The yuan goes global: Money talks and London is listening to the yuan

The Chinese currency is fast gaining weight worldwide and becoming a key topic of conversation for bankers.

THE fashionable youths in hot pants flocking to high-end department stores in London and bankers in dark suits walking in and out of skyscrapers in the financial district have one thing in common, a growing interest in the Chinese currency.

During the recent holiday to celebrate the Diamond Jubilee of Queen Elizabeth II, Harrods, a department store known for its ties with the British royal family, launched its own Sina Weibo, a popular Chinese social media platform, to attract more Chinese customers. Shoppers can find “the very latest, limited edition and exclusive products”, with Hermes, Chanel and Louis Vuitton among the most popular brands, according to the store’s spokesman.

More than 100 UnionPay payment terminals in the store also help to make Chinese shoppers feel more at home. Through the machines, part of China’s unified bank card network, Chinese visitors can pay for their purchases with the same cards they use at home.

Hear, hear: A man walking past the London Stock Exchange in London. London is now a yuan offshore trading centre, which will help both Chinese and European business people to avoid foreign exchange risks. — China Daily/Asia News Network

 

A few streets from Harrods, a billboard featuring a green jade dragon shaped like the yuan symbol stands outside a bank. The ad reads: “A new global currency is emerging. Be part of it.” The commercial is for HSBC, a bank rooted in the silk and tea trade between China and Britain in the 19th century.

The UnionPay terminals, the jade dragon advertisements and the shops on the streets of London offering exchange services between the British pound and the yuan are the tip of the iceberg in the biggest story in the financial markets today: the internationalisation of the Chinese currency.

As people search for a bright spot amid sluggish economic growth in the West, beset as it is by the European debt crisis, companies, investors and financial institutions are increasingly focused on the yuan. From Beijing to Hong Kong, Tokyo to London, policymakers and businesses are part of the push.

There are several forces driving this move, both at home and abroad. The People’s Bank of China has made several moves this year to liberalise the exchange rate; George Osborne, the UK chancellor of the exchequer, took the initiative to develop London into an offshore trading centre for the yuan earlier this year; and this month, the yuan became convertible with the Japanese yen under an agreement between the Chinese and Japanese governments.

“All of it demonstrates that the Chinese government is pushing forward the internationalisation of the yuan and encouraging the use of yuan offshore. That will help the global economy in many ways,” said Adam Tyrrell, head of European capital markets for Standard Chartered in London.

Greenback to redback

These initiatives will have a profound influence on the development of trade. For instance, China and Europe are each other’s largest trading partners, but, up till now, the bulk of that trade has been settled in the US dollar. If a Chinese company buys pork from a UK company, it does not buy and sell in yuan, the pound or the euro. It settles in dollars.

That paradox is changing. Now the same pork company can open a yuan account at a British bank such as HSBC or Standard Chartered, or a Chinese bank that operates in Europe, such as Bank of China or Industrial and Commercial Bank of China, and can then invoice the goods or settle the deal with its Chinese clients in their national currency.

The advantage of this is clear: Settling in yuan helps both sides to avoid foreign exchange risks and reduces transaction costs. For instance, in 2008, many companies in southeast China had to lay off workers and close factories because they were losing money through currency appreciation.

That situation would have been different if the contracts had been signed in yuan, because the agreements would have a fixed value no matter what the change in the exchange rate.

The initiative can also benefit companies outside the European time zone, given London’s position as the world’s foreign exchange centre. “The beauty of London is not just about London,” said Patrick Law, Hong Kong-based managing director and head of trading for Greater China at Barclays. “If you look at the London time zone, it covers both the northern and southern hemispheres.” And that means it will also help facilitate business between China and Africa and the Middle East.

“Africa is a very interesting market to look into because China and Africa have a lot of business together,” Law said. He added that Barclays, a bank with strength in commodity trading, began to conduct trade between the South African rand and yuan from April.

Uncle Sam to dim sum

The internationalisation of the yuan will also offer a new platform for companies and investors looking for alternative methods of financing.

The “dim sum bond” got its name from delicacies in Chinese cuisine such as spring rolls, shrimp dumplings and steamed buns. The name has been appropriated for fixed income denominated in yuan and was started in Hong Kong when the city became the first offshore centre for yuan trading. The bond has become increasingly popular outside Asia and grew rapidly in Europe last year, according to Standard Chartered’s Tyrrell.

British banks were involved in five dim sum bond deals with European companies and financial institutions last year. It has also been involved in three client deals so far this year, according to Tyrrell: “Over time, as the yuan is used more, more European corporations and financial institutions will be interested in transacting in yuan, either for their China business, when they can remit onshore, or as a way of diversifying their investor base.”

The motivation for getting involved in dim sum bonds is also changing, he said. When the yuan market first developed offshore, a lot of investors were looking for a currency play rather than a bond play. At first, investors were looking to invest in the currency because they thought it was going to appreciate.

“Over time, it is developing into a more mature bond market,” said Tyrrell. “It will tend to be more driven by traditional bond market influences.”

Chances and problems

That’s particularly true this year, because of the fragile state of the global economy. If the investor sentiment is not there, there will be fewer bond issuances, according to Tyrrell. “There is definitely momentum in the yuan. It will not stop. It will grow,” he said.

Given the fact that the yuan is still not fully convertible, there is still a lot of work to be done to encourage people to hold it and conduct business with it, as they do with dollars.

The main issue for London as it attempts to develop into an offshore yuan trading centre revolves around the lack of liquidity. That’s due to both a paucity of knowledge about the yuan market and the limits of infrastructure to facilitate trade flows.

“Without liquidity, we cannot grow the pie and make the market more efficient,” Law said. “Everybody is definitely very interested. The current situation is that people have just started looking into it,” he said. “The involvement is still relatively small, but the amount of interest is actually very high.”

Some observers have suggested that the pool of yuan liquidity in London can grow through a huge variety of sources. For instance, Standard Chartered recently issued yuan-denominated European Commercial Paper to investors in Europe.

“ECP is issued to investors. Then Standard Chartered holds the liquidity in yuan and can use that for trade finance. This will help to increase trade flows with China for European clients,” Tyrrell said.

“As investors become more comfortable holding yuan, it will help build liquidity here.”

