still uncertain whom to trust. Food safety violators in China are in all likelihood limited to a small number of people, yet they continue to plague China’s efforts at reform.

Sacha Cody is a PhD candidate at the China Institute, College of Asia & the Pacific, The Australian National University. He has lived in China since 2002 and consulted to many companies on food safety issues.

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

China Huarong Asset Management, the country’s biggest bad-debt manager said it will sell stakes in itself to eight foreign and domestic investors ahead of a planned IPO.

The company announced on Thursday that regulators have approved a deal which will allow a 20.98 per cent to be sold for 14.5 billion yuan (A$2.52 billion) to a consortium.

The consortium includes  Goldman Sachs, Malaysian sovereign fund Khazanah Nasional Bhd., China Life Insurance and Warburg Pincus LLC.

According to media reports citing comments made by Huarong chairman Lai Xiaomin, the the IPO is expected before the end of 2015.

The state-run financial firm was set up to help deal with bad loans in the country’s banks. It is currently majority owned by China’s Ministry of Finance.

Treasurer Joe Hockey has issued a fresh invitation to Chinese state-owned enterprises to invest in Australia.

In a keynote speech to a conference in Sydney, the treasurer said Australia is going through significant change and needs to engage with global investors if the country is to continue to grow.

Mr Hockey said while Australia is economically resilient and strategically located there is "tremendous global competition".

"If Australia is to take advantage of the opportunities presented we will require additional capital," he told a foreign investment roundtable on Friday.

"We need to make sure foreign investors continue to invest."

In particular, he said the Coalition government is very welcoming of Chinese investment, including that by state-owned enterprises (SOEs).

Chinese SOEs are increasingly looking towards Australia for new opportunities as China loosens its restrictions on outbound investment.

"So we are working to make sure that Australia is ready," he said.

China represents Australia's sixth largest source of inward direct foreign investment at $20.8 billion in 2013.

The two largest sources of investment are from the US ($149.5 billion) and the UK ($86.7 billion).

He said the government has done an enormous amount of work on a free trade deal with China and is hopeful of bringing that to fruition by the end of the year.

Treasurer Joe Hockey has issued a fresh invitation to Chinese state-owned enterprises to invest in Australia.

In a keynote speech to a conference in Sydney, the treasurer said Australia is going through significant change and needs to engage with global investors if the country is to continue to grow.

Mr Hockey said while Australia is economically resilient and strategically located there is "tremendous global competition".

"If Australia is to take advantage of the opportunities presented we will require additional capital," he told a foreign investment roundtable on Friday.

"We need to make sure foreign investors continue to invest."

In particular, he said the coalition government is very welcoming of Chinese investment, including that by state-owned enterprises (SOEs).

Chinese SOEs are increasingly looking towards Australia for new opportunities as China loosens its restrictions on outbound investment.

"So we are working to make sure that Australia is ready," he said.

China represents Australia's sixth largest source of inward direct foreign investment at $20.8 billion in 2013.

The two largest sources of investment are from the US ($149.5 billion) and the UK ($86.7 billion).

He said the government has done an enormous amount of work on a free trade deal with China and is hopeful of bringing that to fruition by the end of the year.

When NSW Deputy Premier Andrew Stoner took a weekend trip to Hong Kong a couple of weeks ago, he managed to come home with a $10 million beef export deal under his belt. But that’s not all.

Stoner also made time for a quick detour across the border into mainland China for another sales pitch: In the southern city of Shenzhen, it wasn’t Australian beef he was selling, but visas.

On August 17, two weeks before it was announced to the Australian press, the Shenzhen Economic News had a big splash, with the headline “Australian state of NSW no longer requires investment in government bonds for Significant Investment Visa”.

The Deputy Premier had announced to his Chinese audience in Shenzhen that his government would scrap the requirement for overseas investors to buy $1.5m out of a total $5m in government ‘Waratah’ bonds, starting in September.

This week, back on home soil, Stoner announced the change and said it was designed to make it easier for Chinese investors, and to give them more choice.

Earlier this year, analysis from the real estate advisory arm of Korda Mentha showed that the scheme brought in at least $440 million to the Australian economy, or around $4 million per day in 2013 (China's Great Wall of visa money, 5 February 2014).

David Chin, managing director of BasisPoint and an SIV expert, says the move means investment providers now have a greater incentive to promote NSW, as the Chinese will now have $5m to invest rather than $3.5m.

