Taiwan chip makers win approval for China investments

Four Taiwanese chip assembly companies have won final approval to invest in China amid a global shake-up that could see a new king crowned in the industry.

The companies, which package and test chips before they are sold, can now move ahead with US$99.6 million in planned investments to China. The decision by Taiwan to allow the investments came more quickly than expected, amid rumors that a group of private equity firms may be building a global titan to compete with Taiwan's star chip assembler, Advanced Semiconductor Engineering (ASE).

ASE was among the companies approved for the investments, and allowing it to build more factories in China will help it to stave off potential new rivals by giving it access to China's lower-cost labor market. The investments will also help the Taiwanese companies take part in China's growing chip industry.

Taiwan granted permission for the investments to ASE, the world's largest assembly company, and three smaller rivals: Siliconware Precision Industries Co., Greatek Electronics, and Walton Advanced Engineering. Taiwanese companies are required to gain approval for high-tech investments in China because Taipei fears the technology may boost the military threat against the island.

Taiwanese chip assemblers have been at odds with regulators for years over the slow pace of China investment approvals. Taipei appeared to give ground in the middle of last year, saying it would start allowing such investments, then continued dragging its feet on most applications. Recent consolidation in the sector may have finally prompted regulators to act.

Earlier this week, one of Taiwan's biggest financial newspapers, the Economic Daily News, reported that a deal by two private equity firms to buy Singapore's United Test and Assembly Center (UTAC) could result in a merger with the world's second largest chip assembly company, Amkor Technology, which could threaten ASE's dominance.

Affinity Equity Partners and Texas Pacific Group Capital agreed to buy UTAC for around S$2.2 billion (US$1.43 billion). The Singapore offices of both investment firms declined to comment Thursday on the Amkor rumors, though the talk appears to have moved Amkor's stock price. Its shares have climbed 5.2 percent so far this week to end at US$15.44 Wednesday on the Nasdaq Stock Market, compared to a 0.6 percent rise in the Nasdaq Composite Index over the same time.

Analysts say the chip assembly sector has become more attractive to investors due to steadier profits. In other deals this year, Singapore's Temasek Holdings made a S$2.4 billion (US$1.56 billion) bid for Stats ChipPac. The Carlyle Group, another private equity firm, in April scrapped a US$5.5 billion deal to buy ASE after the two companies failed to agree on a higher offering price.

ASE displaced U.S-based Amkor as the world's largest chip packaging and testing company at the end of 2003, highlighting the exodus of chip production to lower-cost Asian countries. But since then Amkor has been making investments in China, while ASE has been largely held back by Taiwanese regulators.

Analysts view China as an important location for chip investment because of its lower costs and growing clout in the industry. Intel announced a plan in March to spend US$2.5 billion on a plant in China to take advantage of lower production costs there.

Taiwan's chip makers say the heavy regulations they face at home have put them at a disadvantage in China. Labor makes up a significant portion of the costs in chip assembly -- around 20 percent, compared to around 5 percent for actual chip fabrication. Fabricators etch transistors and other components on chips, while assemblers package the chips inside protective coating.

Taipei's approval on Thursday gives ASE the green light to invest US$21.6 million for a 60 percent stake in a venture with NXP Semiconductors in Suzhou, China. Regulators also approved investments of US$30 million by Siliconware and US$18 million by Walton in the same place. Greatek received permission to invest US$30 million in Jiangsu, China.

"We are happy to see the news. We have been waiting for this," said Janet Chen, a spokesperson at Siliconware.

Taiwan and China remain enemies after splitting in 1949 amid civil war, the reason Taipei remains wary of allowing certain high tech investments to the mainland. Despite their strained relationship, China remains the favored destination for Taiwanese investment due to their shared language and culture, as well as China's lower costs and incentives for building factories.

As part of their China applications, the four Taiwanese companies all included plans to continue investing at home. In all, they pledged to invest NT$75 billion (US$2.29 billion) in Taiwan over the next three years, including NT$40 billion from ASE, NT$20 billion from Siliconware, NT$10 billion from Greatek and NT$5 billion from Walton.

US to detain seafood imports from China

US regulators will detain seafood imports from China over concerns about unsafe residues on the fish, the Food and Drug Administration said Thursday.

The broad import control was imposed after regulators repeatedly found seafood shipments contaminated with antimicrobial agents that are not approved for use in the United States.

"We're taking this strong step because of current and continuing evidence that certain Chinese aquaculture products imported into the United States contain illegal substances that are not permitted in seafood sold in the United States," said David Acheson, the FDA's assistant commissioner for food protection.

"We will accept entries of these products from Chinese firms that demonstrate compliance with our requirements and safety standards."

The levels of the drug residues found in the seafood are very low, most often at or near the minimum level of detection, the FDA said.

It has not issued a recall of fish already admitted into the country but said it was "concerned about long term exposure as well as the possible development of antibiotic resistance."

中国要政改了?胡锦涛定调中国政治制度改革的基调

中共领导人胡锦涛近日指出，中国政治制度的现代化尝试，绝不能危及中共的一党统治。纽约时报称，在中共十七大将于秋季在北京举行之前，胡的这番讲话无疑定下一个保守的基调。

纽约时报6月27日发表驻北京记者周看(Joseph Kahn)撰写的文章，介绍了中共领导人胡锦涛6月25日在中央党校省部级干部进修班发表的讲话，并用《中国领导人誓言要坚持一党统治》来作为标题。

文章说，担任中共中央总书记的胡锦涛，6月25日利用在中央党校向党政军精英发表重要讲话的机会，来推动一个渐进的政治和经济改革的视觉。在中国官方6月26日发表的胡锦涛的讲话内容中，他表示要继续扩大平民百姓的“政治参与”，但却排除了走向西方式民主的步骤。

胡 锦涛说：“我国政治体制改革必须坚持正确的政治方向，必须随着经济社会发展不断推进，努力与我国人民政治参与的积极性不断提高相适应。”胡锦涛接着强调 说，这种变化“要坚持党的领导、人民当家作主、依法治国有机统一，不断推进社会主义政治制度自我完善和发展”，来维持共产党的垄断政治权力。

在 胡锦涛发表最新讲话后，中共各级别官员已开始有组织地进行学习。东方网的一篇文章署名文章称：根据我党政治运作的规则，在十七大这么一个重要会议召开之 前，党中央总书记在中央党校的讲话，应该被看作是一次为十七大精神定调的讲话。江泽民在十四大、十五大和十六大召开之前都曾经在中央党校发表过重要讲话并 在国内外产生了很大影响。

人民网的署名文章称，在每次党代会召开前夕，党的总书记都会到中央党校发表重要讲话，既是进一步统一思想，也是向 外界传递一些党代会内容的信息，以便于更好地做好宣传工作。在党的十七大召开前夕，胡锦涛总书记再次来到中央党校，在省部级干部进修班上发表了重要讲话， 提出了“四个坚定不移”的战略目标和要求。

文章称，可以这样说，这“四个坚定不移”，既是十七大的基调，也是今后一段时期党和国家中心工作的方向，是今后一个时期奋斗的目标。

光明日报6月27日发表评论员的文章称，当前，我们要按照胡锦涛总书记的要求，自觉做到四个“坚定不移”。我们要深刻认识到，解放思想是党的思想路线的本质要求，是我们应对前进道路上各种新情况新问题、不断开创事业新局面的一大法宝，必须坚定不移地加以坚持。

文章还称，在新的历史起点上，我们要紧密团结在以胡锦涛同志为总书记的党中央周围，坚持以邓小平理论和“三个代表”重要思想为指导，深入贯彻落实科学发展观，继续解放思想，坚持改革开放，推动科学发展，促进社会和谐，坚定不移地走中国特色社会主义伟大道路。

纽约时报指出，当天出席在中央党校会议的有中共中央委员会委员、中央政府高级官员、各省领导人，以及高级军事和安全官员，这也使胡锦涛的讲话变成他自2002年成为中国领导人后的最重要的讲话之一。

这次会议未对外国记者公开，但中共官方公开的胡锦涛的讲话内容却未有多少新意。胡锦涛强调了他的被人熟知的思想模式－－提倡“和谐社会”和“科学发展”。

这 些流行语是近几年胡锦涛和中国总理温家宝所提出的口号，为的是缩小中国富裕的精英阶层，与占绝大多数的在这个国家经济快速增长中获益很小的工薪人口之间的 贫富差距。纽约时报指出，在发展中国家中，中国是世界上财富分配最不平等的国家，城市和乡村的生活标准存在着极大的差距。

此外，胡锦涛和温家宝这两位中国领导人，还一直在寻求减少对那些能源密集和污染严重的经济的日益依赖，这种经济已使中国的空气和水源变成世界最脏的，并威胁到这个国家的生态活力。

解决这些问题的许多措施，近几年已变得更加恶化，但胡锦涛并没有提出新的政策来强调它。相反，他至少在他发表的言论中，重申了意识形态的框架，似乎是有意让下级官员来作出决策。中国的执政党将在秋季召开每五年一次的全国代表大会，期间将对主要领导岗位做出决定。

纽 约时报称，在中共十七召开前，将涉及到党的所有级别的密集的幕后权力争斗，目前胡锦涛已经发动了反腐败运动。此外，胡锦涛还容许少数被信赖的精英思想家， 针对政治改革措施在党的刊物上展开辩论。在发表的评论文章中，几位退休的高级官员和知名学者都主张在中国的政治生活中要有更多的民主。

在建 议和征询公众参于决策等方面，民主一词已在中国被广泛使用。胡锦涛已明确表示，他并不预期对这个专制统治进行彻底大修。纽约时报最后指出，胡锦涛在讲话中 坚持，“社会主义民主”和“基层民主”是中共的长期目标，应该用“积极稳妥”的努力来发展它。胡锦涛还强调说，这种改变必须有序地进行，不能削弱党的“领 导作用”。

China’s Leader Vows to Uphold One-Party Rule

BEIJING, June 26 — President Hu Jintao said attempts to modernize China’s political system must not jeopardize one-party rule, setting a conservative tone before an important Communist Party conclave in the fall.

Mr. Hu, who is also the Communist Party chief, used a major address to the party, government and military elite in Beijing on Monday to promote a gradualist vision of political and economic change, according to the text of his remarks published Tuesday. He embraced greater “political participation” by ordinary people but ruled out steps toward Western-style democracy.

“The reform of our nation’s political system must maintain a correct political direction, must unrelentingly keep pace with economic and social development and must endeavor to adjust to the active political participation of our nation’s people,” Mr. Hu said.

Such changes should “advance the self-perfection in the development of the socialist political system,” while preserving the Communist Party’s monopoly on political power, he said.

“Insist on the party’s leadership, governance by the people and ruling the nation by laws,” he said.

The members of the Central Committee of the Communist Party, top central government and provincial leaders, and senior military and security officials attended Mr. Hu’s address, at the party’s Central Party School in Beijing, making it one of his most important speeches since he became China’s leader in 2002.

The event was closed to Chinese and foreign journalists, but the published text of his speech broke little new ground. He emphasized his well-worn ideological formulas of promoting a “harmonious society” and “scientific development.”

Those catchphrases have become associated in recent years with a program by Mr. Hu and China’s prime minister, Wen Jiabao, to reduce the gap between China’s wealthy elite and a vast majority of its working population, which has benefited far less from the country’s long streak of rapid economic growth. China has one of the most unequal distributions of wealth in the developing world, with an especially wide gap in living standards between urban and rural residents.

The two leaders have also sought to reduce the economy’s growing dependence on industries that are energy intensive and pollute heavily, which has made China’s air and water among the dirtiest in the world and threatened the country’s ecological viability.

By many measures those problems have worsened in recent years, but Mr. Hu did not advocate new policies to address them. Instead, at least in his published remarks, he reiterated an ideological framework that seemed intended to inform policy making by lower-level officials. The ruling party will convene this fall for a national congress, held once every five years, during which it decides on major leadership positions.

Before the congress, which involves intensive, behind-the-scenes jockeying for power at all levels of the party, Mr. Hu has campaigned against corruption. He has also permitted a few trusted elite thinkers to debate measures for political change in party journals.

In published essays, several retired senior officials and leading scholars have advocated more democracy in Chinese political life.

The term democracy is widely used in Chinese political discourse to suggest public consultation or popular participation in decision making. Mr. Hu made clear that he did not envision an overhaul of authoritarian rule.

He said that “socialist democracy” and “grass-roots democracy” were long-term goals of the party, and that it should make “active and safe” efforts to develop them. He also emphasized that such changes must proceed in an orderly way, without diminishing the party’s “leading role.”