By Diao Ying, China Daily/Asia News Network

China pledges to work with ASEAN to safeguard peace in South China Sea

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

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

In the statement issued earlier on Friday, the ASEAN members reaffirmed their commitment to the "peaceful resolution of disputes" in the South China Sea. Analysts said the six-point principles were reached to make up for the lack of a customary communique after a foreign ministers' meeting last week.

In an unprecedented development, the 45th Foreign Ministers' Meeting of the ASEAN was not wrapped up with the release of a communique showcasing common ground.

ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Qu Xing, head of the China Institute of International Studies, told Xinhua that it was Vietnam and the Philippines that should be blamed for the failure to pass a communique last week.

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

"The Chinese side has noticed the ASEAN's statement on the South China Sea (on Friday)," Hong said, adding that the core problem of the South China Sea was the disputes over the sovereignty of the Nansha islands and the demarcation of the islands' adjacent waters.

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

However, Hong said China is open to consultations with the ASEAN on the conclusion of a Code of Conduct in the South China Sea.

"(We) hope that all the parties will strictly abide by the DOC and create necessary conditions and atmosphere for the consultations," he said.

As a signatory to the United Nations Convention of the Law of the Sea (UNCLOS), China attaches importance to safeguarding the principles and mission of the Convention, said the spokesman.

Hong said UNCLOS is aimed to establish a legal order for the seas and oceans "with due regard for the sovereignty of all States," and it does neither serve as an international treaty to address disputes over territorial sovereignty between states nor as evidence used to judge over the disputes.

The countries concerned should address the disputes over the maritime demarcation in the South China Sea, after the land disputes have been resolved, in accordance with historical facts and all international laws including UNCLOS, he added.

"China attaches importance to its ties with the ASEAN," Hong said, adding the country is committed to promoting friendly neighborhood and reciprocal cooperation with the ASEAN to push ahead with the cooperation in East Asia with joint efforts.

The spokesman said China and ASEAN share common interests and responsibilities in keeping Asia's development and maintaining regional peace and stability against the backdrop of the ongoing international financial crisis.

"The two sides should continue to promote their strategic communication in pursuit of a reciprocal and win-win situation, with mutual respect and trust in mind as well as handle the relationship between the two sides from strategic and long-term perspective," he added.

 Related:

China to deploy military garrison in South China Sea

GUANGZHOU, July 20 (Xinhua) -- China's central military authority has approved to form and deploy a military garrison in the newly established city of Sansha.

Sources with the People's Liberation Army (PLA) Guangzhou Military Command said Friday that the Central Military Commission (CMC) had authorized it to form a garrison command in the city.Full story

ASEAN forum not proper platform to discuss South China Sea issue

BEIJING, July 11 (Xinhua) -- As the foreign ministers of the 27 participating parties of the ASEAN Regional Forum (ARF) meet in Phnom Penh on Thursday, many eye the talks as a platform to ease the tension over the South China Sea, which has flared up in recent months.

However, analysts say the attending parties are likely to be more interested in forging closer ties than focusing on differences that concern only a few members.Full story

Editor: Chen Zhi, Xinhua

Related post:
Asean has no reason to panic

Asean has no reason to panic

Asean is younger than its member nations, so teething problems as it continues to mature are no cause for alarm.

ASEAN’S set pieces following its meetings have become so predictable as to provoke panic when a blip in the set routine appears unexpectedly.

That happened with the anticipated joint communique following the ministerial meeting in Phnom Penh a week ago. This was the first time a communique was not issued, after disagreement over the text between the Philippines and host Cambodia on Manila’s territorial squabble with Beijing.

That was enough to set tongues wagging, pens wriggling and keyboards clacking about a presumed “turning point” in Asean and even speculation about its imminent demise.

Asean proceedings have traditionally been weighed down by diplomatic gobbledygook just because everyone expects such statements to be issued. What later happens in the conduct of member states, however removed from the spirit and content of the communiques, then becomes quite irrelevant.

Yet the substance of statements issued should be more important than the fact of issuing just any statement. After all, Asean is supposed to be more about political process than mere diplomatic procedure.

Therefore, not issuing a collective statement after this month’s pow wow among foreign ministers is better than issuing a meaningless statement just for the sake of issuing something. It makes no sense to produce a statement in the absence of a joint agreement about what it would say.

As it happened, not issuing a joint communique amounts to an indirect statement on the different positions taken by some members, in this case the hotly disputed claims on island territory between the Philippines (and to some extent Vietnam) and China.

Ironically, the Phnom Penh meeting was supposed to consolidate efforts at establishing an Asean community by 2015, as well as to reaffirm blossoming relations between Asean and China.

It may have failed at delivering either, but simply deviating from the norm by not perpetuating a scripted, choreographed and rehearsed custom regardless of circumstances is not a failure of Asean. Nonetheless, the apparent detour from the objectives of this year’s ministerial meeting was enough to turn surprise into shock for many.

Traditionally criticised for saying little and doing even less with boring predictability, Asean is suddenly seen as risking the unprecedented. Its critics should now make up their mind about the nature of their criticism, because they are beginning to contradict themselves.

The other irony concerns the Asean style itself. The regional organisation has long been assessed less by what it says in communiques than what it leaves unsaid, and understood less by what it does than what it obliquely skirts doing.

Thus going by its record, the decision not to issue a communique may be deemed doubly and traditionally Asean. Yet it was taken to be untypical of Asean.

Cynics predicting doom-and-gloom scenarios for Asean forget that its watchword has always been “resilience”, as supported by its near-half-century record. Asean is made of sterner stuff, to which its experience testifies.

But Asean is also not immune to the pitfalls of complacency. Failure to do what is needed now can escalate current challenges and lead to more problems in the future.

For what it is worth, Indonesian President Susilo Bambang Yudhoyono swiftly dispatched Foreign Minister Dr Marty Natalegawa to four Asean capitals, including Kuala Lumpur, to try to cobble together some kind of a belated joint communique.

That may be possible but unlikely, since foreign ministers who refused to be accommodating while together at an official meeting would be even less inclined to compromise when back home. Even if such a statement materialises, it would just be “in absentia” of the assembled ministers, now dispersed, and not a statement “posthumous” of Asean.

Meanwhile, news and commentary about the lack of a communique have overshadowed the issues behind it. And it is not only the absence of a communique that can be seen as untypical of Asean.

