Heavy rain to hit north China

Heavy rain to hit north China
VIDEO: The Chinese left behind by growth
Joint South China Sea efforts
Garrison for Sansha
TV employee arrested for airing porn video clip
Two held for altering college applications
Dough stick 'seasoning' can cause brain damage
Working hard to shed the pounds
VIDEO: The cost of modernising China
Clampdown in China on Corporate Sleuthing
Heineken Bids $6 Billion for Asian Brewer to Block Thai
China Demands Russia Explain ‘Attack’ on Vessel
China Profits Sinking May Pressure Wen to Reduce Taxes
ASEAN urges South China Sea pact but consensus elusive
Have You Heard…
TV employee arrested for airing porn video clip
Two held for altering college applications
Dough stick 'seasoning' can cause brain damage
Working hard to shed the pounds
10 weird products that exists – Acme invents

Posted: 20 Jul 2012 07:44 PM PDT

HEAVY rains will sweep China's northern regions and some southern areas over the next three days, the country's weather authority forecast today.

Most parts of north China, the Sichuan Basin and the central and southern part of south China will see heavy rains or rainstorms from Saturday to Monday, the National Meteorological Center (NMC) said.

Heavy rainstorms are expected in the north of Hebei, the west and north of Beijing and the southwest of the Sichuan Basin, the NMC said.

The NMC calls for precautions to be taken against potential disasters caused by heavy rainfalls, including mudslides, mountain torrents and urban waterlogging.

VIDEO: The Chinese left behind by growth

Posted: 20 Jul 2012 03:58 PM PDT

President Hu Jintao steps down in China later this year, handing over to his successor a country which boasts enviable economic growth rates - but also a growing inequality gap.

Joint South China Sea efforts

Posted: 20 Jul 2012 10:36 AM PDT

CHINA yesterday pledged to make joint efforts with the Association of Southeast Asian Nations to safeguard regional peace and stability after the 10-member bloc issued a six-point statement on the South China Sea.

"The Chinese side is willing to work together with the ASEAN members to implement the Declaration on the Conduct of Parties in the South China Sea comprehensively and effectively," Chinese Foreign Ministry spokesman Hong Lei said.

In the statement issued yesterday, the ASEAN members reaffirmed their commitment to the "peaceful resolution of disputes" in the South China Sea.

Analysts said the six-point principles were reached to make up for the lack of a communique after a meeting last week. In an unprecedented development, the 45th Foreign Ministers' Meeting of the ASEAN was not wrapped up with the release of a communique showcasing common ground.

ASEAN members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Qu Xing, head of the China Institute of International Studies, said Vietnam and the Philippines should be blamed for the failure to pass a communique.

"The two countries attempted to turn the disputes between them and China into a problem between China and ASEAN as a whole," he said, "which was unacceptable for the other members of the bloc."

"The Chinese side has noted the ASEAN's statement on the South China Sea," Hong said, adding that the core problem of the South China Sea were disputes over the sovereignty of the Nansha Islands and the demarcation of adjacent waters.

"China has sufficient historical and jurisprudential evidence for its sovereignty over the Nansha Islands and the adjacent waters," he added.

Garrison for Sansha

Posted: 20 Jul 2012 10:35 AM PDT

CHINA'S military authority has approved the forming and deployment of a military garrison in the newly established city of Sansha in the South China Sea.

Sources with the People's Liberation Army's Guangzhou Military Command said the Central Military Commission had authorized it to form a garrison command in the city.

TV employee arrested for airing porn video clip

Posted: 20 Jul 2012 09:00 AM PDT

A FULL-TIME TV station employee in Chongqing's Youyang County has been arrested for maliciously airing a three-minute porn video clip on July 7.

The suspect surnamed Yang played the foreign porn film during a prime time program to vent his discontent with the TV station's management, the county government said on its microblog on Sina Weibo.

The porn video suddenly appeared during normal programming and shocked many viewers.