China uncovers thousands of dangerous foods

Industrial oils, acid, cancer-causing chemicals and other dangerous ingredients have been found in thousands of foods in China, inspectors said Wednesday following a six-month crackdown.

The nationwide investigation by China's food quality watchdog found products such as baby milk powder, rice, flour, meat, biscuits, seafood, soy sauce and sweets had been contaminated.

More than 23,000 tainted or sub-standard foods were found and 180 food manufacturers closed in the crackdown from December last year to May, said the General Administration of Quality Supervision, Inspection and Quarantine.

Some of the industrial products found in foods included formaldehyde, a chemical more famously used to embalm people, and hydrochloric acid, which was found in some beef products.

Other materials detected included industrial paraffin, which was found in vermicelli, and the dye malachite green, which can be carcinogenic, according to the watchdog's statement published on its website.

"These are not isolated cases," the China Daily newspaper quoted Han Yi, a director with the watchdog, as saying.

The watchdog's probe focused mainly on China's countryside and Han said investigators now intended to turn their attention to cities.

The announcement of the investigation's findings come as China faces unprecedented international scrutiny over the quality of its food exports and other goods that have caused harm to buyers overseas.

Reports in the United States of tainted pet foods, dangerous toys, drugs, fish, cosmetics and other products from China have led to a spate of recalls and bans there.

About 75 percent of China's one million food-processing plants are small operations, according to the quality watchdog.

Han said most of the contaminated foods did indeed come from small, unlicensed food processing plants that employed fewer than 10 people.

Beijing-based writer and dissident Zhou Qing, who wrote a book on China's food industry, said the poor standards were a result of small scale production combined with endemic corruption.

"It is hard to control and prevent because there are many small food processing workshop with chaotic operations," Zhou told AFP.

"Tainted food is a very serious problem in China. Different levels of government authorities are used to covering up and telling lies when food safety problem arise. Therefore, counterfeit food is everywhere in China."

Corruption and small-scale enterprise plague many other parts of Chinese society.

One of the most recent scandals was widespread slavery in small brickyards in two Chinese provinces. Local officials are widely believed to have helped protect the slave trade.

Meanwhile, thousands of people die each year in small and illegal coal mines around the country that similarly operate with the collusion of corrupt local officials.

In Food Safety Crackdown, China Closes 180 Plants

SHANGHAI, June 27 — After weeks of insisting that food here is largely safe, regulators in China said Tuesday that they had recently closed 180 food plants and that inspectors had uncovered more than 23,000 food safety violations.

The nationwide crackdown, which began in December, also found that many small food makers were using industrial chemicals, dyes and other illegal ingredients in making a range of food products, everything from candy to seafood.

The announcement came as part of a sweeping overhaul of this country’s food safety regulations in the aftermath of a series of international food scares involving Chinese exports.

The country’s exports of contaminated vegetable protein earlier this year triggered one of the largest pet food recalls in American history.

Tainted food ingredients also leeched into American meat and fish supplies, and other problem foods, such as tainted fish, have turned up in Europe and other parts of Asia.

China has strongly denied that its food exports are hazardous and has seemingly retaliated in recent weeks by seizing American and European imports.

Earlier this week, China said it had impounded two shipments of food from the United States because the orange pulp and apricots contained “excessive amounts of bacteria and mould.”

And earlier this year, regulators blocked imports of Evian water from France, saying bacteria levels in the water exceeded national standards.

Still, the government has moved aggressively in recent months to enforce the nation’s food safety regulations and to crack down on fake and counterfeit foods.

But Tuesday’s announcement, which appeared on the web site of the country’s top quality watchdog, the General Administration of Quality Supervision, Inspection and Quarantine, has added fuel to concerns about rampant fraud in the food industry here.

Regulators said 33,000 law enforcement officials combed the nation and turned up illegal food making dens, counterfeit bottled water, fake soy sauce, banned food additives and illegal meat processing plants.

“These are not isolated cases,” Han Yi, director of the administration’s quality control and inspection department told the state-run media.

China Daily, the nation’s English language newspaper, said industrial chemicals, including dyes, mineral oils, paraffin wax, formaldehyde and malachite green, had been found in everything from candy, pickles and biscuits to seafood.

Regulators said they also learned that sodium hydroxide and hydrochloric acid were being used to process shark fin and ox tendon.

These industrial chemicals are often toxic or corrosive and can be used in everything from drain cleaners, detergent and fertilizer to surfboard wax.

These types of findings have become all too common in China. For instance, in 2005, officials in south China found a company repackaging food waste and shipping it to 10 other regions. And just last week, officials said a company in Anhui province, not far from Shanghai, was selling a two-year-old rice dumpling mix as fresh, according to the state-controlled media.

Experts here say the problem is that the country’s food regulations are not being enforced and small businessmen feel they need to go to extraordinary lengths to make a profit.

Corruption and bribery have also infected the food and drug industry here.

The former head of the nation’s food and drug watchdog was recently sentenced to death for accepting bribes and approving the licensing of substandard drugs. And now, a Ministry of Agriculture official is on trial in Beijing for accepting bribes in exchange for endorsing food products.

But not all the problems stem from corruption or malfeasance. A.T. Kearney issued a report this week saying one cause of food safety problems is a lack of cold storage and logistics systems.

The consulting firm said China needs to invest about $100 billion over the next 10 years to upgrade its logistics and cold storage capabilities and to implement new standards.

In China, the study said, there are only about 30,000 cold storage trucks. In the U.S., there are about 280,000.

“In the entire supply chain there’s no common standard or world class standard,” said Zhang Bing, who helped prepare the study. “There are a lot of things contributing to the food safety problem. There are companies putting chemicals into food. But there’s also a lot of spoilage.”

China seizes U.S. food, cracks down on safety at home

China has seized two fruit shipments from the United States and warned it would apply greater scrutiny to U.S. cargoes, even as it tightens the screws on manufacturers of unsafe food at home.

The country's quarantine bureau said in a statement on its Web site (www.aqsiq.gov.cn) that quality inspectors had detained U.S. shipments of orange pulp, produced by Modern Skill Co. Ltd, and of preserved apricot from Mariani Packing because they contained high levels of bacteria, mildew and sulfur dioxide.

"When dealing with food from America, local quarantine bureaus should tighten their procedures," said the statement seen by Reuters on Wednesday.

"The bureau reminds importers that the food safety standards should be specified in contracts to reduce transaction risk."

China's food safety record has drawn international attention since mislabeled chemical exports were mixed into cough syrup in Panama and pet food in the United States.

In apparent response, China has also announced the seizure of substandard food shipments at its ports.

Product safety disputes have spread beyond food.

A New Jersey importer this week asked for U.S. government help in recalling about 450,000 Chinese-made truck tires. The Hangzhou Zhongce Rubber Co. has disputed the assertion that its products were defective.

Meanwhile, 180 domestic food manufacturers were shut down over the past six months for making substandard food or using inedible materials for food production, the Xinhua news agency cited Han Yi, a senior official from the General Administration of Quality Supervision, Inspection and Quarantine, as saying.

Chinese legislators identified food safety as one of their top concerns during an annual meeting in March, after a spate of incidents, some fatal, involving fake and dangerous products. The quality bureau cracked 23,000 cases of fake and low-quality food from December 2006 to May 2007, Han said, involving 200 million yuan ($26.26 million).

In 2006, China's industrial and commercial authorities ferreted out 68,000 fake food cases and withdrew 15,500 tons of substandard food from the market, Xinhua said, citing the State Administration for Industry and Commerce.

Only 48 cases were handed over to the judiciary for prosecution.

($1 = 7.615 Yuan)

China warns of inflation pressures

BEIJING, China (Reuters) -- China's central bank is concerned by inflationary pressures and is determined to make use of a range of monetary policy tools to contain price increases, a senior official says.

A recent jump in consumer inflation, which hit 3.4 percent in May from a year earlier, raised expectations among many analysts that the People's Bank of China (PBOC) could raise interest rates or carry out other tightening measures soon.

Yi Gang, assistant governor of the central bank, gave no indication of the timing of any such move, but reasserted the PBOC's focus on prices.

"The central bank has a firm determination to keep inflation in check," Yi told reporters Wednesday.

"We have many tools in our toolbox, including raising reserve requirements, interest rates and also open market operations," Yi said.

"We will make comprehensive use of these tools to fight against inflation and to keep growth in prices and the economy stable."

Yi said asset prices, though important, took a back seat when the central bank debated whether to tighten policy.

"We are paying keen attention to asset prices, but they are not the decisive factor when determining macroeconomic control measures. We are mainly concerned with inflation, which in China mainly means CPI," Yi said.

He said the recent pick-up in CPI was mainly due to increases in pork prices and other food.

Over the long run, the central bank aimed to keep real interest rates positive, Yi said.

The recent spike in inflation has pushed real deposit rates into negative territory, encouraging people to shift their money out of bank deposits into the red-hot stock market.

"Over a relatively long period of time, it's better to keep real interest rates at a positive level. Negative real interest rates will have a negative impact on the economy," Yi said.

央行行长助理马德伦：货币政策不针对股市楼市

　　中国人民银行行长助理马德伦日前接受媒体采访时表示，货币政策一定不会针对资产价格。他说，制订政策时，央行会关注多项条件，如股市、房地产的价格，但这些都不是央行调控的目标。

　　他说，全球的央行都专注于宏观经济，包括GDP、CPI以及投资增长；有些会考虑控制通胀、经济增长、维持就业，或是国际收支平衡。而央行观察股票市场等因素，是因为这些会对宏观经济造成影响。他表示，货币政策一定不会针对资产价格。

　　至于何时再采取“提高准备金率”之类的调控措施，马德伦表示，央行随时关注宏观经济的变化、关注货币供应量的变化、关注GDP和CPI的变化，在该采取行动的时候一定会采取行动。

　　对“储蓄搬家到股市”问题，他表示，居民存款只是流到金融机构的账户内，整体存款没有减少，情况并非外界所说那么严重。马德伦还指出，中国会考虑到对环球市场的影响，不会一下子拋售美国国债。在经营外汇储备时，会按照“安全、流动性及增值”三项条件的顺序考虑。

　　今年初，香港政府在公布的《十一五规划行动纲领》中提出“资金自由行”的建议，即允许内地居民直接投资港股，不用通过金融机构。对此，马德伦表 示，因为个人对风险的判断能力毕竟不如机构投资者，鼓励个人投资者通过QDII投资海外市场，这并非是限制个人投资，而是为了对投资市场的健康发展负责、 也是对个人投资者的保护。

研究报告称约61%储蓄分流资金进入股市

　　上一轮牛市，个人持有流通市值比例顶峰时达81%，目前61%左右，还有增长空间。

　　在今年的股市中，个人投资者的资金入市情况和投资偏好所带来的影响不可忽视，申万研究所在最近的半年度报告中从储蓄分流对股指的具体影响、投资 者个人化的现象对此进行分析。结果显示，总体上储蓄存款增长与实际存款利率成正比，与消费增长、商品房销售、股票投资成反比。2006年5月-2007年 4月期间，平均储蓄存款每分流4.23亿元，上证综指上涨一个点。

　　储蓄分流与股指相关度高

　　统计显示：截至2007年5月份，储蓄存款余额达16.8万亿元，余额同比增长下降为9.7%；储蓄增长低于总存款增长，在总存款中的占比也下降。结构上看，活期储蓄存款增长快于定期储蓄存款增长；其中定期储蓄存款占比创历史新低，2007年一季度占比为63%。

　　储蓄分流了多少？申万研究所认为，分流是相对的概念。假设：基准储蓄存款增长，是在没有消费过快增长、股票交易明显活跃等因素干扰下，储蓄存款 基于人均可支配收入的平稳增长。计算方法为：储蓄分流的规模＝基准储蓄存款增长的余额－现有实际储蓄存款增长的余额。由此他们得出储蓄分流的规模在 2006年5月到2007年4月约11300亿元。

　　储蓄存款分流分别去哪了？申万分析，总体上储蓄存款增长与实际存款利率成正比，与消费增长、商品房销售、股票投资成反比。计量分析表明：储蓄存 款增长与沪深股市保证金存量增长为负相关关系，两者相关系数绝对值达51%，相关性较强。储蓄分流最为主要的去向是股票市场。而且根据模型，上证综合指数( 3863.811,-77.27,-1.96%)回归系数显示为负值，表明储蓄存款分流与股票市场价格上涨显著相关。根据前面计算结果，2006年5月-2007年4月期间，平均储蓄存款每分流4.23亿元，上证综指上涨一个点。按照模型结果，储蓄存款过快分流中约有61%左右的储蓄分流资金流向股市。

