Magazine 41 edition

Magazine_Layout 1 6/29/2013 6:17 PM

News Editors

Summer WongJi Long

Mike LincolnJenny Alvin

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EditorJamshed Ullah

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Co-ordination

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Research & Analysis

Wang AiguoHe Cheng

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EditorialFM’s amazing move

Editor

According to news reports, China’sForeign Minister

Wang Yi has turned to a Hongqi H7 sedan as his

official car, instead of using any luxurious foreign

model.

The Hongqi H7 sedan, priced at between 299,800

Yuan ($48,950) and 479,800 Yuan, is a newly developed

sedan of the First Automobile Works Group Corp, mar-

keted to officials at the ministerial level or above.

at a time when China's domestic automobile indus-

try was going relatively weak, the decision by the Chi-

nese Foreign Minister to use local car for his official use

appears to be not merely a patriotic move but a bid to

promote country’s Auto sector and to restore local and

international confidence in abilities and capabilities of

Chinese carmakers despite the fact that the Chinese

government has already been introducing different

ways and means to promote the production of the local

Auto industry.

it remains a fact that most of China's official cars

are foreign made, despite the 2002 Government Pro-

curement Law stipulating that domestic brands should

be purchased.

In 2012, the Ministry of Industry and Information

Technology published an official car procurement man-

ual, which included more than 400 different Chinese-

made cars.

We believe that the decision that the Chinese FM

has taken and is being followed by his other colleagues

from the government is an amazing example to be fol-

lowed by the world leaders to promote their respective

local industries. We also believe that such decisions

would have a great impact on china’s economy in

coming years and it would come as a great booster for

the local industry.


01, 07 July 2013

Cover Story

Watchdog

steps up

standards on

recalls

04

FM opts to use

local Sedan

06

Growth of China's foreign

direct investment in May

dropped to just under 0.3

percent, an indicator that

global companies remain

hesitant to expand in

China amid its economic

slowdown.

in this issueMagazine_Layout 1 6/29/2013 6:17 PM

in this issueWandaexpandsglobalfootprint

China strikesback with

world’s fastestcomputer

Chinesefilm industry stillgrappleswithproblems

09 12

China Mobile

& Huawei

take 4G to

the Everest


04

Society

Watchdogsteps upstandards onrecalls


CED Monitoring

HANGZHOU-The China Foodand Drug Administration, orCFDA, the country's topfood and drug watchdog,has vowed to furtherstrengthen quality supervi-sion over products to ensuretimely recalls, particularlyfrom overseas.

The high-profile pledgecame in an online notice is-sued by the administration,informing the public of ameeting between it andJohnson & Johnson, a USmedical device, pharma-ceutical and consumerpackaged goods manufac-turer.

Since 2009, the com-pany has issued 33 productrecalls on the Chinese main-land, statistics from the ad-ministration show.

However, the HealthTimes reported on Sundaythat Johnson & Johnson hasissued 51 product recallssince 2005 worldwide, ofwhich 48 were not issued onthe Chinese mainland.

Products recalledranged from blood-sugarmeters to hip-implant parts,while most were over-the-counter medications, in-cluding the allergy medicineZyrtec and pain relieverMotrin, reports said.

Complaints about theseproducts included mustysmell, the presence of metalshavings and excessive doseconcentrations.

The company has with-drawn about 1.6 million bot-

tles of products, includingthe popular cold syrup Chil-dren's Tylenol, in South Koreain late April, citing a risk ofliver damage.

In early May, SouthKorea's Ministry of Food andDrug Safety ordered JanssenKorea to halt production offive drugs, including the chil-dren's syrup, citing improperconcentration of the mainactive ingredient.

Shanghai Johnson &Johnson PharmaceuticalsLtd, the company's unit onthe mainland, issued an an-nouncement shortly afterthe recall alleging that theproblem syrup was limited toSouth Korea.

In response to publicconcern over double stan-dard practices, the com-pany issued another onlineannouncement on Friday,saying the same standardsof quality control and prod-uct recall are enforced in allof its markets, includingChina.

All product recalls issuedin China are carried out inline with the country's rulesand regulations and are re-ported to the CFDA, it said.

The company addedthat overseas recalls not is-sued in China are for prod-ucts that are not registered,sold or produced in thecountry.

According to China'sregulations for drug recalls is-sued in 2007, the entity issu-ing the recall should be aspecific producer of a prob-lem drug.

Sun Zhongshi, a professorwith the national monitoringcenter for the rational use ofmedication under the Na-tional Health and FamilyPlanning Commission, saidthat recalls should be uni-form in all countries if theproblem detected involvesthe efficacy of, or an ad-verse reaction to, the drugproducts.

For problems mainlyconcerning quality control,the company only with-draws products in the af-fected areas, he added.

But Sun said that com-pany should inform drug au-thorities in various markets ofall recalls for reference pur-poses.

Despite the fact the lat-est recall in South Korea did-n't affect products sold inother markets, includingChina and the US, the CFDAmet with the company onThursday to address productquality and recall issues.

Frequent recalls overquality concerns reflect pos-sible flaws in the qualitymanagement system ofJohnson & Johnson, and thecompany should carefullylook into the sources of theissue to eliminate safety risksand ensure the quality ofproducts for the market, theCFDA said in an online no-tice issued after the meet-ing.

"Problem drug productsrecalled outside of Chinahave to be recalled withinthe country as well," itpointed out.

05


Society

06

FM opts to uselocal Sedan


07

FM opts to uselocal Sedan

CED Monitoring

BEIJING-Foreign Minister Wang Yihas turned to a Hongqi H7 sedanas his official car, which expertssaid is a sign Chinese officials aresetting their sights on nationalbrands.

Wang's sedan was put intouse on Monday, according tothe ministry's official micro blog.The message was forwardedmore than 2,500 times in threehours, and was quoted by majorChinese media.

The Hongqi H7 sedan, pricedat between 299,800 Yuan($48,950) and 479,800 Yuan, is anewly developed sedan of theFirst Automobile Works GroupCorp, marketed to officials at theministerial level or above.

FAW's share price roseabruptly after 1:05 pm, when thenews broke.

"Government officials shouldhave used domestic cars earlier,"said Huang Shengmin, director ofthe School of Advertising of theCommunication University ofChina.

"China's domestic auto-mobile industry was weak. Thegovernment has been tryingto promote the production ofthe industry.

So off ic ia ls should setexamples for consumersthrough their own actions,"he said.

Huang said the foreign min-ister is unique because peopletend to pay more attention to hisclothing and cars.

Most of China's officialcars are foreign made, de-spite the 2002 GovernmentProcurement Law stipulatingthat domestic brands shouldbe purchased.

In 2012, the Ministry of Indus-try and Information Technologypublished an official car procure-ment manual, which includedmore than 400 different Chinese-made cars.

"Consumers may be able tochoose between a domesticbrand or a foreign brand, butgovernment procurement, whichuses taxpayers' money, shouldnot have options other than do-mestic products," said WangYong, secretary-general of BrandChina Industry Union.

