Freed China critic says wants to resume activism (AFP)

BEIJING (AFP) – Prominent Chinese dissident Hu Jia wants to resume his activism but he is weighing up the impact on his family, according to his first reported comments since being released from prison at the weekend.

During a phone interview with Hong Kong's Cable TV, Hu stressed the importance of "loyalty to morality, loyalty to the rights of citizens".

"You should be loyal to your conscience," he said in a broadcast aired late Sunday.

One of China's leading rights activists and government critics, Hu returned to his Beijing home early on Sunday, his wife Zeng Jinyan said on Twitter, after completing a more than three-year sentence for subversion.

Hu's release came just days after outspoken artist Ai Weiwei returned to his home in the Chinese capital after nearly three months in police custody, amid a government crackdown on dissent.

Hu, 37, was jailed in April 2008, just months before the Beijing Olympics, after angering the ruling Communist Party through years of bold campaigning for civil rights, the environment and AIDS patients.

He won the Sakharov Prize, the European Parliament's highest human rights honour, later that year while in prison.

Hu now faces one year of "deprivation of political rights" -- essentially a ban on political activities that typically includes not talking to media.

Chinese police have blocked access to his home, which indicates he will face restrictions on his movements and contacts.

Hu said in the phone interview that his family was pressuring him to stay out of trouble.

"They have told me: 'Live an ordinary life and don't clash with the regime because this regime is very cruel and it arbitrarily violates the dignity of its citizens'," Hu said.

"I must try to console my parents and do what I can to console them... but I can only tell them I'll be careful," he added, in a strong indication he would like to return to activism.

Hu is widely expected to be hit with the same strict curbs as those apparently applied to Ai and a range of other activists and rights lawyers, who seem to have been ordered to keep quiet after their release from custody.

On her Twitter page Monday, Zeng said well-wishers hoping to visit Hu would not be allowed in, apparently referring to the police surrounding their apartment.

"Everyone, you don't want to come visit us, you won't be able to get in. We will meet again later if we have the chance," she said.

"I'm slowly reintroducing him into society and arranging his life and work. I don't think it is necessary to say anything more."

Later Zeng posted online links to Chinese regulations that spell out numerous restrictions on those who have been stripped of their "political rights" -- which is what Hu faces.

The rules allow authorities widespread powers to supervise and monitor those affected, or assign neighbourhood and residential committees to keep them under check.

"Please refer to my Twitter accounts," Zeng said in an email to AFP, refusing to comment on Hu's legal standing with authorities.

According to the Hong Kong-based Chinese Human Rights Defenders (CHRD), police have placed numerous activists under surveillance and warned them not to visit Hu.

An editorial in Monday's English-language official Global Times, which is published for foreign consumption, complained that the support Hu enjoys in the West was linked to a Western bias toward China's communist government.

"Hu and other people win Western applause not because of what they have done for Chinese society and world peace, but simply because they are anti-Chinese government," the editorial said, in the only mention of Hu in state media.

"Mr. Hu had better keep a sober mind in the face of Western praise, just as China should keep its eye on the various comments coming from the West."

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Earthquake hits China's Yushu again (Reuters)

BEIJING, Jun (Reuters) – A 5.2 magnitude earthquake rocked a largely Tibetan region in northwest China Sunday, the official Xinhua news agency reported, more than a year after a 7.1 magnitude tremor killed 2,700 people in the same area.

It was not immediately known if there were any casualties or damage after the quake with its epicenter in Nangqian county at a depth of 10 km (six miles), Xinhua cited the China Earthquake Networks Center as saying.

A 7.9 magnitude earthquake left more than 87,000 people dead or missing and millions homeless in the southwestern province of Sichuan in May 2008, months before Beijing hosted the Summer Olympics.

(Reporting by Langi Chiang and Benjamin Kang Lim; Editing by Sugita Katyal)

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China releases human rights activist Hu Jia: wife (AFP)

BEIJING (AFP) – China has released high-profile human rights activist Hu Jia after he completed a sentence of more than three years for subversion, his wife said on Sunday.

"On a sleepless night, Hu Jia arrived home at 2:30 am. Peaceful, very happy," Zeng Jinyan, also an activist, wrote on her Twitter account.

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China securities regulator says looking into accounting issues (Reuters)

SHANGHAI (Reuters) – China is looking into accounting issues involving Chinese companies listed in North America, an official at the country's securities regulator said in the watchdog's first public remarks since a series of accounting scandals.

Corporate misbehaviour, unfamiliarity with the U.S. market and some practices involved in overseas listings had all contributed to recent investor distrust of Chinese companies, said Wang Ou, vice head of research at the China Securities Regulatory Commission (CSRC).

"First, we have to admit that some of our companies may have flaws. Second, our (companies') understanding of the U.S. market and the measures to tackle risk there may be inadequate," Wang said at a conference in Beijing this weekend.

"We have contacts with the U.S. and its relevant regulatory bodies and we're studying the issue together."

Reuters saw the footage of his comments in a video posted on the China Business News website.

Investors have sold off foreign-listed Chinese companies in recent weeks following a flurry of accounting scandals and fraud allegations.

On Monday, shares in meat processor China Yurun Food dived 20 percent on market speculation that short-seller Muddy Waters was about to issue a negative report on the company.

Wang's comments coincide with a visit to Beijing by officials from the U.S. Securities and Exchange Commission and the Public Company Accounting Oversight Board.

The delegation arrived in Beijing to meet Chinese regulators to discuss cross-boarder oversight, hoping to sign an agreement on accounting supervision by the end of this year, the official Xinhua News Agency reported on Friday.

However, experts are doubtful whether there is much the CSRC can do to deal with the situation as most of the Chinese companies listed overseas have an offshore parent company.

"All the CSRC is likely to do is to try to stop Chinese companies from listing abroad without their permission, but it's a difficult problem for them because they really don't have jurisdiction over them, so these companies fall into a regulatory black hole," said Paul Gillis, visiting professor of accounting at Peking University's Guanghua School of Management.

Much of the questionable accounting has involved reverse mergers, a type of backdoor listing in which a foreign company merges with a U.S. shell company.

To overcome regulatory hurdles, many Chinese companies have also set up legal structures under which control of a mainland-based company can be transferred to an overseas entity via certain contracts.

CSRC's Wang said this practice would expose Chinese companies to potential legal risks, another source of worry for overseas investors.

Peking University's Gillis said the main priority for China should be to tackle the practices that lead to the scandals in the first place.

"What I would expect to see is not really the CSRC but other Chinese regulators starting to enforce rules on the corruption that's taking place," he said.

"I would say the real enforcement needs to be by the Ministry of Justice and other law enforcement agencies."

(Reporting by Samuel Shen, Kazunori Takada and Rachel Armstrong in SINGAPORE; Editing by Chris Lewis and Vinu Pilakkott)

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China's Wen calls for greater democracy, reforms (Reuters)

LONDON (Reuters) – Premier Wen Jiabao called on Monday for freedom and real democracy in China, even though Beijing has clamped down on dissent this year following scattered online calls for a "Jasmine" revolution similar to uprisings in the Arab world.

Speaking on a visit to Britain, Wen also said corruption and income disparities were harming people's lives in China.

"Without freedom there is no real democracy and without the guarantee of economic and political rights there is no real freedom," he said in a speech in London.

"To be frank corruption, unfair income distribution and other ills that harm the people's interests still exist in China," he told an audience at the Royal Society, an institution devoted to scientific development and promotion.

"The best way to resolve these problems is to firmly advance the political structural reform and socialist democracy under the rule of law," said Wen, who is due to retire next year.

Wen is known to have reformist tendencies amongst China's ruling elite with earlier speeches and editorials urging the need for political reforms to safeguard economic growth.

In reality, however, an upcoming once-a-decade leadership transition and an inherently conservative ideology amongst broader party ranks make the likelihood of far-reaching reforms a remote possibility at most.

Before Wen's short visit to Europe, China released artist and activist Ai Weiwei last week whose detention drew widespread criticism abroad. One of China's most prominent dissidents, Hu Jia, was also freed on Sunday after serving 3-1/2 years in jail on subversion charges.

China's Communist Party has cracked down on dissent since February, responding to fears that uprisings across the Arab world could also inspire challenges to its one-party rule, especially before the leadership succession late in 2012.

Outside the building where Wen was speaking, groups of Tibetan activists denounced Beijing's rule in the region.

Wen, who retires next year after almost 10 years as Premier and the third-highest ranking Communist Party official, flies to Berlin on Monday after also visiting Hungary during a short European trip.

Wen has cast himself as a servant of the people and met people with grievances. However, he ultimately lacks a factional following in the elite that could give his calls a wider currency.

Earlier at a news conference with British Prime Minister David Cameron, Wen said China would have improved democracy and rule of law in future. "Tomorrow's China will be a more open and inclusive, culturally advance and harmonious society and country," he said. "A country or a nation will only grow and progress only when it is open and inclusive."

(editing by David Stamp)

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Prominent Chinese dissident freed from jail (Reuters)

BEIJING, Jun (Reuters) – One of China's most prominent dissidents, Hu Jia, was reunited with his family early on Sunday after serving three-and-a-half-years in jail on subversion charges, but he needed rest and was not ready to speak in public, his wife said.

