Have You Heard...

• China Makes Effort to Cool Unrest in Inner Mongolia
• Analysis: Lockheed hack highlights cyber-blame snags
• Gates to Display U.S. Military Staying Power on Final Trip to Asia
• Exclusive: China to clean up billions worth of local debt
• China Raises Power Prices for Business, Farmers as Summer Shortage Looms
• Chery Auto to build $200m factory in S America
• Western Graduates Head To China for Internships

China Makes Effort to Cool Unrest in Inner Mongolia

Source: Wall Street Journal By Brian Spegele

HOHHOT, China—Authorities in Inner Mongolia sought to calm some of the worst ethnic strife in two decades by pledging to address concerns of the local Mongol population about the environmental costs of mining in the resource-rich region, and by announcing that a Han Chinese will be tried for murder over the death of a young Mongol man.

Police in riot gear on Monday sealed off the main square of Hohhot, the capital of Inner Mongolia that has been transformed over the past several years into a boomtown amid strong demand for the region's coal and other natural resources to fuel China's rapid industrial growth.

Hundreds of People's Armed Police in camouflage uniform stood at attention at five-meter intervals around the perimeter of Xinhua Square. Hundreds more riot police dressed in black patrolled the square. Police buses with tinted windows waited nearby.

More than a hundred police in armored personnel carriers and many clad in riot gear waited outside the main entrance of Inner Mongolia Nationality University Monday night. Non-students were prevented from entering the campus, where many ethnic Mongolians students study, and cellphone data communication was cut off.

Outside the university gates, two second-year Mongol students sat sipping beers, chewing on grilled lamb and watching police. They said unrest in other parts of Inner Mongolia was a hot topic among the Mongol university students, but said it seemed unlikely that the protests would spread to Hohhot, where the police and military presence was more substantial than in the countryside. Still, they said, in places where Chinese influence had grown so large, they could never feel at home.

The unrest "is not an economic matter," one of the students said. "It's about protecting the environment, protecting our traditional culture."

The deaths of two ethnic Mongolians at the hands of Chinese workers earlier this month set off the kind of ethnic upheaval that has plagued Muslim and Tibetan areas in the far west of China in recent years, and threatened to open a new front in a long struggle by authorities to maintain control along China's strategically sensitive periphery.

"Our situation is just like the ones in Xinjiang and Tibet," said a Mongolian shopkeeper selling dried meats on the square. "Ours just isn't as severe," she said. She declined to say whether she supported the protesters.

The security forces were responding to Internet calls for demonstrations in the city after a week of student-led protests in other parts of the vast region bordering Mongolia and Russia in northeast China.

Internet censors blocked calls for protests on China's most popular microblogging services. Search terms including "Inner Mongolia" remained blocked Monday on Sina Weibo, China's most active Twitter-like website.

China's state-run Xinhua news agency reported Monday that Inner Mongolia's government will investigate the impact of the mining industry on the livelihoods of local people, which is at the heart of recent disputes. It didn't provide details on potential policy changes, but is the government's first response to protestors who complain that economic development at breakneck speed and unrestrained mining activities are destroying local lands and traditional Mongolian culture.

Mongolians, who today make up less than 20% of the region's population, have traditionally used its sweeping grasslands for animal grazing and herding.

Barry Sautman, an expert on ethnic Chinese politics at Hong Kong University of Science and Technology, said the protests are rooted in a desire to protect traditional Mongolian culture. Conflicts between local populations and miners aren't unique to Inner Mongolia, he said, but the situation "takes on an ethnic dimension" when companies are being run by Han Chinese and those who feel victimized are predominantly Mongolian.

Deadly riots in the Tibetan capital, Lhasa, in 2008 were partly inspired by Tibetan resentment against competition from Chinese merchants and laborers, as well as by more generalized fears that Han Chinese settlers are overrunning Tibetan culture.

In Xinjiang, there is widespread discontent among the Muslim population that the region's oil riches are being carried away into the rest of China. In July 2009, nearly 200 people were killed in fighting between ethnic Uighurs and Han Chinese.

The deaths of two ethnic Mongolians this month brought to the forefront ethnic tensions bubbling beneath the surface in Inner Mongolia.

In one incident, a local herdsman, who like many Mongolians went by one name, Mergen, was struck and killed by a Chinese coal-truck driver following local complaints that the trucks were noisy and damaging the local environment, according to Xinhua. Police arrested the Chinese driver and a passenger, who attempted to flee.

In a second incident, Xinhua reported Monday that the driver of a forklift truck ran over an ethnic Mongolian man, Yan Wenlong, during a clash on May 15 over noise, dust and water pollution at a local mine. The clashes occurred in Abag banner, near the small city of Xilinhot. A banner is a traditional Mongolian division of land, roughly equivalent to a county in China, the basic level of administration. Xinhua said the driver has been charged with murder and will stand trial.

Inner Mongolia, China's third-largest province—officially designated an "autonomous region"—, is among its fastest-growing economically. It is already among the country's top coal-producing regions, with annual output of about 600 million metric tons. China's government says the region has 730 billion metric tons of verified coal deposits—increasingly needed to fuel the country's economic growth.

The region is also a key producer of so-called rare-earth elements, which are increasingly in demand in high-tech manufacturing, and are almost exclusively mined in China, which accounts for about 97% of global output.

Analysis: Lockheed hack highlights cyber-blame snags

Source: Reuters  By Jim Wolf and Jim Finkle

WASHINGTON (Reuters) - Past patterns may point to China, but top investigators say they will never know for sure who mounted a "significant" cyberattack against Lockheed Martin Corp, the Pentagon's No. 1 arms supplier.

Lockheed, which is also the government's top information technology provider, said on Sunday it was a "frequent target of adversaries around the world."

The company has not disclosed which of its business units was targeted, but people with experience plugging holes after such strikes said that cyberspies likely sought trade secrets or weapons-related data.

The Bethesda, Maryland-based company did not respond to a request to clarify whom it deemed adversaries, and whether it suspected a foreign state in the digital assault it said it had detected "almost immediately" on May 21.

Lockheed said it had countered with stepped-up security measures and that no customer, program or employee personal data has been compromised in the "significant and tenacious attack" on its information systems network.

China has generally emerged as a prime suspect when it comes to keyboard-launched espionage against U.S. interests, although the Pentagon says more than 100 foreign intelligence groups have been trying to pierce U.S. networks.

"China's government, the Chinese Communist Party, and Chinese individuals and organizations continue to hack into American computer systems and networks as well as those of foreign entities and governments," the bipartisan U.S.-China Economic and Security Review Commission said in its 2010 annual report to Congress.

The body was created by the Congress in 2000 to advise it on implications of trade with China. It said in its report the methods used in suspected Chinese-launched attacks were growing more sophisticated and increasingly piggy-backing on social networking tools.

BEIJING DISMISSES CHARGES

Beijing, at odds with the United States over Taiwan and other issues, has "laced U.S. infrastructure with logic bombs," a cyberweapon, former U.S. National Security Council official Richard Clarke wrote in his 2010 book "Cyber War."

Beijing steadfastly dismisses such charges.

"I'd say it's just irresponsible to arbitrarily link China to such cyber hacking activities in each and every turn," Wang Baodong, the Chinese Embassy spokesman in Washington, said in an email to Reuters. "As a victim itself, China is firmly against hacking activities and strongly for international cooperation on this front".

Pinning down responsibility for an attack like that reported by Lockheed is "incredibly difficult" given the sophisticated ways that an attacker may misdirect, said Anup Ghosh, a former senior scientist at the Pentagon's Defense Advanced Research Projects Agency, or DARPA.

Encoded clues in the Stuxnet virus that may have slowed progress on Iran's nuclear program, for instance, seemed designed to point to Israel.

But "it is impossible to know if these are red herrings or genuine," said Ghosh, who worked on securing military networks for DARPA from 2002 to 2006 and who now runs Invincea, a software security company.

Eugene Spafford, who heads the CERIAS cybersecurity research facility at Purdue University in Indiana, said the digital residue of an attack would not suffice to lead to a person or place.

"Records may show a network address where those bits came from, and that network address may tie to a machine in a country, but that is only the address of the most recent 'hop'," he said in an email interview.

"It is always possible that it is a system that itself was compromised, by another system that was compromised," and so on and so on, Spafford said. In addition, one could never rule out the possibility that a given cyberstrike might be launched by someone in the pay of yet a third party, no matter where it originated.

Spafford, whose CERIAS lab has partnered with a dozen major companies and national laboratories, including defense contractors and Fortune 500 companies, said the bottom line is that "we likely never really will know who did it."

Investigators first look for hard evidence -- searching for stolen data that may be traveling across the Internet or seeking out people looking to sell information culled in a cyber attack. They typically rely heavily on circumstantial evidence, including whether the attack details match known methods from a suspect and if the targets are consistent with a group's perceived interest.

It is also possible that the U.S. intelligence community, using its vast electronic eavesdropping and other spying capabilities, may make a judgment about the origin independent of forensic analysis, but that too would be subject to doubt.

