China will never start a currency war, Premier Li said in World Economic Forum 2015 (Summer Davos)

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Dialogue 09/15/2015 China-ASEAN ties

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Summer Davos

Premier: China's economy moves in positive direction 

The future of China's economy is bright thanks to a solid base and strong impetus, said Premier Li Keqiang at the opening ceremony of the Summer Davos meeting in Dalian, northeast China, on Thursday.

Li said it was not blind optimism because China had the advantages of huge potential and inner tenacity.

Major programs to promote new industrialization, information technology, urbanization and agricultural modernization are now in progress, which will contain domestic demand.

China's variety of industries guaranteed an economy characterized by resistance and self-recovery, Li said.

Structural reforms, to realize sustainable economic expansion, have been successful, the premier said.

As the largest developing country in the world, China will continue to roll out measures to maintain medium-high growth with higher efficiency and quality.

Li highlighted the reform of the financial sector, stressing the importance of market and laws in fostering a fair, transparent and stable capital market as well as improving risk controls.

China has the support of high savings and large foreign exchange reserves, and reforms will improve the usage of such resources to support the real economy. Besides cutting interest rates and reserve requirement ratios, China has scrapped the interest rate ceiling for both loans and deposits, and will allow more private capital to enter the sector as well as boost private banks, financing assurance and financial leasing, the premier said.

He also mentioned the recent changes to the yuan's central parity system, stressing that the move had nothing to do with boosting exports, and the country is unwilling to see a currency war, as it will be harmful to China.

The inter-bank foreign exchange market will be opened to foreign central banks, and a cross-border RMB payment system will be established by the end of 2015 to improve the yuan offshore market, Li said. - (Xinhua)

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Asian voice carries greater weight now

Select head: Jin Liqun is the president-designate of the AIIB. – EPA pic >>

CHINA’S setting up of the AIIB (Asian Infrastructure Investment Bank) is a most significant event in contemporary history.

It represents another shift eastwards in the global balance of power, particularly from the US to China. However, other Asian – particularly Asean – countries have also to reflect on what it means to them.

The US AIIB dilemma is a useful point over which to ponder. It has very little to do with transparency, governance and environment. It has to do with the power equation with China. Predominance and control.

Clearly the US is struggling to come to terms with China’s rise. This is not to say America opposes it, but it is a hard thing for the US to swallow, to play second fiddle. And the AIIB is the first big test of that adjustment.

With the launch of the AIIB, China has also shown how it can make good things happen with support not just from Asia, but also beyond. It is becoming a global power with considerable reach and influence.

Controlling about 30% of the capital of the AIIB China, as the promoter, has shown itself as a leader that can control the future of other countries. How Beijing exercises that leadership remains to be seen, but insofar as member state expectations are concerned, they see Asian countries for the first time in living memory controlling an international institution of considerable weight - and with it their economic prospects.

To sustain Asian economic growth trajectory, US$8 trillion of national infrastructure development is needed up to 2020, not counting US$290bil in regional connectivity infrastructure. Indonesia alone needs US$230bil, Myanmar US$80bil. With the potential of the US$100bil AIIB, plus the US$40bil Silk Road Fund for “One Belt One Road”, there is for the first time some good hope of meeting this need.

The US, in its difficult adjustment, points to potential future problems rather than the promise of the AIIB. How “lean, clean and green” will the AIIB be? As if the US dominated Bretton Woods institutions have been pristine, but that does not mean it is a question that should not be asked about AIIB.

So, as the Asian countries get in line, eyes glued on the lolly, they should not hold back from asking questions and seeking answers on how the AIIB is going to operate.

Another issue raised primarily by the Americans is over procurement and personnel appointments. Again, as if the IMF, World Bank and ADB did not come with strings attached by largely senior Caucasian officials from the institutions. But, having suffered from such suppression in the past, Asian countries should want to know what the future holds with the AIIB on procurement and personnel.

With the AIIB headquartered in Beijing and China putting up most of the money, it is only to be expected there will be a Chinese bias on both scores. The president-designate Jin Liqun, however, is suave and affable, better than some of the boorish heads past and present of the Bretton Woods institutions. Nevertheless, it is not undignified to ask about other appointments and their distribution. This horse-trading occurs at international level.

On procurement, Chinese companies are already assuming they will have first-mover advantage contractual right – but this does not necessarily reflect what the Chinese government thinks or mean that the AIIB will be biased for them.

Indeed, Chinese Prime Minister Li Keqiang during his visit to France this week admitted China lacked advanced technologies and looked forward to “form joint ventures or cooperatives” with the developed world. This was stated on the occasion of a historic deal with France to carry out joint projects in Asian and African countries.

And it follows a considerable period during which China was intent on muscling out developed countries in its economic expansion to African and some Asian countries.

Thus, China’s tendency of blowing hot and cold has been a problem in gauging Beijing objectives and mode of operation.

A former US ambassador to the ADB recently related how the poorest Pacific countries failed to receive Chinese support at board level for projects as they had recognised Taiwan. Again, not that the US was ever reticent about such political power play.

Still, it would not be remiss to ask how far China would penalise countries on the wrong political wave-length, even if it would be too much to expect Beijing to support a state opposed to and in conflict with it.

How would the Philippines and Vietnam score in the AIIB on the Chinese political barometer given their adversarial position in the South China Sea dispute? Indeed, the other claimant states, such as Malaysia and Brunei. Of course, if they are willing to become vassals of the Chinese state in return for largesse, it is entirely up to them. But it is not to be expected the proud sovereign states of South-East Asia would stoop to this, but who knows.

In the AIIB, Asean states will each have a very small stake, even if Indonesia might be among the top ten shareholders. Together they might represent something a little more significant. Would they then not want to develop a common position in areas of infrastructure and connectivity development that would be of shared benefit?

