China eases tax burden on poor with law change (AP)

BEIJING – China's legislature raised the threshold for paying income tax, effectively exempting tens of millions of workers in a new effort Thursday to defuse tensions over surging inflation and a yawning wealth gap.

The change comes on the eve of celebrations of the 90th anniversary of the founding of the ruling Communist Party, which faces public rancor over high prices and corruption and protests over minority and migrant worker rights.

The Standing Committee of China's legislature raised the minimum personal income required to pay taxes from 2,000 yuan ($300) a month to 3,500 yuan ($540).

That will reduce the number of taxpayers from 84 million, or 28 percent of workers covered by the law, to about 24 million, or just 7.7 percent, said a tax official, Wang Jianfan. The income tax law covers about 300 million urban workers but not most of China's hundreds of millions of farmers, who pay tax under a different system.

The change is meant to ease the tax burden on low-income workers, Wang said at a news conference. The official Xinhua News Agency said lawmakers also wanted to "adjust the distribution of income" — a reference to narrowing the gulf between China's elite who have benefited from economic reform and the poor majority.

"It is a serious attempt to maintain social stability and redress the problems of inflation," said Steve Tsang, director of the China Policy Institute at Britain's University of Nottingham.

Inflation jumped to a 34-month high of 5.5 percent in May, driven by a double-digit jump in food costs and some economists forecast a bigger jump for June.

High prices are dangerous for the authoritarian government because they erode economic gains that underpin the ruling party's claim to power. Food costs are especially sensitive because poor families in China spend up to half their incomes on food.

Communist leaders declared controlling inflation their priority this year but prices have continued to climb despite four interest rate hikes since October and curbs on lending and investment.

The government also has promised hefty increases in social spending to help narrow the gap between an elite who have profited from three decades of economic reform and China's poor majority.

Thursday's announcement highlights the extremes of wealth and poverty in a society that had 115 billionaires in Forbes magazine's 2011 list of the world's richest.

The figures cited by Wang would mean only 24 million workers earn more than 42,000 yuan ($6,500) a year, while millions of families get by on less despite rapid economic growth.

The investment bank UBS said this week that June inflation might rise as high as 6.5 percent after the cost of vegetables and pork jumped following floods that damaged crops in China's south and east.

"A steady improvement in living conditions is what people have been led to take for granted" as part of an unspoken "social contract" under which the communists remain in power, said Tsang.

"If you were earning enough to pay tax so you are not at the bottom of the pile but what you can really afford has been eroded in the last couple of years, then this could not have come soon enough," he said.

___

AP researcher Yu Bing contributed.

View the original article here

Reclusive painter keeps Mao spirit alive on Tiananmen (Reuters)

BEIJING (Reuters) – Reclusive Chinese painter Ge Xiaoguang's art has gazed over one of the world's most famous city squares for decades.

For 30 years, he has painted the portraits of former paramount leader Mao Zedong that look across Beijing's Tiananmen Square.

The giant oil paintings of the "Great Helmsman" have kept watch from the Gate of Heavenly Peace since the Communist Party won the civil war and declared a New China on October 1, 1949.

"I feel honored to have done this all these years. It is a sacred job. The sense of duty is quite strong," Ge said.

The paintings, now made of glass fibre and reinforced plastic, are six meters (20 feet) high and 4.6 meters (15 feet) wide, and weigh up to 1.5 tons.

Ge keeps a low-profile and has refused countless requests for interviews. But he gave Reuters access to his studio near the imposing Forbidden City ahead of Friday's 90th anniversary of the founding of the Chinese Communist Party.

Paintbrushes in hand and standing atop a moving platform, 58-year-old Ge gently smoothes the surface of the canvas, creating an airbrushed effect that lends the chairman a benevolent glow. "The key in the portrait is to depict Chairman Mao's presence. It's really important to manage to show the charisma that he had as a great leader," he said.

Born in Beijing in 1953, Ge learned to paint the large-scale portraits from his predecessor Wang Guodong.

When Wang retired in 1976 after Mao's death, Ge formally became the fourth artist to take up the vaunted position. He now leads a team of artists that depict China's political leaders, from Mao to current president Hu Jintao.

Ge alone paints Mao. Every year since 1977, he has created a new portrait, each one slightly different, which replaces the old one during the night between September 30 and October 1, China's National Day. After decades of referring to archive material and photos, Ge says he knows Mao so well he does not need to spend much time sketching out the portrait.

Mao is still revered in China for uniting a vast country much of which had been divided up by warlords and foreign invaders.

But he is also blamed for the deaths of millions in the famine of the disastrous Great Leap Forward and the chaos of the Cultural Revolution.

The official verdict of his rule is that he was 70 percent good and 30 percent bad.

There has been a resurgence in recent years of nostalgia for the Mao era, with restaurants emblazoned in red featuring the fiery cuisine of his native Hunan, and busts and pins and other knickknacks featuring the chairman have long been popular features in tourist bazaars.

During the 1989 pro-democracy protests centered on Tiananmen Square, three demonstrators splattered Mao's portrait with paint, and later received long jail terms.

Today, the tens of thousands of people that flock to the world's largest square are greeted by Mao's imposing portrait, which currently looks directly at a huge hammer and sickle crafted from flowers for the Party's birthday. Even after 30 years of market reforms have made China the world's second biggest economy, Mao is still an official ideological centerpiece of the Party at 90. Which should keep Ge in the job for some time to come.

"You must do this job right," Ge said. "It is not just piece of art. It represents China's spirit and the emotions of an era."

(Editing by Michael Martina and Ben Blanchard and Jonathan Thatcher)

View the original article here

Beijing-Shanghai high-speed train makes debut (AFP)

ABOARD THE BEIJING-SHANGHAI EXPRESS (AFP) – High-speed trains linking Beijing and Shanghai made their passenger debut Thursday on a $33 billion track China hopes will help ease its overloaded transport system.

Premier Wen Jiabao declared the link "in operation" at Beijing South rail station before boarding the first sleek-nosed white train that took passengers to Shanghai, the country's commercial hub, in less than five hours.

He said the high-speed line -- launched on the eve of celebrations to mark the 90th birthday of China's Communist party -- would be key to "improving the modern transport system... and satisfying people's travelling needs".

The line, which has been operating on a trial basis since mid-May, halves the rail journey time between the country's two main cities and could hurt airlines on the busy route plagued by delays and cancellations.

"The high-speed train is fast and more convenient than a plane," 38-year-old Xu Yuhua told AFP as she waited with her 10-year-old daughter to board the first departure for Shanghai, which left promptly at 3:00 pm (0700 GMT).

Armed police and regular officers were on high alert at the station, where 10 of the gleaming trains were lined up for departure. Excited passengers posed for photographs in front of the locomotive and outside their carriages.

The fast link, which has been hit by safety concerns and graft, is opening a year ahead of schedule and will be able to carry 80 million passengers a year -- double the current capacity on the 1,318-kilometre (820-mile) route.

"It could play a transformational role in shaping the future economic dynamics in coastal China... by creating more spillover effects to regions lying along the sprawling high-speed railway line," Ren Xianfang, an analyst at IHS Global Insight, told AFP.

But for the airline industry, the impact could be "destructive", she warned.

One-way train ticket prices will cost 410-1,750 yuan ($63-$270) subject to further adjustments, vice rail minister Hu Yadong said this month, compared with about 1,300 yuan for a flight.

In response, airlines have slashed some prices by up to 65 percent to below the cost of the cheapest high-speed rail ticket, state media said Wednesday, citing travel website ctrip.com.

On board, waitresses wearing blue tunics and yellow smiley face badges walked up and down the aisle selling beer, soft drinks and juice -- but the beverages ran out two hours before arrival.

Supplies of instant noodles and pre-packaged meals were stacked high in the cafe car.

A 36-year-old male passenger surnamed Zhang, who was travelling back to Shanghai with colleagues, said he appreciated the extra legroom, noting: "Planes are not as comfortable."

Frederic Campagnac, general manager of transport and logistics consultancy Clevy China, nevertheless believes the fast link will have a positive impact on airlines by forcing operators to be on time.

It will "put pressure on the airlines to keep more on their schedule," Campagnac said.

Work on the high-speed railway started in April 2008 with a planned investment of 220.9 billion yuan.

China is spending heavily on its high-speed rail network, which spanned 8,358 kilometres at the end of 2010 and is expected to exceed 13,000 kilometres by 2012 and 16,000 kilometres by 2020.

But huge investment has also made the sector a hotbed for corruption, raising concerns over costs and safety.

China's state auditor in March said construction companies and individuals last year siphoned off 187 million yuan in funds meant for the Beijing-Shanghai link.

The revelation followed the sacking of former railways minister Liu Zhijun in February, who allegedly took more than 800 million yuan in kickbacks over several years on contracts linked to China's high-speed network.

The railway ministry has said the trains would run between 250 and 300 kilometres per hour on the new link, which is designed for a maximum speed of 380 kph.

The speed is in line with a nationwide directive made public in April that said all high-speed trains must run slower than previously announced -- no faster than 300 kph -- for safety.

"I'm not afraid," a 30-year-old woman from Shanghai surnamed Wen told AFP, as the train accelerated to top speed, whizzing past factories, high-rise apartment buildings, and vast farmlands where peasants worked in the fields.

"The ticket is a little bit expensive but I think the train is more stable than a plane."

Urban areas within 300 to 400 kilometres of Beijing and Shanghai "will become kind of suburbs to the big cities" because it will be possible to do a return trip in one day, Campagnac said.