Some viewers took photos or videos of the bizarre scenario and posted them on their microblogs. A screenshot shows a naked woman in an erotic pose.

The TV channel was shut down soon after the incident and local disciplinary officials started investigating whether the TV station was guilty of dereliction of duty.

Last month, a man surnamed Li was detained for playing a Japanese adult movie for nearly 20 minutes on an outdoor LED screen on the wall of a shopping mall in downtown Pingdingshan City in Henan Province.

Li, an employee of the mall that owns the advertising screen, inserted a DVD starring Japanese porn actress Aoi Sora into a computer that was connected to the outdoor screen and played it along a busy shopping street.

He was held for 15 days for a term of administrative detention for his dissemination of the pornographic content.

Two held for altering college applications

Posted: 20 Jul 2012 09:00 AM PDT

POLICE have detained two people who allegedly tampered with students' college applications to help a private college boost recruitment following China's national college entrance exams.

The two, a man surnamed Li and a woman surnamed Zheng, were apprehended on Wednesday and Thursday after secretly editing online lists created by 14 prospective college students from Zhoukou, Henan Province, local media said yesterday.

The students, all from the Zhoukou City Medical School, completed an entrance examination for medical college in June. They, like nearly all other Chinese high school grads, participated in a selection process in which they prioritized their first, second and third choices for college, with lists for the colleges posted online.

The 14 students discovered in early July that the top schools on their lists had all been changed to "Shandong Modern Vocational College," a university that admitted hiring Li and Zheng as temporary recruiters.

Li and Zheng told police the school offered them 550 yuan per student for successfully recruiting new students.

Students and parents said the Zhoukou school posted the students' information, including names, ID numbers, exam registration numbers and passwords for filling out their online lists on a school bulletin board on June 27.

Some of them saw three people in charge of SMVC recruitment, including Li and Zheng, removing sheets of paper containing the information from the board.

Officials with the Henan provincial admissions office said recruitment for vocational colleges will start on August 2, before which they will make a decision on the matter based on police investigation. Zou Jianguo, vice president of the SMVC, said the college has assigned a vice president to join investigators.

Zou said Li and Zheng, who were both students at SMVC, were privately hired by college admissions worker Li Zhizhen, but it is still unknown whether Li Zhizhen was involved in the tampering.

"The college will give penalties according to national law and college regulations if any employee is found to be involved," said Zou.

Experts believe the illegal recruitment methods have highlighted the economic difficulties that many private colleges are encountering.

Dough stick 'seasoning' can cause brain damage

Posted: 20 Jul 2012 09:00 AM PDT

A FOOD additive containing a banned chemical has been widely used by fried dough stick vendors in Wuhan, capital of Hubei Province, to make the snack tastier and more attractive.

A major ingredient of the "fried dough stick seasoning" is an industrial chemical, aluminum ammonium sulfate, which has been banned since its long-term intake can lead to brain damage, cerebral atrophy and senile dementia.

The seasoning is popular among Wuhan vendors because 500 grams costs an average of 5 yuan (US 78 cents) but can be used to fry 25 kilograms of crispy and puffy dough sticks, Changjiang Times reported yesterday.

Fried dough sticks, also known as you tiao, are a popular Chinese breakfast food.

Breakfast stall owners prefer "fried dough stick seasoning" over traditional additives, alum and alkali, a seasoning seller told the paper.

According to printed information that comes in the seasoning package, it helps save oil and creates a better taste. However, it is produced by a chemical plant instead of a food factory.

"It must have passed quality tests, otherwise it wouldn't enter the market," another seller said, adding that many fried dough stick makers bought at least 50 kilograms each time.

More than half of the store owners in a local wholesale market sell the toxic seasoning, the paper said.

In previous years, washing powder was said to be used in the cities of Guangzhou and Nanjing to fry the dough sticks to give them a good, puffy appearance.