Manila and Hanoi had come into the meeting room after a recent diplomatic spat with China over competing territorial claims. Despite the ministerial meeting covering various other matters, the Philippines and Vietnam insisted that their problems with China be included in the text of the joint communique.

Cambodia, as host, refused as it saw this as unbecoming and inappropriate. Only half of the 10 Asean members have disputes over island territory with China, with the dispute in question over Scarborough Shoal/Huangyan Island involving only one Asean country, the Philippines.

Philippine Foreign Minister Albert del Rosario then openly accused his Cambodian counterpart Hor Namhong of “consistently defending China’s interest.” Point number two in being untypically Asean.

The ill will created extends beyond the scope of any Asean conference. Its import and impact have already spread beyond the few countries involved.

No country can claim victory or savour any sense of satisfaction from these developments, because they work to the detriment of all. There is also the additional risk of some countries misreading the situation to even worse effect.

China had a pie in the face when it began the conference, as an Asean dialogue partner, by celebrating the new priority of taking relations with Asean to greater heights. If it is seeking any consolation from a divided Asean, it will find itself gravely mistaken.

The Philippines is also finding that it has fewer “allies” in this imbroglio than it would have liked. Thailand had already warned it would not let bilateral differences with China upset regional ties with Beijing, while a caucus of retired diplomats in Indonesia criticised the Philippines for being “blunt” and “very un-Asean.”

The other Asean countries are not exactly behind Manila, and likewise some Filipino commentators. Even Vietnam, despite its inter-state disputes with China, has always had quieter, positive inter-party ties as fellow communist nations.

In contrast, the Philippines has only a treaty with the US. That can make matters worse through emboldening Manila in rash actions, or initiating major power conflict in the region.

Now President Benigno Aquino III has passed the handling of the issue from del Rosario to Ambassador Sonia Brady in Beijing to handle more diplomatically. A sense of realism may yet dawn after all.

In the meantime, changes in the region include some that question old ideological allegiances. Diplomats and policymakers need to be sensitive to such developments to respond accordingly.

Not only does Vietnam have serious differences with China, Myanmar may also begin to do so on separate bilateral matters. At the same time, Taiwan increasingly feels at one with China over claims on territory disputed by other countries, such as the one with the Philippines.

Beyond all the conflicting claims, some realities remain.

Asean is only 45 years old as a regional organisation in the global community of nations, so more differences between members are likely to appear in future. These should not be a problem as long as they are manageable.

Disputes are also best settled, or can only be settled, through negotiations or arbitration. Souring the atmosphere by making diplomacy difficult only makes things worse for everyone.

With China, it has been said that upping the ante only strengthens the hand of hardliners in Beijing. Most Asean countries are wise enough to steer clear of that approach, however much of a rush it may give some politicians playing to the gallery at home.

Behind The Headlines By BUNN NAGARA

Related posts:

Dawn of a new superpower 

No one can stop China in South China Sea but China - Former Philippines National Security Adviser says

China advises ASEAN to be independent

Western Imperial powers overreach, yet again! 

Asean needs to rise to its own loftier level  

Japan-China Territorial Dispute is Serious, and Escalating!

The Prime Minister’s residence in Tokyo has a “war room.”  During the a.m. hours of July 11 the room was bustling as government and Japanese

Self Defense Force officials studied intelligence and heard briefings on intrusions of three Chinese navy ships into waters around the Senkaku Islands (Diaoyutai Islands) claimed by Japan as its “exclusive economic zone”  (EEZ).

The three Chinese ships had entered Japan’s EEZ waters after 4 a.m. on the 11th.  They were met, followed, and ordered out of the EEZ by Japanese Self Defense Force ships.  They finally departed just after 8 a.m.

Later in the day, Japan’s deputy foreign minister summoned the Chinese ambassador to the Ministry of Foreign Affairs and delivered a formal protest over the Chinese “intrusion.”

At the time, Japan’s foreign minister, Gemba Koichiro, was in Phnom Penh attending the ASEAN foreign ministers’ summit.  That day, the 11th, Gemba met in a hotel with Chinese foreign minister Yang Jiechi.  The meeting was scheduled to take 30 minutes.  It continued for 50 minutes.

This could not have been a pleasant meeting.   Very likely, it was lacking in the normal diplomatic decorum.  Seemingly overnight, Japan-China relations have turned icy, bitter, and emotionally charged.

The Gemba-Yang meeting was the first since Prime Minister Noda announced on July 7 that it had become Japanese policy for the central government to purchase the uninhabited Senkaku islands–now privately owned by Japanese interests and administered by Okinawa prefecture–that are also claimed by China, which calls the chain “Diaoyutai.”

Gemba’s talking points with Yang were scripted by Noda who had told reporters on July 7:  “There can be no doubt that the Senkaku Islands are part of Japanese territory, both under international law and from a historical point of view.  The Senkakus are under the effective control of our nation, and there is no territorial issue with any country over the islands.”  (The Yomiuri Shimbun, July 8.)

How Yang responded we can only guess.  We can imagine that the two men talked—or shouted—past each other, uttering almost identical, conflicting positions.

The incursion of the three Chinese vessels was plainly a response to Noda’s announcement, and a signal from China that “nationalization” of the islands by Japan would be met by further escalation.

Tokyo mayor Ishihara Shintaro first touted in April the idea of purchasing the islands, now owned by a man from Saitama prefecture, by Tokyo municipality.  Since then he has continued to advance this idea, setting up a special team in the Tokyo government under his direct control, and raising donations from around the country that reportedly now total more than JPY 1.3 billion (USD 165 million)

Ishihara’s announcement drew a furious response from Beijing.  Also, a public comment from Japan’s ambassador to China, Niwa Uichiro, a former president of one of Japan’s largest general trading companies (sogoshosha), C. Itoh & Co.

“If Ishihara’s plan is implemented, it will produce a crisis in Sino-Japan relations. We cannot let it ruin everything we’ve done in past decades,” Niwa was quoted as saying by the Financial Times on June 7.

This statement raised hackles in nationalist circles and in both major Japanese political parties.  To hard-liners, such a statement displayed weakness and lack of resolve, and sent the wrong message to China.

PM Noda seems to have hoped to quell some of the controversy and unify Japan’s response by “centralizing” Ishihara’s initiative and making it a national government initiative.