"All the cities on the way will benefit from the line," he added.

View the original article here

UN: China should arrest al-Bashir (AP)

GENEVA – The U.N.'s top human rights official criticized China on Thursday for failing to arrest Sudan's president so that he can be brought to trial on war crimes charges.

U.N. High Commissioner for Human Rights Navi Pillay told reporters in Geneva she was "disappointed" that China welcomed Sudan's President Omar al-Bashir during a visit this week, rather than arrest him to ensure he stands trial.

Pillay said that "the whole world favors trial" for al-Bashir on charges of war crimes, crimes against humanity and three counts of genocide, the first time the world's permanent war crimes tribunal issued genocide charges.

China has a duty to enforce warrants by the International Criminal Court, she said, despite the fact that it's not a member of The Hague, Netherlands-based tribunal. The Sudanese leader defiantly rejects the charges and the authority of the court.

"There is a duty and a responsibility on the part of every government including China to assist the court in bringing to justice individuals who have been indicted by the court," Pillay said. "It's disappointing when states do not deliver on this responsibility."

China's mission to the U.N. in Geneva did not immediately respond to requests for comment.

China may be Sudan's biggest trading partner and international protector, but on Darfur the Chinese have subtly tried to push Sudan, particularly to accept a large U.N. peacekeeping force.

China, which is one of the U.N. Security Council's five permanent members with veto power, sent its own experts to Darfur to back up the peacekeepers.

Like China — Sudan's biggest arms supplier and a heavy investor in its oil industry — the United States is a permanent member of the U.N. Security Council but not a member of the International Criminal Court.

But U.S. officials have pressured to have al-Bashir put on trial by the court, despite Sudan serving as a key U.S. ally, particularly with intelligence, in its fight against terrorism.

Even nations that are members of the ICC, such as Chad and Kenya, have declined to carry out the court's international warrant, citing fears it could derail efforts to create peace in Sudan's western Darfur region.

An arrest warrant for al-Bashir said last year there were "reasonable grounds to believe" that since April 2003 Sudanese forces attempted genocide against the Darfur tribal groups Fur, Masalit and Zaghawa. Judges also issued a warrant in 2009 against the president over crimes against humanity in Darfur. The U.N. says the conflict has left up to 300,000 people dead and forced millions to flee their homes.

The U.N. Security Council granted the ICC jurisdiction over Sudanese war crimes in 2005, but the court has no police force or ability to enforce its orders without cooperation from governments.

The council has authorized a new 4,200-strong peacekeeping force to be deployed in the oil-rich Abyei region, southwest of Kadugli, for six months. The U.N. also has a 10,400-strong peacekeeping force on the north-south border but Khartoum demanded that U.N. troops leave the north when the mandate expires July 9.

South Sudan, which will become independent on that date, wants a U.N. force on its side of the border and the U.N. is planning a new mission for the south.

The Sudanese leader has continued to visit countries where he is not likely to face arrest, such as Ethiopia, which is not a member of the ICC, and Saudi Arabia, where he went on a Muslim pilgrimage.

Al-Bashir, who left Beijing on Wednesday for the eastern Chinese port city of Qingdao, was expected to leave China later Thursday to return to Sudan.

Pillay said she could assure everyone, based on her experience as a judge for the ICC, that it would conduct a fair trial.

"It's not like we're calling for an execution of someone, we're calling for an arrest of someone," she said.

Luis Moreno Ocampo, the ICC's chief prosecutor, told the U.N. Security Council last month that genocide and crimes against humanity have continued in Darfur, masterminded by al-Bashir.

Moreno Ocampo said al-Bashir was behind air attacks on civilians and the killing of members of the Fur, Masalit and Zaghawa. The Security Council referred the Darfur conflict to the court in 2005.

Sudan's U.N. Ambassador Daffa-Alla Elhag Ali Osman told the council, however, that Sudan is not a member of the court and Moreno Ocampo's statement and written report to the council in New York were "overloaded with ... unfounded accusations" of rape, killing, war crimes and genocide.

View the original article here

Beijing seeks nearly $2 million from Ai Weiwei (AP)

BEIJING – Beijing tax authorities are seeking nearly $2 million in back taxes and fines from outspoken Chinese artist Ai Weiwei, who was released last week from nearly three months in detention, his close friend said Tuesday.

Ai was released on bail last Wednesday and Chinese authorities said he confessed to tax evasion and pledged to repay the money owed. His family has denied he evaded any taxes and activists have denounced the accusation as a false premise for detaining Ai, who spoke out against the authoritarian government and its repression of civil liberties.

The Beijing Local Taxation Bureau informed Ai that he owed around 5 million yuan ($770,000) in unpaid taxes and would be fined about 7 million yuan ($1.1 million) — totaling just over 12 million yuan ($1.85 million), said Beijing human rights lawyer Liu Xiaoyuan. Liu does not legally represent Ai, but has been a friend and supporter of the artist for many years.

Chinese authorities sometimes try to silence critics by accusing them of tax violations or other nonpolitical crimes.

Ai, who has shown his work in London, New York and Berlin, has earned huge sums selling his work at auctions and through galleries. Last year, Ai filled the Turbine Hall of London's Tate Modern art gallery with millions of handmade porcelain sunflower seeds. A 100-kilogram pile of the seeds sold for more than $550,000 at a Sotheby's auction in February.

Ai's mother, Gao Ying, said two tax bureau officials delivered the notice to Ai on Monday and asked him to sign it in acknowledgement but he refused. Gao said she was unclear about the specifics in the notice, but that the alleged violations took place over the past decade.

"We don't know anything about these taxes," Gao said. "These taxes date back 10 years. Why, at that time, if they really had not paid their taxes, why did they not say anything about it every year?"

Ai declined to comment, saying the terms of his bail barred him from doing media interviews. Ai was the most high-profile target of the government's nationwide crackdown on bloggers, lawyers and activists aimed at derailing potential democratic uprisings like those sweeping through the Arab world.

Before he disappeared, Ai had been keeping an informal tally of the recent detentions on Twitter.

When he was released, the Chinese Foreign Ministry repeated allegations reported earlier by state media that a company linked to Ai, Beijing Fake Cultural Development Ltd., had evaded a "huge amount" of taxes and intentionally destroyed accounting documents.

Previously, his wife said the company, which handles business aspects of Ai's art career, belongs to her.

Calls to the local tax office in Chaoyang district, where Ai's studio is located, rang unanswered Tuesday.

Ai's wife has said that Ai is forbidden to discuss the conditions of his detention and release and is followed by plainclothes officers whenever he leaves the house.

Ai's detention prompted an international outcry among artists, politicians and human rights activists, and Western leaders called it a sign of China's deteriorating human rights situation. His family and supporters say he is being punished for speaking out about the Communist leadership and social problems.

Ai has spoken critically about a number of national scandals, 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 people and was blamed on negligent workers and corrupt inspectors.

In previous cases involving economic crimes that others saw as political persecution, Zhao Yan, a news assistant for The New York Times, was jailed for three years in 2007 on charges of financial fraud. Xu Zhiyong, an outspoken lawyer, was investigated for alleged tax evasion in 2009 but later released.

View the original article here

Senate deplores China's use of force at sea (Reuters)

WASHINGTON (Reuters) – The U.S. Senate unanimously approved a resolution on Monday that deplored China's use of force against Vietnamese and Philippine ships in the South China Sea.

China has shown increasing assertiveness in its claim to the entire South China Sea, believed to be rich in oil and gas.

In its nonbinding resolution, the U.S. Senate urged all parties to refrain from using force to assert territorial claims.

"The Senate ... deplores the use of force by naval and maritime security vessels from China in the South China Sea," the resolution said.

Senator Jim Webb, chair of an east Asian and Pacific affairs subcommittee of the Senate Foreign Relations Committee, said that "a growing number of nations around the South China Sea are now voicing serious concerns about China's pattern of intimidation."

Chinese vessels have harassed Vietnamese oil exploration ships and the Philippines has also complained that one of its ships has been rammed, according to the Senate resolution.

On Sunday, China and Vietnam pledged to resolve their maritime dispute through peaceful negotiations, a sign of possibly easing tension. The dispute was one of several subjects discussed in the first set of talks in Hawaii between the United States and China over the weekend.

(Reporting by Diane Bartz, Editing by Sandra Maler)

View the original article here

Chinese rescuers use saw, sledgehammer to free boy (AP)

BEIJING – A 5-year-old boy who fell into a crevice while playing hide-and-seek has been freed by Chinese rescuers who used a sledgehammer and saw to break through a wall.

China Central Television showed a helmeted rescuer chipping into a wall while the crying boy held up a sheet to protect his face from flying rubble.

Rescuers pried him out after cutting one wall with a circular saw for half an hour.

The state media report Tuesday said the boy in Hunan province slipped from a one-story roof and fell into a gap between buildings just 15 centimenters (6 inches) across at its widest point.

It didn't say when the incident happened or how long he was stuck.

He had minor scrapes on his face but no other injuries.

View the original article here

China welcomes Sudan leader wanted on war crimes (AP)

BEIJING – China said Sudan's president will be warmly welcomed on his delayed state visit Tuesday and it would reserve opinion on the international warrant that accuses him of war crimes.

President Omar al-Bashir has been welcomed in many countries in recent years and would be to China as well, Foreign Ministry spokesman Hong Lei said.

The International Criminal Court warrant alleging war crimes is its first against a sitting head of state, accusing al-Bashir of orchestrating atrocities in Sudan's Darfur region. China, a major economic partner for Sudan, is not a member of the court.