Hu, 37, was convicted in 2008 for "inciting subversion of state power" for criticizing human rights restrictions in China, and was seen by some supporters as a potential recipient of the Nobel Peace Prize before it went to another jailed Chinese dissident, Liu Xiaobo, last year.

"He is back home with his parents and me," his wife, Zeng Jinyan, told Reuters in a brief telephone interview.

"I don't know if he can speak later. At the moment, I want everything to be peaceful. I'm worried that doing interviews at this stage might cause problems. Please understand."

Hu's long-scheduled release followed this week's abrupt freeing from detention of the prominent artist and activist Ai Weiwei, and has come while Chinese Premier Wen Jiabao is visiting Europe on trips to Hungary, Britain and Germany.

Asked how Hu's health was, his mother, Feng Juan, said by telephone: "It's so so. He was in a very good mood. The first thing he did after coming home was to take a bath. Then he had a meal."

China's Communist Party has cracked down on dissent since February, responding to fears that uprisings across the Arab world could also inspire challenges to its one-party rule, especially ahead of a leadership succession late in 2012.

Many dissidents detained in that drive have been ordered by authorities to stay silent after their release. Hu's wife, Zeng, and other advocates have voiced concern that Chinese authorities might also impose restrictions on him amounting to house arrest after his formal release.

Zeng, a prominent activist in her own right, told Reuters in late May that she was worried by the trend of rights activists coming under informal house arrest after their release from formal detention or jail.

"If we are put under house arrest or disappear, I don't want our daughter to be with us when we endure life under house arrest," she said. "I have sent her to be with my relatives."

Zeng posted messages on Twitter, the micro-blogging site, describing harassment from authorities before Hu's release.

"A prohibition on contact with the media was a condition of Hu Jia's sentence, with the one year's deprivation of political rights on his release, and no doubt the authorities will remind him of that," said Phelim Kine, a researcher for Human Rights Watch, a New York-based advocacy group that has denounced the conviction of Hu and other Chinese dissidents.

"Given the current climate of oppression, he will be under extreme pressure to obey," Kine said by telephone.

ENERGETIC CAMPAIGNER

Hu and Zeng have live in an apartment complex in east Beijing called Bobo Freedom City. Many police officers and security guards patrolled the area on Sunday morning.

"A sleepless night and Hu Jia came home at 2:30. Peaceful. Very happy. Needs a period of time to recuperate," Zeng wrote in her latest Twitter entry in Chinese. Most Chinese people lack the know-how to read Twitter, which the government blocks with a censorship firewall.

Hu was detained in late 2007 and then tried and convicted in the following year on subversion charges that stemmed from criticism of the government he had made in Internet writings and interviews with foreign reporters.

China often uses the broad charge of "inciting subversion" to punish dissidents, and when Hu was convicted, state media said that he had bowed to the accusations against him.

Before he was jailed, Hu pursued an energetic career as an environmental protection campaigner, advocate for rural victims of AIDS, and vocal critic of China's restrictions on political dissent. Shaven-headed and wearing bookish spectacles, he was a familiar sight at activist gatherings in Beijing.

Hu is also a vegetarian and Buddhist who has criticized China's controls on that religion in Tibet and voiced sympathy for the Dalai Lama, the exiled Tibetan spiritual leader reviled by Beijing.

Asked about Hu's future plans, Zeng said her husband studied law in prison and has no plans to move abroad.

"According to law, if you have any criminal record you cannot become a lawyer. But he is studying to gain more comprehensive knowledge," Zeng said in May.

"I think he has very clear and fixed ideas about the future, but we don't know what the conditions will be like (after he gets out) ... I think he will (focus) on rights defending."

(Additional reporting by Michael Martina and Benjamin Kang Lim; Editing by Sanjeev Miglani)

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China's Wen, Cameron sign trade deals worth £1.4bn (AFP)

LONDON (AFP) – Chinese Premier Wen Jiabao and British Prime Minister David Cameron signed trade deals worth ￡1.4 billion at a summit on Monday as Wen batted away questions about his country's rights record.

The two men shook hands for the cameras before holding talks with senior officials from both sides at Downing Street, the second formal meeting of the two leaders following Cameron's visit to Beijing in November.

"I am delighted that today's summit has seen new deals signed worth ￡1.4 billion ($2.2 billion or 1.6 billion euros)," the British leader told reporters at a joint press conference afterwards.

As part of wide-ranging discussions, Cameron said he had discussed China's human rights record with Wen, who flew into Britain late Saturday as part of a European tour just as Beijing released high-profile rights activist Hu Jia.

But Wen said there should not be "finger-wagging" at China over human rights.

The men also discussed the ongoing NATO military operations in Libya, in which Britain is playing a lead role.

In a rare comment, Wen said China was talking to both sides because the conflict would only be resolved by Libyans themselves, adding: "Foreign troops may be able to win war in a place, but they can hardly win peace."

Since taking office in May last year, Cameron's coalition government has made boosting trade with China a priority, and wants to increase bilateral trade to $100 billion a year by 2015.

Britain is scrambling to catch up with European rivals Germany and France, the latter of which secured contracts worth $20 billion for French firms last year.

Wen is due to visit Germany after he leaves Britain later Monday.

The new British deals concern the reopening of the Chinese poultry market for British exports, which was halted after a bird flu outbreak in Britain, and a deal to supply breeding pigs to China.

A small crowd of protesters gathered outside Downing Street for the talks, brandishing posters reading "Cameron and Wen: human rights before trade" and "Free Tibet", while a similarly sized pro-China demonstration gathered nearby.

Asked about China's rights record, Cameron said: "We should show each other respect. But we're very clear that political and economic development should go hand in hand, that one supports the other."

But Wen batted off any implied criticism.

"On human rights, China and the UK should respect each other, respect the facts, treat each other as equals, engage in more co-operation than finger-pointing and resolve our differences through dialogue," he said.

The release of 37-year-old activist Hu, jailed on subversion charges in April 2008, was widely seen as a move to defuse tensions over human rights, and followed the release on bail last week of Chinese artist Ai Weiwei.

Wen is in Britain as part of a three-nation European tour intended in part to shore up support for the eurozone. On the first leg in Hungary, he agreed to buy government bonds, and said this showed China's confidence in the currency.

Also during the visit, China's central bank chief, Zhou Xiaochuan, voiced support for French Finance Minister Christine Lagarde's bid to lead the International Monetary Fund, in Beijing's first public statement on the issue.

On his first full day in Britain on Sunday, Wen visited a car plant in Longbridge, Birmingham, central England, which is owned by Shanghai Automotive Industry Corp (SAIC), China's largest automaker.

He launched the first new MG car to be made in 15 years, the MG6 model, hailing it as a potent symbol of friendship between London and Beijing.

He also visited Shakespeare's birthplace in Stratford-upon-Avon, where he watched a brief performance from Hamlet. On Monday, he said the bard was one of the "greatest geniuses in our world".

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China says it, Vietnam agree talks needed over sea (AP)

HANOI, Vietnam – China and Vietnam have agreed to settle their dispute over the South China Sea through negotiations, Beijing said Sunday as protesters in Hanoi marched for the fourth straight week to voice their outrage at their country's more powerful neighbor.

China and Vietnam have traded diplomatic jabs over the past month after clashes in parts of the oil-rich sea claimed by both countries. But China's Foreign Ministry said the countries had agreed to deal with the dispute "through negotiations and peaceful, friendly consultations," the official Xinhua News Agency reported.

It said the State Councilor Dai Bingguo, a veteran diplomat, met Vietnamese Vice Foreign Minister Ho Xuan Son in Beijing on Saturday. Xinhua did not immediately give any other details.

In the Vietnamese capital, about 100 protesters marched down humid streets carrying signs that read: "China stop lying. China stop invading" and "Stop violating the territorial waters of Vietnam."

Protests are extremely rare in communist Vietnam and are typically quashed quickly by security forces. Still, Hanoi has allowed the demonstrations to go on for the past four Sundays amid tight security.

"The tensions in the East Sea may escalate, but if other countries join together, the Chinese may have to back down," said Phung Thi Tram, 70, referring to the area by its Vietnamese name. She yelled "Down With China!" as she marched.

Vietnam accuses Chinese vessels of hindering oil exploration surveys in an area 200 nautical miles off its central coast that it claims as its economic exclusive zone. China says Vietnam illegally entered its waters near the disputed Spratly islands and endangered Chinese fishermen.

The two sides have a long history of maritime scrapes, mainly involving areas around the believed resource-rich Spratly and Paracel islands, which are claimed all or in part by Vietnam, China and several other Asian countries. But the current spat has become much more hostile, with both sides announcing live-fire naval drills were recently held.

Relations also have soured recently between Beijing and the Philippines over the South China Sea. Manila accuses Chinese boats of making nine intrusions into Philippine-claimed waters since Feb. 25.

The United States has said that the sea, home to key shipping lanes, is in its national interest. Last week, U.S. Secretary of State Hillary Rodham Clinton said the U.S. would honor its mutual defense treaty with its ally, the Philippines. She also said Washington was willing to support a collaborative, diplomatic process by the Association of Southeast Asian Nations, which has attempted to frame a code of conduct with China.

Beijing has said all territorial disputes should be settled one-on-one with its Asian neighbors and that the United States should not be involved.

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Sudan's Bashir arrival in China delayed on flight path (Reuters)

BEIJING (Reuters) – Sudan's President Omar Hassan al-Bashir failed to show up on time on Monday in the Chinese capital for talks with his country's most powerful patron, a problem attributed to a change in the flight plan of his aircraft.