Gates to Display U.S. Military Staying Power on Final Trip to Asia

Source: Bloomberg News By Viola Gienger

Defense Secretary Robert Gates takes off for his last official trip to Asia today, aiming to underscore the region’s prominent place on the U.S. agenda and to urge China to strengthen ties regardless of disagreements.

Gates, who retires from office next month, will attend an Asia security forum in Singapore, where he will also hold talks with Japanese, Chinese, Australian and other counterparts.

He’ll detail measures by the Pentagon to reinforce American staying power in the region, U.S. defense officials said, briefing reporters on condition of anonymity. The defense chief will try to show that crises in the Middle East and North Africa aren’t distracting the Obama administration from Asia, the official said.

Gates has “been pretty resolute in the way that he has reiterated that the United States is an inherent Asia-Pacific power,” said Tim Huxley, director for defense and military analysis at the International Institute for Strategic Studies, which is hosting the Shangri-La Dialogue in Singapore later this week. Huxley credits Gates with saying “things that have been important for the U.S. to say, at a time when the regional distribution of power is clearly in a state of flux.”

China is sending to the forum its highest-level official ever, Defense Minister Liang Guanglie. That gives Gates another opening, since the two met in January in Beijing, to reinforce the need for stable, reliable and continuous military relations between the U.Sl and China, the U.S. defense officials said.

‘Growing Concern’

Gates is the latest of a stream of U.S. officials visiting Asia as the Obama administration comes to grips with China’s rise. The Chinese military’s modernization, which the U.S. sees as a potential threat, and territorial disputes between China and its neighbors around the South China Sea, have raised tensions.

Vietnam and the Philippines are pushing forward oil and gas exploration projects in areas of the South China Sea claimed by China, risking clashes in one of the world’s busiest shipping corridors.

Leaders in Beijing, who say American leaders must acknowledge their “core interests” in Asia, often suspend ties over disagreements such as U.S. arms sales to Taiwan or overtures to the exiled Tibetan leader the Dalai Lama.

Taiwan Arms

Members of Congress are advocating more weapons for Taiwan, especially long-requested F-16 C/D fighter jets, as China strengthens its forces across the Taiwan Strait.

U.S. Senator Robert Menendez, a New Jersey Democrat, and 45 other members from both parties wrote Obama on May 26 urging him to expedite the sale of 66 of the aircraft made by Lockheed Martin Corp. (LMT) of Bethesda, Maryland

“Beijing presently has more than 1,400 missiles aimed at Taiwan, and China is in the process of deploying next generation Chinese and Russian manufactured ships, fighter aircraft, and submarines,” the senators wrote. “Military experts in both Taiwan and the United States have raised concerns that Taiwan is losing the qualitative advantage in defensive arms that has long served as its primary military deterrent against China.”

While Chinese officials agreed in Washington earlier this month to conduct joint disaster relief and counter-piracy exercises, they also reiterated what they consider irritants, including U.S. weapons sales to Taiwan, which China considers a renegade province.

“The Chinese are being very forward-leaning now in a couple of areas and very tough in a couple of others,” said Bonnie Glaser, a China specialist at the Center for Strategic and International Studies in Washington.

U.S.-China Talks

Gates plans to follow up on his request to Chinese President Hu Jintao in January to begin formal talks that bring civilian and military officials on both sides together to discuss nuclear power, space, cyberspace and missile defense, the defense officials said.

U.S. officials have raised questions about whether civilian Chinese leaders were either aware or had endorsed antagonistic moves, such as a test flight during Gates’s Beijing visit in January of a new fighter jet that may have stealth capabilities.

Throughout the region, U.S. allies and security partners have been looking for signs of its commitment, Huxley said. That includes force levels, exercises, naval visits and in some cases military assistance, arms sales and technology transfer.

When meeting with his Japanese counterpart in Singapore, Gates will focus on lessons learned from the joint efforts in the aftermath of Japan’s earthquake, tsunami and resulting nuclear crisis this year, and on a planned move of some U.S. Marines on Okinawa, partly to Guam and others to a less-populous location on the island, one of the U.S. officials said.

Japan Bases

Senate Armed Services Committee Chairman Carl Levin, a Michigan Democrat, joined Senators John McCain of Arizona, the panel’s senior Republican, and Jim Webb, a Virginia Democrat and the chairman of the personnel subcommittee, in urging changes to the basing agreement with Japan, signed in 2006.

The agreements involved were carefully crafted over years, one of the U.S. defense officials said. The U.S. has balked at Japan’s own requests for changes in recent years. The Senators’ letter doesn’t change the administration’s approach.

On his way to Singapore, Gates will stop in Hawaii, the headquarters of the U.S. military’s Pacific Command. After Singapore, he will attend a North Atlantic Treaty Organization defense ministers meeting in Brussels next week.

Exclusive: China to clean up billions worth of local debt

Source: Reuters  By Benjamin Kang Lim and Kevin Yao

BEIJING (Reuters) - China's regulators plan to shift 2-3 trillion yuan ($308-463 billion) of debt off local governments, sources said, reducing the risk of a wave of defaults that would threaten the stability of the world's second-biggest economy.

As part of Beijing's overhaul of the finances of heavily-indebted local governments, the central government will pay off some of their loans and state banks including some of the "Big Four" will be forced to take some losses on the bad debt, said the sources, both of whom have direct knowledge of the plans.

Part of the debt will also be shifted to newly created companies, while private investors would be welcomed in projects previously off-limits to them, sources said.

Beijing will also lift a ban on provincial and municipal governments selling bonds, a step aimed at bolstering their finances with more transparent sources of funding.

Many analysts see China's pile of local government bad debt as a major risk to the economy, especially as the economy slows, but few see widespread banking fallout as they believe cash-rich Beijing can step in to soak up losses.

The clean-up plan could boost investor confidence in Chinese banks, which have provided many of their loans as part of the massive economic stimulus program launched by Beijing in late 2008 to counter the global financial crisis.

The program resulted in unfettered lending to local government financing vehicles, hybrid government-company bodies that governments used to get around official borrowing restrictions.

After a months'-long investigation into local government liabilities, Beijing has determined that local governments have borrowed around 10 trillion yuan, said one of the sources.

Chinese media have reported that the governments may default on around 2 trillion yuan worth of those loans.

The source said that three government bodies -- the bank regulator, the Finance Ministry and the National Development and Reform Commission, China's state economic planner -- plan to start cleaning up the debt in June and finish in September. The second source said the program may take longer.

"It's to rescue local government finances, not banks. It's different in nature from the bailout of the four big (state) banks in the late 1990s before they listed (on stock markets)," the first source told Reuters, requesting anonymity because he is not authorized to talk to reporters.

In 1999, China set up asset management companies to clear 1.4 trillion yuan in bad loans off the books of the large state-owned banks, which were saddled with piles of debt after decades of politically motivated lending.

The Big Four are Industrial and Commercial Bank of China, Bank of China, China Construction Bank and Agricultural Bank of China.

The banking regulator, the Finance Ministry and the state planner declined immediate comment when reached by telephone.

CLEANING UP

Planners are still ironing out details about how the sour loans would be written off, the source said.

"The central government will swallow some of it," he said, and "some local governments will be allowed to issue bonds."

"The government hopes to resolve this problem before the 18th Congress next year," the second source said, referring to the Communist Party's key conclave where a leadership reshuffle is expected.

Details on the firms that will be created to manage the debt were not immediately known, but the first source said they may receive funds from private investors.

State-owned China Development Bank accounts for about one-third of all local government loans, said one of the sources, with the rest being extended by big state-owned banks and city commercial banks.

Worried these loans could strain China's public finances if they sour, China's cabinet has instructed banks to clamp down on lending to local governments, an order which Chinese banks say they are abiding by.

State media previously reported that as part of Beijing's clean up of the local government debt mess, it will consolidate about 3,800 local government financing vehicles.

Guo Tianyong, an economist at the Central University of Finance and Economics, said that while the debt overhauling exercise might take the bad debt off the local governments' books, it wouldn't necessarily resolve the question of who would ultimately pay.

"I feel it won't fundamentally solve the problem by hiving off and selling the debt to other investors," Guo said.

Underscoring worries that China's public finances may be strained by bad debt, Fitch last month cut the outlook for China's local currency rating to "negative." Standard & Poor's said this month the non-performing loan ratio among Chinese banks could reach 5-10 percent in the next three years.

Some analysts also believe China's central bank is wary of raising interest rates too forcefully for fear of burdening local governments with growing interest payments.

The stash of local government debt is still growing, however. The Economic Observer newspaper said it may hit 12 trillion yuan by the end of 2011, citing unnamed experts.

($1 = 6.483 yuan)

China Raises Power Prices for Business, Farmers as Summer Shortage Looms

Source: Bloomberg News

China raised electricity prices for businesses and farmers for the first time in more than a year, threatening to exacerbate inflation as the nation aims to curb power shortages that may be the worst on record.

Rates for industrial, agricultural and commercial users in 15 provinces will increase starting tomorrow while those paid by residential customers will be unchanged, said an official at the National Development and Reform Commission, declining to be identified because of internal rules. Malaysia said yesterday it will raise power prices for the first time in three years.

