China to Set Yuan Clearing Banks in Luxembourg, Paris

In its continued push to make the yuan a global currency, China’s central bank said Sunday it plans to designate clearing banks for its currency in Paris and Luxembourg, as the two financial centers battle with London to become the leading European offshore yuan-trading city.

The People’s Bank of China announced the move in two separate statements Sunday. It didn’t say when it would designate the clearing banks.

The French and Luxembourg central banks said Sunday they had signed agreements with PBOC allowing for greater cooperation in the oversight of their domestic yuan market.

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China’s Antigraft Push Snares Most Senior Target Yet

In the most far-reaching public move so far in Chinese President Xi Jinping’s drive against corruption, the Communist Party leadership on Monday expelled a retired military commander from the party and handed him over for a crime investigation on charges of taking massive bribes in return for military promotions.

The announcement followed months of speculation that party investigators had closed in on retired General Xu Caihou, who until his retirement in late 2012 occupied one of the highest posts in the People’s Liberation Army, as a vice chairman of the party’s Central Military Commission, which oversees the military.

Now General Xu, who was also a member of the elite Politburo, has been made the most senior official so far to be caught publicly in Mr. Xi’s effort to clean up the image of the party elite, tarnished by the impression shared by many Chinese citizens of widespread corruption and brazen self-enrichment, including in the military.

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‘Transformers’ breaks box-office records in China

“Transformers: Age of Extinction” broke multiple box-office records in mainland China in its first weekend of release and appears to be en route to displacing “Avatar” as the top-grossing film ever on the mainland.

The Paramount Pictures juggernaut rolled into Chinese theaters in the wee hours of Friday morning and racked up nearly $27 million (166 million renminbi) by the day’s end — the biggest opening day for any film ever in China, according to estimates from Shanghai-based film industry consulting firm Artisan Gateway. Through Sunday, the film had grossed nearly $97 million (600 million renminbi), a record three-day opening for any film ever in China, Artisan said. That’s nearly equal to its opening-weekend haul in the U.S.

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China charges four in Kunming attack, sentences 113 on terror crimes

China charged four people in connection with a deadly attack at a railway station in the southwestern city of Kunming in March, state media said on Monday, a case that helped spur a crackdown on what officials have called an upsurge in militant violence.

The government has said eight knife-wielding militants from the restive western region of Xinjiang launched a premeditated attack at Kunming station in Yunnan province in which 29 people were killed and 140 injured. Police shot four of the attackers dead.

China’s leaders have vowed to strike hard at religious extremists and separatist groups, which they blame for a series of violent attacks in Xinjiang, the traditional home of the Muslim Uighur ethnic minority.

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Daily Iron Ore Mine Closings in China Make Citi Bullish

Iron ore prices, which completed a second straight quarterly loss today, will rebound as the daily closure of mines supplying high-cost output in China boosts demand for seaborne shipments, according to Citigroup Inc.

Local suppliers in Asia’s largest economy are cutting production even as mills increase steel output on improved margins, according to analyst Ivan Szpakowski. An iron ore mine in China is being shuttered every day, with closures seen in all main producing regions, he said in an interview from Shanghai.

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China President’s Visit to South Korea Before North Seen as Telling

Chinese President Xi Jinping is breaking with tradition, making a visit to South Korea for the first time next week before visiting ally North Korea, in what diplomats see as a strong sign of Beijing’s displeasure with Pyongyang.

Mr. Xi’s July 3-4 visit, announced by the Chinese and South Korean governments Friday, will make him the first Chinese leader to visit the South before the North. The visit is likely to be well-received in Washington, which has urged Beijing to take a harder line with North Korea over its nuclear-weapons program, diplomats and analysts said.

Rather than a result of U.S. pressure, though, the trip is seen as a measure of Beijing’s frustration at North Korean leader Kim Jong Un’s perceived unwillingness to show due deference to China, his country’s main ally, aid donor, investor and trade partner, those people said.

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China’s Anticorruption Campaign Moves to a Powerful Party Seat

The Communist Party chief of Guangzhou, one of China’s most populous and wealthiest cities, has been held for investigation by the party’s anticorruption agency, state-run media announced on Friday, one day after he admonished city officials to embrace President Xi Jinping’s campaign against lax discipline.

The abrupt downfall of the official, Wan Qingliang, stood out from some other recent prominent investigations over graft allegations because Mr. Wan still held a position of considerable power, and was not in the twilight of his career. He was the most powerful functionary of Guangzhou, a sprawling city of some 13 million long-term residents that is the capital of Guangdong Province, a pillar of manufacturing and exports in southern China.

Mr. Wan was the mayor of Guangzhou, long known as Canton in English, from 2010 to 2011, when he became the city’s party secretary, a more powerful post in China, where party rank is all-important. Mr. Wan also sat on Guangdong’s Standing Committee, the party body that steers the province and its 106 million people.

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China Works to Move Citizens in Iraq to Safety

China’s government is scrambling to move about 1,200 Chinese workers in northern Iraq out of the path of the violent insurgency that is sweeping through large swaths of the country.

The workers, employed by China Machinery Engineering Corp. 1829.HK +0.22% , are building a fuel oil power station in the city of Samarra and have been trapped by the fighting since at least late last week, according to a statement from the company and state media reports.

China’s foreign ministry has said the workers are safe in their residences in Samarra. A ministry spokesman said Friday that Beijing is working with the Iraqi government and military to move the workers to safety.

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China boat sinks in waters north of islets disputed with Japan

Five Chinese fishermen are missing after a trawler sank on Friday in waters to the north of islands disputed with Japan in the East China Sea in what appeared to be an accident, state media said.

The boat sank in the morning, north of the islands, which China calls the Diaoyus and Japan the Senkakus, the official Xinhua news agency said, citing naval sources.

The dispute over the Japanese-held islets, where Chinese and Japanese ships regularly engage in a cat-and-mouse game, has raised fears of a clash between Asia’s biggest powers that could even drag in the United States.

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U.S. Navy Official Says China Military Relations Have Improved ‘Modestly’

Relations between the U.S. and Chinese militaries have improved “modestly” in the past year, a senior U.S. Navy official said, despite discord over territorial tensions and strategic issues in the Asian-Pacific region.

