Eye on China and Taiwan, Volume Two Options

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A SUCCESSFUL SUMMIT OPINION (PEOPLE'S DAILY, APRIL 25): One thing is certain, that is the positive impact on bilateral ties or even international relations generated by the direct dialogue between top leaders of the world's largest developing and developed countries.
http://english.people.com.cn/200604/26/eng...426_261402.html

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HU US VISIT: WHICH PRESIDENT LOST FACE? ECCENTRIC STAR (APRIL 25): THE ANSWER, OF COURSE, IS BOTH.
Http://eccentricstar.typepad.com/ (SCROLL DOWN LINK FOR ITEM)

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BUSH-HU MEETING A BLOWN OPPORTUNITY: US-CHINA SUMMIT LEAVES STRATEGIC RELATIONSHIP UNEXAMINED IVAN ELAND (ANTIWAR.COM, APRIL 25)
http://www.antiwar.com/eland/?articleid=8894

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A LESS THAN SATISFYING VISIT EDITORIAL (JAPAN TIMES, APRIL 25): The U.S. ? Chinese relationship will only get more complex.
http://search.japantimes.co.jp/cgi-bin/ed20060425a1.html

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THE US FORGETS ITS MANNERS - TODD CROWELL (ASIA TIMES, APRIL 25): Considering the detailed planning put into Hu's Washington visit, it's hard to understand how things could have fouled up so badly.
http://atimes.com/atimes/China/HD26Ad01.html
TEXT OF ENTRY FROM
http://atimes.com/atimes/Front_Page.html

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GO WEST, OLD MEN - THOMAS L. FRIEDMAN (NEW YORK TIMES, APRIL 26): Washington, D.C., has nothing to talk to China about because it is unwilling to impose anything hard on itself and therefore cannot demand anything hard from China.
http://select.nytimes.com/2006/04/26/opinion/26friedman.html
PAID SUBSCRIPTION

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- China To Build A Space Station After Shenzhou 7
http://www.spacedaily.com/reports/China_To...Shenzhou_7.html

Beijing (XNA) Apr 27, 2006 - China will launch Shenzhou VII with three astronauts in September 2008, after the Beijing Olympic Games, said Song Zhengyu, deputy director-designer of carrier rocket F of March II and research fellow of the first institute of the China Aerospace Science & Technology Corp (CASTC).

- US And China To Discuss Space Cooperation
http://www.spacedaily.com/reports/US_And_C...ooperation.html

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- Thai Telecom Giant To Launch Broadband Internet Service In China
http://www.spacedaily.com/reports/Thai_Tel...e_In_China.html

Bangkok (AFP) Apr 25, 2006 - Thailand's Shin Satellite said Tuesday it has sealed a deal to provide broadband Internet services to China through the company's iPSTAR satellite.

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http://www.atimes.com/atimes/China_Business/HD28Cb01.html
Hong Kong's latest bubble
By John Berthelsen

HONG KONG - On December 18, 2003, China Life Insurance, China's biggest life insurer, scored what should have been a huge triumph: a listing on the New York Stock Exchange for US$3.5 billion in American Depositary Receipts (ADRs). It was the biggest initial public offering (IPO) of the year, a symbol of what the new China, freed from its socialist shackles, was about to become.

The unintended consequences of that listing are still being felt: it inadvertently turned Hong Kong into the financial capital of Asia. But China Life's triumph turned to disaster when the country's National Audit Bureau forced the insurer to admit that its state-owned parent had committed "accounting irregularities" worth $650 million, spawning a massive shareholder suit by foreign investors and a probe by the US Securities and Exchange Commission into fraud and misstatements in China Life's prospectus prior to listing.

Since the China Life debacle, corporate China has conspicuously pulled back from the "Big Board" in New York. Since the start of 2004, only two major companies - the fixed-line telecommunications provider China Netcom Group and Semiconductor Manufacturing International Corp - have listed there. Last week, the Bank of China, the country's third-biggest bank, announced it was seeking regulatory approval for an US$8 billion listing - in Hong Kong, not the United States.

With the domestic Shanghai and Shenzhen markets remaining moribund, capital-hungry companies have flooded instead into the Hong Kong Special Administrative Region (SAR). But if the past is any prologue, that shift spells danger for investors. At some point, the confluence of Chinese companies with no semblance of rigorous corporate governance and the torrent of money pouring into Hong Kong is going to spell disaster.

But not yet - though in mid-April, foreign investors showed signs of backing away from Asian markets as they soared to a 16-year high, stretching valuations to their highest levels since the dot-com bust of 2000. Last year, Hong Kong edged out Japan to become the top-ranked market in Asia for capital raised, and was ranked fourth worldwide, at US$37.8 billion. In terms of market volume, Hong Kong ranked second in Asia and eighth in the world, with turnover at a record HK$4.5 trillion (US$580.3 billion) and market capitalization rising to US$1.05 trillion, up 20% over 2004.

Until last week, hot money, the funds that slosh from one side of the planet to the other as investors move from one investment arena to another for what they hope is high short-term gains, has moved into Hong Kong as if 1997, the year of the Asian financial meltdown, had never happened, nor the dot-com bubble that followed in 2000. On April 5, the Hang Seng Index rose by 331 points as institutional investors, many from the Persian Gulf oil states, poured into the market.

