Hong Kong Pro-Democracy Protesters Emboldened by March

         The WSJ reports,"Hong Kong's pro-democracy forces got a shot in the arm from a day of marches and a night of protests in the city, raising the possibility of more demonstrations later this year.

Police arrested 511 people at an overnight sit-in in Hong Kong's Central business district Wednesday morning after thousands of protesters—organizers estimated 510,000, while police said the crowd hit 98,600 at its peak—marched across the city on Tuesday on the anniversary of Hong Kong's handover to China".

Participants in the sit-in on Central's Chater Road, organized by the pro-democracy Hong Kong Federation of Students, said that despite the arrests they felt encouraged by the demonstration, which they deemed a success.

"We are more hopeful now," said Jack Lee, a Hong Kong University student who participated in the Chater Road protest but wasn't arrested. "We have sent a clear message to all Hong Kong people, that civil disobedience can be peaceful and rational."

The protests center on whether Hong Kong voters will be given a mechanism for nominating candidates for chief executive, the city's top post, in the 2017 elections. While the government has committed to realizing what it calls universal suffrage in chief executive elections by that year, it is unclear whether that reform will include a robustly democratic nominating process.

At stake, besides Hong Kong's electoral process, is the city's relations with Beijing, which takes a dim view of democratic advocacy. A front-page editorial in Communist Party mouthpiece People's Daily on Wednesday said that self-governance in Hong Kong "has always had clear boundaries and standards, namely that Hong Kong should be mainly governed by Hong Kongers who love their country."

In addition to the Chater Road sit-in, a separate overnight protest was held in front of the offices of the chief executive by a different student group called Scholarism. The protest ended around 9 a.m. Wednesday without any arrests, that organization said.

"We expect further escalation of our movement such as more protests to encircle the chief executive's offices in coming months," said Mr. Lau.

The showdown on Chater Road was foreshadowed early Wednesday by the police, who said they would start to clear the protesters from the area before dawn. Organizers called for protesters to remain on the road until 8 a.m. By 3:30 a.m., police were slowly carrying individual protesters off the street and loading them onto waiting buses. Some of the protesters shouted and struggled as police carried them off, while others walked or were carried silently. Wheelchairs were also used to move the protesters. Police held signs over the crowd telling them to board the buses.

The protesters have yet to be formally charged. Protest organizers said that that the arrested demonstrators were taken by bus to a police college in Wong Chuk Hang, on the south side of Hong Kong Island, where organizers called for more protesters to gather Wednesday afternoon. The police spokeswoman declined to comment on where the protesters were taken.

Organizers say this may not be the last instance of civil disobedience in Hong Kong this year. "The stronger the oppression from the authorities, the stronger the rebound from the public," said Joshua Wong, a leader of the Scholarism group.

Sumitomo Mitsui Asset eyes acquisitions to meet ambitious growth goals

 Japan's Sumitomo Mitsui Asset Management wants to more than double its $131 billion assets under management by 2020 and is looking at acquisitions to help it grow, its chief executive told Reuters.

Encouraged by signs of economic recovery and a potential shift by Japan's main pension fund to put more money in riskier assets, the company is aiming to overtake industry leader Nomura Asset Management which held 31.5 trillion yen ($308 billion) in assets as of March.

"We want to become the top Japanese asset manager in asset size as well as the quality of our products by 2020. We are now crafting our three year plan as the base to achieve that goal," CEO Kunio Yokoyama said in an interview.

He added that the company was open to both domestic and foreign acquisitions, and was also ambitious in its goals for organic growth.

There are few reliable rankings for Japanese asset firms but Sumitomo Mitsui is regarded as ranking among the top 10.

Prodded by Prime Minister Shinzo Abe, who has lifted the economy with bold monetary easing and hefty fiscal spending, Japan's $1.26 trillion Government Pension Investment Fund (GPIF) is currently studying whether it should lower its substantial domestic bond allocation and shift into other assets.

The likely allocation change by GPIF could also prompt private pension funds and other institutional investors to move more of their money into stocks and other risk assets, and Yokoyama also hopes that retail investors would follow suit.

Japanese individual investors hold some 1,600 trillion yen in savings with more than half parked in low-yielding bank and postal deposits.

To attract retail investors, Sumitomo Mitsui aims to expand its offerings of Japanese equities mutual funds and global multi-asset funds although it will avoid sophisticated products like currency-linked double-decker funds.

"I feel retail money could finally move. A one percent shift to investments by households would create a flow worth 16 trillion yen," Yokoyama said.
Source: Reuters

China: Private, foreign investment to aid tourism industry

China will boost the development of its tourism industry by further opening the market to private and foreign capital, according to a statement issued after an executive meeting of the State Council on Wednesday.

The government will give support to the upgrading of the tourism industry in terms of investment and financing, land use and publicity, the statement said.

The meeting, which was presided over by Premier Li Keqiang, emphasized the leading role of tourism in the modern service industry. It is expected to accelerate the development of local economies, promote employment and protect the environment.