“It will provide a level playing field between NSW and other Australian states to attract SIV investors,” he says.

Between November 2012 and the end of May 2014, state governments issued 1,145 invitations, while 928 applications were lodged. Just over 90 per cent of those applications came from China.

The figures also indicate that Victoria has been more proactive in approaching Chinese investors, having sent out almost double the amount of invitations as NSW.

With NSW’s announcement, the competition looks set to heat up now.

Luke Malone, a director at advisory firm Prosperity Advisers, says applicants may start to favour NSW over the other states as funds previously invested in Waratah bonds move to other asset classes.

“Applicants may find higher-yielding investments such as SIV-compliant managed funds or active business investments assets more attractive as a result” he says.

The inter-state competition is unsurprising when you consider the extremely high demand and increasingly tight global supply of premium investor visas in countries such as the US, Canada and Australia.

According to a recent report by Shanghai research firm Hurun, 64 per cent of Chinese people worth more than $US1.6m are either getting out of the country now, or they’re making plans to do so.

The demand is so high that the equivalent program in the US -- known as the EB-5 -- has been tapped out already for this financial year. That means 10,000 people -- 85 per cent of which are Chinese -- have been willing to pony up $US500,000 to move to the US. The annual US quota restarts on 1 October for another 10,000 places.

Canada, which was running the cheapest program, has had to shut it down after being swamped by applicants. 

What is not mentioned in the survey but is undoubtedly a major factor behind the mass exodus of China’s wealthy, is the sweeping crackdown on corruption that has been underway since late 2012.

For many of those corrupt officials and business people, cheaper options with less stringent requirements have started to pop up in cash-strapped European countries.

Spain, Greece and Portugal are now offering citizenship in return for investments into real estate of over €500,000, says Jonathan Sykes, a partner at Premium Finance Group in Beijing.

“Others like Hungary offer almost instant permanent residency in exchange for investments in Government bonds,” he says.

However he also warns these schemes reek of desperation and their long-term viability is unclear.

“We think Chinese investors who go into these schemes tend to be looking for a quick fix rather than a long-term change” he says.

And as premium supply of investor visas continues to tighten, Australia is in a prime spot to profit from wealthy Chinese who are looking for smart investments rather than just a safe haven.

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Krishan Sharma
With Steve Ballmer out of the picture and Microsoft chanting the ‘platforms and productivity’ mantra espoused by new CEO Satya Nadella, the Surface Pro 3 just might be Microsoft’s last chance to turn its tablet/laptop hybrid into a commercial hit.

It was a typical hot summer’s day in Melbourne and a middle-aged South Korean man had just packed up a stall, finishing his volunteer work at one of the city’s many popular community events. He was an inconspicuous man who was quiet and whose English was poor, so no one took much notice of him. Those who volunteered with him though knew him to be a committed and regular volunteer but they wouldn’t have been able to tell you much else.

Geoff*, a man of Chinese-Australian heritage, offered to drive him home after the event. During their drive the South Korean man spoke, in English, about his story. As he spoke, Geoff was amazed the man had led a colourful life as a former South Korean colonel and had also been responsible for the implementation of the security system in the 1988 Seoul Olympics. He was obviously a very interesting and capable man with a myriad of skills on offer, however due to his poor English no one else had taken the time to find out more.

This story is just a glimpse of the thousands of examples in the Asian communities. One might think these are just the exceptions, but the truth is -- it's not! After all, it was only recently that Chinese Australian real estate mogul Hui Wing Mau was revealed as one of Australia’s wealthiest people, landing at sixth spot on the BRW Rich List 2014.

Australia's multiculturalism needs to move beyond eating the odd goat vindaloo, pad Thai, dumplings and mango puddings, or occasionally enjoying taiko drumming classes, Chinese New Year festival, k-pop competitions or participating in “buka puasa” (Indonesian iftar).

There is clearly a missing link between the Asian-Australian diaspora and the value they bring to Australia, especially to international affairs -- trade, diplomacy and cultural exchange.

This year the Department of Foreign Affairs and Trade in its strategy have started to recognise the importance of “diaspora diplomacy”. There are reasons to be optimistic, but I am not. I have attended (or participated in) too many consultation sessions to know the government and businesses alike only see the Asian communities as a consultative body rather than respecting them for their unique insights, networks and skills.