The confrontation between Japan and China on the Senkaku/Diaoyutai issue has escalated to a truly dangerous level.  Objectively it must be stated that it has been Japan that has done the most to raise tensions.  Further escalation cannot be in the interests of either side.  While his leadership in domestic policy matters has generally been laudable, even brilliant, in relations with China on this issue he seems captive to interests that would lead Japan into a trap.

When Japan and China established diplomatic relations in 1972, Premier Zhou Enlai agreed that the issue of Daiyutai (Senkaku) could be put to one side until the time for resolution “was ripe.”  In 1978, when the two countries concluded an historic peace treaty, Deng Xiaoping said of the issue that it could be settled by “our children and grandchildren.”

Japan seems compelled to force the issue with China, while China would very likely be satisfied to live with the status quo, as long as Japan would acknowledge that it too has a claim on the islands and surrounding area.   Diplomatic negotiation of some kind of modus vivendi and mutual efforts at resource development and safe-guarding navigation would be possible on this basis.

Nothing so positive seems likely under current trends.  Quite the opposite.  Increasing, and increasingly dangerous, confrontation seems to lie ahead.

By Stephen Harner, Forbes Contributor

Newscribe : get free news in real time 

'No’ to property price speculation

Excessive Asian property price appreciation may be over for now

PEOPLE generally like to invest in properties. It is easy to understand you buy a house. It is a simple, tangible investment. It is long term and financing is usually easy. Most people tend to have positive experience after buying their first home, which normally would appreciate after a decade or two.

Simple things can morph into complex series of events. Buying houses may turn to speculation, massive speculations become a boom and bust “housing bubble”; banks may collapse from huge bad mortgages, a financial crisis and then a government bailout ensues, an economic recession soon follows. These events sound a little too familiar.

Low interest rates, massive liquidity and investors shying away from volatile stock markets, are some of the many reasons cited for Asia's potential property bubbles today. From 2009 or so, private residential properties have seen large average price jumps in China (Beijing +100%), Hong Kong (+53%), Singapore (+53%), Malaysia (+21%) and Indonesia (Jakarta +14%).

Asian policy makers have taken many pre-emptive actions to control this property “bubble”, usually by regulating excessive speculation and guiding mortgage lending by banks. In Hong Kong, policy makers try to discourage speculators by raising special stamp duty for short term resale of residential property (5% to 15%, depending on holding period); in Singapore, measures include a hefty extra 10% stamp duty on purchase price for non-residents. In Indonesia, there's a maximum 70% property loan limit.

Recent data suggest such curbs did not slow the Hong Kong or Singapore property markets for long. Transactions or prices picked up again recently. We believe however, if Asian property prices rise rapidly again, tougher curbs may be in the cards. The slew of increasingly tough measures in China the last 18 months is seen as an example. An avalanche of curbs eventually made China home prices dip for eight straight months up to May 2012.

Historically, financial crisis in many countries (Japan 1991, US 2008 and Spain today) are caused by property price bubbles bursting hurting consumers, banks and businesses. Therefore, it makes a lot of sense to have responsible lending.

Asian policy makers, having learned bitter lessons from the 1997/98 financial crisis, sees pre-emptive measures to control any potential property “bubble” as crucial to avoid banking problems or crises.

Governments in Asia on the one hand want to curb excessive price speculation, while at the same time, know that home ownership is a very important (and personal) issue notwithstanding it is also a big contributor to domestic economic growth.

What Asian policy makers aim to do is best captured in a Chinese phrase, which literally means “in peace time, think about danger”. The best time to prepare for rainy days is when the sun is shining it's a lot harder to do so in a storm.

The biggest challenge for policy makers is to develop a sustainable property sector and promote home ownership (especially first time house buyers) without boom and bust. That includes the balancing act of curbing property speculation without inadvertently pulling the brakes on the economy.

Some Malaysian non-listed property developers I met recently have expressed deep concerns that sales of their high-end, new condominiums are lagging, because buyers find it difficult to get financing.

Bank Negara's curbs on lending for third property mortgage (maximum 70% financing) and stricter banks credit standards appears to be working for now.

The intent of Bank Negara, we believe, is to nip excessive property price speculation in the bud. Current property curbs ensure at least prices don't run up too fast and banks may allocate more funds to first time house buyers rather than investors or speculators.

Interestingly, property developers who don't complain about curbs are often the established ones who prefer sustainable growth, rather than a boom and bust property market. I believe many property companies have learnt not to borrow too much.

Tellingly, the top five Malaysian listed property developers have reduced average net gearing from 70% in 2000 to 18% in 2011, (Indonesian and Thai property developers reduced from 612% to 9% and 255% to 84% respectively). Asean property companies today are undoubtedly less leveraged with healthier cash reserves.

That's one reason why most property developers in Malaysia, Indonesia and Thailand for example, are not rushing to unload properties at massive discounts, even as property curbs bite into sales. They know current measures are temporary and consumer demand is likely robust for quite some time.

Asian consumers are financially better off today. Healthy employment and wage increases across Asia means consumer demand for housing will likely stay buoyant and house prices, like in normal times, will gradually rise over time.

However, the intriguing impact on Asian properties today given the mind set and propensity of policy makers to pre-empt any potential property bubble I believe periods of excessive property price appreciation in many Asian property markets may already be over for now.

I believe policy maker's curbs on excessive price speculation is a right policy. Even if there's short-term pain, it will likely make Asian economic growth sustainable for the longer term in these difficult times.

Singular Vision
By TEOH KOK LIN

Teoh Kok Lin is the founder and chief investment officer of Singular Asset Management Sdn Bhd.

Hong Kong 15th aniversary on return to China

 Maintaining a China identity

Hong Kong SAR chief executive-elect Leung Chun-ying takes over the reins of government tomorrow and throws a challenge to the city to really call China its home.

TOMORROW, the people of Hong Kong and the mainland Chinese will celebrate the 15th anniversary of the return of Hong Kong to China.

Days ahead of the momentous celebration that will be attended by Chinese President Hu Jintao and featuring fireworks, military parade and parachute jumps, Hong Kong Special Administrative Region (HKSAR) chief executive-elect Leung Chun-ying threw a challenge to the city to really call China its home.



During an interview with the Chinese media late last month, Leung said that since the handover in 1997, the city dwellers had developed a sense of belonging with their motherland but it would take a little longer before remnants of the British influence disappear entirely.