Asean leaders do not seem to discuss strategic issues such as, now, the meaning and significance of the AIIB to future regional order. Generalised, but not inaccurate, assertions are made about its good in terms of infrastructure and economic development. But there is more to it than that.

When they meet, Asean leaders follow a well-scripted agenda that does not include a free flow of discussion. Foreign ministries often are hell-bent on avoiding this, because they think strategy and state secrets must at all cost be protected. They should give the leaders greater credit than assumed stupidity. These discussions must take place beyond other broad issues, such as the Middle East etc, or immediate issues, such as refugees and migrants.

Strategic issues are so critical to Asean’s future place in the regional order. Deficient discussion, or avoidance of it altogether, erodes Asean role in the evolving system. More time must be set aside at Asean summits for discussion on these issues.

The economic ministries too must not just look at issues and targets one by one and in a rush without presenting the bigger picture. There is great strategic content in the minutiae which is hardly highlighted or discoursed.

If Asean meetings and summits go on like this, community or no community, the region will miss the wood for the trees.

Comment by Munir Majid The Star/Asian News Network

Tan Sri Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.


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The center of world economic gravity moving east as AIIB shows

Chinese President Xi Jinping (C, front) poses for a group photo with the delegates attending the signing ceremony for the Articles of Agre...

The center of world economic gravity moving east as AIIB shows

Chinese President Xi Jinping (C, front) poses for a group photo with the delegates attending the signing ceremony for the Articles of Agreement of the Asian Infrastructure Investment Bank (AIIB) at the Great Hall of the People in Beijing June 29, 2015. [Photo/Agencies]

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Financial leaders of 57 states gathered in Beijing on June 29 to sign the agreement for establishing the Asian Infrastructure Investment Bank (AIIB), expected to become the region’s largest investment bank in the 21st century.

Seventy years ago, the World Bank was established, led by the US and its close western economic and political allies, as the first global financial institution. Along with the World Trade Organization and the International Monetary Fund, the western powers have commanded world financial and trade order for more than half a century. Even the Asian Development Bank (ADB), established 20 years later after the World Bank, has been largely controlled by Japan, backed by the US and other western economic powers.

China benefited from the global and regional development and financial institutions in the initial stage of economic reform and openness. As China expanded its economic strength it has aggressively contributed to financing them. However, despite its financial contribution to these institutions rising significantly China still has limited influence over management and operation.

China’s desire to influence world financial order and its inability to do so have been due to the governance structure of these institutions where China is not only a minority shareholder but its voting rights are marginalized.

Since the world financial crisis, triggered by the US subprime mortgage crisis and the EU’s debt problem, China’s relative importance in the world economy has risen rapidly. By 2010, it surpassed Japan to become the world’s second largest economy, and by 2012 it overtook the US to become the world largest trading nation as well as the largest producer and consumer of motor vehicles.

Apart from China’s second-to-none manufacturing capability, it holds the world’s largest foreign exchange reserves which have to be used effectively so they can generate a financial return and make appropriate contributions to infrastructural development in Asia, the largest and fastest growing region among all continents.

In addition, China, India, Russia and other initial AIIB member states have the financial strength and managerial confidence to create a new financial institution similar to the World Bank and ADB. For the initial $100 billion fund to be pledged, China has agreed to contribute 29.7 percent, India 8.3 percent, Russia 6.5 percent, Germany 4.4 percent and South Korea 3.75 percent. Other major contributors include the UK, Australia and Indonesia.

Both the US and Japan have not expressed their intention to join AIIB although many US political and economic allies have come to Beijing to sign the agreement, particularly the UK, Germany, France, Italy and Australia. The diversion of these countries' attention away from the US to China and Asia not only reflects ever rising business opportunities in Asia, but also the relative decline of the US-led western influence on the global economy and financial order.

The apparent shift of economic gravity from the West to the East reminds me of my personal experience in the past. Thirty year ago, I was awarded a World Bank scholarship from a university in Hainan to study in the UK in 1985. At that time, the salary of a Chinese university lecturer was less than 1 percent of his UK counterpart. Today, all the top Chinese universities are able to pay significantly more than the equivalent UK or US salaries to attract overseas talents to work in China. In addition, numerous university teachers in China can easily apply for more research funding than their western counterparts.

Although China is still a developing economy by definition, it has exceeded many western powers in a number of areas such as equipment manufacturing, high-speed railways, nuclear power, construction, infrastructure engineering and space technology. In 2014, Chinese scientists produced the second largest number of high-impact academic journal papers in the world.

China started the first high speed railway 30 years later than Europe, but by 2014, has built 16,000 km of high-speed tracks, twice as long as the total length of all the EU countries put together. BYD, one of China’s private auto makers, has marched to California to build electric buses for the local market.

India is racing to follow in China’s footsteps. Its economy was growing as fast as China in 2014 and is set to overtake China’s growth in 2015. However, India’s transportation systems are so poor that they are evident constraints on the country’s development. It is expected that India will require $1 trillion to improve its transportation systems, and the establishment of AIIB will be helpful to its development needs. Other Asian countries face similar problems of investment for roads, railways, airports, seaports, telecommunications and internet.

AIIB will become a potent propeller to accelerate economic and social development in Asia. Along with the Silk Road Fund and the Brics Bank, China will use AIIB to implement its “one- belt and one-road” regional and global development strategies.

The Silk Road Economic Belt and the 21st Century Sea Silk Road will cover more than 60 countries surrounding China, and many will benefit from China’s outward-looking investment and development strategies. Under Xi Jinping’s leadership, China has gained increased support from neighbouring countries in Asia and many others in Latin America, Europe and Africa, thanks to its persistent foreign policy of peaceful cooperation, mutual benefit and common prosperity.