"The case is not unique toChina. I visited the US, France,Germany and Japan, and all theofficial cars were local brands,"he said.

However, Jia Xinguang, asenior researcher of the Automo-tive Industry Development Insti-tute, said the foreign minister'schoice has more political signifi-cance than actual meaning forthe industry.

"Even if all the officials at min-isterial level or above use na-tional brands, they are toolimited in number to revitalize thewhole industry," Jia said, addingthat officials at lower levels couldbuy foreign cars.

On the other hand, he notedthat since the Hongqi H7 sedan isdesigned for officials, few peoplewould turn to it when choosing afamily car.

"The design of Hongqi H7sedan, suitable for official use, iselegant, while most consumerswould choose cars that have amore luxurious appearance andmore comfortable interior de-sign," Jia said.

He said that foreign brandshave advantages over domesticbrands because of their bettermanagement.


08

Finance

WandaexpandsglobalfootprintCED Monitoring

BEIJING-Chinese conglomerateDalian Wanda Group is to investmore than 1 billion pounds ($1.6billion) to buy a British yachtmaker and to build a top-endhotel in central London, in a bidto expand its overseas presence.

The company said onWednesday that it will pay about320 million pounds to acquire a91.81 percent stake in SunseekerInternational Ltd, a Dorset-basedluxury yacht manufacturer whichis famous for providing yachts forJames Bond movies.

The remaining 8.19 percentstake will be acquired by Sun-seeker's management team. Thedeal is expected to be com-

pleted by mid-August.Wanda Group also said it will

invest 700 million pounds to builda five-star, 160-room hotel on theSouth Bank overlooking theThames River.

The investment marks thecompany's second major step inits overseas expansion strategy.

Wanda set the currentrecord for the biggest Chinesetakeover of a US company whenit bought the AMC EntertainmentHoldings Inc cinema chain for$2.6 billion last year.

"We choose the most devel-oped economies in the world,such as the United States and theUnited Kingdom, as our top des-tinations for overseas expansion,"said Wang Jianlin, chairman of

Wanda Group, which reportedrevenue of 141.7 billion Yuan($23.1 billion) last year.

"We'll not rule out investing inother developing countries, butwe prefer to do our global ex-pansion moves in well-devel-oped markets withwell-established laws and regula-tions," Wang said, adding thecompany's overseas operationsare expected to contribute tothe company's total revenue by2020.

Wang added that he's veryconfident about the potential ofChina's luxury yacht market.

For instance, his company,which bought a Sunseeker Pred-ator 108 Special Edition in 2010,will need to buy at least 30 luxury


09

yachts for the future operationsof three yacht clubs in three Chi-nese coastal cities as part of thecompany's plans to further de-velop its tourism and resort busi-ness.

He said the company is alsoconsidering setting up a manu-facturing base for Sunseeker inChina to lower the price of luxuryyachts in the country. The heftyprices are a result of high importduties, which can be as high as43 percent.

The booming luxury marketin China and Chinese people'sgrowing appetite for luxurygoods are only part of reason forWanda's expansion into the UK.The company's five-star hotel isexpected to bring a Chinesetouch to London and meet theneeds of Chinese tourists, whoare increasingly traveling over-seas.

According to Wang, the 200-meter-tall hotel, located next tothe Palace of Westminster andBattersea Power Station, is ex-pected to become one of Lon-don's new landmark buildings. Hesaid the company will build morefive-star hotels overseas and

plans to expand into eight to 10major global cities in the next 10years.

Sebastian Wood, the UK'sambassador to China, said hehas seen a surge in investmentfrom Chinese companies in thepast few years.

"The UK is the most openeconomy. As many as 500 Chi-nese companies operate there,"he said.

In 2011, the UK was the third-largest European Union destina-tion for Chinese investment, afterLuxembourg and France, ac-cording to the Ministry of Com-merce. Chinese directinvestment in the country in 2011was $2.5 billion, it said.

A report released byRhodium Group, an economicconsultancy, in June 2012, pre-dicted that Chinese outbounddirect investment will reach $1trillion to $2 trillion between 2010and 2020. The report said that aquarter of that will go to Europethrough mergers and acquisitionsor greenfield investments.

Gary Liu, executive directorof the CEIBS Lujiazui Institute of In-ternational Finance in Shanghai,

said that this is a "very good time"to invest in Europe due to thecurrent period of economic tur-moil.

"Some European assets maybe undervalued, but that doesn'tmean they're bad, actually theyhave high potential growth andappreciation value," Liu said."Also, the appreciation of therenminbi makes the cost of ac-quisitions much lower."

But Liu also warned of therisks of overseas acquisitions,adding that the completion of adeal does not necessarily meansuccess.

"The performance of theparent company can bedamaged if it's unable tomanage the company it buys,which likely has a totally dif-ferent culture," he said.

Wang Jianlin said the com-pany will keep Sunseeker's exist-ing management, workforceand production base in the UK.

"We want to have a diverseculture and management style inWanda Group because our goalis to become a global com-pany," Wang said.


10

Finance

Chinese film industry stillgrapples withproblems


11

CED Monitoring

SHANGHAI-Despite rapid growth,the Chinese film industry still facessome nagging problems that in-dustry experts say must be re-solved before it moves on to thenext level of its development.

Zhang Tian, the general man-ager of Shanghai's Culture Assetsand Equity Exchange - the first pilotprogram backed by the centralgovernment for cultural enterprisesto trade copyrights and equities -told a film and TV finance work-shop this week that inadequaciesin intellectual property right pro-tection, in particular, have contin-ued to cloud the industry.

What's more, Zhang said thelack of a formal channel for closercommunication between filmmak-ers and investors has blocked theflow of investment money into the

industry."More financing products,

tools, and trading measures wouldhelp investors and film makers tomake better use of various re-sources, and the exploration of fur-ther financing models wouldbenefit the industry in the long run,"added Zhang.

These issues aside, however,China's film-making market hasbeen growing fast since 2010.

The country's combined boxoffice revenues reached $2.7 bil-lion in 2012, a 36 percent year-on-year increase.

It is now the world's second-largest film market just behind theUnited States, and the world'sthird-largest filmmaker, accordingto the Motion Picture Association.

"China, and especially Shang-hai, continues to be a popularbackdrop and facility for both

local and foreign film productions,"said Rance Pow, the president ofArtisan Gateway, a leading filmand cinema industry consultingfirm, at the launch of a report onthe economic contribution of theShanghai film and television indus-try.

His company was commis-sioned by the US Consulate inShanghai to release the study.

Pow added that it is essentialto ensure that intellectual propertyrights are protected before con-sidering how to raise film invest-ment and make money out of anymovie projects.

Funding for filmmaking andtelevision production has alsobeen expanding.

According to data from theCulture Assets and Equity Ex-change, China now has 18 fundsthat specialize in filmmaking and


Finance

12

TV investment, worth a combinedtotal of more than 19 billion Yuan($3.01 billion).