The increase in electricity costs may complicate China’s fight against inflation, which is above the government’s target. The world’s biggest energy consumer may boost residential rates in the second half, according to Citigroup Inc. Higher prices may spur generation as pressure eases on profit margins squeezed by rising coal costs. An electricity shortfall this summer may be as much as 40 gigawatts, surpassing the 2004 record, State Grid Corp. of China said.

“This will help power producers and give them more incentive to maximize production amid the power shortage,” Zhang Long, a utility analyst at Essence Securities Ltd., said by telephone from Shanghai.

The country’s five largest generators are China Huaneng Group Corp., China Datang Corp., China Power Investment Corp., China Guodian Corp. and China Huadian Corp.

Huaneng Power International Inc. (902), a unit of China Huaneng, rose 0.9 percent in Hong Kong trading to HK$4.55. Its rival Datang International Power Generation Co. fell 0.3 percent and Huadian Power International Corp. advanced 1.8 percent. The benchmark Hang Seng Index rose 2.2 percent.

Consumer Prices

The increase will affect the consumer price index “indirectly” by 0.05 percentage point, China Central Television reported yesterday, citing Liu Shujie, head of economic research at the NDRC. Inflation was 5.3 percent in April and has been above the government’s 2011 target of 4 percent every month this year.

Li Pumin, a spokesman at the NDRC, the top economic planner, declined to comment when contacted by Bloomberg News.

The price adjustment “should allow power producers to increase utilization rates, boosting coal demand,” Daiwa Securities Capital Markets wrote in a research note.

Yanzhou Coal Mining Co. rose 4.7 percent to HK$32.50 in Hong Kong trading, the highest level since its debut in April 1998. Its bigger rival China Shenhua Energy Co. gained 3.2 percent to HK$38.65, while China Coal Energy Co. jumped 2.9 percent to HK$10.52.

15 Provinces

The government boosted electricity rates for non- residential users by an average 16.7 yuan ($2.58) per megawatt- hour, the official Xinhua News Agency said yesterday, citing the NDRC. Power prices for industrial users are currently 470 yuan a megawatt-hour on average, according to government data.

China will increase prices in the provinces of Shanxi, Qinghai, Gansu, Jiangxi, Chongqing, Henan, Hubei, Sichuan, Guizhou, Shaanxi, Shandong, Hunan, Anhui, Hebei and Hainan, according to Xinhua. On-grid power tariffs were raised in 12 provinces by an average 20 yuan per megawatt-hour on April 10, it reported.

The government may increase industrial rates further and raise residential tariffs in the second half, Minggao Shen, Citigroup’s China research head, said by telephone from Hong Kong today. A 10 percent consumer power price rise would push inflation up by 0.25 percentage point, he said.

At least 10 provincial grids serving municipalities including Beijing, Tianjin, Shanghai and manufacturing bases in the provinces of Hebei, Jiangsu and Zhejiang will be affected by power shortages, the official Xinhua News Agency said on May 23, citing Shuai Junqing, an executive vice president at State Grid.

Coal Costs

The country will also ban local governments from giving power tariff discounts to manufacturers that consume large amounts of energy and reinforce monitoring of coal prices to maintain stability, according to CCTV.

Benchmark power-station coal prices at Qinhuangdao port rose 0.6 percent to between 830 yuan and 845 yuan a metric ton as of yesterday compared with a week earlier, according to the China Coal Transport and Distribution Association. That’s the highest since October 2008.

“Tariff-rate hikes are a positive for thermal-coal producers as they would improve the profitability of their customers, the coal-fired power plants,” Daiwa’s Dai said in a report.

China’s power-generating capacity was 960 gigawatts last year, with coal and oil-fired power plants accounting for 73 percent and hydropower dams 22 percent, the National Energy Administration said in January.

Chery Auto to build $200m factory in S America

Source: By Ding Qingfen (China Daily)

BEIJING - Chery Automobile Co will break new ground in Latin America when its $200 million factory in Venezuela starts producing vehicles for the region later this year, a move seen as further enhancing foothold in the overseas market of the automaker, a top company executive told China Daily.

Chery had signed a cooperative agreement with China Development Bank and the Venezuelan government to set up the new factory, which will be the second-largest that Chery has in Latin America, following its existing auto manufacturing facility in Brazil.

Du Weiqiang, vice-president of Chery International, said the new auto-making plant will be producing 20,000 cars annually.

"Venezuela is not an open market, which leaves huge potential for us to tap, if we have an assembly factory there to sell domestically. And also, Chery has rich experiences in Latin American nations," Du said.

The new factory will be the first Chinese automotive plant in Venezuela and will help Chery - China's largest auto exporter and largest Chinese independent automaker - to ramp up its exports.

Since December 2007, Venezuela raised import tariffs on autos to 40 percent from 35 percent, as a way to fend off imports and protect its own auto industry.

It is estimated that 15 global auto-making companies - mostly from the United States, the European Union, Japan and South Korea - have established factories in Venezuela to cash in on the potential growth of the emerging economy, whose annual production capacity is 250,000 vehicles at the moment.

But such capacity is far from meeting local demand, especially people who want to buy budget vehicles. That provides a niche opportunity for Chinese automakers to gain entry into the domestic market.

"The new factory will mainly make budget cars. Our target is the local consumers," Du said.

Under the agreement, China Development Bank will "grant loans to the Venezuelan government and Chery will transfer technology."

Venezuela imports more than 50 percent of its auto parts annually. The local government has urged foreign companies, including Chinese automakers, to transfer technologies to local partners.

Venezuela is a major crude oil producer and exporter. Since October 2009, the nation has launched a wave of economic stimulus packages, including building infrastructure and simplifying administrative processes.

Venezuela's economy dropped by 1.4 percent in 2010, but it bounced back and increased by 4.5 percent during the first quarter of this year.

Chery has 16 manufacturing bases abroad, including two in Latin America - Brazil and Uruguay. The factory in Brazil, with an investment of $400 million, can eventually produce 150,000 autos annually.

"Latin America is the best performing region for Chery's overseas market, thanks to a stable political situation, less trade barriers and a mature consumption market," Du said.

Since the recent global financial crisis began, Latin America has been one of the top three overseas markets for Chinese automakers, with Brazil expected to overtake Germany as the world's fourth-largest auto market this year.

In 2010, Chery registered sales of 23,000 vehicles in Latin America, making the region the fastest growing market for the Chinese automaker.

Last year, Chery sold 91,986 vehicles, mostly in developing regions such as Southeast Asia, the Middle East, Latin America and Africa.

The company has set a target to sell 120,000 vehicles in the overseas markets for 2011.

Western Graduates Head To China for Internships

Source: Wall Street Journal By Javier Espinoza

In a crowded job market, having work experience in China on your résumé can make a big difference.

Recent graduates in industries from engineering to finance in both Europe and the U.S. are making their way to the country, hoping to land their first jobs faster and more easily than their competitors.

Lesmes Gutiérrez, a 23-year-old engineering graduate of Loughborough University in the U.K., who had a two-week placement with Baoshang Bank in Beijing late last year, says potential employers are more impressed with those who can demonstrate a willingness to move out of their comfort zone. "It's quite a big step to go somewhere not knowing what to expect. The idea of going to China calls for awareness and the willingness to relocate," which could be appealing to employers, he says.

And he's not the only one to have spotted the competitive advantage work experience in China may bring. Applications for internships there have more than tripled over the past couple of years, according to figures released by CRCC Asia, a London-based recruitment consultancy.

In 2009, the company received about 250 applications, compared with more than 1,000 so far this year, says CRCC Asia Director Daniel Nivern. "The Chinese economy is booming and it's very appealing for graduates to get an insight as to why that's happening by visiting [the country]. With the job market depressed in the U.K. and the U.S., China offers a great opportunity to get a long-term career," he says.

He says China has also come into focus for Western companies looking to grow. "A lot of businesses realize that if they want to be part of the global economy, they need to be going into China," adds Mr. Nivern, whose company has mostly placed recent graduates from the U.K. and the U.S., but also from other European countries like Spain, in finance, marketing and legal firms in China.

"I have been told repeatedly that my work in China looks great on my résumé," says Alexander Lesher, who recently finished a master's degree in Environmental Engineering at the Indiana-based Purdue University and subsequently undertook a two-month internship at environmental company Nanjing Zhuangxun Tech Co. in Beijing.

He says his experience there gave him a greater awareness of cultural differences. He says he was surprised by the way business people interacted during lunches. During a working meal with a group of about eight people, a single person would buy enough food to completely fill the table and would go out of his or her way to make sure everyone ate as much as possible. "Then they would act humbly, as if they have done nothing," he says. "That wouldn't happen in the U.S."

Others visiting China for the first time found the first few days disconcerting. Sophie Corcut, a former unpaid marketing intern at fair-trade company Shangrila Farms, says: "Living in Beijing and dealing with a totally foreign language was challenging. Things like crossing the road or buying things in the supermarket or counting the numbers were suddenly difficult." But it was precisely that challenge that Ms. Corcut, who borrowed from her parents to fund her trip, was looking for. "It was brilliant. I was looking for that stimulation."

