China needs time, peace, friends: Wen

Beijing (China)—Chinese Premier Wen Jiabao pledged progress on sustainable economic growth, currency reform and democracy on Tuesday but stressed change would be gradual rather than radical.
Wen also sought to flex China's diplomatic muscle by urging Iran to heed international concerns over its weapons programmes but said dialogue, not sanctions, was the proper means of securing solutions to the Iran and North Korean nuclear crises.
Wen, in a wide-ranging interview with Reuters and a small group of foreign media, stressed that resolving conflicts ranging from the economic to the diplomatic in a harmonious manner was critical to the sustainable development of the world's fourth-largest economy.
"We need peace, we need friends, and we need time," Wen said, closing a one-hour interview in the Purple Radiance Hall inside the Zhongnanhai compound ahead of a visit to Finland, Britain and Germany.
China's economy, which has grown 9 percent a year over the past three decades and more than 10 percent in the past three years, faced unbalanced development and environmental and energy constraints, but Wen was confident growth was far from over.
"We are in a position to ensure continued and fairly fast growth of China's economy for a considerable period of time to come, and we have full confidence in our ability to do so," he said when asked if China could orchestrate a soft landing.
Wen, point man on economic policy and third ranked in the Communist Party Politburo Standing Committee that rules China's 1.3 billion people, promised in March there would be no surprises in currency policy and continued in that vein on Tuesday.
"We will continue to deepen the reform on the renminbi exchange rate setting mechanism," he said, using the formal name for China's yuan currency.
"This means that the floating of the renminbi exchange rate will be mainly determined by market supply and demand, and the floating band will be gradually expanded," Wen said. "So there will be no more 'surprise' adjustment to the renminbi exchange rate."
The premier's talks with German Chancellor Angela Merkel were expected to focus on concerns over piracy in China of everything from Hollywood blockbusters to designer bags. Here too, Wen said China needed time despite having set up a legal framework to protect copyrights, patents and trademarks.
China could come under pressure to do more to rein in Iran and North Korea at the meeting of Asian and European leaders in Helsinki at the start of his week-long tour, which begins on Saturday.
Wen urged Tehran to be responsive to global diplomatic efforts to resolve its nuclear crisis.
"We also hope Iran will heed the concerns of the international community and take constructive steps," he said.
At home, Wen acknowledged illegal land grabs and forced resettlements -- often by corrupt local officials -- had sparked social unrest in many Chinese communities.
"China is a large country with a vast population, weak economic foundation and unbalanced development in different regions," Wen said.
"The conditions are not yet ripe for conducting direct election at a higher level of government," he said, adding that he supported improvements to the system and that current experiments could provide a base for further political development.
"We are confident that when the people are capable of running a village through direct election, they will later be able to run a township, then a county and a province, true to the principle that our country is run by the people."

—The Daily Mail-China Daily news exchange item

Screws tightened on illegal land use

Beijing (China)—The cabinet yesterday announced a string of measures to rein in rampant illegal land use, restrict the transfer of farmland for construction, and prevent the overheating of the economy.
According to the State Council notice:
The onus on scrutiny of land use lies with the provincial governments, which will submit cases to the State Council for approval on an annual basis, instead of case by case now.
Local leaders will be penalized if they fail to stop or investigate illegal land sale cases. Officials who violate land supply rules face disciplinary action and prosecution.
To stop local governments from giving land to investors free or at throwaway prices, the central government will set a minimum price, which will vary according to what it is used for.
Officials who sell land at prices lower than the minimum will be prosecuted.
The government will raise taxes from investors for the use of land, which will be used for the protection and development of farmland.
There will be a ban of leasing land from farmers for construction purposes, a back-door tactic increasingly used by some local governments and investors to dodge taxes on land sales and approvals by higher authorities.
To protect the interests of farmers, revenues from farmland sales must first be used to pay for their resettlement and compensation for crops.
If the sale price of any piece of land is not enough to cover the cost of resettling farmers, local governments must pay from their land sale revenues.
Local governments should ensure that farmers who have lost their land are properly trained for new jobs and provided with means to make a livelihood.
Land sale revenues must be incorporated into local budgets so that they can be scrutinized by higher authorities a major departure from the current practice where local governments have total freedom to spend the money as extra-budget revenue.
Zhang Xinbao, a senior official with the Ministry of Land and Resources, said reining in local governments is a major target of the new policy, as "they are actually behind almost all the major cases of illegal land use."
Land sale revenues have become a major source of income for many local governments, Zhang said.
"The new policies are more 'concrete' and 'operational' than ever," said Yan Jinming, a professor with Renmin University of China.
The Ministry of Supervision, in collaboration with the Ministry of Land and Resources and other central departments, will soon launch a nationwide crackdown on irregularities in land supply.
China's economy grew 10.9 per cent in the first half of this year on the back of a 30-per cent growth in fixed asset investment, both the highest in recent years.
In a bid to prevent a possible overheating of the economy, the central bank twice raised the benchmark interest rate this year and the government has clamped down on unauthorized investment projects.
The government believes that illegal land supply is a leading cause of runaway investment.
A survey of 16 cities by the Ministry of Land and Resources last year showed that nearly 50 per cent of new land under development was acquired illegally.
The figure was as high as 90 per cent in some cities.

