US to press on trade in China talks

WASHINGTON: The United States said Monday it would press China on intellectual property rights and other key concerns as the world's two largest economies hold top-level trade talks next week.

The Commerce Department said that Vice Premier Wang Qishan would visit Washington on December 18-19 for the annual Joint Commission on Commerce and Trade, the main US-China forum to discuss trade policies.

US Trade Representative Ron Kirk called the forum "critical" for the future of the often fractious commercial relationship between the United States and China.

"This year, we're focused on delivering meaningful results on issues including enforcement of intellectual property rights, combating pressures to transfer technology, eliminating trade-distortive industrial policies and removing key obstacles to our exports," he said in a statement.

Trade has been a frequent irritant in relations, with the United States accusing China of hurting US companies by not cracking down on widespread counterfeiting and favoring domestic competitors.

China, in turn, has warned the United States against protectionism and called for the removal of restrictions on the sale of sensitive technologies.

The talks come in the wake of the US election, in which defeated Republican challenger Mitt Romney vowed to take a tougher stance on China over trade and other issues if he defeated President Barack Obama.

This year's talks will likely be the last involving longstanding players in trade negotiations, adding a level of uncertainty into future rounds.

Wang, an economic expert who is widely known and largely respected in Washington, was named last month as China's top official tasked with fighting corruption -- seen by the Communist Party as a major threat to its rule.

Kirk, a former mayor of Dallas, is widely expected to leave his position as the top US trade negotiator when Obama names his new cabinet.

China manufacturing contraction eases: HSBC

BEIJING: China's manufacturing activity contracted in October but at a slower pace than in previous months, HSBC said Wednesday, a sign the slowdown in the world's number two economy is bottoming out.

The preliminary purchasing mangers' index (PMI) released by the British banking giant hit 49.1 this month, the highest level in three months and up from 47.9 in September.

A reading above 50 indicates growth in the key sector, while one below signals contraction.

While the figure marks the 12th straight month of contraction, it is also the second consecutive month of improvement and adds to recent indications that China's economy is on the mend after a slowdown that began early last year.

The index, compiled by information services provider Markit and released by HSBC, tracks manufacturing activity and is a closely watched barometer of the health of the economy.

China's official PMI figure was 49.8 for September, a second straight contraction. October's official figures are expected on November 1, the same day HSBC will release its final result.

HSBC economists Sun Junwei and Qu Hongbin said in a report that October's reading came as total new orders picked up to a six-month high, while new export orders had their best showing in five months.

They also noted that the PMI result "reflected the filtering through of earlier easing measures" introduced by policymakers this year to boost growth.

Those include two interest rate cuts in quick succession as well as the loosening of restrictions on how much money banks must keep on hand in an effort to boost lending.

China last week said the economy grew 7.4 per cent in the three months through September, slowing for the seventh straight three-month period and its worst performance since the first quarter of 2009.

Improvements in September for exports, industrial production and retail sales spurred optimism that the worst may be over for the Asian giant, although Sun and Qu warned that problems in overseas economies and China's job market continued to weigh.

"Growth has likely bottomed out and is headed for a gradual recovery into 4Q (the fourth quarter)," they said, referring to the current final quarter of this year until December.

"With inflation still under control and downside risks to growth lingering, China should continue with its current easing efforts to secure a firmer growth recovery," they wrote.

China's consumer price index slowed in September, rising 1.9 percent year-on-year, slightly down from the 2.0 percent recorded in August.

Inflation plagued China's economy in much of 2010 and 2011, with CPI peaking in July last year at 6.5 percent.

China is preparing for a once-a-decade leadership change at a Communist Party meeting that starts November 8.

Foreign investment in China falls further

BEIJING - Foreign direct investment (FDI) in China continued to fall in September, the government said on Friday, owing to persistent weakness in the global economy and a slowdown in China.

Investment from overseas declined by 6.8 percent from a year earlier to US$8.43 billion last month, the commerce ministry said.

The decline continued a downward trend stretching back to November, with the exception of May, when FDI eked out a marginal gain of 0.05 percent.

The government has blamed the slump on the slowdown in global economic growth, the prolonged European debt crisis and rising costs and weak demand at home.

For the first nine months of the year, foreign firms invested US$83.4 billion in factories and other projects in China, down 3.8 percent from the same period a year ago, the ministry said.

Investment by the 27-member countries of the European Union fell 6.3 percent on year in the first nine months of the year to US$4.83 billion, while that from the United States dipped 0.63 percent to US$2.37 billion, the ministry said.