"China is not a signatory of the ICC ... and we reserve our opinion on the ICC's prosecution of al-Bashir," Hong told a news conference.

Al-Bashir will hold talks with President Hu Jintao on Wednesday, a meeting delayed a day because al-Bashir arrived nearly 24 hours later than expected.

Sudan's Foreign Ministry said in a statement Monday the plane was told to change its route while flying over Turkmenistan but was unable to do so, and instead returned to Tehran.

Sudan's ruling National Congress Party has suggested the United States pressured China and other countries in an attempt to cancel the trip.

Sudanese media reported that the presidential plane was over Turkmenistan airspace when authorities there said they had withdrawn an earlier flight authorization for it.

Another country in the flight path, Tajikistan, excused itself from a prior authorization by citing military exercises taking place in the same airspace, according to the independent Al Rae Al Aam daily, among others.

After Al-Bashir's plane returned to Iran, the Chinese government insisted the trip be completed, the newspapers reported, quoting informed sources in the government who asked not to be named.

"This is a new defeat for the United States of America" the independent daily Al Rae Al Aam, quoted Gotbi Mahadi, a senior ruling party official as saying.

Al-Bashir's 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.

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.

View the original article here

China says Sudan divide on agenda as Bashir visits (Reuters)

BEIJING (Reuters) – Senior Chinese officials will take up the secession of south Sudan during talks with Sudan's President Omar Hassan al-Bashir, who began a state visit to his country's powerful patron on Tuesday after a delay to his arrival.

Bashir had been due to arrive on Monday for a summit with Chinese President Hu Jintao, one of the few foreign leaders willing to host the Sudanese leader, under indictment by the International Criminal Court over war crimes charges stemming from fighting in the Darfur region of Sudan.

But Bashir failed to show up on time in the Chinese capital, a delay that the Sudanese Foreign Ministry later attributed to a change in his aircraft's flight plan.

He arrived in the early hours of Tuesday and the summit with Hu was scheduled for Wednesday morning.

"This visit will help advance traditionally friendly China-Sudan relations, issues facing north and south Sudan, and the resolution of the problems in the Darfur region," Chinese Foreign Ministry spokesman Hong Lei told a briefing.

In comments published earlier by state news agency Xinhua, Hong confirmed that Sudan's "north-south peace process and the Darfur issue" would be on the agenda.

China is a major buyer of Sudanese crude oil, and will be keen to ensure the partition of Sudan into two states, Bashir's north and a more oil-abundant south, will not descend into fighting that could disrupt supplies and damage Beijing's stake on both sides of the new border.

China has been building ties with the emerging state in southern Sudan but remains a major supporter of Bashir, including acting as Khartoum's top arms supplier.

In interviews with official Chinese media, the long-time Sudanese leader mixed reassurances about his commitment to a peaceful secession of the south from July 9, which Beijing has encouraged, with a warning that the split could still go wrong.

The are many "time bombs" in the dividing of Sudan and the possibility of war again erupting between the two sides cannot be excluded, Bashir told the People's Daily, China's main official newspaper, in an interview published on Monday.

Trade between China and Sudan grew to $8.6 billion in 2010, a rise of 35.1 percent on 2009 figures, powered by the rising value of Chinese imports of oil, according to Chinese customs statistics.

Sudan was China's sixth biggest source of imported crude oil last year, when it supplied 12.6 million metric tons, compared with 44.6 million metric tons from the top supplier, Saudi Arabia.

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.

Hong told reporters that Bashir's delayed flight -- due to "technical problems" -- would not affect the visit. But he expressed China's disapproval over the war crimes charges.

"China ... has serious reservations about the complaints lodged against President Bashir," he said.

Human rights groups have urged Beijing to arrest Bashir. China has shrugged off these calls, saying it has every right to host the head of a state with which it has diplomatic relations.

"President Bashir in recent years has visited many countries, and has received warm and friendly treatment. China, in extending a friendly reception to Sudan's visiting head of state, cannot be criticized," Hong said.

(Editing by Ben Blanchard and Robert Birsel)

View the original article here

First individual Chinese tourists arrive in Taiwan (AP)

TAIPEI, Taiwan – The first individual Chinese tourists have begun arriving in Taiwan amid steadily warming ties between the two sides.

Dozens arrived Tuesday, underscoring Taiwanese President Ma Ying-jeou's continuing efforts to forge closer China relations, the centerpiece of his 3-year-old administration.

Previously Chinese tourists could only travel to Taiwan in supervised groups.

Last year 1.6 million Chinese tourists visited the island.

Taiwan and China split amid civil war in 1949. Beijing continues to claim Taiwan as its territory.

View the original article here

China rejects US Senate criticism over sea dispute (AP)

BEIJING – A U.S. Senate resolution critical of Beijing's actions in the South China Sea "doesn't hold water" and its sponsors should promote peace in other ways, China said Tuesday.

Disputes over the South China Sea should be resolved peacefully through talks between "directly concerned parties," Foreign Ministry spokesman Hong Lei told reporters, a reference to what Beijing considers to be meddling by Washington.

The resolution adopted Monday by the U.S. Senate deplored China's "use of force" in recent incidents between Chinese vessels and those of other claimants in the potentially resource-rich waters.

The Philippines accuses Chinese vessels of intruding repeatedly into Philippine waters in recent months, while Vietnam says Chinese vessels have hindered its oil exploration surveys in an area 200 nautical miles (370 kilometers) off its central coast that it claims as its economic exclusive zone. China says it has sovereign rights over the South China Sea.

"The relevant resolution adopted by the U.S. Senate doesn't hold water," Hong said. "We hope the relevant senators can do more to promote peace and stability of the region."

Democratic Sen. Jim Webb led a bipartisan group of four senators who introduced the resolution. Webb said Southeast Asian countries were worried about China's "pattern of intimidation," and that the U.S. had a strategic interest in facilitating multilateral negotiations.

The Obama administration supports multilateral negotiations but has been less strident in confronting China.

Hong added that China wants disputes to be handled through "friendly consultations" between the parties directly concerned.

"Others without a direct stake should respect the efforts made by those directly concerned to resolve South China Sea disputes through dialogue and in a peaceful manner," he said.

More than 1,200 U.S. and Philippine navy personnel, meanwhile, began 11 days of exercises Tuesday that would include live-fire drills, tracking and interdiction and patrolling maneuvers in the Sulu Sea off the western Philippine province of Palawan, which lies near the disputed Spratly Islands.

The annual maneuvers were unrelated to recent spats between China and the Philippines over the Spratlys. They aim to generally improve both navies' ability to deal jointly with any naval threat, Philippine navy spokesman Lt. Noel Cadigal said.

The U.S. Navy deployed the guided missile destroyers USS Chung-Hoon and USS Howard, along with the diving and salvage ship USNS Safeguard and 800 personnel, including Navy Seabees and Riverine forces. Two Philippine navy patrol ships and more than 450 Filipino sailors joined the exercises, officials said.

Aside from the three ships, the U.S. Navy would deploy SH-60 Seahawk aircraft and the P-3c Orion, a long-range anti-submarine warfare patrol and surveillance plane.

View the original article here

Sudan leader Omar al-Bashir arrives in Beijing: AFP (AFP)

BEIJING (AFP) – Omar al-Bashir, wanted for war crimes, arrived in Beijing early Tuesday, according to an AFP photographer, a day after the Sudanese leader was originally due in China to meet President Hu Jintao.

Bashir's visit has outraged rights groups who criticise Beijing for hosting a man wanted by the International Criminal Court (ICC) for atrocities committed during Sudan's civil war.

He had been scheduled to arrive early Monday but Chinese foreign ministry staff said his plane was "delayed", prompting the cancellation of planned meetings, including with Hu.

Chinese state media confirmed the arrival for a state visit as a guest of President Hu.

A Xinhua report quoted comments made earlier by Chinese Foreign ministry spokesman Hong Lei, saying leaders of the two nations will discuss "how to consolidate China-Sudan relations and expand cooperation."

The two sides will also exchange views on Sudan's ongoing north-south peace process and the Darfur issue, Hong said.

China is a key supporter of the regime in Khartoum despite ICC arrest warrants for Bashir for genocide, crimes against humanity and war crimes in Sudan's western Darfur region, where about 300,000 people have died since 2003.

View the original article here

China denies ship active in Japan waters (AFP)

BEIJING (AFP) – China denied claims on Tuesday that one of its marine research vessels had been active inside Japan's exclusive economic zone, after Tokyo launched a formal diplomatic protest with Beijing.

"On June 23, a Chinese scientific research vessel went through the Japanese exclusive economic zone heading for the high seas for marine environmental research activities," foreign ministry spokesman Hong Lei told reporters.

"When it went through the Japanese EEZ, it did not do any marine research activities. China has already made this clear to the Japanese side."

On Friday, Japan said the Chinese ship had crossed through its 200 nautical mile (370-kilometre) EEZ and conducted activities in the zone without asking for permission, prompting Tokyo to protest via diplomatic channels.

Chinese media has reported that the vessel was on a mission in the Pacific to test water for radioactive contamination after the March 11 earthquake and tsunami that damaged the Fukushima nuclear plant on Japan's eastern coast.

The exchange is the latest in a long-running spat between the neighbours over maritime territories and comes as neighbouring nations voice concerns over China's increasingly assertive stance as a naval power.

View the original article here

Sudanese leader Bashir visits China (AFP)

BEIJING (AFP) – Sudanese leader Omar al-Bashir arrived in China on Tuesday for talks with President Hu Jintao, as the United States and rights groups criticised Beijing for hosting an alleged war criminal.