Bashir, who faces indictment from the International Criminal Court over war crimes, had been due to arrive in Beijing early on Monday for talks that will focus on Sudan's impending split into two countries.

Sudan's Foreign Ministry, in a statement published by the state news agency SUNA, said Bashir's arrival had been delayed because of a change in flight path over Turkmenistan.

"The arrival of Omar al-Bashir ... to the Chinese capital, which was expected yesterday evening, was delayed," it said.

"This was due to a change in the presidential plane's path above Turkmenistan's territory at a time when it was not possible to cross on a new path, which obliged the pilot to return to Iran." The news agency added that the Chinese and Sudanese embassies in Tehran were monitoring developments. It also said a new route had been found and it was expected Bashir would arrive in Beijing later on Monday.

A Chinese Foreign Ministry official said Bashir would arrive in Beijing in the early hours of Tuesday, and meet President Hu Jintao on Wednesday.

"It is murky, and in some ways the Turkmenistan connection deepens the confusion further. But I think it's still hugely unlikely that it is a deliberate snub," said Jamie Ingram, Africa analyst at IHS Global Insight.

"If the Sudanese were to abandon the trip altogether, I think that would be taken badly by Beijing and that would probably be unwise for Sudan. China is a very important relationship for them and Beijing could take a much more pro-South Sudan line which would be bad for Khartoum."

Analysts have said Bashir is likely to use his four-day visit to China to reassure Chinese leaders that their investments and energy stake in Sudan will not be threatened by the north-south split of his country scheduled for July 9.

Before leaving Khartoum, Bashir told Chinese media the impending split risked triggering "time bombs," but said his government's bond with China would not be shaken by Beijing's courting of the secessionist south.

Beijing has been building ties with the emerging state in southern Sudan but continues to be one of the major supporters of Bashir, who faces indictment from the International Criminal Court over war crimes charges stemming from long-running fighting in the Darfur region.

China's special envoy for Africa affairs and former envoy to Sudan's conflict-torn Darfur region, Liu Guijin, told reporters last week that China had "done a lot of work to persuade" the north to implement the peace agreement and referendum.

Khartoum seized the main town in the north-south border region of Abyei on May 21, raising fears the two sides could return to conflict. But Sudan's military and the south's Sudan People's Liberation Army last week agreed to withdraw their forces in favor of Ethiopian peacekeepers.

(Reporting by Chris Buckley and Tyra Dempster in BEIJING, Alexander Dziadosz in KHARTOUM, Parisa Hafezi in TEHRAN and Peter Apps in LONDON; Editing by Ben Blanchard and Robert Birsel)

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Sudan president's trip to China delayed a day (AP)

BEIJING – The plane carrying Sudan's president to China was forced to turn back Monday over Turkmenistan, delaying his scheduled visit to the major economic partner that invited him despite an international warrant accusing him of war crimes.

Sudan's Foreign Ministry said President Omar al-Bashir would arrive in Beijing after a new flight plan was approved from the Iranian capital, where he had been visiting. The Chinese Foreign Ministry said he would arrive early Tuesday.

The delay forced the rescheduling of a meeting with Chinese President Hu Jintao and the reasons why the plane had been redirected were not fully explained.

Sudan's Foreign Ministry said in a statement carried by the official Sudan News Agency that al-Bashir's plane had been instructed to change its route while flying over Turkmenistan but was unable to do so, and instead returned to Tehran, where al-Bashir had just attended an anti-terror conference. It did not explain why the original route was altered.

The website of the France-based Sudan Tribune cited unnamed sources as saying the presidential plane's flight path was abandoned after it was "deemed risky" but didn't elaborate.

Chinese Foreign Ministry official Guan Enxia said al-Bashir would arrive early Tuesday and that meetings with Hu and other Chinese leaders had been pushed to Wednesday.

Al-Bashir is wanted by the International Criminal Court for allegedly orchestrating atrocities in Sudan's Darfur region on the first such warrant against a sitting head of state.

The Netherlands-based court has no police force and relies on member states to execute its orders and warrants. China is not a member.

The Sudanese leader rejects the charges, and China, which has major oil investments in Sudan, has expressed concerns the indictment of al-Bashir could further destabilize the region.

Amnesty International earlier said China should withdraw its invitation to al-Bashir and arrest him if he travels to Beijing.

"If China welcomes Omar Al-Bashir, it will become a safe haven for alleged perpetrators of genocide," said Amnesty's Deputy Asia Pacific Director Catherine Baber.

Al-Bashir has traveled without arrest to several other nations, including ICC treaty signatories Chad and Kenya.

His talks with Chinese leaders are expected to focus on promoting peace in the African nation ahead of south Sudan's independence next month.

Violence has escalated in areas contested by the north and soon-to-be-independent south, and China is pressing both sides to peacefully settle the disputes, Beijing's special envoy for African affairs Liu Guijin said last week.

China has long had close ties with the leaders of the north. It has been courting support in the oil-producing south, which becomes an independent country July 9.

In an interview with China's state-run Xinhua News Agency before he left Sudan, al-Bashir said the split would not affect relations between Sudan and China, even if Beijing were to establish relations with the southern Sudan state.

He praised China as an oil partner, calling the agreements with Chinese companies a "real exchange of benefits," while saying deals with Western companies were unfair.

South Sudan's declaration of independence next month will be the culmination of a 2005 peace deal that ended more than two decades of civil war that killed more than 2 million people.

___

Associated Press writer Mohamed Osman in Khartoum, Sudan contributed to this report.

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Earthquake in remote Chinese region measures 5.3 (AFP)

BEIJING (AFP) – A 5.3-magnitude earthquake struck China's Tibetan-inhabited region of Qinghai on Sunday afternoon, the US Geological Survey reported, in an area hit by a devastating quake last year.

The epicentre of the quake was in Yushu prefecture and struck at a depth of 24.8 kilometres (15.4 miles), the USGS said.

Yushu was the site of a 6.9-magnitude earthquake in April 2010 that left nearly 2,700 people dead and more than 12,000 injured, according to state news reports.

The region, situated on the remote Qinghai-Tibetan plateau, is largely inhabited by ethnic Tibetans.

Calls to Yushu government offices on Sunday were not immediately answered.

Xinhua news agency said the epicentre of the quake was about 185 kilometres south of Gyegu town, which was flattened by last year's earthquake that left more than 100,000 people homeless.

China Central Television said the earthquake was felt strongly in the region, but did not immediately report damages or fatalities.

The quake was not an aftershock related to last year's temblor, it added.

According to the China Earthquake Network Centre, the quake measured a magnitude of 5.2.

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China, Vietnam vow to cool S. China Sea tensions (AFP)

BEIJING (AFP) – China and Vietnam pledged to resolve a row over the strategic South China Sea, state media said Sunday, in a bid to ease tensions that prompted accusations of Chinese bullying in the region.

The apparent olive branch between the testy neighbours came as the United States and Philippines readied for joint naval exercises in the face of Chinese actions and after the US called for Beijing to help lower the temperature.

Several recent incidents have put the security spotlight on the South China Sea, a strategic and potentially oil-rich area where China has sometimes overlapping disputes with Vietnam, the Philippines, Brunei, Malaysia and Taiwan.

Recently, Vietnam carried out live-fire drills and the Philippines ordered the deployment of its naval flagship after accusing China of aggressive actions.

Representatives of China and Vietnam met in Beijing for weekend talks and agreed to resolve their maritime territorial disputes "peacefully", China's Xinhua news agency said on Sunday.

They pledged to reach a "peaceful resolution of the maritime dispute between the two countries through negotiations and friendly consultations," it said.

The joint vow was made in a meeting on Saturday between Chinese State Councillor Dai Bingguo, China's senior foreign-policy official, and Vietnamese Vice Foreign Minister Ho Xuan Son.

They agreed to take measures to "safeguard peace and stability in the South China Sea", work toward an agreement on addressing maritime disputes and seek speedy implementation of the Declaration on the Conduct of Parties in the South China Sea.

The latter is a pact signed in 2002 between China and the 10-member Association of Southeast Asian Nations to prevent conflict until the myriad territorial disputes are resolved.

However, the report gave no details on specific steps to be taken or a timetable.

The United States on Saturday called for China to lower tensions through dialogue as they held talks on frictions in Southeast Asia.

Senior US official Kurt Campbell said he assured China during the talks in Hawaii that the United States welcomed a strong role for Beijing, which has warned Washington against involvement in the intensifying disputes.

"We want tensions to subside. We have a strong interest in the maintenance in peace and stability, and we are seeking a dialogue among all of the key players," said Campbell, assistant secretary of state of East Asian and Pacific affairs.

China has in the past rejected calls for multi-lateral talks on the South China Sea disputes, insisting on one-on-one contacts with other claimants.

Vietnam has accused Chinese ships of recently ramming an oil survey ship and cutting the exploration cables of another.

Meanwhile, Philippine President Benigno Aquino this month accused China of inciting at least seven incidents recently, including one in which a Chinese vessel allegedly opened fire on Filipino fishermen.

As tension climbed, China staged its own three days of naval exercises in the South China Sea.

The United States has stepped into the fray, pledging to support the defence of its longtime ally the Philippines and help modernise its cash-strapped military.