Capital flows from 10 Asian countries and regions including Hong Kong, Japan, the Philippines, Malaysia, Singapore and South Korea also tumbled by 4.9 percent year-on-year in the period to US$70.99 billion, it added.

Ministry spokesman Shen Danyang said China was in an "adjustment stage" in terms of receiving foreign funds but that the government remains optimistic about the country's long-term appeal to overseas investors.

"We think the general trend of FDI development in the country remains positive and healthy," he told reporters at a briefing.

He added that there were "positive changes" in the quality and structure of the use of foreign capital, such as a rise in fund flows into less developed central China.

Data on Thursday showed the world's second-largest economy has slowed for seven consecutive quarters, expanding 7.4 percent in the three-month period ending on September 30, its worst performance since the first quarter of 2009.

Exports, the key indicator of the health of China's vital manufacturing sector, rose 9.9 percent in September on year to a record monthly high, but analysts warned the performance was unsustainable given the weak global outlook.

Shen downplayed hopes that the export sector has yet bottomed out.

"Currently the trade environment remains complicated and draconian and there are still many difficulties in expanding foreign demand, so that it is too early to come to the conclusion that China's foreign trade has recovered based on data for the single month," he said.

"The most key target for the full year at the moment is to try hard to maintain and improve our global market share."

China, Singapore should cooperate: China's vice-premier Li

CHINA - China and Singapore should seize the opportunity to boost cooperation in areas such as emerging industries and innovation management, Vice-Premier Li Keqiang said on Friday.

Li made the remarks at a meeting with Singaporean Prime Minister Lee Hsien Loong, who concluded a six-day visit to China on Friday.

China is willing to enhance political mutual trust with Singapore, in order to understand and respect each other's core interests and major concerns, and strengthen communication and coordination on important international and regional issues, Li said.

He also called for more pragmatic local cooperation between Singapore and China, especially with China's Midwest and Northeast regions.

The two sides signed two cooperation agreements between Singapore and China's Northeastern Jilin province on Thursday.

Noting that Singapore has always viewed China's development as an opportunity to develop itself and the region, Lee said that Singapore hopes that China succeeds and wants to share the dividends of China's continuous prosperity.

Lee also said Singapore is willing to explore more ways to cooperate with China.

"China's growth story is impressive and has benefited the entire region, overshadowing the recent friction created by the South China Sea issue," said Satish Bakhda, Head of Operations at Rikvin, a major employment agency in Singapore.

"The Singapore government, with all its ASEAN partners, is working overtime to resolve these issues, to get our growth story back on track, which is a good sign," Bakhda said.

Political trust between China and Singapore, which is a major member of the Association of Southeast Asian Nations, will help to reduce the doubts of other ASEAN members about China and ease tensions in the South China Sea, said a commentary on the website of the China Review News Agency based in Hong Kong.

The ASEAN should adopt a "neutral and forward-looking" position on South China Sea disputes and encourage parties involved to solve the issue through peaceful means, Lee said on Thursday when addressing senior officials at the Party School of the Central Committee of the Communist Party of China.

"First, it's in Singapore's interests to see international disputes settled in accordance with international laws and in particular, the United Nations Convention on the Law of the Sea. Second, navigational freedom is another fundamental interest since trade and waterways are a lifeline for Singapore."

Lee began his third visit to China since taking office in 2004 in Chengdu, Sichuan province, on Sunday afternoon, and continued to Tianjin.

Trade between Singapore and China surged after the establishment of diplomatic ties in 1990.

Singapore is China's third-largest trading partner among ASEAN member states. Trade in 2011 reached US$63.48 billion (S$78.5 billion), up 11.2 per cent.

The Singapore-Sichuan High-tech Innovation Park, Tianjin Eco-city, Suzhou Industrial Park and the Raffles City mixed development project by CapitaLand in Sichuan province are some of the recent flagship projects.

Also, a giant panda couple, Kai Kai and Jia Jia, arrived in Singapore on Thursday on a 10-year loan.

China's inflation rate accelerates in August

BEIJING: China's inflation rate accelerated slightly in August amid higher costs for food, official data showed Sunday, potentially limiting the government's ability to enact fresh stimulus measures.

Consumer prices rose 2.0 percent year-on-year, the National Bureau of Statistics said, as food prices increased 3.4 percent. Inflation stood at 1.8 percent in July.

Analysts say the figures could make moves such as further cuts to interest rates less likely because of the inflationary risks they pose.