Ms. Corcut, who now has a full-time job with management consultancy Accenture in London, says her two months' work experience in China was more rewarding than previous internships she had done in her native England. "I have done a lot of work experience in the U.K., and they actually don't need you. You are just there, and they are constantly trying to find you work. You are given something very menial," she says. "But in China they were actually using me. I was lucky to be interning for a young company that needed a lot of help."

She says initially after graduation she wasn't sure what to do professionally with a degree in history and French, but in China she learned how to use Adobe Illustrator and Photoshop and started designing promotional leaflets for the company. "I tried to get a big sales push and tried to get new clients," she says.

But some recruiters are swift to point out that China isn't the only place that will help students stand out. Chris McCarthy, of London-based recruiter Hays PLC, says it isn't China experience per se that employers are looking for but evidence that potential employees are willing to challenge themselves.

"If Europe and the U.S. are going to maintain their place in global business people need to be prepared to put on a back pack" and head for less familiar places, says Mr. McCarthy. "It is evidence that people are willing to challenge themselves, not specifically China, that employers are looking for. They want to see a bit of ambition and entrepreneurship," he says.

He adds, however, that China can be of particular relevance to employers looking for people with experience in emerging markets.

But while experience in China may be invaluable, some obstacles can seem formidable. Mr. Gutiérrez, working at a microlender, struggled with Chinese. "The problem with a rural bank is that Chinese is its first language and English is not used at all. When it came to producing reports on the fluctuation of gold prices, there were no previous templates I could use so I had to rely on an intuitive process and then improve the subsequent reports based on feedback."

Despite some barriers, the benefits run in both directions, and companies in China are profiting from the surge in interest from potential interns in the West. Thomas Cao, chief executive of Beijing-based Broad Global Venture Capital Co., says he finds real value in the work done by interns.

"We look for graduates to come and do real work. We have asked our interns, for example, to help us analyze the chances of companies going public on the Hong Kong Stock Exchange," he says.

Ultimately, says Mr. Lesher, going to China was about turning a personal fascination into a tangible benefit for his career. "The country was just a point of personal fascination. I wasn't sure how it would work out."

Have You Heard...

• China Clamps Down in Bid to Halt Protests in Inner Mongolia
• Vietnam accuses China in seas dispute
• China's "land of fish and rice" parched by drought
• China Shuts Most Lead-Acid Battery Producers to Curb Pollution, Poisoning

China Clamps Down in Bid to Halt Protests in Inner Mongolia

Source: Wall Street Journal   By Brian Spegele

BEIJING—Chinese police clamped heavy controls across Inner Mongolia on Sunday after a week of ethnic protests by students over the hit-and-run killing of a Mongolian herder by a Chinese truck driver.

The incident exposed simmering tensions in the resource-rich region, which so far has largely escaped the violence that has plagued China's Tibetan and Muslim regions.

Police across the region were requiring students to obtain permission and to register with authorities before leaving university campuses in an effort to keep protesters off the streets.

Meanwhile, authorities blocked searches for terms such as "Inner Mongolia" on Internet sites such as Sina Weibo, China's most active microblogging service, to try to prevent the upheavals from spreading.

Reached by telephone on Sunday, ethnic Han Chinese residents of Hohhot, the region's capital, described paramilitary police in riot gear concentrated in the city's main square. SMS messages to local residents from police said authorities were prepared to "intensify the crackdown."

Residents in other parts of the region shaken by last week's protests said demonstrations had subsided Sunday afternoon, but online postings called for protests to begin Monday in Hohhot.

At least 18 protesters were injured and 40 detained by police last week during protests by ethnic Mongolian students, according to rights groups.

The protests began on May 23 after a Mongolian herder was killed by a person whom authorities describe as an ethnic Chinese truck driver. Details of the incident, including where it occurred, are sketchy. Authorities say they have arrested the driver of a truck and a passenger.

Inner Mongolia is a vast region spanning about 2,400 kilometers (about 1,500 miles) across the top of northeast China. It has a population of just 24 million but has become one of China's fastest-growing regions economically because of its vast reserves of coal and other natural resources, whose prices have been rocketing. The region is a critical producer of rare-earths elements, which are increasingly required in high-tech devices and weaponry but are almost exclusively mined in China.

About 20% of Inner Mongolia's population is ethnic Mongolian, while China's majority Han ethnic group dominates the region. Though outright protest in Inner Mongolia has been rare in recent years, the government struggled to suppress an aggressive Mongolian independence movement in the early 1990s.

In one of the biggest of the recent protests, some 2,000 ethnic Mongolian students took to the streets in the city of Xilinhot on Wednesday, according to Amnesty International, a London-based rights group. On Friday, hundreds of protesters marched on government offices in Shuluun Huh Banner, calling on Chinese authorities to give greater respect and rights to traditional Mongolian herders in the region, the group reported. A banner is a traditional Mongolian division for land and is roughly equivalent to a county—the basic administrative unit in other parts of China.

In a bid to quell the protests, the region's top Communist Party official met with students on Friday. "Please rest assured, teachers and students, the suspects will punished severely and quickly, in accordance with legal procedures," said the party chief, Hu Chunhua, according to a report by the state-run Inner Mongolia Daily.

Phone calls to police public-relations departments in multiple areas affected by the protests went unanswered Sunday.

Inner Mongolia, designated one of China's "autonomous regions" due to its sizable ethnic minority population, has seen little of the strife witnessed in other parts of northern and western China, particularly the regions of Tibet and Xinjiang, where protests have turned deadly in recent years. Clashes between Han and Uyghur ethnic groups in July 2009 in the northwestern province of Xinjiang left nearly 200 dead. Similar unrest in 2008 in the Tibetan capital of Lhasa killed about 20, according to government totals.

"The protests are a wake-up call for the authorities," said Catherine Baber, Amnesty International's Asian-Pacific deputy director. "As in other minority areas, authorities must start heeding the message rather than attacking the messengers."

Inner Mongolia has become an increasingly important coal-producing region in recent years. It has more than 730 billion metric tons of verified coal deposits with annual output of around 600 million metric tons, according to the state-run Xinhua news agency. The region is at the center of massive government infrastructure-improvement efforts, which aim to make inland China's resources more easily available to the country's resource-hungry east.

Vietnam accuses China in seas dispute

Source: BBC

A rare weekend news briefing followed a confrontation in the South China Sea between a Vietnamese oil and gas survey ship and Chinese patrol boats.

Vietnam says the boats deliberately cut the survey ship's cables in Vietnamese waters. China denies the allegation.

China, Vietnam, the Philippines, Malaysia, Brunei and Taiwan all claim territories in the South China Sea.

The area includes an important shipping route and is also thought to contain oil and gas deposits.

The spat comes just days before a regional security conference in Singapore.

Beijing said its defence minister would attend the International Institute of Strategic Studies to promote co-operation and stability in the Asia Pacific region.

'High speed'

The latest clash involving Chinese patrol boats occurred 120km (80 miles) off the south-central coast of Vietnam and some 600km south of China's Hainan island.

"The Vietnamese navy will do everything necessary to firmly protect peace and the independence, sovereignty and territorial integrity of Vietnam," foreign ministry spokeswoman Nguyen Phuong Nga said.

One of three Chinese patrol vessels on the scene intentionally cut a submerged cable towed by the ship, the Binh Minh 02, said Do Van Hau, deputy chief executive of state oil and gas group PetroVietnam, which was operating the ship.

"Chinese vessels were at very high speed and did not respond to our ship's warning and then cut the cables of the Binh Minh 02, about 2km from where it was positioned," he said.

China's foreign ministry blamed Vietnam for the incident, saying its oil and gas operations "undermined China's interests and jurisdictional rights".

China's claim in the South China Sea is by far the largest, and includes the Spratly and Paracel archipelagos.

Taiwan recently said it would improve the defence capability of more than 100 coastguard troops stationed in a disputed area of the South China Sea.

Taiwan's decision was announced shortly after the Philippines increased the pressure recently by lodging a protest at the United Nations against China's claims to the area.

Last year, China sharply rebuked US Secretary of State Hillary Clinton when she said the US supported the freedom of navigation in the area and offered to facilitate multilateral talks on the disputes.

China's "land of fish and rice" parched by drought

Source: Reuters By Chris Buckley

LAKE HONGHU, China (Reuters) - The drought gripping stretches of central and eastern China has dried Lake Honghu into an expanse of exposed mud, stranded boats and dying fish farms, threatening the livelihoods of residents in Hubei Province who call this their "land of fish and rice."

Dry spells and floods blight various parts of China nearly every year, and officials are prone to call each the worst in 50 years or longer.

But many residents around the lake said that was a fitting label for the months-long drought that has drastically shrunk the lake, the adjacent Yangtze River, and many other lakes and tributaries along the mighty river's course through farming and industrial heartlands.

"I've never, ever seen it this bad. Look at the rice. It's all going yellow and the stalks will die unless we get some rain soon," said Ouyang Jinghuang, a pepper-haired 66-year-old farmer tending rice paddies near Lake Honghu.

"We're all digging wells and buying our drinking water. Usually, we have so much water here that we worry about floods, not droughts."

The dry spell is a jarring reminder of how China, the world's second-biggest economy, relies on increasingly strained water resources to feed its people and power rapidly increasing numbers of hydro stations.

