CHINA ECNOMICDIGEST

ISSUE NO. 45

A CASH MEDIA PUBLICATION

www.ccedigest.com

CHINA ECNOMICDIGEST

ISSUE NO. 45

A CASH MEDIA PUBLICATION

www.ccedigest.com

China’s Car sales may hit 21.5m units this year

in this issue

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9

12

22

6

11

21

25

More tourists attracted from emerging markets

Game developers focus on Chinese market

China makes high capacity Nuke Generator

China should follow sustain-able urbanization path

Apple to sell new iPhones across China

Suzhou Garden Archives re opens to public

Home prices continue to rise

Shanghai FTZ tests country’s currency liberalization

eDitOR in ChieFMakhdoom Babar

eDitOR Jamshed Ullah

news eDitORSummer Wong

Ji LongMike LincolnJenny Alvin

ResaRCh & analysisWang Aiguo

He ChengShi ChengweiLeon Ludwing

Uzma Zafar

Designing & layOutAsmat Ullah Khan

Awais ShehzadRaja Pervaiz

teChniCal supORtSultan HaroonIqbal Bukhari

CO-ORDinatiOnSobia Noreen

Internet EditionJohn Nelson

Rehmat Chughtai

in this issue

27

Fonterra reveals plan for 2nd China dairy farming hub

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COveR stORy

Yungang Grottoes tell old story

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Society

Desk RepoRtBeIJING

Yungang Grottoes, located at the southern foot of Wuzhou Hill, 16 kilometers west of Datong city in Shanxi province, rep-

resent the outstanding achievements of Buddhist cave art in China during the 5th and 6th centuries.

Most of the 252 caves and 51,000 stat-ues were constructed during the North-ern Wei Dynasty in the mid-5th century, when Chinese Buddhism was at the peak

of its popularity.The statues are among the few remain-

ing historical relics from the dynasty.Cave No 16 to 20, created by monk Tan

Yao, with their strict unity of layout and design, constitute a classical masterpiece of the first peak of Chinese Buddhist art.

The chest of this Buddhist statue at Yungang Grottoes was scarred by years of wind and water erosion at Cave No 3.

More tourists attracted from emerging markets

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BeIJING

The number of inbound tourists from emerging markets surged year on year in July, while visitors from developed coun-tries continued to decline, according to

National Tourism Administration data.The number of visitors from Vietnam, Thailand,

and India grew 13.86 percent, 11.29 percent and 10.78 percent, respectively, in July. Tourists from Mexico grew 6.42 percent, according to the figures.

Visitor numbers from the Unites States, Japan, Korea, Australia and Canada dropped, the data showed. The slow economic recovery in developed countries led to decreasing tourist numbers from these nations.

Tourism industry experts said China should work harder to attract visitors from emerging markets, including the other four economies of the BRICS group - Brazil, Russia, India and South Africa.

Foreign tourist show Chinese desserts they just bought in Suzhou, East China’s Jiangsu province.

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Finance

Shanghai FTZ tests country’s currency liberalization

sHANGHAI

Among a cluster of warehouses located on the outskirts of Shanghai, China is set to ex-periment one of its most sig-

nificant reforms since Shenzhen freed the country’s trade 33 years ago -- how China should liberalize its currency.

The world’s second largest economy an-

nounced it would build a free trade zone on the shore of the East China Sea. The zone will be a test bed for pushing forward full convertibility of the Chinese Yuan and the opening of financial services.

As China’s economy has showed signs of stabilizing during the last two months, economic transitions and reforms are again becoming the focus of attention.

Chinese Premier Li Keqiang said at Sum-

mer Davos Forum recently that China’s modernization will not be accomplished without reform, nor will it be achieved without opening-up, citing Shanghai FTZ as one of the new ways to open the coun-try wider to the outside world.

“The FTZ will act as a stress test. We are going to explore to what extent can China open its capital account,” said a person with direct knowledge of the issue.

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According to Shanghai Securities News, a financial newspaper owned by Xinhua, the general plan of the zone will possibly be published by the end of this week.

“It’s a landmark event in China’s drive of deepening economic reforms,” said Citi Bank senior economist Ding Shuang. “The Shanghai FTZ demonstrates China’s commitment to reforms before key re-form packages are to be discussed in the third plenary session of 18th CPC central committee.”

China re-started to free its currency exchange rate in 2005, and since then the Chinese Yuan has appreciated over 30 percent against the US dollar. But to buffer China from international financial turmoil, the country’s capital account re-mains closed, a rule in existence for dec-

ades.Exchanges between the Chinese Yuan

and foreign currencies are regulated with strict quota allocation and transactions are scrutinized. Every Chinese person is only allowed to buy up to $50,000 each year.

The regulators, however, now believe tearing down the currency wall will do more good than harm. Opening the capi-tal account will improve financial trans-parency and efficiency as well as spur China’s drive of building Shanghai into a world financial hub.

China’s cabinet pledged in May to map out “operational” plans to make the Chi-nese Yuan convertible under the capital account. Shanghai FTZ is considered the first place to carry out the plan.

“It’s difficult to segregate the Shanghai FTZ from the rest of China. There will be money flows underground. It can be said that the FTZ e x p e r i m e n t opens a hole in China’s capital account wall,”

said Wang Tao, chief China economist at UBS.

“It’s technically possible to completely segregate the FTZ from the rest of China, but that will be unnecessary. If China completely segregates the FTZ, there will be no meaning for building such a test bed,” Ding said. “But unlimited opening is also unlikely. The regulators may adopt quota regulation.”

While such reforms have long been ad-vocated, some analysts argue rolling them out now could be hasty, saying opening the capital account would make China vulnerable to the Federal Reserve’s quan-titative easing (QE) tapering and add to risks rising from other reforms at home.