Copyright evaluation and riskmanagement for lenders, as wellas intellectual property rightbreaches have also becomemajor obstacles for the growth ofChina's filmmaking industry, and in-vestors, under certain circum-stances, may see filmmaking as arisky area, according to Zhang.

Michael Ellis, president and

managing director of the MotionPicture Association, Asia Pacific,said establishing market conditionswhich make it attractive for sus-tainable theatrical and non-the-atrical returns will benefit China'sfilmmaking industry.

While around three-quartersof film revenue in the US comesfrom non-theatrical channels suchas theme parks, hotels and comicproducts, in China only about 10percent of total film revenue is

generated outside of theaters,which means China is yet to fullyexploit that side of the industry,said Ellis.

A recent report jointly com-missioned by the China Film Distrib-utors & Exhibitors Association andthe Motion Picture Association es-timated that China's total incomefrom DVD, Blue-ray, and VCD salesand rentals in 2011 reached justover 350 million Yuan.

Estimates suggest Shanghai's


13

home entertainment market po-tential ranges between 140 millionYuan and 152 million Yuan.

Jo Yan, senior vice-presidentof Walt Disney Studio Distribution,Greater China, emphasized that inChina, it is not so much about howmuch is invested, but about thestory.

"Money has never been thekey problem for China's film indus-try, and most of the recent block-busters were not necessarily big

budget movies," he said.He added that the Chinese

digital market is growing and con-solidating and that he expected itto be very profitable in future forlocal film producers.

In 2012, the total number ofcinema screens in China grew toover 13,000 nationally after 3,832were added during the year - anaverage of 10.5 new screens perday. About 91.5 percent ofscreens are 2K digital projection in-

stallations, and most are 3D capa-ble.

Yu Dong, chairman and chiefexecutive officer of Bona FilmGroup Ltd, said that in five yearshe expects China to have a film-making industry worth $10 billion.

But he added: "It is essential tomake reforms to current filmmak-ing industry policies. Filmmakersneed to improve product quality,and policy makers need to intro-duce a film rating system."


IT

14

China Mobile& Huaweitake 4G to the EverestCED Monitoring

BEIJING-China Mobile's Tibetunit has held a 4G tr ial net-work launching ceremonyand has announced thatmore than 50 4G experiencelocations were already de-ployed, and the 4G era isspeeding up to embraceTibet, a consecrated borderland of China.

Zhuo Feng, the GeneralManager of China Mobile'sTibet arm said, the operatorhas been committed to pro-vide mobile communicationservice everywhere for cus-tomers by using the most infor-mation communicationtechnologies, and help en-hancing overall level of infor-mation in Tibet. Launching 4Gtrial network in Tibet, is notonly to meet the develop-ment needs of Tibet Mobile,

but also to implement the na-tional information construc-tion strategy. And mostimportantly, it’s an importantmeasure for the benefit of thepeople of Tibet.

Zhuo also indicated thatChina Mobile plans to investnearly CNY 300 mill ion Yuan inTibet to build more than 8004G base stations this year. Theplan aims at achieving con-tinuous coverage in the urbancore of Lhasa, and hot-spotswill cover the general districtsof Lhasa as well as the re-maining six main cit ies inTibet. Meanwhile, demonstra-tion sites would be put intoconstruction in each countytown of Tibet. The highwaysand major scenic spots wil lget hot-spots coverage aswell.

China Mobile wil l furtherboost investment plans to

make the 4G network cover-age available to all areas ofthe Tibet Autonomous Regionincluding county, rural areaand vil lage, which is about tobring 4G era with fast andmore convenient communica-tion services to 3 mil l ion Ti-betan people.

At the scene of thelaunching ceremony, ChinaMobile demonstrated a seriesof new 4G technologies andofferings to more than 200guests. What impress most isthe HD video “transfer as youshoot” feature based on 4G,which successful ly brings thepictures and sounds from alldirections including EverestBase Camp, Shanan and Ny-ingchi business hall, thePotala Palace and other 4Gcoverage areas to the mainvenue in Lhasa in real time.

Huawei’s project man-


15


IT

16


17

ager who is in charge of Tibetnetwork deployment said, in ad-dition to the network in launchingceremony location, the TD-LTEbase stations at Everest BaseCamp, Shannan, Nyingchi busi-ness hall and other venues in-volved in the activity were allbuilt by Huawei. Among all thediff icult ies, the construction ofbase station at Everest BaseCamp can be on the top of thelist.

According to C114, it’s thesecond cooperation betweenChina Mobile and Huawei atMount Everest. In the second halfof 2007, to ensure the safety ofmountaineering tour and to sup-port the 2008 Beij ing OlympicGames torch relay, China Mobile,together with Huawei and otherpartners, realized GSM coverageat Mount Everest after overcom-ing a series of diff icult ies asweather, transportation,etc.Now,Huawei’s GSM base stations atEverest Base Camp has been run-ning stably for many years andprovide tourists invaluable com-munication services.

New 4Gtechnologiesand offeringsto more than

200 guests


18

IT

China strikes backwith world’sfastest computer


19

CED Monitoring

BEIJING-China is back on top ofthe supercomputing world withthe successful operation ofTianhe-2, the world's fastestcomputer.

A delighted Liao Xiangke,the 50-year-old chief designer,said his team's supercomputingdream will never rest.

"Like astronauts' spacedreams and sailors' aircraft car-rier dreams, our supercomputingdream is part of the Chinesedream," he said.

Last week, TOP500, an or-ganization that evaluates high-performance computersworldwide, announced that

Tianhe-2 was the world's fastestsupercomputer.

It's ultra-high capability of54.9 petaflops, or 54.9 quadrillioncalculations per second, out-shone competitors from theUnited States and Japan. It willprovide an open platform for re-search, education and high per-formance computing servicesfor southern China.

Jack Dongarra, the US su-percomputing expert who com-piles the TOP500 list, said thereare a number of unique and in-teresting features of Tianhe-2, in-cluding the FT-1500 centralprocessing unit.

Li Nan, deputy chief de-signer and spokesman for the

Tianhe-2 project, said that of themany technological innovationson this "magic instrument", theFT-1500 is "his pride".

Supported by national fund-ing and developed by the Na-tional University of DefenseTechnology, Tianhe-2 was built injust 15 months with a calculationcapability 11 times its predeces-sor Tianhe-1A.

With a peak performance of4.7 petaflops, Tianhe-1A headedthe TOP500 list in November2010, becoming the first Chinesesupercomputer champion. Yetby the end of 2012, the leadingposition had been lost to the Kcomputer from Japan, and theSequoia and the Titan from the


20

IT

United States.Global competition in high-

performance computers isfierce, Liao said, and Tianhe-2,facing rivals from the US andJapan, may only keep its edgeuntil 2015.

Li said the US still dominatesthe high-performance comput-ing field, accounting for half ofthe top 500 supercomputers inthe world.

"That's why nurturing ourown supercomputing talent is soimportant," he said.