The future operation of the AIIB may face many challenges and uncertainty, but the AIIB has signified the rapid emergence of China, India and other developing and transitional economies. The determination and confidence for success through the AIIB and other newly created financial institutions suggest that the world financial and political order will be different from now, as the overwhelming dominance of the World Bank and ADB in Asia and the world financial systems will inevitably decline in the future.

By Shujie Yao (chinadaily

The author is a professor of economics, Chongqing University and the University of Nottingham.

Through AIIB, China can learn to lead

Representatives of 57 prospective founding members of the Asian Infrastructure Investment Bank (AIIB) gathered in Beijing on Monday for the signing ceremony, with 50 of them endorsing the AIIB agreement. As the largest shareholder, China takes a 30.34 percent stake and correspondingly has a voting share of 26.06 percent, which actually enables China to wield a veto on major issues, such as electing the bank's president. This is a moment that our nation could never have imagined just 10 years ago.

The move forward in the AIIB, however, seemed to have no bearing on people's feeble confidence in China's stock market, as shares plunged amid a flurry of automatic sell orders on this remarkable day.

However, the country's fundamental confidence has been elevated to a new stage. This is the first time ever that China is leading an international multilateral bank. Its influence is prominent and far-reaching, and it carries more profound significance than successfully hosting an Olympic Games.

It took China less than six months to complete the signing of the AIIB agreement and this efficiency shocked the world. Although China barely has any experience in this regard, it is proof of its excellent capacity to learn and of its eager pursuit of fairness and equity. The first batch of 50 signatories is far more than the number of founding members of the Asian Development Bank (ADB).

China's attempt to lead the international financial institution may have been forced by unfair treatment in other institutions or China may want to test experiences with the AIIB as we are still a developing country. But from now on, we must shoulder our responsibilities.

Of these responsibilities, the foremost is to bear criticism as numerous Western observers are waiting to find faults with and go bearish about China. But regardless of what they say, China must stick to its current trajectory.

In recent years there have been fewer protests by China, but frequent ones against Beijing overseas. China needs to stick to its major principles, but it does not need to be entangled in minor issues.

US allies that have joined the AIIB do not mean to flatter China, but they see the benefits will outweigh their relations with Washington. With GDP at the $10-trillion level, can China build more platforms of common interest and convince the outside world that working with China always means a win? This serves as the key to China's further rise without encountering strong resistance from the outside.

Compared with the IMF, World Bank and the ADB, the AIIB indicates that the environment where China is rising may not be as terrible as we conceive. We must grasp the opportunities.

Source: Global Times Editorial

50 nations sign AIIB deals - China wields veto powers, enjoys 26% voting rights

China's role as the largest shareholder with significant voting rights in the Asian Infrastructure Investment Bank (AIIB) will make the country shoulder more responsibility in turning the bank into a high-quality financial institution to complement existing multilateral development banks, experts said Monday.

A total of 50 prospective founding members of the AIIB on Monday signed the bank's articles of agreement (AOA) in Beijing, which outlines the bank's objectives, operating principles, governance structure and decision-making mechanisms.

Seven members, including Denmark, Thailand and the Philippines, failed to sign the AOA on Monday. China's Ministry of Finance said they can sign the agreement anytime this year.

"The signing of the AOA is a milestone in the establishment of the bank," Vice Minister of Finance Zhu Guangyao told the Global Times Monday on the sidelines of a forum in Beijing.

The bank was proposed by President Xi Jinping in 2013 during his visit to Indonesia.

Xi said on Monday that China's development would not have been possible without Asia and the world.

"As China grows stronger, we are willing to make our due contribution to world development," he said.

Zhu said the AIIB's establishment process has outpaced other multilateral development banks, and its objectives have won support from members within and outside Asia.

"We hope AIIB members' legislatures will approve their AOA membership as soon as possible and get the bank's operations going by the end of the year," he added.

Voting shares

The AIIB will have an authorized capital of $100 billion, and Asian members are required to contribute up to 75 percent of the total capital, leaving the rest to non-Asian members, according to the AOA.

China is the bank's largest shareholder with a 30.34 percent stake. This gives China 26.06 percent of the voting shares, also the largest, within the multilateral financial institution.

"It is within expectations given China's huge economy, and it also means China needs to shoulder more responsibility in building the AIIB into a high-quality bank," Ruan Zongze, vice president of the China Institute of International Studies, told the Global Times Monday.

According to the AOA decision-making mechanism, China has effective veto powers over major decisions because it has voting shares of over 25 percent.

China does not seek veto powers in the AIIB, Vice Finance Minister Shi Yaobin told the Xinhua News Agency Monday. He said the country's stake and voting shares in the initial stage are natural results of current rules, and may be diluted as more members join.

"Being a major Asian economy, Japan's entry will dilute China's stake and voting shares more than any other country, but so far we have not seen such a sign," Ruan said.

He said he believes the AIIB is not likely to approve a large number of new members in its initial stage. Instead, it will focus on rolling out investment projects.

Owning veto powers does not mean that China will use these powers in AIIB's future operation, Jia Qingguo, dean of the School of International Studies at Peking University, told the Global Times Monday.

Jia said China might use the powers only if the projects would seriously hurt China's interests or are not in keeping with the bank's objectives, adding that the possibility for such conditions is low.

After the signing of the AOA, the bank's senior management will be appointed before it starts operations.

The bank's headquarters will be located in Beijing, and its president will be selected through an open, transparent and merit-based process, according to the AOA.

The AIIB's future investments will focus on Asian infrastructure projects in the energy, power, transport and agricultural sectors that also meet environmentally friendly and energy-saving standards, Jin Liqun, secretary-general of the AIIB's interim multilateral secretariat, said at a forum held in Beijing over the weekend.

The Asian Development Bank said it believes Asia would need infrastructure investments worth over $8 trillion between 2010 and 2020.

