08/21/2009 Source: People’s Daily

On August 19, Guangdong Province published its decision to promote closer cooperation with Hong Kong and Macao, proposing joint efforts to form a metropolitan circle with the strongest core competitiveness in the world by 2012.

Guangdong Province will promote closer cooperation with Hong Kong and Macau’s service industries and grant their modern service industrial projects the same preferential policies as domestically-funded enterprises, including the same special funding, taxation, credit guarantee and interest subsidy support.

Guangdong will construct international shipping, logistics, conference and exhibition centers focused on developing complementary sectors to those in Hong Kong and Macao.

It will also explore and introduce feasible methods for Hong Kong and Macao’s higher learning institutions to establish education institutions in Guangdong Province.

It will promote a pilot Renminbi settlement service program with Hong Kong and Macao.

The decision also proposes intensifying special funding to help Hong Kong and Macao-funded enterprises enhance their capability to cope with the international financial crisis.

Efforts should be made to promote Guangdong’s independent innovation cooperation with Hong Kong and Macao, focusing on garment, lighting decoration, furniture, hardware, leather and other industries. Specialized industrial towns in Guangdong in particular, will introduce design services from Hong Kong and Macao.

Guangdong will also strengthen its cooperation and exchanges with Hong Kong and Macao in fields such as film and television production, cartoon animation and advertising design.

The decision also suggests accelerating the construction of cross-boundary traffic projects including the Hong Kong-Zhuhai-Macao Bridge, the Guangzhou-Zhuhai intercity high-speed rail and the project to extend inter-city rail to Macao.

The decision proposes constructing a high-quality life circle around the greater Pearl River Delta and attracting funds from Hong Kong and Macao to Guangdong’s medical service market. Hong Kong and Macao residents will be given the same treatment as Chinese mainland residents when they see a doctor in Guangdong Province.

The strategic goal proposed in the decision states that by 2012, the industrial structure of Guangdong Province will be further optimized and enhanced, the modern service industry system matching the International Financial Center in Hong Kong will be improved and major infrastructures will be integrated.

Moreover, a green high-quality life circle around the greater Pearl River Delta will be steadily constructed. International shipping, finance, logistics, trade, conference and exhibition, tourism and innovation centers will be formed, featuring work sharing and cooperation, mutual support of relative advantages and complementary development.

That means that the life circle will become a metropolitan circle with the strongest core competitiveness in the world. By 2012, the most vigorous and competitive city cluster in the world will be formed, becoming an economic growth pole with a strong driving effect.

08/21/2009 Source: Xinhua

Hong Lei, maker of China’s most popular pirated edition of Windows XP, was sentenced to three and a half years in jail Thursday in the eastern Suzhou City, the Suzhou-based news portal subaonet.com reported.

Hong, author of the Tomato Garden Windows XP, was sentenced by the People’s Court of Huqiu District in Suzhou. He was also fined one million yuan (146,400 U.S. dollars).

To create the pirated Tomato Garden Windows XP, Hong disabled the authentication and certification process,

In the country’s biggest software copyright infringement case, Hong and his partners offered downloads of the Windows XP Tomato Garden Edition to at least 10 million users for free and made profits from advertisements.

Hong’s partner, Sun Xianzhong, received the same sentence. Another two people were sentenced to two years in prison and each was fined 100,000 yuan.

The Chengdu Gongruan Networking Technology Co., Ltd., which ran the download Web site, had its income of 2.92 million yuan confiscated and was fined 8.77 million yuan.

Microsoft was grateful to the Chinese government and its law enforcement organs for their efforts in cracking down on the software pirates, said Liu Fengming, vice president of Microsoft Greater China Region.

The verdict showed China’s determination in combating piracy and protecting intellectual property rights, said Liu.

Hong set up the tomatolei.com site in 2004 and created the Tomato Garden version of the Windows XP, which soon became one of China’s most popular pirated software system.

In June last year, the Business Software Alliance, of which Microsoft is a member, complained to China’s National Copyright Administration and the Ministry of Public Security about the copyright infringement of Hong’s team.

Hong and his partners were arrested between August and December last year.

Fan Yong, lawyer of Gongruan Networking Co., Ltd., told Xinhua his client will decide whether to appeal to Suzhou Intermediate People’s Court within 10 days.

08/18/2009 Source: Xinhua

Since August 1, 2008, the day on which China’s Anti-Monopoly Law came into effect, the Ministry of Commerce (MOFCOM) received over 100 prior notifications of concentrations of undertakings, and 58 of them were accepted. Multinationals were involved in 40 cases, indication their strong mergers & acquisitions capability as well as keen law awareness, said Yao Jian, spokesman of the MOFCOM, on August 17.

Anti-monopoly reviews have helped to safeguard fair competition and public interest, he said.