In November 2011, a coop-eration agreement was signedby the Guangdong provincialgovernment, Guangzhou mu-nicipal government, the Na-tional University of DefenseTechnology and Sun Yat-sen Uni-versity to establish a Guangzhousupercomputing center by theend of 2015. The center aims tobecome China's fifth national su-percomputing center after Tian-jin, Shenzhen, Changsha andJinan.

The $407.5 million projectfeatures Tianhe-2, which consistsof 170 computer cabinets. Theleading supercomputer, cover-ing an area of 720 square me-ters, also boasts memory of 1.4petabytes and storage capacityof 12.4 petabytes. Tianhe-2 willreportedly be transferred toGuangzhou and put into opera-tion in October.

Wang Bingqiang is amongthe many scientific researchersin Guangdong province withhigh expectations of Tianhe-2.

As head of the high-perfor-mance computing team of BGI,a leading genome research in-stitution based in Shenzhen,Wang said that the company'sscientific research and commer-cial projects rely on supercom-puters like Tianhe-2.

"Genetic research producestremendous amounts of datathat need to be stored and

processed by supercomputers,"he said. "The better utilization ofthe supercomputer, the moretime and resources will be savedfor our benefits."

BGI launched the MillionHuman Genomes Project in No-vember 2011 to decode thegenomes of more than 1 millionpeople.

This project aims to establisha research baseline and refer-ence standard for specific pop-ulations, as well as to connectthe phenotypes of diseases andtraits with genetic variations tounderstand disease mecha-nisms.

It will guide innovative clini-cal diagnosis and treatment,and ultimately advance person-alized healthcare and improvehuman health, said Fang Lin,deputy director of BGI Research.He added that the current guidesystem will no longer satisfy theenormous needs of calculationand data processing of this proj-ect.

"Suppose we are scanningfor a high resolution genetic vari-ation landscape over more than500 human individuals. It wouldtake a single computer morethan four years to finish thework," Wang said. "With theguide system, it requires aboutfive hours, yet with Tianhe-2 thesame amount of calculationneeds only 10 minutes."

Not only companies and re-search institutions will benefitfrom the forthcoming supercom-puter — people will also enjoythe convenience brought byTianhe-2's vast storage and high-speed calculations.

"For instance, an electronicmedical records system can beestablished under Tianhe-2 sothat a patient's previous diagno-sis and treatments will be acces-sible by different medicalinstitutions, avoiding repeatedexaminations as in the past," said

Lu Zexin, technical director ofthe Guangzhou Supercomput-ing Center.

"More information sharingamong different departmentswill also curb red tape and liftworking efficiency," he said.

Genetic engineering, bio-medicine and animation indus-tries have long prospered inGuangdong province.

Li, deputy chief designer,said that scientists have consid-ered demands from these clientsduring feasibility studies ofTianhe-2 to ensure it providesbetter service.

So far, more than 600 usershave registered. Concerns overInternet security have arisen inthe wake of the recent revela-tions of US Internet monitoring byits PRISM program.

Lu said that Tianhe-2 adoptsthe Kylin operating system, aquality research product withhigh security developed by theNational University of DefenseTechnology. It provides strictdata isolation to guarantee se-curity according to the needs ofclients.

Sebastian Schmidt, an ex-pert at the Juelich ResearchCenter in Germany, said that theperformance of Tianhe-2 andthe design team are amazing.

"Development of supercom-puters in the future will requiremuch closer international col-laboration, since it takes joint ef-forts to combat globalchallenges and to find solutions,"Schmidt said.

Li, the deputy chief de-signer, said that the Juelich Re-search Center is nowcooperating with the NationalSupercomputing Center in Tian-jin on some challenging compu-tational projects.

"By joining hands with China,Europe will also reduce its de-pendence on the United Statesin the area of supercomputing,"he said.


21

Despite great progress, Liao,the chief designer, said thatthere remains huge room for im-provement in energy efficiency,software application and devel-opment of a new generation ofCPU. "In the future, we hope do-mestic demands for supercom-puting are fully tapped tostimulate us to design and pro-duce supercomputers with bet-

ter performance," Liao said.China's supercomputing

dream started in 1978 whenthen-Chinese leader Deng Xi-aoping chose the National Uni-versity of Defense Technology asone of the major institutions todevelop China's own supercom-puter.

Five years later, China's firstsupercomputer Yinhe-I came

into being, which could perform100 million calculations per sec-ond.

Supercomputing drew peo-ple's attention again in 2007,when Dawning, vendor of theNebulae supercomputer,helped China National Petro-leum Corporation discover 100million metric tons of oil reservesunder Nanpu in Hebei province.


22

Industry

CED Monitoring

BEIJING-Growth of China'sforeign direct investment inMay dropped to just under0.3 percent, an indicator thatglobal companies remainhesitant to expand in Chinaamid its economic slowdown.

According to the Ministryof Commerce, FDI was up just0.29 percent from a year ear-lier to $9.26 billion, comparedwith a 0.4 percent increase inApril and the slowest growthsince February.

While China's FDI growthdecelerated, its outbound di-rect investment saw robustgains, expanding by some 20percent in the first fivemonths of this year to $34.3billion, according to the min-istry.

The decelerating growthin inbound direct investmentcomes while the world's sec-ond-largest economy is fur-ther losing growthmomentum. The economygrew at its slowest pace for13 years in 2012.

But Shen Danyang,spokesman for the ministry,

rebutted the notion that thenation is losing its appeal tomultinationals as an FDI desti-nation.

He said that "from aglobal perspective, China'sFDI trend remains compara-tively stable and good … andpositive growth (in FDI) forfour consecutive months, to alarge extent, shows therecognition of global in-vestors on the competitive-ness of the Chinese economyand the nation's investmentenvironment".

Shen added: "I have torepeat that China's FDIgrowth this year will remainstable."

FDI in 2012 hit a recordhigh of $111.7 billion. The na-tion has remained the mostattractive FDI destinationamong developing countriesfor more than a decade.

But 2012 was the first yearthat the nation saw a drop inits annual FDI since 2009.

According to the ministry,during the first five months of2013, FDI was up just slightlymore than 1 percent from ayear earlier to $47.6 billion,

mainly led by developed na-tions and regions.

Investment from theUnited States was up by 22.6percent, and that from theEuropean Union increased24.1 percent from January toMay.

During a meeting with ex-ecutives from more than 10multinational companies thatwere to attend the FortuneGlobal Forum 2013 inChengdu earlier this month,Premier Li Keqiang tried toclear up the foreign busi-nesses' doubts by saying that"China has the ability andconditions" to sustain eco-nomic growth and "China willbe committed to deepeningthe reform and opening-uppolicy".

Li encouraged the for-eign companies to "cash inon the huge opportunities re-sulting from the nation's eco-nomic development andefforts toward industrializationand urbanization".

"Short-term fluctuations(in FDI) should not be a bigconcern. We have to see thebigger picture," said Wang

Economic Slowdown hitsChina’s FDI


23

Zhile, a senior researcher onforeign investment at the Chi-nese Academy of Interna-tional Trade and EconomicCooperation.