An AFP journalist saw Bashir's presidential plane touch down in Beijing in the early hours, a day later than planned, after Sudan's foreign ministry said it was forced to choose a "new route" while flying over Turkmenistan.

The change in plans forced an overhaul of Bashir's schedule, but not a cancellation of talks with Hu nor a red-carpet ceremony at the Great Hall of the People for a man who is unwelcome in many countries.

Bashir is wanted by the International Criminal Court (ICC) for alleged genocide, war crimes and crimes against humanity that occurred in Sudan's western Darfur region, where about 300,000 people have died since 2003.

China is a key supporter of the Sudanese leader, who is the first sitting head of state targeted by an ICC arrest warrant.

Beijing is a key military supplier to the regime in Khartoum and the biggest buyer of the country's oil, although the majority of Sudan's oil fields are located in the south, which will become independent on July 9.

Bashir's meetings with Hu and other senior Chinese leaders are now set for Wednesday, according to the foreign ministry in Beijing.

The Sudanese leader had been due to stay in China until Thursday, but it was unclear whether the delay would now prolong his stay. He last visited the country in 2006.

"This visit is the continuation of the distinguished relations between Sudan and China, which have remained friendly and progressive," Bashir told China's official Xinhua news agency in an interview ahead of the trip.

He hailed Beijing as a "strategic partner" and said that China "does not intervene in the internal affairs of others".

Beijing on Tuesday again defended the visit, with foreign ministry spokesman Hong Lei saying: "As a friendly country of China, the Sudanese leader's visit to China is quite reasonable."

The spokesman added: "In recent years, President Bashir has made many visits to foreign countries and was warmly welcomed by those countries. He will also be welcomed in China."

He said Bashir's visit would be "conducive to the development of the traditional friendship between China and Sudan, as well as the advancement of the peace process of North-South Sudan" and would touch on Darfur.

Hong attributed Bashir's delayed arrival to "technical reasons".

Officials at the Sudanese embassy in Beijing were not immediately available for comment when contacted by AFP.

In the interview with Xinhua, Bashir insisted that southern independence "will not affect the relationship" between Beijing and Khartoum, hailing China as a model "real partner".

The Sudanese leader's visit to China has sparked outrage among rights groups, and earned the reproach of the US State Department.

"We continue to oppose invitations, facilitation, support for travel by ICC indictees," State Department spokeswoman Victoria Nuland said on Monday.

"We have a longstanding policy of strongly urging other nations to do the same," she said. "We have urged China to join the international community in its call for Sudan to cooperate fully with the ICC."

ICC statutes dictate that any member country should arrest Bashir if he visits. China is not a party to those statutes, nor is the United States.

"We reserve our opinion on the ICC's prosecution against President Bashir," Hong said on Tuesday.

Bashir arrived in China from Iran, where he attended a counter-terrorism summit which also included the leaders of Afghanistan, Pakistan, Iraq and Tajikistan.

New York-based Human Rights Watch described Bashir's trip as "an affront to victims of heinous crimes committed in Darfur" and had urged Beijing to arrest Bashir on arrival.

Amnesty International said earlier this month that China risked becoming a "safe haven for alleged perpetrators of genocide" if it hosted Bashir.

Topics expected to come up in Bashir's talks with Hu include Chinese aid to Sudan and problems in Abyei, a disputed border area claimed both by Bashir's Khartoum-based northern Sudan regime and the rival government in the south.

The United Nations Security Council voted unanimously on Monday to send a 4,200-strong Ethiopian peacekeeping force to Abyei in a bid to douse tensions.

An estimated two million people died in Sudan's two-decade civil war.

A 2005 peace accord, the Comprehensive Peace Agreement, ended the conflict and allowed for a referendum in January in which the south voted by an overwhelming majority to split from the north.

Abyei did not take part in the referendum because the two sides could not agree who should be eligible to vote.

Fighting is also flaring in South Kordofan, which borders Abyei.

View the original article here

First Chinese solo tourists head to Taiwan: Xinhua (AFP)

BEIJING (AFP) – Nearly 300 solo Chinese travellers on Tuesday headed to Taiwan, state media said, days after Taipei lifted a decades-old ban on trips to the island by individual tourists from the mainland.

The tourists from Beijing, Shanghai and the city of Xiamen on the southeast coast left China by plane or ship, the official Xinhua news agency said.

Travel between Taiwan and China stopped at the end of the civil war in 1949, and mainland tourists have so far only been allowed to visit Taiwan in groups due to official concerns they might overstay their visas to work illegally.

Initially, Taiwan will allow 500 individual arrivals from the mainland per day, in the hopes that the visitors will help promote peace across the Strait.

"The Chinese tourists will all be peace ambassadors," Maa Shaw-chang, deputy secretary-general to Taiwan's quasi-official Straits Exchange Foundation, told AFP last week.

Initially, the programme applies to residents of the three Chinese cities while residents of the coastal province of Fujian, where Xiamen is located, also will be allowed to travel individually to the Taiwan-controlled islands of Kinmen, Matsu and Penghu.

Taiwan's United Daily News reported Saturday that solo Chinese tourists may be allowed to visit the island's parliament.

Travel between the two sides has boomed since President Ma Ying-jeou of Taiwan's China-friendly Kuomintang party came to power in 2008, pledging to boost trade links and tourism.

A ban on mainland Chinese travel to Taiwan was lifted by the two sides the same year.

Last year, more than 1.63 million Chinese visited Taiwan -- most of them on organised group tours, the rest on business, family and study trips -- a rise of 67 percent from a year before, making China the biggest source of visitors to the island, according to Taipei.

Beijing still considers self-ruled Taiwan as part of its territory awaiting reunification, by force if necessary, despite their split in 1949.

View the original article here

China demands Ai Weiwei pay $1.85 million in taxes, fines (Reuters)

BEIJING (Reuters) – Beijing's tax authorities have asked the dissident Chinese artist Ai Weiwei, released recently from more than two months in detention, to pay 12 million yuan ($1.85 million) in back taxes and fines, a friend of his said on Tuesday.

The 54-year-old artist was released on bail last Wednesday, a day before Premier Wen Jiabao left for Europe, where Britain and Germany have criticized Ai's detention. On Tuesday, German Chancellor Angela Merkel welcomed Ai's release as she met with Chinese Premier Wen Jiabao in Berlin.

Liu Xiaoyuan, a lawyer who has advised Ai's family and is a friend of the artist, said that Ai had received a notice on Monday from the tax authorities requesting him to pay 5 million yuan in back taxes and 7 million yuan in fines.

"He has three days to raise any opinions in writing he might have (on the demand)," Liu told Reuters by telephone.

"In accordance with the law on tax evasion ... if he does not pay then he could be subject to legal action," he added.

"For such a large sum, there could be a hearing," Liu said, adding that any hearing could take place before July 7. He did not elaborate further.

Ai could not be reached for comment. Under the terms of his release he is not allowed to talk to the media. Family members were not immediately available.

The official Xinhua news agency said last week that Ai was freed "because of his good attitude in confessing his crimes as well as a chronic disease he suffers from," citing the police.

A company that police said he controlled was found to have evaded a huge amount of taxes and intentionally destroyed accounting documents, and Ai's release last week came after the artist has vowed to pay the taxes he evaded, Xinhua reported.

Analysts say Ai's release is far from a signal of a policy shift by the ruling Communist Party. Authorities have muzzled dissent with the secretive detentions of more than 130 lawyers and activists since February, amid fears that anti-authoritarian uprisings across the Arab world could trigger unrest.

The Foreign Ministry has said Ai, who had a hand in designing the Bird's Nest stadium for the 2008 Beijing Olympics, remained under investigation for suspicion of economic crimes.

But police have issued no formal notice to explain why he was being held. Ai's family says the allegations are an excuse to silence his criticism.

(Reporting by Ben Blanchard; Editing by Yoko Nishikawa)

View the original article here

Germany, China stress support for euro (AP)

BERLIN – Premier Wen Jiabao has underlined China's support for Europe and the euro as it grapples with its debt crisis, insisting that Beijing has confidence in the 17-nation currency.

Wen said after meeting German Chancellor Angela Merkel on Tuesday that if Europe has difficulties, China will "reach out our helping hand." He pointed to Chinese purchases of European bonds.

Wen says China is confident in Europe because it includes countries such as economically strong Germany and it has a skilled work force, among other reasons. He says the current difficulties are "only of temporary nature."

Merkel says she assured Wen that Germany will do everything to ensure eurozone countries' competitiveness but also the "necessary degree of solidarity."

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

BERLIN (AP) — German and Chinese leaders on Tuesday pledged a big increase over the next few years in trade between their countries, the biggest economies of Europe and Asia, while China's premier downplayed Europe's current economic woes.

German Chancellor Angela Merkel welcomed Premier Wen Jiabao and many of his ministers to Berlin, a reception that underlined Germany's hopes of deepening political and economic ties with fast-rising China.

Merkel said at a joint economic forum that Germany and China want to increase their annual bilateral trade volume to euro200 billion ($284 billion) by 2015.

Trade between China and Germany totaled just over euro130 billion last year, a 38.5 percent increase compared with 2009. China was the No. 7 buyer of German exports, at euro53.6 billion; and it led the list of importers to Germany, which bought Chinese goods and services worth euro76.5 billion.

Wen, speaking after Merkel, voiced hopes that the countries could even double their trade volume over five years.

China, which overtook Germany as the world's biggest exporter in 2009, is now Germany's third-biggest trading partner — after France and the Netherlands, and ahead of the United States.