So why is having Asian-Australians in decision-making roles so important for Australia?

It wasn't too long ago that Ansett had to change its Chinese name because it translated to “rest in peace”, becoming the laughing stock of aviation worldwide. It is not rocket science to see the problem of having a name “rest in peace” for an airline. The problem would have been rectified if at least one of their senior executives was Chinese before marketing commenced. It is comforting to think that many companies have improved in the past decade, but the reality is many others still make the same mistakes.

In other cases, businesses or government bodies 'consult' the Asian communities after an Asian strategy is made. At the consultation, the community politely tells them the assumptions made in their strategy are wrong, but after the session they proceed with the original strategy because the decision is already made by the board and can only make minor changes on the fringes. The 'consultation' is a complete waste of people's time who kindly contributed their time (often not remunerated) and a waste of money implementing a strategy that is likely to fail. A workable strategy would have been developed if there were Asian-Australians who picked up on the wrong assumptions made in the first place.

Underutilised, but impressive Asian-Australians are living among us. According to the 2011 census data, 12.9 per cent of Chinese-born people in Victoria have a postgraduate degree and 24.5 per cent have a bachelor degree. This is compared to only 3.9 per cent overall of Victorians who have a postgraduate degree and 12 per cent with a bachelor degree. The story is the similar for those born in other Asian countries such as India, Japan, Sri Lanka, and Indonesia.

If Australia wants a place in Asia, the government and businesses need to move very quickly to engage the local Asian-Australian communities beyond foods and festivals. They need to start respecting their skills, contacts and networks they bring with them by embedding them into key decision making roles and start to increase the number of executives of Asian heritage in their companies.

*name has been changed

Wesa Chau is the director of Cultural Intelligence and was the 2012 inductee to the Victorian Women Honour Roll.

The Communist Party of China's Politburo approved a plan to curb executive pay and perks at major state-controlled companies, the official XinhuaNews Agency reported Friday. 

In a statement, the Politburo said the party will establish differentiated pay systems based on business types and recruitment methods, Xinhua said. 

The Politburo also approved guidelines to keep executive spending in check on official receptions, vehicles and overseas trips by setting maximum expenditure levels, Xinhua said. 

The Xinhua report didn't give specifics on how executive salaries would be adjusted. 

Last week, President Xi Jinping called on the government to more tightly regulate executive salaries at state-owned enterprises. 

Beijing's anticorruption campaign has in recent months focused on state-owned companies, which dominate critical sectors of the economy.

Pro-democracy activists have promised to unleash waves of civil disobedience in Hong Kong after Beijing laid down strict limits in its proposed electoral reforms. The Standing Committee of the National People’s Congress made it clear that it would remain the ultimate gatekeeper to the 2017 universal suffrage for Hong Kong’s chief executive.

A Beijing-controlled nominating committee will vet all candidates to ensure that they are ‘patriotic’ enough to stand. Candidates then need to get at least 50 per cent support from the 1,200 nominating committee that suppose to be broadly representative. In the end, Hong Kong voters get to choose from two to three candidates cleared by Beijing.

Li Fei, a deputy secretary general of the standing committee of NPC, also chose to deliver a stern warning to pro-democracy legislators and activists and said if the Hong Kong legislature were to vote down the electoral reform, it would not get another chance.

“If someone says if we don’t get universal suffrage in 2017, we can try it again in 2022. But I want to say that if Hong Kong misses out on this historical opportunity, it will not get another chance,” he said in response to a question from a Chinese journalist.

Beijing’s uncompromising message has sparked immediate condemnation from pan-democracy legislators and activists. Twenty-seven pan-democracy legislators promised to vote down the promised electoral reform at a press conference after Beijing released its blueprint.

“After having lied to Hong Kong people for so many years, it finally revealed itself today,” said Alan Leong, a pro-democracy law-maker. “Hong Kong people are right to feel betrayed. It’s certain now that the central government will be effectively appointing Hong Kong’s chief executive.”

Benny Tai, a co-founder of the Occupy Central movement, not only denounced Beijing’s move but also said the city had entered “a new era, an era of civil disobedience, and an era of resistance.” Students are also planning to boycott classes in an act of defiance.