Wang Yanyong, director of the Tourism Development and Planning Research Center of Beijing Jiaotong University, said the measures will stimulate the development of tourism, especially in remote areas.

"This will significantly encourage tourism development in the central and western regions where we have great scenery but no mature tourism industry and convenient transportation," added Wang. "Relying on government investment will take a much longer time."

"The participation of private and foreign capital will not only help to tap tourism resources but also provide more jobs, improve transportation, build a reputation which will bring more investment and boost local economies."

In the first quarter of 2014, income in the tourism industry surpassed 960 billion yuan ($153 billion), an increase of 15.2 percent, according to the China Tourism Academy. Outbound travel enjoyed 17 percent growth over the same period.

"After 30 years of reform and opening-up, China has become a giant of tourism and still has a large potential for further development," said Dou Qun, a tourism industry professor at Beijing Union University. "However, we have noticed that we have more visitors headed overseas than visitors coming to China. The deficit of the tourism service trade was more than $50 billion last year."

"China needs to build its own tourism brand like 'Disneyland' to attract more visitors."

Zhang Guangrui, honorary director of the tourism research center with the Chinese Academy of Social Sciences, emphasized that the development of tourism must go along with the protection of the environment.

"Only if we combine the development and protection of natural resources and cultural heritage together, can we find a sustainable path of tourism development in China," Zhang said.

Source: ChinaDaily USA

Peru's roya-damaged coffee crop delays shipments, lifts premium

The premium for coffee grown in Peru, one of the world's top high-quality arabica growers, is nearing a three-year high after a tree-killing fungus ate into more of its crop than expected, delaying shipments, industry sources say.

Peru's harvest kicked off in April at low-altitude plantations - the most vulnerable to the airborne fungus known as "roya" - and yields in those areas were dramatically lower, said Cesar Rivas, a producer and the former president of the major coffee association Junta Nacional del Cafe.

"Those are the places hit hardest by roya," said Rivas.

"They produced such little coffee that now everyone is waiting for the higher altitudes to make their shipments."

U.S. importers blame roya for tight local supplies, which they say have lifted differentials for Peru's "hard bean machine cleaned" coffee to an average of 10 cents over the benchmark contract freight on board, from 7.5 cents less than three weeks ago.

"Exporters are having problems fulfilling their shipment obligations," said Jorge Figueroa, a coffee specialist with the agriculture ministry. "July shipments are going to be delayed somewhat."

If the differential rises above 10 cents, it will reach the highest level since June 2011.

Ructions in deliveries, however, may be temporary as farmers harvest crops grown above 1,000 meters (3,281 feet), which are less affected by the disease. In addition, the problems come during a seasonally quiet time for the U.S. coffee industry.

Even so, signs of slower deliveries will underscore concerns about supplies after the region's years-long leaf-rust infestation and a months-long drought parched crops in Brazil, the world's No. 1 coffee grower, earlier in the year that almost doubled prices in just months.

Beans from Peru, the world's eighth-biggest coffee producer, are typically sought at this time of year as roasters seek fresh supplies to tide them over until the next harvest from Central American rivals hits the market.

This year those supplies are already running low after the region's worst-ever roya outbreak.

Coffee exports from Peru plunged 67 percent in the second quarter year-over-year and were just 3,200 tonnes in June, about a fifth of June 2013, export association Adex data showed.
Source: Reuters
Forecasts on the impact of roya have varied wildly, increasing uncertainty in the market.

In May, Peru's government forecast 2014 coffee output would rise by up to 15 percent this year compared with last year's roya-hit crop that reached 260,000 tonnes, a 20 percent drop from the prior year. A local coffee association has said it expects production to fall by 15 percent this year.

Copper set for biggest weekly gain in nine months

 London copper rose on Friday and was set to forge its biggest weekly climb in nine months, as an upbeat U.S. jobs report fired optimism over economic growth.

U.S. employment growth jumped in June and the jobless rate closed in on a six-year low, decisive evidence the economy was growing briskly heading into the second half of the year. 
That came after a survey showed that global business activity picked up in June, with new orders pouring in at their fastest rate in over three years. 

"We've certainly seen some improvement in terms of macro data, (but) at the same time it's a good idea not to get too carried away" said analyst James Glenn of National Australia Bank in Melbourne.

Glenn said that China's purchasing manufacturing indexes were good but not stellar, while a budding U.S. housing revival, the upbeat labour data and low exchange stocks of metals such as copper and zinc were underpinning prices.

"There is the potential for upside, but prices probably won't move significantly higher," he said.

Three-month copper on the London Metal Exchange had edged back to $7,163.25 a tonne by 0220 GMT. It earlier rose to a 4-1/2 month high at $7,190 a tonne. Copper prices were targeting a 3.1-percent weekly rise, their biggest advance since September last year.

The most-traded September copper contract on the Shanghai Futures Exchange climbed 0.8 percent to 51,320 yuan

($8,300) a tonne, having hit its highest in six months overnight.