Those problems could deepen if rains fail to arrive soon.

"There's still water, but it's not enough to share around," said Gao Desheng, a farmer in his sixties who was taking a rest after plowing a field using an ox, the centuries-old farming method still favored here.

"Before, the sky would always send more than enough water. But this year, the sky has just stopped sending. It's as if we offended it."

STRANDED IN THE MUD

Lake Honghu lies next to the Yangtze, separated from the river by a strip of land with dykes and sluice gates.

The lake's waters are usually up to 1.5 meters deep across much of its 348 sq km (134 sq mile) area at this time of year, said Pan Cheng'e, a sun-browned rice farmer and crab breeder who lives along its banks.

"Now where there's water, it's about 40 centimeters deep at most," he said. "The farmers are already hard-up, and if that dries up, well, this year will be a disaster."

The lake is dotted with hundreds of fishing and house boats stranded on mud by the receding waters. The remaining muddy water is also being pumped away to keep alive fish farms in ponds on nearby farms and marshland.

"Nearly all the fish have died already, and we're trying to keep alive the ones left," said Wu Zhaowei, a brawny man in his twenties who was resting on a stranded houseboat after a morning of dragging water to a fish-raising enclosure.

"Many people have already lost all their fish, and that's a lot of money."

Farmers said they would need generous rainfall in coming weeks, or the first of their two annual rice crops could wither and die, and more of the thousands of fish and crab farms could lose all their stock.

Millions of farmers in Hubei, Hunan, Jiangxi and other provinces face similar threats of damaged or even lost rice crops.

Almost 35 million people across five provinces on the middle and lower reaches of the Yangtze have been affected to different degrees by the drought, the Chinese Ministry of Civil Affairs said on Friday. That number includes 4.2 million who have difficulty getting drinkable water.

Direct economic losses are nearing 15 billion yuan ($2.3 billion), it said.

China's economy, the world's second largest, could probably absorb the crop losses so far with only a small bump in food inflation.

But the drought also threatens to cut into power production, since the Yangtze River and its tributaries feed the Three Gorges Dam, the world's biggest hydropower project, as well thousands of smaller hydro plants.

"The Yangtze River always has ups and downs, depending on what the heavens do," said Li Bin, a fisherman casting nets on the banks of the river.

"But I haven't seen it this low before, and it was even lower a few days ago before they let water out of the Three Gorges," said the 60-year-old.

He pointed to a spot on the river bank about two meters above where he was standing.

"That's about where it should be at this time of year, so we're going to need lots of rain to catch up. I don't see it coming soon."

China Shuts Most Lead-Acid Battery Producers to Curb Pollution, Poisoning

Source: Bloomberg News

Battery makers in China, the largest lead user and producer, have shut factories in major producing regions after the government tightened measures to curb pollution, an industry executive said today.

Plants in Zhejiang, Guangdong, Sichuan and Henan provinces have suspended production for about two weeks, said Xu Hong, head of the lead-acid battery branch at the China Electrical Equipment Industry Association. The Ministry of Environmental Protection ordered local governments on May 18 to tighten management of battery units and recycled lead producers following incidents of poisoning from so-called heavy metals.

The closures may damp lead demand in the world’s largest exporter of the storage batteries used from mobile phones to electric bicycles and cool a 36 percent rally in the prices of the metal in the past year on the London Metal Exchange. The battery makers including Tianneng Power International Ltd. (819) and Chaowei Power Holdings Ltd. (951) represent about 80 percent of the country’s total lead demand, according to the China Nonferrous Metals Industry Association.

“This is definitely going to curb lead demand in the next couple of months, and we’ll need to wait till later this year to see if demand can come back,” said Shi Lei, an analyst at Cofco Futures Co. “Domestic lead prices will be capped in coming months as a result of demand losses.”

Lead consumption in China may increase 8 percent this year to 4.05 million metric tons, compared with a growth of 11 percent in 2010, Zhang Shu, a lead analyst at data provider SMM Information & Technology Co., said at a conference on May 27.

Poisoning Incidents

China’s environmental ministry ordered tight controls of lead-acid battery units as well as recycled lead producers after reports of poisoning incidents in Zhejiang and Guangdong provinces. The country will prioritize environmental checks as part of a crackdown to curb pollution from so-called heavy metals, the ministry said in a statement on March 29.

The legal representative of Zhejiang Haijiu Battery Co. was detained on May 16 after more than 300 people near a plant were found to have elevated levels of lead in their blood, the official Xinhua news agency reported, citing a local government spokesman. Eight officials from the local government, the environmental protection bureau and the health bureau are being investigated as lax supervision has also been blamed for the poisonings, the agency reported.

Zhejiang and Guangdong provinces are the two biggest battery-producing regions, accounting for 36 percent of the country’s total, according to data provider SMM Information & Technology Co.

‘No Timetable’

“Regardless of the plants’ conditions, they’ve all been shut down, and there is no timetable now to resume operations,” China electrical equipment association’s Xu said.

The closures have reduced the volume of lead traded in the cash market, according in Cofco’s Shi.

Lead traded on Changjiang Nonferrous Metals Market, Shanghai’s largest spot metals market, traded at 16,359 yuan ($2,522) a ton. Lead for September delivery on the Shanghai Futures Exchange closed the morning session 0.7 percent lower at 17,195 yuan a ton. Three-month lead traded on the London Metal Exchange climbed 0.6 percent to $2,505 a ton on May 27.

Have You Heard...

• China tightens grip on Inner Mongolia before planned
• China reprimands Vietnam over offshore oil exploration
• Culture clash complicates China's Brazil push
• Wal-Mart Names Senior China Bosses

China tightens grip on Inner Mongolia before planned

Source: Reuters By Ben Blanchard

HOHHOT (Reuters) - Security forces sealed off parts of the capital of China's vast northern region of Inner Mongolia on Sunday to prevent residents from staging a planned mass protest after the hit-and-run death of a herder sparked six days of protests by ethnic Mongolians.

Hundreds of paramilitary policemen and police in riot gear, armed with shields, batons and helmets, patrolled Hohhot's Xinhua Square, next to the Inner Mongolia radio and television station, after calls spread online for a protest on Monday.

Police also surrounded Ruyi Square, in front of the local government building, but elsewhere in the city appeared bustling as normal.

Chinese authorities sealed off parts of the northern region of Inner Mongolia, a resource-rich region strategically located on the borders of Russia and Mongolia, on Friday in what residents described as martial law.

In a rare sign of defiance, hundreds of China's Mongolians, who make up less than 20 percent of the roughly 24 million population of the Inner Mongolian Autonomous Region, have taken to the streets in other parts of the province despite tighter security.

They were angered by the death this month of a Mongolian herder, Mergen, after being struck by a coal truck. The government announced the arrest of two Han Chinese for homicide, but that failed to stem public anger.

But the resentment goes much deeper. Inner Mongolia, which covers more than a tenth of China's land mass, is supposed to offer a high degree of self-rule, but Mongolians say the Han Chinese majority run the show and have been the main beneficiaries of economic development.

China's Mongolians rarely take to the streets, unlike Tibetans or Xinjiang's Uighurs, making the latest protests highly unusual.

The New York-based Southern Mongolian Human Rights Information Center said Mongolians were planning further protests over the next few days, including in Hohhot, less than an hour's flight from Beijing.

Some schools in Hohhot said authorities had stepped up security.

"The school has told us to keep an eye for any illegal gathering these days as June 4 is coming," one man in a high school in Hohhot told Reuters, referring to the armed crackdown on pro-democracy protesters on June 4, 1989, in Beijing.

"Security is tight, there are many policemen in the streets," he added. He declined to give his name.

A worker at a university in Hohhot said three entrances had been sealed off and there was a heavy police presence. He declined to comment on the reason. Telephone calls to the Hohhot government and its propaganda department went unanswered.

In the first response from the ruling Party to the demonstrations, Inner Mongolia's Communist Party chief Hu Chunhua told students and teachers on Friday he was representing the government to seek their views on the situation and said "public anger has been immense," state media reported.

"Please be assured, teachers and students, that the suspects ... will be punished severely and quickly, so that the ... rights of victims and their families can be resolutely safeguarded," the Inner Mongolian Daily cited Hu as saying.

But Hu's reassurances are unlikely to bring lasting calm, said Enghebatu Togochog of the Southern Mongolian Human Rights Information Center.

"The conflict between the Chinese authorities' attempts to exploit the natural resources and the disrespect of the Mongolians' way of life will not be easily resolved, unless the Chinese government changes its policy," he said.

China reprimands Vietnam over offshore oil exploration

Source: Reuters | Photo: WSJ

BEIJING (Reuters) - China criticized Vietnam on Saturday for its offshore exploration of oil and gas in the contested South China Sea after Hanoi complained that three Chinese patrol boats had challenged a Vietnamese ship.

The Vietnamese ship, the Binh Minh 02, detected the Chinese patrol boats approaching on radar at about 5 a.m on Thursday, the official Vietnam News Agency reported.

About an hour later, the three Chinese boats intentionally ran through the area where the Vietnamese ship was working, snapping cables the ship was using, then left the scene after about three hours, it said.