"The AIIB will complement existing multilateral development banks to promote sustained and stable growth in Asia," Zhu said.

World Bank President Jim Yong Kim welcomed the signing of the AOA.

"More funding for infrastructure will help the poor, and we are pleased to be working with China and others to help the AIIB hit the ground running," he said in a statement on Monday.

- Song Shengxia contributed to this story

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Can Malaysia's household debt at 87.9% in 2014 be reduced to 54% ?

BEING a teenager, my granddaughter started to pick up interest on how the economy works, what are the real assets and liabilities in one’s financial planning. As the topic itself can be slightly “dry”, I made an attempt to discuss it in a way that was easier for her to digest.

“Our national household debt to GDP ratio edged up to 87.9% last year. Is the number alarming?” she asked one day.

“It depends. We have good debts and bad debts in life. For example, 10 years later, our new cars may have depreciated more than 80% and our new clothes would have been worn out. Those are liabilities. On the other hand, houses are assets as they will appreciate in the long run. Debts which are backed by appreciating assets are considered good debts,” I said.

As she nodded in agreement with my simple explanation of good debts and bad debts, her question has piqued my curiosity to look into the details of our household debt.

Overall, is our nation having more good debts or bad debts?

Bank Negara report shows that our household debt was at RM940.4bil or 87.9% of GDP as at end of 2014. Residential housing loans accounted for 45.7% (RM429.7bil) of total debts, hire purchase at 16.6%, personal financing stood at 15.7%, non-residential loans were 7.7%, securities at 6.5%, followed by credit cards and other items at 3.9% respectively.

At first glance, our residential housing loans were the highest among all types of household debts. However, a recent McKinsey Global Institute Report highlighted that in advanced countries, mortgages or housing loans comprise 74% of total household debt on average. As a country that aspires to be a developed nation by 2020, our housing loans that stand at 45.7% is considered low. In other words, we are spending too much on other depreciating items instead of appreciating assets like houses.

If advanced economies, which are usually consumer nations, have only 26% debts on non-housing loans, we shouldn’t have as high as 54% loans on items such as hire-purchase (which are mostly cars), personal loans, credit cards and others.

If we were to follow the household debt ratio of advanced economies, our housing loans of RM429.7bil should be at 74% of total household debts, and other loans should be reduced from 54% to 26%, i.e. from RM510.7bil to RM150.9bil. With such reduction, total household debt would be slashed significantly from RM940.4bil to RM580.6bil (existing housing loans plus reduced non-housing loans), the amount would be at 54.2% of GDP instead of 87.9%.

I am wondering why we can’t have a household debt to GDP ratio of 54.2% as illustrated above. Are we spending too much on depreciating items?

Non-housing loans comprise mainly borrowings for cars, personal loans and credit cards. Car value depreciates about 10% to 20% per year based on insurance calculation and accounting practice. Borrowings for personal loans and credit card are also likely to depreciate over time which can be dubbed as “bad debt”.

Perhaps it is time for the Government to introduce massive cooling off measures for non-housing loans in order to curb bad debt in our household debt.

According to our Deputy Urban Wellbeing, Housing and Local Government Minister, our homeownership rate currently stands at 50% and the Government strives to increase the number with more affordable homes. As a comparison, almost 85% of Singaporeans are homeowners.

We can expedite the above vision if more stringent measures are imposed on non-housing loans, it will free up more resources for household financial planning. The rakyat should be encouraged to secure a roof over their heads with effective execution of affordable housing policy by the Government.

It is time to re-look our debt categories and reallocate our resources appropriately. If we are willing to cut back on cars, clothes, shoes and other depreciating items, reducing a household debt to GDP ratio of 54.2% is not only an aspiration, but an achievable reality.

By ALAN TONG Food for Thought

And the more beneficial effect is, more rakyat will have the financial resources to own a house, which is both a shelter and an appreciating asset.

■ FIABCI Asia-Pacific regional secretariat chairman Datuk Alan Tong has over 50 years of experience in property development. He is also the group chairman of Bukit Kiara Properties. For feedback, please email feedback@fiabci-asiapacific.com.

 
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Contradiction blots Obama's legacy with outdated Cold War mindset

Obama insurance conference call providers Russia and the U.S. are sending rather contradictory signals about their relationship.

US President Barack Obama belittled Russia as a nation that "doesn't make anything" in an interview with the Economist on Sunday. He also said that the West must be "pretty firm" with China, as the latter will "push as hard as they can until they meet resistance."

Obama downplayed Russia's role in the international community by saying Moscow is unable to attract quality immigrants and Russia's population is shrinking and aging. He described US tensions with China as "manageable," but stressed that the West should be tough with China when China "breaches international norms," and show China "the potential benefits over the long term."

Condescending to China and Russia, Obama treats both nations separately. He wants to draw more Western attention to China, so there could be more efforts to contain China. Obama paying close attention to China resulted in his "rebalancing to Asia" strategy.

He hasn't shown much belligerence to China and Russia since he took office, but apparently, he lacks strategic insight and the power to control his government and be a good decision-maker. His advocacy is always ambiguous and easily misguided by some emergency issues. Diplomacy will not be a proud part of his legacy.

In the Middle East, the US withdrawal from Iraq under his leadership has not helped sort out the mess in the region. He won't be given a medal for the current situation.

In its relationship with Russia, the US wrongfully kept its momentum to squeeze Russia's strategic space and caused Moscow's intense countermeasures.

Washington and Moscow are now engaged in Cold-War-level tensions, and they will cost the US much resource and attention.

In US-China relations, Obama has also found it hard to fully achieve his "rebalancing to Asia" goals. When the new Chinese leadership proposed the concept of a new type of major power relationship, the Obama administration accepted the general idea, but hasn't accepted the connotations.

Obama has not made constructive contributions to China-US relationships. He cannot make landmark progress if he still clings to an outdated Cold War mindset.

