04/24/2009 Source: China Daily

China’s prolific Internet users, hell bent on exposing corruption in government functioning, have another reason to smile.

Their consistency in blowing the whistle on corrupt officials has even encouraged the spokesman of the country’s top court to open his own blog, with the sole intention of “connecting with the public”.

“Anyone and everyone is welcome to leave messages on my blog. I will try hard to be a trustworthy and respectable spokesman,” read the Supreme People’s Court (SPC) spokesman Sun Jungong’s web page, http://sunjungong.home.news.cn/blog, which popped up on the Internet on Tuesday.

Sun’s move to open his blog comes close on the heels of a notice issued by the top court last week, urging judicial officers at all levels to “better communicate” with the general public.

“The rapid growth of the Internet has offered us a faster and broader way to hear from and respond to the people,” Sun said during an online interview yesterday, which he immediately made public on his blog.

Sun wrote that the traditional way to communicate with the country’s people, which meant occasional visits to their homes and listening to their grievances or complaints, “obviously cannot reflect the true picture”.

He said more than 300 courts across the country had recently opened and made public their mail boxes on www.chinacourt.org after the SPC issued the notice last Tuesday.

“Direct communication between court officials and the public will help the people better understand our work,” Sun said. “And we must adhere to the principle that we tell them no lies.”

Chinese courts are facing an increasing pressure to ensure fair and efficient trials and fight corruption, while the financial crisis has only posed new challenges for them, Sun said.

“We should be frank with the media and facilitate their interviews,” Sun said.

The netizens, who have been responsible for pushing many corrupt officials off their chairs in the past few months, flocked to Sun’s blog address to hear their new friend in the judiciary. By yesterday, Sun’s page had seen more than 2,000 visitors and about 100 comments, most of them positive.

A few took the opportunity to give their opinions on allegedly unfair verdicts, while some offered suggestions to the ongoing judicial reform.

Zhou Ze, a law professor at the China Youth University for Political Sciences, said Sun’s blog and recent measures taken by the top court are obviously a step forward in ensuring a fair and transparent judicial system.

04/22/2009  Source: China Daily

A draft law on how the nation mobilizes its resources in times of war or emergency had its first review by the top legislature on Monday after more than 10 years of being mulled over.

The national defense mobilization law authorizes the National People’s Congress (NPC) Standing Committee to request a national or regional mobilization if “State sovereignty, unification, territorial integrity or security are threatened”, and let the president issue the order.

After the order is issued, governments above county level can “expropriate civilian resources according to law if material supplies cannot meet the demand”. But such resources must be returned or compensated after use.

People’s daily necessities and housing, and social welfare institutes such as kindergartens and rest homes, are exempt from expropriation, according to the draft law.

It also stipulates that members of the reserves have to provide contact information to military authorities if they leave home for more than a month.

Anyone who refuses or evades national defense duties, or delays civilian resource expropriation, could be fined up to 20,000 yuan ($2,930) or face criminal punishment.

Companies or public institutes refusing to cooperate could face fines up to 200,000 yuan, the draft says.

Defense Minister Liang Guanglie said the law is of “great significance” in safeguarding State security and development and in boosting national strength.

“Though peace and stability remain the norm, the world is not peaceful. Hegemony still exists and regional conflicts appear constantly,” he told legislators.

“We must be prepared for dangers and increase our national defense awareness,” he said.

Liang, also a member of the Central Military Commission, said such a mobilization law is common in major countries. “In a country as big as China, we should have such a law too,” he said.

Experts said the law is actually long overdue. The draft law entered the legislative agenda of the NPC Standing Committee in 1998, but was not submitted for review until Monday.

“The army has been pushing for such a law for years, but constant military and government reforms have delayed it,” said Pan Zheng, a senior researcher with China’s National Defense University.

The existing National Defense Law stipulates that the nation can assemble both military and civilian resources for war or emergency. However, Luo Haixi, another researcher with the National Defense University, said a separate law on mobilization will nevertheless offer more legal backing and standardize the procedures.

04/22/2009  Source: China Daily

Sales at China’s most famous trade fair have dropped 20 percent amid the global financial crisis, organizers said yesterday.

Transactions at the 105th China Import and Export Fair, or Canton Fair, totaled $13.03 billion, a 20.8-percent drop from the same phase of the 104th session last October, Mu Xinhai, deputy secretary-general of the fair, said.

Figures from the fair have long served as a gauge of China’s foreign trade.

A total of 82,520 foreign buyers were present during the fair’s first phase from last Wednesday to Sunday.

This was a 5.4-percent drop on the comparable period of the 104th session.

According to Mu, there was a decrease in the number of trade deals with the European Union (EU), Japan, Australia and the United States – China’s four key export partners.