The comments by Rear Admiral Mark Montgomery, who leads an aircraft-carrier battle group that operates mainly in Asian waters, came just weeks after senior U.S. and Chinese defense officials traded barbs at a regional security summit over Beijing’s perceived assertiveness over territorial claims.

“We’re doing our best to reach out and build relationships and strengthen [inter-military coordination], and increase transparency and sharing” between the U.S. and Chinese navies, Rear Adm. Montgomery said in a recent interview aboard the aircraft carrier USS George Washington during a pass through the South China Sea.

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China Finds $15 Billion of Loans Backed by Fake Gold Trades

China’s chief auditor discovered 94.4 billion yuan ($15.2 billion) of loans backed by falsified gold transactions, adding to signs of possible fraud in commodities financing deals.

Twenty-five bullion processors in China, the biggest producer and consumer of gold, made a combined profit of more than 900 million yuan from the loans, according to a report on the National Audit Office’s website.

Public security authorities are also probing alleged fraud at Qingdao Port, where copper and aluminum stockpiles may have been pledged multiple times as collateral for loans. Steps by the Chinese government to rein in credit by raising borrowing costs in recent years created a surge in commodities financing deals that Goldman Sachs Group Inc. estimates to be worth as much as $160 billion.

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Chen Guangbiao, China’s controversial philanthropist

Chen Guangbiao wants rich people in China to give more to charity and he’ll do anything to get their attention.

That includes stacking piles of cash to form a wall for a photo op or dancing on the rooftops of brand new cars that he bought for a donation.

Chen’s latest stunt involved buying lunch for underprivileged people in New York City and giving each person a cash gift. The free lunch took place on June 25 at Loeb Boathouse in Central Park.

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‘Transformers’ tries for delicate US-China balance

Dazzling special effects, Optimus Prime … and Beijing. The latest “Transformers” movie has all three, mixing Texas-based action with scenes in China’s capital and a heavy dose of Hong Kong in an attempt to straddle the world’s two biggest movie-going audiences.

The fourth installment of the Michael Bay-directed franchise has gone all-out to woo China’s audience with Chinese locations, talent and even a reality TV show. “Transformers: Age of Extinction” illustrates the delicate balancing game of Hollywood studios trying to work out what the Chinese market wants while simultaneously catering to Americans.

If such films aren’t handled properly, they risk alienating both audiences, said Michael Keane, an expert on China’s creative industries at the Queensland University of Technology in Brisbane, Australia. In China, the core movie-going group of 19-to-25-year-olds already like Western films, he said.

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GM Says Part Linked to Recall Made in China

General Motors Co said an ignition switch linked to the recall of almost 3.4 million cars was made in China, where another car maker discovered a problem part earlier this year.

The top U.S. automaker said in a filing on Tuesday with U.S. safety regulators that the switch used in the Chevrolet Impala and Monte Carlo, Buick LaCrosse and Lucerne, and Cadillac DeVille and DTS cars that were recalled on June 16 was made by China-based Dalian Alps Electronics Co Ltd.

Dalian Alps is 90-percent owned by Japan’s Alps Electric Co. Alps acknowledged it supplied GM with ignition switches but said it has not been contacted by the U.S. automaker over any defect.

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U.S. envoy Max Baucus to China: More business ties, less cyber-theft

In his first public address on the U.S.-China relationship since taking up the post of U.S. ambassador, Max Baucus said Wednesday that “the U.S. welcomes China’s rise” and that his priorities include pushing for a bilateral investment treaty and increasing cooperation on environmental issues.

But the former Montana senator briefly rapped Beijing on the knuckles over concerns including human rights, cyber-theft of U.S. companies’ trade secrets, and the blocking of American tech firms from the Chinese market.

“Trade and investment have come to be the foundation, the ballast, of the U.S.-China relationship, providing great stability,” said Baucus, speaking to a luncheon hosted by the American Chamber of Commerce and other business groups in Beijing. Developing trust on issues like business and the environment, he said, would serve as a basis for addressing other matters where the two nations disagree.

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China expands plans for World Bank rival

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China is expanding plans to establish a global financial institution to rival the World Bank and the Asian Development Bank, which Beijing fears are too influenced by the US and its allies.

In meetings with other countries, Beijing has proposed doubling the size of registered capital for the proposed bank to $100bn, according to two people familiar with the matter.

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China gov’t struggling to meet fiscal target

China may struggle to make this year’s fiscal revenue target, the finance minister warned on Tuesday.

The central treasury received 2.9 trillion yuan (472 billion U.S.dollars) from January to May, a year-on-year growth of 6.3 percent and 0.7 percentage points lower than the budgeted target, said Lou Jiwei, when briefing lawmakers on the final accounts for 2013.

This year’s budgeted growth in central fiscal revenue is 7 percent.

The government is “under heavy pressure,” Lou said.

Difficulties lie in the downward pressure on the economy and the program to replace business tax with value-added tax (VAT) in some service sectors, which will reduce tax revenue to some degree, he explained.

Despite the poor central performance, total national fiscal revenue has reached 6.12 trillion yuan, up 8.8 percent and higher than the 8 percent budgeted for.

“Economic growth is stable and performance remains in a reasonable range,” according to Lou. “The general situation has met expectations.”

The State Council report was submitted to the Standing Committee of the National People’s Congress (NPC) at its ongoing bi-monthly session, presided over by Zhang Dejiang, chairman of the NPC Standing Committee.

SLOWER FISCAL REVENUE GROWTH IN 2013

According to the report, the central treasury had an annual revenue of 6.02 trillion yuan in 2013, up 7.2 percent from 2012.

Although the actual revenue in 2013 was higher than the budgeted one, the annual growth was lower than 9.4 percent in 2012 and 20.8 percent in 2011.

The revenue from several major taxes, including VAT and consumer tax on domestic and imported products as well as the customs, were all lower than budgeted figures. But the revenue from corporate and individual income taxes exceeded the set targets, thanks to corporations’ unexpected profit growth.

Meanwhile, the central government’s spending continued to rise. In 2013, the figure stood at 6.85 trillion yuan, 6.8 percent higher than in 2012.

The deficit of central government was about 850 billion yuan as the budgeted goal and deficit of the whole country stood at 1.2 trillion yuan, accounting for 2.1 percent of gross domestic product, according to the report.