The news about dough sticks caused concern on the Internet. "I haven't eaten it for long time. I feared vendors might add leftover oil or banned additives," a netizen said.

Working hard to shed the pounds

Posted: 20 Jul 2012 09:00 AM PDT

Two boys join in an exercise at a summer camp catering to obese children in Tianjin yesterday. Sponsored by Tianjin Women's Activity Center, more than 10 kids who have been diagnosed with obesity took part in the special summer vacation camp aimed at helping them lose weight in a scientific way.

This posting includes an audio/video/photo media file: Download Now

VIDEO: The cost of modernising China

Posted: 19 Jul 2012 11:23 PM PDT

Vast swathes of China's cities have been knocked down to make way for new high rise housing and office blocks.

Clampdown in China on Corporate Sleuthing

Posted: 20 Jul 2012 09:00 AM PDT

Source: Wall Street Journal By Dinny McMahon aand Kathy Chu | photo: Morning Whistle

BEIJING—Even as the latest doubts over accounting at a Chinese company sent investors fleeing from its shares, investors who specialize in ferreting out dodgy businesses say that a crackdown by Beijing is making their work more difficult and in some cases dangerous.
Shares of New Oriental Education & Technology Group Inc. EDU +12.19%lost more than half their value in two days, after the company said the U.S. Securities and Exchange Commission told New Oriental it was investigating the company's corporate structure and a short-seller released a report critical of the education provider, which trades on the New York Stock Exchange. The stock gained back some ground Thursday after New Oriental issued a statement disputing the short-seller's report.

The SEC didn't return calls seeking comment Thursday.

New Oriental Education is the latest of dozens of Chinese companies that have come under fire by regulators and short-sellers in the past two years. Over the past several months, it has become harder to investigate these companies as corporate information has become harder to get and researchers have been harassed, say investors who seek to do due diligence on Chinese companies.

The Chinese government's moves are part of a "broad-based clampdown of non-government-authorized information that involves the economy or investment," says Steven Dickinson, a Seattle-based attorney at law firm Harris & Moure and co-author of the China Law Blog, aimed at multinationals doing business in the country.

What started as seemingly localized harassment of investigators and researchers by corporate security people and local authorities now also involves national government measures to crimp the availability of access to information about Chinese companies.

"Eight or nine months ago it was already getting dangerous to research a company," said Dan David, a vice president at GeoInvesting LLC, an investment fund. "Back then you could still go back and talk to people you'd interviewed and get more information. Now it's too dangerous to go back for a second turn."

Mr. David said that in the second half of last year one of his fund's investigators was knocked down and had his ID taken by security people at a company he was investigating. Mr. David said the man was standing across the road from the company's factory counting trucks as they entered and left.

On April 20, China's police started a campaign across 20 provinces against companies that conduct private investigations, according to an article in the People's Daily, the Communist Party's official publication, a week after the campaign began. That campaign was aimed at preventing investigators from getting personal information on individuals, the article said. In practice, the rules affected investigations of corporations because they often involve background checks into the political connections and other business interests of company executives.

As of April 28, more than 1,900 people had been detained in connection with the campaign, according to the front page story in the People's Daily. People in the industry say more detentions followed.

The campaign came after it became almost impossible to access corporate records at the State Administration of Industry and Commerce, according to lawyers, investors and research companies. Such documents were typically the starting point for investors conducting due diligence on a company they were considering investing in. The State Administration of Industry and Commerce declined to say last month whether it had moved to limit what it once made public, but the Beijing-branch of the agency said some lawyers in the past had abused the availability of data by selling it.

Jon Carnes, who runs Eos Global Holdings, an investment fund, said three of his researchers, including a Canadian national, were detained in December during the course of an investigation, and still are greatly restricted in their movement. Mr. Carnes himself left China in October after living here for more than five years, saying it had become too dangerous.