Copper stocks in LME warehouses have ticked up in the past few sessions, but still remain close to six year lows near 150,000 tonnes.

Across benchmark contracts, volumes were suffering from low liquidity with barely more than 2,000 lots of total turnover.

Operations at some of Chile's largest copper mines were affected to some extent for a few hours by a power outage in the country's mineral-rich north, industry sources said on Thursday, though the actual impact on production could not be quantified.
In other metals, broker Triland said the investor community has rediscovered its appetite for nickel, encouraged by improving economic signs out of the United States.

"A weekly close (Friday) above $20,000 may encourage stainless buyers into the market if nickel prices look like they may be running higher again," it said.

Iraqi Kurds say will sue Baghdad if it blocks oil sales

Iraq's autonomous Kurdish region has hit back at Baghdad over independent oil exports, a letter from the Kurdistan Regional Government (KRG) showed, threatening to counter sue the central government for trying to block its sales.

The strongly worded letter shows growing confidence from the Kurdish capital Arbil in the long-running oil sales dispute, as Baghdad struggles to regain control of swathes of territory lost to a Sunni Islamic militant insurgency.

The letter, addressed to Iraqi Oil Minister Abdul Karim Luaibi from KRG Natural Resource Minister Ashti Hawrami, said the Kurds would pursue legal action by the middle of this month if Baghdad does not stop its "interference".

"(The) KRG will bring civil, and where necessary, criminal proceedings against your Ministry and any person, foreign advisor, or any entity conspiring with your Ministry in any form," Hawrami wrote, in the letter dated June 29 and carried on a KRG website. He did not specify a court for the action.

The autonomous Kurdish region has been trying to establish greater financial independence from Baghdad by selling its own oil production directly on international markets. It has largely been spared the violence affecting much of Iraq.

Baghdad has cut the KRG's budget since January over the dispute, arguing the sales are illegal, and has repeatedly threatened to sue any firm that buys oil from the autonomous region.

But since the KRG took control of the northern oil hub of Kirkuk amid the retreat of the Iraqi military from the Islamic State-led insurgency, the autonomous region has been emboldened.

On Thursday, the president of Iraq's Kurdish north asked the region's parliament to prepare the way for a referendum on its long-saught goal of independence. 

In the letter, Hawrami said Baghdad has treated the 2005 Iraqi constitution with "contempt", arguing it was designed to allow the autonomous Kurdish region to export its own oil.

"These actions of your Ministry are clearly politically motivated, hostile, illegitimate, and without constitutional basis, and contrary to the fundamental interests of the people of Iraq," the letter said.


BAGHDAD SUPREME COURT

The KRG has also been buoyed by a ruling by Iraq's Federal Supreme Court, which denied Iraq's Oil Ministry request for a preliminary injunction against the KRG's exports.

Hawrami said this is evidence they are permitted to export their own oil under the country's 2005 constitution, though Baghdad has dismissed their interpretation of the Supreme Court ruling.

"This Court decision requires you to ensure that your Ministry immediately desists from any further actions to directly or indirectly interfere with the KRG's export of crude oil," Hawrami said in the letter.

Iraq's oil ministry called the KRG’s stance on the ruling

"false and misleading" saying in a statement the court made "no ruling on the substance of the case".

Tensions between the Kurdish regional capital Arbil and Baghdad have increased since the start-up of a new KRG-controlled pipeline to the Turkish port of Ceyhan in May.

The autonomous region has been exporting around 125,000 barrels per day to Ceyhan on the line, with plans to shortly double that number, but so far it has struggled to sell some of the tankers as potential buyers come under pressure from Baghdad.
Of the four tankers that have loaded the KRG's pipeline oil since May, only one has successfully delivered into an Israeli port after executing a ship-to-ship transfer in the Mediterranean. The buyer has not yet been revealed.

The KRG has denied selling oil to Israel.

Source: Reuters

France to miss deficit, growth targets -IMF

 France will miss its deficit targets as growth in the euro zone's second-biggest economy fails to live up to the government's hopes, the International Monetary Fund said on Thursday.

In its annual report on the French economy, the IMF also saw a real threat that voter resistance to spending restraints could jeopardise France's long-term strategy for restoring the public accounts to health.

It estimated the public sector deficit will come to 4.0 percent of economic output this year, more than the 3.8 percent targeted by President Francois Hollande's Socialist government.

As a result, France will fail to bring its deficit in line with an EU-agreed limit of 3 percent next year, the IMF estimated, forecasting instead a budget gap of 3.4 percent.

France has already received two extra years to reach the limit and risks a credibility-damaging showdown with EU partners like Germany if it is forced to seek yet more time.

The government has based its plan to meet the deficit targets on expectations the economy will grow 1.0 percent this year and 1.7 percent next year, which the IMF estimated to be too optimistic.

Cutting its growth forecasts, the IMF predicted the economy would grow only 0.7 percent this year and 1.4 percent next year.