This included a 38.6-percent decrease with the EU, 36.5 percent with Japan, 11.2 percent with Australia and 4.9 percent with the US.

But deals increased with some growing economies such as Argentina, India and ASEAN countries.

This included a 16.6-percent increase with Argentina, 9.7 percent with India and 4.5 percent with ASEAN countries.

Deals with Russia, Brazil and the Middle East dropped by 42.6 percent, 35.1 percent and 7.3 percent respectively.

“The business transactions to some extent speak for the fact that the negative influence of the global financial crisis is still haunting and its influence on China’s foreign trade will not vanish in the near future,” Mu said.

“The orders from the overseas buyers were more short-term and on a smaller scale than in any previous sessions.”

04/20/2009  Source: Xinhua

China’s top legislators met in Beijing Monday to discuss how and when the country’s military should be mobilized in times of war or emergency.

The draft law of national defense mobilization is one of a raft of proposed laws being considered for the first time by the Standing Committee of the National People’s Congress (NPC).

The draft law sets out principles and organizational mechanisms of national defense mobilization, personnel and strategic material storage, as well as the prevention and relief of war-inflicted disasters.

Lawmakers are also considering for the first time a draft law on the People’s Armed Police.

The draft stipulated the duties and responsibilities of the armed police in order to “safeguard state security and social stability,” said Wu Shuangzhan, commander-in-chief of the armed police, who explained the draft law to lawmakers.

The eighth session of the Standing Committee of the 11th NPC, presided over by chairman Wu Bangguo, will also consider the draft amendment to the rules of procedure of the NPC Standing Committee.

Draft amendments to the Postal Law and the law on arbitration of disputes concerning contracted farmland are scheduled for second readings.

According to the NPC Law Committee, the Postal Law amendment would be  be passed at the session if lawmakers agreed.

Minister of Justice Wu Aiying briefed lawmakers about treaties with the Republic of Korea and Australia on the transfer of convicted criminals.

Vice-Minister of Foreign Affairs Li Jinzhang briefed lawmakers about a treaty with Venezuela on judicial assistance in criminal affairs.

The three treaties are to be submitted to the session for approval.

Lawmakers at the bimonthly session, scheduled from April 20 to 24, will also examine the qualifications of some NPC deputies and consider for approval official personnel changes.

04/20/2009  Source: China Daily

Money will not be an issue for Chinese companies planning to shop overseas thanks to a policy allowing domestic commercial banks to offer loans for mergers and acquisitions (M&A).

China’s banking regulators lifted restrictions last December making it possible for Chinese commercial banks to help finance M&A activities of Chinese companies both at home and abroad.

As of the end of March, five Chinese commercial banks had issued a total of 7.6 billion yuan worth of new loans to support 10 different companies’ M&A deals within China, said Huang Yi, an official from China Banking Regulatory Commission (CBRC).

This figure doesn’t include lending for international acquisitions such as the $21 billion of syndicated loans the Aluminum Corporation of China (Chinalco) secured from four Chinese banks to support its investment in global mining company Rio Tinto.

On Feb 12, China’s State-controlled metal giant Chinalco signed a $19.5 billion deal with Australia’s Rio Tinto that will eventually double its stake in the world’s second largest mining company. This is by far the largest overseas investment by a Chinese company.

The loan arrangement includes a $19.5 billion loan for the transaction and $1.5 billion to finance ongoing working capital and other expenditures linked to the deal, Chinalco said.

The four banks that supported Chinalco’s acquisition include two State-controlled commercial banks – Bank of China and Agricultural Bank of China, China Development Bank and Export-Import Bank of China.

Based on their 2008 earnings report, Chinese commercial banks can provide a total of 900 billion yuan worth of loans for M&A activities. The CBRC regulations mean that a Chinese bank’s outstanding M&A loans cannot exceed 50 percent of its core capital.

In addition to securing funding for their acquisitions abroad, Chinese companies would also be able to get favorable interest rates for the loans, just as Chinalco did from the four Chinese banks.

According to loan documents filed with the US Securities and Exchange Commission, Chinalco would pay just 90 basis points, less than 1 percentage point over the benchmark six-month London Inter-Bank Offered Rate, known as the Libor.

The interest rate is considered highly competitive compared with the 345-point spread over Libor that BHP Billiton, the world’s largest mining company, recently agreed to pay on a five-year bond and the 390-point spread it paid on a 10-year bond.

One of the main purposes of allowing commercial banks to finance Chinese firms’ M&A activities is to support the Chinese government’s call for domestic companies to “go global”, an official from the CBRC said when announcing the new rules.

The global financial crisis could prove a great opportunity for Chinese companies to expand their presence abroad, according to some analysts.

The market value of the world’s mining and metal companies has dropped about 40 to 60 percent due to the global economic downturn, presenting a great chance for Chinese mining and metals firms to pursue overseas acquisitions, global consultancy firm Ernst & Young said in a report.