Although central fiscal revenue saw slower growth, the central government continued to expand spending on sectors directly linked to people’s livelihoods, such as health services and social insurance.

Expenses on health services, social insurance and cultural services increased by 26.4 percent, 14.2 percent and 4.3 percent respectively.

In an audit report on the central government’s final accounts for 2013 also tabled for review, the National Audit Office (NAO) acknowledged the effective implementation of the central budget.

In addition, the central government smoothly pushed forward the fiscal and taxation reform, canceling or decentralizing 416 items of administrative approvals, removing 348 administrative fees and expanding the tax reform, said Liu Jiayi, auditor-general of the NAO, when elaborating on the report to lawmakers.

The central government also adopted effective measures to control and prevent financial risks, manage liquidity and supervise credit growth, Liu said.

FINANCIAL REFORM TO CLOSE LOOPHOLES

However, the NAO also pointed out a number of loopholes concerning budget implementation and management of the central treasury.

Auditors discovered vague categorizing and confusing definition in the central budget and inefficient arrangement of the revenue, Liu said.

Also, malpractice was found in the allocation of government money. Auditors uncovered 1.86 billion yuan of central funds that were falsely claimed by local governments or embezzled by officials.

According to the report, a large amount of government funds was not put into effective use. By the end of 2013, 32 central government departments audited by the NAO reported about 49.38 billion yuan that remained in their bank accounts for more than a year and 836 million yuan of that was there for more than five years.

The NAO suggested in the report that the central government strictly implement financial protocols and speed up fiscal reform so as to streamline the allocation of government funds between central and local governments and prevent malpractice.

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Hong Kong will always be part of China

A large number of Hong Kong residents are taking part in an informal – mainly Internet-based – poll to “determine” whether they want to have a more direct say in nominating candidates for the post of Hong Kong’s “chief executive” in future elections. More than 700,000 Hong Kong residents had voted until the third day of the 10-day “referendum” organized by “Occupy Central” forces.

The central government agrees to universal suffrage in future Hong Kong elections, but has denounced the poll as “illegal” and “invalid”, and emphasized that “the high degree of autonomy of the Hong Kong Special Administration Region is not full autonomy, nor a decentralized power … the Hong Kong people who govern Hong Kong should above all be patriotic.”

The poll, which some people refer to as an “informal referendum”, is part of a growing wave of both officially sanctioned and informal referendums, some of them Internet-based, in many countries. Venice has just held an online unofficial “referendum” on separating from Italy; the recent referendum in Crimea resulted in the region seceding from Ukraine and rejoining Russia; and Scotland is scheduled to hold an official referendum on Sept 18 on possible independence from the United Kingdom.

But there is one arresting difference between the unofficial Hong Kong poll and many of the others that have been held or will be held in other countries. Some Hong Kong people may even try to seek independence through the poll, but more are only concerned with how candidates for elections are nominated. So the majority of Hong Kong people want to be part of China.

It is natural for people of a country to have different opinions on social, political, and economic issues. But whatever grievances some Hong Kong people may have, they appear to fully recognize the substantial benefits of being an integral part of the Chinese nation. To begin with, Hong Kong people are, for the most part, Chinese. So there is strong cultural affinity with China as a whole.

Second, some Hong Kong residents may be uncomfortable with the present state of democratic development in the SAR, but they should know that there was not even a pretense of democracy from 1841-1997 when the UK ruled Hong Kong as a colony. In fact, in the 1960s and the 1970s, Hong Kong residents held large-scale and serious anti-British demonstrations – which sometimes led to riots – against the lack of democratic rights under British rule. The era of democracy in Hong Kong began only when it was reunited with the motherland.

The Western media conveniently forget a vital fact when reporting on Hong Kong – that it was the central government that initiated Hong Kong into the modern democratic era.

Besides, there is no denying that Hong Kong’s close ties with the Chinese mainland are to the SAR’s great advantage. Hong Kong’s prosperity is in large measure based on serving as China’s “window to the world”, because as an international financial, shipping and logistics hub it can strengthen business relations between China and other countries and regions.

Hong Kong’s port is one of the largest and busiest in the world; it is a leader in terms of container throughput. Its stock exchange, too, is one of largest in the world and handles public offerings of Chinese as well as foreign companies. Moreover, military costs can be an onerous burden for many regions, but Hong Kong does not have to worry about it because they are borne by the central government.

Finally, Hong Kong residents know that the central government will come to their defense in moments of crisis. The Asian financial crisis of 1997 to 1998 was initially disastrous for Hong Kong. Business was at a standstill and property values dropped dramatically. At that time, Zhu Rongji, then Chinese premier, announced that the central government will protect Hong Kong “at all costs”. The central government then established a closer economic partnership with Hong Kong to substantially enlarge the mainland market for Hong Kong products and services. That agreement dramatically opened up a whole new market for Hong Kong.

In 2003, when Hong Kong (especially its pillar tourism and retail sectors) was reeling under the impact of SARS, the central government initiated an “Individual Visit Scheme” to boost tourism and stabilize the SAR’s struggling economy. Needless to say, the two measures proved catalytic in turning around Hong Kong’s economy.

Therefore, irrespective of the temporary issues and disagreements of Hong Kong residents with the central government’s policies, the cultural, political and economic bonds between the SAR and the mainland are unbreakable.

By Eric Sommer (China Daily)

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China set to be net investor

Outward flows likely to exceed FDI in nation this year, UN report says

China’s outward investment is very likely to exceed foreign direct investment inflows this year, making the country a net investor, according to officials at a United Nations body.

This “inevitable trend” will have “great significance in reshaping the economic structure and long-term development” of the world’s second-largest economy, they said.

In 2013, China’s foreign direct investment rose by 2.3 percent year-on-year to $123.9 billion, ranking second in the world after the United States, according to the United Nations Conference on Trade and Development’s World Investment Report on Tuesday.

“China remained the recipient of the second-largest flows in the world. Meanwhile, the quality of FDI inflows improved, with more into high-end manufacturing and services with high added value,” said Zhan Xiaoning, director of the Investment and Enterprise Division at UNCTAD.

“What’s more, China’s outward investment is more striking,” Zhan said.

In 2013, investment outflows from China increased by 15 percent year-on-year to $101 billion, the third highest in the world after the United States and Japan, the report said.