Among the 58 prior notifications of concentrations of undertakings accepted by the MOFCOM, 46 cases were concluded: 43 won unconditional approval, 2 got conditional approval, and only Coca-Cola’s bid to acquire Huiyuan was rejected.

The MOFCOM has set up anti-monopoly dialogue mechanisms with the EU, the US, Japan, United Nations Conference on Trade and Development (UNCTAD), OECD and APEC, Yao added.

08/18/2009 source: People’s Daily

China’s top legislature is to consider a draft resolution on climate change, and a draft amendment to its renewable energy law, at a bimonthly session scheduled from August 24 to 27.

The draft amendment to the law will undergo its first reading, a meeting of the Council of Chairmen of the Standing Committee of the 11th National People’s Congress (NPC), the top legislature, decided on Monday.

The meeting, presided over by Chairman Wu Bangguo and attended by the secretary-general of the NPC Standing Committee Li Jianguo and various vice chairpersons, set down the four-day session to begin next Monday.

Lawmakers will deliberate a law regulating armed police for the second time, after a consideration in April.

They will also deliberate a draft resolution on the amendment of laws and consider for the third time a draft law relating to administration of government functions.

The legislators will also consider State Council (Cabinet) reports on application of the national plan for economic and social development, methods of development and structural economic adjustments, as well as work to combat climate change.

Lawmakers will also examine a report presented by a NPC Standing Committee law enforcement team on the nationwide inspection of the implementation of animal husbandry laws.

Further, lawmakers will examine qualifications of some NPC deputies and approve personnel changes.

08/13/2009 Source: People’s Daily

According to Shanghai Securities News, the latest report published by the China Academy of Social Sciences (CASS) pointed out that, impacted by a rise in domestic asset prices, a flow of hot money may return to China. CASS experts believe that Hong Kong may be the most recent source of hot money flowing into the Chinese mainland.

Zhang Ming, deputy director of the International Financial Research Office under CASS, said that the latest data from Hong Kong shows that nearly 100 billion HKD have flowed into Hong Kong since July 2009.

Zhang pointed out that the flow of hot money into Kong Kong may actually be targeted at the Chinese mainland, and not merely intended to appreciate the HK dollar. He said that Hong Kong is adjacent to the Chinese mainland and the continuously expanding “Chinese mainland and Hong Kong Closer Economic Partnership Arrangement” (CEPA) has created space for closer capital flows between the two sides. Therefore, Hong Kong is very likely the more recent source of short-term international capital flowing into the Chinese mainland.

He added that the financial crisis has significantly slowed down the growth of the European and American economies and also caused many international investors to turn their attention to emerging Asian markets. The Chinese mainland has become a place favored by large quantities of investment capital because it has the most attractive economic growth model and capital market trend, as well as the rapid increase in Chinese mainland’s asset prices caused by China’s astronomically large loans.

Although the expectation of Renminbi appreciation is not the biggest cause of an inflow of hot money, as with previous inflows of hot money, speculative hot money entering the Chinese mainland has mainly entered into the stock and real estate markets, where investment has high profits and products can be sold easily, said Guo Tianyong, director of the Chinese Banking Industry Research Center at the Central University of Finance and Economics.

Overseas capital investors have switched their focus of investment to the Chinese mainland’s stock markets. According to statistics detailed in the report on China’s QFII A-share funds which was jointly released by Thomson Reuters Lipper and Shanghai Securities News, as of the end of the first half of 2009, nearly all QFII funds have been invested in stocks.

Zhang said that the foreign exchange administration authorities in the Chinese mainland should remain vigilant to a flow of hot money to Hong Kong.

08/13/2009 Source: Global Times

Allegations of stealing state secrets could still resurface from the Rio Tinto investigation, according to law and economic security experts, following yesterday’s reports that four employees of the mining giant have been formally arrested on charges of trade-secrets infringement and bribery.

The employees of the Anglo- Australian mining giant were detained July 5. They have been formally arrested on charges related to improperly obtaining commercial secrets about the industry and taking bribes as non-governmental employees, according to a statement released late Tuesday night by China’s Supreme People’s Procuratorate.

The statement said the employees, including Stern Hu, the general manager of Rio Tinto’s Shanghai office and head of the London-based firm’s iron-ore business in China, were found to have obtained trade secrets.

An official with the Shanghai division of China’s State Security Bureau told AFP yesterday that the case was “no longer under the jurisdiction of the” bureau, as it had been passed to the procuratorate.

Rio hailed the development, calling it a “downgrade” compared with the earlier charges pertaining to spying and stealing state secrets. Hu is an Australian passport holder. He was detained along with Chinese employees Liu Caikui, Ge Minqiang and Wang Yong.