Muddy Waters Research Inc., a well-known short-selling research firm, weighed in on New Oriental the day after the news of the SEC investigation, alleging that the company doesn't actually own its network of schools, in part based on what it described as a conversation between the New Oriental and a potential franchisee.

New Oriental said in a statement Thursday that it allows third parties to offer a couple of niche programs in its name, but those programs are immaterial to its business and have never been included in its count of schools. "The Muddy Waters report is wrong," New Oriental's statement said.

The company's shares closed Wednesday at $9.50 on the NYSE, down 57% in two days. Thursday afternoon, following the New Oriental statement, the stock was up 16% at $11.05.

Muddy Waters founder Carson Block said that in the course of his investigation into New Oriental one of his employees had been visited by officials from the Ministry of State Security. The Ministry of State Security couldn't be reached for comment.

"The message that investigative firms are hearing [from state security] is that we do not want any more work done researching companies, especially public companies," Mr. Block said.

On Tuesday, New Oriental said the SEC was investigating whether profit earned by its mainland-China-based "variable interest entity" can legitimately be included in the listed company's financial statements. Such entities, known as VIEs, use a series of contractual agreements to enable an offshore holding company owned by foreign investors to effectively run a business inside China. However, foreign investors don't have direct control over the assets in the VIE.

The controversy centers on whether the company has absolute control over these entities or if there is a risk that someone else can claim ownership, potentially wiping out some or all of the value of the company. In a conference call Tuesday, New Oriental President Louis Hsieh said he didn't know what triggered the investigation.

Heineken Bids $6 Billion for Asian Brewer to Block Thai

Posted: 20 Jul 2012 08:52 AM PDT

Source: Bloomberg News By David Fickling and Clementine Fletcher

Heineken NV (HEIA), the world's third- biggest brewer, offered as much as $6 billion for full control of Asia Pacific Breweries Ltd. (APB) to prevent one of Thailand's richest men from muscling in on a vital emerging-market asset.
Heineken, which owns 42 percent of APB, said today it will seek to acquire the outstanding shares in the Singapore-based maker of Tiger beer, mainly a 40 percent stake owned by Fraser and Neave Ltd. (FNN) Fraser & Neave, or F&N, said it's considering an offer from the Dutch company, though there's no certainty that an agreement will be reached.

Heineken, which has been involved with APB since 1931, proposed paying as much as S$7.5 billion ($6 billion) to protect its position after Thai Beverage Pcl (THBEV), controlled by billionaire Charoen Sirivadhanabhakdi, this week offered to buy a 22 percent stake in F&N. A company owned by his son-in-law Chotiphat Bijananda is acquiring about 8.4 percent of APB. Brewing assets in high-growth emerging markets are in short supply following a decade of consolidation in the industry.

"Heineken's been spurred into action by what happened this week," said Ian Shackleton, an analyst at Nomura in London. "They may succeed with their bid, but our view is that they're going to have to pay more than they've offered now. What's very clear is that the status quo is not a long-term solution."

Heineken, responding to what it described as a "sudden development" when Oversea-Chinese Banking Corp. (OCBC) agreed to sell the stakes in Fraser & Neave and APB into Thai control, will fund any bid through existing cash and new debt facilities, John-Paul Schuirink, a spokesman, said by phone today.

Changing Dynamics

The deal would be the Amsterdam-based company's largest after offering $7.4 billion in 2010 for the beer operations of Coca-Cola bottler Fomento Economico Mexicano SAB, or Femsa.

"In the past, Heineken was quite comfortable in the partnership with F&N, but the entry of Thai Bev really changed the dynamics of the relationship," Goh Han Peng, an analyst at DMG & Partners Securities in Singapore, said by phone. "If Heineken had not responded, over time Thai Bev could have increased its stake in F&N and really controlled the interest."