"We are determined and committed to supporting the defence of the Philippines," US Secretary of State Hillary Clinton said last week.

The two countries will hold 11 days of naval exercises starting Tuesday off the southwestern Philippines in a show of unity.

Vietnam and the United States also are to hold joint naval activities next month but they were long-planned and are unconnected to the recent tensions, the US Navy has said.

The South China Sea has long been considered one of Asia's potential military flashpoints due to the overlapping claims.

That fear has risen as China has worked to upgrade its military in recent years and made more strident declarations of its claims.

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China reports local governments owe $1.6 trillion (AP)

BEIJING – China's local governments have piled up debts of $1.6 trillion, the national audit agency announced Monday, amid mounting concern Chinese banks might be hurt if borrowers cannot repay loans.

It was the first public accounting of massive borrowing by local governments to pay for construction and other spending. The announcement, following months of speculation about the scale of the debt, might help to mollify worries about possible risks facing banks that also lent heavily to help China ward off the 2008 global crisis.

Analysts say some local governments might be unable to repay loans but a banking crisis is unlikely because China's state-owned lenders are flush with cash and avoided the mortgage-related turmoil that battered Western institutions.

Beijing has flexibility because economic growth is strong and its total government debt is well below that of the United States, Japan and some European economies, said Zuo Xiaolei, chief economist for Galaxy Securities in Beijing.

"But the government must bear the risks in mind and try to prevent the local debts expanding too fast," she said.

The National Audit Office report gave no indication what portion of local government debt might not be repaid. Its total figure was in line with estimates by outside analysts but it was unclear whether that included all government debts.

The audit office said local governments owe 9 trillion yuan ($1.4 trillion) to banks and other lenders and might be responsible for an additional 1.6 trillion yuan ($200 billion) in debt. The disclosure came in a report to China's legislature that was released on the agency website.

"Due to inadequate repayment ability, some local governments can only pay their debts by taking on still more debt," the report said.

UBS economist Tao Wang, in a report this month, said local governments eventually might be unable to repay 2-3 trillion yuan ($300-$450 billion) in loans, equivalent to 4-5 percent of total lending by Chinese banks.

Many local Chinese governments created investment agencies over the past decade to invest in construction and other projects, financed by borrowing from state banks.

An American researcher, Victor Shih of Northwestern University, has estimated total local government borrowing in 2004-09 at 12 trillion ($1.6 trillion).

Bank lending was a key element of Beijing's 4 trillion yuan ($586 billion) stimulus that helped China rebound from the global economic crisis. Beijing provided only about 25 percent of the total. The rest came from local governments, state companies and bank loans.

Regulators began to tighten controls early last year amid warnings local governments were borrowing too much.

A central bank deputy governor, Su Ning, said in March 2010 that banks might face risks if local governments defaulted. But the Finance Ministry and bank regulator later issued a statement saying risks were under control.

Many loans are likely to be repaid because they were invested in projects that will produce taxes and other revenues, analysts say. But they say some were given without required collateral, some borrowing was used for regular spending instead of investment and some governments committed the same future revenues to multiple projects.

China's top state-owned banks are among the world's biggest, with several having more than $1 trillion in assets.

Beijing injected tens of billions of dollars into China's biggest banks over the past decade to clear away mountains of unpaid loans.

"It can't be excluded that the government might remove bad debts from the banks again if there were debt defaults," said Zuo. "But that would be no good for the development of the economy and the banks as well."

___

AP researcher Yu Bing contributed.

___

National Audit Office report (in Chinese): http://www.gov.cn/zwgk/2011-06/27/content(underscore)1893782.htm

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China, Vietnam agree to resolve maritime dispute (Reuters)

BEIJING, Jun (Reuters) – China and Vietnam pledged on Sunday to resolve their maritime dispute through peaceful negotiations, a sign of easing tension over rival claims in the South China Sea which is believed to be rich in oil and gas.

Relations between the old rivals have been strained over the past month because of a flare-up in a long-standing disagreement over sovereignty in the South China Sea.

State Councilor Dai Bingguo, China's foreign affairs tsar, and Vietnamese Vice Foreign Minister Ho Xuan Son held talks in Beijing after Ho met his Chinese counterpart, Zhang Zhijun, the ministry said on its website (www.fmprc.gov.cn) said.

The two sides agreed to "peacefully resolve their maritime disputes through negotiations and friendly consultations," the ministry said.

Both sides also agreed to "strengthen public opinion guidance to prevent words and actions that would be detrimental to the friendship and mutual trust between the peoples of the two countries," it said.

"Healthy and steady development of Sino-Vietnamese relations accords with the basic interests and common aspirations of the peoples of both countries and is also conducive to regional peace, stability and development," the ministry added.

China and Vietnam have traded accusations over what each sees as intrusions into its waters in a sea crossed by major shipping lanes and thought to hold large deposits of oil and gas.

Such accusations are not uncommon between China, Vietnam, Brunei, Malaysia, the Philippines and Taiwan, which are also involved in long-standing maritime disputes.

The latest spell of tension began last month when Hanoi said Chinese boats had harassed a Vietnamese oil exploration ship. Beijing said Vietnamese oil and gas exploration undermined its rights in the South China Sea.

The two sides have conducted independent naval exercises but analysts say neither has an interest in pushing the dispute to the brink of violence.

Last week China urged the United States to leave the South China Sea dispute to the claimant states, saying U.S. involvement could make the situation worse, its most direct warning to Washington in recent weeks.

Earlier this month, navy ships from Vietnam and China held a two-day joint patrol in the Gulf of Tonkin, according to Vietnamese state media.

Two Vietnamese vessels docked in the city of Zhanjiang in China's southern Guangdong province -- the second port call by Vietnamese ships to China since 2009, Vietnamese media reported.

(Reporting by Benjamin Kang Lim; Editing by Sugita Katyal)

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Chinese dissident freed; more surveillance feared (AP)

BEIJING – A prominent Chinese political activist imprisoned for sedition was released Sunday at the end of his more than three-year sentence, his wife said, though his freedom could be limited by continued surveillance.

A major figure in China's dissident community, Hu Jia advocated a broad range of civil liberties before he was imprisoned in 2008. His 3 1/2-year prison sentence was set to end Sunday.

He returned home before dawn, Hu's wife Zeng Jinyan said in an online message. "Safe, very happy. Needs to recuperate for a period of time," Zeng said in a Twitter message.

No one answered Zeng's phones on Sunday, but she had said earlier she would announce his release on Twitter. She had visited him on Monday at the Beijing Municipal Prison.

Hu, 37, is known for his activism with AIDS patients and orphans. The sedition charge stems from police accusations that he planned to work with foreigners to disturb the 2008 Beijing Olympic Games.

Hu's release comes amid one of the Chinese government's broadest campaigns of repression in years as Beijing has moved to prevent the growth of an Arab-style protest movement.

Like other dissidents released recently from jail, Hu might be kept under some sort of continued detention in his home, although such restrictions are illegal in China.

Hu's release comes several days after outspoken Chinese artist Ai Weiwei were released after nearly three months in detention. He was one of the most prominent activists detained in China's sweeping crackdown on dissent, which began in February.

In a posting last week, Zeng said that upon his release, Hu, who suffers from a liver ailment, would be deprived of his political rights for one year and will not be able to speak to the media.

"For this one year, the focus should be on treating his cirrhosis, caring for parents and child, to avoid being arrested again," she wrote.

In late 2008, Hu won the European Parliament's top human rights award, the 50,000-euro ($72,000) Sakharov Prize. Hu was honored in Strasbourg, France, where because he was in prison, his name was placed in front of an empty seat.

China's Communist-run government heaped scorn on the award, with Beijing calling Hu a criminal.

Initially an advocate for the rights of HIV/AIDS patients, Hu expanded his efforts after the government gave little ground and he began to see the country's problems as rooted in authorities' lack of respect for human rights.

Hu used the Internet and telephone to chronicle the harassment and arrests of other dissidents and also published a series of articles criticizing the authorities for using the Olympics to mask serious human rights abuses.

In recent months, hundreds of lawyers, activists and other intellectuals have been questioned, detained, confined to their homes or simply disappeared in the wake of online appeals calling for peaceful protests across the country similar to those in the Arab world. Though no protests took place, the calls spooked the Chinese government into launching the clampdown.

There are concerns that extra-judicial tactics will be used against Hu, including illegally detaining him, said Human Rights Watch senior Asia researcher Nicholas Bequelin.

"Of course we are happy to have him be released, the problem is that we are not sure he is going to be released to freedom, but rather that he is going be again under some form of limitations to freedom, such as house arrest or monitoring and harassment by the authorities," Bequelin said before Hu's release.

Another activist, Chen Guangcheng, and his wife have been kept under an unofficial house arrest in their village in eastern China since he was released from jail last fall, and reporters trying to visit them have been kept away by thugs who patrol the village.

Chen angered authorities after documenting forced late-term abortions and sterilizations and other abuses in his rural community, but was sentenced for instigating an attack on government offices and organizing a group of people to disrupt traffic, charges his supporters say were fabricated.

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U.S., China broach South China Sea in Hawaii talks (Reuters)

HONOLULU (Reuters) – The United States and China kicked off a new round of consultations on the Asia Pacific region in Hawaii Saturday by broaching the flaring tensions in the South China Sea, a U.S. official said.

