China's Baidu invests $306 mln in travel website (AFP)

BEIJING (AFP) – Chinese search engine Baidu has agreed to invest $306 million in domestic travel website Qunar as it seeks to cash in on the booming tourism market in China.

Baidu, which dominates the Chinese search market after Google retreated following a spat with Beijing over censorship and cyberattacks last year, will take a majority stake in the travel search engine, Baidu said late Friday.

"Travel has long been one of the top categories on Baidu, and the number of travellers in China has been growing very rapidly, so this is a market of obvious strategic importance to us," chief financial officer Jennifer Li said in a statement.

Chinese tourism has ballooned in recent years along with blistering economic growth as an increasingly wealthy middle class travels around the country and overseas for leisure.

The country's air travel market is growing fast with a total of 267 million air passenger trips in 2010, up 15.8 percent from the previous year, according to official figures.

Qunar will operate as an independent company, with both firms cooperating on certain areas of online travel search, the statement said.

"By working with Baidu, we can focus on enhancing our search technology and the quality of our products and services," said Zhuang Chenchao, co-founder and chief executive of Qunar.

China is the world's biggest online market, with 477 million Internet users, according to official data.

Baidu had a 75.8-percent share of the overall search market in the first quarter of 2011, dwarfing Google's dwindling 19.2 percent, according to figures from research firm Analysys International.

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Ai release 'important signal': Germany (AFP)

BERLIN (AFP) – Chinese dissident artist Ai Weiwei's release from prison is an "important signal," Germany said Friday, as Prime Minister Wen Jiabao embarked on a trip to Europe that will also take in Berlin.

"It is an important signal that Ai Weiwei is free and is living now between his own four walls," deputy government spokesman Christoph Steegmans told a regular government briefing.

He echoed Chancellor Angela Merkel in saying however that with Ai, 54, still prevented by the Chinese authorities from leaving Beijing, his release from prison was only a "first step."

"Naturally we hope there will be other steps," he said.

Ai was freed late Wednesday because of his "good attitude" in confessing to tax evasion, his willingness to repay taxes he owes, and on medical grounds, the government said.

His detention in April during a major government crackdown on activists launched in February sparked criticism led by rights groups and Western governments, with London and Berlin among the most vocal.

The artist's plight is set to come up during Wen's European tour beginning Friday to Hungary, which currently holds the EU's rotating presidency.

He will travel on to Britain and Germany, where the official tour will wrap up on Tuesday.

The visit will be centred primarily on economic issues, however, with China the world's second largest economy and the European Union struggling to deal with a sovereign debt crisis among countries using the euro single currency.

Campaign groups including Amnesty International said in an open letter to Chancellor Angela Merkel published Friday that it would be a "fatal signal" if human rights are not properly discussed during Wen's visit.

"We ... call for human rights to be addressed in all high-ranking government talks as a central element in German-Chinese relations," Amnesty, the International Campaign for Tibet, Reporters Without Borders and the World Uyghur Congress said.

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Exclusive: Solutions sought for lengthy Chinese stock halts (Reuters)

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NEW YORK (Reuters) – The U.S. securities industry is studying ways to avoid lengthy trading halts of U.S.-listed Chinese securities that have been suspected of accounting problems, the Securities Industry and Financial Markets Association (SIFMA) said.

SIFMA, U.S. securities regulators and exchanges all held talks, according to a separate source, to deal with halts of shares that have stretched for several months while exchanges wait for delayed regulatory filings or resolutions to audit probes.

"I can confirm for you that SIFMA is exploring this issue and studying possible solutions," said SIFMA spokeswoman Katrina Cavali said.

Numerous U.S.-listed Chinese companies, many of which first listed on U.S. exchanges through reverse takeovers, have been hit with charges of accounting fraud. When companies respond to allegations, shares are often halted for weeks.

But the trading halts created a skid row of sorts of Chinese companies languishing on exchanges without trading for several months. There are currently more than a dozen such companies.

Investors in companies that have been halted have been unable to close out positions because trade halts have stretched for months. One Chinese company, NIVS IntelliMedia Technology Group, has been halted since March 24.

A source familiar with the discussions said some of the possible solutions discussed include matching outstanding long and short positions in the halted securities.

Normally, an individual company can have shares halted for a few hours so a company can disseminate news or the exchange can resolve a trading-related issue.

It was unclear whether a final decision had been made.

Shares of Chinese companies have been hit hard, with some losing most of their value, as a result of the allegations. The Canadian-listed Chinese forestry company Sino-Forest, which is down more than 90 percent since allegations were raised by a short-selling research firm.

(Reporting by Jonathan Spicer; editing by Gunna Dickson)

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660 reservoirs at risk of overflowing in China (AP)

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BEIJING – Heavy rains in eastern China have put more than 660 reservoirs at risk of overflowing, an official said Tuesday.

Rain-triggered floods have swept parts of eastern and southern China this month, leaving at least 175 dead and 86 missing and causing 35 billion yuan ($5 billion) in direct economic losses, according to the Ministry of Civil Affairs.

An official at the media department of the Anhui Water Resource Department said water levels at more than 660 reservoirs in the province were above the warning level. Like most Chinese officials, she would give only her surname, Zhao.

The official Xinhua News Agency also said in a Chinese-language report that the reservoirs were in danger of overflowing. The Anhui flood control headquarters said most of the reservoirs — more than 620 — were small, and that only three were large.

Such flooding is common every year during China's rainy season, with reservoirs and rivers overflowing.

Zhao referred further queries to the provincial Communist Party Propaganda Department, but calls were not answered there.

Xinhua said the water levels of the Shuiyang and Qingyi rivers, both tributaries of the Yangtze River running through Anhui, had risen above the warning safety mark.

It said many of the reservoirs in Anhui had started discharging water on orders from the state flood-control headquarters.

In neighboring Zhejiang province, the operator of eastern China's largest reservoir opened three of its nine floodgates Tuesday because of the risk of overflowing.

It was the first time the Xin'anjiang Reservoir has been forced to discharge water since 1999, Zhejiang's flood control headquarters said.

Xinhua quoted officials as saying the release of water into the Lanjiang river wouldn't cause havoc downstream because water there had receded below the danger level.

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Vietnam, China hold joint naval patrol amid spat (AP)

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HANOI, Vietnam – Vietnam and China have concluded two days of joint naval patrols, including a port call in China, despite a heated dispute over claims in the South China Sea, state media said Tuesday.

Two boats from each country participated in the patrols Sunday and Monday, sailing more than 300 nautical miles in the Gulf of Tonkin bordering Vietnam and China, Vietnam's People's Army Newspaper said. A demarcation treaty for the area was signed in 2000.

"Respecting the signed agreements is one of the factors that will promote the friendly and neighborly relations between two countries and ensure sustainable stability and security at sea," it quoted Col. Nguyen Van Kiem, deputy chief of staff of Vietnam's navy, as saying.

Chinese Foreign Ministry spokesman Hong Lei did not comment on the joint patrol at a regular news conference Tuesday. He reiterated Beijing's sovereignty over the South China Sea, but said it would work toward a peaceful resolution to the territorial dispute.

The joint patrol was the 11th since 2005 between the neighboring Communist countries, but it was unclear how long it had been planned or whether it signaled any cooling of tempers. Relations between the two have plummeted in recent weeks as they have traded diplomatic punches over run-ins involving territory in the South China Sea claimed by both.