The S$50 a share bid is 19 percent above APB's closing price yesterday of S$42 and more than the S$45 that Bijananda's company is paying for a stake. The average premium paid in 45 takeovers of beermakers announced in the last two years is 25 percent. The stock, along with F&N, was suspended from trade today. Heineken shares rose 1.1 percent to 43.50 euros at 1:05 p.m. in Amsterdam.

High Price

The purchase would be the latest step in the consolidation of the industry as brewers buy each other or seek full control of joint ventures. Anheuser-Busch InBev NV (ABI), the world's biggest brewer with an 18 percent share of the market, bid $20.1 billion for the remaining 50 percent of Grupo Modelo SAB last month, tightening its hold on the Mexican market.

"We're going to see less M&A in beer as there's less to be done, but prices are going to go up," Nomura's Shackleton said. "It starts to raise a bit of a question about whether you can add value in these deals."

The APB deal is expensive for Heineken from a valuation perspective and the Dutch company may have to raise its bid to satisfy Thai Bev and Kirin Holdings Co. (2503), the Japanese brewer which owns about 15 percent of Fraser & Neave, according to Dirk van Vlaanderen, an analyst at Jefferies International Ltd.

Emerging Markets

The transaction values APB at about S$13 billion, or about 17 times the S$754 million in earnings before interest, tax, depreciation and amortization the company recorded in the 12 months to the end of March. In nine brewery takeovers worth more than $1 billion over the past five years, the median multiple for the same pretax earnings measure has been 13, according to data compiled by Bloomberg.

Heineken's offer is "a very full price in our view and may still need to go higher," Van Vlaanderen wrote in a note.

Rising incomes in emerging markets make them attractive for beer, wine and spirits companies, who expect consumption levels to rise over time to match developed markets, said Thomas Jastrzab, an analyst for Bloomberg Industries in Hong Kong.

"You have large populations with a higher proportion of younger consumers combined with an expanding middle class," he said by phone. "As incomes rise consumption of alcoholic drinks will increase and consumers will trade up to premium products."

Heineken, which accounts for about 8.8 percent of the global beer market, has the smallest emerging-markets presence of the world's big three brewers, according to data compiled by Bloomberg. About 37 percent of operating income came from western Europe last year, the data show.

Better Fit

Besides the Singaporean Tiger brand, APB has rights to brew Bintang beer in Indonesia, Anchor in China, Southeast Asia and Sri Lanka, and Heineken from China to New Zealand.

APB would fit better with Heineken's assets than in Charoen's Thai Bev empire, said Hugh Young, Singapore-based managing director at Aberdeen Asset Management Asia Ltd.

"It's Heineken's DNA as a business," Young said. "Yes, the Thais brew beer as well, but Heineken has really been the founding father" of APB. The S$50 a share offer was "quite high," he said.

Aberdeen owns 7 percent of OCBC, from which Thai Bev bought its 22 percent stake in F&N. The fund manager also owns less than 1 percent of F&N and less than 0.1 percent of APB.

Chareon's holdings of publicly traded assets are worth $6.1 billion, according to data compiled by Bloomberg. Thai Bev's shares rose 7.4 percent to 36.5 Singapore cents at the 5 p.m. close of trading in the city-state, the highest since May 4.

It's Heineken's "right to move," Vichate Tantiwanich, a Thai Bev spokesman, said today in a mobile-phone text message, adding that the Thai company's purchase of the F&N stake would "go on." He said the company will "make the deal friendly," declining to give further details.

Kirin isn't likely to block Heineken's bid for APB, according to Mikihiko Yamato, deputy head of research for JI Asia in Tokyo. Kirin's stake in Fraser & Neave makes it the biggest shareholder before Thai Bev's purchase is completed, according to data compiled by Bloomberg.

Hajime Kawasaki, Kirin's spokesman, declined to comment.