As China continues to deregulate outbound investment, outflows to developed and developing countries are expected to grow further, it said.

Zhan said, “China’s economic landscape, driven by exports and foreign investment in the past three decades, will change significantly. Outward investment will serve as an important driver for industrial upgrading and economic growth.”

Liang Guoyong, an economic affairs officer at UNCTAD, said, “It is very hard to predict when China will become a net investor, but the trend is inevitable.”

The process will accelerate along with the nation’s fast economic growth, the increase in Chinese companies’ competitiveness and the amount of resources and market share they gain, Liang said.

The change will lead to a more effective allocation of financial resources for the Chinese economy, as the country holds the world’s largest foreign exchange reserves, Liang added.

Huo Jianguo, president of the Chinese Academy of International Trade and Economic Cooperation, a Ministry of Commerce think tank, said China’s new role as a net investor will help ease trade frictions.

“The rapid increase in overseas investment by Chinese enterprises is very likely to transform the trade landscape, because profits from the overseas market will lessen the country’s reliance on exports, reducing trade frictions and pressure from swelling foreign exchange reserves,” Huo said.

By Li Jiabao and Mu Chen (China Daily)

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Vietnam Vows Stand Against China as Sea Collisions Continue

Vietnam accused Chinese ships of ramming one of its fishing boats yesterday, saying relations between the two countries have been “deeply damaged” by the their standoff over a disputed oil rig in the South China Sea.

Vietnam’s sovereignty and security as well as regional peace are “threatened” by China’s decision to place an oil rig off Vietnam’s coast on May 2, National Assembly Chairman Nguyen Sinh Hung told legislators in Hanoi. The friction at sea, which has led to collisions, the sinking of a Vietnamese fishing boat on May 26 and anti-China riots in Vietnam, is hurting ties between the two communist countries, Hung said in his address.

A high-level meeting between Vietnamese leaders and China’s top foreign policy official on June 18 failed to ease the daily sea skirmishes near the oil rig. The dispute is fraying ties between the communist countries and adding to regional tensions even as leaders from both sides promised to manage disagreements ‘‘using peaceful measures.’’

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China’s Supreme Court overturns death sentence for victim of domestic violence: lawyer

China’s top court has overturned the death sentence of a woman convicted of killing her husband after years of violent abuse, her lawyer said on Tuesday, in a move activists say shows the government could be serious about battling domestic violence.

The landmark case of Li Yan, which was widely discussed on the Internet in China, highlights the plight of victims of domestic violence, and drew the attention of international human rights groups.

The decision “will have an exemplary effect” on similar future lawsuits, Li’s lawyer, Guo Jianmei, told Reuters, as it may be the first case in China to overturn capital punishment for the killing of a domestic abuser.

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China Money Rate Rises Most in Eight Weeks as Banks Hoard Funds

China’s overnight money-market rate climbed by the most in eight weeks as banks hoarded funds to meet quarter-end regulatory requirements.

The People’s Bank of China withdrew 18 billion yuan ($2.9 billion) from the banking system today via 28-day repurchase agreements at a 4 percent yield, according to a statement on its website. Funds will flow back into the market through 20 billion yuan of the contracts maturing today and 10 billion yuan due on June 26, data compiled by Bloomberg show. Banks typically boost cash holdings before reporting their financial positions to regulators at the end of each quarter.

The overnight repo rate, a gauge of interbank funding availability, jumped 23 basis points, the most since April 29, to 3 percent in Shanghai, according to a daily fixing from the National Interbank Funding Center. That is the highest level since April 3 and compares with 12.85 percent reached during a record cash crunch in June 2013. The seven-day repo rate was steady at 3.48 percent, the highest since May 4.

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China Activist to Stand Trial, Lawyer Says

Prosecutors in southern China have decided to put on trial a well-known human rights campaigner, Yang Maodong, on charges of disrupting public order, his lawyer said on Tuesday.

Mr. Yang and a co-defendant are likely to be the latest in a line of activists tried for participating in a burst of protests against corruption, censorship and the detention of protesters after President Xi Jinping’s elevation to the Communist Party leadership.

Mr. Yang, 47, best known by his pen name, Guo Feixiong, was detained last August in Guangzhou, the southern Chinese city where he had emerged as a combative and charismatic leader of activists and aggrieved citizens who had sought to push for political change in the relatively relaxed atmosphere after Mr. Xi’s elevation in November 2012.

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China’s current economic growth normal: expert

Renowned Chinese economist Li Yining on Monday refuted the notion that China’s economy is in decline while noting that the previous high growth rates were “not normal.”

“The previous 9 to 10 percent growth rates were to cope with the global economic crisis, and they were actually not normal. It won’t do us much good if we keep that up,” said Li, a national political advisor, at a meeting of the Standing Committee of the Chinese People’s Political Consultative Conference National Committee, China’s top political advisory body.

Li said that China’s current GDP growth should be higher than the released figure, citing that housing construction in rural areas, the significance of which is growing fast in China, is not included in the country’s GDP calculation while it usually is in developed countries.

According to Li, other fast-developing fields such as the incomes of maids and nannies as well as rural roads and bridges built in charity programs were not encompassed by China’s GDP either.

He also refuted doubts concerning the authenticity of China’s GDP figures.

“Some state-owned companies might make false reports to showcase their performances. However, the discrepancy can only be small, otherwise, it will be easily detected during auditing,” according to the political advisor.

Meanwhile, private businesses, which contribute more than half of China’s GDP, will do anything to report less due to taxation concerns, Li added.

He warned that a roller coaster-style trajectory will not be good for China’s economic growth in the long run.

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Crackdown urged on Web terror content

Security analysts say increase of material on Internet fuels violence

Anti-terrorism experts said the crackdown on terrorist-linked video and audio content on the Internet must intensify, as such information has fueled the spread of religious extremism and terrorist attacks in China.

Video and audio files released on the Internet by the East Turkistan Islamic Movement have spiked – from 32 files in 2012 to 109 last year. In the first three months of this year, the terrorist group released 36 such files.

Terrorist attacks in China also rose sharply last year, and the video and audio files are a direct cause of the increase, security analysts said.

On June 26, 16 terrorists launched an attack in Lukqun, a township in Turpan prefecture of the Xinjiang Uygur autonomous region, leaving 35 dead.