　　申万认为，当期储蓄存款分流加快，则表明投资者预期未来股价将持续上涨，储蓄分流可支撑后续股市创新高。但考察储蓄存款增长与股价关系，还应当 考虑消费增长对储蓄分流影响，1999年-2001年行情前后，储蓄存款增长变化对行情波动具有明显的领先关系。最为显著的是，当2000年中储蓄存款增 长开始恢复回升后，股票行情上升的动力即开始逐步减弱。

　　申万分析，目前阶段储蓄分流总体上利大于弊。有利的方面在于可推动直接融资发展、适当减轻商业银行负债过高压力、促进银行转变经营机制，并一定 程度上促进消费增长，弊端有可能加大中小银行流动性管理压力，储蓄分流渠道单一可能助长投机。申万建议管理层可择机取消利息税，同时也可抓住机遇推进利率 市场化改革。取消利息税不影响存贷利差，但将使收益率曲线上移；无论何种政策都只能缓解过快的储蓄存款分流速度，对市场的影响取决于心理层面。

　　投资者个人化影响股价

　　几年来投资者队伍不断壮大，个人投资者的数量快速增长，2007年5月28日开户数突破1亿。截至2007年5月31日，个人投资者持有的股票 市值占无限售条件股票总市值的比例达60.76%，投资者结构有“个人化”的趋向。这也是投资意识的觉醒、投资渠道狭窄，缺乏合适的理财产品分享中国经济 发展成果的必然结果。

　　从营业部样本分析来看，申万调查认为，新的个人投资者具有的特征为：以趋势投资为主，不以获取红利为目的，主要以获取市场差价为主，资金个人所有，灵活机动，熊市中不需要保持仓位，股票周转率较高，及时锁定风险和利润、在转折时期对咨询需求强。

　　2006年5月，申万风格指数显示，当月涨幅最大的板块是：高市盈率股、亏损股和微利股，绩优股涨幅最小。当月受调查营业部的股票周转率相对较 高。2007年4月也呈现这样的特征。2006年11月到12月，上证综合指数大幅上涨，尤其是12月，单月涨幅达到了27%。而该月营业部的资金周转情 况却并不十分高。显然，大盘股、中低市盈率品种以及绩优股并不是个人投资者短线操作的对象。

　　个人投资者超常规地发展，也经常制造局部热点，形成一定的投机氛围。一旦形成某种气候，可在较大程度上影响股价结构。申万认为，个股投资者对市 场的影响力可能持续。观察上一轮牛市，个人持有的流通市值比例顶峰时达到81%，目前61%左右，还有增长的空间。居民金融交易账户中各类资产比例的变动 也表明个人投资者仍可提高。

　　随着行情多次宽幅波动，个人投资者对基金的认识也在逐步加深。大跌之际净申购额的增加，显示投资者也在逐渐成熟，基金投资队伍将越来越壮大。

　　申万的建议是，个人投资者在精彩纷呈的市场格局中虽有投机氛围，但也应是价值投资的拥护者。机构投资者除了坚持价值投资的大方向外，不必排斥短期题材投资。

Japan, China to resume talks on gas dispute

Japan and China are set to resume talks here Tuesday on a longstanding dispute over drilling rights in the energy-rich East China Sea after the last round ended in deadlock.

The negotiations come amid a degree of hope as Asia's two largest economies, which are both major energy importers, work to ease political tensions.

Chinese Premier Wen Jiabao paid a landmark visit to Japan in April and agreed with his Japanese counterpart Shinzo Abe to find an amicable settlement.

But the two countries have also stood by their territorial claims and there was no visible progress at the last round of negotiations held in May in Beijing.

As part of the effort to step up dialogue, Japan and China have also appointed experts, apart from the main negotiators, to complete a study on the dispute by the autumn.

Japan's negotiator Kenichiro Sasae and Chinese counterpart Hu Zhengyue will hold one day of closed-door talks, the ninth round since the dialogue began in 2004.

Japan and China, two of the world's largest energy importers, are locked in disagreement over the boundaries between their territorial waters in the East China Sea, which is rich in gas deposits.

China began test-drilling in the area in 2003, provoking outrage in Tokyo.

China has proposed joint development, but only in the part of the area also claimed by Japan.

A newspaper report earlier this year said Japan, seeing no headway, may be willing to compromise and propose joint development of the entire area, outraging hardliners in Tokyo.

In China, Cash Carries the Weight

Despite Banking Strides, Credit Largely Shunned

BEIJING -- When Wang Xiaoyu set out to buy some sleek Lincoln automobiles for the small company he owns, the problem was how to pay. No dealer in China takes personal checks. Credit card limits are too low. Car loans barely exist.

So he brought cash, more than $200,000 worth of it, in three rolling suitcases.

"Everything else is a lot of trouble -- just easier to use cash," said Wang, 29, who runs a consulting company that helps Chinese businesses find foreign partners.

China's state-owned banks rank among the highest-valued in the world, with stock market capitalizations in the billions of dollars, but they are widely considered the weakest part of the country's booming economy.

Although China has made strides in reforming its banking system over the past five years -- cracking down on corruption, buying out many troubled loans and allowing foreign banks into the market -- retail banking remains stuck in an earlier era. The problem isn't new, but the number of people in China who have enough money to need modern banking services is soaring. The system hasn't kept up.

Many employees' salaries are still distributed in fat envelopes of cash rather than by check or direct deposit. It's not unusual for life's major purchases, such as cars or even houses, to be paid for in cash.

It isn't just the banks stuck in the past; there's consumer resistance in China to financial tools that are routine in other countries. Credit cards are gradually spreading, for instance, but many people embrace them chiefly as a fashion statement. There are floral-scented ones, cards bearing Hello Kitty logos, pink cards aimed at women. But because they are only accepted at some stores, such as designer boutiques and larger chains, their utility is limited.

"The reason I got that in the first place was because it was cute and cool, and has value as a collectible," Zhu Jing, a 24-year-old bank clerk said as she flashed one of her cards. She has seven, including one with an MSN Messenger logo and another with an Olympics theme.

Chen Jing, a 28-year-old teacher from the eastern coastal city of Ningbo, however, came to the conclusion that the novelty wasn't worth the $25 annual fee. "I had a credit card but just canceled it recently because I don't need it and I never used it," Chen said.

The underdeveloped financial system has frustrated many Chinese consumers and foreigners trying to do business in the country. But China's banking regulators say the slow pace of change is in the national interest.

China's financial leaders say they are cautious about moving too quickly because they see the problems that has caused in other countries. They cite the United States as an example of what can happen to a country that hands out credit too loosely, pointing to high levels of indebtedness among young Americans and the recent problems in the mortgage industry that have caused families to lose their homes.

Wang Huaqing, assistant chairman of the China Banking Regulatory Commission, said in an interview that in recent months, the country has been alarmed to see novel financial schemes crop up. People have been caught taking out cash from credit cards and loans to gamble the money away in the stock markets or on speculative real estate. Gangs have been investigated for stealing people's identities to open accounts. And criminals have been put away for laundering money.

"We have been paying great attention to credit card risk and loan risk," Wang said.

As a result, Wang said, the country is trying to avoid allowing citizens to get their hands on credit too easily. He said restrictions on retail banking -- such as a $50,000 a year cap on how much a Chinese citizen can convert from yuan to foreign currencies and low credit limits on cards -- are meant to prevent these problems from spiraling out of control.

The slow development of consumer banking in China is rooted in the role banks historically played in the Communist state.

Until a few years ago, China's banks essentially were agents of government social policy, keeping state-owned enterprises afloat. Retail banking existed on a limited basis. Chinese citizens who wanted to invest had no choice but to put their money in state-owned banks because foreign banks were not allowed to operate in the country and because stock markets didn't exist.

Furthermore, the banks had little financial incentive to introduce fee-based retail banking. They were already markedly profitable from a large spread between lending and deposit rates, both controlled by the central government.

Now, retail banking is still a secondary reason for banks' existence. China's banks mostly supply credit to enterprises, said Arthur Kroeber, managing editor of the China Economic Quarterly in Beijing. He said the banks are not like those in the United States, which, he said, "provide credit to the creditworthy." They are "more like the idea of banks in Japan in the '70s or South Korea in the '80s and '90s."

"In a broad sense, the main purpose of the state-owned banks in China today is not profit maximization for shareholders," he said. "It's financing industrial development."

For instance, at the Industrial and Commercial Bank of China, one of the largest state-owned banks, bad loans represented 21 percent of its portfolio in 2005.

It wasn't uncommon for clerks at its remotest branches to use abacuses to make calculations. If a local branch was in trouble because of bad loans, the central government would send trucks with cash to bail it out and prevent a run on the bank.

But after a series of overhauls, the ICBC in October 2006 pulled off the biggest-ever initial public offering, raising $21.9 billion to make it the world's No. 5 bank by market value of its shares, just behind J.P. Morgan Chase. Its value climbed late in the year and it has since been the No. 2 or No. 3 bank in the world, depending on the closing price of various banks' shares. Only Citigroup of New York consistently outranks it now.

China's banks are so large that near-monthly announcements of embezzlement and bribery valued in the millions of dollars are mostly shrugged off by investors. For example, in 2005, shares in China Construction Bank, whose chairman resigned after allegations that he was taking bribes, soared during its initial public offering, which occurred after the scandal was announced.

"In any other country, this kind of scale of scandal would be a big event. But in China, the scandal cases did not really have a material impact on the operations of the banks," said May Yan, a bank analyst at Moody's Investors Service in Hong Kong.

Taking ICBC public was supposed to be part of China's transition to a free-market economy. But analysts say investors are throwing money at Chinese banks for an opposite reason: support of the Communist government, with investors calculating that the government won't let the country's flagship banks fail. "It's a bet on China," May said.

Kroeber backed that up. "There is an implicit message: If things get really bad, the government would come in," he said.

Moody's estimates that China has poured $432 billion into bailing out state-owned banks. Recapitalizing the Agricultural Bank and the China Everbright Bank may cost $150 billion more.

Wang acknowledges that excessive dependence on the government is not a sustainable strategy, because it means the banks won't innovate. "They don't have any motive to create new financial products," Wang said. "This is a big difference between China's banks and multinationals."

As the Chinese government opens its banking sector to more foreign competition, there's a recognition that China's citizens will turn elsewhere for banking. This year, China's government for the first time allowed foreign banks to take local currency deposits and offer yuan-denominated credit cards.

Wang said that in the future, China would inevitably have to cut the banks loose to fend for themselves.

China: HSBC to Buy Part of Tower in Shanghai

HSBC Holdings, the European bank, said it would buy part of an office tower in Shanghai to house its China headquarters as it speeds up expansion in China. HSBC agreed to buy naming rights and occupy 20 floors of one of the twin towers of the Shanghai International Finance Center, to be completed by 2010, from Sun Hung Kai Properties, HSBC said in a statement to the Hong Kong Stock Exchange. The tower, a few blocks from the bank’s current headquarters, would be renamed HSBC Building-Shanghai IFC. Stephen K. Green, the chairman of HSBC, disclosed the deal at a news conference in Shanghai, but he declined to say how much the bank had agreed to pay.

China issues reward for slave traders

China issued a reward late Monday for the capture of eight foremen wanted over the brickyard slavery scandal that has rocked the nation, state media said.

The eight are suspected of forcing people to work in kilns in north China's Shanxi province, the official Xinhua news agency said.

A 10,000 yuan (1,300 US dollars) reward has been offered by the ministry of public security for anyone with information that leads to the capture of the eight, Xinhua said.

Investigators have said they have freed 359 people in Shanxi, including 12 children, and 65 people with mental disabilities, who were forced to work in kilns in appalling conditions.

An Internet petition posted by concerned parents earlier this month said up to 1,000 children were languishing in brickyards and small mines in Shanxi, triggering widespread attention to the scandal.

Since then, 45,000 policemen have raided more than 8,000 brickyards and small coal mines in Shanxi and Henan province in the past two weeks in an effort to end the slave labour, the government has said.

Police are now holding 35 people linked to the forced labour and are still hunting for another 20, Xinhua has said.

The eight foremen are "suspected of beating and forcing enslaved people" to work in the kilns, Xinhua said Monday.

The eight were named as Chen Zhiming, Zhou Qiusheng, Zhang Zhenjiang, Yao Haitao, Ke Changjiang, Ke Changfu, Wang Ziguo and Wang Zihong.

France, China, US in new push to end Darfur conflict

France, the United States, China and some 15 other nations open a conference in Paris on Monday to shore up international efforts to end the bloodshed in Sudan's Darfur region.