The first set of talks in the superpowers' Asia Pacific push -- agreed upon by President Barack Obama and Chinese President Hu Jintao -- came at the end of a difficult week for the two countries over the growing antagonism in the South China Sea between China and its neighbors.

U.S. Assistant Secretary of State for East Asian and Pacific Affairs Kurt Campbell emerged from the day-long talks acknowledging detailed discussions on the South China Sea and maritime security, but offered few details.

"We want tensions to subside," Campbell said. "We have a strong interest in the maintenance of peace and stability. And we are seeking a dialogue among all the key players."

China has shown increasing assertiveness in its claim to the entire South China Sea, believed to be rich in oil and gas. Vietnam has accused Chinese boats of harassing a Vietnamese oil exploration ship in the region.

Campbell said the U.S. delegation stressed China's military expansions have raised concerns, but hoped greater transparency and dialogue would help ease those concerns.

His counterpart in the talks, China's Vice Foreign Minister Cui Tiankai, did not make himself available to the media.

Earlier in the week, Cui told foreign reporters in Beijing China had not provoked any incidents in the South China Sea and said if Washington wanted to play a role it should urge restraint on other claimants.

Secretary of State Hillary Clinton struck back by saying she was "concerned that recent incidents in the South China Sea could undermine peace and stability in the region."

She pledged support to the Philippines, which lays claims to parts of the South China Sea, along with Brunei, Malaysia, Taiwan and Vietnam.

The two delegations also discussed North Korea and Campbell said he asked China to urge North Korea to deal responsibly and appropriately with South Korea without provocation.

"We believe that for North Korea to be effective in its diplomacy, it must responsibly first work and engage with South Korea and we are encouraging that process as we go forth," Campbell said.

Also discussed were issues relating to climate change, health, disaster preparedness, piracy, and poverty in the Asia Pacific region.

The next round of talks will take place in China, Campbell said.

(Editing by Mary Milliken and Todd Eastham)

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Freed critics not a sign China is soft on dissent (AP)

BEIJING – Despite recent releases of high-profile critics, China's authoritarian government seems as determined as ever to silence dissidents and run roughshod over their thin legal protections, activists and academics said Monday.

Sunday's scheduled release of the prominent activist Hu Jia from a Beijing prison came days after outspoken Chinese artist Ai Weiwei was freed after nearly three months in detention.

A major figure in China's dissident community, Hu advocated a broad range of civil liberties before he was imprisoned in 2008. Ai was the most high-profile target of a sweeping crackdown on activists that started in February in a bid to prevent protests similar to those in the Middle East and North Africa.

Activists welcomed the releases but said the international community should not take the developments as signs of softening in the government's attitude toward its critics, noting that Hu was freed only after he had completed his 3 1/2-year sentence for sedition. Ai was never formally indicted and was mysteriously released under a form of bail that restricts suspects' movements to their home city for one year.

Activists also note that many once-vocal activist lawyers and dissidents who were rounded up in the government crackdown that started in February have been silent since their release. Ai told reporters last week that the conditions of his release mean he cannot give any interviews or say anything about his case.

Many petitioners and other activists also continue to be rounded up routinely, they said.

"We closely follow dozens of rights' defense cases, and I've found that that at the grassroots and lowest levels of society in China, the rights defense environment has not seen any fundamental improvements," said Huang Qi, a veteran dissident who was released earlier this month from prison at the end of his 3-year jail term for illegal possession of state secrets.

"One cannot count how many ordinary people are being locked up or taken away every day," Huang said by phone.

Bruce Jacobs, a China expert at Monash University in Australia, said China was not easing its clampdown on dissent. "I don't think there's any evidence that the Chinese regime is softening up," Jacobs said. "I think fundamentally it will want to hold on to its hard line."

U.S.-based Chinese activist Wan Yanhai suggested, however, that there could be an easing of pressure on rights activists in the short term. Wan argued that the government might be realizing that the current crackdown has not prevented recent bouts of unrest, such as riots by migrant workers in southern China's Guangdong province and protests by ethnic Mongolians in the north.

Many have pointed to the restrictions imposed on the dissidents despite their release as evidence the government is not letting up. Hu and his wife are apparently not allowed to receive any visitors.

"Everyone, please do not come to visit us, you will not be allowed in. We will meet you when there is a chance," Hu's wife, Zeng Jinyan, said in a posting on her Twitter page on Monday.

Hu was dropped off at his Beijing home in the early hours of Sunday morning, apparently to evade media attention, and on the day of his return, dozens of police and plainclothes security patrolled the compound where the couple live.

In a brief phone interview with Hong Kong's Cable TV on Sunday, Hu, too expressed concern about hostility from the authorities though he indicated he would not give up his work.

"(My parents) have told me to just be a normal citizen and don't confront the system because this system is very cruel, using the country's absolute power to violate people's dignity without restraint. But I can only tell my parents I will be careful," Hu said.

Another activist, Chen Guangcheng, and his wife have been kept under an unofficial house arrest in their village in eastern China since he was released from jail last fall, and reporters trying to visit them have been kept away by thugs who patrol the village.

Such illegal detentions mean China is moving further away from international norms on human rights, said Human Rights Watch senior Asia researcher Nicholas Bequelin.

"The Chinese government used to tell diplomats that they were handling things according to law whenever a dissident was arrested. They would justify it. And we would not agree with the justification. Now they just flatly deny that they are arbitrarily detaining these people," Bequelin said.

China's state-run Global Times newspaper, meanwhile, lambasted the Western media's coverage of Hu's release, saying that they were "making a saint" out of Hu, a person the paper said is unknown to most Chinese people.

"Hu and other people win Western applause not because of what they have done for Chinese society and world peace, but simply because they are anti-Chinese government," the paper said in an editorial Monday.

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How China's Public Officials Stole $120 Billion and Fled (Time.com)

By XIN HAIGUANG / ECONOMIC OBSERVER / WORLDCRUNCH Xin Haiguang / Economic Observer / Worldcrunch – 2?hrs?34?mins?ago

This post is in partnership with Worldcrunch, a new global-news site that translates stories of note in foreign languages into English. The article below was originally published in the Economic Observer.

Just how many corrupt Chinese government officials have fled overseas? How much money have they stashed away? And how did they manage to transfer abroad such colossal sums?

Last week, the People's Bank of China published a report that looked at corruption monitoring and how corrupt officials transfer assets overseas. The report quotes statistics based on research by the Chinese Academy of Social Sciences: 18,000 Communist Party and government officials, public-security members, judicial cadres, agents of state institutions and senior-management individuals of state-owned enterprises have fled China since 1990. Also missing is about $120 billion. (See photos of the flooding in China.)

The People's Bank of China report stresses that until now, nobody has been able to provide an authoritative figure of the exact sum pilfered, and the figure of $120 billion is still only an estimate. It is nonetheless an astronomical sum. It is equivalent to China's total financial allocation for education from 1978 to '98. Each escaped official stole, on average, $7 million. But the real numbers might be even higher. Some media have reported that the wife of the deputy chief engineer of the Ministry of Railways, Zhang Shuguang, who was recently caught for corruption, owns three luxury mansions in Los Angeles and has bank savings of as much as $2.8 billion in the U.S. and Switzerland. This example gives a glimpse into the broader picture.

The number of corrupt officials fleeing China reflects the government's serious attitude about the crackdown on corruption. But if corruption, dereliction of duty and abuse of power are the norm, then the system itself is corrupt. The number also highlights multiple failings in China's embarrassingly ineffective anticorruption campaign.

It takes considerable time for an official to gain a large sum of money by corrupt means and then organize to smuggle it out of the country. Not being able to catch someone during this long time period is the government's first failing. (See photos of China's transit system.)

Next, when a corrupt official prepares his flight, he usually first sends his wife and children overseas while staying behind in China as a so-called naked official. To have such "naked" yet unexposed officials makes for a second failing.

In a country where capital outflow is strictly controlled, how on earth do these people manage to transfer their money overseas successfully? This is the third failing.

And the fourth failing: how they manage to change their identity. These crooks usually hold multiple passports and use many identities. For instance, the former governor of Yunnan province, Li Jiating, had five passports, all real.

The way they escape punishment is the fifth failing. Extradition involves the political and judicial systems of two countries, each with its own concept of law enforcement. The judicial procedure is often complicated and tedious. Extradition is very often obstructed by the fact that a person condemned to death in absentia cannot be extradited for human-rights reasons. In addition, China has not signed extradition treaties with the U.S. or Canada, the two most used destinations, so once the official has run away, the chance of catching him and putting him on trial is close to zero. (See photos of the panda people of China.)

Even if they do get caught, the stolen funds are rarely recovered. This is the sixth failing. The U.N. Convention Against Corruption sets out the principle of returning illegal assets, but the procedure is difficult in practice. Not only does China have to show that it owns the assets, but it also has to share some of the money with the countries participating in the joint action. After deductions here and there, there isn't much left.

And, finally, the seventh failing: the government officials who have managed to escape set an example for those still hiding at home. Some of them once held high positions with access to important state secrets and were likely bribed by hostile parties. This poses is a threat to China's political, military and economic stability.

It is for these reasons that it is more important to stop corruption at the source than to catch the culprits after it has happened.

Policies combating money laundering or obliging top government employees to report their personal wealth will not solve this problem. Nor will the close monitoring of naked officials. The effective solution would be to establish a clean system where nobody dares to be corrupt. Certain media have suggested the implementation of a property declaration system. This would be like using antiaircraft guns to fight mosquitoes. But at least it would be a weapon that knows its target.