Since 2000, the Gulf countries have accumulated more than US$1 trillion in oil revenues. Arab-world outrage after public and political sentiment in the United States forced the United Arab Emirates-owned DP World to transfer its US ports operations to an as-yet-unformed US entity has reportedly resulted in the diversion of huge amounts of petrodollars from the United States into other markets. Hong Kong has been a particular beneficiary.

Some analysts question the wisdom of several of the investments. As an example, says the head of sales for a Dubai-based global investment fund, look no further than Hunan Nonferrous Metals Co, an obscure Changsha-based metals producer that listed in Hong Kong on March 21. Its 1.09 million shares were oversubscribed 701 times, with Hunan raising US$227.5 million in new funds.

The oversubscription "is indicative of the huge amounts of liquidity pouring into the market", the Dubai sales trader said. Nor, he said, is the phenomenon limited to Hong Kong. Markets across the world are at five-year highs as traders pour too much money into too few stocks.

The Chinese companies aren't choosing the Hong Kong market because of its geographical proximity. Most don't dare list in the US. Their bete noire is Sarbanes-Oxley, a US law named for its architects, Senator Paul Sarbanes and Congressman Michael Oxley. The reform legislation was passed by the Congress in 2002 in the wake of the massive Enron meltdown and other scandals that crashed the US markets.

Sarbanes-Oxley, now known as SOX, requires strengthening corporate governance by corporations seeking to trade on US exchanges. Regarded as draconian by financial markets, SOX is probably the most stringent law in the world governing major capital markets. Among other things, it requires company executives to accept personal responsibility for any material misstatements due to error or fraud. Boards of directors, once the cozy preserve of the chief executive officer's friends, must now be composed of a majority of independent directors.

This is not something that China Life's company officers, to their sorrow, apparently considered on their way to the market. But the officers of Chinese banks and other firms planning IPOs took serious notice. Fortunately for them, being blocked by generally accepted accounting practices from listing in the US turned out not to be much of a handicap. China's newly listing companies simply dropped their US plans and listed in Hong Kong, where a flood of foreign investors found them anyway.

Mind you, Hong Kong listings don't attract subscriptions as big as they do in the US. But for most of those going to market, getting there at all is fine. Given China's notoriously poor corporate governance, the cost of producing accounts that comply with US accounting standards is prohibitive. Companies must provide three years of year-end financial data and in some cases five. Many of China's banks simply don't have that information, and the ones that do are rife with fraud. Cleaning up the balance sheets of China's big four banks, presumably the best of the lot, has taken years and at least US$260 billion in recapitalization from the central government. In addition, the four asset-management companies set up to peddle dud assets are selling off many of them for pennies on the dollar.

As David Webb, a onetime investment banker turned independent Hong Kong financial gadfly, pointed out in an October newsletter prior to the listing of China Construction Bank, recapitalization efforts "have taken all the bad loans out of the bank, but what about the bad lenders? Do you really believe that thousands of semi-autonomous branches have suddenly discovered the art of credit analysis and that the local Communist Party cadres and bribe-waving wanna-be tycoons will leave them alone to make good lending decisions?"

Webb, a non-executive director of the Hong Kong Stock Exchange, said in an interview that "the banks are not going to go sour straight away. They will succeed in floating the Bank of China this year, but it takes a long time for banks to accumulate ... problems. They will make new loans and later [these] will start to be recognized as bad debts. You can expect an accumulation of bad debts and a banking crisis in about five years."

China Construction Bank, characterized by Webb and others as "China Corruption Bank" because of the jailing of former chairman Wang Xuebing for offenses committed when he was with the Bank of China, listed last October. It was the largest IPO in Hong Kong history, obtaining HK$71.5 billion, or 43% of all the money raised in the SAR in 2005.

There are other ominous portents besides the 1997 Asian financial meltdown and the bursting of the 2000 dot-com bubble. Last year, Chen Jiulin, the former head of China Aviation Oil (Singapore) Corp, pleaded guilty to six charges of fraud in a scandal that nearly sank China's biggest jet-fuel trader, acknowledging that he had failed to disclose a US$550 million trading loss and deceived the company's adviser, Deutsche Bank. It was Singapore's worst financial scandal since the bankruptcy of Barings Plc caused in 1995 by trader Nick Leeson, who cost Barings US$1.4 billion in trading losses.

Could the soaring Hang Seng be ripe for a fall? Webb pointed out that only about 20% of the companies listed in Hong Kong are actually domiciled here. "For the new ones," he said, "very few are [headquartered] in Hong Kong. They are in Bermuda or the Caymans or [mainland China]."

Of course, systemic problems can be addressed. But is there any reason to believe that Hong Kong's regulators would be better at doing this than those elsewhere? Enron went under in the US in 2001. It has taken five years to get Kenneth Lay, Enron's former chairman and CEO, and Jeffrey Skilling, his successor, in the dock, but they are finally there. Would corrupt company officials go into the dock in Hong Kong?

The SAR's regulators, never that strong in the first place, have always had a knack for placating the markets. On March 26, Webb pointed out, the exchange scrapped a requirement for listed companies to disclose large accounts receivable, which could have warned investors about impending disaster.

"Dressed up as a 'minor and housekeeping' rule amendment without consultation, the change is illustrative of the urgent need to increase investor representation on the Listing Committee, to produce pro-investor policy reform," Webb wrote.

So at some point, with 80% of the newly listed companies on the Hong Kong market domiciled overseas, the SAR's regulators are going to have an interesting time catching up with them if and when yet another bubble bursts.