In the next two years before his last term ends, Obama could make himself remembered by making breakthroughs in the Sino-US relationship.

He could work with his Chinese counterparts to work out a framework for both countries, which would influence the entire picture of international relations.

In the early years of Obama's administration, people were impressed by his less strident posture toward international affairs, and this is also why he was awarded the Nobel Peace Prize. But now he has become more self-contradictory.

Perhaps that's how the most powerful man plays his role, held back by many different forces. It seems that only recklessness and strident talk can make the US presidency function well, while forward thinking won't get anywhere.

Source: Global Times

Global bank profits hit US$920bil, China accounted for 1/3 total; Globalized RMB to stabilize world economy

LONDON: China's top banks accounted for almost one-third of a record US$920 billion of profits made by the world's top 1000 banks last year, showing their rise in power since the financial crisis, a survey showed on Monday.

China's banks made $292 billion in aggregate pretax profit last year, or 32 percent of the industry's global earnings, according to The Banker magazine's annual rankings of the profits and capital strength of the world's biggest 1,000 banks.

Last year's global profits were up 23 percent from the previous year to their highest ever level, led by profits of $55 billion at Industrial and Commercial Bank of China (ICBC). China Construction Bank, Agriculture Bank of China and Bank of China filled the top four positions.

Banks in the United States made aggregate profits of $183 billion, or 20 percent of the global tally, led by Wells Fargo's earnings of $32 billion.

Banks in the eurozone contributed just 3 percent to the global profit pool, down from 25 percent before the 2008 financial crisis, the study showed. Italian banks lost $35 billion in aggregate last year, the worst performance by any country.

Banks in Japan made $64 billion of profit last year, or 7 percent of the global total, followed by banks in Canada, France and Australia ($39 billion in each country), Brazil ($26 billion) and Britain ($22 billion),The Banker said.

The magazine said ICBC kept its position as the world's strongest bank, based on how much capital they hold - which reflects their ability to lend on a large scale and endure shocks.

China Construction Bank jumped to second from fifth in the rankings of strength and was followed by JPMorgan , Bank of America and HSBC .

ICBC, which took the top position last year for the first time, was one of four Chinese banks in the latest top 10.

Wells Fargo has this year jumped to become the world's biggest bank by market value, after a surge in its share price on the back of sustained earnings growth. Its market value is $275 billion, about $75 billion more than ICBC.

The Banker said African banks made the highest returns on capital last year of 24 percent - double the average in the rest of the world and six times the average return of 4 percent at European lenders.- Reuters

Globalized RMB to stabilize world economy

BEIJING, June 27 (Xinhua) -- The globalization of the yuan, or renminbi (RMB), will not only benefit the Chinese economy, but generate global economic stability, a senior banker has said.

The yuan did not depreciate during the 1997 Asian financial crisis or the 2008 global financial crisis, helping stabilize the global economy, Tian Guoli, chairman of the Bank of China, said at a forum in London last week, according to the Friday edition of the People's Daily.

China's economy ranks second in the world and its trade ranks first, so it is thought that use of the RMB in cross-border trade will be a mutually beneficial move for China and its trade partners.

The yuan has acquired basic conditions to become an international currency as China's gross domestic product took 12.4 percent of the world's total and its foreign trade 11.4 percent of the world's total in 2013, Tian said.

According to the central bank, RMB flow from China hit 340 billion yuan (55.74 billion U.S. dollars) in the first quarter of 2014, replenishing offshore RMB fluidity. The balance of offshore RMB deposits hit 2.4 trillion yuan at the end of March, 1.51 percent of all global offshore deposits. Offshore trade between the yuan and foreign currencies doubled in the first quarter from the fourth quarter of last year.

Analysts widely forecast five steps in RMB internationalization: RMB used and circulated overseas, RMB as a currency of account in trade, RMB used in trade settlement, RMB as a currency for fundraising and investment, and RMB as a global reserve currency.

Already, some neighboring countries and certain regions in developed countries are circulating RMB, indicating the first step has been basically achieved.

Data provider SWIFT's RMB tracker showed that in May, 1.47 percent of global payments were in RMB, a tiny amount compared to the global total but up from 1.43 percent in April. This indicated progress in the second and third steps.

Some countries in southeast Asia, Latin America and Africa have or are ready to take RMB as an official reserve currency. It indicated the fourth and the fifth steps are burgeoning.

Investors are also optimistic about RMB globalization. Bank of China's global customer survey shows that over half of the respondents expect RMB cross-border transactions to rise by 20 to 30 percent in five years. And 61 percent of overseas customers say they plan to use or increase use of RMB as a settlement currency.

Li Daokui, head of the Center for China in the World Economy under Tsinghua University, said RMB internationalization is a long-term process and should be made gradually based on China's financial reforms, including freeing interests and reforms on foreign exchange rates.

Dai Xianglong, former central bank governor of China, forecast that it will take about 10 to 15 years to achieve a high standard of RMB internationalization.

Among the latest moves toward RMB internationalization is the naming of two clearing banks to handle RMB business overseas.

The central bank announced last Wednesday that it has authorized China Construction Bank to be the clearing bank for RMB business in London, and the next day named the Bank of China as clearing bank for RMB business in Frankfurt.- Xindua

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"Chinese dream" speaks to the whole world, offers global inspiration

When President Xi Jinping articulated a vision of prosperity, national rejuvenation and happiness for the people at the UNESCO headquarters in March, he added the best footnote yet to the notion of the "Chinese dream."

No other words about China in recent years have captured the world's attention and imagination as those two have.

The phrase, first mentioned during a speech by Xi two weeks after he was elected general secretary of the Communist Party of China (CPC) Central Committee in November 2012, has been echoed repeatedly by Chinese leaders and is considered a central mission of the new leadership.