But Sudan will not be attending the one-day meeting held after President Omar al-Beshir bowed to months of pressure and agreed to a new peace force for Darfur under both the United Nations and the African Union.

US Secretary of State Condoleezza Rice, who met with French President Nicolas Sarkozy ahead of the conference, said it was important for Khartoum to deliver on its promise to allow the 20,000-strong AU-UN force into Darfur.

The "hybrid force" would significantly bolster the current 7000 ill-equipped AU soldiers who have failed to stop the violence in Darfur since their deployment in 2004.

"I do not think that the international community has really lived up to its responsibilities here," said Rice, who arrived in Paris on Sunday.

The success of the Paris conference will ultimately "come down to the will to insist that the government in Khartoum permit the UN hybrid force with the AU to ... intervene," she said.

The war in Darfur is pitting a rebel insurgency against the Arab-dominated government in Khartoum and its proxy militia known as the Janjaweed, whose leader stands accused of war crimes.

At least 200,000 people have been killed and two million driven from their homes since February 2003, according to the United Nations. Khartoum says the figures are exaggerated.

The United States has described the violence in Darfur as a genocide and moved to tighten sanctions on Sudan despite opposition from China, Khartoum's leading oil customer and a top arms supplier.

Prospects for advancing the peace process in Darfur were significantly raised when China agreed to take part in the conference, signalling a new willingness on the part of Beijing to try to use its leverage with Sudan.

China has been facing calls from activists to improve its human rights record ahead of the 2008 Olympics and promoting peace in Darfur could be key in that effort.

UN Secretary General Ban Ki-moon and representatives of Britain, Egypt, Japan and Russia along with officials from the Arab League and the European Union are taking part in the conference.

But the African Union, which has brokered peace talks between Khartoum and Darfur rebels, is staying away from a meeting that it sees as duplicating its own efforts.

Sarkozy and Foreign Minister Bernard Kouchner have made Darfur a high priority amid concern for the instability spreading to neighbouring Chad and the Central African Republic, two French allies in the region.

France earlier this month launched an air bridge to ferry aid to Darfur victims in eastern Chad and is considering a humanitarian force to help some 500,000 internally displaced Chadians and refugees from Darfur in camps in eastern Chad.

The initiative followed a visit by Kouchner to refugee camps in eastern Chad and talks with Beshir in Khartoum.

On Sunday the French foreign minister laid out three goals for the conference: supporting the new Darfur peace force which he said will "perhaps have an important effect on stopping the massacres."

He also said the big powers would step up pressure to re-launch peace talks under the auspices of the African Union and offer financial support for the AU-UN force.

Rice has praised the new French leadership for taking an "energizing role" in the effort to end the Darfur conflict.

The conference formally opens at 1000 GMT.

海啸就要来了:中国股市一个巨大的等待发生的事故

美国《纽约太阳报》6月23日载文《有一场海啸等着中国股市》，摘要如下：

　　很难对世界上经济发展最快和股市狂飙的结合体说不。不过这正是理财经理莫尔（Leonard Mohr）对中国所说的。中国国内生产总值增长10%以上，作为衡量的上海综合指数继2006年激增130%后今年上扬了56%。

　　“象地狱一样诱人，不过我不在中国。”莫尔是洛杉矶MCR Associates公司的负责人，他告诉我说：“中国市场不是一个等待发生的事故，而是一个巨大的等待发生的事故，”“海啸就要来了——不是是否会来，而是什么时候来。这就象死亡和税收一样必然。”

　　他的观点和前美联储主席格林斯潘的一样，后者最近令到全球都用他的警告做为头条：中国股市的上涨‘显然是不可持续的’”，“某些时候，将会有一个戏剧性调整。”

　　“某些时候”的意思，当然受到严重质疑。是几天、几周、几个月，也许是几年？无疑格林斯潘是正确的，没有哪一个市场是顺利地发展而不经历重大挫折的。

　　尽管存在着明显的风险，一些投资者还是坚持持有中国股票。

　　亚洲股市警报（Asian Stock Alert）的编辑萨格密（Tony Sagami）评述“慢速增长的美国经济有着比快速增长的中国经济更大的风险”。指出世界银行预测今年中国GDP增长率为10.4%，比一些经济学家预测 美国的增长率2.2% -2.5%多了四倍多，萨格密相信中国每一支股票都会获利至少10%。他认为，中国股票不比任一支美国着名的科技股有更大的风险。

　　全球金融界名人罗杰斯（Jim Rogers）也同意萨格密对中国的乐观看法，这位64岁的纽约居民，打算如果能把河岸街的房子卖掉，就搬到一个说中文的国家去。最近他把自己的房子放到市场上去，标价1500万美元，而他在1977年买的时候花了10.7万美元。

　　为什么搬到中国去？“因为它是未来的召唤，”这位索罗斯的前搭档表示，“搬到中国去就象1907年搬到纽约或是1807年搬到伦敦一样。”

黑砖窑案有了处理结果，被罚最高官员是村支书?

中新网6月18日电(记者 余湛奕)全国总工会书记处书记、纪检组组长张鸣起今天下午介绍了山西洪洞县黑砖窑案的最新进展，山西黑砖窑窑主王兵兵的父亲王东记已被免去村党支部书记职务，并被开除党籍。

　　山西洪洞警方5月破获一起黑砖场虐工案，解救出大批民工。在此之前，400多位失踪儿童的父母在网上联名发帖，寻找被拐黑砖场打工的孩子。案件引起中央震动，胡锦涛温家宝等作出批示。工头衡庭汉16日晚在湖北落网。

　　王兵兵黑砖窑厂位于洪洞县北15公里处的曹生村最内侧，王兵兵的父亲王东记是洪洞县两届人大代表、曹生村党支部书记。张鸣起介绍说，王兵兵的父亲王东记已被免去村党支部书记职务，并被开除党籍

China forgives Iraqi debt, but how much?

China announced with great flourish this week that it is forgiving debt owed by Iraq. But with the Iraqi president set to hold talks Friday with the Chinese premier, it was still unclear how much debt has been written off.

But even after Iraqi President Jalal Talabani met with the Chinese premier Friday, it was still unclear how much debt had been written off.

State media said only that Premier Wen Jiabao told Talabani that China would help train Iraqi personnel to upgrade Iraq's medical and educational capacities.

Chinese Commerce minister Bo Xilai and three Iraqi ministers signed a deal Thursday to cancel Iraqi debt owed to China's government, and Iraqi President Jalal Talabani was set to meet Chinese Premier Wen Jiabao on Friday.

No details were given on the debt relief, although Chinese Foreign Ministry spokesman Qin Gang said Beijing wanted to cut the debt "by a large margin."

Friday's official English-language China Daily newspaper ran a front page headline trumpeting "Nation set to forgive Iraq debt," but offered no figures.

According to Iraq's finance minister, Iraq owes China about $8 billion — part of the roughly $60 billion in foreign debt accumulated during the Saddam Hussein era.

There was no immediate explanation for the lack of information about figures. However, China has frequently used debt relief, especially toward African nations, to burnish its credentials as a friend of the developing world.

Such debt relief, though, has gone hand-in-hand with China's global campaign to secure natural resources to feed its sizzling economy.

China had been a major investor in Iraq before the fall of Saddam Hussein, and during Talabani's visit, the two sides were are expected to discuss reviving a 1997 deal for China's National Petroleum Corp. to develop the billion-barrel al-Ahdab oil field.

The company, also known as PetroChina, began renegotiating the $1.2 billion contract in October. The project could be reactivated if Iraq's parliament passes a hotly debated oil law.

The Iraqi president was expected to travel to the ancient capitals of Xi'an and Nanjing after meeting Wen.

回国买房 当心陷阱

在城市房价高涨刺激下，城乡接合部的“小产权房”也日益热卖。但走俏的背后，还有着一系列法律问题的困扰。日前，建设部提示城市居民不要购买在集体土地上 建设的房屋。建设部表示，非集体经济组织成员购买此类房屋，将无法办理房屋产权登记。对于集体土地能否像国有土地一样直接入市，国土资源部相关人士曾表示 该问题还没有提上议事日程。
在众多城市郊区，一些村集体经济组织在本村集体土地上集中建设农民住宅楼，除用来安置本集体经济组织成员外，还以较低的价格向本集体经济组织以外成员销售。这些房子一般俗称“小产权房”。 建设部表示，非集体经济组织成员购买此类房屋，将无法办理房屋产权登记，合法权益难以得到保护。有些项目允诺办理的 “乡产权”、“小产权”，均不符合法律规定，不受法律保护，即不能办理土地使用证、房产证、契税证等合法手续。国土资源部有关新闻负责人也明确表态，“只 知道有国家产权证的房子，不知道有所谓的‘小产权房’。”

建设部发言人表示，目前的法律法规不允许在集体土地上进行房地产开发，不允许集体土地上建设的房屋向本集体经济组织以外成员销售。据了解，各地热销 中的 “小产权房”，仅有乡（镇）政府或村委会的盖章以证明其权属，并没有国家房管部门的盖章，没有国家所发的产权证。同时，“小产权房”也不具有房屋的所有、 转让、处分、收益等权利，且不能办理房屋的产权过户手续。如果遇到国家征地或拆迁以及出现房产纠纷，购房者将缺少法律支持。

但近年，在城市房价高涨刺激下，“小产权房”已渐成为除商品房、廉租房、经济适用房、限价房和单位集资建房外的另一种城市房屋供应类型。目前，北京 “小产权房”占到北京在售楼盘总量的两成左右，其房价多在每平方米2500元至4000元之间，这仅为四环内商品房价格的 25%至30%。

金网络房地产经纪公司副总经理杨强宏表示，由于“小产权”楼盘大多由村、镇自己开发，不存在土地出让金、土地征用费、耕地占用税等成本，且没有缴纳 房地产开发相关的各项税费。即使以城市商品房价格的30%出售仍有很高利润。对于各地出现的购买“小产权房”现象，国内一些城市曾采取过曝光禁售等办法， 但杨强宏坦承，目前法律并没有处罚方面的明确规定，处于模糊地带。

由于村民建房本身是合法的，而争议在于上市交易环节。近年来广东等八省市已率先进行了集体土地直接入市的试点，但这些试点城市都又同时规定，通过出让、转让和出租方式取得的集体建设用地，不得用于商品房地产开发建设和住宅建设。

对于集体土地能否像国有土地一样直接入市，国土资源部相关人士曾表示该问题还没有提上议事日程。中国房地产协会副会长顾云昌表示，集体建设用地用于商品房开发目前处于敏感阶段，还涉及到农村集体建设用地和城市建设用地如何统一管理。

谷歌抗百度有新招：从乡村包围城市

台湾工商时报记者彭媁琳综合报导/谷歌在宣布与新浪网进行搜寻引擎的战略合作后，更要联合香港首富李嘉诚旗下的TOM集团和中华网，目前已与中华网达成共识，七月中旬可望宣布结盟，谷歌正以最本土化的乡村包围城市战略，对抗中国大陆搜寻引擎龙头百度。

目前谷歌与TOM和中华网合作的内容尚未透露，谷歌对於该消息也三缄其口。

「网易科技」报导，谷歌进军大陆市场的路途走得并不顺遂，先有中国大陆政府担心谷歌散布不利当局思想而加以封杀，后有自己以国际规范为依归，不开放中国大陆民众最常使用的MP3搜寻，在在都使得谷歌与百度的距离越拉越远，「本土化」更成为谷歌在中国大陆发展的最大罩门。

因此，谷歌开始采取仿效共产党作战的策略，联合众多次要敌人，包括新浪网、中国网通和迅雷等二线搜寻网站，并结合中国移动、中国电信等行动业务服务公司，壮大自己声势后以乡村包围城市方式挑战百度地位。

谷歌以自身所收取到的广告费用，来换取结盟网站上的搜寻连结。以谷歌与新浪网合作的模式为例，在双方宣布合作后，新浪网的首页就出现了谷歌的搜寻框，用户可直接在新浪网上利用谷歌进行搜寻，条件是谷歌所获得的部分广告收益。

流量与广告收益的交换，一直是谷歌在全球市场中的强项，据「新浪网」的报导，最近谷歌中国的流量，六五％来自於这些结盟网站。

谷歌全球副总裁兼大中华区总裁李开复，日前在召开盛大的媒体日时表示：「全面丰富具有本土特色的产品线，是谷歌中国二○○七年的产品方向。」而这个方向，将以满足高阶用户需求的整合搜索，作为主要的实施计画。

Algae Threatens China Lake Again

Blue-Green Algae Outbreak on Famed Lake Again Threatening Water Supply in Eastern China

BEIJING (AP) -- As many as 2,000 people have been working on a lake in eastern China each day to remove fetid blue-green algae that is again threatening the water supply for millions of people, state media reported Friday.