New leader: Leung speaking to a group of low-income families at the rooftop of an old residential building in Sham Shui Po District, Hong Kong, in this file photo.

 

“There are two meanings of the handover. First, Hong Kong was legally returned to China and the Chinese government retained the administrative power of Hong Kong by establishing the HKSAR and passing the Basic Law for the ‘one country, two systems’ and ‘Hong Kong run by Hong Kong people’ model,” the People’s Daily quoted Leung.

“On the other hand, Hong Kong was under British control for 100 years. More needs to be done to rid that influence on people.”

For instance, he said, some Hong Kong people would still say that they were “leaving for China” instead of “going to the mainland”.

He cited an example where a Hong Kong saleswoman told her friend on the mainland that she had visited Beijing on her friend’s National Day, instead of referring to the celebration as hers, too.

“These people may not have any political stance when they speak that way. This is probably due to decades of British rule. We will keep on educating our people so that they can better understand the country. But we cannot rush it; it has to be done step by step,” he said.

Leung will begin his tenure as the new boss of the city for a five-year term starting tomorrow, along with his government line-up of Carrie Lam Cheng Yuet-ngor, John Tsang and 18 others.

Besides working on better interaction between Hong Kong and mainland Chinese people, the new HKSAR government has to tackle social problems such as the influx of mainlanders which puts a strain on the city’s healthcare and housing resources.

On the economy, Hong Kong will have to work around the central government’s supporting policies to maintain its competitiveness and improve its people’s livelihood.

In its editorial, the Hong Kong-based Sing Pao daily said the people of Hong Kong had mixed emotions and experienced ups and downs in the last 15 years, but the city was heading in the right direction under the “one country, two systems” policy.

“It was unavoidable that we had to ‘cross the river by touching the stones’. In the past 15 years, we have seen numerous conflict of opinions, political hostility and delayed reforms. No matter how many protests and demonstrations were staged, the majority of residents remain united in steering this boat named Hong Kong forward,” it said.

Oriental Daily hoped that Leung would “clean up the mess” left behind by his predecessors Tung Chee-hwa and Donald Tsang, and, turn around the economy and stabilise the social situation.

“During elections, Leung Chun-ying pledged to introduce a financial development unit if he was elected. Now he has walked the talk by setting up a committee headed by executive council member Laura M. Cha to form the objectives, functions and operations of the unit.

“Leung should invite financial advisers and economics experts to give their input on how to solidify Hong Kong’s status as the world financial centre and to counter future financial crises. Let us see if the Leung administration can lead Hong Kong on a new path of development,” the newspaper said.

Recently, Beijing announced a package of supporting policies such as issuing bourse-traded funds listed on both the Hong Kong and mainland stock markets, encouraging foreign investors to use the yuan for trade settlement in the city and easing restrictions on small businesses run by Hong Kong residents in the mainland.

Peng Qinghua, director of the liaison office of the central government in HKSAR, told China Daily that Beijing had played a key role in maintaining Hong Kong’s prosperity by keeping its promise of autonomy for the HKSAR government.

“The economic achievement in Hong Kong today is the result of its people’s ability to take the opportunities, and their flexibility and diligence. However, it could not have happened without the support of its motherland,” he said.

Peng hoped that the people from both sides would continue to respect their differences, improve communications and deepen cooperation in order to achieve real unity.

MADE IN CHINA By CHOW HOW BAN
hbchow@thestar.com.my

PLA gaining trust in HK

Shortly after being stationed in Hong Kong, Brigadier Zhang Jie said he was asked by a city official why were his soldiers "so invisible".

Soldiers of People's liberation Army pose for photograghs at teh Stanley barracks in Hong Kong earlier this month. Edmong Tang/China Daily

The People's Liberation Army troops had been at the garrison for a month, following the return of Hong Kong to China on July 1, 1997, and many residents expected them to have a high-profile presence.

"I told the official that the reason we were invisible was because we only leave the base when necessary, to not disturb residents," Zhang said ahead of the 15th anniversary of the handover.

This is a policy that stayed unchanged for 15 years.

The garrison, which has roughly 8,000 troops spread over battalions of infantry, engineers, airborne staff and navy personnel, is housed in several bases across the special administrative region.

Due to some differences between the mainland and Hong Kong, which the United Kingdom controlled for more than a century, and the "one country, two systems" policy, PLA troops stationed adhere to stricter rules than those in other parts of China.

"We have to be committed to strict discipline to gain the trust of Hong Kong citizens," said Zhang, who heads the garrison's infantry division.

Liang Yuejia, deputy director of the garrison's political department, explained that there was a lot of suspicion among residents at first that soldiers would get involved in local affairs, such as reacting to street protests.

"But we didn't. Unless the protesters illegally entered our barracks or threatened our lives, we did not resort to contacting the police," he said, adding that they respected such activities according to local regulations.

Even when anti-communist literature was thrown over the walls or staff received harassing calls from political groups, officials said they did not react.

That policy of noninterference has over the years helped the garrison gain a good image among residents.

A poll of 1,006 people by the University of Hong Kong last year found that only about 2 percent of those polled had a negative opinion about the garrison.

"Developing a good relationship with citizens has been the key," said Lieutenant General Zhang Shibo, commander of the garrison. "I think that mission has been accomplished."

Major Wu Qiong, a battalion commander with the garrison's communication station, added: "Before 2000, Hong Kong citizens usually kept their distance. But after years of interaction, many now often say hello. I guess that's because they are aware of our decent style of working and strict discipline."

Increasing openness

Compared with the "invisibility" of the early years, the garrison has greatly increased its openness to the outside world in recent years.

Besides regular training and exercises for army personnel, officials have also been promoting links between Hong Kong and the mainland through various activities, said Lieutenant General Zhang Shibo.

The troops have actively participated in public activities, such as planting more than 50,000 trees, donating 2.5 million milliliters of blood and helping more than 2,600 elderly people and children in care homes.

The garrison has also opened its barracks 23 times to visitors, receiving around 469,000 local people, and held summer camps for children.

The last open day, on May 1, attracted 37,000 visitors, far more than the 28,000 expected and extra free admission tickets had to be distributed. Some people waited in line overnight to get a ticket.

During the open days, guests can view the military facilities and watch soldiers perform combat skills and motorcycling stunts, including drills by the first female special forces of the PLA army.