The latest reaffirmation came on Sunday, when Chinese Vice President Li Yuanchao called on young people to work for the "Chinese dream" to integrate their personal dreams with the bigger dream of the Chinese nation's revival.

Although the country might still be years, if not decades, away from living its dream for real, the Chinese dream has provided global inspiration.

Bulgarian President Rosen Plevneliev said in January during a visit to Beijing that he admired China for its great achievement of development and that he believed the Chinese dream of national rejuvenation will benefit the whole world as well as the Chinese people.

Asha-Rose Migiro, a former UN deputy secretary-general, also said last year that the "Chinese dream" resonated with the dream of Africa, as China and Africa can achieve common development through common efforts.

This is no accident and not difficult to understand. For one thing, the Chinese dream does not run contrary to the common aspirations worldwide, but is compatible with them.

Peace, prosperity, happiness and social stability, which are the essence of the Chinese dream, are also the most fundamental components of the shared pursuits of people worldwide.

In that sense, people across the world have all dreamt of the "Chinese dream" in their own way. It is no wonder that foreigners understand the notion upon first hearing it.

The Chinese dream also offers huge potential opportunities for cooperation and mutual benefit for other countries, both economically and politically.

China's rapid economic growth has produced enormous "bonuses," not only for the Chinese people, but also for the whole world.

According to figures from the National Statistics Bureau, China has topped the list of contributors to the global economy, with up to 19.2 percent of world economic growth coming from China in 2007, compared to only 2.3 percent in 1978.

China is not only the main engine of global economic growth, but also the defender of regional peace and stability.

Unlike certain troublemakers in the region, China has the resolve to create with Asian countries a peaceful and bright future for East Asia and the rest of the continent.

The realization of the Chinese dream does not entail fracturing the dreams of other countries. On the contrary, it helps them to realize their own dreams of peace and prosperity. - Xinhua

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Singapore downplays its world's most expensive city

 

People stand along the Marina Bay promenade in Singapore on March 4, 2014. The soaring cost of cars and utilities as well as a strong currency have made Singapore the world's most expensive city, toppling Tokyo from the top spot, a survey showed March 4. AFP PHOTO / ROSLAN RAHMAN (Photo credit should read ROSLAN RAHMAN/AFP/Getty Images)

SINGAPORE - Singapore on Wednesday played down a global survey showing that it is now the world’s most expensive city, a finding which has triggered outrage among Singaporeans struggling with rising costs.
 
Finance Minister Tharman Shanmugaratnam said reports like the 2014 Worldwide Cost of Living survey by the Economist Intelligence Unit (EIU) are aimed at measuring expatriates’ expenses.

“It is not that these surveys are wrong, or that they are misguided. But they are measuring something quite different from the cost of living for an ordinary local in different cities around the world,” Tharman said in a parliamentary speech.

In the survey released Tuesday, Singapore toppled Tokyo as the world’s costliest city, a result the EIU attributed to the high cost of cars and utilities as well as a strong local currency. Paris was in second place.

The survey examines prices of 160 products and services including food, toiletries, clothes and domestic help in 140 cities, and is aimed at helping companies calculate allowances for executives overseas.

Tharman noted that the basket of goods and services evaluated by the EIU included imported cheese, filet mignon, “Burberry-type raincoats,” the four best seats in a theater and three-course dinners for four in high-end restaurants.

“The EIU tries to put together a basket of what they think are expatriate costs, perhaps more on the higher end of expatriates,” Tharman said. ”

It is quite different from the goods and services consumed by ordinary Singaporeans.”

He also reiterated a point noted by the EIU — that Singapore’s rising living costs for expatriates are driven by the strengthening of its currency.

“What is important for us is that Singaporeans, and particularly low- and middle-income Singaporeans, have incomes that grow faster than the cost of living,” Tharman said.

Jon Copestake, editor of the EIU report, acknowledged the points raised by Tharman but told AFP the basket of goods includes many everyday items as well.

“The survey basket ranges from a loaf of bread to a luxury car. In fact, the highest-weighted category in our survey is that of groceries and everyday staples which include goods like fresh fruits and vegetables, meat, fish, rice, etc.,” Copestake said.

“Expatriates make up a very significant proportion of Singapore’s population, and this means that the results of our survey will be more keenly felt by a higher proportion of the people who live and work there.”

The survey’s release provoked strong online reactions from Singaporeans, who saw it as confirmation of their complaints about soaring living costs.

Others however saw it as a sign that Singapore has attained high living standards.

Singapore’s per capita income of more than $51,000 in 2012 masks a widening income gap between the richest and poorest citizens.

By Bhavan Jaipragas, AFP

S’pore ranked world’s most expensive city by EIU .

The high cost of cars and utilities as well as a strong currency have made Singapore the world's most expensive city. (AFP/Roslan Rahman)

SINGAPORE: Singapore has jumped to the top of the Economist Intelligence Unit's (EIU) ranking of the world's most expensive cities, overtaking the likes of Tokyo and Osaka as the Singapore dollar appreciated against the yen.

Singapore was ranked sixth in the EIU's survey last year, behind the two Japanese cities, Sydney, Oslo and Melbourne.

According to the EIU, Osaka and Tokyo fell off the top of its cost of living ranking because of the weaker yen.

Tokyo, the most expensive city to live in for 2013, fell to joint sixth place alongside Caracas, Geneva and Melbourne, while Paris is second, ahead of Oslo, Zurich and Sydney.

Ten years ago, Singapore was number 18 on the list.

The EIU report compares the price of products and services such as food, clothing, transport and domestic help among 140 cities with New York city as a base.

According to the survey, Singapore's curbs on car ownership, which include a quota system and high taxes, make it the most expensive city to run a car.

A new Toyota Corolla Altis, for example, could cost as much as US$110,000 in Singapore but only US$35,000 in Malaysia.