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Berlin, Beijing to talk euro (Reuters)

BERLIN (Reuters) – Germany and China will discuss the euro and world currency system reforms during a visit by Premier Wen Jiabao, a German government source said, as Berlin said it would welcome more Chinese firms as long-term investors.

Fresh from reiterating China's commitment to the euro zone and the region's volatile debt market, Wen arrives in Berlin later on Monday for a visit that starts with dinner with Chancellor Angela Merkel.

Noting that China "has in the past diversified its currency holdings" including into the euro, the German source said the currency would be discussed by the two countries' finance ministries during the two-day visit.

"China has in the past diversified and also built up euro reserves. The issue of the development of the euro will play a role in talks," said the source, who asked not to be named.

China's intentions regarding holdings in the common European currency and investments in the sovereign debt of euro zone countries -- especially troubled peripheral states like Greece -- is the subject of huge speculation.

About a quarter of China's record foreign currency reserves of more than $3 trillion are estimated to be held in euros and China has reiterated its confidence in the euro since the debt crisis began, as well as pledging to buy euro zone debt.

Its support for global currency reforms was affirmed on Sunday by the head of the country's pension fund.

But Chinese officials have also urged EU officials to take action to address debt problems and bolster faith in the euro.

European Central Bank policymaker Juergen Stark cautioned on Monday that he did not see China as a "rescuer" of the euro, nor did he believe the currency needed to be rescued.

"It's not a matter of China rescuing the euro. That is a completely misplaced interpretation of what might be discussed," Stark said. "If China decided to buy Greek government debt, that would be a decision for the Chinese leadership."

"I don't see China as the rescuer of the euro. I don't think the euro needs to be rescued," he told a conference in Berlin.

CHINESE RESPONSIBILITY

The German source said the issue of reforms to the world currency system, which France has put high on the agenda in its current presidency of the G8 leading economies, would also be on the agenda of talks with China.

"The important thing here is China's growing responsibility because of its large trading volume," the German source said.

On the issue of trade and investments, the source pointed out that while Germany's direct investments in China amount to about 20 billion euros to date, China has only invested about 600 million in Germany, meaning there was room for growth.

China is Germany's fifth biggest export market and the biggest importer of goods into Germany, with bilateral trade volume last year reaching 130 billion euros, up more than 34 percent on the previous year, the German official said.

But the official detected a "change of direction" in China's lagging investments in Germany, noting "strong Chinese interest in German companies." Wen's visit will include the signing of corporate deals in the auto, aerospace and chemical sectors.

German government ministers said their country has no reason to fear long-term Chinese investments but does need to ensure that German firms' intellectual property rights are upheld.

"Germany's economy is benefiting from China's strong growth rate ... and I see no reason why German firms shouldn't be able to hold their own against Chinese competitors," Economy Minister Philipp Roesler said in a German newspaper interview.

Foreign Minister Guido Westerwelle said it was crucial to ensure German firms going into closer cooperation with Chinese partners are able to protect their intellectual property rights.

China's German investments have to date focused on small and medium-sized firms, though media have speculated on a possible tie-up between Opel and China's Beijing Automotive Industry Holding Co (BAIC). The German carmaker already works closely with another Chinese firm, SAIC Motor Corp (600104.SS), via parent General Motors Corp (GM.N).

(Additional reporting by Annika Breidthardt, Andreas Rinke and John Stonestreet; Editing by John Stonestreet)

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China denies safety lax on high-speed rail link (AFP)

BEIJING (AFP) – A top Chinese railway official tried Monday to ease safety concerns over a major high-speed rail link between Beijing and Shanghai, just three days ahead of the much-anticipated formal launch.

He Huawu, chief engineer at China's railway ministry, dismissed accusations by a former official that the top speed of the nation's high-speed trains -- as set by the ministry -- was unsafe, the official Xinhua news agency said.

"The claims of the former MOR (railway ministry) official are groundless," Xinhua quoted He as telling a news briefing. China's high-speed trains are "fast, comfortable and safe", he stressed.

His comments came after Zhou Yimin, a former deputy railway chief engineer, told state media last week that claims the trains could run as fast as 350 kilometres per hour (217 miles per hour) were "fraudulent" and ignored safety standards.

A major corruption scandal that erupted in February has also raised concerns over the costs and safety of China's high-speed rail links.

Then railways minister Liu Zhijun was dismissed after an investigation into "serious disciplinary violations" -- a term that usually results in criminal charges.

He had allegedly taken more than 800 million yuan (123 million dollars) in kickbacks on contracts linked to China's high-speed rail network, which state press reports have said may have resulted in shoddy construction work.

In April, officials issued a nationwide directive saying all high-speed trains must run at a slower pace than previously announced -- no faster than 300 kph.

Officials have since said the trains on the $33 billion Beijing to Shanghai link will run between 250 and 300 kph, and not the maximum speed of 380 kph.

The eagerly awaited line goes into service on Thursday, just one day before the ruling Chinese Communist Party marks its 90th anniversary.

The link, which has been operating on a trial basis since mid-May, will cut the journey between the two cities to four hours and 45 minutes -- two hours less than the fastest current trip by train.

A flight between Beijing and Shanghai takes about two hours. But travel to the airports is time-consuming, and the busy air route is often subject to delays and cancellations, making train travel a reasonable option.

China has invested heavily in its high-speed rail network, which reached 8,358 kilometres (5,180 miles) at the end of 2010 and is expected to exceed 13,000 kilometres by 2012 and 16,000 kilometres by 2020.

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China, Vietnam 'to resolve maritime row' (AFP)

BEIJING (AFP) – China and Vietnam have pledged to resolve a row over competing South China Sea territorial claims "peacefully", Chinese media on Sunday quoted both sides saying after tensions spiked over the issue.

The neighbours pledged to reach a "peaceful resolution of the maritime dispute between the two countries through negotiations and friendly consultations," a report by China's official Xinhua news agency said.

The joint vow was made during talks in Beijing on Saturday between Chinese State Councilor Dai Bingguo, China's senior foreign-policy official, and Vietnamese Vice Foreign Minister Ho Xuan Son.

They agreed to "take effective measures to jointly safeguard peace and stability in the South China Sea" and speed up talks aimed at reaching an agreement on addressing bilateral maritime disputes, Xinhua said.

But no details on specific plans or timings were given.

Besides the recent Sino-Vietnamese tensions, the Philippines has also complained of increasingly aggressive actions by Beijing in waters claimed by both nations in the strategically vital and potentially resource-rich South China Sea.

The Philippines and China -- along with Brunei, Malaysia, Taiwan and Vietnam -- claim all or part of the South China Sea, and the area has long been considered one of Asia's potential military flashpoints.

The United States has stepped into the fray, pledging to support the defence of its longtime ally the Philippines.

Those two countries will hold 11 days of naval exercises starting on Tuesday off the southwestern Philippines in a show of unity.

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US, Japan delay Okinawa plan but hold firm (AFP)

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WASHINGTON (AFP) – The United States and Japan acknowledged Tuesday that they would miss a 2014 deadline for a controversial shift of a US base in Okinawa, but stood firmly behind the plan in the face of opposition.

The future of the Futenma air base on the subtropical island has bedeviled ties between the Pacific allies for years and both governments have been eager to push ahead on a 2006 deal instead of restarting exhaustive talks.

In a joint statement after top-level talks, the Pacific allies said the relocation "will not meet the previous targeted date of 2014" but renewed their commitment to complete the project "at the earliest possible date."

Secretary of State Hillary Clinton and Defense Secretary Robert Gates, meeting with their Japanese counterparts, also confirmed plans to move 8,000 Marines and some 9,000 dependents from Okinawa to the US territory of Guam.

Under the 2006 plan between previous governments, the United States planned to shut the flashpoint Futenma base in Okinawa which has long been a source of grievance as it lies in a crowded urban area.

The Japanese and US leaders on Tuesday endorsed building a replacement base with V-shaped runways at Henoko on an isolated stretch of beach elsewhere on the strategically located island.

A number of activists on Okinawa demanded that the base be removed entirely from the island, the often reluctant host to half of the 47,000 US troops based in Japan under a post-World War II treaty.

US senators recently moved to force the Pentagon to consider a new option, saying the current plan is too costly and politically unrealistic when Japan should be focusing on the rebuilding from its massive earthquake.

Gates, addressing one of his final news conferences as defense secretary, tried to put the effort led by Senators Jim Webb and Carl Levin -- members of President Barack Obama's Democratic Party -- in the context of the current plan.

"The letter from Senators Webb and Levin about the realignment is really a manifestation of growing congressional impatience about the lack of progress," Gates said at a four-way news conference with Clinton.

"We both reaffirmed the US government's commitment to the 2006 realignment plan, but at the same time emphasized the importance of concrete progress over the course of the next year," Gates said.

One prime minister, Yukio Hatoyama, resigned last year after failing to fulfill campaign promises to renegotiate Futenma, with the Obama administration insisting the crux of the deal was not open to debate.

His successor, Prime Minister Naoto Kan, has sought to move ahead with the base plan without tying his fate to the issue as he focuses instead on the earthquake aftermath and his government's survival in parliament.