Finance Minister Michel Sapin said earlier on Thursday the government was standing by its forecast at least until second quarter growth figures are published in mid-August. He also said the 2015 budget would target a public deficit of 3 percent of GDP as agreed with EU partners.

The IMF was less optimistic than the government about how soon the growth would get a kick from plans to phase out over three years a 30 billion euro ($40.9 billion) cut in payroll tax paid by companies.

It said the biggest home-grown risk to the economy was that a recovery in investment fails to materialise. The government is banking precisely on that to drive a rebound.

Though welcoming government plans to rein in spending by 50 billion euros over three years, the IMF warned that resistance to belt-tightening would build as specific measures come up for discussion.

The government's support from its own Socialist party is already fraying over its plans to cut spending growth. Last month, France saw its longest rail strike in years as unions challenged relatively modest reform plans for the sector.

Yet there was no room for the government to stray from its planned path to fiscal rectitude on account of tax cuts for business and people on low incomes, the IMF said.

"The major risks are that the initial plans may be diluted in sequential annual budgets and that cuts in transfers to local governments may be compensated by unsustainable cuts in investment, higher taxes or higher debt," said Edward Gardner, the IMF's mission head to France.

"This would undermine the government's fiscal rebalancing strategy," he said in a statement.

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.

Source: Xinhua

With one eye on Washington, China plots its own Asia "pivot"

The Silk Road, an obscure Kazakh-inspired security forum and a $50 billion Asian infrastructure bank are just some of the disparate elements in an evolving Chinese strategy to try to counter Washington's

"pivot" to the region.

While Chinese leaders have not given the government's growing list of initiatives a label or said they had an overall purpose, Chinese experts and diplomats said Beijing appeared set on shaping Asia's security and financial architecture more to its liking.

"China is trying to work out its own counterbalance strategy," said Sun Zhe, director of the Centre for U.S.-China Relations at Beijing's Tsinghua University and who has advised China's government on its foreign policy.

Added one Beijing-based Western diplomat who follows China's international relations: "This is all clearly aimed at the United States."

President Barack Obama's pivot - as the White House initially dubbed it - represented a strategy to refocus on Asia's dynamic economies as the United States disentangled itself from costly wars in Iraq and Afghanistan.

China sees the pivot as an attempt to contain its growing influence, especially given the United States is strengthening its ties with Asian security allies such as Japan and the Philippines, which have bitter territorial disputes with Beijing in the region's waters. Washington denies this.

One key part of China's diplomatic outreach has been to breath life into the little-known Conference on Interaction and Confidence Building Measures in Asia, or CICA, which has languished since Kazakhstan proposed it in 1992 to promote peace and security.

CICA comprises two dozen mostly Asian nations, as well as Russia and some Middle Eastern countries. The United States, Japan and the Philippines are not members.

China took over chairmanship of CICA at a summit in Shanghai in May for three years. There, President Xi Jinping spoke about a new "Asian security concept", saying China would explore the formulation of a code of conduct for regional security and an Asian security partnership programme.

While Xi gave few details and made no direct mention of disputes such as in the South China Sea, he warned Asian nations about strengthening military alliances to counter China, an oblique reference to the U.S. pivot. 

"Asian problems must be resolved by Asian people, and Asian security must be protected by Asian people," Xi said.


A RIVAL BANK?

Another Chinese initiative is the $50 billion Asian Infrastructure Investment Bank, which Xi first proposed in October during a visit to Southeast Asia.

Finance Minister Lou Jiwei said this week Beijing would likely have a 50 percent stake in the bank, which diplomats see as a possible rival to the World Bank and the Asian Development Bank, though China says its role is a complementary one, not competitive. 

Washington and Tokyo have the biggest voting rights in both the decades-old institutions.

China sees the infrastructure bank as a way to spread the message of its benign intentions in Asia, where developing countries such as the Philippines and Vietnam accuse Beijing of being the aggressor over territorial claims.

"China upholds a basic guiding principle in regional diplomacy - being friends and partners with our neighbours," Lou said.

On top of that, China has dangled financial and trade incentives to Central Asia, backing efforts to resurrect the old Silk Road that once carried treasures between China and the Mediterranean.

China is also pushing ahead with various trade pacts in the region, but is not part of negotiations for the Trans-Pacific Partnership (TPP), a 12-nation bloc whose two biggest economies are the United States and Japan. 

Not everyone is convinced China's initiatives will amount to much.

"Some of those things are more about the optics of these issues rather than the realities of a Chinese-led order," said Matthew Goodman, senior adviser for Asian Economics at the Center for Security and International Studies in Washington.


WASHINGTON WATCHING

China's foreign policy since the country began economic reforms three decades ago has traditionally followed the maxim of late paramount leader Deng Xiaoping of "hiding ones' strength and biding ones' time", or keeping a low profile.

Foreign Minister Wang Yi earlier this year flagged China's more assertive regional foreign policy at his annual press conference and in a newspaper article.