"Undoubtedly, the newChinese leadership is very en-thusiastic about furthering itsopening-up policy and at-tracting foreign companies.This is a very positive signal for

China's prospects on FDI," hesaid.

James Lee, regional di-rector of the Institute of Char-tered Accountants in Englandand Wales in China, agreed.

"Some positive reformsand measures that China istaking on things such as ur-banization are good news forforeign investors," he said.

Shen said he was confi-dent of the strong momentumthat China's ODI will maintainthis year.

Developed nations andregions have led the robustgrowth. During the first fivemonths, China's ODI into Aus-tralia gained by 93 percent,the United States 76 percent,and the European Union 47percent, from a year earlier.


24

Industry

Carbon tradingbegins in Shenzhen


25

CED Monitoring

SHENZHEN - The city of Shen-zhen, in south China's Guang-dong province, launched acarbon trading scheme onTuesday, the country's first mar-ket for compulsory carbon trad-ing.

The scheme covers 635indust r ia l companies andsome publ ic bui ld ings thataccount for about 40 per-cent of the ci ty ' s carbonemiss ions, the Shenzhen car-bon t rade exchange said ina statement.

Under the trading program,

those which emit below theirquotas could sell their excesslimits to other emitters andeven investors for profit.

The carbon intensity, or theamount of carbon producedper unit of gross domestic prod-uct, of the 635 industrial com-panies in 2015, will slump 32percent from levels in 2010, thestatement said.

Eight deals, or 21,112-toncarbon quotas, were tradedTuesday at prices ranging from28 to 32 Yuan ($5.2) per ton.

China's National Develop-ment and Reform Commission,the top economic planning

agency, also approved pilotcarbon emission tradingschemes in six other areas: Bei-jing, Tianjin, Shanghai,Chongqing, Hubei and Guang-dong.

Experts and governmentofficials hailed the pilotschemes as a landmark step forChina in building a nationwidecarbon emission trading mar-ket.

The country has pledged toreduce carbon dioxide emis-sions 40 to 45 percent per unitof GDP by 2020, in comparisonwith 2005.


26

Automobile


27

Changanpoised to

sell JV carshome &abroad


28

Automobile

CED Monitoring

BEIJING-Changan AutomobileCo Ltd, one of China's largestState-owned automakers, ispoised to make a historicbreakthrough by having one ofits joint ventures both produc-ing and selling Chinese-branded cars at home andabroad.

The Chongqing-basedcarmaker and the Frenchautomaker PSA Peugeot Cit-roen establ i shed thei r jo intventure in 2011 in Shenzhen,cal led Changan PSA Auto-mobi les Co Ltd, to acceler-ate the State-owned automanufacture's internat ional-izat ion process.

"Within the next threeyears, Changan cars producedby our joint venture with PSAwill be sold in China and over-seas," said Ren Qiang,Changan's vice-president.

"As China's largest nationalbrand auto producer,Changan is now realizing thisunprecedented success injoint-venture enterprise opera-tion," Ren said.

Since the 1980s, various au-tomotive joint ventures havebeen set up in China. Interna-tional carmakers have sharedtheir manufacturing technol-ogy and know-how with Chi-nese State-owned partners togain a foothold in the market.

Shanghai's SAIC MotorCorp Ltd operates 104 jointventures, including two of thebiggest with Volkswagen andGeneral Motors.

Changan has also set upjoint ventures with Mazda, Fordand Suzuki.

Joint ventures have beenselling foreign or joint-brandedcars in the Chinese market withthe Chinese companies having

little say on the marketing strat-egy, Ren said.

China is now the world'sbiggest car market with inter-national brands gaining hugepopularity and joint venturesdominating the market.

In 2011, 95 percent of totalprofits generated by all autoenterprises in China were fromjoint enterprises, and inde-pendent firms accounted forjust 5 percent, according to areport released by ChineseAcademy of Social Scienceslast month.

"Until now, none of the au-tomobile joint ventures inChina had ever introduced in-dependent Chinese brandsonto the market," said JiangAiqun, a spokesman atChangan, adding that withthis breakthrough, the com-pany has now achieved thebusiness model of a true multi-national group.

Although already a majorauto producing and consum-ing country, China's inde-pendent-branded autocompanies are sti l l at thelower end of the global indus-try, the Chinese Academy ofSocial Sciences report con-cluded.

In a market investigationconducted by PSA in SouthAmerica last year, unmarkedChangan vehicles gained thesame satisfaction reading asunmarked PSA productsamong local consumers, andJiang said that was the mainreason for the decision byboth sides to launch Changanautos produced by CAPSA, inthe Chinese market.

The French company hasbeen low-key about its plansto introduce Chinese-branded cars from the jointventure because the move is

so unusual, according to aworker at Changan.

Chinese automakers areseeking various opportunit iesto increase market share fortheir own brands, in their fightagainst foreign counterparts.

Companies includingSAIC, FAW Group andChangan all plan to introducemiddle- and high-end vehi-cles, an sector of the marketnow dominated by foreignbrands.

Overseas expansion is alsoone of their strategies.

"By 2020, we plan to in-crease overseas sales ofChangan autos to 25 percentof the brand's total sales vol-ume," said Ren.

In 2012, more than 1 mil-l ion Chinese-branded carswere exported mainly by fiveleading companies: CheryAutomobile Co Ltd, Geely Au-tomobile Holdings Ltd, GreatWall Motors, GMAC-SAIC Au-tomotive Finance CompanyLtd, and Lifan Group, accord-ing to data from China Associ-ation of AutomobileManufacturers.

Although stil l in its infancy,the Chinese automotive in-dustry is now expected tostep up its overseas expan-sion.

From January to Apri l ,Changan registered 710,000sales in total, a 23 percentyear-on-year increase, and 10percent higher than the indus-try average.

Its independent brandsales reached 321,000, rank-ing it top among China'sbrands.

"Having al ready startedsel l ing in Braz i l , Changan'snext step is to establ ish com-ponent and process ing jo intfactories overseas," said Ren.


29


30

Automobile

‘Volvo Carscommitted toWest Chinauplift’


31

STOCKHOLM -- Volvo CarsGroup is committed tothe development of WestChina, Hakan Samuels-son, the company's Presi-dent and CEO said.

"We are very commit-ted to Chengdu and ourdevelopment in WestChina Exploration,"Samuelsson, who at-tended the 2013 FortuneGlobal Forum in China'swestern city of Chengduon June 6-8, said in a re-cent interview with Xin-hua.

He said his company,as an official partner,hosted one of the SpecialRoundtable Discussionson the future of trans-portation.

The forum focused onthe monumental changesthat are defining China'sfuture and shaping thecourse of global businessfor the 21st century.

Samuelsson believesthat for purposes of "botheconomic prosperity anda better life for the Chi-nese people" illustrated inthe "Chinese dream" Pres-ident Xi Jinping raisedover the last few months,West China plays a criti-cal role in closing gapscreated in the past.