(Copyright 2006 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing .)

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- China Successfully Launches Remote Sensing Satellite
http://www.spacedaily.com/reports/China_Su..._Satellite.html

Taiyuan, China (XNA) Apr 28, 2006 - China successfully launched a remote sensing satellite and put it into preset orbit Thursday morning, the first of a series of space launches planned by China this year.

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- China Denies It Ignores Human Rights Abuses In Pursuit Of Oil
http://www.terradaily.com/reports/China_De...uit_Of_Oil.html

Beijing (AFP) Apr 27, 2006 - China rejected accusations Thursday that it ignored human rights abuses in countries such as Sudan as it searched for oil and other natural resources to fuel its rapidly growing economy.

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http://www.atimes.com/atimes/China_Business/HD29Cb02.html
RFID: New markets for an old technology
By Fred Stakelbeck

First used during World War II to identify aircraft as friend or foe, radio frequency identification (RFID) systems have become increasingly visible worldwide. They are used in the United States and Europe for physical access control, passport identification and records management.

Last May, Venture Development Corp, a technology and market research firm, noted, "The global market for RFID systems revenues will grow by approximately 36% annually through 2008, with long-term growth outpacing short-term growth - revenue will reach nearly US$5.9 billion by 2008." Much of the growth will come from China.

Generally, RFID systems consist of four distinct components: a transponder or "tag", a reader, a database and a software program. Tags can be either passive, with no independent power source and a limited read range, or active, containing an independent power source that transmits a continuous signal. RFID tags are normally attached to, or embedded in, an object requiring identification, such as a pallet or payment instrument.

Roughly the size of a grain of rice, RFID tags contain an integrated circuit that stores a unique serial number or other information based in the tag's memory. An antenna transmits information to a receiver, called a reader, that sends a signal to the tag and receives and stores the responses for transfer to a data-management system.

The benefits of RFID technology are improved handling efficiencies, traceability, and immediacy of data capture. The technology helps business because of its ability to maximize operating income by minimizing capital costs. Strategic business objectives are met by increasing revenue through reduced order-cycle times, eliminating manual inventory counts, and maximizing shipping and receiving efficiencies. The technology also optimizes assets by reducing inventory and improving forecast accuracy and enhancing safety and quality control by improving responsiveness to product recalls.

China offers an intriguing market for the future acceptance, development and implementation of RFID technology. Early indications are that the technology is already taking hold. In February, Beijing-based Analysys International, an information services provider, reported that China's RFID market grew 8.6% in the fourth quarter 2005, with most of that growth concentrated in the identification-card and public-transportation sectors.

"Once this market blows out, it will become a multibillion [dollar] business," said Tom Grant, chief executive officer at ThingMagic, a US-based manufacturer of readers, sensors and related equipment.

So far, the government has been the key driver in the early development of RFID technology in China. Under the "Golden Card" project, launched in 1993 to promote the use of credit cards, individual identification cards with embedded RFID chips were vigorously promoted. As a result, more than 900 million RFID-enabled identification cards are expected to be issued by the end of 2008. Moreover, the Ministry of Information Industry (MII) announced that China's 11th Five-Year Plan would include a comprehensive RFID plan as one of the country's six major information-technology initiatives.

At the fourth RFID Application Summit Forum held in Shenzhen recently, Dai Dingyi, deputy director of China's Logistics Network Alliance, noted that RFID adoption in China was growing "faster than expected" and that the technology had already been adopted in a wide variety of fields, such as anti-money-laundering systems, traffic monitoring, logistics and manufacturing.

The crowded ports of Hong Kong and Shenzhen currently use RFID systems to manage cargo shipments, and last month Beijing Capital International Airport announced plans for an RFID system for outbound luggage transport and security checks. In addition to government-related applications, RFID technology has been considered for use by the country's retail sector. Venture Development Corp, a technology market research firm, recently reported that RFID technology in the global retail sector reached $161 million in 2005 and is expected to reach $1.5 billion by 2010.

According to analysis by Research and Markets, an international market research firm, China is expected to use 5 trillion tags annually within the next several years. A large number of those tags are expected to be used in products supplied to Wal-Mart, the world's largest retailer and a key advocate for the use of RFID technology.

The most likely area for implementation will be in supply-chain management for the country's vast manufacturing sector, as costs associated with tags, equipment and services decrease making them more affordable for small businesses.

In an interview with ChinaTechNews.com last month, Edward Zeng, founder of SparkiceLab, a business-to-business global commerce provider, noted, "China is the world's manufacturing hub. It is 'ground zero' for innovations and applications in the development of manufacturing infrastructure and capabilities. China is a starting point for a huge chunk of the global supply-chain."

According to Zeng, almost half of all RFID tags will be sold in East Asia by 2010.

Obstacles to implementation
Although positive signs exist for the eventual acceptance of RFID technology in China, significant obstacles remain. Technical difficulties such as the placement of tags, transponder read-rate accuracy, and patent-infringement lawsuits, as well as market trends caused by "over-hyping" of the technology and the large number of trial applications, continue to plague early implementation efforts.

A much more controversial and problematic issue is China's continued effort to introduce its own RFID national standard. By rejecting the widely accepted Electronic Product Code (EPC) standard, a tag serial-numbering system promoted by EPCGlobal for international use, Chinese officials hope to avoid paying costly royalties. But this delivers a serious setback to global standardization.