The principal criminal of the gang, Ekrem Usman, said: “We watched some videos, which told us to launch jihad (holy war). We started to watch those videos in 2013.”

“He (Ekrem Usman) downloaded the video made by the East Turkistan Islamic Movement, which advocates jihad, to his cellphone at home, then drew people to join his group. He played the video and audio files when they held meetings and gradually developed their ideas of religious extremism,” said an officer from the Piquan county public security bureau in Xinjiang.

Terrorists from Xinjiang drove a jeep into a crowd at Tian’anmen Square in Beijing and set the vehicle on fire on Oct 28. Five people, including the three in the jeep, died, and 40 others were injured.

One of the suspects, Yusanjan Wuxuer, who participated in planning the attack, said: “Except for reading books and watching videos, I also received some materials from Usman Asan (the terrorist who killed himself in the attack). Nobody else spread the ‘ideas’ (extremist and terrorist ideology) to me.”

After an attack in Xinjiang’s capital, Urumqi, on April 30, which killed three and injured 79 others, the ETIM released a video on how to make a briefcase bomb of the type that was used in the attack. It also claimed responsibility for it.

The “Turkestan Islamic Party”, the other name of the ETIM, released a video on the Internet referring to the Tian’anmen attack as “jihad”.

After the June 26 terrorist attack in Lukqun, the group released a statement: “It’s Allah’s order and the act of worship we must do to attack Chinese government organs and police stations and kill heretics and Muslims working for the Chinese government.”

According to Xinjiang police, several terrorist attacks against government organs occurred after the statement was released.

With the help of their own or other terrorist groups’ websites, free online storage facilities, file-sharing portals, social networking platforms and e-books, the ETIM promotes itself and spreads extremism via videos, said Yalikun Yakuf, deputy director-general of the Xinjiang public security department.

“The terrorists in China recruit new members by downloading those videos made by the ETIM and organize people to watch them, then launch terrorist activities,” he said.

“All those who participated in the terrorist attacks of ETIM have watched the videos, produced at home or abroad, that advocate terrorism, separatism or jihad,” said Li Sheng, a professor at the Xinjiang development research center of the Chinese Academy of Social Sciences.

Apart from strengthening related legislation to prevent the spread of the video and audio content that fuels extremist ideology and instigates ethnic conflict, the government should also promote knowledge of the laws governing such criminal behavior among the public, Li said.

“Even as we protect the Internet and citizens’ freedom of speech, we shouldn’t give opportunities to the terrorists to make use of that freedom to spread their terrorist ideas,” said Li Wei, an anti-terrorism researcher at the China Institutes of Contemporary International Relations.

The ETIM, which advocates violence to force the separation of Xinjiang from China, has been identified as a terrorist group by China, the United States, the European Union and the United Nations.

By Hou Liqiang (China Daily)

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U.S. prepares for awkward military engagement with China in Hawaii

The U.S. Navy has dispatched numerous ships to Hawaii as it prepares for Rim of the Pacific 2014, the world’s largest international maritime exercise. It will involve 49 surface ships and six submarines from 23 countries this year, but the inclusion of one — China — will get an inordinate amount of attention.

The People’s Liberation Army of China will participate in the exercise for the first time, sending ships that include the missile destroyer Haikou, the missile frigate Yueyang, the oiler Qiandaohu and the hospital ship Peace Ark. The Chinese were invited to join two years ago by Adm. Samuel Locklear, the chief of U.S. Pacific Command, and will do so now as Chinese President Xi Jinping pushes an overhaul and expansion of the Chinese military.

But the engagement, which starts June 26, comes at an awkward time following a series of controversial moves by China within the last year. That could complicate an already highly unusual level of engagement between China, the United States and U.S. allies at RIMPAC, even if senior military officials in China and the United States have had discussions for years.

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China Metal Probe Weighs on Copper Outlook

Hedge funds and other money managers are increasing their bets against copper, according to U.S. data, amplifying pressure on prices following allegations of fraudulent metal-backed financing in China.

The wagers are likely to further weigh on the outlook for one of the world’s most heavily traded metals, as the effects of an official probe on stockpiles in the eastern Chinese port of Qingdao continue to ripple across global markets. The port’s operator has confirmed that Chinese authorities are investigating allegations of fraud relating to stockpiles of metals, though the government hasn’t commented publicly.

Data from the U.S. Commodity Futures Trading Commission issued Friday showed hedge funds, institutional investors and other large speculators increased their short positions in New York copper futures and options in the week ending Tuesday to 29,063 contracts, compared with 25,734 a week earlier and 21,802 three weeks ago. The CFTC publishes such data on a weekly basis.

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China urges peaceful development of seas, says conflict leads to “disaster”

China, involved in a growing dispute with its neighbors over the energy-rich South China Sea, wants to promote peaceful development of the oceans, Premier Li Keqiang said, warning conflicts in the past had only brought “disaster for humanity”.

China claims almost the entire ocean, rejecting rival claims to parts of it from Vietnam, the Philippines, Taiwan, Malaysia and Brunei in one of Asia’s most intractable disputes and a possible flashpoint. It also has a long-running dispute with Japan in the East China Sea.

“China will unswervingly follow the path of peaceful development and firmly oppose any act of hegemony in maritime affairs,” Li said at a maritime summit in Greece on Friday in comments carried by China’s Foreign Ministry website on Saturday.

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China Charges Former Head of Planning Ministry With Bribery

China filed graft charges against the former deputy director of the economic planning ministry, saying he illegally received money and goods in bribes.

Liu, 59, former deputy head of the National Development and Reform Commission, was accused of seeking gain for others, a statement on the Supreme People’s Procuratorate said. The case was filed with the People’s Intermediate Court in Langfang city in central China’s Hebei province, it said. The procuratorate didn’t quantify the amount of the bribes Liu is accused of taking.

The prosecution of Liu, which will almost certainly result in conviction, could vindicate public claims made against him by a journalist months before his downfall from a ministry with control over a vast swathe of the economy. Liu was stripped in May 2013 of his position at the NDRC, which approves infrastructure projects and controls energy prices, after Luo Changping, deputy managing editor of Caijing Magazine, posted allegations on his microblog in December 2012.