"It is the right direc-tion for China and thestart of a transformationas we are doing for VolvoCar Corporation," hesaid.

Having witnessedgreat changes ofChengdu over the pastdecade, where manyother Fortune 500 com-panies have set up of-fices and poured ininvestment, Samuelssonsaid that he was "glad

Volvo is a pioneer in thisregard," referring to anew "world-class Automo-tive Industrial Base in thiscity."

According to thecompany's latest finan-cial report, Volvo Cars willinaugurate in Chengduits first Chinese manufac-turing plant, whichSamuelsson vowed willfollow the same principlesand processes as its Euro-pean car plants.

Like many otherglobal companies, VolvoCars believes thatChengdu is a very goodchoice for regional hub.

"Volvo is coming tostart a new chapter of it-self and Chengdu, shift-ing the city and provinceby adding the automo-bile industry to IT," saidSamuelsson.

"Volvo since threeyears ago have startedbuilding our 3rd world-class or state-of-the-artmanufacturing plant inChengdu. We will alsobuild logistic center,Volvo Museum and BrandExperience Center as wellas training center inChengdu," said Samuels-son.

"Chengdu is a veryhigh priority for the entireorganization. Chengduand the surrounding re-gion is not only a hugemarket but also a goodlocation to invest basedon talent, cost, govern-ment support and sup-plier base," he said.

"The automobile in-dustry has a very fiercecompetition in China. Inthe first quarter, our salesvolume grow by 30 per-cent and far above the

“Volvo since threeyears ago havestarted building our3rd world-class orstate-of-the-art man-ufacturing plant inChengdu. We willalso build logisticcenter, Volvo Mu-seum and Brand Ex-perience Center aswell as training cen-ter in Chengdu”


Automobile

32

market average," he said, ex-pressing "confidence" that afterthe Chengdu plant starts pro-duction and six new models arelaunched in China this year,"we will make our China Growth

Plan a success and Volvo's suc-cess in China is very importantfor our global transformation."

Samuelsson emphasizedthat Geely Holding Company,based in China, as Volvo Cars'

parent group is the company's"good advantage."

Talking about structuralchange in Volvo Car productsfor China, he said, "we applyglobal and consistent sourcing


33

and supplier management,manufacturing technology andquality standard as in Swedenand Belgium while our competi-tors might do it a little differ-ent."

"Also we are studying carelectrification and have pro-vided C30 electricity vehicleand V60 plug-in hybrid for testdrive in Shanghai," saidSamuelsson.

"In short, Volvo regardsChina its 2nd home base and isbuilding a full-fledge capabilityand strategic investment inChina," he said. "We are happywith our progress."(XINHUA)


34

Construction

China Railwaytargets freighttransport market


35

BEIJING -- TheChina Railway Corpo-ration, a commercialarm separated from

the nation's ex-rail-ways ministry, said Sat-

urday that it will pushits freight transportservices to cover a

bigger market.A company

spokesman said it willwork toward that goal

through a slew of re-forms focused on effi-

ciency and betterservices, in efforts to

transform the com-pany's freight trans-port into a modern

logistics business.The China Railway

Corporation will sim-plify procedures re-garding customers'

needs in freight trans-port, such as offering

direct and fast serv-ices via its platforms

including hotlines andits Internet-based serv-ice platform 12306.cn,

the spokesman said.The website is also

the primary serviceproviding passengers

with online ticketbookings and ticketrefunds in case pas-

sengers want to can-cel a trip.

In March, Chinadismantled its Ministry

of Railways into ad-ministrative and com-

mercial arms toreduce bureaucracy

and improve effi-ciency. The ministry,both a policymaker

and service provider,had long been criti-

cized for low effi-ciency and

unpleasant services.(XINHUA)

The China Railway Corporationwill simplify procedures regardingcustomers' needs in freight trans-port, such as offering direct andfast services via its platforms in-

cluding hotlines and its Internet-based service platform 12306


36

Real Estate

Golden touch togreen building


37

CED Monitoring

BEIJING-When Ben Pape, afounder of the UK-China Eco-Cities and Green BuildingGroup, first came to Beijing inthe early 1980s, the capital wasbuilding the 48-kilometer ThirdRing Road. When he came thisyear, it was working on a sev-enth, 940 km long.

The frenzied expansion ofthe capital is only part of thebiggest and most rapid popula-tion shift in human history. In justthree decades, hundreds ofmillions of people in Chinahave moved from the country-side to the cities, resulting in anincredible mushrooming ofbuilding and infrastructure con-struction.

In 1980 when 20 percent ofChina's population was classi-fied as urban, the averagehousing space per head inChina's cities was about 7square meters. The numberjumped to 30 sq m in 2011, bywhich time about half of thecountry's population lived incities. Those figures indicate theextent of China's building spreeand its effect on the country'senvironment.

Factories and cars havetaken most of the blame forpolluting China's air and water,but buildings account for atleast 20 percent of China's totalenergy consumption. This has amajor bearing on governmentplans for reducing energy con-sumption, says Yang Hongwei,

Energy-saving models of housing on dis-play at an expo in Jinan, Shandong. Withmore buildings coming up, construction

companies are being urged to maketheir buildings greener.


Real Estate

38

director at the energy effi-ciency center of the NationalDevelopment and ReformCommission, China's top plan-ning organization.

With a predicted 1 billionpeople living in urban areas,with most in bigger apartments,by 2030, China's new leader-ship is calling for a new modelof sustainable urbanization,supported by new types ofbuildings.

In January, the State Coun-cil issued the Green BuildingAction Plan, a clear indicationthat the industry is now a policypriority.

In the plan, the govern-ment has set ambitious targets,including adding more than 1billion square meters of greenbuilding floor area by 2015 - 14times the area at the end of

last year. Insiders say that many

companies, from real estatedevelopers, architects andbuilding materials suppliers to ITcompanies and financial insti-tutions, may soon benefit froma boom in the market for greenbuildings, especially ones fromthe West.

Pape of the UK-China Eco-Cities and Green BuildingGroup, a government-to-gov-ernment platform set up in2010, says the West is in goodposition to help China becauseit made a lot of mistakes on theenvironment and has a lot ofexperience in trying to rightthose wrongs.

"The West focused greatlyon economics in the past,"Pape says. "If you looked at thedevelopment of the West

about 100 years ago, the dam-age to the environment was se-vere.

"There was smog in London,like Beijing has today. I can re-member as a young man that ifI put my hand out, I couldn'tsee the end of my fingers. Itwas unbelievable. Now Londonis very clean, so given the rightpolicies, the pollution problemscan be solved."

Pape says the Chinesegovernment has recognizedthis, and that after years of ed-ucating the public on the im-portance of livable cities andgreen buildings, it is high timefor action.

In Beijing, from June 1 allnew buildings have had tomeet the criteria for greenbuildings. They must be moreefficient in the use of energy,

An apartment with zero-carbon emission in Chongqing


39

water, building material andland, as well as providing a liv-ing place that is healthier thanconventional buildings.