In March, Chen Wei, a representative of the MII, said that China would press ahead with an national standard. According to Wei, the main obstacles to a national standard have been disagreements among concerned parties within China and the ability of the country's national standard to operate with the three other international standards - ISO/IEC 18000, EPCGlobal and Ubiquitous ID.

At present, several Chinese working groups are heavily involved with RFID-related issues. In 2004, the Standardization Administration of China established a National RFID Standards Working Group to draft and develop a national standard. The Leading Working Committee for RFID, a government-sponsored working group in Shenzhen, has worked diligently to promote RFID applications.

In addition, the Article Numbering Center of China's Electronic Product Code (EPC Global-China) Working Group and the China Electronic Standardization Institute's (CESI) RFID Working Group are all focused on RFID-related issues. Currently, the Ministry of Science and Technology and 13 other Chinese government departments are drafting a white paper on RFID in China, which will set the general direction of RFID development for the country.

The International Association of Countries and the International Electrotechnical Commission are actively involved in setting international RFID standards using a process whereby representatives from interested countries and business sectors undertake consensus-based decision making. The Auto-ID Center, the Electronic Article Numbering Association (EAN) and the Uniform Code Council (UCC) are also key groups working on the development of international standards.

If China does decide to adopt its own proprietary RFID national standard, it may be in conflict with the supply-chain mandates of important foreign companies such as Wal-Mart, Target and Tesco, raising significant interoperability issues. In particular, Wal-Mart, which purchased an estimated $20 billion of Chinese products in 2005, has already endorsed the existing EPC standard. For purposes of standardization, software data formats, transmission capacity and the frequency range of RFID tags are also important topics that will require further discussion.

In addition to standardization issues, RFID technology raises important legal, ethical and privacy questions that remain largely unanswered. For example, what legal rights do Chinese citizens have if they feel their privacy has been violated? Which government agency or agencies will ultimately be responsible for the collection and maintenance of RFID-related data?

Last month, researchers at Vrije University in Amsterdam released the results of a study that showed that tags may be vulnerable to viruses that could harm computer databases, raising questions regarding the technology's long-term viability.

But for China, it is no longer a question of "if" RFID technology will take off, but "when?" Claus Heinrich, a member of the executive board of SAP AG, a leading provider of business software solutions, noted in March, "With China's ever stronger role in the global economy, it is crucial for the country to leverage new technologies such as RFID. Its adoption in China will drive supply-chain efficiency, visibility and adaptability for companies of all sizes and industries worldwide."

China is at an important point in the early acceptance, development and implementation of RFID technology. Beijing, along with domestic and foreign RFID vendors, retailers, international standards organizations and the country's manufacturing sector, must work together to address the outstanding concerns expressed by both businesses and consumers. If cooperative and open dialogue occurs, the future should be bright for the spread of RFID technology in China.

Fred Stakelbeck is an expert on bilateral and trilateral alliances as they relate to China's foreign policy. His writings address the implications of China's emerging regional and global strategic influence and relationships with US national security. He can be reached at Frederick.stakelbeck@verizon.net

(Copyright 2006 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing .)

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_ http://www.businessday.co.za/PrintFriendly...x?ID=BD4A192561
Friday, 28 April 2006 close window

China signs oil exploration deal in Kenya
Reuters

Kenyan President Mwai Kibaki and his Chinese counterpart Hu Jintao walk after inspecting the guard of honour at Nairobi State House. Hu concluded an offshore exploration deal with Kenya. Picture: AP


NAIROBI - Chinese President Hu Jintao on Friday wrapped up a world shopping trip for oil supplies to fuel his booming economy by concluding an offshore exploration deal with Kenya.

The deal was one of a clutch of bilateral agreements signed at the end of the five-nation tour, which has cemented Beijing’s economic and political clout, especially in Africa where it seeks raw materials to feed its economy.

The pact allows China’s state-controlled CNOOC Ltd to explore in six blocks covering 115,343 sq km in the north and south of Kenya, which produces no oil but has attracted foreign companies sniffing after possible reserves.

"If they discover oil we will go into production sharing agreements," Kenya’s acting energy minister Henry Obwocha told Reuters, saying Chinese exploration would start soon.

The exploration agreement covers 20 years, he said, giving no financial value for the deal.

The other China-Kenya deals, which came two days after Beijing struck a $4bn deal for drilling licences in Nigeria, included grants for economic and technical cooperation, anti-malarial medicine and rice.

Hu’s delegation also agreed to maintain a Chinese-built sports stadium, help carry out a feasibility study into revamping Nairobi’s potholed roads and patchy street-lighting, as well as providing exchange programmes for Kenyan students.

For its part, Kenya, which backs Beijing’s sovereignty over all of China, said it would oppose the island of Taiwan if it declared independence from the mainland.

"The Kenyan government expressed its opposition to ’Taiwan independence’ in any form and expressed its support for China’s efforts to realise national reunification," Foreign Minister Raphael Tuju said, reading a joint communique.

Kenya and other African countries are eager for investment from China, which offers aid without demands for good governance, unlike Western donors.

Hu reiterated China’s stance of non-intervention in other countries, which critics say allows Beijing to turn a blind eye to human rights abuses, corruption and political repression.

"We pursue a policy and ... the principle of non-interference in others’ internal affairs," Hu told reporters.

Last year, China handed Kenya $36,51m in aid, mainly to modernise its state-run power firm.