China's Foreign Ministry implied the fault for the incident lay with Vietnam.

"China's stance on the South China Sea is clear and consistent. We oppose oil and gas operations conducted by Vietnam, which have undermined China's interests and jurisdictional rights in the South China Sea and violated the consensus both countries have reached on the issue," ministry spokeswoman Jiang Yu said.

"What relevant Chinese departments did was completely normal marine law-enforcement and surveillance activities in China's jurisdictional sea area," she said in a statement posted on the ministry's website (www.mfa.gov.cn).

"China has been committed to safeguarding peace and stability in the South China Sea. We are willing to work together with relevant parties to seek a solution to related disputes," Jiang added.

Vietnam's Foreign Ministry protested against the incident by passing a diplomatic note to representatives of the Chinese embassy in Hanoi on Thursday.

The South China Sea covers an area of more than 648,000 sq miles (1.7 million sq km), containing more than 200 mostly uninhabitable small islands, rocks and reefs.

China, Vietnam, the Philippines, Malaysia, Brunei and Taiwan all claim territories in the sea, which covers an important shipping route and is thought to hold untapped oil and gas reserves.

The incident this week took place in an area called Block 148 about 120 km (80 miles) off the south-central coast of Vietnam from the beach town of Nha Trang, the Vietnamese news agency said.

Culture clash complicates China's Brazil push

Source: Associated Press

SAO PAULO (AP) — Stocking shelves in a Chinese grocery store, Thiago warned that he didn't want to be caught chatting during working hours. Within seconds, however, the Brazilian unleashed a pent-up flood of complaints about the owners, who lingered just beyond hearing distance.

"My bosses have never heard of a day off," said the 20-year-old, who would only allow his first name to be used, for fear of losing his job. "Vacations? Forget it. They pay well and they pay for extra hours, but they don't understand that some things are more important to Brazilians than money.

"I've seen many workers walk in, see the Chinese way of doing things, and quit the very same day."

Such cross-cultural tensions have become a stumbling block in an otherwise meteoric rise in business ties between China and Brazil, two of the world's fastest-growing economies.

Chinese companies' direct investment in Brazil jumped to $17 billion last year, nearly 60 times the investment the previous year, according to SOBEET, a Brazilian economic think tank. At the same time, more Chinese companies are hiring local workers rather than following their old practices of bringing in Chinese laborers.

That new reality has meant frequent contact between two cultures that hold vastly different expectations about the role of workers, government regulations and unions.

Brazilians enjoy some of the most labor-friendly protections in the world, with guarantees such as one-month annual bonuses and stipends for meals and transportation.

China, on the other hand, has quickly become the world's second-biggest economy on the strength of a low-paid work force and, in practice, virtually nonexistent labor protections, according to the U.S.-based nonprofit Global Institute for Labor & Human Rights. Brazil's strong independent labor movement also clashes with a centralized Chinese system of company unions without collective bargaining power.

"You're looking at a whole different model of how society operates," said Charles Kernaghan, the institute's director. "That means no rights to organize, virtually no labor protections."

Chinese companies are attempting to export that model and, at least in Brazil, have been finding it difficult to retain workers, even in management positions.

A survey of 500 Brazilian executives working for Chinese, North American and European companies recently conducted by the Michael Page International recruitment firm for the newspaper Folha de S. Paulo found that 42 percent of Brazilian executives working for Chinese companies left their jobs within a year, a 68 percent higher turnover rate than found in the other firms studied.

Brazilian workers complain that their Chinese employers don't understand the country's culture of developing personal relationships among co-workers. Brazilians also bristle against a centralized office hierarchy that puts little trust in local executives.

"The cultural misunderstandings are going to frustrate the development of Chinese business in Brazil," said Marcelo de Lucca, director of Michael Page's Brazil operations. "Multinational companies, when they arrive in Brazil or any country, have to adapt to the local culture. But the Chinese, with their old culture, being a country ruled by a strong Communist party with extreme levels of hierarchy, for them this process will take longer."

Global accounting firm KPMG, whose specialists help Chinese companies get started in Brazil, say about 30 of China's big state-run companies with annual revenues above $1 billion are now in the country, more than three times the number five years ago.

China and Brazil's bilateral trade surpassed $56 billion last year, up from $2.3 billion a decade earlier. In 2009, China replaced the U.S. as Brazil's biggest trading partner.

Brazil isn't China's first foray into Latin America — Chinese companies have a strong presence across the region, from mining operations in Argentina to manufacturing in Mexico. China has bilateral trade agreements with Peru, Costa Rica and Chile.

Zhang Jianhua, chief of the Bank of China's operations in Sao Paulo, said Chinese companies have been enticed by Brazil's wealth of iron ore, soy, oil and other natural resources, and many companies are finding it more cost-effective to move closer to the commodities. Chinese companies also see Brazil's booming middle class as a lucrative market.

Chinese companies' experience elsewhere in Latin America, however, hasn't helped them avoid problems in Brazil.

A former top executive for Chinese computer maker Lenovo said most Brazilians at the company's local offices were frustrated by demands to come up with almost immediate results in a country with some of the world's worst red tape. Even seemingly mundane tasks, such as getting a phone line or renting an apartment, can require trips to the notary and stacks of paperwork.

Brazilian workers also balked at what they saw as their Chinese superiors' suffocating management style, said the executive, speaking on condition of anonymity for fear of putting in jeopardy the jobs of other Brazilians at Lenovo.

"It was not the quantity of work — we're all chained to our Blackberry, working 24 hours a day, seven days a week," she said. "But the Chinese bosses wanted people physically in the office 100 percent of the time so they could control them.

"That's definitely not how deals are closed in Brazil. It's over dinner, at lunch, having a drink. You cannot keep your work force locked up in an office and expect to make headway in Brazil."

The executive added that Chinese bosses would often create ill will by upbraiding Brazilian project managers in front of their staff.

"They thought the workers would do more if the orders were coming from the big boss, but that's not what Brazilian workers think — it's just the opposite," she said. "They lost motivation because they thought their manager had no respect within the company, to the point that he was being dressed down in front of them. I saw that a lot."

Calls to Lenovo were not returned.

Asian executives have had their own complaints about what they've seen as the lax work ethic of Brazilian employees, but are up against laws that require all foreign companies in Brazil to hire locally.

Charles Tang, who founded the Brazil-China chamber of trade and industry 25 years ago, vividly recalls the difficulties he encountered when the Bank of Boston first sent him to Brazil in the mid-1970s. He was particularly frustrated with what he said was some Brazilians' lack of punctuality.

"I banged my head against the wall for a year or so before I really got into Brazilian culture," he said.

Tang said he soon learned the Brazilian way — essentially to relax, realize nobody is going to arrive at a meeting on time and understand that informality doesn't necessarily equate with a lack of professionalism. He realized that the differences in style ultimately didn't affect the bottom line.

In fact, data from the U.S.-based business group The Conference Board show Brazilian workers were 30 percent more productive last year than their Chinese counterparts. Chinese worker productivity, however, grew at more than twice the annual rate than that of Brazilian workers.

In the past, Chinese firms circumvented such complications by importing thousands of their own workers, a practice Brazilian officials don't tolerate, said Antonio Barros de Castro, a former president of Brazil's state development bank who has closely studied China's rise.

"They know that here they have to work mostly with Brazilian laborers, the government has made that clear," Barros said. "In places like Africa, they resolved work force problems by ignoring the problem, by working with Chinese workers."

Despite efforts to build better working relationships between the two countries, distrust was still rife on a recent afternoon in the Liberdade neighborhood of central Sao Paulo.

Celio Lin, 29, sat by the cash register of his family's busy Chinese restaurant complaining about the Brazilian staff, while his mother checked on the line cooks by tugging on their coats and attentively peeking into pots of soup and noodles.

"Brazilians want vacations for I-don't-know-what, they want a day off for I-don't-know-what, they want to go to the beach, to relax," Lin said. "The beach is obviously pleasant, but if you send a Chinese man to the beach, he'll go there to sell something!"

Wal-Mart Names Senior China Bosses

Source: Wall Street Journal  By Laurie Burkitt

BEIJING—Wal-Mart Stores Inc. moved quickly to name successors for two former top China executives, whose resignations earlier this month rattled the retail giant as it strives to gain market share in one of its strategic growth markets.

The world's largest retailer tapped Mario-José Medina to head its financial operations in China, according to a company statement issued Friday. Mr. Medina joined the U.S. company in 2007 and has served as the chief financial officer of Wal-Mart Puerto Rico and most recently of Wal-Mart Chile. Del Sloneker, a former senior vice president, will become chief operating officer in China, the statement said.

"Both executives bring with them years of experience and a solid understanding of the retail market in China," Ed Chan, chief executive of Wal-Mart's China operations, said in the written statement.

The previous chief financial officer, Roland Lawrence, and chief operating officer, Rob Cissell, resigned in mid-May "to explore other opportunities," a spokesman for Wal-Mart said at the time. Messrs. Lawrence and Cissell couldn't be reached for comment.