It is feared that demolishing the cur-rency curb will trigger a capital flight draining China of liquidity. According to foreign media reports, it was reported that cash in billions of US dollars has already left China through money trafficking to seek better yields or alternative invest-ments overseas.

Although the general plan is about to be released, until now, no detailed proposal of how to operate the test bed has been finalized, which suggests the regulators vary on the pace and steps of opening the capital account, according to sources with direct knowledge of the issue.(XINHUA)

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Bankcard consumer confidence slight dropBeIJING

Chinese consumer spending us-ing bankcards dropped slightly in August illustrating stable consumer confidence, accord-

ing to the Bankcard Consumer Confi-dence Index (BCCI) released here.

The BCCI, compiled by the Xinhua News Agency and China UnionPay, a national bank card association, dropped 0.03 points to 86.73 in August from July.

The index was up 0.52 points on a year-on-year basis, according to the BCCI re-port.

The value of transactions recorded at supermarkets took a higher share of con-sumption in August, about 0.2 percentage points up from July.

Consumers reduced spending in areas including air, tourism agencies and tourist sites as summer holidays ended in August, said the report.

With the rising price of gold and jew-elry, the value of transactions recorded at jewelry dropped 0.02 percentage points in

August from July.The consumer price index (CPI), a main

gauge of inflation, rose 2.6 percent year on year in August, down from 2.7 percent in July, according to the National Bureau of Statistics (NBS). China’s producer price index (PPI), which measures inflation at

the wholesale level, fell 1.6 percent in Au-gust from a year earlier, compared with a 2.3-percent drop in July, said the NBS.

The BCCI index, first released in April 2009, is based on bank card transaction data and analysis of structural changes in urban consumption.(Agencies)

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MoNItoRING Desk RepoRtBeIJING

The mobile games market in Chi-na is set to generate more than $1.2 billion in 2013, up from $750 million in 2012, according

to new research estimates, and that could set the stage for game developers to con-centrate more on that booming market.

Asian games research firm Niko Part-ners recently released its new “Chinese Mobile Games Market Report 2013” and estimated that approximately 500 million smartphones will be in use by the end of 2013, five times more than the 100 mil-lion in early 2012. “These smartphones are taking advantage of the fast migration of users to 3G and faster networks, which is creating a ripe environment for increas-ingly engaging games,” according to the report.

PopCap Games, the American game developer and publisher behind the hit “Plants vs. Zombies,” launched its se-quel, “Plants vs. Zombies 2: It’s About Time” last month on Apple devices only. In a move that shows a focus on Chinese players, the sequel became available to the Chi-nese market before being released worldwide.

Though download numbers don’t in-clude pirated copies through j a i l b r o k e n phones or o t h e r -w i s e ,

there have been approximately 20 mil-lion downloads of the game to date since its release in China in August. In the US, there were 25 million downloads within the first two weeks of release.

PopCap is currently working with Changsha-based TalkWeb to help distribute the sequel to the Chi-nese Android market, accord-ing to a media report. The game-maker hasn’t an-nounced a PC version yet, and PopCap’s ef-forts to cater to the mobile market reflect prior-itizing an in-creasingly imp or-t a n t

Information Technology

Game developers focus on Chinese market

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mobile games sector.Rapidly growing smartphone us-

age in China has led to an increase in mobile gaming with a decrease in PC gaming. “Mobile games…have taken market share from PC based casual and social online gaming,” said Kevin Hause, senior partner of Niko Partners, in a statement.

In a similar study, research and consulting firm Pearl Games found “in 2012 and 2013, there was a sig-nificant shift in user activity from PC to mobile, driven by rapid ex-pansion of China’s mobile Internet user base, smartphones and new mobile apps and games. Pearl Re-search believes the number of smart devices (phones, tablets) in China could exceed 400 million by the end of 2013. Top mobile titles can gener-ate $2 million or more a month.”

PopCap’s China general manager, Leo Liu, agreed that there are oppor-tunities to be found in the Chinese mobile market: “From a business perspective, the Chinese market, even if it’s not bigger than the US [market], will be the same size as the US’. If you’re looking at growth rate, it’s higher [in the Chinese market] than in the US market.”

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BeIJING

Apple Inc will start selling two new iPhone models in the Chinese mainland as of Sept 20, the first time the region has

been included in the company’s maiden launch list.

The iPhone 5S and iPhone 5C will be available to buy in the world’s largest mobile market on Sept 20, when the two models will also be on sale in the United States, Australia and Japan, according to a company press conference held in Beijing.

The retail price of the iPhone 5C in Chi-na will be 4,488 Yuan ($728), while the iPhone 5S will cost 5,288 Yuan. Both the prices are much higher than their peers in markets outside the Chinese mainland.

Apple fans said the simultaneous maid-en launch in China’s mainland together with other major markets shows the com-pany’s sincerity towards Chinese custom-ers. But some have been left disappointed.

A white-collar female worker surnamed Chen who works at Zhongguancun, or China’s “Silicon Valley,” said, “Apple Inc has finally attached importance to Chi-nese customers by including China into the first launch markets, although the prices are a little high.”

“There was no surprise at all. We miss the era of Steve Jobs,” said Zheng Xiyun, a marketing director with the interactive group IM2.0.

However, Wu Shu, an IT expert and Chief Editor of iheima, an online platform to encourage creativity, said Apple has de-veloped a complete integrated system. “If it makes major changes, such as enlarging the screen size, it will cause trouble for the application developers.

Meanwhile, Mobile chat application Yixin, which was launched by China Tel-ecom Corp Ltd and NetEase Inc, is push-ing China Mobile Ltd, the nation’s biggest telecom operator, into an awkward corner, analysts said.

On Aug 19, China Telecom and Inter-net company NetEase Inc jointly launched Yixin, a smartphone app similar to Ten-cent Holdings Ltd’s WeChat.

Yixin, which has created to challenge WeChat, has several features that set it

apart from the competition. For instance, the app is capable of sending free text and voice messages to any mobile phone user, whether the receiver has installed Yixin or not.