China Demands Russia Explain ‘Attack’ on Vessel

Posted: 20 Jul 2012 09:05 AM PDT

Source: Wall Street Journal By Carlos Tejada | Photo: AFP

BEIJING—China called on Russia to explain what it called an "alleged attack" on a Chinese fishing vessel this week, as well as the fate of a sailor missing off Russia's east coast, in the latest bout of tension between Moscow and Beijing.
Chinese Vice Foreign Minister Cheng Guoping expressed "strong dissatisfaction" with Russia Thursday over the incident, according to the state-run Xinhua news agency. The report said that Russian forces opened fire on the Chinese boat and that one sailor was missing.

"China demands Russia thoroughly investigate the incident and inform China of the results in a timely manner," Mr. Cheng said, according to Xinhua, which added that he summoned an unidentified Russian diplomat to hear the demand.

Chinese officials haven't responded to requests to comment, and attempts to contact the Chinese consulate in the eastern Russian city of Vladivostok were unsuccessful.

Chinese state-run media said this week that two Chinese fishing vessels were seized by Russia, one on Sunday and one on Monday, citing the Chinese consulate in Vladivostok. One ship carried 19 fishermen and the other 17, according to the reports. The status of the second vessel wasn't clear.

According to Russia's Border Guard Service, the vessel captured on Monday was inside the country's exclusive economic zone, tried to ram a Russian vessel, and then resisted when Russian personnel tried to board. The ship was fishing for squid, according to both sides, with the Russian reports saying its hold was filled with an unauthorized squid haul.

In a similar episode in 2009, China said that a Russian warship fired on a Chinese cargo vessel, and that seven crew members were missing. Russian authorities had said the boat didn't stop despite warning shots.

Though they are traditional rivals, China and Russia are in accord on a number of major global issues, including opposition to efforts at the United Nations Security Council to enact tougher measures against Syria and Iran. But they have struggled to reach agreements on natural-gas exports and are among the players jockeying for power in the resource-rich Central Asia region.

Mr. Cheng said Russia should make sure that the detained sailors are safe, that their legitimate rights are guaranteed and that they are provided with humanitarian treatment, according to Xinhua.

China Profits Sinking May Pressure Wen to Reduce Taxes

Posted: 20 Jul 2012 09:11 AM PDT

Source: Bloomberg News

Profit declines for hundreds of Chinese companies in the first half may increase pressure on the government to reduce corporate taxes as part of efforts to stem the economy's slowdown.
Net income declined from a year earlier for more than half of 760 listed companies to report results, worse than in the first six months of 2009, Societe Generale SA said yesterday. Credit Agricole CIB sees tax cuts as a likely policy tool.

The breadth of the declines raises the urgency for Premier Wen Jiabao to move beyond boosting investment and monetary stimulus in dealing with the worst deceleration in the world's second-largest economy since the global financial crisis. Wen this month repeated his call for structural tax changes and the State Council may be poised to announce measures to support growth, the China Securities Journal reported July 16.

"The stakes are very high — it's about the corporate world's confidence in the whole economy," said Yao Wei, China economist at Societe Generale in Hong Kong. "The positive sign is that the central government has realized the problem and is talking more frequently about the issue."

Tax cuts are among "fundamental changes" that can't wait much longer, Yao said.

The government may loosen policies through tax cuts as well as fiscal measures and reductions in banks' reserve requirements, Dariusz Kowalczyk, senior economist and strategist at Credit Agricole in Hong Kong, said July 9.

Private Investment

Vice Premier Li Keqiang said this month that the government should implement structural tax reductions and encourage and guide private investment, the official Xinhua News Agency reported.

Corporate income tax is 25 percent and the nation also has a 17 percent value-added tax.

The benchmark Shanghai Composite Index fell 0.4 percent today at the 11:30 a.m. local-time break, the first drop in four days. The gauge has declined 22 percent over the past year, compared with a 16 percent fall in the MSCI Asia Pacific Index.

Among companies reporting profit declines, telecommunications equipment maker ZTE Corp. (000063) said first-half net income may have fallen as much as 80 percent from a year earlier on reduced investment income, foreign-exchange losses and delayed contracts.