Beijing has been hardening its stance over Hong Kong as pro-democracy groups take on an increasingly confrontational approach. The Communist Party is particularly annoyed by some prominent activists, such as Martin Lee and Anson Chan, who have been calling for the US and Britain to intervene on Hong Kong’s behalf.

A former senior Chinese official in charge of Hong Kong affairs warned in an interview that the Occupy Central movement could end in bloodshed if it decided to go ahead, regardless of Beijing’s warnings.

Chen Zuoer, a former deputy director of Hong Kong and Macau affairs, said in a radio interview that the movement was being “manipulated by Western countries to overthrow a regime”. He labelled the movement as “colour revolution” that swept across Eastern Europe and the Middle East and resulted in many regime changes.

It seems that Hong Kong is poised to become a political battleground between Beijing and pan-democracy supporters. But there will be no winners in a political showdown.

Beijing has lost an opportunity to introduce political reform in China’s most prosperous and freest city. Many people in Hong Kong feel that they have been betrayed by Beijing’s promise of allowing them to elect a Hong Kong chief executive through universal suffrage. Despite its projected confidence, China is clearly nervous about opening up a Pandora’s box of political liberalisation.

It is likely that Beijing-endorsed candidates will struggle to get a popular mandate to govern an increasingly agitated population. Young Hong Kongers are less optimistic about their future than their parents and grandparents, and there is a widening gulf between the haves and have-nots. Beijing’s preference to retain a British-style colonial government may not be suited to a changed Hong Kong.

On the other hand, the pro-democracy supporters’ uncompromising tactics and language is not helping their cause. By throwing down gauntlets at Beijing, they are essentially making the Chinese government harden its stance over the city.

Calling for the US and Britain to support the democratic movement is a tactical error, which not only arouses Beijing’s suspicion of foreign interference, but also offers the Communist Party ammunition to label democracy activists as “foreign agents”.  

How to handle Hong Kong’s increasingly poisoned political stalemate will be a test for both sides. Its future as an international financial centre and a vibrant cosmopolitan city is at stake.  

Hong Kong democracy activists are vowing to embark on an "era of civil disobedience" including mass sit-ins after China announced rules giving it control over candidates in the city's next leadership election.

The standing committee of the National People's Congress (NPC), China's rubber-stamp parliament, decided that the next chief executive will be elected by popular vote in 2017, but candidates must each be backed by more than half the members of a 1200-strong "broadly representative nominating committee".

Democracy advocates in the semi-autonomous Chinese city say this means Beijing will be able to ensure a sympathetic slate of candidates and exclude opponents.

"This is one person, one vote, but there is no choice. They have that in North Korea but you can't call it democracy," Democratic Party chairwoman Emily Lau said.

The pro-democracy group Occupy Central said it would go ahead with its threat to take over the city's Central financial district in protest, at an unspecified date.

Hundreds rallied in a park outside the city's legislature late on Sunday chanting "No to fake democracy!" and blowing vuvuzelas.

"A new chapter is unfolding in Hong Kong. It is an era of civil disobedience," Benny Tai, a co-founder of Occupy, told supporters in front of a stage decked with two large Chinese characters that spelt the word "Disobedience".

"I am very sad," Henry Chung, a 37-year-old scriptwriter, said.

"We have waited so many years. But now we have nothing."

Public discontent in the former British colony handed back to China in 1997 is at its highest for years over perceived interference by Beijing, with the election method for the chief executive a touchstone issue.

The text of the NPC decision, released by the official news agency Xinhua, said universal suffrage must have "institutional safeguards" to take into account "the actual need to maintain long-term prosperity and stability of Hong Kong".

The nominating committee will pick two to three candidates, it added.

NPC official Li Fei dismissed the activists' demands, adding that Hong Kong's leader must be loyal to China's ruling Communist Party.

"The Hong Kong leader must be a person who loves the country and the Party," he said.

Late on Sunday, a large group of protesters chanted slogans and sang outside a hotel where Li was believed to be staying after being barred by hundreds of police officers behind barriers.

Leung Chun-ying, the city's current chief executive who was picked by a pro-Beijing committee, hailed the NPC's decision as a "major step forward in the development of Hong Kong's society".

"If we are willing, the majority of Hong Kong people, and that is some five million people eligible to vote, will no longer be bystanders in the next election," he told reporters.

But Beijing's plan to vet candidates caused dismay among democracy advocates, who said it could not be considered genuine universal suffrage.