To show the companies’ determina-tion to fight against WeChat, which has attracted more than 300 million users in two years, China Telecom’s Chairman Wang Xiaochu and NetEase’s Chief Exec-utive Officer William Ding both appeared on stage at the launch ceremony. Other celebrities, including Sohu Inc’s chairman Charles Zhang and Lan Ye, vice-president of Chinese e-commerce giant JD.com, were also present.

Before that, China United Network Communications Co Ltd (China Uni-com) - China’s second-largest mobile carrier - had joined h a n d s with Tencent in July to launch the nation’s first SIM card cus-tomized for WeChat.

After these moves, China Mobile is now expected to come up with its own strate-gy for the mo-bile instant-m e s s a g i n g sector, said Tian Siyu, an analyst with research firm Zero2IPO.

“People can-not help but wonder what kind of move will China Mobile take next? Will the world’s biggest telecom car-rier endure the situation and be left b e h i n d ? ”

Tian asked.There’s no indication yet that China

Mobile will react to the market changes or release any strategy for the sector soon.

The company declined to comment for this story.

However, the carrier did not abandon the mobile chat market. In June, China Mobile launched Jego - a Skype-like mo-bile app that targets users with interna-tional communication needs. But Jego did not last long, and China Mobile suspend-ed the service three weeks after its launch.

“It’s quite hard for China Mobile to do the same things that Internet companies do. China Mobile is a telecom carrier and it lacks that sort of Internet gene,” Tina Tian, a telecom industry insider, pointed

out.

Apple to sell new iPhones across China

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Industry

China makes high capacity Nuke Generator

CHeNGDU

Dongfang Electrical Machin-ery Co Ltd (DFEM), a major Chinese power generating equipment manufacturer, has

completed construction of a 1,750 mW nuclear generator and started transport-ing it to a nuclear power plant in South China.

The 1,750 mW generator currently has the biggest per-unit installed capac-ity among the nuclear generators in the world, according to the DFEM, which is

based in Southwest China’s Sichuan prov-ince.

The generator is being sent to the Tais-han nuclear power plant in South China’s Guangdong province from the company’s production base in Deyang city, Sichuan province.

DFEM will provide two such generators for the nuclear power plant.

DFEM has produced 14 nuclear genera-tors so far with a total installed capacity of 15,790 mW.

The Taishan nuclear power plant is a joint venture of China Guangdong Nucle-

ar Power Holding Co Ltd (CGNPC) and Electricite de France.

According to CGNPC, the first-phase project of the nuclear power station got a total investment of 50.2 billion yuan ($8.13 billion), and would include the construc-tion of two units using the Electron Para-magnetic Resonance (EPR) technology, with each unit capacity up to 1,750 mW.

The two units of the first-phase project are to be respectively put into commercial operation in 2013 and 2014, and will an-nually generate 26 billion kilowatt-hours on-grid energy when completed.(Xinhua)

File photo of an employer of Dongfang Electrical Machinery Co Ltd working on a 1,150 mW nuclear generator completed by the company in 2009.

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High tech industry grows fast in SanmenxiaDesk RepoRtBeIJING

The new and high-tech indus-try of Sanmenxia, a city in western Henan, continued to prosper in the first half of this year, driven by innovation

and high-tech industrialization.In the first half, total output value of the

new and high-tech industry in the city amounted to 7.36 billion Yuan ($1.2 bil-lion), a growth of 28.6 percent from a year earlier. The added value of the industry reached 2.26 billion Yuan, an increase of 29.3 percent year-on-year.

During this period, 66 new and high-tech projects were launched. A total of 6.46 billion Yuan was invested into these

projects. These projects are expected to further boost the new and high-tech in-dustries in the city.

At present, the city has 96 new and high-tech enterprises; 20 of them have been certified as high-tech enterprises.

Innovation and technology have con-tributed greatly to the upgrade of tradi-tional industries. By applying new tech-nologies, the city has basically developed a gold and silver processing industrial chain. In the aluminum industry, inno-vation and new technology have given enterprises in this sector more room to grow.

The city has attached greater importance to the development of new and emerging industries, including environmentally-friendly gold-plating materials, battery

materials and biological pharmaceuticals. A number of high-tech enterprises have been established in these sectors.

The city has also sped up the construc-tion of a science, technology and R&D system. The city has set up 33 provincial-level engineering R&D centers and 21 provincial-level corporate R&D centers. The construction of industry clusters has also benefited greatly from innovation and high-tech development. Enterprises have also established technological co-operation with universities and research institutes, implementing a great number of technological projects. At the same time, the municipal government offered assistance and support for innovation and high-tech development in terms of finance and taxation.

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Automobile

China’s Car sales may hit 21.5m units this yearAUto Desk RepoRtsHANGHAI

China’s passenger vehicle sales maintained a stable growth trend in August, making it possible that the country’s overall auto-

mobile sales will reach 21.5 million units this year, analysts said.

In August, the total sales of cars, multi-purpose vehicles, sport utility vehicles and minivans in China increased 13.3 percent year-on-year to about 1.32 million units, the China Passenger Car Association has said.

CHINA’s MoNtHLY pAsseNGeR VeHICLe sALes

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“The figure should be higher but the floods in the south and the super high tem-peratures in central China hit market de-mand,” said Rao Da, secretary-general of the association.

“The stable uptrend in recent months made us estimate a 12 percent increase in September, thus we are optimistic that Chi-na’s total vehicle sales will likely also surge by 12 percent to 21.5 million units this year,” said Rao.

China overtook the United States to be-come the world’s largest automobile market in 2009. That year, domestic demand surged 46 percent from a year earlier, and the boom continued in 2010 as sales grew 32 percent year-on-year.

However, the market slowed down in 2011 and 2012 with annual growth of 2.5 percent and 4.3 percent, respectively, as the government ceased stimulus measures.