"One of the reasons why we are gaining increasing recognition in Hong Kong is that the openness of the barracks provides local people with an opportunity to know more about us, as well as a platform for us to serve them," said Lieutenant General Wang Zengbo, political commissar of the garrison.

The activities organized by the garrison also present the PLA, the Communist Party of China and the mainland to Hong Kong residents in a proper way, Wang said. "Their national identity and patriotism have greatly increased," he said.

The garrison has organized seven military summer camps for around 1,200 local teenagers, six exchange activities with 1,600 students from 12 local universities and a military camp for college students. The troops also visited the University of Hong Kong for the first time in 2011 and talked with students.
A total of 215 teenagers participated in the military summer camp in 2011, and the number is expected to reach 260 this year.

"Despite the increase, every school can only send one student, while dozens of others actually want to come, so we'll continue enlarging the camp's scale in future," said Wang.

Tung Chee-hwa, former chief executive of Hong Kong, said the camps influence many families and hundreds of people even though there are only about 200 participants every year, and they also would influence the participants' whole life even they only last for 15 days. 

In 2010, Hong Kong saw an upsurge of young people wanting to enlist in the military. Most of the 4,000 local young people who signed up for enlisting participated in the garrison's exchange activities and military camps.

The summaries written by military camp participants revealed that the 15-day interaction with the garrison provided them with a chance to learn more about the troops, socialism, the Communist Party of China, as well as the strength of the PLA and China, Wang said.

Boosting defenses
With the garrison enjoying a good image in Hong Kong, Zhang Shibo said the focus has shifted from public relations to bolstering military defense.

The mission of the garrison is mainly to exercise China's sovereignty over Hong Kong, safeguard social stability and provide disaster relief and defense campaigns. However, military training is also a priority.

"Since 2007, we have invested millions to upgrade our army's equipment, navy and air force," said the garrison's commander.

Based on Hong Kong's strategic features, the PLA garrison added a special forces unit, an armored battalion and a chemical defense battalion. It has also been equipped with reconnaissance planes, armed helicopters and air defense missiles.

Soldiers receive regular training. More than 20 drills were held in Hong Kong over the past 15 years.
"We aim to test our basic military strength, commanding and organizing capabilities through joint drills," Zhang Shibo said.

The infantry brigade, the garrison's pillar force, has ranked at the top for three years in the military competitions in the adjacent PLA Guangzhou Military Area Command, which has the administrative control of the garrison.

Speaking of the possible challenges the garrison faces, Brigadier Zhang Jie said the garrison "needs to be prepared to tackle possible regional conflicts at all times".

Contact the writer at zhaoshengnan@chinadaily.com.cn

Yu Daimin in Hong Kong contributed to this story.
 

US naval fleet to shift towards Pacific by 2020

New strategy: The US plans to shift the bulk of its naval fleet to the Pacific, as Defence Minister Stephen Smith dismissed fears the move would stoke tensions with China. Picture: AP AP

SHIFTING FOCUS:While the US plans a ‘new strategic focus’ in Asia, China warned that now is not the time to ‘make waves’ in the South China Sea, which it claims

AFP, BEIJING and SINGAPORE

US fighter jets take off from the flight deck of the Nimitz-class USS George Washington for joint military exercises between the US and South Korea in the Sea of Japan (also known as the East Sea) on June 26, 2010.

China’s Xinhua news agency warned yesterday it was no time to “make waves” in the disputed South China Sea, after the US said it would shift the bulk of its naval fleet to the Pacific Ocean by 2020.

“It is advisable for some to refrain from muddying the waters and fishing therein,” said Xinhua, referring to the sea, which is part of the Pacific and the subject of overlapping territorial claims.

China claims the sea in full, and it is also claimed in whole or part by Taiwan, Brunei, Vietnam, Malaysia and the Philippines.

“As regards the South China Sea tensions, it is some other claimants, whether emboldened by the United States’ new posture or not, that sparked the fire and have been stoking the flames,” the agency said.

It was Beijing’s “genuine wish” to turn the South China Sea “into a sea of peace, friendship and cooperation,” Xinhua added.

The commentary was a reaction to US Secretary of Defense Leon Panetta telling a summit in Singapore yesterday that the US would shift the bulk of its naval fleet to the Pacific as part of a new strategic focus on Asia,

The decision to deploy more ships to the Pacific Ocean, along with expanding a network of military partnerships, was part of a “steady, deliberate” effort to bolster the US role in an area deemed vital to the US’ future, he said.

He insisted the switch in strategy was not a challenge to China, saying both countries had a common interest in promoting security and trade in the region.

“By 2020, the navy will re-posture its forces from today’s roughly 50/50 percent split between the Pacific and the Atlantic to about a 60/40 split between those oceans,” Panetta said.

“That will include six aircraft carriers in this region, a majority of our cruisers, destroyers, littoral combat ships and submarines,” he added.

The US Navy currently has a fleet of 285 ships, with about half of those vessels deployed or assigned to the Pacific.

Although the total size of the overall fleet might decline in coming years depending on budget pressures, Pentagon officials said the number of US naval ships in the Pacific would rise in absolute terms.

The US also planned to expand military exercises in the Pacific and to conduct more port visits over a wider area extending to the Indian Ocean.

Panetta was speaking to mainly Asian defense officials and officers from 27 countries at the Shangri-la Dialogue, an annual summit organized by the London-based International Institute for Strategic Studies.

VIDEO: US EXPLAINS PACIFIC-FOCUSED MILITARY STRATEGY CCTV News - CNTV English



Unlike previous summits, China chose not to send a high-level delegation to the event, prompting speculation as to what lay behind the move.

Since US President Barack Obama unveiled plans in January to shift toward Asia, the Pentagon has offered up few details about how it intends to achieve that goal.

Yesterday’s announcement on the future of the US fleet provided the clearest evidence yet of a shift to Asia, and the speech appeared designed to reassure allies that Washington would back its much-publicized “pivot” to Asia with tangible action.

In his speech, Panetta said budget woes in Washington would not affect the plan to tilt towards Asia, which he said would take years to fully realize.

The US planned new investments in capabilities needed “to project power and operate in the Asia-Pacific,” including radar-evading fighter jets, a new long-distance bomber, electronic warfare and missile defenses, he said.