"The South China Sea has led to a souring of political relations but has not yet spilled over to affect the broad and deep nature of Sino-Vietnam relations," Carlyle Thayer, a Vietnam expert at the Australian Defense Force Academy in Canberra, said in an email. "The holding of the exercises is a good sign."

Last week, Vietnam held live-fire naval drills off its central coast and issued an order outlining who would be exempt from a military draft during wartime. China announced a few days later that it also recently held similar maneuvers in the South China Sea without providing exact dates.

On Tuesday, a newspaper published by China's ruling Communist Party ran a scathing editorial, warning Vietnam to back off.

"If Vietnam wishes to create a war in the South China Sea, China will resolutely keep them company," the Global Times said. "China has the absolute might to crush the naval fleets sent from Vietnam. China will show no mercy to its rival due to 'global impact' concerns."

China has been upset with Vietnam's welcoming of U.S. involvement in helping resolve disputes in the South China Sea that Beijing believes should be settled bilaterally. The editorial said any attack on Vietnam would likely not lead to a direct conflict with the U.S., but that "even if some friction occurs, that is no reason for China to put up with Vietnam's unlimited vice in the South China Sea."

The U.S. has said that keeping key shipping lanes open in the South China Sea is in its national interest.

On Monday, U.S. Republican Sen. John McCain, a former prisoner of war in Vietnam, told a conference held by the Center for Strategic and International Studies, a Washington think tank, that Chinese aggressive behavior and unsubstantiated territorial claims are "exacerbating tensions in the South China Sea."

He urged the U.S. to help Southeast Asian nations resolve territorial disputes with China, while also assisting them in developing and deploying maritime defense systems, including early warning radar and coastal security vessels.

Hundreds of Vietnamese protested Sunday for the third straight week, yelling "Down with China!" as they marched through the streets of the capital, Hanoi. Many also carried signs demanding that China stop entering Vietnamese-claimed territory in the Spratly and Paracel islands.

Vietnam and China have a long history of scrapes on the contested high seas, typically resulting in tit-for-tat diplomatic rhetoric.

The recent blowup has sparked a feverish response from Hanoi, which accuses Chinese boats of hindering its oil exploration activities within 200 nautical miles of its coast, which it claims as its exclusive economic zone. China dismisses the argument, saying the incidents occurred near territory it claims and that Vietnamese vessels endangered Chinese fishermen.

___

Associated Press writer Christopher Bodeen in Beijing contributed to this report.

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3 Indonesian militants get prison for terror plot (AP)

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JAKARTA, Indonesia – Three Indonesians radicalized by the teachings of a firebrand Muslim cleric were sentenced Tuesday to six years in prison for involvement in a terror plot.

A Jakarta court found Muhammad Iqbal, Helmi Wardani and Kurnia Widodo guilty of violating anti-terrorism laws by making bombs and exploding them in trial runs for a terrorist attack. It said they gleaned their bomb-making knowledge from the Internet.

Presiding Judge Mustofa said the men were influenced by the preaching of Aman Abdurrahman, a radical cleric who was sentenced to nine years in prison in December for involvement in a militant training camp in westernmost Aceh province.

Indonesia, the world's most populous Muslim nation, has battled militants with links to al-Qaida since 2002, when extremists bombed a nightclub district on Bali island, killing 202 people, most of them foreigners. A security crackdown since then has seen hundreds of militants killed or captured and convicted.

Mustofa said the three men, all in their thirties, were highly educated with no history of militancy until becoming radicalized through their participation in Islamic study at a mosque in West Java that was a base for Abdurrahman.

He said they planned to target police and local officials whom they considered their main enemy because of the government's support for the U.S.-led fight against terrorism.

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Pakistan army officer held on extremism suspicions (AP)

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ISLAMABAD – A senior officer serving at Pakistan's army headquarters has been detained on suspicion of ties to a banned Islamist group that has called for the military to overthrow the country's U.S.-allied government, the army spokesman said Tuesday.

The announcement could be an attempt by the Pakistani military to counter Western suspicions that it tolerates within its ranks soldiers who sympathize with militant groups such as the Taliban or al-Qaida. Those suspicions have spiked in the wake of last month's U.S. raid that killed al-Qaida chief Osama bin Laden in an army town not far from the Pakistani capital.

Army spokesman Maj. Gen. Athar Abbas said Brig. Ali Khan was detained recently for suspected links with Hizb-ut-Tahrir, an Islamist organization that wants to re-establish the caliphate, the administrative structure that once governed a large section of the Muslim world.

The army spokesman labeled the group a "proscribed militant organization." But Hizb-ut-Tahrir insists it rejects violence, although observers say the group nonetheless promotes an intolerant mindset that can ultimately lead some followers to embrace militancy.

On what appears to be its Pakistan website, Hizb-ut-Tahrir, which means "Party of Liberation," calls for officers in the Pakistan army to oust the country's government because of its alliance with the United States and to help establish an Islamic caliphate.

Abbas said the detention shows the army is determined to weed out bad actors, but also stressed that Khan was not linked to the Taliban, which is seen as much more of a threat by the West than Hizb-ut-Tahrir.

"We follow a zero percent tolerance for any breach of discipline or indulgence in any illegal activity," Abbas told The Associated Press.

Khan's wife insisted her husban was "totally innocent."

"These allegations are totally rubbish," she told the AP. She declined to give her first name because of cultural traditions among her Pashtun clan.

She said her husband went missing May 5, and she has been searching for information about his whereabouts since then. Authorities had assured her that he would soon return, she said.

She said her father-in-law served in the army as a junior commissioned officer, while her son and son-in-law were currently serving in the army.

"Our three generations have served the army, and none of our family members have any links with the militants," she said.

Hizb-ut-Tahrir officials could not immediately be reached for comment. Although it is banned in some countries, including Pakistan and parts of Central Asia, the group is active in Western countries such as the United States, where it finds protection under free speech and association laws.

Western officials have long worried about Islamist extremism within Pakistan's security forces given their historical ties to militant groups that have fought in Afghanistan and Indian-held Kashmir.

Many U.S. officials questioned how bin Laden could have hidden in the Pakistani army town of Abbottabad for up to five years without officials knowing, although they say they have not found any evidence that senior members of the government or military knew of his whereabouts.

U.S. attempts to rebuild the relationship with Pakistan have not gone well.

American officials say they have shared intelligence on four bomb-making factories in Pakistan's tribal areas, but militants were intentionally or inadvertently tipped off before they were raided by Pakistani forces. Pakistani military officials have denied they tipped off the militants.

Analysts say the Pakistani army is better than the country's police at rooting out extremists, but current and former military officers have participated in attacks in recent years.

Faisal Shahzad, the Pakistani-American who tried to bomb New York City's Times Square last year, allegedly was in contact with a major in the Pakistani military. In 2009, Pakistani army headquarters in Rawalpindi was attacked by 10 men in military uniforms reportedly led by a former army soldier. And the 2008 attacks in Mumbai, India, are alleged to have been carried out with the guidance of a Pakistani spy known only as "Major Iqbal."

One constant fear is that extremists in the military could somehow infiltrate Pakistan's nuclear program to steal materials for a terrorist weapon, but that program is governed by a multilayered security system that involves scrutiny of individuals' backgrounds and beliefs.