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China: 32 terror groups broken up in crackdown

Chinese authorities said Monday they broke up 32 terror groups and arrested more than 380 suspects in the far west in the first month of a crackdown aimed at demonstrating the Communist Party’s resolve to maintain order in a borderland hit by recent unrest. Many suspects received rapid trials and stiff sentences, including death penalties.

Security forces also seized several hundred explosive devices, a few tons of explosive material and computers and books about terrorism and religious extremism, officials from the Xinjiang region told reporters.

The crackdown follows a string of high-profile attacks on civilians since late October that have handed Communist Party leader Xi Jinping a major security challenge during his first year and a half in office. Last month, a market bombing killed 43 people in the region’s capital, Urumqi.

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China Auditor Finds Irregularities in China Resources

China’s state auditor said Friday that it has found irregularities in the operations of the state-owned conglomerate China Resources, including misused funds, improper bidding procedure and failure to seek approvals. The audit also found evidence that some executives were involved in “serious violations of law and discipline.”

The audit results came after the government started investigating the activities of several former executives of the group. The auditor didn’t name or blame any officials.

Earlier, the Communist Party announced a probe into China Resources’ ex-chairman Song Lin, who was stripped of his party and government positions in April. Wang Shuaiting, vice chairman of China Travel Service (Holding) Hong Kong, is also under investigation for activities during his tenure at the company, the Communist Party’s antigraft arm said in May. Neither former official has commented on the probes.

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China launches campaign to cleanse web of terror content

China began a campaign on Friday to purge the Internet of content it says promotes terror and violence, enlisting the aid of major websites, state media said, as the country moves to damp violence in its restive far west.

The Xinjiang region is the traditional home of Muslim Uighurs who speak a Turkic language, and China has blamed a series of attacks on Islamist separatists it says seek to establish an independent state there called East Turkestan.

A suicide bombing last month killed 39 people at a market in Xinjiang’s capital of Urumqi. In March, 29 people were stabbed to death at a train station in the southwestern city of Kunming.

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Nuclear Regulators ‘Overwhelmed’ as China Races to Launch World’s Most Powerful Reactor

China is moving quickly to become the first country to operate the world’s most powerful atomic reactor even as France’s nuclear regulator says communication and cooperation on safety measures with its Chinese counterparts are lacking.

In the coastal city of Taishan, 100 miles (160 kilometers) from the financial hub of Hong Kong, Chinese builders are entering the final construction stages for two state-of-the-art European Pressurized Reactors. Each will produce about twice as much electricity as the average reactor worldwide.

France has a lot riding on a smooth roll out of China’s EPRs. The country is home to Areva SA (AREVA), which developed the next-generation reactor, and utility Electricite de France SA, which oversees the project. The two companies, controlled by the French state, need a safe, trouble-free debut in China to ensure a future for their biggest new product in a generation. And French authorities have not hidden their concerns.

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Brother of Aide to Former Chinese Leader Comes Under Investigation

The brother of a top aide to Hu Jintao, the former Chinese president, has been put under investigation by the ruling Communist Party, its internal discipline agency said on Thursday.

Ling Zhengce, the deputy head of a government advisory body in the coal-rich northern province of Shanxi, is the target of a investigation by the party’s Central Commission for Discipline Inspection for “suspected grave violations of regulations and law,” which in past cases has referred to corruption.

Mr. Ling, 62, is the older brother of Ling Jihua, who served as head of the party’s general office, roughly equivalent to a White House chief of staff, under Mr. Hu, who retired from all his posts last year.

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China’s Monetary Policy in the Second Half of the Year

On May 30^th of 2014, the Chinese State Council made a detailed plan for the financial work of the second half of the year. It seems to stress enhancing the capability of financial services for the real economy, but in fact it sets the tone for the central bank’s monetary policy in the second half of the year. It is also innovative in strengthening “directional drop quasi”, lowering the financing cost, and optimizing bank credit.

Yi Xianrong

First, the so-called “directional drop quasi” means a directional reduction of the reserve requirement ratio. In the case of China’s downward economic growth, a periodic adjustment of the real estate market, and an increasing risk of default for Chinese enterprises, “directional drop quasi” means that the Chinese central bank will not likely change the present moderately tight monetary policy but can only fine tune different bank reserve ratios. Thus, the debate over the central bank’s expected reduction of the reserve ratio came to a halt, meaning a lower possibility of an overall reduction of reserve requirement ratios and loan interest rates in the second half of the year.

Meanwhile, “directional drop quasi” also means that in the case of a tight control of credit and social financing scale, a directional easing policy will be adopted to support the development of the real economy, the development of agriculture as well as small and micro businesses in particular. At present, China’s over expanding credit funds failed to flow into these enterprise. These industries and enterprises not only relate to the people’s livelihoods and the most dynamic aspects of the social economy, but also to the industries contributing the most to job opportunities. So, in the second half of the year, a directional easing policy will improve the financing conditions for agriculture as well as small and micro businesses.

Also, “directional drop quasi” is a way to regulate China’s financial market. In the early years, the fast growth of China’s interbank market was very related to the excessive use of the interbank market by quite a few small and medium banks as well as financial institutions. Due to the lack of available loans, caused by excessive expansion, these banks had to go to the interbank market for short borrowing and long lending, thus causing a serious maturity mismatch of their assets. Any trouble in the market will cause turbulence in the interbank market. That was the cause of the “money shortage” in 2013. Adopting a directional easing policy is meant to encourage small and medium banks to make themselves accessible to the real economy and to small and micro businesses.

Of course, “directional drop quasi” is a quantitative policy instrument of a small effect. If the issues exist, such as the lack of further reform of China’s interest rate market, the distortion of financial market price mechanisms, and the lack of a fundamental transformation of the investment-oriented real estate market, “directional drop quasi” will have a limited ability in enhancing the service for the real economy. Now there are a lot of problems in the Chinese financial market and these problems are mainly caused by the central bank’s excessive use of the quantitative policy instrument instead of a flexible use of price instruments. Therefore, if a directional easing policy is set as a usual instrument, it will still have a limited effect.