"We must accept the role of a responsible major country in international affairs," Wang wrote.

Asked this week whether China was carrying out its own pivot, Foreign Ministry spokesman Hong Lei said China was pursing a policy of good neighbourliness.

A senior Obama administration official said Washington was paying close attention to Xi's approach to Asia.

"We noted his statement at the CICA conference about Asia for Asians, the growing criticism of U.S. alliances and the Asian infrastructure bank," said the official, who spoke on condition of anonymity.

"It's raising serious questions about whether the U.S. vision and the Chinese vision are fully compatible."

A second senior U.S. official said Washington had not been assured that the infrastructure bank would adopt the high governance and other standards of institutions such as the World Bank and the ADB. He said the administration did not see how such an entity would "add value" for the region and that Washington would be making this point to Asian allies.

While they were not members, the United States and Japan were welcome to join the bank, Lou said.

Top Chinese and U.S. officials will get the chance to discuss the bank and many other issues during annual talks in Beijing on July 9-10, a meeting known as the Strategic and Economic Dialogue. 

FORGOTTEN ANNIVERSARIES

At the start of the CICA summit, China turned on the pomp, with live television showing Red Flag limousines delivering leaders one by one to a Shanghai conference centre where they walked down a red carpet to shake hands with Xi.

Most recently, Xi feted suspicious neighbours India and Myanmar last Saturday to celebrate the 1954 signing of almost forgotten principles of peaceful coexistence.

He cited Indian Nobel Literature laureate Rabindranath Tagore in a speech to India's vice president on the 60th anniversary of the Five Principles of Peaceful Coexistence, an early Cold War pledge of peace between China, India and the country then known as Burma.

Xi has gone out of his way to court India, a country which hosts exiled Tibetan spiritual leader the Dalai Lama and with which China has a festering border dispute.

Still, China's messages of peace can come across as ham-fisted to those it's trying to court.

"China has long engaged in a kind of smile diplomacy in the region but the challenge for China is that many of its neighbours can see the glint of steel beneath the robe," said Goodman from the CSIS think tank.

Source: Reuters

Xiaomi sells 26.11 smartphones in H1 2014.

Freeport-McMoRan Looking to Sell Large Copper Mine in Chile

        The WSJ reports,"Freeport-McMoRan Copper & Gold Inc.  is looking to sell its large Candelaria copper mine in Chile, an asset sale that could raise several billion dollars, according to people familiar with the matter.

The mine has attracted interest from Magris Resources Inc., a Toronto-based mining-investment vehicle headed by former Barrick Gold Corp.  chief executive Aaron Regent, according to these people.

Phoenix-based Freeport, which has been diversifying into oil and gas, is under pressure to reduce its debt from its current level of $20.9 billion. In May, it announced a deal to sell its Eagle Ford Shale assets in Texas for $3.1 billion to reduce debt and raise cash to buy new operations. Some of the mining world's biggest players have been selling mines as they look to pay down debt taken on through acquisitions during the commodity-boom years.

"This might not be the best time to sell a copper asset but they promised to reduce their debt," says Charles Bradford, an analyst with Bradford Research Inc. "And Candelaria's a good property that can generate some cash, and there are people out right now with money to spend."

Freeport mines copper, gold and other metals in Peru, Chile, Indonesia, the Democratic Republic of Congo and the U.S. But it has been diversifying. In 2012, it paid $9 billion for two oil and gas companies. CEO Richard Adkerson has also said he wants to invest more within the U.S., which he says has more consistent, and in some cases, easier environmental and labor rules. It has launched major expansion projects in Arizona. Its Morenci mine in Eastern Arizona is now expected to produce almost a billion pounds of copper a year—37% of U.S. annual output—by 2016.

Candelaria—in which Freeport owns 80% and Sumitomo Corp. 20%--is Freeport's fifth biggest mine overall by number of union employees and second biggest in Chile. It is one of four mines the company owns in South America.

The company's overall copper output was 4.1 billion pounds in 2013.

The 13,400-acre Candelaria complex in northern Chile in 2013 produced 370 million pounds of copper, up from 270 million pounds a year earlier. The mine also produced 87,000 ounces of gold last year.

But it also carries some risk, making it potentially more attractive to a smaller, private owner than to institutional investors and mainstream shareholders. It is located in a desert with average rainfall of less than an inch a year. Last year, Freeport completed a $315 million desalination plant and pipeline that will supply Candelaria with water in the long term. The mine was also the object of an environmental complaint filed by a neighboring municipality. The complaint was later withdrawn".

News Analysis: Globalized Renminbi to stabilize world economy

The globalization of the yuan, or renminbi (RMB), will not only benefit the Chinese economy, but generate global economic stability, a senior banker has said.

The yuan did not depreciate during the 1997 Asian financial crisis or the 2008 global financial crisis, helping stabilize the global economy, Tian Guoli, chairman of the Bank of China, said at a forum in London last week, according to the Friday edition of the People's Daily.