An outbreak last month on Lake Tai forced 5 million residents of the lakeside city of Wuxi to drink and bathe with bottled water. The algae bloom, which top Chinese officials blamed on pollution, lasted six days until it was flushed out by rain and water from the nearby Yangtze River.

State media reported last week that the algae had returned and was covering one-third of the surface of Lake Tai, a famous but long-polluted tourist attraction in Jiangsu province.

The bright green algae, which scientists say are plantlike organisms, are common in fresh water worldwide. Some types can produce dangerous toxins.

Winds have pushed the algae bloom to the western end of the lake, 11 kilometers (about 7 miles) from Wuxi's main water plant. The algae is expected to grow rapidly as temperatures rise, the official China Daily newspaper reported, citing experts with the city's agriculture and forestry bureau.

"We have been pulling out more than 1,000 tons of algae from the lake every day, first using baskets and then pumps," said Zhang Xianzhong, an official with the bureau, adding that as many as 2,000 people have been involved in the effort each day.

More than 100 boats equipped with filtration devices will be used over the coming months to clear away the algae, Zhang was quoted as saying in the China Daily.

In neighboring Anhui province, a water plant had stopped using Lake Chao as a source this week, also because of blue-green algae contamination. The China Daily did not say how many people were affected by the outbreak.

China's waterways are dangerously polluted after decades of rapid economic growth and lax enforcement of pollution controls, creating ideal conditions for algae blooms. Outbreaks are usually caused by concentrated run-off of chemicals from industries and farms.

The China puzzle

The "Chinese miracle" has been the biggest economic story for several years now, a tale of a nation rising from the ashes of a Stalinist command economy to become the world's premier trading partner. But China reminds us with distressing regularity that the progress has been selective.

The latest reminders are reports of slave labor in Chinese factories and the discovery that some of the popular Thomas the Tank Engine toys manufactured in China have lead in their paint. Before that, it was the contaminated dog food, the stubborn support of Sudan for its oil, the regular reports of human rights abuses, the huge economic disparities between city and country, the controls on the media.

Why rehearse these faults now? Because governments and companies tend to become so seduced or intimidated by China that they won't hold it to high standards of human rights and business ethics.

Western companies have been so anxious to transfer manufacturing to China's cheap factories that they have been happy to close their eyes to what else goes on over there - just as Google or Yahoo were happy to assist in repressing information to get a toe into the Chinese market, or as Washington and other Western capitals compete in trying to please visiting Chinese leaders. The ultimate source of China's failings is a Communist Party that has jettisoned worn-out Marxist economic theories but clings to its authoritarian rule on all other fronts, creating a dangerously unbalanced behemoth.

This is not an argument against trading with or investing in China. Globalization can be a potent force for democratization. But human rights violations cannot be relegated to untouchable internal affairs. Just as the world has not hesitated, rightly, to lambaste the United States over issues like Guantánamo Bay, it should not be shy about systematic and widespread violations of human rights in China.

China's unreformed political system fosters corruption and an undue focus on short-term economic gains, which will lead to more internal inequities and injustices and more tainted exports. A politically reformed China would be an even more formidable economic power, but a less destructive one.

Microsoft Looks for Space in China's Living Room

Microsoft Corp. wants to play a bigger role in China's living rooms, and the company is willing to spend millions of dollars to get there.

The company's latest home-entertainment moves in China include a planned US$12.3 million investment in Sichuan Changhong Electric Co. Ltd. The deal, announced earlier this week, gives Microsoft a small stake in one of China's largest TV makers, which in turn agreed to develop TVs and other products able to link with the Internet.

"Microsoft and Changhong have partnered in exploring the use of digital media technologies to benefit the consumers for a better in-home networked digital entertainment experience," Microsoft said Friday in an e-mail statement.

Its investment is intended to build goodwill, rather than bring a specific product to market.

"The investment is more like a gesture of saying, 'We're friends strategically,'" said Jason Yin, managing director at In-Stat China.

Critics have compared the Changhong deal to Venus, an ill-fated project launched in 1999 to develop Windows CE set-top boxes for the Chinese market. But that's not an accurate comparison. "It's very different," Yin said.

Unlike Venus, Microsoft isn't trying to bring a new piece of hardware to market. Current versions of Windows are capable of connecting a TV with the Internet, and these types of systems are already available in China.

Changhong's own M10 Living Room Entertainment Center is an example. Based on Windows XP Media Center Edition, the M10 is designed to connect with a television and comes with a remote control and wireless keyboard, allowing users to access music, videos and the Internet from a couch instead of a desk.

Changhong also offers other consumer products that connect to the Internet. For instance, it sells a 32-inch LCD (liquid crystal display) television with a camera that can be used for Internet video calls. And the company has worked with China Telecommunications Group Corp., one of the country's two major fixed-line operators, to sell IPTV (Internet Protocol TV) set-top boxes.

Microsoft hopes closer ties with Changhong will strengthen the channel through which its home-entertainment software reaches Chinese consumers. Those products include Windows Media Center and Mediaroom, the company's IPTV software.

"Microsoft now has a better understanding of the value of local partners in penetrating China's market," Yin said, citing the example of Xiamen Amoi Electronics Co. Ltd., which develops and sells Windows Mobile smart phones in China.

Whether Microsoft's small investment in Changhong yields the desired result remains to be seen. In past years, the company used investments to build closer relationships with Chinese partners to varying degrees of success.

"The investment doesn't always mean they get what they want," Yin said.

The Changhong investment is just one part of Microsoft's home-entertainment push in China, and the company continues to seek out new deals and alliances.

On Thursday, Microsoft signed an agreement with Shanghai Media Group (SMG), the country's second-largest media company. Under the terms of that deal, SMG will use Microsoft products across its new-media division, which includes Internet video, IPTV and mobile television. The partners hope their combined strengths in software and content will convince more companies to join them.

Financial details of the deal were not disclosed.

China eases overseas share curbs

China's securities brokerages and fund managers will be allowed to invest in overseas stocks and bonds for the first time as Beijing looks to reduce soaring foreign exchange reserves and provide alternative investments for its citizens.

The China Securities Regulatory Commission issued new regulations on Thursday allowing the country's 110-odd securities firms and 57 fund management compan­ies to apply for qualified domestic institutional investor (QDII) quotas to invest in offshore securities.

Fund managers had about $138bn under management by the end of the first quarter, while securities firms had $84bn under management at the end of 2006. Until now, only one fund manager, Shanghai-based Hua-an, had been allowed to invest overseas, alongside 18 banks and three large insurers, under a pilot programme begun last year.

Beijing has handed out nearly $19bn of QDII quotas to these institutions but just a fraction has been used, because its policy of slow but steady currency appreciation makes offshore investment unattractive.

By expanding the programme the government expects to generate much greater enthusiasm among investors, eager to trade shares in Chinese companies listed in Hong Kong, whose shares are roughly twice as expensive on the mainland. Such a price discrepancy is a result of China's rigid capital controls and a lack of investment options on the mainland, which has contributed to the Chinese stock market frenzy and quadrupling of valuations in the past two years.

"There is a very good case for arbitrage between Hong Kong and mainland-listed shares right now so this is a very good time to sell funds based on overseas stocks," said Qu Hongbin, chief China economist at HSBC.

Hong Kong's HSCEI Index, which covers mainland companies listed in the territory, rose 2.5 per cent yesterday on news of the regulatory change.

So-called "H-share" companies listed in Hong Kong are expected to be the biggest beneficiaries of the QDII scheme because they are already familiar to mainland fund managers.

A Beijing-based fund manager said all China's biggest and best fund companies had already prepared their QDII products and were just waiting for licences to be issued. "The bigger the quota we can get, the better," the manager said.

The expansion of QDII is another step towards opening China's closed capital account and is aimed at recycling some of its massive and rapidly growing foreign exchange reserves

中国股市继续疯狂 大起大落好象忽然跟世界脱钩了

中国股市6月初一度狂泄。现在却又很快地回到了狂泄前的高度，进入了高位震荡阶段。这究竟是怎么回事呢？为什么中国股市不但恢复以前那种大起大落， 而且好象忽然又跟世界脱钩了呢？记者在此归纳看好与不看好中国股市的两方的理由、原因，着重探讨中国股市仍然处于半封闭状态这个现状。

中国股市大落大起持续震荡

6月初，中国股市一度狂泄，上证综指几天之内从4300多点跌至3600点上下。但一段下跌有两个特点：一是世界股市几乎不再象2月那样受影响；二是大多数中国股民不为所动。

周一，上证综指又涨了2.92%，达4253.35点，几乎回到了狂泄前的高度。深圳综指也以上升2.84%收盘，达1257.75点。香港指数几乎同步，也升了2.69％，达21582.89。周二，上指继续涨了0.38%，深指继续上扬1.00%。

周三，中国股市再度跌落，幅度也很大：上证综指报收4182.45点，下跌87.08点，跌幅达2.03%。深成指收盘14107.23点，下跌229.17点，跌幅也达1.58%。

中国股票和基金在德国继续走红

中国股市6月初的大落不但几乎没有给西方股市带来不良影响，而且，此间人们对在西方上市的中国股票的信心也一点都没有动摇。

上 周，汉堡股市增长最好的10个基金，5个是中国基金。在柏林股市上，中国移动和中国电信的股票增长特别好；中国钼（China Molybdenum）的股票特别吃香，增长了11.11%，达每股1.30欧元；在新加坡上市的中国安利兴一天内也增长了4％，达每股0.096欧元。

中国股市的心态极端矛盾

大起大落，表明中国股民、股市的心态极端的矛盾。来自两个不同方向的动力主持着这种矛盾，也造成持续震荡的状态。试着归纳如下。

看 坏的（反方）心态。看坏的心态比较简单，看上去也比较明朗，动力大体上只有两个：一是，泡沫的存在和对泡沫的认识。中国股市存在泡沫是众所周知的，泡沫之 大实际上已经超出了通常的想象力：“中国证券报”6月18日深沪市场统计表明：上海A股平均P/E为52.04倍；上海B股更是突破了78.81倍；深圳 市场平均P/E更高达79.67倍。二是，中国政府的调控措施和对此的担忧。6月初的大跌可以说就是由中国政府上调一点印花税引起的。本周三中国股市又跌 了2％，就有中国媒体评论道，这是因为股民担心政府继续抛出调控措施。

看好的（正方）心态。看好有许多原因，主要的大体上有：

第一，中国经济的发展始终保持高速度，最近又公布了中国工业产值高达18％的增长率，人们对中国经济的信心非常足。而且，上市企业大多业绩很好。所以多少倍的P/E股民们也不怕。

第 二，在经历了那么多年的银根紧缩之后，中国“终于”出现了一点点通货膨胀。尽管只有3％左右的通胀率（相对两位数的经济增长率而言这实在不算什么），可是 人们“终于”意识到了，钱存在银行里是丢分的事，即使政府再提高一些银行利率，也是没有多大用处的。钱往何处去呢？买房是一个去处，不少人已经抛了股票， 排队买房（北京新开盘的就出现了排队两天的现象）；买基金，也是一个去处，但仍然是股票。对小股民而言，几万元买不了房，干不了什么，还是股票吧。

第 三，全民炒股的意识已经形成，这不是一、两天能够扳回去的。德国电视台n-tv网站的文章标题把中国的炒股热干脆称为“全民体育”。真是没错。低潮过后， 每天仍有25万人新开户，谁也不相信中国股市会倒掉。经过这次风波，股民们势必更相信这一点了，可不是吗？捂了几天就又上去了。许多股民可能今后更是要 “打死也不卖”了。

第四，不断有大企业新上市。尤其是最近一段时间，中国政府要求在境外（包括香港）上市的企业也要在境内上市。有那么多大企业要上市，总市值将大增。

第五，人们坚信，中国股市的操作权掌握在中国政府手里；而中国政府绝不希望股市出现太大波动，影响全国的安定，社会的“和谐”，尤其在奥运之前。成也萧何，败也萧何。中国政府有能力挤泡沫，但也有能力保持相对的稳定。这是许多人相信的。

周三“东方财富网”发表的一篇评论认为“上证综指年内可能跌破2000点”，说上证和深证都将挤掉一半以上的泡沫。这篇文章的泡沫论当然是正确的，仅以泡沫论，那个结论也不错。但是，从上面排列出情况可以看出，与挤泡对着干的还有许多因素。这种大跌论因此而显得武断。