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Aftershock rattles quake-damaged New Zealand city (AP)

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WELLINGTON, New Zealand – A moderate aftershock has shaken the quake-devastated city of Christchurch in New Zealand.

The Christchurch Press says the main jolt late Tuesday night was widely felt but no major damage was reported. It says power was out in parts of the city and four flights were diverted to Auckland while the Christchurch airport's runway was checked for damage.

The Institute of Geological and Nuclear Sciences says the quake registered magnitude 5.3 while the U.S. Geological Survey measured it at 5.1. It was only 7.5 miles (12 kilometers) below the surface and centered about 18.6 miles (30 kilometers) southeast of Christchurch.

Thousands of aftershocks have followed the magnitude-6.3 quake in February that killed 181 people and devastated the city's downtown.

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Death for Chinese man in case that fueled protests (AP)

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BEIJING – Chinese state media say a man has been sentenced to death in a case that fueled the biggest ethnic protests in Inner Mongolia in two decades.

The Xinhua News Agency says Sun Shuning was sentenced Tuesday after being convicted of killing Yan Wenlong on May 15 during a dispute between coal mine operators and local residents protesting pollution.

The swiftness and severity of the sentence demonstrate the government's desire to soothe anger among Mongols, who took to the streets over that and another case. The protesters demanded justice and greater protection for Mongol culture and the traditional herding lifestyle.

Earlier, a Chinese truck driver was sentenced to death for killing an ethnic Mongol herder by dragging him under his truck on May 10.

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US seeks to help defuse tensions in South China Sea (AFP)

WASHINGTON (AFP) – The United States said it will seek to help defuse tensions in the strategic and resource-rich South China Sea when it holds talks with China in in Hawaii on Saturday.

Tensions in the South China Sea have escalated in recent weeks, with the Philippines and Vietnam alarmed at what they say are increasingly aggressive actions by Beijing in the disputed waters.

"The United States has no intention to fan the flames in the South China Sea and we have a very strong interest in the maintenance of peace and stability," Kurt Campbell, the top US diplomat for East Asia, told reporters on Friday.

He said he expected the South China Sea disputes to be raised Saturday at a US-China meeting in Honolulu which is part of the two countries strategic and economic dialogue. He will attend the talks.

"We've been very clear that the United States does not take a position on sovereignty issues," said Campbell, the assistant secretary of state for East Asia and Pacific Affairs.

"But we also have strong principles that are long-standing in the maintenance of freedom of navigation, and free and unimpeded legal commerce and the maintenance of peace and stability," he said.

"Those principles are long-standing and will continue, and we underscore them in all of our interactions in the Asia-Pacific region," he added.

"It is not our desire to see, as I said, these flames fanned. We want recent tensions to subside and cooler heads to prevail," he said.

Campbell said the US delegation will ask the Chinese "some specific questions" about "the direction of Chinese military developments" as well as sound them out on diplomacy with North Korea and Myanmar.

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China wants to ordain bishops 'without delay' (AFP)

BEIJING (AFP) – China's state-controlled Catholic church wants to ordain at least 40 bishops "without delay", its vice president said Friday, in a move likely to further irritate ties with the Vatican.

Liu Bainian, deputy head of the Chinese Patriotic Catholic Association, confirmed an official Xinhua news agency report that said more than 40 of the country's 97 dioceses were without a bishop.

The report said leaders of China's Catholic church had agreed at a recent meeting that they would "strive to select and ordain bishops at these dioceses without delay".

Liu told AFP that China's existing bishops would "help various areas to select their own bishops. It's the best opportunity to spread the Gospel in China."

The Vatican and China have not had formal diplomatic ties since 1951. Beijing insists it has the right to ordain its own bishops, defying the Holy See, which says ordinations can only go ahead with the pope's blessing.

Last November, China angered the Vatican when it ordained a bishop for the northern city of Chengde without the Holy See's approval.

Another ordination in the central province of Hubei was postponed earlier this month, although Liu said Friday it was still "under examination."

In May, the pope himself called on Catholics across the world to pray that Chinese bishops refuse to separate from Rome, despite what he called "pressure" from communist authorities.

The Vatican and China cut ties when the Holy See angered Mao Zedong's Communist government by recognising the Nationalist Chinese regime in Taiwan as the legitimate government of China.

The atmosphere worsened when in 1957 China set up its own Catholic Church administered by the atheist Communist government.

The 5.7 million Catholics in China are caught between staying loyal to the ruling Communist Party in Beijing and showing allegiance to the pope as part of an "underground" Church not recognised by the authorities.

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West Indies 119-5 at lunch (AFP)

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KINGSTON, Jamaica (AFP) – West Indies were 119 for five, in response to India's first innings total of 246 on the first day of the first Test on Tuesday at Sabina Park.

Score summary

India 246 (S. Raina 82, H. Singh 70, R. Dravid 40; F. Edwards 4-56, R. Rampaul 3-59, D. Bishoo 3-75)

West Indies 119 for five (A. Barath 64; P. Kumar 3-24, I. Sharma 2-17)

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China's Communist Party members grow to 80 mln (AFP)

BEIJING (AFP) – China's ruling Communist Party topped 80 million members last year, a yearly increase of nearly three percent, a top official said Friday as the party gears up for its 90th anniversary next week.

More than half of the party's 80.27 million members were 46 years or older and more than a quarter were over the age of 60, said Wang Qinfeng, deputy chief of the party's Organisation Department, which handles personnel matters.

But the party was seeing continued applications by and recruitment of young people, college students, and women, Wang told reporters at a press briefing.

More than three million people applied or were targeted for recruitment into the world's largest political party in 2010, he said.

Of these, 81.8 percent were under the age of 35 and 38.5 percent were women, Wang said.

The percentage of full party members in 2010 who were under 35 was 24.3 percent, while 22.5 percent were women.

"The ranks of party members and grassroots party organisations have continuously developed" since the 1949 founding of communist China, he said.

The briefing was one of a series recently to extol the ruling party's history and accomplishments ahead of the July 1 anniversary of its founding.

China has pushed in recent years to expand the party's membership beyond the traditional make-up of government functionaries, retirees, blue-collar workers and farmers.

In particular, talented youths have been targeted, many of whom view membership as a prerequisite for a coveted civil service job.

Members of the business community, who have only been allowed into the party over the past decade, are seen as eyeing a party card as a good business move due to the connections it can spark.

Aspirants from "private sector organisations" made up 4.3 percent of all applicants and recruits last year, Wang said.

Another 40 percent in 2010 were college students.

The actual net increase in the party's total membership in 2010 was 2.23 million.

There were 4.5 million Communist Party members at the time of the founding of the People's Republic of China in 1949.

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China's Wen says prices under control: report (Reuters)

LONDON/BEIJING (Reuters) – China Premier Wen Jiabao sounded his most upbeat note this year on Beijing's fight against inflation, saying he expects price pressures to decline steadily even as the country keeps up its brisk economic growth.

In an opinion piece published in Friday's edition of the Financial Times newspaper, Wen wrote he was "confident price rises will be firmly under control this year," and that China is "fully capable of sustaining steady and fast economic growth."

Wen's remarks came as he kicks off a visit to debt-stricken Europe and is a timely response to investor worries that China, in its struggle to tame near three-year high inflation, could over-tighten monetary policy at the expense of economic growth.