Wal-Mart, based in Bentonville, Ark., said last week that it plans to delay the closing of a deal to acquire Chinese megastore Trust-Mart until January 2012, the second delay since it announced last year that it would take full ownership of the discount chain. Wal-Mart bought a 35% stake in Trust-Mart, owned by Bounteous Co., in 2007. Finalizing regulatory approvals has taken additional time, a spokeswoman for Wal-Mart said, declining to provide further details. She added that the resignations weren't related to the Trust-Mart deal.

Wal-Mart, which operates more than 330 outlets in China, is aiming to expand operations in smaller Chinese cities, where disposable income is ballooning, Mr. Chan said at a meeting for investors in March.

The company's China sales totaled $7.5 billion last year, accounting for just 2% of its $420 billion in global revenue. The company didn't break out China revenue in 2009.

Wal-Mart is relying on emerging markets, including China, Mexico and Brazil, to supply growth as U.S. sales falter. Its first-quarter global revenue increased 4.4% from a year earlier to $104.19 billion amid a 12% rise in international sales. U.S. sales edged up 0.6%, while sales at stores open at least a year fell 1.1%.

Wal-Mart is battling to gain a greater share in China's crowded retail landscape. It had a 5% market share of megastore sales in 2010, according to Cambridge, Mass., consulting firm Monitor Group. Competitor Carrefour SA of France, which operates 180 stores in China, also had a 5% market share. Market leader RT-Mart International Ltd. of Taiwan held 8%, while regional chains and mom-and-pop shops occupied 73%.

Have You Heard...

• Report: Some areas in China under martial law after protests
• U.S. says China yuan undervalued, but not manipulated
• US senators urge Obama on sale of F-16 C/Ds to Taiwan
• Disney Shanghai Gets Loan From Chinese Banks

Report: Some areas in China under martial law after protests

Source: By Eve Bower, CNN

In an apparent response to days of protests, Chinese authorities have declared martial law in parts of the northeast's inner Mongolia autonomous region, according to Amnesty International.

The region has long been the scene of ethnic tension between Mongolians, who have lived in the area for centuries, and the Han people, who arrived in larger numbers after the founding of the People's Republic of China in 1949. Han people are the majority ethnic group in China.

In the report released Friday, Amnesty International detailed protests in and around the city of Xilinhot.

CNN contacted officials in the affected areas, but they declined to comment.

According to the human rights organization, 2,000 Mongolian students took to the streets Wednesday in Xilinhot, in a show of solidarity with an ethnic Mongolian herder by the name of "Mergen," who was killed earlier this month when he was hit by a coal truck that was driven by ethnic Hans.

Amnesty reported that the drivers of the coal truck are both in custody of Chinese authorities.

In a clip posted to YouTube that purports to show that same demonstration, a large group of people, many of whom are young people wearing school uniforms, can be seen walking through the streets.

The students were marching toward the building that houses the regional government, shouting, "defend our land and defend our rights, according to the New York-based Southern Mongolian Human Rights Information Center. The group refers to the area as "southern" -- not "inner" -- Mongolia, and would like to see the region achieve independence or merge with Mongolia.

CNN could not independently verify the authenticity of the clip.

According to Amnesty, the protests, which started Monday, have been largely peaceful, but at least 18 people were reported injured in confrontations with police northeast of Xilinhot, in Right Ujimchin Banner, or Xi Wu Qi in Mandarin.

"The protests are a wake-up call for the authorities. As in other minority areas, authorities must start heeding the message rather than attacking the messengers," said Catherine Baber, Amnesty's Asia pacific deputy director.

Protesters say their culture is under threat as pastoral herders are pushed out from the grasslands and forced to move to the cities, or to places where animal grazing is not possible, according to Enghebatu Togochog, Director of the Southern Mongolian Human Rights Information Center.

He traces the motivation for recent demonstrations to the Chinese central government's efforts, in recent years, to expand coal mining and production in areas that have traditionally been used for grazing.

The demonstrations have been difficult for international media to cover. Jonathan Watts, a correspondent for The Guardian, reported on his Twitter account that police forced their way into his hotel room in Xilinhot "for questioning" at 4:30 a.m. Thursday

"It would be funny if it wasn't for (the) potential hassle for the local people I spoke to. That's (a) major concern," he tweeted later that day.

The next day, he added, "am fine, but still fuming about being woken by two cops standing over my bed at 4:30a.m. Tough to be suitably indignant while naked & groggy."

Watts reported that, as of Thursday, Xilinhot was "not closed," but the site of the Mongolian herder's death was blocked.

On China's social media, talk about the protests was limited. On the popular microblog site Sina Weibo, the search terms "martial law," "Xi Wu Qi" and "Mergen" were all blocked on Friday night.

As is common when sensitive terms are blocked within the Chinese firewall, the result of searching these terms was "in accordance with the relevant laws and policies, the search results cannot be displayed."

U.S. says China yuan undervalued, but not manipulated

Source: Reuters By Doug Palmer

WASHINGTON (Reuters) - The Treasury Department ruled on Friday China was not manipulating its currency to gain an unfair trade advantage, but said Beijing still needs to allow the yuan to rise much faster in value.

Although the Obama administration has often used blunt language to warn China over its currency practices, the semiannual report issued by Treasury on Friday maintained its practice of avoiding the harsher step of naming it a currency manipulator.

The department said it concluded China did not meet the U.S. legal definition of a currency manipulator due to the appreciation of its currency -- known as the yuan or renminbi -- since June 2010 and recent Chinese statements that it would continue to promote exchange rate flexibility.

But a number of factors, including China's continued rapid accumulation of dollar reserves and a projected widening of its current account surplus, "all indicate that the real effective exchange rate of the renminbi remains substantially undervalued," the department said.

"Treasury's view ... is that progress thus far is insufficient and that more rapid progress is needed," the department said in the report.

The report had originally been due on April 15 but was delayed ahead of a key meeting with senior Chinese officials in Washington earlier this month. China says it is moving to revalue the yuan, but will proceed at its own pace.

The yuan closed at 6.4917 to the dollar on Friday, little changed on the day, but up 5.15 percent since it was loosened from a peg to the dollar in June 2010.

Treasury's decision came as no surprise, even though the U.S. trade gap with China hit a record $273 billion in 2010.

President Barack Obama's Democratic administration has declined to name China as a currency manipulator in five consecutive reports now, following the pattern set by the Republican administration of former President George W. Bush.

Many U.S. lawmakers and import-sensitive manufacturers, such as steel and textiles, claim that China's currency is undervalued by as much as 40 percent, giving Chinese companies an unfair price advantage in international trade.

But Erin Ennis, vice president of the U.S.-China Business Council, which represents roughly 230 American companies that do business in China, said Treasury made the right call.

"While USCBC has advocated repeatedly that China should allow its exchange rate to better reflect market forces, designating China as a 'manipulator' would achieve nothing," Ennis said.

Congress has threatened for years to pass legislation to pressure China to revalue its currency, but so far no bill has reached the president's desk.

Commerce Secretary Gary Locke, tapped to be the next U.S. envoy to China, told the Senate Foreign Relations Committee on Thursday that a more flexible Chinese currency was key to U.S.-China economic rebalancing.

"We are seeing movement on the currency," he said, referring to a roughly 5 percent increase since China slightly loosened the yuan peg to the dollar in June 2010.

"We believe it should float more and faster," Locke said.

By preventing the yuan from rising more rapidly, China imposes an unfair burden on other emerging economies with more flexible exchange rates and eliminates a tool it could be using to counter domestic inflation, Treasury said.

Derek Scissors, a research fellow with the Heritage Foundation, said he agreed with Treasury's decision not to cite China because it should be focused on other Chinese policies that are much more damaging to the United States.

However, the department has turned the report into a "minor joke" by repeatedly delaying its release, he said.

"It is no longer ever issued when scheduled because that time is always wrong for some reason. ... At this point no one should take the report seriously," Scissors said.

Altogether, Treasury reviewed the exchange rate practices of 10 major trading partners in the semi-annual report. It concluded none was manipulating their currency to gain an unfair trade advantage or to prevent an effective balance of payments adjustment.

US senators urge Obama on sale of F-16 C/Ds to Taiwan

Source: Want China Times

Nearly half of the members of the US Senate sent a letter to President Obama on Thursday (May 26) urging the sale of F-16 C/D fighters to Taiwan in accordance with the Taiwan Relations Act (TRA), which requires the US to provide the island with the arms needed for its own defense.

The letter, initiated by Senate Taiwan Caucus co-chairmen Robert Menendez (D-NJ) and James Inhofe (R-Okla), said the Senate is very concerned about the growing military imbalance across the Taiwan Strait due to the unprecedented scale of China's military buildup.

It urged Obama to move quickly to notify Congress of the sale of 66 F-16 C/D aircraft that Taiwan has requested in order to modernize its air force and maintain cross-strait peace and stability.

Menendez said earlier the same day at a hearing on Commerce Secretary Gary Locke's nomination for the post of ambassador to China that 45 of his Senate colleagues signed the letter.

Saying it was "very rare" for so many senators across party lines to send such a letter, Menendez urged Locke to be an advocate within the Obama administration for the sale of the jet fighters to Taiwan.

Menendez further said he is extremely concerned as China ramps up its military spending while the United States has put off a decision on selling new fighters to Taiwan.