Defense Minister Toshimi Kitazawa played down criticism that the center-left Democratic Party of Japan has held up progress since taking power in 2009, saying: "This is the cost that is entailed in democracy when we have a change of government."

"The purpose of the US realignment is to maintain deterrence and to reduce the local burden, so we will be making maximum efforts with the United States to achieve both objectives."

Under an alternative plan drafted by Webb, a former Marine who represents Virginia, Futenma would be closed and its air assets largely shifted to Okinawa's existing Kadena Air Base.

Webb also proposed shifting some of the existing air assets from Kadena to elsewhere in Japan and Guam, a solution he said would ease both congestion and costs in Okinawa.

The Senate Armed Services Committee last week agreed to cut off funding for the 2014 shift until the Marine Corps comes up with a new study on Guam -- where opposition is also building -- and considers the alternative on Futenma.

Senator John McCain, the top Republican on the committee, has supported the effort, telling a forum Monday: "As new realities and cost overruns call our current plans into question, Congress must ask the hard questions."

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Chinese artist Ai Weiwei says assistant freed (AFP)

BEIJING (AFP) – Chinese artist Ai Weiwei confirmed a fourth associate of his had been released from detention, just days after the activist himself was unexpectedly freed on bail.

Ai's assistant Wen Tao returned home on Friday night, the activist told AFP in a text message -- the same day his accountant and designer were freed. The artist's cousin and driver Zhang Jinsong was released Thursday afternoon.

Ai was freed from nearly three months of detention late Wednesday because of his "good attitude" in admitting to tax evasion, his willingness to repay taxes he owes, and on medical grounds, the government said previously.

His detention -- which came during a major government crackdown on activists launched in February -- sparked furious criticism led by Western governments who repeatedly called for his immediate release.

"I'm fine. I'm very happy to be free and I'm very happy to be back with my family," Ai told AFP by telephone early Thursday.

The terms of Ai's bail conditions prevent him leaving Beijing "without permission", the foreign ministry said Thursday, and the previously vocal activist has told foreign media that he cannot accept interviews.

Ai and his four associates were released as Chinese Premier Wen Jiabao embarked on a trip to Europe, with stops in Hungary, Britain and Germany.

London and Berlin have been among the most vocal critics of Ai's detention.

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Analysis: Sino saga shows flaws in Canada's regulatory regime (Reuters)

TORONTO (Reuters) – Canadian regulators are under fire for their disappearing act as shares of Chinese forestry company Sino-Forest melted down, raising new questions about a regulatory regime that's long been criticized for lacking teeth.

Sino-Forest, which three weeks ago had a market capitalization of about C$4.7 billion, is now worth just C$700 million, after accusations of fraud leveled by Hong Kong-based short-seller Carson Block and his one-man firm Muddy Waters sent its shares and bonds into a downward spiral.

Regulators said they had launched an investigation, but then stayed silent, doing nothing to quell the speculation, halt the stock or drill down into the problems.

There were similar complaints of inaction during the huge Bre-X stock fraud of the 1990s, while shareholder activists noted bitterly that press baron Conrad Black was successfully prosecuted in the United States and not in Canada.

"We have a system in Canada that is 80 years behind the times," said Al Rosen, a forensic accountant with Rosen & Associates, who said Canada's current reporting standards serve the interests of auditors more than investors.

He said Ontario regulators, responsible for Mississauga, Ontario-based Sino-Forest under Canada's patchwork of provincial regulators, have let investors down, and Canada would be better served by a single securities regulator, with separate prosecution and regulation arms.

"If you don't have these people with proper supervision and leadership and guts and courage you've got nothing," he said.

The Ontario Securities Commission, the biggest of Canada's provincial regulators, did not return repeated phone calls seeking comment.

"The OSC's policy all the time is to not comment, which is a convenient policy, right?" said Rosen. "So when the OSC say, we're giving it the same treatment we've given everything else, you can read anything you want into that. I read into it that they're doing nothing again."

Joseph Groia, a securities lawyer and former director of enforcement at the OSC, also believes regulators were slow to respond in the Sino-Forest saga.

"As best I can tell, they've done nothing. My view is that the horse is out of the barn and there is probably no point in them doing anything now," he said.

MARKET 1; REGULATORS 0

Block, in his fifth successful assault against the stock of a North American-listed Chinese company, said Sino-Forest had fraudulently overstated its assets in a gigantic Ponzi scheme.

Sino-Forest denies the charges.

But while some experts said the OSC should have halted Sino-Forest shares pending probes into the allegations, others said the market should decide the company's fate.

"With 20/20 hindsight you can always say regulators should have done more. But that doesn't mean that at the time there were any warning signs, or red flags that suggested they should have done more," said Cristie Ford a University of British Columbia professor and an expert on securities regulation.

Ford is less sure that U.S. regulators would have been more proactive in their response than their Canadian counterparts and said the Canadian framework is more "compliance-oriented."

"It's about trying to catch things before they require enforcement action rather than hitting the company with the big stick after they've done the bad thing," she said.

"The Americans are very much outliers when it comes to how much enforcement and how much strong action they take in these kinds of situations, relative to everybody, not just Canada."

Sino-Forest's collapse has prompted parallels with Canada's 1997 Bre-X mining scandal, when rock samples were salted with gold to create the impression of a massive gold strike.

That scandal led to a whole new regulatory framework to govern how miners outline mineral resources, and some said Sino-Forest's woes could prompt new rules on other matters, regardless of whether the accusations turn out to be true.

"It is very likely that once the matter of Sino is fully determined one way or the other, the regulators will take a more proactive role in closing any gaps that might have occurred," said Darryl Levitt, a lawyer with Macleod Dixon.

WHO'S IN CHARGE?

But for now, investors burned by the scandal are left to wonder who is actually in charge.

"There are quite a few regulatory bodies in Canada and it would appear that the buck is being passed," said Levitt.

Federal government officials defer to provincial regulators, while officials at IIROC, which oversees trading activity, and the Toronto Stock Exchange operator TMX Group point to the OSC as the organization that handles cases like this.

"I think they've been lax right across the board," said Rosen, author of the book "Swindlers," which says Canadian regulators who should watch corporations and protect investors are all too often missing in action, or asleep at the wheel.

"It's like having signs on the highway that say it's 50 km/h. But there's never any police, there's never any radar, there's never any helicopters. How many people are going to treat it seriously?"

BLAME THE ANALYSTS

The Sino-Forest case and accounting scandals at other North American-listed Chinese companies have also shone a spotlight on the murky world of reverse takeovers, that let small private entities go public via listed shell companies with far less scrutiny than through an initial public offering.

"For certain types of transactions, even if they are done via RTO's, regulators may ask for a prospectus, as opposed to an information circular and thus up the nature of disclosure required," said a lawyer who asked not to be named due to a conflict of interest.

Even as class action lawsuits pile up against Sino-Forest, its directors, its management and its auditors, some say analysts and short-sellers like Muddy Waters should also be held accountable for their actions.

"There are eight research analysts covering this company, all of whom had a buy or an outperform rating on this stock. It's their job to kick the tires in a way that regulators never do," said UBC's Ford.

"If you're going to lay this at the foot of the regulators for not having put a cease trade on this company it seems a little bit misplaced. What about all those research analysts? Why weren't they doing the job they were meant to be doing?"

Any case against analysts who touted the stock, or others that have slammed the company is unlikely to proceed until the allegations are proven, or quashed by an independent probe.

Groia said regulators should watch short-sellers like Muddy Waters too.

"This ought to be a lesson that the regulators learn from, so that they put more liability on the Muddy Waters of this world," he said. "They are not doing this because they are altruists; they are doing it because they are capitalists."

(Additional reporting by Louise Egan and Randall Palmer; Editing by Janet Guttsman)

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Taiwan's legislature may open to Chinese tourists (AP)

TAIPEI, Taiwan – Taiwan's parliamentary speaker has said he will consider opening the legislative floor to Chinese tourists so they can learn from the island's freewheeling democracy.

Lawmaker Wu Yu-sheng of the ruling Nationalist Party proposed late Friday that the legislature open its floor to the visiting Chinese because "out of all places in Taiwan, the legislature is where democracy is most thoroughly implemented."

Speaker Wang Jin-pyng agreed to study the proposal to help spread the island's democracy to authoritarian China, according to television reports.

More than 600,000 Chinese tourists visited Taiwan last year. The two sides split amid civil war in 1949 and China still claims the democratic island a part of its own territory, but ties have improved substantially under Taiwanese President Ma Ying-jeou's three-year efforts to engage China economically.

Taiwanese tour operators say many Chinese tourists — used to the propaganda programs on state TV — have asked to stay in their hotels to watch the freewheeling TV political talk shows on Taiwan.

The United Daily News said a number of Chinese college students had received a "shock education" when interning at Taiwan's legislature.

"They were surprised that our lawmakers could question and even shout at senior government officials," the report said.

Taiwan's senior officials, from the premier to all ministers, regularly deliver reports to the legislature and patiently answer lawmakers' questions in lengthy sessions. Following Taiwan's transformation to democracy in the 1990s, lawmakers frequently ripped off microphones and brawled with their colleagues over differences, but such displays have given way to verbal debates in recent years.

Taiwan's leaders hope the visiting Chinese envy the island's freedoms and human rights and in turn demand that their government relax its strict political controls.