"There is concern as to whether China can rein in inflation and sustain its rapid development," Wen wrote. "My answer is an emphatic yes."

"China has made capping price rises the priority of macroeconomic regulation and introduced a host of targeted policies. These have worked," he said.

"The overall price level is within a controllable range and is expected to drop steadily."

But some analysts said it was too early for China to declare victory in its fight against inflation, and warned investors against thinking that Wen was signaling an imminent change in monetary policy.

Ting Lu, an economist at Merrill Lynch-Bank of America, argued Wen might have deliberately sounded so positive as he knew he was addressing foreign readers of the Financial Times.

In Chinese culture, there is a tendency to play up one's achievements when speaking to the outside world, and swing the pendulum the other way to emphasize challenges when speaking to one of your own, Lu said.

"Readers should read the article with some grain of salt," he said. "Despite these positive messages from Wen, it could be wrong to expect the Chinese government to change its policy stance soon."

Lu said he still expects China to raise interest rates once more this year. That is roughly in line with market forecasts for a 25-basis-point rise in benchmark lending rates, and a 50-basis-point increase in deposit rates.

On the global economy, Wen said it was recovering from the turmoil seen in the financial crisis, but said many uncertainties remained and that the recovery was fragile.

He pointed to uneven global growth, stubbornly high unemployment in developed economies, mounting debt risks and inflationary pressures.

"While the shock of the crisis has yet to end, new risks have emerged," Wen wrote. "The world must co-operate closely to meet the challenges."

STILL EYEING RATE RISE

Wen's latest remarks on China's inflation were a marked shift from his comments in March when he warned about rising price expectations, and likened inflation to a tiger that is hard to cage once it is let out.

China's inflation ran at a 34-month high of 5.5 percent in the year to May, and is expected to quicken to 6 percent in June or July.

That would be well above China's 2011 inflation target of 4 percent, which Wen did not mention on Friday.

Some analysts have noted, however, that China's official inflation target is among some malleable objectives that the central bank can breach. For instance, Beijing has for years trounced its official economic growth target of 8 percent.

Given wages in China are expected to climb in coming months and a stubbornly buoyant property market that has kept house prices at record highs, economists doubted China can rest easy in its anti-inflation campaign anytime soon.

"Inflation may peak in June or July, but there are many underlying factors that could push up prices such as labor cost and agricultural product inflation," said Hua Zhongwei, an analyst with Huachuang Securities in Beijing.

Still, shares in Hong Kong and Shanghai bounced on Friday morning after Wen's remarks on inflation. China shares have been among the worst performers in Asia this year on persistent worries of further policy tightening to combat price pressures.(.HK)

(Reporting by Paul Hoskins in LONDON, Koh Gui Qing and Zhou Xin in BEIJING; Editing by Jacqueline Wong)

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China accounting scandals put Big Four auditors on red (Reuters)

HONG KONG (Reuters) – The string of accounting problems and stock plunges at publicly traded Chinese groups has sparked deep concerns across the world's biggest audit firms, putting the so-called Big Four on alert from worries that their reputation could be brought down along with a growing list of stricken companies.

Auditing Chinese firms preparing to go public on overseas exchanges is a lucrative business and one that plays into the strengths of the top, international auditing partnerships known as the Big Four: KPMG, Ernst & Young, Deloitte Touche Tohmatsu and PricewaterhouseCoopers.

Yet fears are growing that the struggle to find enough high-quality auditors in China and Hong Kong means it may only be a matter of time until one of the top firms finds itself caught in a blow-up rivaling Enron, which brought down their old rival Arthur Andersen.

"Costs have gone up, fees have gone down, as competition for fees is enormous. You can easily see there is a real risk of an audit firm failing," said Paul Winkelmann, the partner in charge of risk and compliance for PWC in Greater China. According to interviews with professionals at the four firms, each firm is getting more and more cautious about the work they take on from mainland companies looking to IPO. "The whole industry, I will say, is very sensitive and cautious to China IPOs," said an auditor at one of the Big Four, who handles IPO work, who did not want to be named.

The Big Four are also getting nervous about work with existing Chinese clients, turning to lawyers at an earlier stage if they think something might be amiss.

"If a risk situation arises they're now consulting lawyers earlier and dealing with it in a much more structured way than was perhaps the case in the past," said Tom Fyfe, a partner at law firm Barlow, Lyde & Gilbert in Hong Kong who acts for some of the big four in litigation issues.

All four of the audit firms responded to a Reuters request to comment on the matter. The four firms said they have a rigorous approach to risk management.

CHINA BOOMING BIZ

The big four have basked in China's emergence as an economic powerhouse. In 2009 their revenue from work on the mainland stood at 9.1 billion yuan ($1.41 billion) according to the Chinese Institute of CPAs (CICPA), around half of China's accounting industry's revenue. Last year's figures were not immediately available.

As the revenues have risen, so have the risks.

Most of the accounting scandals in the U.S. have come from small Chinese companies who went public via a reverse takeover. Those companies were audited by smaller U.S. or Hong Kong-based accountancy practices, not the Big Four's China firms. But some recent high profile cases have started to drag in the names of the world's most prestigious auditors.

Last month, Deloitte quit as auditor of Longtop Financial Technologies after working on the company's books for six years, citing "recently identified falsity" in their finances.

Ernst & Young was named in two class action lawsuits over its work on Sino-Forest, the Toronto-listed company accused by short-seller Muddy Waters of accounting fraud.

In Hong Kong, KPMG said in January that it had found possible irregularities in the books of China Forestry, leading to a suspension of its shares.

Accounting experts say the firms have been acting as they should by raising the alarm once they find irregularities that can't be explained by the company. They also point out that the Big Four's China businesses and its broad global resources are much better placed than small U.S. firms to conduct audits on Chinese companies.

"I think firms here have always been aware of the risks associated with audit work in China. There is more endemic fraud in Asia, but people are much more aware of it here and so manage the risks accordingly," said PWC's Winkelmann.

Winkelmann, on behalf of the Hong Kong Institute of CPAs (HKICPA), is drafting a paper to present to the Hong Kong government later this year calling for changes to the law on auditor liability. The IPOs are now so large -- last year saw two greater than $20 billion in Hong Kong -- the worry is that a massive IPO liability, if it were to hit an auditing firm, would be too big for the firm to handle. The change calls for a cap on the liability.

The latest string of scandals has laid bare some of the difficulties auditors have in China, forcing the big firms to reappraise their methods, given that a loss of reputation could bring them to their knees.

"There's no doubt about it -- the firms are very alert to these issues and very sensitive to what it means. They will be looking at their risk assessment procedures," said Chris Joy, executive director, HKICPA.

STAFF SHORTAGES

Two of the biggest challenges facing the big four are staffing and the type of companies they audit.

Together the firms now employ just under 40,000 people in mainland China, Hong Kong and Taiwan. While that's a relatively high number compared to other regions, it's not enough to handle the huge demand created by the rapid economic growth of the world's most populous country, experts say.

"We are in tremendous need of experienced accounting professionals and graduating college students," said a spokeswoman for Ernst & Young, which plans to recruit 1500 new staff this year.

Finding them might be tough.