And overall transport costs in Singapore are almost three times higher than those in New York.

But the survey does not include public transport, which is most commonly used by Singaporeans.

In addition, the lack of natural resources and energy supplies means Singapore is the third most expensive city for utility costs.

The survey also shows that Singapore is the priciest place in the world to buy clothes, as shopping malls along the prime Orchard Road shopping belt import luxury European brands.

As for housing, Singapore, being smaller in size than New York City, has seen home prices jump to record highs in recent years amid rising wealth and an influx of foreigners.

But the survey does not include public housing.

And it must be noted that the EIU survey is aimed at helping companies and HR managers calculate allowances for executives or expatriates being sent overseas.

This means that their spending patterns may differ from locals. Hence, while cars and utilities are expensive, public transport and hawker food in Singapore are cheaper than in most developed cities.

And latest data also show that in January, consumer prices in Singapore rose at their slowest pace in four years, rising by 1.4 per cent from a year ago.

- CNA/nd/ir

Human Rights Record of the United States in 2013

Video:

China published a report on the United States' human rights record on Friday, in response to U.S. criticism and "irresponsible remarks" about China.

"The Human Rights Record of the United States in 2013" was released by the Information Office of the State Council, China's cabinet, in response to "Country Reports on Human Rights Practices for 2013" made public by the U.S. State Department on Thursday.

China lashes out at US human rights record 

Press TV
China's report states that there were serious human rights problems in the U.S in 2013, with the situation deteriorating in many fields. Once again posing as "the world judge of human rights", the U.S. government "made arbitrary attacks and irresponsible remarks" on almost 200 countries and regions, the report says.

The United States carefully concealed and avoided mentioning its own human rights problems, according to the report.

THE WORLD THROUGH PRISM

The U.S. government spies on its own citizens to a "massive and unrestrained" degree, the report says.

The report calls the U.S. PRISM surveillance program, a vast, long-term mechanism for spying on private citizens both at home and abroad, "a blatant violation of international law" and says it "seriously infringes human rights."

The U.S. intelligence services, by virtue of data provided by Internet and telecom companies -- including Microsoft, Google, Apple, Facebook, and Yahoo -- "recklessly" track citizens' private contacts and social activities.

KILLER ROBOTS AND DEAD CONVENTIONS

The report quantifies drone strikes by the U.S. in countries, including Pakistan and Yemen, which have caused heavy civilian casualties. In Pakistan alone, since 2004, the U.S. has carried out 376 drone strikes killing 926 civilians.

The U.S. has not ratified, or participated in, a series of core UN conventions on human rights, such as the International Covenant on Economic, Social and Cultural Rights, the Convention on the Elimination of All Forms of Discrimination against Women, the Convention on the Rights of the Child, and the Convention on the Rights of Persons with Disabilities.

CRUEL AND UNUSUAL PUNISHMENT

Solitary confinement is prevalent in the U.S., the report says.

In U.S. prisons, inmates in solitary confinement are enclosed in cramped cells with poor ventilation and little or no natural light, isolated from other prisoners; a situation that takes it toll on inmates' physical and mental health.

About 80,000 U.S. prisoners are in solitary confinement. Some have been held in solitary confinement for over 40 years.

RAMPANT GUN VIOLENCE

The rampant U.S. gun culture breeds violence that results in the death of 11,000 Americans every year.

The report cites figures from the FBI that state firearms were used in 69.3 percent of the nation's murders, 41 percent of robberies, and 21.8 percent of aggravated assaults.

In 2013, 137 people were killed in 30 mass murder events (four or more deaths each).

A rampage in the headquarters of the Naval Sea Systems Command in Washington D.C. left 12 people dead, according to the report.

UNEMPLOYMENT AND HOMELESSNESS

"The U.S. still faces a grave employment situation with its unemployment rate still high," the report says.

Unemployment for low-income families has topped 21 percent. The homeless population in the U.S. has climbed 16 percent from 2011 to 2013.

There are also many child laborers in the agricultural sector in the U.S. and their physical and mental health is seriously compromised, the report says.

Friday's report was the 15th such annual report published by China in response to U.S. attacks.

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BEIJING, Feb. 28 (Xinhua) -- A Chinese idiom says that all will follow one who is personally upright, even though he does not give orders; but if he is not personally upright, they will not follow, even though he gives orders.

Attributed to Confucius (551 BC-479 BC), one of the greatest Chinese philosophers in history, the idiom is an important tenet for the Chinese. Full story

	Full text of Human Rights Record of the United States in 2013
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ABC Network's kids say the darndest things

During a children’s segment in a late night talk show in the United States, a child proposed to wipe out the Chinese as a solution to the US$1.3 trillion (RM4.17 trillion) debt to China. The Chinese were not amused.

 

At the network's office in Houston (top left), Washington and Los Angeles (right).

A POPULAR Chinese idiom, Tong yan wu ji, loosely translated means that one should not take offence at what a child says.

The phrase is used to show that a child should not be taken seriously when he or she utters something improper or inauspicious, especially in an unacceptable manner.

It implies that kids say the darndest things, which are candid and laughable at times.

But when a child proposed to wipe out the Chinese during the Jimmy Kimmel Live show as a solution to the US$1.3 trillion (RM4.17 trillion) debt to China, the Chinese were not amused.

During the ABC Network’s late-night programme that was aired on Oct 16, a segment was dedicated to a group of young children having a light-hearted roundtable discussion.

When host Jimmy Kimmel asked for suggestions on how to pay China back, a blond boy answered, “Shoot cannons all the way over and kill everyone in China,” slamming his hands on the table.

“Kill everyone in China? Okay that’s an interesting idea,” Kimmel responded with a laugh.

Another child suggested building a huge wall to prevent the Chinese from coming after them, to which Kimmel replied, “That will never happen.”