年内“跌破2000点”，可以说是“反方”的极端。“正方”的极端则是：有人认为年内可能突破6000点。显然都有点太“过”。今天中国媒体大多评论是认为，中国股市将在前期市场高点（上海为4300点左右）前面徘徊震荡。也就是说，持续的大涨和大跌都不太可能。

细化第四个“正方”原因：汹涌的上市潮

细化上述第四个看好中国股市的原因：中国股票在海内外即将上市的消息也是源源不断。

一 段时间来，德国和西方媒体反复报导中国一家公司将在德国股市有较大规模的上市行为。这家公司有点神秘，它的名字是ZhongDe Waste Technology，意译为中德垃圾技术公司，将于7月在德国上市，希望回笼7500万欧元的资金。在网上查不到这家公司。但由于这个公司的上市是由著 名的金融企业萨尔奥彭海姆组织安排的，所以可靠性不容怀疑。据称，这家企业的多数股占有者叫陈泽峰（Zefeng Chen），企业2006年营业额为1900万欧元（2005年还只有1140万），利润高达8万欧元（2005年只有440欧元）。这家企业可能是专为 在德国上市而新组合的。在网上检索的结果表明，有一位陈泽峰是福建丰泉集团的董事长，而丰泉集团就是搞垃圾回收的。也许这就是这家公司的背景。这家公司的 上市规模比年初山东企业的上市要大得多了。

周一公布的消息称，中国最大的商业网站阿里巴巴（Alibaba.com）即将在高盛集团和摩根士丹利两大金融企业的扶持下在香港上市。由于美国的上市条件严格，这个网站目前并没有在那里上市的打算。

最 大的上市消息还是来自中国境内。周末消息：中国最大的物流船运公司中远和中国第三大银行中国建设银行都即将在中国境内上市。据称，这是应中国政府的要求： 在海外上市的公司也要在中国股市上上市。中远在月内就将提供12亿股A股，以期获得17.8亿美元的资金，每股在7.60至8.48元之间。中国建设银行 将在上海抛出90亿股，期待获得57亿美元的资金。本周初消息：拥有3.2亿顾客而称雄世界的中国移动将在近期在中国国内上市。周三消息又称：在中国境外 拥有2730亿美元市值、因而已是仅次于埃克森的世界第二大石油公司中国石油天然气集团也将在中国国内上市，计划筹资60亿美元。

细化第五个“正方”原因：中国股市的封闭式或曰“政府行为”

中 国股市今年已经经历了两次大落，2月中和6月初各一次。奇怪的是：大落之后随即大起；全世界的股票专家的预言都有点落空，甚至格林斯潘的警告也没有太大作 用。更奇怪的是：2月那个中国黑色星期二引起了世界股市全面的大波动，6月这次却几乎没有影响。德国之声中文网在2月黑色星期二时用了一位专家说中国股市 打个喷嚏全世界都感冒的比喻，很多中文媒体也这样说了；我们分析了几个原因，其中说道，这种世界范围的影响表明，中国对世界的经济影响力已经从量变发展到 了质变。这些难道都说错了吗？这些现象的原因是什么呢？

上述“正方”的第五个原因也许是最关键的：人们坚信，中国股市的操作权掌握在中 国政府手里；而中国政府绝不希望股市出现太大波动，影响全国的安定，社会的“和谐”，尤其在奥运之前。海外媒体和专家们也有不少是从这个角度来理解的，海 外股民也一样。这恐怕也是中国股市这次大落为何海外已经不相信它的“真实性”的原因，即为何没有对世界各地股市产生影响的原因。并不是说，中国经济对世界 的影响还是很小的，没有发生质变。应该说，2月那次证明了中国经济对世界影响力的质变；但与此同时（后来中国股市很快就恢复了），也让世界各国股民股商获 得了这么一种观念：中国股市还是控制在中国政府手里，因此并没有真正与世界挂钩。

德国马科斯普朗克研究所的中国问题专家皮斯勒（Benjamin Pissler）对路透社记者说：“中国想得到资本市场的优点，但不要它的缺点。”所以，在中国的证券市场上存在着强于需求的势力。

德国最大企业咨询公司罗兰贝格的中国问题专家瑙曼（Ivo Naumann）说：“中国政府做的事情是一个非常大的走钢丝动作。”一方面它要阻止股市太“繁荣”，或者说泡沫太大（过去18个月里涨了180％），另一方面它又要防止它不要出现太大的破裂。

皮 斯勒归纳的中国政府干涉证券市场的做法和能力有如下几点：一，调整银行利率和与股票交易相关的税；二，吸收1929年股市大崩溃的经验规定的10％涨停与 跌停的界限；三，一旦需要扭转趋势，就由官方媒体发表一些专家看法，比如6月初跌得太厉害了专家们就把股市说得好些；四，皮斯勒认为，中国的股值3分之2 掌握在政府手里（应该说是国家手里，因为大多为国营企业），是不上市销售的，导致中国股市缺乏深度，是随时可以直接调控的；五，股票经纪人、投资公司和基 金都紧密地拴在一起，同时都拴在国家银行的腰带上，“在大事件发生时，比如人大，党大，就可以制造好的气氛，让股市上扬。”瑙曼不太同意最后这个观点，他 相信中国政府还是希望中国的证券市场成为一个“理智的市场”的，他说，最近调节印花税就说明了这一点。

海外专家和股民的这种观点，导致 中国境外的股市不再跟着中国股市波动。因为他们认为，他们理解了：中国股市还是一个半封闭的东西。尽管如此，还是有不少西方专家和媒体发出警告。N-TV 电视台的网站说：“但是，专家们认为，许多中国人快速赚钱的梦无论如何还是很快就会成为过去的，因为疾速的增长隐藏着急性过热的危险。”问题是，这种危险 是否始终会处在中国政府可以通过上述种种手段可以控制的范围之内。对于中国股市泡沫的存在，可能谁都不怀疑，但对这个泡沫是否真会破裂，是否会破裂到难以 收拾的地步，却也是谁都无法下结论的

China No. 1 in carbon dioxide emissions

BEIJING (AP) — China has overtaken the United States as the world's top producer of carbon dioxide emissions — the biggest man-made contributor to global warming — based on the latest widely accepted energy consumption data, a Dutch research group says.

According to a report released Tuesday by the Netherlands Environmental Assessment Agency, China overtook the U.S. in emissions of CO2 by 8% in 2006. While China was 2% below the United States in 2005, voracious coal consumption and increased cement production caused the numbers to rise rapidly, the group said.

"It's an expression of their fast industrial production activities and their fast development," Jos G.J. Olivier, the agency's senior scientist who compiled the figures, said Wednesday. The agency is independent but paid by the Dutch government to advise it on environmental policy.

The study said China, which relies on coal for two-thirds of its energy needs and makes 44% of the world's cement, produced 6.2 billion metric tons of carbon dioxide in 2006. In comparison, the U.S., which gets half its electricity from coal, produced 5.8 billion metric tons of CO2, it said.

The group's analysis makes sense and had been predicted to happen by 2009 or 2010, said experts from the United Nations and the U.S. Energy Information Administration, and outside academics.

Bert Metz, a senior researcher at the Dutch agency and a leading expert on efforts to battle global warming, said the analysis was done using methods and data that "are the best currently available."

This means that "Chinese contributions to global CO2 emissions are getting more important," Metz said in an e-mail to The Associated Press.

Telephone calls to China's State Environmental Protection Agency and the National Development and Reform Commission, the Cabinet-level economic planning agency, were not answered Wednesday.

Earlier figures indicated China would likely surpass the U.S. in greenhouse gas emissions as early as 2009, although other predictions said it could happen this year.

Chinese environmental officials have said that while total emissions are going up, they are still less than one quarter of those of the United States on a per capita basis. Because China's population of 1.3 billion people is more than four times that of the United States, China spews about 10,500 pounds of carbon dioxide per person, while in the United States it is nearly 42,500 pounds per person.

Olivier said there was not much chance China will now lose its lead.

"China's growth will saturate at some point," he said. But "for now, we don't see a trend (toward) this saturation yet."

Olivier said the research was based on data on fossil fuel consumption from BP PLC's Review of Energy 2007, compiled by the British oil company, and cement production data through 2006 published by the U.S. Geological Survey.

John Christensen, head of the U.N. Environment Program's Center on Energy, Climate and Sustainable Development in Denmark, said the figures did not come as a surprise.

"The Dutch agency referred to BP statistics, which is the standard reference tool. We have no reason to doubt that the numbers are right. We have no reason to doubt the methodology," Christensen said. "It's been stated many times that China will overtake the U.S. in emissions."

Other sources of carbon dioxide, such as deforestation and the flaring of gas in oil and gas production, are not included in the data. They also do not include methane from fuel production and agriculture and nitrous oxide from industry.

Fatih Birol, chief economist of the Paris-based International Energy Agency also said the findings were not surprising, given China's economic growth of more than 9% annually over the past 25 years.

His agency had estimated China would overtake the U.S. before 2010; in November it sharpened the forecast to 2007 or 2008.

But the issue isn't just current emissions, but carbon dioxide stuck in the atmosphere, where it lingers for about a century trapping heat below, said Jay Apt, a professor of engineering, business and public policy at Carnegie Mellon University in Pittsburgh.

Apt and a colleague calculated the share of carbon dioxide now in the atmosphere that can be attributed to each country and determined that the United States is responsible for 27%, European nations contributed 20% and China only 8%.

"The planet does not respond to emissions, the planet responds to the amount of carbon dioxide in the atmosphere," said Apt. "It means the U.S. will have the lion's share of carbon dioxide in the atmosphere for the foreseeable future. In fact, even if China's exponential growth continues, China will not surpass the U.S. in the numbers of carbon dioxide atoms in the atmosphere, that is concentration, until at least 2050, which is too late to start anything."

The International Energy Agency's Birol said the key message from the emission figures isn't who is No. 1, but the need to slow growth in CO2 emissions. "The rest of the world with the help of China needs to find ways for China to reduce CO2 emissions," Birol said.

China has come under growing international pressure to take more forceful measures to curb releases of greenhouse gases.

This month, China unveiled its first national program to combat global warming with promises to rein in greenhouse gas production. While the program offered few new concrete targets for greenhouse gas emissions, it outlined steps the country would take to meet a previously announced goal of improving energy efficiency in 2010 by 20% over 2005's level.

Beijing also indicated an unwillingness to enforce mandatory emissions caps.

Ma Kai, the minister heading the National Development and Reform Commission, said economic development is a priority for China, but efforts would be made to raise awareness about global warming.

China signed the 1997 Kyoto Protocol, which caps the amount of carbon dioxide that can be emitted in industrialized countries. But because China is considered a developing country it is exempt from emission reductions — a situation often cited by the Bush administration and Australia for not accepting the treaty.

Yang Ailun of Greenpeace China called on the country to take more steps to protect the environment. "Due to the urgency of climate change, China has the responsibility to take immediate actions to reform its energy structure and curb its CO2 emissions," Yang said in a statement.

She noted that Western consumers use products made in China.

"All the West has done is export a great slice of its carbon footprint to China and make China the world's factory," she said. "This trend has kept the price of projects in the West down, but led to a climate disaster in the long term."

China needs to speed up currency reform, Paulson says

WASHINGTON (AP) — For the sake of the global economy, China needs to accelerate the pace of currency reform and overhaul its economy to be less dependent on exports, Treasury Secretary Henry Paulson said Wednesday.

Testifying before the House Financial Services Committee, Paulson defended the Bush administration's decision last week not to cite China as a currency manipulator in a report it is required to make to Congress twice a year.

While the administration did not believe China met the technical requirements to be branded as a currency manipulator, Paulson said the administration would continue to press Beijing to move more quickly to let the yuan rise in value against the dollar.

"The risk that China now faces is moving too slowly on exchange rate reform, rather than moving too quickly," Paulson said in prepared remarks for a hearing.

American manufacturers contend the yuan is undervalued by as much as 40%. That makes Chinese goods cheaper for American consumers while increasing the price the Chinese must pay for American products.

Paulson also cautioned that the U.S. economy would be harmed if it raised barriers to trade.

"I have been and will continue to be an outspoken advocate for maintaining and extending open trade. This is fundamental to the long-term competitiveness of the U.S. economy," he said. "We must resist the sentiment that favors economic isolationism."

The administration is under growing pressure to take a get-tough approach with the Chinese in light of soaring trade deficits. They include an imbalance of $233 billion last year with China alone, the largest ever recorded with a single country.