Producer prices -- which measure costs of goods as they leave factories -- declined 3.5 percent year-on-year, falling for the sixth straight month, NBS data showed. Producer prices fell 2.9 percent in July.

China's economy expanded 7.6 percent in the second quarter through the end of June for its weakest performance in three years and marking the sixth straight quarter of slower growth.

The government is targeting expansion in gross domestic product of 7.5 percent for 2012. That would mark a significant slowdown for the world's second-largest economy, which grew 9.3 percent in 2011 and 10.4 percent in 2010.

Data in the current third quarter have remained weak as the slack global economy dents demand for exports and domestic activity weakens.

Chinese authorities have taken steps this year to boost growth by cutting interest rates twice in quick succession and slashing the amount of funds banks must keep in reserve to boost lending, but with little impact so far.

Given continued weak figures, analysts have been expecting authorities to take further monetary loosening steps to fire up growth, though the slight rise in consumer price inflation in August could call that scenario into question.

"The likelihood of a cut is now clearly smaller than last month," IHS Global Insight economists Ren Xianfang and Alistair Thornton said in a report on the August inflation data, emphasising that higher consumer prices make it harder to "absorb the inflationary pressure" of monetary stimulus.

Rather, they expect the government to use other tools, such as fiscal stimulus, to help gird the economy.

Indeed, state media reported Friday that that China has approved a massive infrastructure package worth more than 1.0 trillion yuan ($158 billion).

The top economic planner, the National Development and Reform Commission, last week announced approval of 55 infrastructure projects ranging from subway lines to highways, reports said.

The official Xinhua news agency described the package of projects as a "stimulus plan" though the government did not use that language when announcing the approvals.

China carried out a massive 4.0 trillion yuan fiscal stimulus package in the wake of the global financial crisis in 2008.

E-commerce gaining ground with each click

When Wang Longxia, 51, saw her colleague's new house furnished with materials that were purchased online - from floor tiles to furniture - she was impressed with his results and decided to take the plunge with e-commerce.

That was two years ago, when online shopping was completely new to her. She made her first online purchase - a book - and was encouraged when everything went smoothly.

Now, she navigates through websites with ease, making purchases such as her mobile phone and a 3,000-yuan (S$601) laptop computer.

She is by no means an online shopaholic, who are usually younger netizens between 18 and 30.

However, as an increasing number of Chinese gain Internet access, people are changing the way they shop, whether they are die-hard Web users or simply trying to keep pace with technology.

Out of 513 million Internet users in China, about 194 million people had made an online purchase by the end of last year, according to the China Internet Network Information Center.

Consumers spent 782.6 billion yuan online last year, which accounted for 4.32 per cent of total retail sales in the country.

China is expected to overtake the United States to become the largest online shopping market by next year, said Li Jinqi, head of the department of electronic commerce and information at the Ministry of Commerce.

Wang, a company manager in Guangdong province, has witnessed the changes in shopping trends in the past decades.

"At one time, I had to dash to several department stores just to find a piece of furniture with the best combination of price and quality," she said.

"It consumed too much time and the selection was very limited."

About 10 years ago, she started to buy consumer products - mainly cosmetics - through television shopping programs.

The programs, selling a wide range of products from pressure cookers to cars, generated sales of 23.4 billion yuan in 2009, or 0.19 per cent of total retail sales that year, according to industry figures.

Shopping in brick and mortar stores continues to be the most common shopping experience in China, but some people have moved their shopping carts from the streets to TVs to computers, just like Wang.

In certain categories, including books, clothing, and consumer electronics, online sales exceed 10 per cent of total retail sales in that category, said Lu Bowang, president of China IntelliConsulting Corp, a market research company.

Online sales of books, one of the first type of products sold on the Internet, account for more than 20 per cent of total book sales.

Other categories, such as building materials and furniture, are likely to see substantial growth in the next two to three years, he added.

Last year, each online shopper spent an average of 4,341 yuan, up 28.8 per cent from 2010, and made 18.2 online purchases, according to a survey of 3,310 people by China IntelliConsulting.

The rise in average spending contributed more to the sector than the increase in the number of online shoppers, accounting for two-thirds of e-commerce growth last year, the survey found.

Online shoppers in central and western China have been increasing their spending more rapidly than those in eastern China, it said.

While current e-commerce websites are simply another outlet for traditional retail, "made-to-order" shopping experiences that consider the specific needs of each online customer will become the future of e-commerce, according to Zeng Ming, chief strategy officer of the Chinese e-commerce giant Alibaba Group Holding Ltd.