China’s offer of "no strings" aid may be welcomed in the east African country, under Western pressure to tackle rampant corruption. But critics say a flood of cheap Chinese imports is the price Kenyans pay for Beijing’s "good will".

"We want the trade between us to grow," Trade and Industry Minister Mukhisa Kituyi told reporters. "But we want to see more ’made in Kenya’ available in China," he said, urging China to drop its opposition to a preferential trade deal between African textile producers and the US.

China’s exports to Kenya were worth $457 million in 2005, a 31% increase on the previous year, while imports from Kenya rose only 4% to $17,6m.

Kenyan businessmen say this huge imbalance could be offset if China would use its expertise to help foster domestic industry and encourage its expanding middle class to visit Kenya’s scenic game parks and beaches.

"If we could only attract 1% of the Chinese population to travel to Kenya as tourists, imagine the huge amounts to be earned in foreign currency," one commentator, George Mutua, wrote in the Daily Nation.

Kenya was the final stop of a tour that has taken Hu to the US, Saudi Arabia, Morocco and Nigeria.


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http://news.yahoo.com/s/ap/20060430/ap_on_...HE0BHNlYwN0bWE-





China's Church Defies Vatican Objections
By ALEXA OLESEN, Associated Press WriterSun Apr 30, 11:48 AM ET

China's state-sanctioned Roman Catholic Church ordained a new bishop Sunday, rejecting the Vatican's request to delay the appointment and threatening efforts to restore official ties between the sides after five decades.

China's Foreign Ministry defended the official church's right to ordain bishops without Vatican input and called the Holy See's criticism of such appointments "groundless."

The ordination could damage recent efforts to restore Sino-Vatican ties, cut in 1951 after the Communist Party took control in China. One of the stumbling blocks in improving relations has long been a dispute over who has the authority to appoint bishops.

"The recent ordination of bishops at some diocese have been unanimously well-received by church members and priests," the Foreign Ministry said in a faxed statement. "The criticism toward the Chinese side by the Vatican is groundless."

China's church — the Chinese Patriotic Catholic Association — held a ceremony for the new bishop, Ma Yinglin, in the city of Kunming in southwestern Yunnan province.

Hong Kong Cable TV showed Ma wearing his new bishop's hat and carrying an ornate gold staff as he waved to the faithful.

Before the ceremony, the TV report showed a long line of clergy in white robes walking into a church with a Chinese-style sloping roof with yellow tiles. Security was tight, with police checking the invited audience at the entrance.

Outside the church, ethnic minorities from Yunnan performed, with dancing women on one side of the sidewalk twirling and clapping their hands as men on the other side played banjo-like instruments.

"We are extremely happy to participate in Father Ma Yinglin's ordination," an unidentified dancing woman wearing an ornate headdress decorated with silver balls told the TV station. "He's been a big help to us. This year when we built a new church, he gave us part of the money."

One middle-aged man in a brown blazer told the TV station he also was pleased with Ma's ordination.

"I think he has a lot of prestige. In the hearts of the faithful here, we feel really good about the way he treats people and how he handles things for everyone," said the man, who was not identified.

AsiaNews, a Vatican-linked news agency, has reported that the Vatican opposed Ma because he does not have enough pastoral experience and he is too close to leaders of the official Chinese church.

In Hong Kong on Sunday, Vatican-appointed Cardinal Joseph Zen told reporters the Vatican has yet to make a final assessment of Ma and wanted China to hold off on his appointment until Rome could make a decision.

"The Vatican has said that the ordination should be suspended for now but not canceled," Zen said.

But Liu Bainian, vice chairman of the Chinese Patriotic Catholic Association, told Hong Kong's ATV news Sunday that Ma's ordination should not involve the Vatican.

"The Vatican and China don't have diplomatic relations so this (appointing Ma) is China's sovereign authority," Liu told ATV. "The Vatican didn't oppose this so we should keep moving forward."

Hong Kong's cardinal has said Sino-Vatican discussions are ongoing about restoring ties. Zen has said that if relations were re-established, the pope would be willing to allow Beijing to express an opinion about that appointments of bishops.

But he has said the Vatican should have the final say.

The Foreign Ministry, however, called on the Vatican to respect's the state-sanctioned church's authority.

"We hope the Vatican can respect the will of the Chinese church and the vast numbers of its priests and church members so as to create a good atmosphere for the improvement of Sino-Vatican ties," the statement said.

Hong Kong, a former British colony now ruled by China, still enjoys religious freedom and the clergy obey the Vatican. But Catholics in the mainland are only allowed to worship at churches run by the Chinese Patriotic Catholic Association.

However, millions of worshippers belong to underground churches loyal to the Vatican. Those who meet in such churches are frequently harassed, fined and sometimes sent to labor camps.

___

Associated Press reporter William Foreman in Hong Kong contributed to this report.

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SMALL STEPS FORWARD FOR U.S.-CHINA TIES - BONNIE S. GLASER (BALTIMORE SUN, APRIL 27): The summit between President Bush and Chinese President Hu Jintao should not be condemned as a failure.
http://www.baltimoresun.com/news/opinion/o...-oped-headlines

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http://www.mehrnews.ir/en/NewsDetail.aspx?NewsID=318875

$100b Iran-China energy deal ready to be signed: Chinese ambassador
TEHRAN, April 29 (MNA) – Chinese Ambassador to Tehran Lio G. Tan has said that the oil and gas deal between Iran and China has been thoroughly studied by experts and is ready to be signed.
The Chinese ambassador was clearly referring to an energy agreement between Tehran and Beijing which is worth over 100 billion dollars.