"We both take the view that what is good can become better," Merkel said. She added that China and Germany are "ideal partners" to develop electric cars for the future, for example, and said both sides want to "deepen our investment relationship."

Germany has led growth in the 17-nation eurozone over the past year, posting an increase in output of 3.6 percent last year. It has "great opportunities for powerful growth this year" as well, Merkel said. Officials and economists say this year's growth could total 3 percent or more.

Wen, whose visit to Germany followed stops in Hungary and Britain, stressed that ties with the European Union are of strategic importance to Beijing.

"Some EU countries are currently in economic difficulties," Wen said in a reference to the debt crisis weighing on countries such as Greece, Ireland and Portugal. "But these are of temporary character."

China, he said, is "full of confidence" in the EU's development.

Wen said China is prepared to buy more high-quality German goods but also called for Berlin to quickly grant it formal recognition as a full market economy to help remove obstacles to trade.

He said that "we are not forcing anyone into technology transfer" but urged Germany to seek a loosening of EU export restrictions which, he argued, "significantly limit the export of Germany's new technologies to China and the international competitiveness of German companies on the Chinese market."

Merkel, Wen and their ministers were meeting at the chancellery later Tuesday.

View the original article here

China's CNPC says Iraqi oil field now onstream (AFP)

BEIJING (AFP) – China National Petroleum Corp (CNPC), the country's top oil producer, has said operations have begun at Iraq's Al-Ahdab oil field, with an initial annual capacity of three million tonnes.

The field located in central Iraq, which came onstream a week ago, is a new major oil project in war-ravaged Iraq, the company said in a statement released on Monday.

The project marks "the realisation of the Chinese oil industry's goal to develop the high-end oil market in the Middle East," CNPC said.

In 2008, CNPC signed a three-billion-dollar contract to develop the Al-Ahdab oil field with another Chinese company, Zhenhua Oil, in the province of Wasit for 23 years.

The project, the first major oil development deal that a foreign firm has secured in Iraq since the fall of Saddam Hussein in 2003, revives a contract signed in 1997 that granted China exploration rights in Al-Ahdab.

Al-Ahdab's oil production is expected to reach 25,000 barrels per day in the first three years and expand to up to 115,000 barrels per day in six years, according to CNPC data.

The Al-Ahdab oil contract is strictly a service deal, which allows CNPC to charge a service fee of six dollars a barrel that will decrease eventually to three dollars, offering the Chinese an entry into Iraq ahead of Western majors.

China's state oil firms are scouring the world for resources to power what is now the world's second-largest economy.

In 2009, CNPC sealed a deal, along with Britain's BP, to ramp up production at Iraq's biggest oil field, Rumaila.

A consortium led by PetroChina, the listed arm of CNPC, has also signed a 20-year deal with Iraq to develop the Halfaya oil field.

View the original article here

China stops short of backing warrant for Gadhafi (AP)

BEIJING – China stopped short Tuesday of backing an international arrest warrant for Libyan leader Moammar Gadhafi that accuses him of crimes against humanity for killing civilians who rose up against his rule.

Foreign Ministry spokesman Hong Lei told a news conference that China is closely following the decision by the International Criminal Court.

"We hope the ICC will adopt a prudent, objective and just attitude in fulfilling its responsibilities so as to make sure its work will be generally conducive to peace and stability in the region," Hong said.

The ICC is based in The Hague, Netherlands, but lacks police powers and needs international support to back the warrant issued Monday.

Hong's comments come as China appears to be hedging its bets on Libya, meeting members of Gadhafi's government as well as representatives of the rebels trying to overthrow him.

Earlier this month, China's foreign minister sought to bolster ties with the rebels, telling the opposition leader that his Transitional National Council represents a growing segment of the Libyan public.

Yang Jiechi's remarks to Mahmoud Jibril were China's strongest endorsement of the council yet and dealt a further diplomatic setback to Gadhafi.

But Beijing has criticized the NATO bombing campaign in support of the rebels. And Libyan Foreign Minister Abdul-Ati al-Obeidi visited Beijing this month in an apparent attempt to reassert the Libyan government's influence.

After fighting began in February, China evacuated 35,000 of its citizens working in Libya, while China-backed deals such as a half-finished public housing project being built by state-owned contractor China State Construction Engineering Corp. were abruptly put on hold. Other Chinese engineering, telecommunications and energy companies also face massive losses.

Estimates of China's investments in Libya before fighting began run as high as $18 billion.

Hong repeated Chinese statements that it supports efforts by South Africa and the African Union to resolve the Libyan crisis through political means.

View the original article here

US Senate deplores China action in South China Sea (AFP)

WASHINGTON (AFP) – The US Senate on Monday unanimously approved a resolution that "deplores the use of force" by Chinese vessels in territorial disputes in the strategic and resource-rich South China Sea.

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

The symbolic resolution "deplores the use of force by naval and maritime security vessels from China in the South China Sea" and urges a "multilateral, peaceful process to resolve these disputes."

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

The senate measure also "supports the continuation of operations by the United States Armed Forces in support of freedom of navigation rights in international waters and air space in the South China Sea."

Lawmakers reaffirmed "strong support" for the "peaceful resolution" of maritime territorial disputes there and urges all party to the feuds to "refrain from threatening force or using force to assert territorial claims."

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.

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.

View the original article here

1.34B people, how many pandas? China is counting (AP)

BEIJING – China has counted its 1.34 billion people; now it's the pandas' turn.

After conducting a census of its human population last year, China is about to start a once-every-10-years count of giant pandas in the wild.

The official China Daily reported more than 60 trackers were trained at Wanglang National Reserve in the southwestern province of Sichuan, which is believed to have the largest number of wild pandas in China.

They will collect droppings for DNA analysis, which will allow zoologists to track individual pandas and accurately estimate the population, Chen Youping, director of the reserve's administrative bureau, was quoted by Xinhua News Agency as saying.

The census is also expected to reveal more on living conditions, age structure and changes of habitat of the endangered species.

The last census counted 1,596 wild pandas in China, 1,206 of which were living in Sichuan.

Wild pandas are threatened by a loss of habitat, poaching and for being poor breeders. Females in the wild normally have a cub once every two or three years.

Fertility rates of captive giant pandas — of which there are more than 300 in China — are even lower.

Xinhua said the trackers will start a pilot survey at the nature reserve this week that is expected to end by early July, before carrying out the nationwide panda census — the fourth since they began in the 1970s.

The human census last year showed the country with the world's largest population had swelled to 1.34 billion.

View the original article here

China premier's call for reform draws accolades and barbs (Reuters)

BEIJING (Reuters) – A vain "screen idol" or a prophet of Chinese political change?

In the wake of China's crackdown on dissent, Premier Wen Jiabao has again promised China's citizens democracy and human rights. The response from seasoned observers in Beijing on Thursday ranged from catcalls to applause.

None, however, saw any prospect of the ruling Communist Party reining in its own vast powers before a big political shake-up next year.

As Wen prepares to retire from late 2012, he has made a habit of calling much more forthrightly for political reform than his more cautious comrades in the Communist Party elite.

Wen's latest call, made in London, stood out all the more after months of arrests and detentions of Chinese dissidents, human rights lawyers and long-time protesters that flew in the face of his mild message.

"Without democracy, there is no socialism. Without freedom, there is no real democracy," Wen told an audience at the Royal Society during his visit to Britain.

China is troubled by corruption, inequality and other social ills, said Wen, offering political reform as an antidote.

"The best way to resolve these problems is to firmly advance political structural reform and build socialist democracy under the rule of law," he said.

For skeptics, Wen's hazy words are a pre-retirement vanity project, burnishing his own reputation without venturing to achieve real change.

"This was screen idol Wen staging a performance in London," Chen Yongmiao, a Beijing-based lawyer and commentator, told Reuters, using a put-down (yingdi) often used by Chinese people to poke fun at the premier's heart-on-his-sleeve public manner.

Sympathetic observers said Wen is defending a liberalizing agenda that is beleaguered now but could gain ground after late 2012, when he and President Hu Jintao step down and make way for new leaders who could loosen the hardline policies of recent years.

Both sides voiced their views on Chinese Internet sites and micro-blogging services as reports of Wen's speech spread.

"He may be speaking from the heart, but it doesn't mean anything," said Chen.

"The title of his speech was 'The Path to China's Future', and so are these things he talks about -- democracy, rights -- a hundred years in the future, or five hundred years? These days, there's a lot of pent-up social tension in China, and society might not be willing to wait as long as he thinks," he said.

However, another Beijing-based lawyer and liberal commentator, Qiu Feng, said the criticism was unfair.

"I think he should be applauded. The Chinese political scene is very delicate right now. Different people want to take China in different directions, and Wen is the one (leader) who points in the direction I think we should take," said Qiu, whose real name is Yao Zhongqiu.

"Yes, this is rhetoric. But politics is to a large extent rhetoric, using words to spell out a goal and create consensus around it," said Qiu. "That's what he's doing."

But Qiu and other well-placed supporters said there was no prospect of a significant relaxation before late 2012, when a Communist Party congress will anoint a new leadership.

Even after the congress, political relaxation was by no means a given, they said.

"Wen Jiabao knows he leaves after the Congress, and he has only his rhetoric as a way to set the direction for after then," said Qiu.

NOT SO FAST

Especially since China's 1989 armed crackdown that extinguished pro-democracy protests, Beijing has reviled any notion that it should embrace Western-style democracy.