Air China Ltd. (601111), the world's second-biggest carrier by market value, said profit may have declined more than 50 percent on weaker demand and higher fuel costs. China Southern Airlines Co. and China Eastern Airlines Corp. forecast similar slumps.

Sany Forecast

Sany Heavy Industry Co. (600031), China's biggest maker of excavators, has lowered its annual unit-sales forecast, Vice Chairman Xiang Wenbo said in a July 11 interview. A "meaningful recovery" in demand for earth-moving equipment may not be visible until the first quarter of next year, Xiang said.

Sany is postponing a $2 billion share sale in Hong Kong after struggling to attract investors, two people with knowledge of the matter said.

"Many people think our industry will see a substantial decline, which I think is reasonable," Xiang said in the interview, adding that the government's past stimulus measures had provided a growth opportunity that was "abnormal" and "irrrational."

A government report last month showed industrial companies' profits fell for a second month in May, dropping 5.3 percent from a year earlier to 390.9 billion yuan ($61 billion). Revenue in the first five months rose 11.9 percent to 34.5 trillion yuan. The statistics bureau releases June data on July 27.

Depressed Prices

"Despite the rapid disinflation of input costs like raw materials, profit margins continued to shrink as weakened demand has depressed finished goods prices while some cost components such as wages have remained sticky," UBS AG analysts led by Wang Tao said in a report yesterday. They were commenting on industrial companies' profits, and said that net income is likely to rebound in the fourth quarter as growth accelerates on additional policy support.

Some U.S. companies doing business in China indicated this month that they're struggling with the deceleration of economic expansion.

Dell Inc. Chief Executive Officer Michael Dell said July 17 that the computer maker is seeing a slowdown. Yum! Brands Inc. (YUM), owner of the KFC and Pizza Hut restaurant brands, reported second-quarter profit gains that were short of analysts' projections as labor and commodity costs increased in China.

Gao Shanwen, chief economist for Essence Securities in Beijing, said tax cuts are "more symbolic than serious." More government spending is necessary to help the economy, even as corporations bear the brunt of the slowdown, said Gao, who previously worked for the People's Bank of China and the State Council's Development Research Center.

Revenue Growth

Government revenue is rising at a faster clip than economic expansion, up 12 percent in the first half from a year earlier to 6.38 trillion yuan. The official target of 9.5 percent growth in fiscal revenue for this year compares with a 7.5 percent goal for GDP.

China has "relatively large" room to boost fiscal spending to support economic growth and can allow the fiscal deficit to widen if necessary to a size similar to 2009's gap, Zhang Peng, a Beijing-based researcher with the Fiscal Research Institute at the Ministry of Finance, said in a telephone interview this week.

Wen Jiabao said in March that the government plans a deficit of 800 billion yuan this year; the shortfall was 950 billion yuan in 2009, ministry data show.

Right Decisions

Even with the deceleration, China is likely to "continue to grow very well" and leaders will make the right decisions in their management of the economy, David Cote, chief executive officer of Honeywell International Inc., said on a July 18 conference call, according to a transcript. "You should bet on them, not against them," he said.

Elsewhere today in the Asia Pacific region, import prices in Australia rose 2.4 percent in the second quarter from the prior period, while export prices gained 1 percent, both faster than forecast. Taiwan may say export orders fell in June from a year earlier for a fourth straight decline.

In Europe, Germany's producer prices may have declined 0.2 percent in June from the previous month, based on the median estimate in a Bloomberg survey of economists. It would be the second consecutive drop following four increases.

Mexico's central bank is forecast to leave its benchmark interest rate unchanged at 4.5 percent, where it's been since 2009. Canada will report a 1.7 percent increase in the consumer price index from a year earlier, according to analysts.