“No country can prevent the deal,” the ambassador told the Mehr News Agency correspondent in Tehran last week.

When asked whether China was under U.S. pressure not to sign the deal, Lio responded by asking, “Would the U.S. export oil to us if it didn’t let you (Iranians) give it to us?”

The ambassador said that even if there were no dispute over Iran’s nuclear program, the U.S. would have tried to halt the deal, but China will not be swayed.

He noted, “For example, can you find a time since the victory of the Islamic Revolution that the U.S. has not interfered in your country’s affairs?”

He put China’s annual oil imports from Iran at over 10 million tons.

A delegation from Iran’s Oil Ministry is due to visit China soon to conclude the huge oil and natural gas deal.

A memorandum of understanding was signed in October 2004 between Iran and Sinopec, China's largest refiner, to buy 250 million tons of liquefied natural gas (LNG) over 25 years.

In exchange for developing Yadavaran, one of Iran's largest onshore oil fields, China would agree to buy 10 million tons of liquefied natural gas a year for 25 years beginning in 2009.

RA/MS/HG

End

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http://www.truthout.org/docs_2006/050106T.shtml

How China Is Winning the Oil Race
By Jon D. Markman
TheStreet.com

Thursday 27 April 2006

Is America too ethical to have cheap gasoline?

That is the inescapable question presented to US investors and policy makers as pump prices soar after a state visit by Chinese President Hu Jintao.

The US is the world's greatest consumer of energy at present, but China is the world's fastest-growing consumer. That puts us in direct competition for any new sources of crude oil, natural gas, coal and uranium that materialize through exploration and discovery, not to mention any current sources that profit-seeking producers decide to put up for grabs.

Increasingly, new energy sources that China is acquiring are in countries that Americans find distasteful. Many of them are in Africa, in countries with horrific human-rights records such as Sudan, Chad and the Republic of the Congo. And much of the energy is controlled by rapacious despots in the Central Asian republic of Kazakhstan and in Southeast Asia's Myanmar.

Energy acquisition is a zero-sum game in which there are winners and losers. Any new energy that China obtains for its fast-growing economy is unavailable to us forever. So you just have to wonder whether the US's antipathy for dealing with the worst of the world's rogue states has led inexorably to $4-a-gallon gasoline this spring.

The New Colonial Power

Dan Zhou, chief analyst at CEB Monitor Group in Beijing, points out that China has emerged as an attractive partner in Africa and Central Asia in four ways. Its intensifying demand drives up prices for its products, which are largely raw materials such as oil, zinc and copper. It sets virtually no standards for political transparency or economic reform to get deals done. It ignores internal human-rights abuses as an impediment to deal-making. And it is a one-stop shop, offering not just investment, trade, skilled workers and military weapons but also diplomatic protection in the form of its United Nations Security Council veto.

China's hunt for oil in Africa has made it essentially the new colonial superpower in the region, surpassing the memories of prior imperial forces such as Belgium, Italy, the Netherlands, Great Britain and France. And it has achieved that status in record time. Trade between China and Africa, which totaled $10 billion in 2000, soared to $39.7 billion in 2005. According to research by CEB Monitor, here is a guidebook of China's assets in the region:

Sudan: China has a $4 billion investment in the country widely believed to have the largest untapped oil reserves in Africa. The China National Petroleum Corp. has a 40% stake in Greater Nile Petroleum, which owns oil fields, a pipeline, a large refinery and a port. Last year, China purchased more than half of Sudan's oil exports. Conversely, Sudan accounted for 6% of China's oil imports, about 200,000-plus barrels a day.


Angola: Offshore wells have made this Africa's second-largest oil producer. Through February of this year, Angola accounted for 13% of all oil imports to China - making it the country's main supplier. China has committed at least $3 billion in loans to Angola for additional oil rights, and it has supplied engineers and trained workers to develop fields. China is now Angola's largest aid donor as well.


Nigeria: This is Africa's largest oil producer, and until recently it has not been a major supplier to China. However, China's largest publicly held oil company, Cnooc, bought a 45% stake in a Nigerian oil-and-gas field for $2.27 billion last month and has also bought 35% of an exploration license in the Niger Delta for $60 million.


Elsewhere in Africa: Cnooc has been active in Equatorial Guinea, Chad and Gabon, it has made investments of $170 million in the mines of Zambia, and it has become a major weapons supplier and trading partner of Zimbabwe, which is run with unbounded corruption by global outcast Robert Mugabe.
A Less Meddlesome Buyer

In Latin America, the story is much the same: China is increasingly becoming the partner of choice for repressive, paranoid or regionally ambitious regimes that want to buy guns and tanks with their oil and ore revenue.

According to The Los Angeles Times, the Bush administration held talks with the Chinese to encourage them to curb their role in training and advising forces to the south of the US This is getting to be a problem, as the region - fabulously rich in metal, energy and agricultural resources - is increasingly run by ideologues willing to snub US interests and seek less meddlesome buyers.

China is now Latin America's second-largest trading partner, surpassing Europe. From 2001 to 2006, exports from the region to China rose more than 500%. In 2004 alone, Hu signed letters of intent worth $100 billion over the next 10 years, according to published reports. Here are the key developments by country, according to CEB Monitor:

Brazil: The largest South American country exports iron ore, soybeans, cotton, oil and sugar to China and jointly develops satellites and aerospace equipment. China has promised $10 billion in additional investment in the short term.