"Between us and the CICPA and other bodies that offer qualifications, we can't produce enough at the moment, but we're not going to compromise the quality of our program just to mass produce accountants," said Joy at the HKICPA.

That skill shortage is likely to be felt even more keenly now that the type of IPO work the big firms are handling is shifting. Whereas 10 years ago the majority of firms going public in China were state-owned enterprises (SOEs), a lot more of the work now is for privately-run businesses.

"Previously the market was for SOEs, and China is not going to allow a major embarrassment with an SOE," said PWC's Winkelmann. "But now it's changing as international firms are starting to do more of the private enterprises in China, which don't come with that government support."

(Reporting by Rachel Armstrong; Additional reporting by Benjamin Lim in BEIJING, George Chen in HONG KONG; Editing by Michael Flaherty)

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China blurs A380 order, backs 747 amid EU row (Reuters)

LE BOURGET, France (Reuters) – China downgraded the announcement of an Airbus superjumbo order and signed up for the Boeing 747-8 as deals worth $9 billion coincided with a row over European emissions trading rules, industry sources said.

The deals both involved parts of the HNA airlines group and had been planned before the Paris Air Show, they said, but the decision not to announce the names of the buyers triggered one of the mysteries of this week's event.

Industry sources said plans to announce a high-profile $3.8 billion deal between Airbus and Hong Kong Airlines for 10 A380 superjumbos were called off on Thursday because of China's anger over European plans to charge airlines for emissions.

China threatened last month to hold back on purchasing Airbus aircraft because of the EU emissions trading scheme, which airlines body IATA has called illegal.

Additionally, industry sources said a company affiliated to the same carrier, Hainan Airlines, was behind the unexpected announcement of an anonymous deal at Boeing this week.

Boeing said an unidentified airline had provisionally committed to 15 747-8 passenger jets worth $4.8 billion.

Airlines often choose to buy jetliners without identifying themselves to their competition, but such announcements are rarely made at air shows which are designed for publicity. Boeing also rarely announces deals before they are confirmed.

Airbus (EAD.PA) and Boeing (BA.N) declined to comment and representatives of the HNA Group were not available.

Hong Kong Airlines is 46 percent owned by HNA Group, the parent of Hainan Airlines Co Ltd (600221.SS).

TEMPTING TARGET

Airbus and Boeing both brought their largest passenger jets to the show, a biennial event which rotates with the Farnborough Air Show in Britain.

The 747-8 with 467 seats is Boeing's first stretched version of the 747 and is in the midst of flight testing. It will enter service initially as a freighter, then in a passenger version.

The 525-seat A380 is the world's largest airliner and Europe's most high-profile aircraft since Concorde, making it a tempting target in any political tensions affecting aerospace.

The Airbus deal has not itself been blocked and is in the manufacturer's order book, but the decision to cancel a signing ceremony is a clear protest signal, the industry sources said.

Aircraft purchases also need Chinese government approval.

The 747-8 purchase followed competition between Airbus and Boeing for the Hong Kong Airlines order.

While advancing development of its own smaller airplane, China tends to balance orders between the two foreign suppliers.

From Jan 1 next year, the EU will require all airlines flying to Europe to be included in the Emissions Trading Scheme (ETS), a system that compels polluters to buy permits for each tonne of carbon dioxide they emit above a certain cap.

China's top aviation industry body ramped up pressure on the European Union earlier this month, saying it would give full support to legal action against the forced entry of airlines into the EU's carbon trading scheme. [ID:nL3E7H60D5]

China says the scheme is unfair for developing countries and costly.

(Additional reporting by Matthias Blamont; Editing by Jon Loades-Carter)

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US, Japan delay Okinawa base plan (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.

In a joint statement after top-level talks, the Pacific allies said that 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 reconfirmed plans to move 8,000 Marines and some 9,000 dependents from Okinawa to the US territory of Guam.

Under the 2006 plan between the two 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.

But 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.

Three US senators recently moved to force the Pentagon to consider a new option, saying that the current plan is too costly and politically unrealistic as Japan grapples with the aftermath of its massive earthquake.

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China sentences jailed journalist to 8 more years (AP)

BEIJING – The lawyer for a Chinese journalist jailed after he wrote about suspected wrongdoing by local officials says the reporter has been sentenced to another eight years behind bars.

Wang Quanzhang said Friday that the imprisoned journalist Qi Chonghuai was about two weeks away from being released from a prison in eastern China's Shandong province when a court put him on trial again on June 9.

Wang says the court convicted Qi on a new charge of embezzlement but also tried him again for extortion and blackmail — the same charges he faced in 2008 when he was first sentenced.

The Committee to Protect Journalists says Qi was arrested in 2007 after he wrote about a local official who had beaten a woman for coming late to work.

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Report: China plans aircraft carrier test in July (AP)

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BEIJING – China is planning an initial sea trial of its first aircraft carrier next month, a Hong Kong newspaper said Tuesday, a move likely to further worry neighbors amid heightened tensions over territorial disputes.

Some form of limited testing of the ship is planned to coincide with celebrations of the 90th anniversary of the founding of the Chinese Communist Party on July 1, the Hong Kong Commercial Daily said.

The newspaper reported earlier this month that a top general, Chen Bingde, told it that the carrier was being outfitted, the highest-level confirmation by the secretive military that work is under way. Chen refused to give a timetable for its completion.

China has spent the best part of a decade refurbishing the former Soviet aircraft carrier Varyag after it was towed from Ukraine in 1998, and the carrier program has been widely known for several years.

Activity aboard the ship, docked in the northern port of Dalian, has picked up in recent days, with photos on military enthusiast websites showing workers removing heavy equipment from its sloped flight deck.

The newspaper said the ship will be formally launched next year on Oct. 1, China's national day, after workers complete the installation of weapons systems and other equipment.

The still-unnamed ship was bought as an empty shell without engines, weapons systems, or other crucial equipment and isn't believed to have traveled before under its own propulsion. Years of sea trials and flight training are needed before it will be fully operational.

Once launched, it is expected to primarily serve as a training vessel for the navy and for naval pilots, while China moves swiftly to build its own carriers.

The carrier's move toward operability raises the stakes for Washington, long the pre-eminent naval power in Asia, and jangles the already edgy nerves of China's neighbors upset with what they see as Beijing's more assertive posture in enforcing claims to disputed territories.

Over the past year, China has seen a flare-up in territorial spats with Japan, the Philippines and Vietnam and seen its relations strained with South Korea — all of which have turned to Washington for support.

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Bangladesh moves to retain Islam as state religion (AP)

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DHAKA, Bangladesh – Bangladesh will retain Islam as the state religion in amendments the government is proposing to its constitution, a government minister said Tuesday.

A former military ruler declared Islam the state religion in 1988 by amending the charter, but it barely affected Bangladesh's secular legal system mainly based on British common law.

The government says the proposed changes won't affect the legal system. Inheritance and other family laws already are based on religion.

The decision was made late Monday at a Cabinet meeting, the minister told The Associated Press on condition of anonymity because of the sensitivity of the issue.

A special government committee prepared proposals for the amendment, and the government will send those proposals to the parliament for passing as a law.

Bangladesh won independence from Pakistan in 1971 with help from India through a bloody nine-month war.

The original constitution was installed by independence leader Sheikh Mujibur Rahman, the father of current Prime Minister Sheikh Hasina. After Rahman's assasination in a military coup in 1975, military rulers made a series of amendments to the charter.