China's economy ranks second in the world and its trade ranks first, so it is thought that use of the RMB in cross-border trade will be a mutually beneficial move for China and its trade partners.

The yuan has acquired basic conditions to become an international currency as China's gross domestic product took 12.4 percent of the world's total and its foreign trade 11.4 percent of the world's total in 2013, Tian said.

According to the central bank, RMB flow from China hit 340 billion yuan (55.74 billion U.S. dollars) in the first quarter of 2014, replenishing offshore RMB fluidity. The balance of offshore RMB deposits hit 2.4 trillion yuan at the end of March, 1.51 percent of all global offshore deposits. Offshore trade between the yuan and foreign currencies doubled in the first quarter from the fourth quarter of last year.

Analysts widely forecast five steps in RMB internationalization: RMB used and circulated overseas, RMB as a currency of account in trade, RMB used in trade settlement, RMB as a currency for fundraising and investment, and RMB as a global reserve currency.

Already, some neighboring countries and certain regions in developed countries are circulating RMB, indicating the first step has been basically achieved.

Data provider SWIFT's RMB tracker showed that in May, 1.47 percent of global payments were in RMB, a tiny amount compared to the global total but up from 1.43 percent in April. This indicated progress in the second and third steps.

Some countries in southeast Asia, Latin America and Africa have or are ready to take RMB as an official reserve currency. It indicated the fourth and the fifth steps are burgeoning.

Investors are also optimistic about RMB globalization. Bank of China's global customer survey shows that over half of the respondents expect RMB cross-border transactions to rise by 20 to 30 percent in five years. And 61 percent of overseas customers say they plan to use or increase use of RMB as a settlement currency.

Li Daokui, head of the Center for China in the World Economy under Tsinghua University, said RMB internationalization is a long-term process and should be made gradually based on China's financial reforms, including freeing interests and reforms on foreign exchange rates.

Dai Xianglong, former central bank governor of China, forecast that it will take about 10 to 15 years to achieve a high standard of RMB internationalization.

Among the latest moves toward RMB internationalization is the naming of two clearing banks to handle RMB business overseas.

The central bank announced last Wednesday that it has authorized China Construction Bank to be the clearing bank for RMB business in London, and the next day named the Bank of China as clearing bank for RMB business in Frankfurt.

Xinhua: Chinese economic confidence retreating: survey

Chinese entrepreneurs and bankers have become less optimistic about the country's economic conditions, central bank data revealed on Wednesday.

Its entrepreneurs confidence index came in at 64.9 percent in the second quarter of 2014, retreating 2.1 percentage points from the previous quarter, the People's Bank of China (PBOC) said in a report, citing results from a survey of over 5,900 Chinese entrepreneurs.

In a separate report based on a survey of 3,100 bankers, the PBOC said their quarter-two confidence index was down 13.9 percentage points from the previous quarter to 53.7 percent.

China's economic growth slowed to 7.4 percent in the first quarter, marking the lowest quarterly expansion since the third quarter of 2012, but a string of key indicators showed the economy is gradually gaining strength.

Growth in the manufacturing sector continued to accelerate in May, hitting a five-month high that pointed to a stabilizing economy.

Despite the improving signs, the surveys found that more people are concerned about employment. Of the 20,000 savers the central bank surveyed, around 43.8 percent considered employment conditions as "harsh" or "murky," and their expectation index was 47.8 percent, down 2.1 percentage points from a quarter earlier.

Wednesday's reports also show that home prices are still a major issue of public concern, with 63 percent of people surveyed describing prices as "high and hard to accept," down 1.3 percentage points from the previous quarter.

Some 50.3 percent reported that they expect home prices to remain unchanged in the third quarter, while 21.2 percent predicted rises.

The changing outlook came as China's property sector continued to cool in May, as new home prices in half of a sample of 70 major cities showed month-on-month drops.

Source: Xinhua

Court transcripts proving Japanese war crimes released

China's State Archives Administration is set to release for the first time court transcripts proving war crimes committed by the Japanese Army, during the War of Aggression against China between 1937 and 1945. The Information Office of China's State Council is holding a press conference on the transcripts.

China has applied to UNESCO to include 11 sets of documents relating to the 1937 Nanjing Massacre in the Memory of the World Register. Preparation work began in 2009, and the application process started in March this year, when the State Archives Administration handed the documents to the Memory of the World Secretariat.

The documents, which include diaries, films, photographs and testimonies, depict the brutality of the Japanese invaders.

The documents also relate to Japan's use of wartime sex slaves, also called as "comfort women." Historians estimate that 200,000 women were forced into sexual servitude by Japanese forces during World War Two, most of them from countries invaded by Japan at that time.

Japan invaded northeast China in September 1931. But historians agree that Japan's full-scale invasion started on July 7, 1937, when a crucial access point to Beijing, the Lugou Bridge, was attacked by Japanese troops.

CCTV.com

China's People's Daily newspaper: Arrest Japan's challenge to int'l order

 People's Daily, the flagship newspaper of the Communist Party of China, on Thursday published a commentary stating that Japan's decision to challenge the international order should be stopped.