Paulson said that China must overhaul its economy so that it is less dependent on sales to the rest of the world and gets more support from domestic demand. He said this could be done by boosting competition in such industries as financial services and improving the country's social safety net, which would address China's high savings rate that is spurred by concerns about the lack of pensions and health care.

Paulson said the administration would keep raising these issues as part of new high-level talks known as the Strategic Economic Dialogue. The second of those meetings was held in Washington in May and a third round is scheduled for China in December.

Critics in Congress have complained that these discussions have so far produced little progress in narrowing the soaring trade gap with China, which they say has played a role in the loss of more than 3 million manufacturing jobs since 2000.

Unhappy with the lack of action on the currency front, lawmakers introduced two Senate bills last week that would require the administration to take a tougher line in its dealings with China. Those measures join a host of other proposals put forward by lawmakers who are feeling political pressure from constituents unhappy with the loss of American manufacturing jobs.

Expanding deserts hurts farmers in China

Half a century after Mao Zedong's "Great Leap Forward" brought irrigation to the arid grasslands in this remote corner of northwest China, the government is giving up on its attempt to make a breadbasket out of what has increasingly become a stretch of scrub and sand dunes.

In a problem that's pervasive in much of China, over-farming has drawn down the water table so low that desert is overtaking farmland. Authorities have ordered farmers here in Gansu province to vacate their properties over the next 3 1/2 years, and will replace 20 villages with newly planted grass in a final effort to halt the advance of the Tengger and Badain Jaran deserts.

"I don't want to move," said Chen Ying, 58, sitting in a sparsely furnished bedroom dominated by a red, wall-sized poster of Mao, the communist founding father who sought to catapult Chinese farming and industry into modernity with the so-called Great Leap Forward.

"But if we keep using the groundwater, it will decline," said Chen. "We have to think about the next generation."

It's not just Chen's home region that's at risk.

The relocation program is part of a larger plan to rein in China's expanding deserts, which now cover one-third of the country and continue to grow because of overgrazing, deforestation, urban sprawl and droughts.

The shifting sands have swallowed thousands of Chinese villages along the fabled Silk Road and sparked a sharp increase in sandstorms; dust from China clouds the skies of South Korea and has been linked to respiratory problems in California.

Since 2001, China has spent nearly $9 billion planting billions of trees, converting marginal farmland to forest and grasslands and enforcing logging and grazing bans.

The policy is driven in part by concerns over food, as farmland yields not only to the deserts but also to pollution and economic development. China has less than 7 percent of the world's arable land with which to feed 1.3 billion people — more than 20 percent of the world's population. By comparison, the United States has 20 percent of the world's arable land to feed 5 percent of the population.

But the initiative is also a tacit admission by the government that the effort to feed the country at all costs may have backfired.

Chen was just a child when the government turned the rugged grasslands on the edge of the Tengger into an oasis.

In the 1950s, as part of Mao's scheme to boost food production, the government built the Hongyashan Reservoir in Gansu province witsoil to become contaminated with salt.

Worried the desert could reach the city of Minqin, 35 miles away, authorities decided to return the land to its natural state.

"If the government does nothing, it is scared that the entire area will become a desert," said Sun Qing-Wei, a desertification expert with the Chinese Academy of Sciences. "There are alternative solutions like introducing new plant species or conserving water. But this is the quickest solution. The government can show the people they are doing something."

Chen, a grizzled farmer who sports a Mao cap, blue coat and baggy, mud-spattered pants, has planted dozens of trees outside his home to prevent the desert dunes from overrunning his property. He also switched from wheat to less thirsty cotton and fennel.

But he appears to have met his match in the government, which already banned the use of well water for irrigation and threatened to cut the electricity ahead of the scheduled move of his village later this year to a new location about 12 miles away.

Talk of the impending moves dominates the conversations of villagers, gathered around their coal-fired stoves to ward off the springtime chill. Most are reluctant to leave. Authorities are offering up to $784 per family to move 10,500 residents from Gansu Province, but the villagers don't trust the government to compensate them fairly.

Their ancestors are buried on their land, and their crops continue to earn a tidy income, they say — even though the canals that once transported water to the area are bone-dry, and the wheat that thrived here is a distant memory.

"The government is taking this action against desertification, but we are the ones being forced to pay for this policy," said Li Jianzhu, a father of three in the village of Waixi, whose population has dropped nearly two-thirds to 60 residents.

Throughout the province, treeless, wind-swept plains stretch for miles in all directions. Gone are the knee-high grasses and the Qingtu Lake, replaced by sands from the expanding Tengger and nearby Badain Jaran deserts and with soil scarred white from salt.

The only signs of civilization in many areas are the herds of sheep munching on thorn bushes, the clusters of mud and straw homes and the burial mounds. Billboards promoting the country's one-child policy compete with those pushing slogans like "No Reclamation, No Overcultivation."

Many communities have been emptied altogether, leaving behind crumbling homes and empty courtyards.

The battle against deserts is playing out across much of western China. Desertification has caused as much as $7 billion in annual economic losses, the China Daily reported.

Over the past decade, Chinese deserts expanded at a rate of 950 square miles a year, according to Wang Tao of the Chinese Academy of Sciences in Lanzhou.

"There are quite a few countries with this problem but none on the scale of China because it is so big," said Lester Brown, president of Earth Policy Institute. "You only have to go to northwest China and see that the numbers and size of dust storms are increasing."

Expanding deserts have contributed to a nearly six-fold increase in sandstorms in the past 50 years to two dozen annually, Wang said.

Global warming will worsen the problem, as rising temperatures lead to widespread drought and melt most glaciers on the Tibetan Plateau, depriving lakes and rivers of a crucial water source, according to the U.N.-funded Intergovernmental Panel on Climate Change.

Hotter, drier land is more vulnerable to soil erosion, Wang said. "This is the same problem the United States faced in the 1930s with the dust bowl."

Global warming also threatens to make a huge dent in grain production, which Brown said has already slipped from 432 million tons in 1998 to 422 million tons in 2006 because of desertification. At the same time, grain consumption has risen about 4.4 million tons a year to 418 million tons, in part because of rising demand for beef, chicken and pork.

The production declines have forced China to draw down its grain stocks, and eventually it will need to buy a massive 30-50 million tons a year on the world market, Brown said.

"It's not that they are likely to face famine in the next few years. But what they may face is rising food prices, and that can create political instability," he said.

In Dongyun village, Wei Quangcai and his deaf wife may offer a glimpse of that future. Once part of a thriving village of 200 people in Gansu province, they are the only ones left after neighbors fled two years ago.

Walking past the empty homes, Wei, 58, recalls the days when his village hummed with farmers chatting over a game of cards and the school was packed with children. Now, the only sounds are the wind whipping through the empty doorways. His son has left for a job in Beijing over his objections.

"We're the last people," Wei said. "It is lonely. It would be better if my son lived with us. But if he did, he wouldn't be able to find a wife."

Resignation calls over China worker abuse

BEIJING, China (Reuters) -- Chinese police have detained 168 people accused of involvement in slavery that trapped victims in scorching brick kilns, state media said on Monday, as outrage over official complicity rippled through the usually tame press.

Of those held, 48 were caught in Shanxi province and the rest in neighboring Henan, where hundreds of teenagers and poor farmers, and even some children, were trapped or cheated into kilns, mines and foundries, the China Daily reported.

The unfolding scandal has stained the ruling Communist Party's promises to build a "harmonious" society with better rights and income for hundreds of millions of poor farmers.

Local news media have been unusually blunt in demanding answers from the government and calling for resignations.

The Southern Metropolis Daily, a popular tabloid, said the same local officials who were now parading themselves as rescuers of trapped workers had long turned a blind eye to the trade.

"Who'll assume responsibility for this crime that has lasted for over a decade?," asked the paper.

"In many countries, a scandal like this would be enough to spark a major political crisis and crisis of confidence. But here in China to date there's not even a hint of resignations."

State television has reported that owners of primitive brick kilns ran their operations like prisons, making use of fierce dogs and thugs who beat minors. One owner accidentally killed a child with a shovel and buried the body at night, state TV said.

Some workers were shown with festering wounds, presumably from burns from the kilns where they worked for little or no pay.

The government has sent a team to investigate the abuses and given freed workers -- more than 500 so far -- 1,000 yuan ($130) each as "sympathy" money, the Beijing News reported.

But many reports have dwelt on local government complicity in the abuses. One of the kiln owners detained, Wang Bingbing, was the son of the village Communist Party secretary. And critics say the trade could not have survived without official collusion.

"The dereliction of local government departments and even collusion between officials and criminals is plain to see," said one local newspaper commentary reproduced on the Web site of the People's Daily (www.people.com.cn).

Other critics said the abuses highlighted the disintegration of local government in the countryside.

"The state's control over the countryside and farmers has weakened," said the Guangzhou Daily. "In some towns and villages a power vacuum has emerged and criminal forces have seized the opportunity to flourish and dominate."

Continental in alliance with China Southern

China Southern Airlines, the largest airline in China, has entered a code-share partnership with Continental Airlines.

"We look forward to welcoming them into the SkyTeam alliance in the very near future," said Continental CEO Larry Kellner Monday, adding that actual code sharing begins in November.

The plan is for Continental to sell tickets under its own brand on China Southern connecting flights from Beijing, which Continental serves from New York. It also will sell Continental tickets on China Southern's service from Los Angeles to Guangzhou.

"Continental Airlines' cooperation with China Southern will significantly increase China Southern's market share on cross-Pacific and the U.S. domestic market," China Southern Chairman Liu Shao Yong said. China Southern will sell code share tickets on Continental flights across the U.S. Mainland that connect to Los Angeles.

Houston-based Continental (NYSE: CAL - News) is the fifth largest U.S. airline and ranks third for Asia-Pacific capacity. Its service between Honolulu and Guam connects to other flights to Asia.

China to help push forward WTO trade talks

China Monday told WTO chief Pascal Lamy it would help to push forward the Doha round of trade talks which have been stalled for a year over agricultural subsidies, state media said.

Finance Minister Jin Renqing said China would make further contributions to the Doha talks, and stressed that it had honoured commitments made before it joined the

World Trade Organization in 2001 by slashing tariffs and further opening its markets, Xinhua news agency reported.

The WTO head, who arrived here on Monday, said he hoped China would introduce more flexible policies on its sensitive farm produce imports and play a more important role in pushing forward the trade talks, Xinhua said.

Lamy "also expressed concerns about China's market access rules for some sensitive non-agricultural products and urged more cooperation in the Doha talks among China, the United States and the European Union," the agency said.

His visit coincides with a meeting in Germany of Brazil, the European Union, India and the United States aimed at breaking the deadlock in the Doha round, aimed at liberalising world trade.

Jin said the pressure on China should be eased as it had made large cuts in import tariffs on farm produce and had a trade deficit in farm produce.

He said developed countries should play a leading role in the Doha talks while China would work with other developing countries to bolster support for the multilateral talks, Xinhua said.

China has slashed tariff duties on non-farm produce to 8.9 percent in 2007 from 42 percent in 1992 and those on farm produce have been cut to 15.3 percent this year from 54 percent in 2001, Xinhua said, quoting finance ministry figures.

The WTO's 150 members are striving to wrap up a round of talks that has defied intensive efforts and stretched well beyond a target date of 2004 for an agreement.

Although it is a major global trading power, China has remained in the background and allowed Brazil and India to spearhead the interests of developing nations around the world.

But Beijing, which joined the WTO in late 2001, has also been singled out by the United States and the European Union as being at fault regarding industrial subsidies, intellectual property rights or customs duties on spare parts for cars.

China's key index surges as investors snapped up stocks

China's key stock index surged Monday as investors snapped up stocks, relieved that the government had not announced further moves over the weekend to cool the economy.

China stock markets have taken less than two weeks to rebound from a rout that erased more than $400 billion of market value.

The Shanghai Composite index, which tracks the bigger of China's stock exchanges, gained 2.9 percent to 4253.35. The Shenzhen Composite index, which covers the smaller one, rose 2.8 percent to 1257.75.

"The government didn't raise interest rates over the weekend, and that's bolstering sentiment," said Yao Maogong, head trader at Shanghai Securities.

Prime Minister Wen Jiabao last week said monetary policy needed "moderate tightening," after reports showed that inflation was at a two-year high and money-supply growth exceeded the central bank's target.

The CSI 300, which tracks yuan-denominated A shares listed on China's two exchanges, climbed 128.19, or 3.1 percent, to close at 4227.57, with about 90 percent of the shares included in the measure advancing.

The CSI 300 is also the top performer of the past year, having tripled in that time.