Some see the government's latest action as a compromise by Hasina, who during her election campaign before December 2008 polls said she would restore the 1972 constitution if voted to power.

The original charter did not recognize any faith as a state religion, promised elimination of communalism and disfavored discrimination or persecution because of a person's faith.

The new proposals want to restore those provisions of secularism but keep Islam as state religion.

Monday's Cabinet meeting chaired by Hasina also endorsed equal status and equal rights for practicing other religions, including Hinduism, Buddhism and Christianity, the minister said.

The Cabinet decided to keep the provision of state religion considering the national reality, the minister told AP.

The main opposition Bangladesh Nationalist Party led by former Prime Minister Khaleda Zia has campaigned that Hasina's Awami League party is anti-Islamic. The country's main Islamic party Jamaat-e-Islami and its hardline allies also brand Hasina's party as anti-Islamic.

Bangladesh has thousands of Islamic schools that advocate installation of Sharia laws, and a violent hardline group years ago bombed government buildings and courts demanding Sharia law. The government claims the group, Jumatul Mujahedin Bangladesh, was broken after its top leaders were hanged.

The government also proposed an amendment to cancel a constitutional provision that requires the government to hand over power at the end of its term to a nonpartisan administration. A former chief justice is usually chosen to head the three-month caretaker administration that conducts new elections.

The Supreme Court has ruled the provision in the 1996 constitution is undemocratic.

The next general elections is due in 2014, and opponents of Hasina say amending the consitution to remove that provision could lead to vote-rigging.

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Chinese prime minister offers support for euro (AP)

BUDAPEST, Hungary – Chinese Prime Minister Wen Jiabao has offered his country's support for Europe and its common currency amid the eurozone's debt crisis.

Wen says China is a long-term investor in the European sovereign debt market and has purchased a "not small" amount of euro-denominated bonds in the past years.

Wen says China will offer "consistent support for Europe and the euro."

Wen, on a five-day tour of Hungary, Britain and Germany just as Europe hammers out a plan to battle the eurozone debt crisis, met Saturday in Budapest with Hungarian Prime Minister Viktor Orban.

Wen says China is also willing to purchase bonds issued by Hungary, which does not yet use the euro, and offered Hungary a loan of 1 billion euros ($1.4 billion).

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Obama set to give Afghan speech Wednesday evening (Reuters)

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WASHINGTON (Reuters) – President Barack Obama will deliver a speech on Wednesday evening on his plan to pull back U.S. troops from Afghanistan, the White House said on Tuesday.

"At 8 p.m. EDT on Wednesday, June 22nd, the President will address the nation from the White House to lay out his plan for implementing his strategy -- first unveiled in December 2009 -- to draw down American troops from Afghanistan," the White House said in a statement.

(Reporting by Steve Holland, Editing by Will Dunham)

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Australian military hit by 1,000 abuse claims (AFP)

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SYDNEY (AFP) – More than 1,000 people have made allegations of sexual and other abuse against the Australian Defence Force, lawyers assessing the complaints for the government said Tuesday.

The review was ordered in the wake of a scandal at the elite Australian Defence Force Academy in Canberra in which a teenage female cadet alleged that she was unwittingly broadcast having sex with another cadet to classmates.

DLA Piper, the law firm conducting the review on behalf of Defence Minister Stephen Smith, said more than 1,000 people had since come forward with allegations, including complaints made in the media and direct to the minister.

"The allegations range from relatively minor matters to very serious matters," DLA Piper said in a statement.

"Some of the allegations are made by victims or parents or partners of victims, some are made by witnesses and some are made by people who have no direct knowledge of the incident which they allege/report."

"We need to proceed with care because the issues involved are serious and sensitive. We are taking advice on our processes from an expert in dealing with victims of sexual abuse," the firm added.

DLA Piper said there was a surge in complaints after fresh allegations were broadcast by the media last week, and extra lawyers were drafted in to take calls.

The firm said it was now carefully considering how best to gather more detailed information, responding to criticism that the process was too formal or that the review was a "cover-up" exercise.

"The Minister expects the Review to provide our own honest assessment and recommendations, regardless of whether or not doing so may involve criticism of aspects of Defence's response to allegations," DLA said.

"The Review members would not be participating in the Review if we thought it was a sham."

The Australian Defence Force has been stung by a string of allegations, some decades old, of abusive and sexist behaviour in its ranks.

Cases aired in the media involve the hushing up of gang rape and the brutal bashing and bullying of military cadets.

Minister Smith has called the allegations "very concerning" and promised they would be "methodically and exhaustively" assessed.

Australia's top military brass have stressed that such practices are completely unacceptable, and that the defence force has improved and reformed over the years.

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Indonesian MPs demand protection for Gulf workers (AFP)

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JAKARTA (AFP) – Indonesian lawmakers on Tuesday urged the government to stop sending migrant workers to the Middle East, and especially Saudi Arabia, after the beheading of a maid who murdered her Saudi employer.

Parliamentarians said the oil-rich kingdom and other Gulf states should not benefit from cheap Indonesian labour until they agreed to protect workers' basic rights.

"We have asked the government to temporarily suspend sending Indonesian workers overseas, especially countries which refuse to sign an agreement which protects our workers' rights," deputy speaker Priyo Budi Santoso said.

Several lawmakers called on Foreign Minister Marty Natalegawa and other key members of President Susilo Bambang Yudhoyono's cabinet to resign over the treatment of migrant workers abroad.

The uproar came after Riyadh beheaded an Indonesian maid on Saturday for murdering her Saudi employer.

Ruyati binti Sapubi had been convicted of murdering Khairiya bint Hamid Mijlid with a meat cleaver after being denied permission to leave the kingdom, according to Indonesian officials.

Indonesia recalled its ambassador to Saudi Arabia for consultations on Monday and lodged a strong protest with the government in Riyadh, saying the Saudi authorities had ignored normal consular protocols.

Another 23 Indonesian migrant workers are on death row in Saudi Arabia, according to parliamentary labour commission member Rieke Dyah Pitaloka.

"The suspension (of migrant labour to the Middle East) must be applied soon, especially to Saudi Arabia," she told AFP.

Dozens of protesters including Sapubi's daughter protested outside the Saudi embassy in Jakarta to condemn the execution, carrying banners reading "Saudi is cruel and murderous".

Around 70 percent of the 1.2 million Indonesians working in Saudi Arabia are domestic helpers, according to officials.

Sapubi's case is the latest in a string of incidents involving Indonesian menial labourers in the Middle East.

Indonesians were outraged in April when a Saudi court overturned the conviction of a Saudi woman who had been jailed for three years for allegedly torturing her Indonesian maid with scissors and a hot iron.

London-based Amnesty International said the maid's treatment, which Yudhoyono described as "extraordinary torture," was all too characteristic of the plight of foreign workers in the region.

It said workers from countries like Indonesia, India, Pakistan and Sri Lanka underpin the Gulf states' economies but face extreme forms of exploitation.

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China to remain long-term investor in Europe's debt (Reuters)

BUDAPEST (Reuters) – Chinese Premier Wen Jiabao said on Saturday he was "still confident" that Europe can overcome the debt crisis and said China would remain a long-term investor in Europe's debt market.