Argentina: China has signed agreements offering $20 billion in investment over 10 years. Cnooc is developing an offshore oil field.


Venezuela: This is the third most important source of foreign oil to the US, but political and social disputes have led strongman Hugo Chavez to seek alternative partners. He plans to double oil exports to China to 300,000 barrels a day, about a fifth of the 1.5 million barrels a day that are sent to the US. The Chinese are buying stakes in several oil fields, making their output unavailable to U.S. consumers.


Ecuador: This country is a top-three producer of oil for the West Coast of the US. The Chinese just purchased one oil field and are in negotiations for more.
Meanwhile, in the Middle East, Hu has found in Saudi Arabia another repressive regime that wishes to ease away from a highly dependent relationship with the US. He visited in January, and turned around and visited again this month on his way home from Washington, with weapons sales and technology transfer high on the discussion list. China gets an eighth of its oil imports from the Saudis, and trade has increased ninefold since 2000 to $14 billion.

As you might expect, Iran is China's fastest-rising partner in the region. There have been unconfirmed reports that Hu has committed to spend $70 billion to $100 billion to develop a single large oil field in Iran, about a fifth of which involves a $20 billion order to purchase liquefied natural gas over the next 25 years. Zhou says that one Chinese company is expanding Tehran subways, another is building out the city's fiber-optic networks, and others are setting up auto and electronics factories. It probably won't be long before Iran becomes China's largest source of imported oil; this would put its economic and political interests directly in opposition to U.S. politicians and consumers.

Neighbors: Theirs and Ours

And finally we get to Central Asia republics, which formerly belonged to the Soviet Union, all nestled up against China's back door. They deliver almost 500,000 barrels of oil a day through pipelines and tankers. This has been a boon to the commissars of Kazakhstan, where gross domestic product has reached $56 billion due to the development of its robust energy fields by U.S., European and Russian explorers. The country shares a border with the gigantic Xinjian province of China and has developed fast-expanding bilateral trade, not just in oil and gas but also in cement and small manufactured goods.

Of course, the Chinese have not left democratic countries' resources off its shopping list. A couple of years ago, it bought a large stake in the big Canadian miner Noranda, and it has dozens of supply relationships with individual Alberta and Saskatchewan oil, gas and coal producers. No rock is left unturned, so to speak; a venture capitalist in my Seattle office building has helped Chinese entrepreneurs acquire privately held coal, gold and silver mining interests throughout the western US.

For stone-cold US investors, the obvious play here is to simply tag along by taking positions in foreign and domestic companies supplying the Chinese juggernaut, whether they are base metal producer Falconbridge in Canada; a producer of Turkish energy like Toreador Resources of Texas; a producer of Venezuelan oil and gas like Harvest Natural Resources; or the two big Chinese energy companies Cnooc or China Petroleum & Chemical.

For consumers, outraged indignation is about the best you can do, along with new personal choices about limiting the use of fossil fuel. China has no incentive to bend to U.S. demands to force change on its repressive foreign energy partners. And our politicians are unlikely yet to ease up on rules preventing US companies from participating in the sort of bribery and weapons brokerage that has become de rigueur for doing business in the equatorial zone where most new energy sources are being discovered.

So this really is just another case of joining 'em when you can't beat 'em. Shake your fist at the Chinese if you must, but also continue to buy global miners and drillers on dips in this bull market for commodities, sell your SUV, move closer to work, install solar energy panels and make peace with nuclear energy.



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At the time of publication, Markman had no positions in stocks mentioned in this column.
Jon D. Markman is editor of the independent investment newsletter, The Daily Advantage, and writes a weekly column for CNBC on MSN Money that is republished on TheStreet.com.

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http://www.atimes.com/atimes/China_Business/HE02Cb03.html
China follows world trend in raising rates
By Laurence Lau

The action by China's central bank in raising lending rates to 5.85% would not have been so important if it had not come at a time when the United States is doing the same - and may do it again. With interest rates already climbing in the US and Europe, and with monetary officials starting to tighten policy in Japan, China seems to be joining the world's central bankers in trying to gain control of speculation that has driven up prices of such assets as gold and real estate.

The Chinese action aims to slow a spectacular surge in investment, and it may potentially brake China's voracious appetite on world markets for oil and other commodities. From steel mills and auto factories to luxury apartment buildings and plush office complexes, China has been engaged in a nationwide building boom fueled by easy loans. New loans soared at least 61% in the first quarter of this year, causing investment in factories and other fixed assets to climb 29.8%.

The boom in lending and investment, which has contributed to China's rapidly rising exports, pushed growth in the economy to 10.2% in the first quarter. That was high even by China's extraordinary standards - so strong that President Hu Jintao himself warned in April that the country needed efficient, high-quality development and not "excessively rapid economic growth". Premier Wen Jiabao also warned that China would move to tighten controls on real estate and lending.

One can understand why China needed to raise rates. However, it came about in an environment in which its currency is also appreciating. The rates-squeezing movement in the United States and the European Union has also forced second-tier players, such as the smaller Asian economies, to follow suit. Now we have a situation where most stock markets, interest rates and currencies are on an uptrend. The exception is the US, where the dollar could come under more pressure.