Kimmel later asked the panel of four, “Should we allow the Chinese to live?”

The kids had mixed opinions – the screen showed a girl raising her clenched fist, shouting “Yes!” while the blond boy stood by his earlier answer.

“But if we don’t allow them to live, then they will try to kill us,” said another girl who tried to talk some sense into the boy.

“But they’re all going to be killed (first),” two kids, including the blond boy and the girl who had earlier shouted “yes” out loud, argued.

Kimmel wrapped up the segment, noting that it was an “interesting edition of the Kids Talk – the Lord of the Flies edition”.

(Lord of the Flies, a novel by William Golding, tells the story of how a group of boys govern themselves on a deserted island after a plane crash.)

This particular segment has sparked a backlash with viewers commenting that the skit was racially insensitive.

Protests were staged outside ABC studios, prompting ABC and Kimmel to apologise, but the controversy has not died down.

As of Thursday morning, more than 104,000 online signatures were collected on the White House petitions page, urging the Obama administration to investigate the show.

Since the petition had reached the 100,000-signature threshold in 30 days, the White House was compelled to issue a formal response.

Meanwhile, in China, Foreign Ministry spokesperson Qin Gang told a press conference that ABC should reflect on its mistake and respond to the Chinese Americans with a sincere attitude.

On Wednesday, China’s state broadcaster CCTV reported that it had received a response from White House National Security Council spokesperson Caitlin Hayden.

“As the President has stated publicly, the United States welcomes the continuing peaceful rise of China. He believes it is in the United States’ interest that China continues on the path of success, because we believe that a peaceful, stable, and pros­perous China is good for the United States, China, and the world.

“The comments reported on the Jimmy Kimmel show do not reflect mainstream views in the United States on China,” she said.

The controversy has also ignited discussions on the Internet as well.

Nick Zhang Xu, who made waves in cyberspace last year with a video of him speaking English in 10 dif­ferent accents, responded with a video titled “Jimmy Kimmel, you owe us an apology”.

Since it was uploaded to Youku – the Chinese equivalent of YouTube – about 20 days ago, it has been viewed more than 35,000 times.

“What kind of education do the kids have in America? They can just shout out loud ‘kill everyone?’” Zhang asked.

“‘This is an interesting idea.’ You find it amusing. You don’t call it wrong in the first place. What’s the matter with you?”

While sending a strong message across, it was hard not to note that Zhang had attempted to inject some humour into the video as well.

“You know what? We can make shows (to defame you) too. We are really good at remaking things.”

Some Youku users threw their support behind Zhang and agreed that the Kimmel’s skit had painted a larger picture on the culture of violence and hatred.

But there were also people who believed that the kids’ comments were harmless and called for fellow Chinese to be less sensitive.

“We place too much emphasis on “saving face” and cannot afford to have others making fun of us. This is just an entertainment programme,” a user said.

Contributed by Check In China Tho Xin Yi 
The Star/Asia News Network 

Chinese Americans protest across US over Jimmy Kimmel's 'kill Chinese' skit

Thousands of protesters, mostly Chinese, rallied in 27 US cities over a perceived anti-Chinese skit that aired last month in a talk show hosted by comedian Jimmy Kimmel.

A rally in New York, one of 27 cities that saw a protest over the ABC talk show, which aired last month. Photo: SCMP 

Chinese state media reported that protests swept across the United States on Saturday. One was staged at the Los Angeles headquarters of broadcaster ABC, which aired the programme. Participants argued that ABC and Kimmel had not taken full responsibility for what they perceived as an insult to their heritage.

The protesters called for Kimmel to be fired over a segment of his talk show called "Kids' Table" that aired on October 16. Both ABC and Kimmel have since apologised for the episode, in which a six-year-old boy said "kill everyone in China" when asked by Kimmel how the US should pay back the country's US$1.3 trillion debt to China. Kimmel responded: "That's an interesting idea."



However, Chinese-American groups were not impressed. While some accepted the apologies that were offered after the subsequent uproar, others viewed them as insincere and demanded more. Charles Lu, chairman of the Roundtable of Chinese American Organisations, told the Los Angeles Times last week that they wanted a formal apology from ABC not just to the groups protesting, but to all Chinese people around the world.

Online pictures of Saturday's protests showed demonstrators, including college students, parents and children, dressed in red T-shirts with logos reading "Teach kids to love, not to kill", and chanting slogans such as "Kimmel must go" and "Shame on you, ABC".

Chinese Americans express their anger in San Jose, California. Photo: SCMPProtest organisers distributed free posters to demonstrators. One featured Kimmel with a swastika just above his head.
"The protest plays an important role in improving our prestige and national cohesiveness," a Chinese demonstrator in New Jersey said on internet chat room Mitbbs. "The parade is intended to raise the social status of Chinese Americans in the US."

The segment also prompted the submission of a petition to the White House to investigate the Jimmy Kimmel Live! show on the grounds of offensive content. The petition garnered more than 100,000 signatures.

Xinhua said 800 people attended a rally in Washington, where a letter of protest to ABC was read out. The letter urged the broadcaster to fire Kimmel and hold a press conference to officially apologise to Chinese communities. It called on ABC to make sure that such "rhetoric of racial discrimination" was prevented by stepping up regulation of its televised content.

No one from ABC attended the event in Washington to accept the protest letter, reports said. Police were mobilised to maintain order, but the day ended without incident.

The demonstrations are believed to have been the largest held by the Chinese community in the US since those just before the Beijing Olympics in 2008 in response to CNN commentator Jack Cafferty labelling Chinese leaders "goons" and "thugs".

Video: Animators in China to Jimmy Kimmel: Why you shouldn't 'Kill the Chinese'



Contributed By  Keith Zhai keith.zhai@scmp.com