In recent months, China's leaders have revived that message, fearing that anti-authoritarian uprisings across the Arab world could inspire challenges to their own one-party rule. China's says its own definition of human rights gives priority to basic needs, such as enough food, housing and health care.

Wen has a milder demeanor than other Party leaders, but he has defended the crackdown, and his broad notions of political reform amount to an effort to rejig, but not replace, Communist Party dominance. In London, he also chided Western "finger-pointing" over China's restrictions on human rights.

But Premier Wen, who survived the ouster of his reformist boss Zhao Ziyang in 1989, has stood out as the one senior official who has repeatedly urged reforms to give citizens more say, even if he has not spelled out what changes he favors.

He is now in the final stretch of his time in office, and he lacks a factional following in the elite that could give his calls a wider currency. As his power leaks away, Wen will have little more than his words to advance his legacy.

"I think the voices calling for faster political reform will grow louder and more urgent, and Premier Wen is heeding those calls," said Du Daozheng, a veteran Party official and former head of China's press control apparatus who has published articles urging support for Wen's calls for political reform.

"But he also has his conservative critics," Du, who is in his late 80s, said in a telephone interview.

"The views inside the Party are not a single, undivided piece of iron and Wen Jiabao represents forces who favor gradual but practical reform."

(Reporting by Chris Buckley; editing by Brian Rhoads)

View the original article here

Chinese premier visits Shakespeare's birthplace (AP)

By RAPHAEL G. SATTER, Associated Press Raphael G. Satter, Associated Press – 1?hr?1?min?ago

LONDON – Chinese premier Wen Jiabao, reportedly a big Shakespeare fan, made a pilgrimage to the Bard's birthplace of Stratford-upon-Avon on Sunday.

Wen is in Britain as part of a three-day visit intended to reinforce economic links between the two countries. Britain, like other European nations, is hoping to tap into the emerging economic superpower to help drive its own recovery — a sentiment that was on display as Wen browsed the treasures of the town's Shakespeare Birthplace Trust.

While Wen saw extracts of "Hamlet" and examined a 17th-century folio of the Bard's famous plays, British Culture Secretary Jeremy Hunt was enthusing about the visit's potential impact on the U.K. tourist industry.

"I am hoping that a billion Chinese might see some pictures on their TV of their premier coming and visiting the birthplace of Shakespeare, and thinking: 'Well, I'd like to go there as well,'" he told Sky News television.

Wen stayed half an hour longer than expected, joked about Hamlet and even called Shakespeare "the greatest writer of all time," according to trust director Diana Owen, who chatted with the 68-year-old Chinese leader during an informal tour.

Wen said that it was important for political leaders to respect "the creativity of the people of other countries."

But his one-party government has a more ambivalent attitude toward artists back at home. Wen's arrival at Birmingham Airport came a few days after Beijing announced the release of outspoken sculptor Ai Weiwei, whose detention highlighted China's sweeping crackdown on dissent.

Ai became well-known in Britain after he filled the Turbine Hall of London's Tate Modern art gallery with millions of porcelain sunflower seeds, and artists here and elsewhere in Britain have rallied to his defense.

After getting his fill of Shakespeare, Wen turned his focus to manufacturing as he visited a Chinese-owned car plant in Birmingham.

MG, owned by the Shanghai Automotive Industry Corp., China's largest carmaker, designs cars in the U.K., but makes its car parts in China, which are then sent to Britain for assembly. Wen was on hand for a launch ceremony for the MG6 Magnette — the company's new sports sedan — and took a turn sitting in the driver's seat. He's expected to dine with Britain's Deputy Prime Minister Nick Clegg later Sunday.

The Chinese leader is due to meet with British Prime Minister David Cameron on Monday, and although Ai's release may spare Wen some awkward questions about his government's human rights, demonstrations are still planned by pro-Tibet groups over the course of his visit.

Many Tibetans — and their supporters in the West — have demanded independence or autonomy for the Himalayan territory. Beijing claims the area as an integral part of China.

At London's Mandarin Oriental Hotel in Knightsbridge, where Wen is believed to be staying, protesters had already gathered, waving Tibetan flags.

Wen, whose tour will take him to Germany once he leaves the U.K., is expected to retire next year amid a major Chinese leadership reshuffle.

___

Online:

Shakespeare Birthplace Trust: http://www.shakespeare.org.uk/

Raphael G. Satter can be reached at: http://twitter.com/razhael

View the original article here

Sudan's Bashir forced to reroute China flight (AFP)

KHARTOUM (AFP) – President Omar al-Bashir, who is accused of war crimes, had to fly back to Iran and reroute his trip to China, the Sudanese foreign ministry said on Monday, delaying his controversial visit by a day.

"The presidential plane was flying over Turkmenistan on Sunday, when they chose a new route," the foreign ministry said in a statement carried by Sudan's official SUNA news agency.

"The pilot returned to Tehran, where they arrived at 9:30 pm local time.

"The Sudanese embassy in Beijing and Tehran followed the situation, to look for a new route. President Bashir is expected to arrive in China later today (Monday)," the statement added.

Bashir had been attending a counter-terrorism summit in Tehran on Saturday.

He president is wanted by the International Criminal Court (ICC) for alleged war crimes, crimes against humanity and genocide in Sudan's war-ravaged Darfur region, and rights groups have expressed outrage at Beijing's offer to host him.

China is a major military supplier to the regime in Khartoum and the biggest buyer of the country's oil, although the majority of Sudan's oilfields are located in the south, which will become independent next month.

SUNA said in an earlier report that during his three-day visit to China, Bashir and his accompanying delegation would "seek ways to develop relations and the bilateral strategic partnership between the two countries."

Beijing last week defended Bashir's visit, pointing out that he had been warmly welcomed in other countries since his indictment by the ICC.

"It's quite reasonable for China to invite the head of a state that has diplomatic ties with China to come for a visit," foreign ministry spokesman Hong Lei told reporters.

ICC statutes dictate that any member country should arrest Bashir if he visits. China is not a party to those statutes.

At the weekend, the Sudanese president flew to Tehran, another close ally of Khartoum, for a counter-terrorism summit that was also attended by the leaders of Afghanistan, Pakistan, Iraq and Tajikistan.

View the original article here

China: Military action won't solve Libyan crisis (AP)

LONDON – Military action alone won't resolve the Libyan crisis, Chinese Premier Wen Jiabao said Monday in a warning to nations conducting the NATO-led air campaign in Libya.

Following talks in London with British Prime Minister David Cameron, the Chinese leader said his nation backed attempts to reach a political solution over Western calls for Libyan leader Moammar Gadhafi to step down after 42 years in power.

"Foreign troops may be able to win war in a place, but they can hardly win peace. Hard lessons have been learned from what has happened in the Middle East and Afghanistan," Wen told reporters at a news conference with Cameron.

He said China still supported the U.N. Security Council resolution that authorized air strikes against Libya to protect civilians, but insisted the nations involved must comply with the strict terms.

Russia has accused Britain, France and other NATO participants of going beyond the scope of the resolution.

"We hope that the issue of Libya will be resolved through political, peaceful means, to reduce the humanitarian harm and in particular the harm of innocent civilians," Wen said.

He said China has had recent contacts with both Gadhafi's regime and the main opposition leadership based in eastern Libya.

Wen, who was wrapping up a three-day visit to Britain, took a swipe at "finger-pointing" Western critics who insist the U.K. and other nations should not pursue increased trade with China until the Asian powerhouse improves its human rights record.

Cameron said he had raised the issue during talks and that no topic had been off limits. "There is no trade-off in our relationship. It is not about either discussing trade or human rights," he said.

In its latest annual report on global human rights, Britain expressed concern over the plight of Nobel Peace Prize recipient Liu Xiaobo and the detention and prosecution of other political activists.

"On human rights, China and the U.K. should respect each other, respect the facts, treat each other as equals, engage in more cooperation than finger-pointing and resolve our differences through dialogue," Wen said.

"China is not only pursuing economic development but also political structural reform and improvement in democracy and the rule of law," he said.

In an afternoon speech to Britain's Royal Society, a scientific academy, Wen said he recognized the need for an academic environment "which encourages innovation, criticism and risk-taking."

"Tomorrow's China will be a country that fully achieves democracy, the rule of law, fairness and justice," Wen said, promising the nation would create the "conditions for people to oversee and criticize the government."

Britain and China sealed trade deals worth 1.4 billion pounds ($2.3 billion) during the talks between senior ministers. China also offered to send two panda bears to Edinburgh Zoo in Scotland.

The two nations are aiming to quickly increase the value of their trade, and discussed opportunities for British companies in rapidly expanding regional cities outside Beijing.

However, Cameron and Wen acknowledged that Germany is currently a larger trading partner with China. German Chancellor Angela Merkel was hosting a formal dinner for Wen in Berlin on Monday evening.

"I see no danger in China, but an enormous opportunity," German Foreign Minister Guido Westerwelle said on ZDF television. "We have to tend our old partnership, we must deepen our friendships, but we must at the same time also find new partnerships."

Like Cameron, Westerwelle said China's new partners could woo new trade while also delivering a tough message on human rights.

"German business opportunities and values-led foreign policy that pays attention to compliance with human rights are not contradictions — they belong together," Westerwelle said.

"If you approach things, let's say, in a face-saving way, with sensible handling, you can address everything — even the most difficult questions," he added.

___

Geir Moulson in Berlin contributed to this report.

View the original article here

China's Wen in Britain to boost trade ties (AFP)

LONDON (AFP) – Chinese Premier Wen Jiabao toured Britain on Sunday, in a European trip aimed at cementing trade links, as Bejing freed high-profile human rights activist Hu Jia in a move seen as defusing tensions.