The insidious intention and potential danger of Japan's move to reinterpret its pacifist Constitution regarding the right to collective self-defense are clear and evident to international society, said the commentary signed by Zhong Sheng, a regular commentator in the paper.

The Japanese government endorsed a reinterpretation of its pacifist Constitution on Tuesday for the right to collective self-defense.

The reinterpretation, approved by Japanese Prime Minister Shinzo Abe's Cabinet, is believed to be paving the way for Japan to send troops into battle overseas under the name of defending Japan and "countries with close ties".

Actions by Japan in regard to its military and security policies have long been a concern of China as the moves matter not only to Japan's development but also regional security, the article said.

The commentary noted that countries like the Republic of Korea, which have suffered from Japan's wartime aggression, have voiced their concern. International media have also noticed the possible sabotage Japan may do to peace in Asia.

"The easing of Japan's military limits has set off an alarm," it said, adding that almost 70 years since the triumph over fascism, the battle between justice and evil still goes on.

"With actions to deny its aggression history and atrocities it has done to Asian people, to visit the Yasukuni Shrine which honors World War II leading criminals and to encroach its pacifist Constitution, Japan is heading down a dangerous path," it said.

"The international order and post-War system is not Japan's own backyard which allows its flagrant challenges and assaults, and a wake-up warning to the Japanese right-wing forces is an effort to protect the world's anti-fascism achievements."

The article said the good will to cherish peace and the capability to safeguard peace are equally important, and China is willing to, capable of and confident in building a harmonious world of enduring peace and common prosperity together with people from around the globe.

Xinhua Insight: China-ROK relations their "best in history"

Chinese President Xi Jinping will pay a state visit to the Republic of Korea (ROK) from July 3 to 4. It is believed the visit will inject new vigor to bilateral ties.

"China-ROK relations are now at their best in history," said Qu Xing, head of the China Institute of International Studies.

Since diplomatic relations were established in 1992, bilateral ties have undergone positive and upward development with no major twists and turns, according to Qu.

"High-level official exchanges, economic and trade and people-to-people exchanges have all seen major progress over the past 22 years," Qu said.

China has become the ROK's largest trading partner, largest export destination and largest source of imports, while ROK is now the third-largest trading partner and fifth-largest source of foreign investment for China.

Both are the largest overseas tourist destination and source of foreign students for each other.

During his state visit, Xi will hold talks with his ROK counterpart Park Geun-hye to outline the future of bilateral ties and exchange views on enhancing mutual trust and cooperation in international and regional affairs.

FREQUENT EXCHANGES

Observers said it is quite rare in China's diplomatic arrangement that the president pays a state visit to only one country in an overseas trip.

"The trip, Xi's first visit to the ROK since he took office last year, could be seen as a return visit for ROK president Park's state visit to China in June 2013, demonstrating that China is attaching great importance to China-ROK ties," said Qu.

During Park's state visit, the two heads of state held talks in Beijing and pledged to boost cooperation and enhance their relations of strategic cooperation and partnership. The two sides issued a joint statement and an action plan to enhance the strategic partnership.

They also met each other ahead of the 21st informal economic leaders' meeting of the Asia-Pacific Economic Cooperation last October on Indonesia's resort island of Bali and on the sidelines of the Nuclear Security Summit in the Netherlands in March.

"Such frequent exchanges are important and they are conducted on the basis of close cooperation between the two countries in economy, trade, cultural and people-to-people exchanges, their consensus on major issues in the region, as well as their shared understanding of the post-World War II order," Qu said.

Two-way trade between China and the ROK surpassed 270 billion U.S. dollars in 2013, a 7 percent year-on-year increase, equating to South Korea's trade volume with the United States and Japan combined.

A China-ROK free trade agreement (FTA) negotiation was launched in May 2012 and more than ten rounds of talks have been conducted. The two countries aim to reach a comprehensive, balanced and high-level FTA.

Xi's visit will consolidate the China-ROK relationship and inject new vigor for future cooperation, said Zha Daojiong, a professor at the School of International Studies under Peking University.

Zha said the two countries should speed up negotiations on the free trade pact and reach an agreement at an early date.

Both countries should encourage more enterprises to participate in the FTA, to further unleash the huge potential in economy and trade between the two countries, Zha said.

During Park's visit to Beijing last year, the two sides signed bilateral cooperation documents concerning economy, trade, finance, science and technology and energy conservation.

The two sides are expected to release a joint statement and sign cooperative documents covering economy, trade, finance, environment and consular affairs during Xi's visit.

Once the paradigm of Asia's economic take-off, the ROK boasts many innovation-spirited companies, such as Samsung, LG and Hyundai.

"Chinese enterprises can learn from the innovation spirit of these ROK enterprises," Zha said.

Source: Xinhua

JD.com analyst coverage. End of quiet period.