The largest domestic mobile phone operator China Mobile and insurance giant China Life both expressed interests in acquisition opportunities overseas as assets abroad became cheaper.

Homegrown carmakers such as Chery Automobile, Changan Auto and Shanghai Automotive Industry Corp, have been frequently mentioned as potential bidders of Ford’s struggling Volvo unit.

04/17/2009  Source: China Daily

China’s former 68th richest person had alledgedly swindled nearly 390 million yuan ($57 million) from 11 people in one of the country’s biggest financial frauds committed by a woman if convicted, a court in Zhejiang province was told yesterday.

Wu Ying, 28, had been detained for more than two years before standing trial at Jinhua Intermediate People’s Court. She appeared thinner than when she was arrested and remained calm throughout the proceedings.

The financial fraud charges she faces carry a maximum penalty of capital punishment, Caijing magazine reported on its website.

When the hearing began at 9:30 am, journalists and more than 200 local residents flocked to the courthouse to watch the proceedings

Wu’s 3.6 billion yuan in assets saw 2006 Hurun Report list her as China’s sixth richest woman and 68th richest person. She was arrested in Feb 2007.

The indictment said she had collected nearly 390 million yuan for the “purpose of possession”, promising high returns.

She told victims she would use the money to register companies, invest in projects, loan out or improve cash flow for her business.

But she instead used it to pay off loans and incurred interest, buy real estate and cars, or spent it on personal consumption.

“The amount she collected (from victims) was extremely large and resulted in huge losses,” the indictment said.

At first, Wu was charged with illegal fundraising, which carries a maximum penalty of 15 years in prison.

On those charges, she would have stood trial at a district-level court.

But as investigators uncovered more evidence against Wu, the charges were changed to financial fraud, which can carry the death penalty, and the case was handed over to the intermediate court.

Wu’s attorney Yang Zhaodong insisted his client was innocent, Caijing reported.

He told the court yesterday that Wu simply borrowed the money but did not cheat anyone. Yang also said Wu used the money for business and did not illegally spend it. Wu told the court she had been investing in highly profitable businesses, including trading companies, hotels, investment guarantee agencies and property developments.

The 11 people who lent her money were her friends – not the “general public” as they were defined in the indictment, Yang said.

He also said Wu should not be responsible for the amounts the 11 investors collected from others to give Wu.

In January, seven people who had allegedly collaborated with Wu were convicted of fraud. Their prison sentences ranged from 22 months to six years, and their fines ranged from 20,000 yuan to 300,000 yuan.

04/17/2009  Source: China Daily

Laurence D Fink is quite a busy man these days. He travels around the world frequently, trying to convince his clients, many of whom are institutional investors and sovereign funds, that this is the best time to buy distressed mortgage debt in the United States.

His trip to China is for the same reason.

“I am here to tell my clients that this is the best opportunity to invest in distressed mortgage debt,” the chief executive of BlackRock, one of the largest asset management firms in the world, told China Daily in Beijing yesterday.

Fink declined to disclose the names of clients he would be meeting with during his visit. But one thing is for sure. A year ago, when China Investment Corp (CIC) was inviting bidders to manage its overseas assets, over a hundred financial firms flew in to participate in the bidding.

But the financial world has been transformed over the last six months ever since Lehman Brothers went bankrupt and AIG collapsed, making BlackRock a more prominent force in the financial world.

Since it now faces fewer competitors, the opportunities for BlackRock are obvious. It has become more attractive to sovereign entities, given the highly possibility of it being selected by the US Treasury as one of the top five fund managers that will purchase troubled assets from US banks under the ‘public-private investment program (PPIP)’.

Under the PPIP, select fund managers would get government loans on favorable terms for purchasing these “distressed mortgage assets” if they can raise $500 million from investors within three months. Fink’s China visit now is aimed at raising money to buy these assets since the US is expected to announce the first batch of asset managers next month.

“The opportunity is unique, as the PPIP will help in the economic recovery process. Investing in the PPIP is safer than equity market investment,” Fink said.

But, is the housing market close to bottoming out? Fink certainly seems to think so.

“The growth rate in prices of secondary houses is the leading indicator of consumer sentiment. If we do not stabilize secondary house prices, we cannot stabilize the economy or the equity markets.”

Fink also said there could be a significant risk of inflation as soon as the economy starts to recover, possibly in six months.

“Economic recovery efforts in the United States and abroad have raised the specter of inflation, with signs that they are already feeding a recovery in prices for oil and other commodities,” he said.

“We are recommending to our clients worldwide to start to move some of their government treasury bonds and money market funds to inflation-protected notes.”

Fink was identified by the Financial Times as one of the 50 people who could frame a way forward from the economic crisis.