The influx of Chinese tourists has brought a business bonanza to Taiwanese luxury hotels, stores for designer goods as well as souvenir and snack vendors. Chinese tourists have had to travel in supervised group tours, out of fear some of them may stay behind to work illegally, but Taiwan officially allowed them to travel on their own earlier this week. The first independent Chinese tourists are scheduled to arrive Tuesday.

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Mirza in new knee injury agony (AFP)

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LONDON (AFP) – India's Sania Mirza was battling agonising pain as a nasty knee injury left her bid to win Wimbledon doubles glory resting on an ultrasound scan.

Mirza was already carrying a niggling left knee problem but tweaked it within minutes of starting her Wimbledon singles first round match against France's Virginie Razzano on Tuesday.

The world number 60 battled on and even won the second set despite being unable to change direction in her 7-6 (7/4), 2-6, 6-3 first round defeat.

The 24-year-old has been playing a "ridiculous" non-stop schedule and whatever the doctors say, she plans a break after Wimbledon regardless.

"I've had the same injury since just before the French Open. I've been playing a lot on it," Mirza said.

"It will get worse if I keep playing on it. At 3-0 I tweaked it in the first set. I served and fell on the leg, tried to change direction and jerked it. I was already on painkillers but immediately the pain level went up 10 times.

"I have to see the doctor and get an ultrasound scan.

"It is very, very painful. I can still serve but I can't move and change direction. I'm hurting to go up and down stairs and even to walk."

Mirza did not blame the injury directly on her schedule but admitted the punishing round of singles, doubles and qualifiers takes its toll.

"Tennis takes a lot out of you physically and emotionally," she said.

"I've been playing for 12 months continuously. It's not easy on the body.

"From the French Open until Birmingham, I had 21 days of no day off. That's ridiculous on the body. Anyone's body's going to collapse. But that's the way the season is.

"I was going to take a little off season after Wimbledon but depending on what my knee says I'll decide what to do."

Razzano will now face Danish top seed Caroline Wozniacki in the second round.

Mirza feels she would have struggled to give a good account of herself given how bad her knee feels.

"Maybe it's better because going into the next match I would play the number one in the world. That's hard enough and to play with one leg isn't very easy," she said.

Mirza has formed a fruitful partnership with Russia's Elena Vesnina and they are seeded fourth here, while she is also eyeing a shot at the mixed doubles.

The right-hander says she could still cover the right side of the court with a left knee injury.

"I could play with solid taping but it's a decision I have to make after I get the ultrasound as to how bad it could get if I do play on it," she said.

"I don't want to do something silly and be out for six months. That's the last thing you need."

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Tata Group overtakes Reliance as India's wealthiest (AFP)

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MUMBAI (AFP) – India's leading conglomerate Tata Group has become the country's wealthiest in terms of market capitalisation, beating the combined wealth of the two Ambani brothers, stock exchange data showed Tuesday.

The salt-to-steel Tata Group, led by chairman Ratan Tata, was worth 4.32 trillion rupees ($96 billion) -- the highest for any Indian corporate group. The combined value of the two Reliance groups was 3.46 trillion rupees.

Tata and Reliance officials declined to comment on or confirm the data, which is based on an analysis of volume and prices of shares in both the groups' listed companies on Indian exchanges.

Tata Group subsidiaries have reported improved earnings in recent years, which has seen the companies value increase, analysts said.

They include Tata Motors and its British luxury car brands Jaguar Land Rover, the world's seventh largest steel maker Tata Steel and its unit Corus, which have all turned profitable after the global slowdown.

Other units that have added market wealth in the past year include India's largest outsourcer TCS. Group firms Titan Industries, which makes watches, Tata Coffee, Tata Chemicals and agri-business outfit Rallis have also grown.

In contrast, Reliance Industries -- the highest weighted stock on the benchmark Sensex index at the Bombay Stock Exchange -- has been sluggish for over a year, mainly on concerns over output at its main gas fields.

"Investors are jittery over negative news linked to Reliance stocks, which has pulled stocks down," said a dealer with a securities firm from a development bank, who asked to remain anonymous.

Mukesh and younger brother Anil Ambani, who runs the Anil Dhirubhai Ambani Group, last year ended a bitter and public feud over the spoils of their late father's vast business empire.

The elder Ambani, who handles oil and gas and petrochemicals, is India's richest man, with a fortune estimated at $27 billion, according to Forbes magazine.

The younger Ambani, who deals with telecoms, financial services and utilities, is the eighth richest, with a wealth of $8.8 billion.

The reclusive Ratan Tata is not on the Forbes billionaire list but is listed 61st amongst the world's most powerful people.

Anil Ambani has seen fortunes of his firms dip since he and other group officials met investigators probing a multi-billion-dollar telecom licence fraud that has badly shaken India's government.

Some local brokerages have downgraded the Reliance Industries stock, fearing that gas output from the KG D6 basin off India's east coast may not rise sharply in coming months.

Two of Anil Ambani's firms, flagship Reliance Communications and subsidiary Reliance Infrastructure have slipped after news last week that these stocks would be removed from the benchmark index of the Bombay Stock Exchange.

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Colleagues of Chinese artist Ai Weiwei released (AP)

BEIJING – Colleagues of Ai Weiwei who were detained along with the outspoken Chinese artist were released around the same time he was, a close friend of Ai's said Saturday.

Ai was released Wednesday after nearly three months in detention. He was one of the most prominent activists detained in China's sweeping crackdown on dissent, which began in February.

Ai's driver Zhang Jinsong, designer Liu Zhenggang and accountant Hu Mingfen were all released this week, Liu Xiaoyuan, a lawyer and a close friend of Ai, said in a phone interview.

Liu said Ai confirmed that the three had been released but did not say exactly when. The 54-year-old Ai has said he is not allowed to discuss his case.

A studio assistant, Wen Tao, also has been released, said Liu Yanping, a volunteer who works with Ai. She said over the phone that Wen's girlfriend told her Saturday that he had been released.

Dozens of rights activists and lawyers have been detained, put under house arrest or disappeared, and several of those who have been released have kept almost totally silent ever since.

Ai was detained on April 3. The authoritarian government said he was released after confessing to tax evasion and pledging to repay the money owed. His family denies the allegations and activists have denounced them as a false premise for detaining an artist critical of the government.

Before his detention, Ai constantly blogged and Twittered on sensitive subjects including the deaths of students in shoddily built schools that collapsed during the 2008 Sichuan earthquake; children killed or sickened by tainted infant formula; and a deadly high-rise fire in Shanghai that killed 58 and was blamed on negligent workers and corrupt inspectors.

The Foreign Ministry said the conditions of Ai's parole require him to report to police when asked and bar him from leaving Beijing without permission for one year.

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Philippine massacre trial to be on live webcast (AP)

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MANILA, Philippines – The Philippine Supreme Court on Tuesday ordered a live video webcast of the trial of members of a political clan accused in the massacre of 57 people, including 31 journalists.

It is the first time the tribunal has allowed real-time coverage of court proceedings via the Internet, and the trial to be broadcast involves the November 2009 massacre that is the worst act of political violence in a country inured to bloodshed.

Chief Justice Renato Corona's order comes after the court last week gave permission for live radio and television broadcast of the trial.

"With this, the Maguindanao massacre trial will be accessible to viewers worldwide, continuously and without interruption," a court statement said.

The powerful Ampatuan clan patriarch and former southern Maguindanao provincial Gov. Andal Ampatuan Sr. and several of his sons are among the 196 people accused of killing members of a rival clan and journalists traveling in a convoy in November 2009.

Of the total, 92 suspects are in custody and 58 have been arraigned. The principal suspect, former town Mayor Andal Ampatuan Jr., is accused of leading about 150 gunmen with his father's approval in mowing down the victims. Andal Jr. and his father have pleaded not guilty.

The trial is held twice weekly in a maximum-security detention facility inside a police camp where video, pictures and taping have been previously banned. The prosecution has been presenting evidence and witnesses.

One witness, Ampatuan's servant, Lakmudin Saliao, has testified that six days before the killings, the patriarch asked his family over dinner how they could stop rival Esmael Mangudadatu from running for governor.

According to Saliao, Andal Jr. said "If they come here, just kill them all." His father allegedly agreed.

On the day of the killings, Andal Jr. told his father by cellphone that he had blocked the convoy, Saliao testified. The father ordered him to gun down everybody but spare the journalists, to which Andal Jr. replied, "No ... somebody could talk if we won't wipe out everybody," the servant said.

Radio and TV networks had petitioned the court for live coverage, and President Benigno Aquino III supported their petition, writing to the court that live coverage would let Filipinos learn lessons from the violence so that it won't be repeated.

The broadcasters welcomed the earlier court decision but complained about the strict conditions like continuous broadcast without commercials.

"Hopefully, with the live webcast, the objections regarding no commercial breaks or gaps, and continuous broadcast of entire proceedings will be addressed," court spokesman Midas Marquez said.

The live streaming will be hosted by the Supreme Court's website.

Romel Bagares, a lawyer for relatives of some of the victims, said he "supports any move on the part of the court to broaden the public's right to information and media's right to gather news and report or issue fair comment on issues of the day."

However, he said the order needs to be clarified in case there are conflicts in the guidelines for implementing the webcast and conditions for the live radio and television broadcasts.

"We hope the court listens to media and appreciates the logistical, financial and above all, constitutional issues involved in both traditional and new media broadcasts because they are now interfaced and intertwined," Bagares said.

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