“Now the market’s back to around 10 per-cent growth, and that’s an indication that the industry is well on track to a healthy and sustainable long-term development,” said Rao.

Even though the country’s domestic brands have seen continued market share losses for months because of fierce compe-tition from their foreign and joint-venture counterparts, Rao said that the “domestic brands’ heavy investment in R&D will grad-ually improve the quality and design of their

products, and make them attractive to dis-cerning Chinese consumers”.

Rao added that the government decision to use Hongqi models for official cars, for instance, will set a good example for private buyers.

The latest figures released by the Chinese

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Association of Automobile Manufacturers showed that the sales of domestic passenger cars in July slumped 17.3 percent from June, with their market share dropping to 35.2 percent, the lowest point since 2008.

However, Rao said that the domestic brands’ market share is expected to increase 1 percentage point every year to reach 40 percent in 2020.

According to a recent survey conducted by market research firm Nielsen Holdings NV, German brands are the Chinese con-sumers’ first choice, with 68 percent of the respondents’ preference, followed by Japa-nese brands with 13 percent.

Chinese brands rank third with the prefer-ence of 11 percent of respondents, followed by US brands with 6 percent and South Ko-rean brands with 2 percent.

“Consumer attitudes toward the country of origin of the brands indicate a growing challenge worth the attention of Chinese domestic brands. Compared with foreign brands, Chinese brands still enjoy an advan-tage over international brands by offering lower costs and more benefits, but the situ-ation is becoming tougher as many interna-tional brands are trying to price down their cars to get more market share,” said Yan Xuan, president of Nielsen Greater China.

“Though there is a certain gap of core competency against international brands, if more efforts can be made in technology innovation, and in the promotion of their competency in the safety and power-train technology areas, Chinese domestic brands will have more opportunities to convert po-tential buyers into actual buyers in the fu-ture,” said Alice Yu, vice-president of Niels-en China.

Also, “the building of a brand image should be based on the segmentation of the Chinese automotive consumers, whether men or women, younger or older”, said Yu.

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Automakers look to drive sales overseas

AUto Desk RepoRtsHANGHAI

Chinese carmakers will have to re-think strategy, improve products in order to compete globally, reports Alfred Romann in Hong Kong.

More than 1 million new cars were sold in Indonesia last year. That fact alone makes the Southeast Asia giant a very desirable market for automakers.

Indonesia accounts for about 40 percent of the population of the Association of South-east Asian Nations and its economy has been growing fast, at more than 4 percent a year for more than a decade. It is a natural export market for Chinese auto manufacturers look-ing to up their market share.

Earlier this year, the Indonesian govern-ment launched new tax incentives for low-cost green cars, which give automakers another reason to get into the action. The

government has cut the luxury tax by 25 per-cent for cars that have a fuel efficiency of 20 kilometers per liter, 50 percent for 28 km per liter and 100 percent for cars that can go even further.

But there is a catch. These vehicles must be assembled domestically and as much as 84 percent of the components must be made locally. Virtually no Chinese automakers are in a position to take advantage of those tax breaks. For the time being, Japanese automak-ers will continue to dominate the market.

Not only in Indonesia but in most foreign markets, Chinese automakers are having a hard time competing with more advanced multinational manufacturers from Japan, South Korea, Europe and North America.

Chinese companies want to go abroad, but their offerings are still of lower quality and the after-sales service typically weak because they generally do not have the networks in place to provide quality services, said John

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Zeng, managing director at LMC Automo-tive Consulting in Shanghai.

Aside from a couple of standouts such as Great Wall Motors Co Ltd, Chery Auto-mobile Co Ltd and possibly Zhejiang Geely Holding Group Co Ltd, most Chinese au-tomakers simply cannot compete in this area.

“(Chinese automakers) are quite eager to go overseas. It is a great marketing tool for them to go overseas. It is good advertising for them,”said Zeng. The problem is that “most of them are treating overseas markets as a trading business. They mainly rely on price as a weapon”.

On the surface, it makes sense for Chinese automobile manufacturers to look to new markets.

Competition in China is intensifying and overcapacity among domestic makers is still a significant issue, according to a new report by international consultancy AlixPartners. Most Chinese manufacturers operate at 65 percent capacity, compared with the 80 per-cent considered to be the minimum for sta-ble profits.

At the same time, Chinese automakers have struggled to gain market share, par-ticularly in the key sedan segment. The only standout is Great Wall, which has a leading position in the China sport utility vehicle market, according to the report. In the luxu-ry car segment, Bayerische Motoren Werke AG (BMW) and Audi AG lead the way, fol-lowed by Mercedes-Benz.

Dongfeng Motor Corp, China’s second largest auto group, plans to boost sales abroad from 64,000 in 2011 to about 300,000

by 2016.In October 2012, the Chongqing-based

Lifan Industry Group announced plans to invest in its overseas operations to double exports to 120,000 by 2015. If the company meets that target, exports will account for about 40 percent of total sales and jump from around 53,000.

In June, Beijing Auto announced an in-ternational strategy that would see the com-pany’s annual sales outside China jump to 400,000 vehicles by 2020. More than two-thirds of these cars would also be manufac-tured abroad.

Chinese passenger vehicle exports peaked in 2008 at 314,000 before halving the follow-ing year. They have been climbing steadily since. In 2012, exports jumped to 616,738. The vast majority of these vehicles are going to emerging markets in the Middle East and Africa.

Total vehicle exports last year rose 30 per-cent to 1.05 million, according to the China Association of Automobile Manufacturers. Chinese automakers have set up 546 compa-nies and institutes abroad with investments approved by the Ministry of Commerce.

The top exporters were Chery, Geely, Great Wall Motors, SAIC Motor and Lifan. In the first half of this year, Chinese au-tomakers exported 486,800 vehicles, a drop of 0.6 percent from last year, according to CAAM.