The Chinese Premier spoke at a press conference with Hungarian Prime Minister Viktor Orban during a visit to Hungary.

"I have confidence in European economic development," he said. "China is a long-term investor in Europe's sovereign debt market. In recent years we have increased by a quite big margin holdings of euro bonds."

"In the future, as we have done in the past, we will support Europe and the euro," Wen added.

He said China stood willing to help Europe "work for expeditious recovery and stable growth," but did not give exact figures on how much euro zone sovereign debt China might buy.

Wen also said China was willing to buy a "certain amount" of Hungarian government bonds and aims to boost bilateral trade to $20 billion by 2015. He did not specify the amount of Hungarian bonds China would be willing to purchase either.

He said China's state development bank would provide 1 billion euros for development projects between Hungary and China.

The Chinese premier is visiting Europe as the euro zone grapples to contain Greece's worsening debt crisis and possible default which analysts fear could roil global markets and trigger another financial crisis.

China has large holdings of euro-denominated assets in its vast $3.05 trillion foreign reserves and is desperate to do what it can to preserve the value of its holdings, though analysts say the extent to which China may commit fresh funds toward purchasing distressed European debt as a market-calming gesture, will likely be limited.

Wen Jiabao, the first Chinese head of government to visit Hungary for 24 years, is also seeking to explore greater trade ties with the country given its strategic location and increasing role as a logistics and trade processing hub in Eastern Europe for Chinese goods.

Hungarian Prime Minister Viktor Orban said China's buying of Hungarian government bonds would increase the security of debt financing for Hungary in the medium term.

"The purchase of government bonds is also important for Hungary as Hungary is able to finance itself from markets but the fact that China will buy further will bring huge security," Orban said.

While Wen is expected to face a barrage of protests and criticism from governments in Britain and Germany over China's human rights record and its recent clampdown on dissent, the release of prominent activist and artist Ai Weiwei on the eve of Wen's visit could ease some pressure on this front.

The 54-year-old artist Ai was freed on bail on Wednesday, while a batch of Ai's associates and other activists have also been freed since then, marking a climbdown of sorts by Chinese authorities, who have rarely flinched in prosecuting critics of Party rule.

The 27-member EU bloc is now China's largest trading partner with bilateral trade worth nearly 400 billion euros ($573 billion).

(Writing by Krisztina Than and James Pomfret; Editing by Toby Chopra)

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West Indies 119-5 at lunch (AFP)

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KINGSTON, Jamaica (AFP) – West Indies were 119 for five, in response to India's first innings total of 246 on the first day of the first Test on Tuesday at Sabina Park.

Score summary

India 246 (S. Raina 82, H. Singh 70, R. Dravid 40; F. Edwards 4-56, R. Rampaul 3-59, D. Bishoo 3-75)

West Indies 119 for five (A. Barath 64; P. Kumar 3-24, I. Sharma 2-17)

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Vietnam, China hold joint naval patrol amid spat (AP)

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HANOI, Vietnam – Vietnam and China have concluded two days of joint naval patrols, including a port call in China, despite a heated dispute over claims in the South China Sea, state media said Tuesday.

Two boats from each country participated in the patrols Sunday and Monday, sailing more than 300 nautical miles in the Gulf of Tonkin bordering Vietnam and China, Vietnam's People's Army Newspaper said. A demarcation treaty for the area was signed in 2000.

"Respecting the signed agreements is one of the factors that will promote the friendly and neighborly relations between two countries and ensure sustainable stability and security at sea," it quoted Col. Nguyen Van Kiem, deputy chief of staff of Vietnam's navy, as saying.

Chinese Foreign Ministry spokesman Hong Lei did not comment on the joint patrol at a regular news conference Tuesday. He reiterated Beijing's sovereignty over the South China Sea, but said it would work toward a peaceful resolution to the territorial dispute.

The joint patrol was the 11th since 2005 between the neighboring Communist countries, but it was unclear how long it had been planned or whether it signaled any cooling of tempers. Relations between the two have plummeted in recent weeks as they have traded diplomatic punches over run-ins involving territory in the South China Sea claimed by both.

"The South China Sea has led to a souring of political relations but has not yet spilled over to affect the broad and deep nature of Sino-Vietnam relations," Carlyle Thayer, a Vietnam expert at the Australian Defense Force Academy in Canberra, said in an email. "The holding of the exercises is a good sign."

Last week, Vietnam held live-fire naval drills off its central coast and issued an order outlining who would be exempt from a military draft during wartime. China announced a few days later that it also recently held similar maneuvers in the South China Sea without providing exact dates.

On Tuesday, a newspaper published by China's ruling Communist Party ran a scathing editorial, warning Vietnam to back off.

"If Vietnam wishes to create a war in the South China Sea, China will resolutely keep them company," the Global Times said. "China has the absolute might to crush the naval fleets sent from Vietnam. China will show no mercy to its rival due to 'global impact' concerns."

China has been upset with Vietnam's welcoming of U.S. involvement in helping resolve disputes in the South China Sea that Beijing believes should be settled bilaterally. The editorial said any attack on Vietnam would likely not lead to a direct conflict with the U.S., but that "even if some friction occurs, that is no reason for China to put up with Vietnam's unlimited vice in the South China Sea."

The U.S. has said that keeping key shipping lanes open in the South China Sea is in its national interest.

On Monday, U.S. Republican Sen. John McCain, a former prisoner of war in Vietnam, told a conference held by the Center for Strategic and International Studies, a Washington think tank, that Chinese aggressive behavior and unsubstantiated territorial claims are "exacerbating tensions in the South China Sea."

He urged the U.S. to help Southeast Asian nations resolve territorial disputes with China, while also assisting them in developing and deploying maritime defense systems, including early warning radar and coastal security vessels.

Hundreds of Vietnamese protested Sunday for the third straight week, yelling "Down with China!" as they marched through the streets of the capital, Hanoi. Many also carried signs demanding that China stop entering Vietnamese-claimed territory in the Spratly and Paracel islands.

Vietnam and China have a long history of scrapes on the contested high seas, typically resulting in tit-for-tat diplomatic rhetoric.

The recent blowup has sparked a feverish response from Hanoi, which accuses Chinese boats of hindering its oil exploration activities within 200 nautical miles of its coast, which it claims as its exclusive economic zone. China dismisses the argument, saying the incidents occurred near territory it claims and that Vietnamese vessels endangered Chinese fishermen.

___

Associated Press writer Christopher Bodeen in Beijing contributed to this report.

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US, Japan delay Okinawa base plan (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.

In a joint statement after top-level talks, the Pacific allies said that 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 reconfirmed plans to move 8,000 Marines and some 9,000 dependents from Okinawa to the US territory of Guam.

Under the 2006 plan between the two 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.

But 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.

Three US senators recently moved to force the Pentagon to consider a new option, saying that the current plan is too costly and politically unrealistic as Japan grapples with the aftermath of its massive earthquake.

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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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(AP)

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Could not find default endpoint element that references contract 'TranslatorService.LanguageService' in the ServiceModel client configuration section. This might be because no configuration file was found for your application, or because no endpoint element matching this contract could be found in the client element.

ISLAMABAD – Pakistan army: Senior officer detained for suspected links with banned militant group.