For NDRC's Yang, a mem-ber of the Green Building Ac-tion Plan team, the reasonbehind the initiative is simple:China is the world's largest en-ergy consumer and emitter ofgreenhouse gases.

He says the country's an-nual energy consumptionsurged from 1.38 billion tons ofstandard coal in 2000 to 3.25billion tons in 2010, and is ex-pected to jump to 7 billion tonsby 2020.

"Buildings, which consumeone-fifth of China's energy, arecertainly considered a priorityin the country in terms of re-ducing energy consumptionand carbon intensity," Yang

says. As a relatively new entrant,

China's regulations for greenbuildings are not as strict as inthe West. China has been de-veloping a star-rating systemrelated to energy efficiencyand consumption, while Britainrequires all new houses to becarbon neutral in 2016, andCopenhagen in Denmark aimsto become a zero carbon cityby 2015.

Although the standardsmay not be set as high, manyWestern companies believeChina is the place in which todevelop green buildings be-cause of its giant market size.

"Green building is no longera discussion but a demand inChina," says Kristian LarsAhlmark, a partner SchmidtHammer Lassen Architects of

Denmark. Ahlmark says the potential

of the green building market inChina is one of the key reasonshis company set up an office inShanghai in 2011, although ithad worked on projects in thecountry since 2002. The globalfinancial crisis of 2008 hit thecompany hard, and its residen-tial projects in China werestopped.

"It forced our firm to thinkwhere they can see steadygrowth in the years to come.And we think the green build-ing sector in China is the an-swer."

Ahlmark's firm has grownfrom three architects to 20within 18 months of openingthe Shanghai branch.

Using the "passive design"concept of energy-efficient


40

Real Estate

building, his firm has worked ona mountainside residentialcommunity in Wuxi city in EastChina's Jiangsu province,where the buildings are de-signed and positioned to maxi-mize natural light while beingsheltered from cold winds.

If you can control the day-light, you can control the en-ergy in the building, Ahlmarksays, adding that design alonecan greatly reduce energy usebefore other technologies areapplied.

"We expect to double thearchitects we have now inShanghai within the next twoyears because of the momen-tum in China's green building

sector." Chris Twinn, senior sus-tainability consultant with Arup,a renowned international com-pany of designers, planners,engineers, consultants andtechnical specialists, saysChina is catching up fast in thegreen buildings sector.

UK-based Arup, noted forits work on the Sydney OperaHouse, Pompidou center inParis and for the 2008 Olympicsin Beijing, is constructing its firstzero-carbon building in HongKong as a demonstration proj-ect for potential clients, espe-cially on the Chinese mainland.

But China's work to pro-mote green buildings is mostlyfrom the top down, Twinn says.

"The politicians say the rightthing, pass the regulations andpolicies but there needs to beimprovement from the bottom,"he says, adding Chinese clientsare interested in green build-ings as long as they do not costmore.

When he started workingon zero-carbon housing about15 years ago, the cost wasabout 30 to 40 percent moreexpensive than conventionalhousing. Costs have fallen, butby 2016 they are likely beabout 5 percent dearer, hesays.

In Hong Kong, his teamplans to build the zero-carbonbuilding at zero extra cost. If

A demonstration of a zero-carbon emission building in Shanghai.


41

they succeed, he says, it will bea game changer in the sector.

Meanwhile, the highercosts of green building has afundamental influence on realestate developers.

Zhang Xuezhou, vice-presi-dent of China Real EstateChamber of Commerce, saysthe expensive upfront cost isthe main challenge for the fu-ture development of greenbuildings in China.

But Stanley Yip, a researchassociate at the Centre ofUrban Planning and Design atPeking University, says the costvery much depends on thetechnologies used in a design.Based on a research sample of

50 million sq m of China's certi-fied green buildings with one tothree-star ratings, the extracost for green buildings inChina can be as low as 0.43Yuan a square meter and ashigh as 306 Yuan ($50; 38 Euros)a sq m. Yip says developmentof the green-building sector willnot move into top gear until acity's GDP exceeds 600 billionYuan a year. In 2011 as manyas 16 cities in China hadreached that level.

Zhang of the China Real Es-tate Chamber of Commercesays incentives are needed tobetter promote green-buildingdevelopment before morecities become wealthy enough

to embrace the sustainablelifestyle. In May 2012, the gov-ernment released national sub-sidies for two-star greenbuildings of 45 Yuan a sq m,and 80 Yuan a sq m for three-star ones.

"These incentives are fordevelopers," Zhang says. "Mostof them use the best technolo-gies in green buildings for theirhigh-end projects. But it is theordinary buyers who really de-cide the market.

"If there were subsidies forbuyers, like the governmenthas done with green-energycars, the sector will grow muchfaster and on a much biggerscale."


Real Estate

42

CED Monitoring

SHANGHAI-Home prices in China ex-tended their rally for a seventhstraight month in December, with 57of the 100 major cities monitoredseeing higher prices, according tothe latest industry report.

The average price of new resi-dential properties across the 100cities edged up 0.23 percent fromthat of a month earlier to 9,715 Yuan(US$1,542) per square meter, ac-cording to the China Index Acad-emy's report released yesterday.That compared with an increase of0.26 percent in November.

Twenty-six cities registered again of more than 1 percent, com-pared with 17 cities in November.Harbin in the northeast led the gain-ers with a 3.68 percent rise. Forty-three cities, meanwhile, reportedprice drops, with 21 seeing a fall ofmore than 1 percent, comparedwith 10 in November.

"Strong sentiment among end-

users fueled a continuous rally inprice while robust demand for mid-to low-end houses led to a deceler-ating pace in average pricegrowth," said Sky Xue, an analystwith China Real Estate InformationCorp.

The average price for a newhome in China's 10 largest cities ad-vanced 0.45 percent from Novem-ber to 16,157 Yuan per squaremeter. That compared with a gainof 0.39 percent a month earlier. Yearon year, it rose 1.06 percent. It alsoaccelerated from a 0.15 percent in-crease in November.

Transactions of new apart-ments, excluding subsidized afford-able housing, exceeded 1.2 millionsquare meters in Shanghai in De-cember, the highest monthly vol-ume in two years, Shanghai UwinReal Estate Information Services Cosaid in a separate report. That repre-sented a rise of 23 percent from No-vember and a 109 percent surge

year on year.The new homes were sold for

an average 21,943 Yuan persquare meter across the city, anincrease from November of 0.77percent and a decrease fromDecember 2011 of 1.06 percent,Uwin data showed.

"Though the monthly volume hita 24-month high, the minor growth inaverage price indicated that first-time buyers with limited budgetscontinued to be the mainstreamconsumers," said Huang Zhijian, chiefanalyst at Uwin. "I don't expect anynew tightening policies to be rolledout anytime soon despite the no-table rebound in sales since all rein-in measures were aimed to curbspeculation."

Last year, Shanghai saw newhome sales exceed 9.38 millionsquare meters, annual surge of 28.9percent. They cost an average22,461 Yuan per square meter, up 2percent from 2011.