"Investors keep buying shares as a rumored clampdown involving measures such as interest-rate increases failed to materialize over the weekend," said Chen Shide, who manages the equivalent of $212 million, or $28 million, at GF Fund Management in Guangzhou. "It can't be ruled out that the government will still take action."

The CSI 300 plunged as much as 22 percent from the May 29 close of 4168.29 after the government tripled the tax on securities trades. It took about a month to recoup a single-day loss of 9.2 percent on Feb. 27, the biggest slide since the gauge was introduced in April 2005.

Investor interest has waned little since the stamp duty was tripled to 0.3 percent.

About 250,000 new securities accounts were opened daily last week, compared with the quarter's average of some 300,000, official figures show.

Merchants Bank has the biggest weighting in the CSI 300, Industrial & Commercial Bank of China, the nation's No. 1 lender, and Bank of China, the second biggest, were among the best performers.

But the three stocks may fare less well Tuesday after the lenders were named by China's banking regulator as being among six banks under investigation for granting loans to China Shipping that were used to finance illegal speculation in the stock and property markets.

In addition, China's securities regulator summoned managers and chief investment officers of 57 mutual funds last week, telling them to refrain from speculating on market rumors for short-term gains, China Business News reported Monday.

The People's Bank of China has raised interest rates twice this year to rein in industrial expansion and tame inflation, with both announcements made over weekends. It has also ordered commercial banks five times to set aside more money as reserves to curb lending.

Even so, bank savings rates trail inflation, helping steer funds into stocks.

Household deposits fell by 278.4 billion yuan in May, after sliding in April for the first time since February 2003. Commercial banks' deposit rates are capped at the central bank's one-year deposit rate of 3.06 percent, less than the 3.4 percent inflation rate.

China's banking regulator, the China Banking Regulatory Commission, said in a statement on its Web site (www.cbrc.gov.cn) that it had uncovered cases of irregularities amounting to about 5 billion yuan during an investigation that was initiated early this year.

The bank branches involved belonged to Bank of Communications , China Merchants Bank, Industrial and Commercial Bank of China, Bank of China, Industrial Bank, China C Bank, Bank of Beijing and Shenzhen Development Bank, it said.

The punishments included fines and demotions of bank employees, the regulator said.

The penalties come amid government efforts to improve regulation of the country's state-owned banks and enforce credit controls meant to cool twin booms in real estate and stock market speculation.

Two state companies that received the loans, China Nuclear Engineering & Construction and China Shipping, also are to be penalized, the CBRC said.

Meanwhile, the China Securities Regulatory Commission said it would review on Friday applications from Bank of Nanjing and Bank of Ningbo to open initial public equity offers.

The regulator made the announcement on its Web site (www.csrc.gov.cn) on Monday, putting the Nanjing and Ningbo banks on track to become the country's first city commercial banks to float shares.

内幕及风险大起底：大陆股市的致命弱点是什么？

亿万中国大陆股民发现了投机股票的经济效益，但很少有人知道大陆股市的内幕及风险。德国《时代周报》撰文在报道了中国今年来的股票热之后，分析了大陆股市的致命弱点：

　　“大陆股市最大的弱点之一是缺少一个由长期投资人构成的牢靠基础。估计70%可交易股票的买卖都在小股民之间进行。专家们一致认为，必须有更多的大单 位投资股市才行。欧洲经合组织的经济师施希说，大单位投资股市有长远打算，它掌握了某一公司的股票就可以对该公司的经营起到积极的影响作用。

　　“从大陆股市受人操纵的情况，我们可以看出，大陆的股市目前幷没有按照争取大单位投资的思路发展，也处于十分脆弱的地位。直到四月份，证监会才收紧了 对股市内部交易的控制，因为上市公司为了哄抬本公司股票价格，提供假信息，这已成了一种‘趋势’。对此，只有观察家提出批评，而中国大陆的法律常常得不到 贯彻。在别的国家，对股市内部交易的追查严厉多了。

　　“中国大陆的股市热使中国领导人如坐针毡：听任股市热下去，泡沫早晚要破灭。采取提高印花税等措施控制股市，指数下跌会造成社会动荡。”

　　德国《明镜》周刊就中国股市发表长篇文章写道：“北京领导人最害怕股市地震可能带来社会和政治混乱，他们在国家的报纸上发表社论，呼吁股民不要惊慌失措地抛售股票，同时教育股民应懂得资本主义的游戏规则。中国证券报说：‘股市需要稳定，发财需要理智。’

　　“在市场经济条件下，独立的中央银行可以通过利率政策遏制疯狂投机的势头。但中国很难做到这一点。只要中国不能很好解决政府控制经济和市场自由之间的 矛盾，对投资者来说，股市大厅的地面永远坎坷不平。此外，中国不允许批评和透析上市企业的自由报刊存在，所以内部交易的事件很少能浮出水面。中国现在急需 制定出使金融转移具有透明度的法律。

　　“中国大陆的股民希望自己不要遭受损失，他们寄希望于北京的国家计划部门。上海一名姓黄的女股民说，‘我们的政府从头到尾操纵着股市，现在它应该使我们的损失得到补偿。’”

传中国人民银行近日加息 幅度超出预期

来自北京的消息透露，中国人民银行将在近日提高银行存贷款利率，这是中国央行今年以来第三次加息。有关人士指出，此次加息反映了中国央行控制通胀的决心。
星岛环球网报道，消息指出，中国人民银行将在近日提高存贷款利率0.56个百分点，利率提高幅度是最近几次加息幅度最高的一次。在此之前，人民银行的数次加息幅度均为0.27厘。早前也有消息说，人民银行即将进行的加息行动也只有0.27厘。

　　分析家指出，0.56厘的加息幅度反映了中国央行控制资产价格和流动性过剩的决心，并对通胀的前景感到担忧。

　　中国国务院13日召开常务会议，总理温家宝强调要继续加强和改善宏观调控，有效防止经济增长由“偏快”转向“过热”。会议认为当前价格上涨压力 正在加大，并强调货币政策要稳中适度从紧。外界相信次会议反应了中央政府对通胀的警惕，并对股市以及房地产市场等资产价格上涨速度的忧虑。分析家认为，这 次会议表明当局将有可能收紧银根并考虑强化宏观调控的各项措施，以防止经济过热。

　　中国人民银行行长周小川此前表示，是否加息要在国家统计局公布五月份CPI（居民消费物价指数）统计数据之后决定。

　　国家统计局最新公布的数据显示，今年5月居民消费物价指数（CPI）达到3.4%，创27个月以来新高，引发经济界对通胀的担忧。中国央行此次加息措施反映了控制经济过热的强烈态度。

　　在此之前，中国人民银行连续七次调高商业银行存款准备金率，以控制货币流通性过剩的问题，但是收效甚微。

　　根据官方公布的数字，第一季度中国国内生产总值（GDP）增长达到11.1%，大幅超出外界的预期。经济界普遍认为，下半年中国经济增长仍然强劲，并对近期由粮食价格暴涨引发的通胀感到忧虑。

　　经济界人士认为，现行的汇率机制是造成中国流动性过剩的元凶之一，持续的贸易顺差导致央行外汇占款的居高不下，从而引发货币供应膨胀。为此，中 国持续降低出口退税政策，一方面消除贸易货币的抱怨，另一方面希望藉此控制过快增长的出口。中国商务部最新公布的数据显示，今年5月中国进出口总额达到 1656亿美元，顺差达224.5亿美元，创今年以来的新高。

　　外界相信，快速增长的贸易顺差，令中国人民银行的货币政策面临两难的局面。为了控制通胀，央行无疑有加息的需要，不过，加息将引发人民升值的压力则是人民银行不愿看到的。

　　分析家指出，流动性过剩导致人民币资产价格急剧膨胀的局面，将迫使中国人民银行采取更强硬的货币政策，此次大幅加息应当是中国货币政策转向的第一步，市场还预料可能出台包括停征存款利息税和再次调高存款准备金率等措施。

　　也有分析称，如果央行保持原有加息幅度未必能够发出清晰的政策信号，需要通过更大幅度的调整，表明人民银行的态度。

Torrid China investment levels portend tighter monetary policy

With urban fixed-asset investment growth again approaching 30 percent, another interest-rate rise may be unavoidable.

BEIJING: China's spending on fixed assets like roads and power plants accelerated in the first five months of the year, prompting projections of an imminent monetary tightening to slow growth in the world's fourth-largest economy.

Urban fixed-asset investment rose 25.9 percent from a year earlier, picking up from 25.5 percent growth in the January-April period, the National Bureau of Statistics said Friday.

The number of new investment projects in the first five months was 74,701, an increase of 7,282 from a year earlier, the bureau said. Investment grew 30.3 percent in the first five months of last year and 24.5 percent in all of 2006.

Spending by industries producing nonferrous metals jumped 40.7 percent in the first five months from a year earlier, while real estate investment climbed 27.5 percent.

The increases underscore the government's failure to cool an economy that grew 11.1 percent in the first quarter. Wen Jiabao, China's prime minister, this week highlighted the risk of an investment rebound and signaled that the central bank may need to raise borrowing costs for a third time this year or further curb bank lending.

"The economy is absolutely booming and after a brief correction the stock market has taken off again," said Jing Ulrich, chairwoman of China equities at JPMorgan Chase in Hong Kong. "Clearly the central bank has a tightening bias after this week's economic data."

China raised borrowing costs and deposit rates on May 18, pushing the benchmark one-year lending rate to 6.57 percent and the deposit rate to 3.06 percent, still less than the inflation rate. The central bank has also ordered lenders to set aside more reserves five times this year.

The investment report capped a strong set of monthly data. China's trade surplus rose more than 80 percent in the first five months, industrial output surged 18.1 percent compared with a year earlier and consumer price inflation quickened to 3.4 percent in May.

Chris Leung, a senior economist at DBS in Hong Kong, said the authorities could tighten China's monetary policy at any time.

He said he expected the sixth half-point increase so far this year in the proportion of deposits that banks must hold in reserve as well as a 27 basis-point increase in bank deposit rates and a rise of 18 basis points in benchmark lending rates.

The People's Bank of China, the central bank, has already raised interest rates twice this year to rein in an economy that is on course to grow by double digits in 2007 for the fifth year in a row.

Chen Jijun, an analyst at Citic Securities in Beijing, said the cost of bank loans was simply too low. With profits strong, companies have every incentive to borrow to expand.

"I think the government will take swift measures in the near term," he said.

The government is likely to reduce or eliminate a 20 percent tax on interest income from bank deposits before raising rates, Frank Gong, an economist at JPMorgan Chase in Hong Kong, said Friday. That may help to stem the flow of money from household bank accounts to the stock market, amid concern that gains have been too fast and a bust is looming.

China promises product piracy crackdown

China has promised to pursue product pirates identified by U.S. authorities in a new effort to stamp out its thriving counterfeit industry, the head of the U.S. customs agency said Friday.

The agreement comes amid mounting concern that Chinese pirates are endangering public safety in the United States and elsewhere by selling fake medicine, auto parts and other goods.

China accounted for about 80 percent of the 14,775 shipments of counterfeit goods seized at U.S. ports last year, said W. Ralph Basham, commissioner of U.S. Customs and Border Protection.

Under a memorandum of cooperation signed this week, U.S. Customs will provide China with information on the source of seized goods, and Beijing will report back within 90 days on the status of efforts to track down the counterfeiters, Basham told reporters.

"We've got to start dealing with the source of the problem. We can't expect to rely upon interdiction to be our tool in order to stop these products," Basham said.

A representative of U.S. manufacturers said it remains to be seen how effective the initiative will be. China's government frequently promises to crack down on counterfeiters but has made little dent in the country's rampant piracy.

"It's a potentially useful tool," said Bill Primosch, director of international business policy for the National Association of Manufacturers. "As always, we'll have to see whether they're sincerely committed to implementing it."

China has long been the world's leading source of illegally copied goods ranging from designer clothes to movies and music. But concern about possible danger to the public has risen following the discovery of a toxic chemical in Chinese-made toothpaste.

Basham said his talks with Chinese officials did not touch on tainted products, which he said was the responsibility of the U.S. Food and Drug Administration. He said the FDA was in touch with Chinese officials.

Under foreign pressure, China has increased penalties for piracy and launched repeated crackdowns. But business groups including the U.S. Chamber of Commerce and the Motion Picture Association of America say the scale of piracy is growing faster than enforcement.

Basham met with his Chinese counterpart, Mu Xinsheng, and other officials this week.

Basham said American officials offered China help with security for the 2008 Beijing Olympics. He said that might include support from a U.S. program used at several foreign airports to identify travelers who might be barred from the United States.