—The Daily Mail-China Daily news exchange item

Banks plan employee share schemes

Beijing (China)—Bank of China and China Construction Bank, two of China's top four commercial banks, will initiate employee stock ownership plans in the near future as part of their employee incentive programmes.
"The bank's board of directors has approved the employee stock ownership plan," the 21st Century Business Herald quoted Zhu Min, assistant president of Bank of China, as saying yesterday.
Zhu said the plan was also supported by the government regulator, but the specific operation method has yet to be decided.
Guo Shuqing, chairman of China Construction Bank (CCB), revealed in a recent interview that the bank's employee stock ownership plan is likely to be implemented before the end of this year.
The bank said in a statement on Monday that the general meeting of shareholders approved its employee stock ownership incentive plan, as well as a stock appreciation rights policy for the management team in August 2005.
"The specific plans are now under internal and external approval procedures," it said.
"The implementation of such plans is to increase the bank's cohesion, to harmonize benefits for employees and shareholders, and to reduce the bank's operational risks."
"We expect to build up our core competitiveness by attracting more talent and improving innovation through the employee incentive programmes," the bank said.
Earlier media reports said CCB will allow its employees to hold 1 to 2 per cent of its total shares, which means each staff member will be able to buy 52,000 yuan (US$6,500) worth of stocks on average, according to the bank's current market value on the Hong Kong stock exchange.
The 300,000 employees will be able to hold around 4.5 billion shares, with a total market value of HK$15 billion (US$1.95 billion).
However, the bank said the amount of shares its employees could buy in the first year has not yet been decided, but will be much lower than media estimates, because employees would take part in the plan phase by phase.
"For a long-term view, the employee stock ownership plan will benefit these State-owned commercial banks in terms of improving corporate governance and shareholding reform," said Li Yongsen, a professor with Renmin University of China.
In May, Zhou Xiaochuan, governor of the People's Bank of China, encouraged State-owned financial institutions to adopt employee stock ownership plans for the first time.
"The employee stock ownership plan is an important part of financial institutions' joint stock reform," Zhou said earlier.

—The Daily Mail-China Daily news exchange item

China top investment destination through 2010

BEIJING—China will keep its status as the developing world's top investment destination in coming years, attracting some US$80 billion in 2010 while neighboring India lags behind, according to a study released Wednesday.
Foreign investment in Southeast Asia should rise, despite fears that investors might divert money to China, said the study by the Economist Intelligence Unit and Columbia University's Program on International Investment.
Developing countries in Asia attracted a record high US$177 billion last year in foreign direct investment, or FDI, by far the highest level for any emerging-market region, said the report. It said China accounted for US$79.1 billion of that.
"China was far and away the main FDI recipient among emerging markets and will attract almost US$87 billion this year," said Laza Kekic, director of the EIU's Country Forecasting Services, in a statement that accompanied the report.
The report's conclusion suggests that China will be able to stay attractive to foreign investors despite rising costs and competition from other emerging economies such as Vietnam or India.
Among other leading Asian investment destinations, Hong Kong received US$35.9 billion last year and Singapore US$33.4 billion, it said. India was in a distant fourth place with US$6.7 billion.
China is forecast to receive US$80 billion in investment in 2010, while India's figure rises to US$14.3 billion, said the report, "World Investment Prospects to 2010: Boom or Backlash."
"India still lags behind," it said. "India has yet to build a critical mass in FDI, having only initiated investment-attracting reforms in 1991."
China also is growing as a source of foreign investment as Beijing encourages companies to expand abroad, hoping to reduce reliance on export-driven manufacturing.
Foreign investment by Chinese companies jumped 123 percent in 2005 to US$12.3 billion, according to government figures reported Tuesday by state media. It said top destinations were Hong Kong, the United States, Japan and Russia.

—The Daily Mail-China Daily news exchange item

Chinese Army's land forces launch exercise

Beijing—The Chinese People's Liberation Army (PLA) has launched an exercise to test the long-distance maneuverability of its land forces under real-war conditions, according to an officer with the Headquarters of the PLA Shenyang Military Area Command.
The exercise is being conducted in accordance with recent instructions by Hu Jintao, chairman of the Central Military Commission, who has ordered the Army to pay greater attention to military exercise, and the essence of the recent PLA conference on military training.
A PLA brigade, who plays the role as the "Red Army", left its barracks in northeast China on Tuesday and will trek in a dozen days to arrive at a training base of the PLA Beijing Military Area Command, where it will fight with a "Blue Army" brigade belonging to the Beijing area command.
The "Red Army" brigade, which travels to the destination by train and its own vehicles, will hold a series of drills on war preparation, long-distance maneuver, firing, self-protection, and logistic work.
Over 50 experts from several military academies and training bases have formed a direction board to examine the results of the exercise.

—People’s Daily, Daily Mail news exchange item