ASEAN urges South China Sea pact but consensus elusive

Posted: 20 Jul 2012 09:08 AM PDT

Source: Reuters By Prak Chan Thul and Olivia Rondonuwu

(Reuters) – Southeast Asian states sought to save face on Friday with a call for restraint and dialogue over the South China Sea, but made no progress in healing a deep divide about how to respond to China's growing assertiveness in the disputed waters.
After heated discussions at a summit last week that saw its customary communique aborted for the first time in its 45-year history, the Association of Southeast Asian nations (ASEAN)issued a six-point statement that omitted the contentious issues that had its 10 members locked in a bitter dispute for days.

ASEAN chair Cambodia, which was accused by several members of stonewalling in support of key ally China, on Friday blamed "two countries" for scuttling the communique by refusing to agree to the six points it had initially proposed.

"Cambodia is not at fault at all," Foreign Minister Hor Namhong told a news conference.

"Why the Foreign Ministers meeting was unable to issue a joint communique on these six points which were all raised by me? Why did two countries keep opposing? Probably, there was a plan behind the scenes against Cambodia."

His comments risk widening cracks that have appeared in a grouping that is becoming polarized by China's rapidly expanding influence. China wanted to keep the maritime dispute off the agenda, putting members dependent on it for loans and investment – Cambodia among them – in a tight squeeze.

The divisions follow a rise in incidents of naval brinkmanship involving Chinese vessels in the oil-rich waters that has sparked fears of a military clash.

China has territorial claims over a huge area covering waters that Vietnam and the Philippines say they also have sovereignty over. All three countries are eager to tap possibly huge offshore oil reserves.

China's Foreign Ministry said on Friday it "noted" ASEAN's position on the South China Sea issue, but added China had a "full historic and legal basis" to its territorial claims.

"China and ASEAN have joint interests and responsibilities when it comes to maintaining regional peace and stability and the impetus of Asian development," spokesman Hong Lei said in a statement on the ministry's website (www.mfa.gov.cn).

Vietnam and the Philippines have sharply criticized China and last month ramped up their rhetoric following agreements to strengthen their military ties with the United States.

"POURING GASOLINE ON FIRE"

The failure to issue the communique and the bitter rows behind closed doors over what words and names to use and what details to exclude were a huge embarrassment for a 10-member bloc planning to form an EU-style economic community by 2015.

In Friday's statement, ASEAN made no reference to specific incidents but agreed to draft and implement a regional code of conduct, respect international law and exercise self-restraint.

"We have not issued a joint communique because there was no consensus …one week later, we have a document to express the stance of ASEAN over the South China Sea," Hor Namhong said.

He defended the decision to omit recent disputes from the text, which he said would have been like "pouring gasoline onto a burning fire".

"It would not be a solution … on the contrary, this would complicate talks in the future. There are no other choices, or a war that no parties want."

Cambodia's comments contrasted with the positive gloss applied by Indonesian Foreign Minister Marty Natalegawa, who on Friday said ASEAN had reached a "common position", even though there was no communique.

Natalegawa, who emerged as the group's de facto troubleshooter after intervening on ASEAN's behalf to try to halt deadly Thai-Cambodia border clashes last year, spent two days shuttling between member countries to try to strike an agreement. He said ASEAN had learned lessons from the debacle.

"You can only have an ASEAN that is central in the region if ASEAN itself is united and cohesive. Last week we were tested, there have been some difficulties but we have grown the wiser from it," he told Reuters.

"Indonesia took the initiative to recalibrate ASEAN through the 36-hour effort, shuttle diplomacy, visits and working the phones and we can now reach a common position again."

Natalegawa said the communique was aborted during the summit because one of the four paragraphs relating to the South China Sea in the 132-paragraph draft could not be agreed on.

Despite stark differences on some of the more contentious issues, such as how to deal with its once rogue member, Myanmar, ASEAN had always managed to at least appear to be unified by delivering a communique at the end of its summits.

Have You Heard…

Posted: 20 Jul 2012 09:12 AM PDT

Have You Heard…