Not all is bad news, however. The best and largest Chinese automakers such as SAIC, Great Wall, BYD Auto Co Ltd, Geely and Chery have a shot at developing better cars and better networks, said Zhang Junyi of

the strategy consultancy Roland Berger. Some of them are moving in this direction.

In October 2012, Geely started producing cars out of new assembly lines in Egypt and Uruguay, which supplement exist-ing assembly lines in Rus-sia and Indonesia.

In April, Great Wall

Motors showed off five SUV models during the Bangkok International Motor Show. The fancy-looking cars with winged doors that open upwards were intended to generate in-terest in the manufacturer.

Great Wall has announced plans to build a $340 million plant in Thailand to produce 100,000 units for markets across Southeast Asia. In 2012, the company opened a new factory in Bulgaria.

Chang’an Automobile Group is building a new plant in Paraguay.

Chery has been among the fastest when it comes to international expansion. The com-pany has 16 manufacturing bases outside China and a sales network of 1,153 dealers.

CCEDIGEST |19

Construction

Human centered urbanization to revitalize economyCHeNGDU

Squat, shabby houses built over half a century ago still stand and har-bor more than 100 households in the Alley 14 neighborhood in the

center of Chengdu, capital of southwest China’s Sichuan Province.

Discarded sewage and garbage on its narrow lanes is a constant eyesore and renders the place a complete mismatch to the tall modern buildings in the vicin-ity. Residents, mostly elderly and laid-off workers, struggle in their daily lives, from sharing the single public toilet in the area to living in cramped rooms.

“My original house here was built be-fore New China was founded. It’s separat-ed into two rooms. The roof was originally thatch. Over the years, we added layers of shingles such as asphalt felt, asbestos, and plastic in order to prevent rain leakage,” said Shi Ziqing, a resident in her 60s.

Shi’s family has moved to an adjacent home more recently, but the new dwell-ing is barely any better in terms of living conditions.

With similar situations in many other Chinese cities, the country has begun work in earnest to do something about the problem and modernize accommodation for its increasingly urban population. Shi’s family and their neighbors are currently experiencing the full force of this drive.

Under a government-led renovation plan, Alley 14 will disappear in two or three years, and it is not the only Chengdu neighborhood waiting to be renovated or demolished.

Work on Caojia Alley, also a run-down section of the city center, was officially launched in July. Under a range of settle-ment packages, residents are temporarily living elsewhere as they wait to return to the rebuilt Caojia Alley, being resettled in other districts or accepting compensation.

In late August, the Chengdu municipal government announced that all shanty-towns will be renovated or rebuilt over the next five years, a project which will see homes totaling 15 million square meters renovated or reconstructed.

In recent years, the city has invested 30.2 billion yuan (4.9 billion U.S. dollars) in renovating 3.7 million square meters of old buildings for nearly 65,000 house-holds.

Nationwide, the Chinese government aims to revive another 10 million homes in dilapidated neighborhoods. Between the start of 2008 and the end of 2012, 12.6 million such homes were restored.

Analysts point out that such projects are being integrated into China’s new-style urbanization that improves livelihoods on the one hand, and on the other injects new vitality to the economy, which slowed to 7.5 percent in the second quarter of 2013 from 7.7 percent in the first.

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The Political Bureau of the Communist Party of China Central Committee,China’s top decision maker, pledged to maintain a reasonable investment increase and push “human-centered” urbanization in the second half of 2013.

Premier Li Keqiang has also reiterated the importance of human-centered ur-banization. He emphasized that improv-ing urban infrastructure and other weak sectors can not only satisfy people’s aspi-rations, but also stimulate investment and consumption.

An annual renovation of 2 million to 3 million dilapidated homes can bring about investment of 200 billion Yuan to 300 billion Yuan, adding a 3-percentage points increase in investment growth, the China International Capital Corporation Ltd. has forecast.

A cabinet document released in July called for greater efforts to speed up im-provements to run-down neighborhoods, and pledged greater policy aids including enhancing credit support and encourag-ing private investment.

Wang Zhong, governor of China Devel-opment Bank’s Sichuan branch, told Xin-hua that the branch signed an agreement with the Chengdu municipal government

earlier this year to specifically support Chengdu’s new-style urbanization. The branch will offer 100 billion Yuan of credit over the next five years to help with the city’s investment plans on projects such as a public transit system, urban construc-tion and rural-urban integration.

China’s urban population hit 690 mil-lion and accounted for 51.27 percent of its total population in 2011, the first time more people lived in cities than in the countryside.

But the UNDP report said China’s ur-banization comes at a critical time with pressure accumulating in matters such as the efficient use of natural and energy resources, development of urban govern-ance systems, employment, transporta-tion, housing and access to basic social services, security, and the livelihoods of migrant workers.

In Alley 14, the local government is still negotiating terms with residents, with 15 percent of them remaining unconvinced about whether to sign an agreement un-der the renovation plan. They fear their interests may be harmed and complain the renovation plan is not completely fair and open.

“I am afraid we could be the victims.

The government officials are pushing us to agree, but why don’t they just give us the money and we renovate our homes by ourselves?” said a resident who declined to provide his name for fear of coming to the attention of officials, who in turn talk of “sunshine projects” and absolute open-ness.

Shi Ziqing, meanwhile, is in favor of the renovation project. Having already signed an agreement, she has been working to persuade her neighbors to do the same.

Wu Shaofu, vice director of the hous-ing management department of Wuhou District in Chengdu, said attentions have lately turned to run-down areas of the city scattered in isolated spots. Compared to large areas of old shingle-roofed houses, these smaller neighborhoods hold little commercial value for development and pose challenges.