Wen arrived in the central English city of Birmingham late on Saturday as news emerged that Hu, one of China's most prominent prisoners of conscience, was to be released.

Beijing is seeking to gain a greater foothold in Europe, but has faced fierce criticism from the West over its human rights record -- and in particular a recent crackdown on dissidents.

Hu, 37, was jailed on subversion charges in April 2008 after angering the ruling Communist Party through years of bold campaigning for civil rights, the environment and AIDS sufferers.

His release followed that of outspoken Chinese artist-activist Ai Weiwei last week, but Hu looked likely to be similarly muzzled along with other top dissidents.

Britain's Foreign Office has yet to give any official reaction to the release of Hu, who spent more than three years in prison.

However, EU foreign affairs chief Catherine Ashton welcomed the news -- but her spokesman stressed the bloc's demands for Beijing to ensure full freedoms are respected.

And Germany said it will press human rights issues at its first joint cabinet meeting with China later this week, including the conditions of Ai's release, Foreign Minister Guido Westerwelle said.

London has also been among international critics, with Foreign Secretary William Hague repeatedly speaking out against Ai's detention and the crackdown against activists.

Wen visited England on Sunday before holding talks with British Prime Minister David Cameron on Monday and attending the UK-China summit -- which is an annual event during which major investment deals will be announced.

The Chinese premier is on a three-country tour of Europe with 13 ministers and a large business delegation.

He visited the MG car plant in Longbridge, Birmingham, which was for many years a symbol of British manufacturing dominance but is now owned by Shanghai Automotive Industry Corp, which is China's largest automaker.

Wen will later indulge his interest in Shakespeare with a visit to the bard's birthplace in Stratford-upon-Avon, where he will be treated to a short performance.

The premier, who began his trip in Hungary, will leave Britain on Monday for Germany, where he will underline his support for eurozone economies that have been rocked by a debt crisis, with Greece on the brink of a second bailout.

Around the time Wen arrived in England late Saturday, China released Hu after he completed a sentence for subversion, and he returned to his home outside Beijing early Sunday morning, his wife said in a Twitter posting.

"On a sleepless night, Hu Jia arrived home at 2:30 am. Peaceful, very happy. Need to rest for awhile. Thanks to you all," Zeng Jinyan, also an activist, wrote on her Twitter account.

Hu's release came several days after Ai was freed on bail after nearly three months in police custody.

Foreign Secretary William Hague had given Ai's release only a cautious welcome, saying that "serious questions" remained about the circumstances of his detention and legal status.

It is Wen's second Europe tour in just nine months, highlighting a shift in China's interest towards investing in the continent after having ploughed money in recent years into Africa, Australia, Latin America and the United States.

Beijing has vowed to be a long term investor in the European debt market and has repeatedly expressed its confidence in the eurozone, and has invested an increasing portion of its foreign exchange reserves in euro-denominated assets.

View the original article here

China cities owe $1.65 trln, some 'may default' (AFP)

BEIJING (AFP) – Chinese local governments held $1.65 trillion in debt at the end of 2010, the state auditor said Monday, warning there is a risk some could default amid fears that bad loans will harm the economy.

Excessive borrowing by authorities to fund infrastructure and other projects has sparked concerns among China's leadership about the risks the loans pose to the financial stability of the world's second largest economy.

By the end of last year, local governments had 10.7 trillion yuan ($1.65 trillion) of debt, the National Audit Office (NAO) said in a statement, or about 27 percent of China's 2010 GDP of 39.8 trillion yuan.

"The ability of some areas and industries to repay debt is weak and potentially risky," the NAO said.

The announcement represents the first time China has given an overall figure for local government debt, according to the state-run Xinhua news agency.

The state auditor said some local governments had to make new borrowings in order to pay back old loans, and some are depending heavily on revenue from land sales to meet their repayments.

Auditors also found that 108.3 billion yuan of total borrowings had been issued or used improperly, citing methods such as providing fraudulent collateral or diverting the funds raised into capital or real estate markets.

Chinese banks last year loaned huge amounts to provincial financing vehicles -- intermediary agencies through which the governments take out borrowings because they are officially banned from assuming debt directly.

The credit was used to fund construction projects after Beijing called for nationwide efforts to spur the economy on the back of the global financial crisis.

The Asian nation has managed to power out of the crisis thanks to a stimulus package worth four trillion yuan and state-backed lending.

As a result, new loans nearly doubled to 9.6 trillion yuan in 2009. Last year, new lending fell to 7.95 trillion yuan but still exceeded the government's 12-month target.

The surge in credit has fuelled fears of inflation and bad loans, and the government is now moving aggressively to rein in lending activity.

It has hiked interest rates and increased the amount banks must keep in reserve over the past several months, as it tries keep a lid on consumer price rises and cool the economy amid concerns over overheating.

In May, however, the consumer price index in China rose 5.5 percent year on year -- way above the government full-year target of around four percent -- with many analysts expecting the rate to increase even further this month.

The NAO suggested that efforts should be made to "properly resolve" the current local government debt situation, based on a principle that says "the borrower must bear responsibility."

The provincial financing systems must be "cleaned up and regulated", it said.

View the original article here

China releases human rights activist Hu Jia (AFP)

BEIJING (AFP) – One of China's most prominent prisoners of conscience, Hu Jia, returned home Sunday after completing a jail term for subversion but looked likely to be muzzled along with other top dissidents.

The human rights activist's release after more than three years in prison comes after outspoken artist Ai Weiwei emerged in Beijing last week from nearly three months in police custody amid a government crackdown on dissent.

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

Hu returned to his home outside Beijing early Sunday morning, his wife and fellow activist Zeng Jinyan said on Twitter.

"On a sleepless night, Hu Jia arrived home at 2:30 am. Peaceful, very happy. Need to rest for a while. Thanks to you all," she said.

Hu, 37, was jailed on subversion charges in April 2008 just ahead of the Beijing Olympics after angering the ruling Communist Party through his years of bold campaigning for civil rights, the environment and AIDS sufferers.

Ai's detention had sparked an international outcry and his recent release has been widely seen as an attempt by China to defuse criticism during a visit by Premier Wen Jiabao to Europe now under way.

Hu's release at the end of his prison term, however, was long expected.

Aside from his jail sentence, Hu also faces one year of "deprivation of political rights" -- essentially a ban on political activities -- and Zeng has indicated he would be making no public statements.

"During this time, he must treat his cirrhosis and take care of his family," she said on Twitter last week.

Hu suffers from cirrhosis of the liver and Zeng has said the ailment has worsened during his time in jail, blaming the prison for providing inadequate medical care.

Hu and Zeng have a young daughter.

It was not immediately clear exactly what sort of restrictions Hu may face.

Attempts to reach Zeng by telephone at the couple's home were unsuccessful and Chinese security personnel prevented AFP journalists from reaching their apartment on Sunday.

EU foreign affairs chief Catherine Ashton welcomed Hu's release, but her spokesman stressed the bloc's demands that Beijing ensure full freedoms are respected.

"Obviously we welcome the fact Hu has been released," said Ashton's spokesman, Michael Mann. "But it is important to keep an eye on how he is treated from here on in. We hope Hu is given full rights," he told AFP.

Hu began his activism by highlighting discrimination against Chinese HIV/AIDS sufferers and environmental degradation, but later spoke out on behalf of a wide range of victims of government abuses.

As a result, he and Zeng have suffered repeated detention or lengthy periods of house arrest that they have criticised as unlawful.

They made a short documentary, available on the Internet, detailing one of these detentions from 2006-2007 called "Prisoners of Freedom City".

Regularly tipped as a potential candidate for the Nobel Peace Prize, Hu has won overseas human rights awards from bodies such as the European Parliament.

"China has been a dictatorship throughout its entire history," Hu told AFP in a 2007 interview.

"Now... I believe that we have a chance to bring democracy to this country for the first time in 5,000 years."

He was taken into custody in December 2007 amid a previous crackdown on government critics ahead of the Beijing Olympics and convicted on subversion charges.

Rights groups have accused China's ruling Communist Party of abusing such charges as a way of silencing government critics.

Zeng said police told her Hu was not likely to enjoy a "normal" life after his release, remarks she interpreted to mean he would be confined to his home like some other recently released dissidents.

New York-based activist group Human Rights Watch on Friday also urged the Chinese government not to subject Hu and his family to "house arrest or other extrajudicial deprivations of liberty".

The government launched a major crackdown on dissent in February in an apparent bid to squelch any possible Chinese version of the "Arab Spring" uprisings in the Middle East.

Normally outspoken detainees such as Ai have uncharacteristically refused public comment after their release.

Activists say this indicates a systematic new government strategy to silence dissenters, possibly through threats against them or their families.

The rights group Chinese Human Rights Defenders has said 49 people have been detained on suspicion of criminal acts in the ongoing crackdown, most of whom have either been formally arrested, sent to re-education camps, or released on bail awaiting trial.

View the original article here

China's Wen signals doubt inflation goal can be met (Reuters)

HONG KONG/BEIJING (Reuters) – Chinese Premier Wen Jiabao signaled for the first time that China would struggle to meet its 4 percent inflation target this year, underlining expectations that interest rates will rise further even as economic growth slows down.

Wen, who is traveling in Europe, was quoted by Hong Kong media on Monday as saying that while he sees the Chinese economy growing above 8-9 percent this year, it was hard for China to keep inflation under 4 percent in 2011.