"There is no genuine choice. They (Beijing) will just give us one or two or three people they have chosen," Lau said.

In a statement, Occupy Central said: "All chances of dialogue have been exhausted and the occupation of Central will definitely happen."

Activist leaders have said they intend to start with small acts of civil disobedience before launching wider direct action such as the mass sit-in to block Central's roads.

Student leader Joshua Wong said preparations would be made for class boycotts among secondary students within the next two months.

Some university students have also vowed to go on strike.

A pro-democracy Hong Kong lawmaker broke down on live television after the NPC announcement, saying there was "no way out for Hong Kong".

"This is the darkest and most painful day for Hong Kong's democracy movement," said a sobbing Ronny Tong of the Civic Party.

His colleague Claudia Mo said: "They're turning Hong Kong into a bunker and they can do whatever they want, basically."

Britain handed Hong Kong back to China on July 1, 1997 under a "one country, two systems" agreement, which allows residents civil liberties not seen on the mainland, including free speech and the right to protest.

Since then the city's leader has been chosen by a 1200-member pro-Beijing committee.

Japan's defence ministry has made its biggest ever budget request as Tokyo bolsters its military amid worries over China's expanding naval reach.

The ministry wants 5.05 trillion yen ($A52.69 billion) for the year, with the focus on boosting protection of a string of southern islands that stretches from Kyushu to waters near Taiwan.

Friday's request, if approved, would mark the third straight annual defence budget increase and a 3.5 per cent rise from the budget for the current fiscal year to March 2015.

The trend reflects Prime Minister Shinzo Abe's wish to build a more active military, with an eye on a possible escalation of tensions with China.

Japan is increasingly wary of China, which is seen by several countries in the region as becoming increasingly aggressive in various sovereignty claims, including a suppurative row over island ownership with Tokyo.

Among items on the defence ministry's shopping list are 20 "P1" maritime patrol aircraft, with a price tag of 378 billion yen.

It also wants five MV-22 "Osprey" - crossover aircraft that have the manoeuvrability of helicopters and the range of airplanes - along with three "Global Hawk" drones and six high-tech F-35 stealth fighters.

The ministry also wants to set aside money to launch a new amphibious brigade, to be assigned to protect the Nansei Shoto islands that lie between the East China Sea and Pacific Ocean.

The augmented budget request comes after the Abe cabinet decided late last year to set aside roughly 24.7 trillion yen between 2014 and 2019 to spend on things including drones, submarines, fighter jets and amphibious vehicles, in a strategic shift towards the south and west.

Japan and China have routinely butted heads over the ownership of the Tokyo-controlled Senkaku Islands, which Beijing claims as the Diaoyus, with official Chinese ships and aircraft regularly testing Japanese forces.

Separately, Chinese naval ships and military jets are seen increasing their activities around Japan, while an unpredictable North Korea continues its missile and nuclear programmes.

Conservative ideologue Abe has tirelessly travelled abroad to reinforce ties with foreign leaders, particularly those in Southeast Asia, in a bid to counter China's efforts to expand its sphere of influence.

Abe has also worked to strengthen Japan's military alliance with the United States.

His defence efforts, however, have provoked unease in China and South Korea, which were victims of Japan's aggressive military campaigns through the end of World War II.

Hong Kong pro-democracy legislators heckled a top Chinese official on Monday as he sought to explain Beijing's position on how the city should elect its leader, while police and demonstrators scuffled outside the venue. 

Dozens of pro-democracy politicians disrupted remarks by Li Fei, deputy secretary-general of the Standing Committee of the National People's Congress, China's rubber-stamp parliament, which decreed on Sunday that candidates for Hong Kong's top leadership post must be approved by a committee heavily loyal to Beijing. 

Legislators shouted slogans and held up signs saying "breach of promise" and "shameful." A few of them were escorted out by the police, while some were dragged out. 

Police used pepper spray to restore order outside the venue, the AsiaWorld-Expo near Hong Kong's airport, after some protesters tried to force barricades set up by police, according to a police spokesman. 

A 21-year-old social worker identifying himself only as Kit said he and others in his pro-democracy group of activists were pepper-sprayed by police. "We are here to protest in a peaceful manner," he said. 

According to the police, the pepper spray was used after protesters consistently ignored police warnings to back down. 