For Wu, how he uses a fair approach to convince Alley 14 residents of the true benefits of renovation will directly de-termine the outcome of their new home dreams. And ultimately, it will impact upon such projects’ economy-boosting ef-forts when they are rolled out across the country.(XINHUA)

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Suzhou Garden Archives re opens to publicDesk RepoRtBeIJING

Suzhou Garden Archives in Suzhou, Jiangsu province, re-opened to the public after over one year of design and construction.

The new archive has an area almost twice as large as the previous archive, dis-playing celebrity handwriting, paintings, calligraphy and related books.

Professionals in archive and gardening can book a visit in person or in a group.

The exhibition hall features garden el-ements such as carved wood windows, gateways and old trees, combining ancient style with modern flavor.

This is the first time celebrity handwrit-ing, paintings, calligraphy and related books have been exhibited, said Ni Lex-ian, an employee of the archive. Paintings and calligraphy works are all about Su-zhou’s gardens.

Meanwhile, Infrastructure projects for the Shuangshan Island holiday resort in Zhangjiagang of Jiangsu province will be completed within the year with an invest-ment of 300 million Yuan ($49.02 mil-lion).

The projects include three categories: roads and waterways, modern agriculture

and eco-environment.The roads and waterways project fo-

cuses on improvement of transportation, such as re-building ports, improving a reception center of a golf course and pro-viding ferry services. It aims to advance service functions of the resort.

A tourist town project is being carried out at the same time to meet the require-ments of tourists such as food, accommo-dation, transportation, travel, shopping and entertainment.

Good environment is key to sustain-able development of the resort. The island is trying to develop the sight-seeing in-dustry and recreational agriculture. Rice, wheat and oil-producing plants will be planted on a field measuring 4 million square meters. Sunflowers, rape flowers, mulberries and cherries will also be plant-ed in the field.

The construction of a waterway for sight-seeing is also underway on the is-land.

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Real estate

China should follow sustainable urbanization pathBeIJING

With massive city construc-tion and rising urbani-zation rate over the past decades, the Chinese gov-

ernment should focus more on a human-oriented and sustainable path, experts say.

On the back of galloping economic growth since the implementation of the reform and opening up policy in 1978, China has become more urbanized.

Data showed that the country’s urbani-zation rate increased from 17.92 percent in 1978 to 52.57 percent in 2012, an an-nual growth of 1 percent.

However, local governments have fa-vored a campaign of city construction, as their local finances rely largely on revenue from land sales, mostly for real estate de-velopment.

The sheer focus on construction of real

estate has created many cities with very few inhabitants, such as Erdos city in In-ner Mongolia autonomous region, which is known for its sparse residential com-munities.

According to the Beijing News on Sep-tember 2, permanent residents in Erdos is just above 100,000.

Since last year many construction sites have suspended operation and many workers have left, Liu Yao, a taxi driver, said.

“Local governments should abandon the mentality of pursuing urbanization for driving up investment and stabilizing growth in the short term,” according to Wang Xiaoguang, an expert with the Chi-nese Academy of Governance.

Last year, the 18th National Congress of the Communist Party of China said that the nation will pursue a new kind of ur-banization with Chinese characteristics.

A major task of the government’s eco-nomic work in 2013 is to actively promote urbanization and strive to enhance its quality, according to a central economic work conference held in December.

Since the beginning of the year, the gov-ernment has emphasized efforts that put people first, using the potential of urbani-zation to support growth in the coming decade.

Government plans on how to do this should be released later this year.

Wang said the new urbanization drive should not be about investment, but about the future direction of related reforms, in-cluding “hukou”, or the household regis-tration system, the land system and push-ing for equal public services.

Hundreds of millions of migrant rural workers in Chinese cities cannot enjoy the same public services and social benefits as urban residents do partly due to the coun-

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China should follow sustainable urbanization pathtry’s household registration system.

Xia Bin, a counselor for the State Council and a former member of the monetary policy com-mittee of China’s central bank, believed the old pattern of urbanization is not sustainable in the longer term.

The new type of urbanization should be able to overcome the drawbacks of the old path, and a significant job is to solve the housing, educa-tion, health care and pension problems of rural workers to grant them the same treatment as ur-banites, Xia said.

China had 262.61 million migrant workers by the end of 2012, about a fifth of its total popula-tion, according to the National Bureau of Statis-tics.

Apart from providing equal public services, the government should also promote the de-velopment of the service sector and encourage small enterprises to offer more job opportuni-ties for migrant workers, said Zhang Yansheng, secretary-general of the Academic Committee of

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the National Development and Reform Commission.

The country must provide necessary vocational educa-tion and technical training for rural workers, Zhang said.

“The central issue in seek-ing new-type urbanization is quality and efficiency, instead

of scale,” according to Zhang. Urbanization should also

focus on energy-saving, green and efficient development of cities and make scientific plans when it comes to layouts so that land resources can be used with minimum waste, Xia said.

Urbanization needs to ex-plore a new pattern that fits the next 35 years, instead of be-coming an extension of the old mode seen in the past three-and-a-half decades, according to Zhang.

The secretary-general added that China should take an ur-

banization path that meets high international standards, incorporates the ideas of green and intelligent growth and also features values including fru-gality, love of the environment and social harmony.(Agen-cies)

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Home prices continue to riseDesk RepoRtBeIJING

New home prices in 100 major cities averaged 10,442 Yuan ($1,706) per square meter in Au-

gust, rising for 15 consecutive months in month-on-month terms, and indicating the recovery of the property sector, a sur-vey has shown.

Of the 100 cities tracked by the China Index Academy, the research arm of Sou-fun, China’s largest property website, 71 cities posted month-on-month increases, with 31 of them seeing prices rising at a pace above 1 percent, two cities fewer than in July.

The other 29 cities saw monthly de-clines, 10 cities fewer than in the previous month. Of those, 14 cities saw drops more than 1 percent.

On an annual basis, new home prices in those 100 cities increased 8.61 percent on average, 0.67 percentage point higher than in July.