Usually higher rates would stifle equity markets, but that mechanism seems to be ineffective for the time being. This is even more surprising in that oil prices are also stubbornly high, not to mention other commodities, including gold. Long-term observers of gold would note that gold rallies tend to coincide with long periods where returns from other asset classes are diminished. Again, that does not seem to apply for now.

Growth in equity markets will eventually slow because of higher rates, but investors are also attracted to potential gains in respective countries' currencies. So what gives?

These are the important conclusions:

1. The US is printing buckets of money. To finance consumption in the US, the number of dollars in circulation has to rise. As long as there are willing holders of US Treasury bonds, nothing really bad will happen.

2. More funds are chasing all kinds of assets. The result is higher demand for all commodities, whose supplies are limited, thus pushing prices higher. Hence one can argue that in every case assets are rising because of higher dollarization, not productivity values. To that end, timber and palm-oil prices should have a lot more room to rise in the foreseeable future.

3. Investors are still pouring funds into stocks in almost all markets, chasing equity and currency gains at the expense of the US dollar. They will continue to do that until the dollar drops substantially, thus improving actual returns of investors (hedge funds included).

4. Rates cannot continue to rise without something happening to asset prices. Already equity markets in China are among the worst first-quarter performers. Surprisingly, equity prices in the United States have surged. The inevitable will happen: there will be more rate hikes in the US, and the bottom will fall out.

5. While I have been a believer in the resilience of the US dollar, it appears that the moon and stars have aligned to force the issue. If the US Federal Reserve tries to delay a substantial correction, it will have no choice but to raise rates again. The next rate increase may still not be sufficient to derail the status quo. I figure a increase of 150 basis points from now should do it.

6. What China is doing in raising rates is more to protect its domestic overheated economy. Additionally, China will allow for the yuan to appreciate gradually. Both will have a depressing effect on Chinese stocks this year.

7. Smaller emerging and developing markets, such as Singapore, Malaysia, Thailand, Indonesia and Hong Kong, will be forced to follow suit on any US/China rate increases. However, their stock markets would have a better chance of rising further, having recovered from the 1997-98 crash. A substantial correction in the dollar would spell a temporary end to their bull runs, as investors would then be able to lock up gains and cash out.

Is there any way the US dollar could stave off devaluation of 15-20% or more from its current values? Not this time, as every single asset class seems to be ganging up to push the dollar lower. How many more rate increases can the Fed make to support the dollar without derailing the US domestic economy?

Oil prices can stay high while rates rise, and equity prices rise because demand generally comes from real productivity demand. Even if you pay a higher price for a commodity, it still works because the product used generates sufficient improvement in productivity in such countries as China and India.

Consuming nations such as the US and Japan will have to bear the burden, as that will eat into margins without sufficient improvements in productivity. For Japan, the case is slightly different because it is finally emerging from its deep, 13-year recession. Hence the economy can withstand many more rate increases from it "zero rate" base.

Chinese officials were probably not worried about inflation, given that the consumer price index in China was just eight-tenths of a percent higher in March than a year earlier. That is a luxury the Fed does not have in the US. Meanwhile, the smaller Asian nations should be able to better cope with inflation via their appreciating currency.

Laurence Lau has more than 18 years of experience in business/finance. Born in Malaysia, he has worked in Sydney, Singapore, Hong Kong and Kuala Lumpur. He was head of research for two securities firms and a portfolio manager for a UK firm.

(Copyright 2006 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing .)

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http://www.busrep.co.za/index.php?fSection...ticleId=3226877

African oil deals quench Beijing's thirst for energy sources
May 2, 2006

By Bogonko Bosire

Nairobi - Chinese president Hu Jintao wrapped up his trip to Africa at the weekend after clinching oil deals that highlighted Beijing's search for fresh energy sources to power its booming economy.

As Hu headed home after a five-nation tour, critics argued that China's demand for energy and other resources was helping unsavoury African governments heavily criticised by the international community.

Under one deal, state-owned oil company Cnooc will explore six blocks off the coast of Kenya, a country grappling with graft. It will also buy a 45 percent share in an oilfield in Nigeria, where oil-related clashes have recently intensified.

Last year China bought 38.47 million tons of African oil, representing about 30 percent of its total imports.



China inked deals to improve the host countries' floundering economies and shoddy infrastructure, prompting a cautious welcome from the Kenyan Standard newspaper.

"This might be an answer for the parsimony and intransigence shown in the recent years by our traditional development partners, who have often used aid as a form of blackmail."

But critics have accused Beijing of doing business with undemocratic regimes, notably Sudan, an oil-rich nation that has for several decades used oil revenues to wage deadly successive wars on dissent.

"When Western governments try to use economic pressure to secure human rights improvements, China's no-strings rule gives dictators the means to resist," said Human Rights Watch's Richard Roth. - Sapa-AFP

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The Chinese nuclear stockpile appears to be only half as big as previously thought, according to a new overview published in the Bulletin of the Atomic Scientists. Up to 130 warheads may be deployed out of a total stockpile of some 200 warheads. Several new weapon systems are under development which the Pentagon says could increase the arsenal in the future, but past US intelligence projections have proven highly inflated and inaccurate. The new overview will be followed by a more detailed report published by the Federation of American Scientists and the Natural Resources Defense Council this spring.

See also: Chinese Nuclear Submarine Cave Discovered



Senior Director

for Corporate, Foundation and Public Outreach

Federation of American Scientists

www.FAS.org

202-454-4673