“But make no mistake — in a steady, deliberate and sustainable way — the United States military is rebalancing and is bringing an enhanced capability and development to this vital region,” he added.

Military commanders are revising doctrine to take into account new weapons that “could deny our forces access to key sea routes and lines of communication,” Panetta said.

Amid a growing US-China rivalry, US officials privately acknowledge the push for a larger military footprint is meant to reinforce US diplomacy when confronting Beijing’s assertive stance in the South China Sea.

Related posts:
Who owns the South China Sea islets in the eyes of the world?
U.S. designs on South China Sea exposed!
China's warns US of Confrontation over South China Sea

Japan's Politics Favoring a Regional FTA over TPP?

It is easy to misapprehend Japanese politics.  It is hard—to put it mildly—to correctly apprehend them.   I say misapprehend, rather than misunderstand, Japan’s politics because the problem is not so much interpretation of information as of one of limited and biased sources of information.

Sad to say, if you don’t have Japanese and aren’t listening to and reading the Japanese media, you can simply give up thinking that any judgment you make is based on meaningfully representative information.  But even if you do follow matters in Japanese, it is hard to avoid finding one’s judgment biased by the fact that only Japan’s big business community—whose organ is the Nihon Keizai Shimbun—seems to speak on any issue clearly and with one voice.  The trap is allowing oneself to think that the Nikkei’s advocacy—because clear and forceful—holds more sway in the political process than that of a host of other interest groups, or that Japan’s political process is particularly responsive to big business.

I say this by way of apology and no doubt excuse for what I have suggested in the past is the “slam dunk” logic of Japan’s entering the Trans-Pacific Partnership (TPP) negotiations, or of meeting any ostensible deadlines for doing so, or of TTP being one of the highest priorities of the Noda government, and that accession to an agreement is critical to Japan’s future.

During the past month, and for at least the next few weeks, the Noda government—and Prime Minister Noda personally—have been engaged in a raucous and exhausting debate with dissident members of its own ruling Democratic Party of Japan (DPJ) as well as the opposition parties, led by the Liberal Democrats (LDP), over legislation to raise Japan’s consumption tax from 5% to 10%.  Noda has said many times that he is staking his political life on passage of the consumption tax rise, so vital does he believe it is to putting Japan back on a path to fiscal soundness and avoiding a Greece-like crisis.

Noda’s policy stance on the consumption tax is exactly that of Japan’s big business establishment, and the editorial pages of the Nihon Keizai Shimbun.   What about TPP—along with the consumption tax hike, a cause celebre of the Nikkei?  In fact, the trade agreement seems to have slipped completely off the agenda, at least for the time being.  Why—if it is so critical—might this be the case?

In answering this question I am indebted to an exceptionally insightful analysis by Professor Aurelia George Mulgan of the University of New South Wales in Australia recently posted in the East Asian Forum (website: eastasiaforum.org).  Apart from the obvious point that presently Noda has no spare political capital to invest in TPP, Professor Mulgan notes that “Japan’s record on signing Free Trade Agreements (FTAs) is not promising.  As a general rule, Japan prefers signing FTAs with non-agricultural exporting powers, rather than with powerhouses like Australia, New Zealand, and the U.S….  Japan has not signed trade agreements with its major trading partners or with developed countries (except for Switzerland in 2009); and it has preferred developing countries instead because it asks them to accept a lower trade liberalization rate with exceptions for some agricultural product.”

Professor Mulgan elaborates on why TPP is stalled, and may be doomed, in Japan.  I want to relate his many insights in a future post.  Now I will focus on one more; he writes:

“PM Noda has argued that by joining the TPP Japan ‘can absorb the Asia Pacific’s growth power’, but this argument is flawed because…China, South Korea, Thailand, Indonesia, and the Philippines, are not in it.”

While TPP may be going nowhere, Professor Mulgan believes that Japan will “continue to push the Japan-China-South Korea FTA proposal, which was boosted by Noda’s recent trip to Beijing.”  In fact, at the tripartite meeting in Beijing Noda suffered another humiliating snub as Hu Jintao refused to meet one-on-one with him.  Speculation was briefly rife in the Japanese press as to why this happened.  But the buzz quickly passed, as snubs from Beijing seem recently to be the rule rather than the exception.

As readers of this blog know, I believe that the China-centric Asian regional economic and trade integration is an overriding mega-trend shaping and redefining Japan’s future.

Despite the Nikkei’s advocacy, movement toward TPP has stalled.    Very likely, where Japan’s varied political interests are aligning is toward a Japan-China-Korea FTA.

Stephen Harner, Forbes Contributor

Newscribe : get free news in real time

China's Revolutionary New Thinking On Private Capital

In a stunning series of announcements last week, Beijing opened the doors to private capital.  In the process, officials signaled a reversal of a half decade of anti-reform sentiment.

Play Video China has issued new measures on guiding non-governmental capital into the domestic banking sector.

The China Banking Regulatory Commission has stated that private investors will have equal rights with other state-owned banks. Private investors can bid for the establishment and capital increase of a rural bank.



They can now have a larger share of a rural bank, as state-owned financial institutions shareholding has been lowered to 15% from 20%.

In addition, the Chinese banking industry will strengthen its financial support for private investors.

Yesterday, for instance, the China Banking Regulatory Commission announced private capital will have the same entry standards as state capital when it comes to the country’s banks.  Specifically, private companies will be able to buy into banks through private stock placements, new share subscriptions, equity transfers, and mergers and acquisitions.  Moreover, the government will liberalize investment into the rural banks and as well as the trust, financial leasing, and auto financing sectors.

And on the day before, Beijing gave the “all-clear” for the break up of state monopolies.  The State-Owned Assets Supervision and Administration Commission issued guidelines that, among other things, permit private investors to contribute cash or assets like intellectual property to state enterprises in return for equity and discourage these enterprises from placing additional restrictions on private parties when the enterprises sell their stakes in listed companies.  As SASAC noted, “The guideline reflects equal treatment of various kinds of investors and it helps ensure fairness in economic development.”

These two major developments followed a series of other recent indications of liberalization.  The China Securities Regulatory Commission announced it would allow private companies to list on domestic and foreign stock markets and to issue bonds; the National Development and Reform Commission said it is drafting rules to open the electricity, oil, and natural gas sectors to private capital; and the Ministry of Railways talked about opening railroads to private capital.  The State Council itself announced it is looking for private investment in the energy, telecom, education, and health care industries.