Sunday's decree capped months of blunt reminders from Beijing of who is in charge in the former British colony and drew immediate ire from pro-democracy voices in Hong Kong. China's government has for years been contending with a democracy campaign in Hong Kong, a major international financial center. It has counted on support from Hong Kong's business elites and what local media have sometimes called a silent majority of locals more interested in steadily rising living standards than politics. 

Democracy advocates, however, say Beijing has been infringing on the autonomy it guaranteed the city under the "one country, two systems" policy and have decried growing inequality and rising prices. They say universal suffrage -- a one-person-one-vote system -- would make the local government more responsive to the public. 

Pro-democracy voices in Hong Kong have threatened a mass civil-disobedience campaign if they weren't offered "genuine choice" in 2017 elections, and 23 legislators said Sunday they would veto Beijing's proposal in the 70-seat Hong Kong legislature, where it needs two-third approval. By constituting a bloc of more than a third, the city's 27 pro-democratic legislators hold effective veto power. 

If the package is voted down, Mr Li said, there will be no universal suffrage in 2017. If the proposal doesn't pass, he said, "The governance of Hong Kong would turn more difficult. Many people in Hong Kong are very worried about it." 

Beijing's position is that its proposal provides for the most democratic regime Hong Kong's 7.2 million residents have ever enjoyed, after over a century after British colonial rule. Until the handover, Hong Kong was led by a governor -- most often a career diplomat -- appointed by the British government. 

Since China took over in 1997, the city's leader has been selected, around once every five years, by an election committee stacked with Beijing loyalists and members of the business community, in an arrangement to ensure that the winning candidate was palatable to China. 

If legislators vote down the reform package, the selection method for the chief executive in 2017 will revert to the previous arrangements, Mr Li said on Monday. 

Pro-democracy lawmakers, however, say that means little, arguing that the reforms announced Sunday are no more democratic than the committee-based selection process. 

As for planned protests in Hong Kong in coming weeks, Mr Li called one main organizer, activist group Occupy Central, illegal. "History and practical experience tells us that if some people want to instigate radical activities, and we succumb to that, that will only breed further illegal activities." 

As he spoke, protesters outside held up banners demanding "genuine elections," and hurled insults at pro-Beijing politicians in Hong Kong, saying "their conscience has been devoured by dogs." 

Meanwhile, pro-Beijing supporters also in attendance waved Chinese flags and held signs saying, "Respect the decision of the National People's Congress." James Lee, 30, a secretary, said, "We want election, not confrontation." 

Chinese officials gave Microsoft Corp a deadline to explain what they called compatibility and bundling issues with its software, putting pressure on the software maker as it faces an antitrust probe into its business practices in China. 

In a statement posted on its website Monday, the State Administration for Industry and Commerce said the US company should issue a written explanation within 20 days. The agency required Microsoft to explain "problems like incompatibility and other issues caused by a lack of released information about its Windows and Office software," it said. 

In the brief statement, the agency said it issued the deadline in a meeting with Microsoft personnel Monday. Those attending the meeting included David Chen, a Microsoft vice president who oversees legal and corporate affairs in China, it said. 

In a statement, Microsoft said, "We strictly adhere to the relevant laws and rules in China and we have been actively cooperating with the SAIC's investigation." 

The probe has included surprise inspections in recent weeks by Chinese government officials at Microsoft's offices. The SAIC has said it seized email and other material and was seeking to speak with Microsoft executives. 

The investigation into Microsoft is one of a number faced by foreign businesses in China, as Beijing steps up enforcement of its six-year-old antimonopoly law. Foreign luxury auto makers are facing probes by another Chinese agency into the way they price spare parts and aftermarket services. Chip maker Qualcomm Inc. also faces an investigation into its pricing practices and has said it is cooperating. 

The SAIC oversees antimonopoly issues that don't involve mergers or pricing, such as potential production agreements or other measures that could give companies outsize sway in the Chinese market. It has released few details into the Microsoft probe, saying that it was responding to complaints from other businesses about Microsoft's Windows operating system and its Office productivity software. 

China's state-controlled Xinhua news agency said Monday that other businesses complained that Microsoft "used tie-in sales and verification codes" with Windows and Office in a way that may have broken the antitrust law. 

Last month, an SAIC official said the agency was also looking into how Microsoft distributes its media player and Internet browser software, without elaborating.