Second, social financing cost should be comprehensively reduced. It should be done through “deleveraging” and reducing bank service charges respectively. The government has excessively controlled the financial market and misused monetary policy instruments, thus impeding the marketization reform of the interest rate market. In this case, Chinese banks and financial institutions had to break through controls through all kinds of so-called financial innovations. For instance, there are the problems of the prosperity of the interbank market, the spreading of transactions, such as trusts, wealth management, and entrusted loans, and the explosive growth of internet finance. The emergence of these financial markets not only made the entire financial market’s financing chain unlimitedly expand and become complicated, thus increasing the price level of the financial market, but it also increased the potential risk of the entire financial system.

In 2013, the government started to regulate these financial markets. Particularly in 2014, relevant documents were issued and were targeted at the interbank market. They were demanding a regulation of the complicated and ever expanding financing chain, bringing all the non-standard banking businesses under supervision so as to clear away the unnecessary financial “channels” and “bridge” links, shorten the financing chain, and reduce the financing cost and potential risk of the financial system.

However, if the “deleveraging” policy is launched, it will be effective in the short term from the technological perspective, but the market will likely break through these supervisions through new ways in the long term. So the key to the problem of Chinese shadow banks is to accelerate the marketization reform of Chinese interest rates and exchange rates, to change the central bank’s thinking on its policy, and to allow for the decisive role of the effective price mechanism in the financial market operation.

Third, optimizing financing structures concern how to guarantee the flow of bank credit into the real economy and the government-supported industries as well as to control credit to the industries of over capacity. This policy is expected to have quite a big impact on China’s real estate market, which is in the process of periodic adjustment. Faced with the huge risk in China’s real estate market, not only are the commercial banks unwilling to undertake related transactions, but policy restrictions are also more likely to worsen the financing problems of Chinese real estate. So, unless China’s financial system shows systematic risk, the central bank’s monetary policies will not change very often.

These three aspects are innovative and also the focus and trend of the central bank’s monetary policy in the second half of the year.

Yi Xianrong is a researcher at the Financial Institute of the Chinese Academy of Social Sciences.

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China Moves Second Rig Toward Vietnamese Coast

China says it is moving a second oil rig closer to the Vietnamese coast. The move comes amid continuing tensions and confrontations between ships from the countries.

The Maritime Safety Administration said in a notice viewed Thursday on its website that it was towing the Nan Hai Jiu Hao drilling platform to the southeast. It said the 600-meter (1,970-foot) rig would be in place on Friday and asked vessels in the area to give it a wide berth.

The shifting of the rig comes as officials from Vietnam and China said they had made no progress in talks about the deployment of another Chinese rig.

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China’s Wealth Fund Vows Better Investment Management After Audit

China Investment Corp., the nation’s $575 billion sovereign wealth fund, said it is improving how it manages overseas investments after state auditors said mismanagement led to losses.

The fund has drafted plans to rectify issues identified by the National Audit Office, analyzed the causes, and is amending related mechanisms and procedures, Beijing-based CIC said in an e-mailed statement. CIC, as it’s known, will also strengthen due diligence for overseas deals and enhance post-investment management, and standardize the selection of external managers, according to the statement.

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China to Move Citizens in Iraq

China said it would move an undisclosed number of its more than 10,000 citizens in Iraq away from danger zones amid an intensifying insurgency there and urged Baghdad to protect its people and interests.

At a daily press briefing on Thursday, China Foreign Ministry spokeswoman Hua Chunying said those in dangerous areas could be moved to either safer places in Iraq or neighboring countries. Ms. Hua said most Chinese nationals in the country are in relatively safe areas already.

“China is willing to continue to provide assistance to Iraq at the request of the Iraqi side in antiterrorism and reconstruction works,” she said. “We also hope that Iraqi side could take concrete measures to ensure security of Chinese institutions and personnel.”

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China not at World Cup, but they’re still crazy for it

Thirty-two of the world’s best football teams are now competing for the iconic golden World Cup trophy — but the planet’s most populous nation is not among them.

Team China failed to qualify for the “beautiful game’s” showpiece event in Brazil. In fact China’s World Cup dream turned into a nightmare as early as 2011, when it was eliminated in a regional qualifying round.

But for all the interest in football in this country of more than one billion people, it is a huge source of frustration that they can’t field a competitive national team.

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Probe May Hit China’s Imports of Copper, Iron Ore

China’s imports of copper and iron ore may drop due to an alleged financing scandal, as banks withhold credit and customs officials tighten checks on incoming shipments, metals traders say.

Western banks are looking into allegations that a Chinese trading company illegally pledged metals as collateral to more than one lender. The operator of Qingdao Port, the eastern Chinese port where the metals are stored, has confirmed that Chinese authorities are investigating allegations of fraud relating to stockpiles of metals.

China’s government hasn’t commented publicly.

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China Audit Uncovers Irregularities at Wealth Fund, Big State Banks

The National Audit Office said it had uncovered management failures related to investments at China Investment Corp., the country’s big sovereign-wealth fund, as well as irregular lending and credits at Bank of China and Agricultural Development Bank of China.

China Investment Corp. was found to have management shortcomings that resulted in overseas losses on six projects between 2008 and 2012. The extent of the losses wasn’t given.

The auditor blamed the losses at CIC on dereliction of duty by management, insufficient due diligence and poor post-investment management. It didn’t provide further details, though it said that CIC and the state banks had largely addressed the problems as of May.

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As China’s Leader Fights Graft, His Relatives Shed Assets

As President Xi Jinping of China prepares to tackle what may be the biggest cases of official corruption in more than six decades of Communist Party rule, new evidence suggests that he has been pushing his own family to sell hundreds of millions of dollars in investments, reducing his own political vulnerability.

In January of last year, just after Mr. Xi took power, his older sister and brother-in-law finalized the sale of their 50 percent stake in a Beijing investment company they had set up in partnership with a state-owned bank. According to the billionaire financier Xiao Jianhua, who co-founded the company that bought the stake, the move was part of a continuing effort by the family to exit investments.

They did it “for the family,” Mr. Xiao’s spokeswoman said in a statement.

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China Shows Regulatory Heft by Sinking Shipping Deal

China is flexing its growing power over global deals, after it put the kibosh on a shipping alliance that officials here said would hold too much sway over trade lanes to Europe.

Tuesday’s decision by China’s Ministry of Commerce came despite approvals for the shipping alliance in Europe and the U.S. It marks only the second time the Chinese regulator has stepped in to block a corporate combination since the country enacted its antitrust law in 2008.