Online retail sales in China will triple to more than US$360 billion (S$459 billion) by 2015, according to a report by The Boston Consulting Group.

You can learn more on how to expose your business online at http://www.AffiliateQuickOnline.com

Asian thirst for wine feeds new investment market

HONG KONG: Asia's thirst for rare and fine wine is moving beyond the dining table as the industry seeks to tickle the region's capital markets as well as its taste buds.

China is already the fastest-growing wine consumption market globally, and industry experts say wealthy Chinese business people are now also developing an appetite for the investment opportunity that wine offers.

"Wine is a very passionate subject, much more so than stocks and shares. It's a passion as well as an investment for our clients," said Stephen Wickens, the managing director of Wickens & Co, a Hong Kong-based wine investment firm.

"It's a very safe investment and it's very attractive at this time when people are uncertain about the stock and property markets."

Two thirds of the 18-month-old company's clients, totalling about 500, come from China and Hong Kong. Wickens reckons his client base will double next year.

"Right now Asia is really driving the demand. The traditional markets of Europe and America are very slow," he said on the sidelines of a wine trade fair in Hong Kong this month, which drew a record 934 exhibitors.

Hong Kong has capitalised on the rapid expansion of personal wealth in China to become the dynamic centre of Asia's wine trade since it abolished duties on wine imports in 2008.

Wine imports are poised to set a new record after surging nearly 60 per cent year-on-year in the first nine months of 2011 to US$940 million. The figure stood at $895 million in 2010, up 73 per cent from $517 million in 2009.

The wine industry council in the French region of Bordeaux says local producers saw a 92 per cent surge in export volumes to China in the 12 months to July, and a 69 per cent increase to Hong Kong.

To capitalise on this, businesswoman Ling Zhijun has just launched Dinghong, mainland China's first investment fund specialising only in wine -- available only to those with one million yuan (US$160,000) or more at their disposal.

She is waiting for the green light from authorities to start raising money, but says she already has investment pledges from a dozen people and will be able to collect 200 million yuan by the end of the year.

"We're banking on a return on investment of 15 per cent a year," she said, adding she chose to focus only on French wines because those from the New World are "more standardised, a bit like Starbucks coffee".

Hong Kong's Wing Lung Bank, meanwhile, launched a wine financing service, the first in the southern Chinese city, in April this year to allow investors to borrow to buy wine at designated merchants.

Buyers can borrow up to HK$5 million (US$650,000) with a repayment period between one and five years, and the response has been "overwhelming", said assistant general manager William Tang.

"Like many other businesses, the wine industry takes advantage of Hong Kong as the gateway to mainland China, where increased prosperity and changes in lifestyle have led to a significant rise in the demand for wine," he said.

"People in Hong Kong and China have become more knowledgeable over their favourite wines. All of these help raise people's interest in investing or purchasing wine, resulting in the growing demand on wine financing services."

But if they are looking for a place to shelter from the headwinds buffeting the global economy, Asia's new wine speculators might be disappointed. Wine prices have fallen about 15-20 per cent this year, according to Wickens.

"This is a market correction. It's not a bubble bursting or another disaster in the market, and we still see some wine going up in value, such as the Domaine de la Romanee-Conti and Petrus," he said.

"Wine is not just a piece of paper, it's a physical item. It has some tangible value, it's unlikely to go zero," he added.

Investors are advised to put their money away for the medium to long term, and target batches of young wines at their initial release price.

Wickens said certain "blue-chips" like the Mouton Rothschild 2006, which currently fetches about HK$6,300 (US$800) per bottle, and Chateau D'Yquem 2007, at HK$4,000 a bottle, could return 25-30 per cent after three years in a cellar.

"For a 2004 bottle of Lafite, which is not a great vintage -- two years ago it was selling at 5,000 pounds (US$8,000) a case and now it's about 8,000 pounds.

Even though it's not a great vintage, it has good return," he said.

The wine can also be bought "en primeur", where a specific vintage of wine is bought before it is bottled and sold in the market two or three years later.

"It's becoming increasingly interesting to consumers, it's an alternative investment," said Geordie Willis from the Hong Kong unit of Britain's oldest wine and spirit merchant, Berry Bros & Rudd, which has supplied wine to the British royal family.

He said the tight supply of fine wine, due to the limits of how much can be produced each year, make it a scarce commodity.

"It is a product which is improving in terms of quality, diminishing in terms of quantity and the market is enlarging in terms of the size of the customers," he said.

"There are more companies coming to us and there are more private investors who are trying to diversify their portfolio. It's growing all the time."