Among the 10 largest cities, Beijing saw the biggest property inflation with a 3.22 percent month-on-month increase in Au-gust, trailed by Wuhan, Hubei province, which posted a 2.16 percent month-on-

month increase.On a year-on-year basis, new home

prices in the 10 top-tier cities grew 12.18 percent in August, extending the period of gains to 10 months and pointing to ro-bust housing demand.

“It’s increasingly less likely that we’ll see new tightening measures in the property market, and investors and homebuyers are returning to the market and push-ing up prices because of the limited sup-ply,” said Huang Zhijian, chief analyst at Shanghai Uwin Real Estate Information Services Co.

Loosened purchase restrictions in Wen-zhou, Zhejiang province, and Wuhu, An-hui province, have sent signals lately that a relaxed policy environment might be in the works by local governments, and trad-ing is now more active than a few months ago, said the report.

In August, Wenzhou quietly loosened purchase restrictions in the housing mar-ket by allowing local and non-local resi-dents to buy second homes, while Wuhu decided to abolish transfer taxes and start paying a 20,000-yuan subsidy to under-graduate homebuyers with three-year work experience in the city.

Zhang Dawei, research director at real

estate company Centaline Group, said there will likely be more cities following those moves across the nation to ease purchase restrictions. Local governments rely heavily on the property market, a key driver of economic growth and a cash cow for them, Zhang added.

However, Hui Jianqiang, research direc-tor of Beijing Zhongfang-yanxie Technol-ogy Service Ltd, said that Wenzhou and Wuhu tweaked the policies to stop the continuous fall of home prices in the two cities.

Wuhu saw the heaviest losses in the home price list after shedding 2.29 per-cent month-on-month, while Wenzhou saw home prices decrease 0.31 percent.

Xu Shaoshi, minister of the National Development and Reform Commission, said in a report delivered to a meeting of the Standing Committee of the National People’s Congress on Aug 28 that the gov-ernment will launch pilot property tax programs in more cities.

“There will be between six and eight more cities with trial property tax pro-grams this year, with some of them possi-bly levying the tax on pre-owned homes,” said Chen Sheng, vice-president of the China Real Estate Data Academy.

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Agricultural

China plans to tame the WeatherBeIJING

In a move appearing to support that saying, China plans to boost its weather intervention through a na-tional plan.

The plan, running from 2013 to 2020, will divide the country into six regions and set up an interprovincial mechanism for weather control, Yao Zhanyu, a senior researcher of the Weather Modification Center under the China Meteorological Administration, told media.

Each region will build infrastructure and a command center for weather inter-vention, according to Yao.

Programs in northeastern, central and southeastern areas will be used mainly to guarantee the wheat harvest, and the northwestern program will be for envi-ronmental protection, Yao said.

He added that the southwestern pro-gram will focus on ensuring the operation of agriculture and hydropower, while the northern program will be concerned with guaranteeing water supplies.

China modifies weather mainly to in-crease rain or snow and prevent damaging weather such as hail, fog and rainstorms. Cloud seeding is the major weather modi-fication activity in China.

According to Yao, the northeastern re-gion — covering Liaoning, Jilin and Hei-longjiang provinces and parts of the Inner Mongolia autonomous region — was se-

lected as a pilot area to test the coordina-tion system after the National Develop-ment and Reform Commission approved a feasibility report in May 2012.

The report said the project will invest nearly 1.1 billion Yuan ($177 million) by 2014 to build a regional weather interven-tion system in northeastern China, in-cluding 12 weather intervention airplanes and ground-based facilities.

Yao said a feasibility report for the northwest started recently and the pro-gram is expected to be launched within one year if everything goes well.

The northwestern area, including Gan-su province, the Ningxia Hui autonomous

region, the Xinjiang Uygur autonomous region and parts of Inner Mongolia, is the main source of the sandstorms in spring and autumn.

To better meet agricultural demand and relieve disasters, China plans to increase annual precipitation by 60 billion metric tons and extend the coverage of artificial hail suppression to more than 540,000 square kilometers by 2020, according to the State Council.

“Cloud seeding to coax rain can relieve agricultural drought, reserve water for lakes, cool down high temperatures and ease pollution,” Yao said.

However, as cloud seeding is used on a massive scale, some critics have ques-tioned whether there is an environmen-tal impact as a result of manipulating the weather.

China commonly uses silver iodide, a hazardous substance and a toxic pollut-ant, for cloud seeding.

The country has used silver iodide to lessen the impact of periodic droughts since 1958.

But Lei Hengchi, a scientist specializing in weather intervention, said little impact would occur because the amount of chem-icals in cloud seeding is too small com-pared with the size of the affected region. Cloud-seeding aircraft use 200 grams to 300 grams of silver iodide during a flight. A rain-enhancement shell contains only 1 gram of silver iodide, while a rocket con-tains about 8 to 15 grams.

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Fonterra reveals plan for 2nd China dairy farming hubWeLLINGtoN

New Zealand dairy giant Fonterra is to launch a sec-ond farming hub in China and is looking for strategic

partners in the development planned for Ying County, Shanxi Province.

The company, which was at the center of an international food scare last month after issuing a false alert over botulism contamination, said Wednesday that it had received “strong support “ for its strategy to grow its Chinese interests from many levels of government in China.

The hub would comprise 3,000 cat-tle farms and was expected to be in production in the second half of 2014 and was the next step in the company’s strategy to produce 1 billion liters of milk in China by 2020.

“This is a key part of our strategy to become a more integrated dairy busi-ness in China and to contribute to the growth and development of the local Chinese dairy industry. Having se-cured the right location in the Shanxi province we are now able to approach potential strategic partners,” Fonterra

president of Fonterra Greater China and India Kelvin Wickham said in a statement.

“Ying County provides an ideal en-vironment for us to expand our farm-ing operations due to its new agricul-tural zone, proximity to customers and the high quality supply of animal feed available in surrounding areas.”