China, in short, is open for business, and there is no mystery surrounding the sudden change of attitude.  First, many cite the eroding profitability of state enterprises for these announcements.  In fact, official figures show that their profits fell 8.6% year-on-year in the January-April 2012 period.

Second, other factors include the decline of foreign direct investment—FDI fell for the sixth consecutive month in April—and a dramatic slowdown in economic activity—the economy showed signs of either zero growth or contraction last month.  Initial indications for this month, such as the sinking HSBC Flash PMI, are mostly bearish.

Third, Beijing technocrats realize they will fall far short of reaching their target of 36 trillion yuan of fixed asset investment because the central government can only “channel” 402 billion yuan and state enterprises are sitting on their hands.  The inescapable conclusion is that the only way to make up the difference is private capital.

Despite the country’s economic distress, it’s not clear when we will actually see implementation of the dramatic announcements.  For one thing, it is not an encouraging sign that Beijing issued precious few details.  At the moment, this looks like another instance of Chinese vaporware.

Why?  In the last few years state enterprises have become entrenched and extremely powerful in Chinese political circles.  And provincial and local governments are even more hostile to non-state capital because of the perceived divergence of interests between private investors and Party officials.

Moreover, it’s unlikely that much, if anything, will get done this year as top leaders are now embroiled in disruptive political struggles.  In fact, part of the reason for the accelerating economic slide is that for months they have been distracted by the worsening turmoil in the top reaches of the Party.  Moreover, not much may get done next year either.  Xi Jinping is slated to take over this fall, and new supremos usually take a couple years before they are able to effectively exercise power.

In any event, central government ministries, if they were truly serious about liberalization, would just implement structural changes as opposed to talking about them.  Until there is a sign he is serious this time, many will think Premier Wen Jiabao is borrowing from his 2010 playbook when he had his State Council grandly announced similar reforms that were not put into effect with real rules.

And there is one more factor suggesting private capital will not rescue the Chinese economy this time.  As domestic and foreign investors learn more about both the fundamental and cyclical problems in China, it will be increasingly unlikely that anyone will commit substantial sums to the country.

After all, you don’t see private investors heading for Greece at the moment, and in some important ways China is in far worse shape.  The internal and global narratives on the Chinese economy and political system are changing, and those changes are bound to have a negative effect on investment sentiment.

In short, Beijing’s announcements this month may evidence a welcome change of heart, but they could end up being both too little and too late to stop the country’s accelerating slide.

Gordon G. Chang, Forbes Contributor

I write primarily on China, Asia, and nuclear proliferation.

Newscribe : get free news in real time 

U.S. designs on South China Sea exposed!

BEIJING, May 25 (Xinhua) -- U.S. Senator John Kerry's recent statement on the UN Convention on the Law of the Sea has exposed the country's selfish intentions for the South China Sea, an area where the United States has no claims to sovereignty and is not a party in disputes there.

Kerry, chairman of the Senate Committee on Foreign Relations, said during a hearing on the convention held Wednesday that China and other countries are "staking out illegal claims in the South China Sea and elsewhere."

He added that becoming a party to the treaty would provide an immediate boost to U.S. credibility "as we push back against excessive maritime claims and illegal restrictions on our warships or commercial vessels."

As the United States turns its national security focus toward the Asia-Pacific region, its willingness to join the convention is a means to find a legal framework for the country to interfere with issues in the South China Sea and elsewhere, as well as maximize its strategic interests in political, economic and military fields around the world.

The U.S. is the only major nation that has refused to sign the treaty, which has been endorsed by 160 countries and the European Union.

The hearing was the first one on the treaty in four years, and the Obama administration and the U.S. Armed Forces are now pushing Congress to sign it.

The reason why the U.S. once refused to sign the treaty is that the treaty's provisions will limit the free navigational rights of U.S. warships in other countries' exclusive economic zones.

However, the U.S. attitude toward the convention is now changing.

Dr. Zhang Haiwen, deputy director of the China Institute for Marine Affairs under the State Oceanic Administration, said the U.S. has realized the disadvantages of not signing the convention, which have impaired its role as a leader in global maritime issues.

Kerry said at the hearing that ratifying the treaty will lock down the favorable navigational rights that the U.S. military and shipping interests depend on every single day. It will also strengthen the country's hand against China and others who "stake out claims" in the Pacific, the Arctic or elsewhere.

The treaty will also help U.S. companies' oil and gas investments secure the country's energy future as well as help secure access to rare earth minerals, which the country needs for weapons systems, computers and cell phones, among other products, Kerry added.

Kerry also said that China and other countries are "staking out illegal claims in the South China Sea and elsewhere." However, the truth is that he thought disputes in the South China Sea have affected U.S. companies' rights to gain oil and gas resources in the region and the free navigational rights of its vessels.

Zhang said the convention is the fruit of over a decade of international negotiations and the product of the balance of different interests. It provides fundamental and principled provisions for maritime activities for the whole of mankind.

"But the convention itself cannot solve territorial disputes," said Zhang.

She said China's territorial claims over some islands and shoals in the South China Sea have sufficient historical evidence and legal bases, and have been recognized by the international community over a long period of time.

It is dangerous that some U.S. politicians are expanding U.S. claims and raising its degree of interference. This will aggravate regional tensions and is not conducive to resolving issues.

Related posts/articles/news:

 
Who owns the South China Sea islets in the eyes of the world?

China's warns US of Confrontation over South China Sea

United we stand, divided we fall in South China Sea?

China to handle S China Sea disputes through direct negotiations
BEIJING, May 25 (Xinhua) -- A Foreign Ministry spokesman said Friday that China will negotiate directly with relevant parties in regards to resolving disputes in the South China Sea.
"China has long been committed to safeguarding peace and stability by consulting with ASEAN nations and signing agreements, such as the Declaration on the Conduct of Parties in the South China Sea," Foreign Ministry spokesman Hong Lei said. Full story

Video: China opposes third party involvement in Huangyan Island dispute

•	U.S. top diplomatic, military officials urge Senate to ratify UN sea convention
•	U.S. defense chief urges Congress to ratify UN Sea Convention
•	China to handle S China Sea disputes through direct negotiations
•	China strengthens control in Huangyan Island waters
•	China opposes third party involvement in Huangyan Island dispute