"We will leave Taiwan in a position that is, I think, indefensible at the end of the day," he added.

For his part, Locke said that no decision has been made on the fighter deal but that the US remains firm in its commitment to Taiwan's defense needs.

"The United States stands with Taiwan to ensure that it can defend itself and that its self-defense capabilities are never eroded," Locke said.

The US government switched diplomatic recognition from Taipei to Beijing in 1979 but Congress at the same time approved the TRA, which requires the US government to provide Taiwan with defensive weapons to safeguard its own security.

Among the senators who signed the letter were Senate Committee on Homeland Security and Governmental Affairs Chairman Joe Lieberman, Senate Banking Committee Chairman Tim Johnson, Senate Committee on Commerce, Science and Transportation Chairman Jay Rockefeller, Senate Republican whip Jon Kyl and many other senior senators, as well as ten first-term senators.

Jason Yuan, Taiwan's representative to the United States, said the support shown by nearly half of the 100-member Senate for the F-16 C/D sale to Taiwan signifies the importance Congress attaches to the TRA.

Expressing his gratitude for the senators' support, Yuan further said he is confident that the US will not back off from its obligations under the act.

Disney Shanghai Gets Loan From Chinese Banks

Source: Wall Street Journal By Jean Yung

SHANGHAI – Walt Disney Co.'s Chinese government-owned business partner, Shanghai Shendi Group Co., has agreed on a syndicated loan for an undisclosed amount with 12 Chinese banks for the construction of Shanghai Disneyland, the official Xinhua News Agency reported Friday.

Xinhua said the lead arrangers are China Development Bank Corp., Shanghai Pudong Development Bank Co., and Bank of Communications Co.

Co-lead lenders are Industrial and Commercial Bank of China Ltd. Agricultural Bank of China Ltd., China Construction Bank Corp. and Bank of China Ltd.

Other participating banks are Export-Import Bank of China, Bank of Shanghai Co., China Citic Bank Corp., Hua Xia Bank Co. and Shanghai Rural Commercial Bank Co., Xinhua said.

Disney's first theme park in mainland China will be part of a bigger $4.4 billion Disney resort that is to include hotels, restaurants, retail shops and other amenities.

The deal to build the resort, recently approved by the Chinese central government, gives 43% of the project to Disney and 57% to a trio of state-owned businesses, collectively known as the Shanghai Shendi Group. The project's costs--and profits--are to be divided along those proportions.

Disney is to operate the theme park, which broke ground in April and is expected to take five years to complete.

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South China Sea Oil Rush Heightens Conflict Risk as U.S. Emboldens Vietnam

Source: Bloomberg News  By Daniel Ten Kate  | Photo: WSJ

Vietnam and the Philippines are pushing forward oil and gas exploration projects in areas of the South China Sea claimed by China, sparking a fresh clash in one of the world’s busiest shipping corridors.

State-owned PetroVietnam’s partner Talisman Energy Inc. (TLM) aims to begin drilling next year in a separate block that China awarded to a U.S. rival and has protected with gunboats. Ricky Carandang, a spokesman for President Benigno Aquino, said the Philippines plans to exploit a field in an area of the sea where Chinese patrol boats harassed a survey vessel in March.

The neighbors of China, which has Asia’s largest military, were emboldened after the U.S. asserted interest in the waters last year, said James A. Lyons Jr., a former U.S. Pacific Fleet commander. A surge in crude prices to near $100 a barrel also spurred Vietnam and the Philippines to pursue the oil needed to meet economic growth targets of at least 7 percent this year.

“With the economic situation in the Philippines and Vietnam, the exploration for oil and gas makes good economic sense,” said Lyons, who led the Pacific Fleet from 1985 to 1987 and is now president of Lion Associates LLC, a Warrenton, Virgina-based business advisory company. “They depend on the United States to provide the overarching security umbrella.”

Cut Cables

Vietnam protested to China over an incident yesterday in which it says three Chinese vessels cut the survey cables of a ship belonging to Vietnam Oil & Gas Group, more commonly known as PetroVietnam. The confrontation occurred inside lot 148, 120 nautical miles off the coast of Phu Yen province, the Ministry of Foreign Affairs in Hanoi said in a faxed statement. Lot 148 is also claimed by China.

China asserts “indisputable sovereignty” over most of the South China Sea, including oil and gas fields more than three times further from its coast than they are from Vietnam. Exploration in waters under China’s jurisdiction infringes its “sovereignty and interests and is illegal,” the Foreign Ministry in Beijing said May 12.

Maritime disputes may be discussed at an annual security forum in Singapore starting June 3 that will include a speech from Chinese Defense Minister Liang Guanglie. At last year’s event, Defense Secretary Robert Gates said the U.S. opposed efforts to “intimidate” companies operating in the sea.

The Philippines protested April 5 to the United Nations that a Chinese map laying out its claims had “no basis under international law.” Taiwan, Malaysia, Indonesia and Brunei also have overlapping claims with China.

‘Legitimate Licenses’

Talisman, Canada’s third-largest oil company by market value, will start exploratory drilling about 1,000 kilometers (625 miles) from China’s Hainan island, located off its southern coast, after a seismic program this year, according to a corporate presentation on its website this month. The Calgary- based company is partnered with Hanoi-based PetroVietnam.

“We have what we believe are legitimate licenses,” John Manzoni, Talisman’s chief executive officer, said in a May 4 interview. The company plans to push ahead “at a normal pace.”

Talisman’s blocks 133 and 134, about 300 kilometers from Vietnam, are known as WAB-21 in China -- which in 1992 awarded Crestone Energy Corp. the site, now owned by Houston-based Harvest Natural Resources Inc. (HNR)

China “did indicate it was very concerning to them and that they would intervene in some way,” Harvest CEO James Edmiston said in response to questions about Talisman’s license in an August interview.

Ordered to Leave

Exxon Mobil Corp. (XOM) plans an exploratory well off Vietnam this year, Mark W. Albers, a senior vice president, said in a March 9 meeting with analysts. The Irving, Texas-based company is developing Block 119, state-run Vietnam News reported March 31, without saying where it got the information. Part of the site sits in waters claimed by China.

Details of exploration programs are confidential, Exxon Mobil spokesman Patrick McGinn said by e-mail.

Two Chinese patrol boats in March ordered a ship doing seismic work for Forum Energy Plc (FEP) to leave an area near disputed waters about 250 kilometers west of the Philippines’ island of Palawan, Philippines Army Lieutenant General Juancho Sabban said at the time. The Chinese left the area after two military aircraft were deployed, he said.

The contract area for Chertsey, U.K.-based Forum Energy lies in waters China, Vietnam and the Philippines agreed to explore jointly in an arrangement that lapsed in 2008. Majority owned by Manila-based Philex Mining Corp. (PX), Forum plans to drill wells there, it said in a March 15 statement.

The field the Philippines plans to exploit is a “very important” part of Aquino’s plan to cut oil imports, spokesman Carandang said by phone May 16.

‘Not Bullied’

American policy makers have put forward the U.S., which has defense treaties with the Philippines and Thailand and guarantees Taiwan’s security, as a counterbalance to China. More than half of the world’s merchant fleet by tonnage passes through the South China Sea each year, according to GlobalSecurity.org, a research group in Alexandria, Virginia.

Secretary of State Hillary Clinton declared a “national interest in the freedom of navigation and unimpeded lawful commerce” in the waters at a regional meeting in Hanoi in October.

That statement gave Southeast Asian nations “a little more confidence,” said Michael Green, a former Asia specialist at the U.S. National Security Council who is now at the Center for Strategic and International Studies in Washington. “It took somebody to say ‘we’re not going to be bullied.’”

China’s Shrinking Reserves

The U.S. navy has patrolled Asia-Pacific waters since World War II. China has bolstered its forces over the past decade, procuring nuclear-powered submarines and developing an aircraft carrier, according to a Defense Department report in August.

In a 1988 skirmish over the Spratly islands, China killed more than 70 Vietnamese troops and sank several ships, according to the U.S. Energy Information Administration. In 1994, Chinese warships were sent to stop Vietnamese drilling.

Chinese studies cited by the EIA suggest the waters sit atop more than 14 times BP Plc estimates of the country’s oil reserves and 10 times those for gas. China’s oil reserves have shrunk almost 40 percent since 2001 as the economy expanded 10.5 percent a year on average, according to data compiled by Bloomberg.

Vietnam’s domestic gas demand is set to triple by 2025, according to World Bank estimates. The Philippines plans to boost hydrocarbon reserves by 40 percent in the next two decades to reduce its almost total reliance on imports, according to a department of energy plan.

‘Tough Political Decision’

Going it alone may be a negotiating tactic, said Marshall Mays, director of Emerging Alpha in Hong Kong. China and its neighbors are likely “working on the assumption that a negotiated split of revenues” will be agreed, he said.

The 10-member Association of Southeast Asian Nations has made little progress in negotiating a binding code of conduct for the sea with China since 2002.

“By agreeing to a joint exploration you ipso facto recognize the legitimacy of the claims of the other countries,” said Ralf Emmers, a professor at the S. Rajaratnam School of International Studies in Singapore. “That’s a very tough political decision.”