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Bangladesh moves to retain Islam as state religion (AP)

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Could not find default endpoint element that references contract 'TranslatorService.LanguageService' in the ServiceModel client configuration section. This might be because no configuration file was found for your application, or because no endpoint element matching this contract could be found in the client element.

DHAKA, Bangladesh – Bangladesh will retain Islam as the state religion in amendments the government is proposing to its constitution, a government minister said Tuesday.

A former military ruler declared Islam the state religion in 1988 by amending the charter, but it barely affected Bangladesh's secular legal system mainly based on British common law.

The government says the proposed changes won't affect the legal system. Inheritance and other family laws already are based on religion.

The decision was made late Monday at a Cabinet meeting, the minister told The Associated Press on condition of anonymity because of the sensitivity of the issue.

A special government committee prepared proposals for the amendment, and the government will send those proposals to the parliament for passing as a law.

Bangladesh won independence from Pakistan in 1971 with help from India through a bloody nine-month war.

The original constitution was installed by independence leader Sheikh Mujibur Rahman, the father of current Prime Minister Sheikh Hasina. After Rahman's assasination in a military coup in 1975, military rulers made a series of amendments to the charter.

Some see the government's latest action as a compromise by Hasina, who during her election campaign before December 2008 polls said she would restore the 1972 constitution if voted to power.

The original charter did not recognize any faith as a state religion, promised elimination of communalism and disfavored discrimination or persecution because of a person's faith.

The new proposals want to restore those provisions of secularism but keep Islam as state religion.

Monday's Cabinet meeting chaired by Hasina also endorsed equal status and equal rights for practicing other religions, including Hinduism, Buddhism and Christianity, the minister said.

The Cabinet decided to keep the provision of state religion considering the national reality, the minister told AP.

The main opposition Bangladesh Nationalist Party led by former Prime Minister Khaleda Zia has campaigned that Hasina's Awami League party is anti-Islamic. The country's main Islamic party Jamaat-e-Islami and its hardline allies also brand Hasina's party as anti-Islamic.

Bangladesh has thousands of Islamic schools that advocate installation of Sharia laws, and a violent hardline group years ago bombed government buildings and courts demanding Sharia law. The government claims the group, Jumatul Mujahedin Bangladesh, was broken after its top leaders were hanged.

The government also proposed an amendment to cancel a constitutional provision that requires the government to hand over power at the end of its term to a nonpartisan administration. A former chief justice is usually chosen to head the three-month caretaker administration that conducts new elections.

The Supreme Court has ruled the provision in the 1996 constitution is undemocratic.

The next general elections is due in 2014, and opponents of Hasina say amending the consitution to remove that provision could lead to vote-rigging.

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West Indies 119-5 at lunch (AFP)

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Could not find default endpoint element that references contract 'TranslatorService.LanguageService' in the ServiceModel client configuration section. This might be because no configuration file was found for your application, or because no endpoint element matching this contract could be found in the client element.

KINGSTON, Jamaica (AFP) – West Indies were 119 for five, in response to India's first innings total of 246 on the first day of the first Test on Tuesday at Sabina Park.

Score summary

India 246 (S. Raina 82, H. Singh 70, R. Dravid 40; F. Edwards 4-56, R. Rampaul 3-59, D. Bishoo 3-75)

West Indies 119 for five (A. Barath 64; P. Kumar 3-24, I. Sharma 2-17)

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

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Could not find default endpoint element that references contract 'TranslatorService.LanguageService' in the ServiceModel client configuration section. This might be because no configuration file was found for your application, or because no endpoint element matching this contract could be found in the client element.

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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Australian military hit by 1,000 abuse claims (AFP)

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Could not find default endpoint element that references contract 'TranslatorService.LanguageService' in the ServiceModel client configuration section. This might be because no configuration file was found for your application, or because no endpoint element matching this contract could be found in the client element.

SYDNEY (AFP) – More than 1,000 people have made allegations of sexual and other abuse against the Australian Defence Force, lawyers assessing the complaints for the government said Tuesday.

The review was ordered in the wake of a scandal at the elite Australian Defence Force Academy in Canberra in which a teenage female cadet alleged that she was unwittingly broadcast having sex with another cadet to classmates.

DLA Piper, the law firm conducting the review on behalf of Defence Minister Stephen Smith, said more than 1,000 people had since come forward with allegations, including complaints made in the media and direct to the minister.

"The allegations range from relatively minor matters to very serious matters," DLA Piper said in a statement.

"Some of the allegations are made by victims or parents or partners of victims, some are made by witnesses and some are made by people who have no direct knowledge of the incident which they allege/report."

"We need to proceed with care because the issues involved are serious and sensitive. We are taking advice on our processes from an expert in dealing with victims of sexual abuse," the firm added.

DLA Piper said there was a surge in complaints after fresh allegations were broadcast by the media last week, and extra lawyers were drafted in to take calls.

The firm said it was now carefully considering how best to gather more detailed information, responding to criticism that the process was too formal or that the review was a "cover-up" exercise.

"The Minister expects the Review to provide our own honest assessment and recommendations, regardless of whether or not doing so may involve criticism of aspects of Defence's response to allegations," DLA said.

"The Review members would not be participating in the Review if we thought it was a sham."

The Australian Defence Force has been stung by a string of allegations, some decades old, of abusive and sexist behaviour in its ranks.

Cases aired in the media involve the hushing up of gang rape and the brutal bashing and bullying of military cadets.

Minister Smith has called the allegations "very concerning" and promised they would be "methodically and exhaustively" assessed.

Australia's top military brass have stressed that such practices are completely unacceptable, and that the defence force has improved and reformed over the years.

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660 reservoirs at risk of overflowing in China (AP)

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Could not find default endpoint element that references contract 'TranslatorService.LanguageService' in the ServiceModel client configuration section. This might be because no configuration file was found for your application, or because no endpoint element matching this contract could be found in the client element.

BEIJING – Heavy rains in eastern China have put more than 660 reservoirs at risk of overflowing, an official said Tuesday.

Rain-triggered floods have swept parts of eastern and southern China this month, leaving at least 175 dead and 86 missing and causing 35 billion yuan ($5 billion) in direct economic losses, according to the Ministry of Civil Affairs.

An official at the media department of the Anhui Water Resource Department said water levels at more than 660 reservoirs in the province were above the warning level. Like most Chinese officials, she would give only her surname, Zhao.

The official Xinhua News Agency also said in a Chinese-language report that the reservoirs were in danger of overflowing. The Anhui flood control headquarters said most of the reservoirs — more than 620 — were small, and that only three were large.

Such flooding is common every year during China's rainy season, with reservoirs and rivers overflowing.

Zhao referred further queries to the provincial Communist Party Propaganda Department, but calls were not answered there.

Xinhua said the water levels of the Shuiyang and Qingyi rivers, both tributaries of the Yangtze River running through Anhui, had risen above the warning safety mark.

It said many of the reservoirs in Anhui had started discharging water on orders from the state flood-control headquarters.

In neighboring Zhejiang province, the operator of eastern China's largest reservoir opened three of its nine floodgates Tuesday because of the risk of overflowing.

It was the first time the Xin'anjiang Reservoir has been forced to discharge water since 1999, Zhejiang's flood control headquarters said.

Xinhua quoted officials as saying the release of water into the Lanjiang river wouldn't cause havoc downstream because water there had receded below the danger level.

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