Other Chinese agencies have also stepped in to set conditions on deals, including when no Chinese company was directly involved. They include the merger that formed mining giant Glencore Xstrata PLC as well as separate deals by Microsoft Corp. and Google Inc. to acquire mobile device makers.

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Citic’s Missing Alumina Prompts Concern Over China Commodities Fraud

Citic Resources, a Chinese state-owned commodities trader, said on Wednesday that it had been unable to locate more than 100,000 tons of alumina at a port in northeast China that is the focus of a commodities fraud investigation.

The company said it had secured a court order to sequester, or secure, about 223,000 metric tons, or 253,000 tons, of alumina, also called aluminum oxide, and about 7,500 metric tons of copper to which it has legal title at the port of Qingdao. However, it has not been able to locate more than half of its alumina, some 123,000 metric tons. The material is worth about $43 million, according to Reuters.

The announcement by Citic Resources, which also produces oil and coal and is a unit of the state-owned conglomerate Citic Group, is likely to raise further concerns about how companies in China use — and potentially abuse — imported commodities such as copper, aluminum and iron ore to obtain short-term financing. The Chinese authorities are investigating whether one such importer in Qingdao, Dezheng Resources, acted with its subsidiaries to fraudulently obtain loans by pledging and re-pledging the same stockpiles of metals as collateral to multiple banks.

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Premier Li says China’s economy won’t suffer hard landing

Chinese Premier Li Keqiang said on Wednesday that China’s economy would not suffer a hard landing and would continue to grow at a medium to high pace in the long term without strong stimulus.

Li made the comments during a speech in London’s financial district on the final day of a visit which has yielded trade and investment deals worth 14 billion pounds ($23.76 billion) and strengthened Britain’s bid to become the dominant centre for the Western trade in offshore yuan.

Li said he expected China’s economy, the world’s second-largest behind the United States, to grow at a minimum clip of 7.5 percent, confounding critics, including the International Monetary Fund (IMF), who say the country’s rapid growth may eventually falter.

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NGOs boost charitable donations in China

China received charitable donations worth 56.64 billion yuan ($9.2 billion) in 2013, most of it raised by non-governmental organizations (NGOs), according to the Ministry of Civil Affairs.

NGOs with charitable status raised 45.88 billion yuan in money and goods, while civil affairs authorities received donations worth 10.76 billion yuan, according to figures released by the ministry on Tuesday.

The ministry is in charge of NGO management, disaster relief and the social welfare cause. It also has a function of receiving donations from the public.

There were 547,000 NGOs across China by the end of 2013, increasing by 9.6 percent from the previous year, the figures show.

These organizations employed 6.36 million people and owned fixed assets worth more than 149.6 billion yuan.

The ministry also revealed that sales of welfare lottery tickets grew by nearly 17 percent to reach 176.5 billion yuan last year, raising 51.07 billion yuan in charitable funds.

Civil affairs authorities spent 19.55 billion yuan of the funds to do public good, the ministry said.

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Chinese premier proposes expanding China-Britain trade to 100 billion dollars in 2015

Visiting Chinese Premier Li Keqiang proposed here Tuesday that China and Britain expand two-way trade to reach a target of 100 billion U.S. dollars in 2015.

Li, at an annual meeting with his British counterpart, David Cameron, also called on China and Britain to boost cooperation in such areas as nuclear power, high-speed railway, infrastructure construction and urbanization.

This year marks the 10th anniversary of the establishment of the China-Britain comprehensive strategic partnership. The two premiers agreed to seize the unique opportunity to lift bilateral relations to a new level.

Li said China and Britain should constantly consolidate the political foundation of bilateral relations, promote common growth and inclusive development, so as to speed up the development of China-Britain ties.

He said the two countries need to advance financial cooperation, facilitating direct trading of their local currencies, setting up RMB clearing bank and opening branches of Chinese banks in Britain.

The Chinese premier also urged the two countries to strengthen cooperation in such areas as scientific innovation, green economy, medicine and aviation.

Li applauded measures adopted by Britain to simplify visa application procedure for Chinese visitors.

Cameron, for his part, said bilateral cooperation has borne rich fruits since the two countries forged a strategic partnership a decade ago.

He said Britain attaches great importance to its relationship with China and is willing to have sincere dialogues with China and deepen cooperation in the fields of economy and trade, finance, education, science, nuclear power and high-speed railway.

The British prime minister added that Britain welcomes more Chinese companies to invest in Britain and more Chinese students to study here.

On global and regional affairs, Li noted that both China and Britain are firm guards of world peace and regional stability, calling on the two countries to strengthen communication and cooperation in international and regional affairs.

Cameron said China and Britain are indispensable partners in dealing with international issues.

Britain pursues a policy of open and free trade and investment, and is ready to promote the negotiations on the Europe-China investment agreement, and the construction of the Europe-China free trade zone.

Li and Cameron witnessed the signing of a series of bilateral cooperation documents after their meeting.

The Chinese premier arrived here on Monday for an official visit. Britain is the first leg of his two-nation trip to Europe, which will also take him to Greece.

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BP Makes $20 Billion Gas Deal With China

The U.K.’s PLC will sign a $20 billion long-term contract to supply liquefied natural gas to southeast China, the company’s chief executive said Tuesday.

Speaking to reporters at the World Petroleum Congress, Bob Dudley said the 20-year deal will be signed with Chinese state-owned CNOOC in London in front of British Prime Minister David Cameron and Premier Li Keqiang during the Chinese leader’s three-day visit to Britain this week.

“It is a big deal, a fair price for them, a fair price for us…and a good bridge between the U.K. and China in terms of trade,” he said.

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China, Trying to Bolster Its Claims, Plants Islands in Disputed Waters

The islands have all that one could ask of a tropical resort destination: white sand, turquoise waters and sea winds.

But they took shape only in the last several months, and they are already emerging as a major point of conflict in the increasingly bitter territorial disputes between China and other Asian nations.

China has been moving sand onto reefs and shoals to add several new islands to the Spratly archipelago, in what foreign officials say is a new effort to expand the Chinese footprint in the South China Sea. The officials say the islands will be able to support large buildings, human habitation and surveillance equipment, including radar.

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