Fonterra would employ more than 500 people in Ying County, three quarter of them local employees.

“The second hub builds on our exist-ing investment in Hebei Province and will help us to meet customer and con-sumer demand for high quality fresh milk in China,” said Wickham.

“Raw milk supply growth in China has been around 2 percent over the past three years, but demand is grow-ing at around 6-8 percent. So there are significant opportunities for Fonterra to help bridge this supply gap by grow-ing our own domestic milk supply in China and continuing to import our high quality finished dairy products. “

When fully operational, Fonterra’s two hubs would together produce up to 300 million liters of milk per year. (Agencies)

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Science and technology

China develops new generation of high speed aircrafts&t Desk RepoRt

In a move appearing to support that saying, China plans to boost its weather intervention through a national plan.

China is developing helicopters with the ability to fly at speeds twice the current average, according the country’s major aircraft maker.

Lin Zuoming, chairman of Avia-tion Industry Corp of China, said the company is developing new-generation helicopters that can travel up to 500 kilometers an hour.

“We have been keeping pace with other countries in the research and development of ultrafast helicop-ters,” he added.

Lin was speaking after models of several new-concept helicop-ters were presented at the Second China Helicopter Expo, which con-cluded in Tianjin on Sunday. His company produces a wide range of helicopters, from ultra-light mod-els to heavy-lift helicopters.

The Blue Whale tilt rotor aircraft being developed by AVIC’s Helicopter Research and Development Institute will have a maximum takeoff weight of 60 tons and a payload of up to 30 tons, an engineer at the institute told People’s Daily.

He said the Blue Whale will be able to reach speeds of up to 700 km/h.

The aircraft will be able to perform ver-tical takeoffs and landings in areas with complex geographical conditions and conduct disaster relief supply airdrops and other heavy-lift duties.

It also can serve a wide range of military purposes such as battlefield reconnais-sance, patrols and air-to-ground strikes.

The Jueying-8, an unmanned, high-speed helicopter with coaxial rotors, was also featured at the expo. The air-craft, with much of its airframe made of composite materials, was designed to test the feasibility of ultra-fast heli-copters.

A prototype of the Jueying-8 is expected

to make its maiden test flight in 2015, and designers hope it will achieve a maximum speed of 400 km an hour.

Russia and France have also begun to develop ultrafast helicopters.

Russian Helicopters, the leading Rus-sian designer and manufacturer of heli-copters, announced in May that it is cooperating with industry and defense authorities in Russia on the development of a high-speed helicopter, which is ex-pected to perform its first test flight before 2020.

Meanwhile, the Eurocopter X3, an ex-perimental high-speed compound heli-copter being developed by the European helicopter giant, has been reported to be the fastest helicopter in the world, after reaching a top speed of 472 km/h during several test flights in June.

Ultrafast helicopters like the Eurocop-ter X3 will be able to conduct search-and-rescue missions, border patrols, passenger transport and a host of other military op-erations, China Aviation News reported.

Fang Yonghong, director of unmanned helicopters with the Helicopter Research and Development Institute, said China has cracked core technologies in key areas such as rotors, flight control and avion-ics, and developed a wide variety of un-manned helicopters.

In addition to high-speed helicopters, the institute is also developing an all-elec-tric helicopter, Fang said.

“Seeing that AVIC has the confidence to display those advanced, new-concept helicopters at the expo, we can conclude that China has authentically achieved substantial progress in helicopter research and development,” said Wu Peixin, an edi-tor at Aerospace Knowledge magazine.

“The appearance of these helicopters in-dicates Chinese designers and technicians have accumulated profound experience in composite material and engine research.”

After the unmanned prototype of Juey-ing-8 passes tests, it’s highly possible that designers will develop manned variations of the aircraft, Wu said.

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New Nano tech could treat lake pollutionHefeI

Chinese scientists announced on Monday that they have developed a type of nanomaterial which can catalyze algae masses growing on

water surfaces into inorganic earth.Chinese lakes are often plagued by

catastrophic outbreaks of blue-green al-gae. Triggered by vast amounts of sewage water drained into rivers and lakes, it can exude an unusually bad odor, suffocate fishery stocks and turn water into a milky green shade. Algae pollution has been a particular problem in three of China’s ma-jor freshwater lakes -- Chaohu, Taihu and Dianchi.

Chinese governments at multiple lev-els have invested billions of Yuan in re-cent years to treat the pollution. But large blooms of algae, although reduced in den-sity, still persist in times of sufficient heat and sunshine, conditions that are favora-ble for its growth.

Scientists with the Chinese University of Science and Technology said on Mon-day that their laboratory tests had showed a single gram of the new nanomaterial that can kill algae floating in an area equal in size to a basketball court.

Fan Chongzheng, who led the research, said that the catalyzer leads to a biodeg-radation of the algae into an inorganic earthenlike substance.

He added that lab tests were conducted

on water covered with a density of algae of over 100 million particles per liter. The water of Chaoku Lake, home to the most serious algae pollution among China’s major lakes, is covered with a density of algae of over 5 million particles per liter.

The 13,000-square km lake, located in east China’s Anhui Province, is surround-ed by fast-growing cities. Heavy use and local industrial development in recent years have made it one of the country’s most polluted lakes.

Sewage discharge has brought excessive amounts of nitrogen and phosphorus to the lake, incurring eutrophication of wa-ter, fueling the algae outbreak.

The development and reform com-mission in the provincial capital of Hefei pledged last year that facilities that can handle 5,000 to 10,000 tonnes of wastewa-ter per day will be built in every township surrounding Chaohu Lake by 2015.

Fan said that the biological treatment, along with the government’s measures to intercept sewage from urban areas, can together solve the algae pollution conun-drum.

He said the project team will conduct field studies at the lake, before reporting the research results to concerned central government departments for the applica-tion.