"China's financial situation will still be among the best in the world this year, with economic growth kept above 8-9 percent, and CPI controlled under 5 percent," Wen told Hong Kong television media during the England leg of his Europe tour.

Wen's latest comments sounded somewhat less sanguine than his remarks on Friday, when he said China's inflation was firmly under control this year and should cool steadily. However, they may not alter investors' thinking about monetary policy.

Many economists had assumed China would overshoot its 4 percent target given that the inflation rate has stayed well above that mark since January, and is expected to peak at 6 percent in June or July.

Inflation rose in May to a 34-month high of 5.5 percent.

Economists polled by Reuters in June predicted China would stay in a tightening mode, raising its benchmark lending rate by one-quarter of a percentage point and its deposit rate by a half-point this year.

Investors are watching carefully to see whether Beijing can ease inflation without stifling growth. A string of disappointing readings on factory activity and exports raised concerns that China's economy may be slowing down more sharply than expected.

Copper prices lost ground on Monday in part because of concern that inflation pressures may prompt top buyer China to tighten credit further.

A sharper China slowdown would be particularly damaging for global growth now that the U.S. economy looks shaky and Europe is mired in a sovereign debt mess.

China is keen to keep prices in check to preserve social stability. Food and energy prices have been the primary culprits behind the steep inflation rate, and that tends to hit lower-income households the hardest.

STAYING THE COURSE

Judging by a recent stream of comments from Beijing, the market's bias toward tighter policy in China appears to be in step with that of the Chinese government.

Vice Premier Li Keqiang said on Saturday that fighting inflation was still China's top priority, effectively rebutting arguments among some investors that China could face a hard landing if it over-tightens when growth is already slowing.

Wen also took a stab at worries that China's economy risks a hard landing on Friday when he said China is "fully capable" of keeping its economy growing briskly.

Writing in an opinion piece in the Financial Times, Wen said: "There is concern as to whether China can rein in inflation and sustain its rapid development. My answer is an emphatic yes."

The economy grew 10.3 percent in 2010 and in the first quarter that pace eased to 9.7 percent.

China's central bank has made clear that its focus is squarely on inflation.

It raised banks' required reserve ratio to a record 21.5 percent earlier this month, hours after the May inflation data was released. The higher reserve ratio means banks have less money available for lending, which policymakers hope will help to cool growth and inflation.

(Reporting by Victoria Bi and Donny Kwok in Hong Kong, Koh Gui Qing in Beijing; Writing by Emily Kaiser; Editing by Neil Fullick)

View the original article here

China audits local government finances in debt clean-up (Reuters)

BEIJING (Reuters) – China released a comprehensive review of the massive debt of its local governments on Monday and curtailed their future borrowing, taking its first major step to prevent widespread defaults from destabilizing its vast economy.

Releasing its first audit of local government debt, which amounts to 27 percent of the economy, China's chief state auditor Liu Jiayi said local government financing vehicles would be cleaned up and regulated depending on the type of debt they hold.

The results, presented to the Chinese parliament by Liu, showed local Chinese governments had chalked up about 10.7 trillion yuan ($1.65 trillion) of debt as of the end of 2010.

The audit and the proposed measures, the most comprehensive so far, underscored Beijing's determination to head off credit risks that may destabilize growth in the world's second-largest economy ahead of a leadership change in 2012.

Although the estimated figure for local government debt was in line with market forecasts and short-term risk appeared contained, some analysts were still worried local governments would struggle to repay their loans.

"The property sector is feeling the pinch from government policy tightening, and it takes time for government-invested projects to generate returns," said Hua Zhongwei, an analyst with Huachuang Securities in Beijing.

"These will create big pressures on local governments to repay their debt."

To contain the problem, the audit office said financing vehicles would be "firmly" barred from incurring new debt, while local governments would be allowed to sell bonds, but only with approval from Beijing.

FINANCING VEHICLES

The audit office said about half of local government debt, or 4.97 trillion yuan, was held by financing vehicles, well under market estimates for the vehicles to have borrowed 10 trillion yuan.

Analysts welcomed the surprisingly low estimate for debt incurred by these vehicles, but many warned against reading too much into what may well be an understated figure.

Different definitions for what makes a financing vehicle, and a recent consolidation in the sector in the face of tighter regulation by Beijing have skewed the picture, they said.

"The lower-than-expected figure should alleviate some worries on a surge of new crop of bad loans in the banking system," said Li Xunlei, an economist at Guotai Junan Securities in Shanghai.

"But we need to note that the way of calculating the debt varies from one ministry to the next."

Local government debt has long been identified by analysts as a weak spot in China's economy, responsible for a covert and fervent borrowing spree that has generated wasteful spending, with some loans believed to be in default.

About half of all local government debt was taken up during the 2008 financial crisis when Beijing unleashed a 4 trillion yuan fiscal stimulus to foster economic growth. This group of post-crisis loans is due to mature in 2013.

The audit office did not say what proportion of loans was in default or was at risk, except to say that of over 6,500 financing vehicles reviewed, around 2 percent, or 148 of them, had a default rate of 16.3 percent.

WELL-CAPITALISED BANKS

Monday's release of the audit findings confirms a Reuters story last month when sources said Beijing wants to start overhauling its local government debt mess by June to have the house in order by the next leadership reshuffle in late 2012.

To clean up the debt mess, the sources said Beijing would shift 2-3 trillion yuan of debt off the books of local governments. They said Beijing and China's "Big Four" banks will be forced to take some losses on bad debt.

Liu from the audit office said efforts would be made to "clean up and regulate" financing vehicles and that "the borrower must bear responsibility."

But analysts thought any losses that Chinese banks may suffer would be manageable.

"These are among the best-capitalised banks in the world. Disaster isn't going to happen, not this year, not next year," said James Antos of Mizuho Securities Asia.

The performance of bank shares suggested investors agreed, with most either steady or marginally lower.

To be sure, not all local government borrowing has gone to waste. Much has been used to fund the building of roads and railways, investment which many economists argue that China needs and is of value even if loans are not repaid on time.

Still, ambiguity around just how much debt Chinese local governments have chalked up has fed the overall investor concern about China's problem of bad debt.

Various Chinese government bodies, including the central bank and the bank regulator, have all provided varying estimates for the amount of outstanding debt.

China's central bank created a stir earlier this year when it estimated that local government debt accounted for less than 30 percent of total Chinese bank lending.

That led Chinese media to extrapolate that local governments had borrowed as much as 14 trillion yuan.

But given China's audit office was authorized by China's cabinet to investigate the debt mess of local governments, it is likely to have the final say on this issue.

"The audit office has a much more narrow definition. My understanding is that the debt as defined by them are those that are government guaranteed, or are backed by government revenues," said Wei Yao, an economist at Societe Generale in Hong Kong.

"But I think in terms of the size of the debt, it's largely consistent with the previous reports."

All said, few see a widespread banking fallout as they believe cash-rich Beijing will step in to absorb losses if needed.

As the owner of $3.05 trillion of foreign exchange reserves, the world's largest, Beijing has deep pockets to recapitalize its banks.

And despite the eye-watering amount of debt that has been incurred by local Chinese government, China's total government debt stands at 44 percent of its gross domestic product, well under the debt-to-GDP ratio of other major economies.

Japan's ratio is over 225 percent; the U.S. ratio is 93 percent, and Germany's debt-to-GDP is 75 percent.

($1 = 6.475 yuan)

(Additional reporting by Wang Lan, Kevin Yao, Terril Jones, Kelvin Soh, Langi Chiang, Emily Kaiser; Editing by Vidya Ranganathan)

View the original article here

Airbus set for multi-billion China order: sources (Reuters)

BERLIN/PARIS (Reuters) – China could order dozens of Airbus jetliners during a visit by Premier Wen Jiabao to Berlin according to sources, but the deals are clouded by a spat between Beijing and Europe over aviation carbon tariffs.

A Chinese leasing firm could, under one scenario discussed in the build-up to the visit on Tuesday, order over 60 A320 aircraft, worth about $5 billion at list prices, according to sources close to the negotiations.

But other people familiar with the matter said the type and value of deals had not yet been finalized on the eve of the visit.

Airbus (EAD.PA) declined to comment.

Britain and China signed a series of deals worth $2.3 billion during the premier's visit there on Monday.

The visit comes just days after industry sources said China had delayed the announcement of a $3.8 billion order for 10 Airbus A380 superjumbo jets at the Paris Air Show to protest over EU emissions trading rules.

Under plans to include international aviation in its carbon market from next year, the EU would require all airlines flying to Europe to buy permits for each tonne of carbon dioxide they emit above a certain cap.

Air transport body IATA has called the proposed scheme illegal and industry players, including German airline Lufthansa (LHAG.DE), say China has threatened retaliatory measures if the EU pushes through its plans.

But while China continues to put the brakes on lucrative orders of European wide-body aircraft, this week's visit will demonstrate whether the row has spilled over to narrowbody A320 aircraft which China helps assemble to feed huge traffic growth.

Although it plans to start competing with Airbus and Boeing by building its own narrowbody passenger jets from the second half of this decade, China continues to order large volumes of Airbus A320s and Boeing (BA.N) 737s to support its economic growth.

Such narrowbody airplanes seat about 150-160 passengers.

Airbus began assembling A320s for the Chinese market at a factory in Tianjin outside Beijing in 2009.

China typically schedules aircraft orders to coincide with political visits, but the deals are often difficult to analyze as to whether the contracts are new or not. (Reporting by Rene Wagner in Berlin and Tim Hepher in Paris; Writing by Victoria Bryan)

View the original article here