Enough time has lapsed since the initial public offerings of Arista Networks Inc. (NYSE: ANET) and JD.com Inc. (NASDAQ: JD) that the analysts from the underwriting companies have now been freed up to initiate research coverage. This is called the end of the quiet period.

JD.com Inc. (NASDAQ: JD)  analyst coverage was started as follows:

• Barclays started as Overweight and $35 price target;
• Bank of America Merrill Lynch started as Neutral and $31 price target;
• Cowen and Co. started as Market Perform and $30 price target;
• Jefferies started as Buy and $36 price target;
• Nomura started as Buy with $35 price target;
• Piper Jaffray started as Neutral and a $29 price target; and
• SunTrust Robinson Humphrey started as Buy with $35 price target.

  July 1st,2014.
  24/7 Wall St

1 year and $92 billion later, Alibaba’s massive mutual fund starts to stagnate

Chinese e-commerce giant Alibaba’s premiere mutual fund savings product Yuebao turned one year old this week, and announced it now holds RMB 574 billion (US$92 billion) in assets. That makes it the fourth-largest money market fund in the world, according to the company’s official blog. That’s pretty impressive, but those assets are growing at a much slower clip now than they were in the first quarter of this year. This is due to a variety of reasons.

Yuebao’s annual yield fell below five percent for the first time in May. This is in part due to heavier pressure placed on Alibaba and its bank partners by China’s big four state-owned banks. New restrictions emerged around March, making it harder for customers to shift funds to online rivals, imposing transfer limits, banning new types of payments such as QR codes, and preeminently halting the launch of virtual credit cards. Alibaba chairman Jack Ma publicly slammed the central bank and big four for abusing their ‘monopoly’.  Additionally, as China’s overall economy begins to slow, yields will probably dip across the board. Secondly, Yuebao seemed to really take off around Chinese New Year, when cash gifts between friends and family are a common custom. This likely led to a surge in deposits and the inevitable lull in the months after. Yuebao caught fire in China because of its higher yields and lower barrier to entry than the big four banks. There’s no minimum investment amount, and users can deposit funds directly from their Alipay accounts on both PCs and mobile devices. Alipay is China’s biggest third-party payment system used on the biggest ecommerce marketplaces in the country, Alibaba’s Taobao and Tmall, among many other online storefronts. Alibaba recently acquired Tianhong Asset Management, the fund firm that ultimately runs Yuebao, to secure a stronger hold over its customers’ money. Yuebao, as part of the Alipay arm, will not be part of the company’s impending US IPO.

Source: TECHINASIA

TECHINASIA: Following Line’s disruption, Korea’s KakaoTalk confirms it’s experiencing issues in China

More than a day after Tech in Asia first observed that Japanese chat app Line was malfunctioning in China, it looks like another mobile messenger is hitting roadbumps in the Middle Kingdom – South Korea’s KakaoTalk. Reports of the disruption first surfaced in Korean media last night, with the first English-language report arriving this morning. A Kakao representative confirmed with Tech in Asia that pre-registered users in China were still able to maintain one-to-one chats but could not add new friends or use other features. Steven Millward, our colleague in Suzhou, was unable to register for KakaoTalk as a new user. KakaoTalk tells Tech in Asia that it does not practice keyword censorship for its users based in China. This differs from Line, which was accused of blocking out sensitive terms last year. A study from University of Toronto’s Citizen Lab suggested that Line outsources its keyword censorship to Qihoo 360. Companies will often practice self-censorship in order to ensure operations in China can continue without issue – LinkedIn and Skype are among some of the firms that block the flow of politically sensitive information in China. As a result, whereas Line in theory might comply with the CCP’s standards for monitoring online discourse within the state, Kakao might make a more likely target for suppression. Of course, Chinese authorities tend to be inconsistent with these sourts of things, so what works in theory matters little in practice. Tech in Asia also reached out to Viber, another popular mobile messenger, to see if the company was undergoing similar problems from China. CEO Talmon Marko claims that it’s smooth sailing as usual. What’s the cause for the sudden disruption of these apps in China? The Chinese government will occasionally time its internet blocks whenever societal tensions emerge. Earlier this month the company deepened its restrictions of Google services in the wake of the anniversary of the June 4th incidents. The block remains in effect more than one month after it first emerged. This week, as demonstrators in Hong Kong take to the streets to protest of growing ties with Beijing, it’s easy to assume that the mass rallies led Chinese internet authorities to crack down on mobile messengers. But WhatsApp, which is owned by Facebook and likely holds the title for Hong Kong’s most widely used chat app, continues to operate freely and undisturbed in China. As a result, it’s not yet possible to draw a connection between the protests in Hong Kong and the troubles for Line and KakaoTalk. Of course, now that two apps have been hit, rather than just one a bona-fide block certainly seems more likely than before. KakaoTalk and Line aren’t the only online services that have suddenly lost access to Chinese users – Microsoft’s OneDrive and Yahoo’s Flickr are currently inaccessible as well.

Source: TECHINASIA