HOME pRICES RALLy 7TH STRAIGHT

MONTH


43


Agriculture

44

GRAIN FOR GREEN IN NW

CHINA bENEFITSFARMERS


45

BEIJING -- A curtain of dust used to blur the sightall year around and the blowing sand would evenblock the doorways of local people’s home at times.

Beginning in 1990, Zhang Chengxiang spent onedecade trying to plant a green fence around the vil-lage to fend off sandstorms.

But ten years of efforts went nowhere, the formeremployee of a local forestry farm said.

"The sandstorms were so heavy. It took you somuch strength just to even open the door, and whenI returned home everyday, my body was covered withsand," villager of Duolun County in Inner MongoliaZhang Chengxiang said.

As the sandstorms continued to expand theirreach, Zhao was forced to move homes two times ayear.

"But things have changed a lot since 2003. Treescan grow here now, and as you see, it’s green allaround," villager of Duolun County in Inner MongoliaZhang Chengxiang

The coverage of forests, which has increased by3 fold over the past decade, is contributed to the"grain for green project" initiated by the local govern-ment 12 years ago.

Under the program raising livestock was for-bidden, and local herdsmen were encouraged togrow trees, with subsidies from the government.

"The profits turned out to be good, I have500,000 saplings. The combined income of the past5 years is over one million," villager of DuolunCounty Huang Guolin said.

The policy has attracted local farmers backfrom the cities. They used to migrate to cities as aresult of land desertification.

Feng Jichun was one of them. He beganplanting strawberries 5 year ago, and they are nowselling well in the market.

"The income from planting crops is more satis-fying now than in the past. My annual income nowreaches 100,000 yuan," said Feng Jichun, villagerof Strawberry Planting Assoc., Duolun County

Most of the villagers in Duolun County, whoused to raise livestock for a living, are now en-gaged in industries like fruit and tree planting, andtourism. Village farmers say, the "grain for greenproject" has not only improved their local environ-ment, but also raised their incomes.(Agencies)


46

Agriculture

BEIJING -- China’s Agricul-tural Ministry has announcedthat it recently approved theimport of three types of ge-netically modified soy beans.GM modified products are acontroversial topic, not only inChina, but around the world.

Three years. That’s howlong it took the three newtypes of genetically modifiedsoy beans to get permission toenter the Chinese market.

Peng Yufa, Deputy Direc-tor of National TransgenicCrop Committee, said, "Weneeded to check all the doc-uments, and verify the grow-ing environment and safety,before approving a new type

of transgenic crop. The cropshould also pass tests from in-dividual testing centers."

The three types of newlyapproved genetically modi-fied soy beans, are from theUS transgenic giant Mon-santo, and the German Com-pany BASF. Chinesegovernment officials say thecrops will not be on the mar-ket directly.

Peng said, "The importedGM soy beans are to bemade into cooking oil. Thefinal product will not containtransgenic protein. So there isno food safety threat."

Although officials say ge-netically modified products

are safe, there has been in-creasing attention to the issuein China .

Liu Jingliang, InformationDirector of Jinxiudadi FoodWholesale Market, said, "Thegovernment requires all GMproducts to be clearly la-beled. And now more andmore people are asking if thefood they buy is geneticallymodified."

Even in the US, where ge-netically modified foods arewidely used, there has beenpublic concern over theirsafety. And sometimesprotests.

US protestor Tracy Heiersaid, "What I want is a ban of

IMpORT OF GM

SOybEANSAppROVED


47

genetically modified organ-isms from our food and seedssupply. We would like to havea world-wide ban."

China began to importtransgenic soy beans in 1997.By now, imports of 8 types ofgenetically modified soybeans have been approvedinto the country as materialsfor processing.

Liu You, a farmer in Ke-shan County of northeast

China's Heilongjiang Province,stopped planting soybeanslast year, due to the crop's lowyield and economic return.

He grows corn instead,which yields much more thansoybean and brings more in-come. "The price of soybeanshas kept almost unchangedwhile the prices of corn andrice have been rising in recentyears," says Liu.

In Keshan County, the

plantation area of soybeansnearly halved from 2007 to2012, showing farmers haveless interest in planting thecrop, a trend that is playingout in many other rural areas.

The root for the decisionstaken by Liu and his peers canbe found in China's rising im-ports of genetically modified(GM) soybeans. By virtue ofthe modifications, GM soy-beans are more economical


Science and Technology

48

to produce than their con-ventionally-farmed equiva-lents. With large-scaleproduction of GM crops notyet approved in China, do-mestic farmers of soybeanare being priced out of themarket as the country proveshappy to look to imports forthis most quintessential of Chi-nese foodstuffs.

However, this is far fromthe only troubling aspect ofimported GM food. GM re-mains controversial overdoubts as to its safety. As itflows into China, the country ishaving to face up to suchquestions.

Last week, China's Ministryof Agriculture announced theapproval of three varieties ofGM soybeans to be importedas processing materials.

The news triggered freshdomestic concerns aboutsafety, although there hasbeen large-scale commercialplantation of GM crops foryears in the United States andmany other countries.

China began to importGM soybeans in 1997 to meetsurging domestic demand,according to Peng Yufa, asenior member of the coun-

try's GM crop bio-safety com-mittee and a researcher atthe Chinese Academy ofAgricultural Sciences.

Last year, China imported58.38 million tones of soy-beans while the country's ownsoybean production wasabout 13 million tones, officialstatistics showed.

For Chinese farmers, theplantation of corn per mu, aChinese measurement whichequals about 667 square me-ters, can earn them about300 to 400 Yuan (about 48 to65 U.S. dollars) more in rev-enue than that of soybeanson average.

This has prompted morefarmers to stop planting soy-beans. In Heilongjiang, amajor soybean producer inChina, the area used for plan-tations of this legume re-duced to about 40 million mulast year from about 70 millionmu in 2009.

Although edible soybeanoil made from GM produce iscommon in Chinese super-markets, most citizens worryabout its safety despite rela-tively lower prices than equiv-alents such as peanut oil.

"When I buy edible oil, I

will make sure whether theyhave GM marks. After all,there is no final conclusion asto the safety of GM products,"says a lady surnamed Zhengin Guangzhou, capital ofsouth China's GuangdongProvince.

Results of an online surveyconducted by Chinese newsportal Sina.com showed onWednesday that about 85percent of the 30,000 votingnetizens said they would notbuy GM products and 78 per-cent believed GM is harmfulto people's health.

To woo consumers,some companies in Hei-longjiang have tried tohighlight their non-GM soy-beans. For example, theHeilongjiang Jiusan Non-GM Soybean Trade Centerwas set up last September.

"The key is to allow andencourage Chinese scientiststo catch up with others andcome up with quality prod-ucts, including safe GM prod-ucts. Only in this way can wechange the status quo ofChina's soybean products,"says Rao Yi, dean of theSchool of Life Sciences atPeking University.(Agencies


Magazine 41 edition

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