“The charges have been downgraded, and I think that reflects what we’ve been saying all along – that we don’t, in fact, believe there’s any evidence of wrongdoing,” Rio’s chief executive of iron ore, Sam Walsh, said yesterday. “From what we understand, this is a normal commercial-market situation. I don’t believe that our employees have, in fact, done what has been inferred by (the) charges.”

Earlier yesterday, Australia’s Foreign Affairs Ministry also commented that “the involvement of the Ministry of Public Security” indicated that the case has moved from the “state secrets” realm.

But Chen Tao, a member of the Criminal Law Committee of the Beijing Bar Association, argued that the announcement by the procuratorate only represents the result of the initial investigation, and there is a possibility that the accusations of espionage could be revisited after further investigation.

“The formal arrest of four Rio employees marks the case having officially entered into the legal and judicial processes,” Chen said.

That thinking was echoed by Jiang Yong, director of the Center for Economic Security Studies at the China Institutes of Contemporary International Relations.

“Hu’s case is very complicated,” Jiang said. “It won’t be subdued easily, and more sensitive issues may emerge with the ongoing investigation, I suspect.”

Jiang, however, noted that the current allegations against Hu are light compared with the losses China has suffered from the alleged illegal activities.

“China took the feelings of the Australian side into consideration,” Jiang said, adding that with a lack of corresponding articles in Chinese law dealing with industrial espionage, authorities also found it difficult to finalize the charges.

Shi Yinhhong, a professor of international relations at Renmin University of China, diverged with Jiang on the handling of the case.

“The case was not deemed a diplomatic one,” Shi said. “The investigation is aimed at Rio Tinto, not the Australian federal government. China does not have to compromise diplomatic pressure imposed by Canberra. China was firm and upright in its handling of the case, displaying a sense of propriety.”

The Rio Tinto case was alarming to many foreign corporations operating in China, Shi said, adding that the nation is in a process of standardizing the market.

“Some of the immediate impacts of the case could be negative. But foreign companies won’t lose their interest in China,” Shi said. “They will probably become more cautious about their actions in the future. Upright foreign corporations in China may find some encouragement from the outcome of the case.”

According to article 219 of Chinese Criminal Law, infringing upon trade secrets carries a maximum penalty of seven years in prison, Chen said. Espionage carries a much stricter penalty: death, or life imprisonment.

Trials involving commercial or national secrets should be separate from public trials according to Chinese law, Chen noted, adding that police will continue to investigate and present any evidence to the procuratorate. “The whole process lasts 14 months, at most, when charges” are assessed, he said.

About 81 percent of Web users who participated in a survey on the Global Times’ huanqiu.com claimed that the result of the case would be conducive to the security of national resources, citing the anti-corruption nature of the case.

In the meantime, 51.9 percent of Web users polled said that the Rio case could strain relations between the two nations, while 25.2 percent disagreed, and the remaining 22.9 percent said the case was irrelevant to the ties.

In an apparent attempt to head off concern among foreign investors, Chinese Vice Commerce Minister Fu Ziying said the Rio Tinto case would not impact China’s status as a destination for foreign direct investment.

In addition to the formal arrests, Chinese investigators have asked for permission to arrest a number of local steel executives in connection with the Rio Tinto case, the procuratorate said.

Officials with the China Iron and Steel Association said they didn’t have any information on the identities of the Chinese executives of steelmakers allegedly being investigated for their involvement in the case.

08/13/2009 Source: Xinhua

China’s State Council Wednesday passed a draft regulation on environmental evaluation over new projects to prevent pollution or ecological destruction from the beginning.

Under the regulation, environmental evaluations are required before the planning of development projects could be approved, according to an executive meeting of the State Council, presided over by Premier Wen Jiabao.

Such a regulation covers all development activities, from land use and the development of rivers or oceans, to development projects related to industrial, agricultural, husbandry, and forestry sectors as well as energy, water conservation, transportation, urban construction, tourism, and exploration of natural resources.

In the latest case, the Ministry of Environmental Protection in June suspended two hydropower station projects over the Jinshajiang River, upstream of Yangtze River, which had been started without environmental approval.

China Huaneng Group and China Huadian Corporation, which owns the two plants, were ordered to conduct environment-friendly improvement to their high energy-consuming and highly polluting projects.

The regulation would be revised and later publicized by the State Council for enforcement, according to the meeting.

The government also reiterated its stance of sticking to the principle of “common but differentiated responsibilities” established by the UN Framework Convention on Climate Change, according to a statement issued after the meeting.

The government would continue to work with other countries and play a constructive role for the success of the Copenhagen conference, according to the statement.

China would also include its strategy against climate change into its economic and social development planning, it said.

The country would work hard to fulfil the target of reducing energy consumption for every 10,000 yuan (1,470.6 U.S. dollars) of GDP by 20 percent by 2010, raising the ratio of renewable energy to 10 percent of the total, and achieving a forest coverage of 20 percent by then, in its effort to fight the climate change.