China, Russia should support each other, Xi tells Putin

China and Russia should firmly support each other’s efforts to safeguard sovereignty, security and development interests, President Xi Jinping said on Sunday.

Xi made the remarks in a meeting with Russian President Vladimir Putin on the sidelines of the G20 Summit in Hangzhou.

The two countries should push forward practical cooperation in areas such as infrastructure construction, energy, aviation, aerospace and high-technology, Xi said, adding that bilateral military exchanges and security cooperation should also be strengthened.

China and Russia should strengthen coordination in international and regional affairs to safeguard justice and promote world peace, he said.

Xi also called for the alignment of China’s Belt and Road Initiative with the Russia-led Eurasian Economic Union.

A successful G20 Summit could meet the demands of a developing global economy and is in the common interest of all members, including China and Russia, Xi said.

During Putin’s state visit to China in June, the two nations issued three joint declarations and signed some 30 cooperative agreements.

Such collaboration reflects the shared stance of China and Russia on key international and regional issues, with both sides making similar comments on safeguarding global strategic security and world peace, Xi said.

Putin said Russia would like to join with China to share political trust and their people’s friendship to stimulate economic cooperation.

The two countries should enhance cooperation in trade, investment, finance, energy, science and technology, to bring real benefits to people on both sides, he added.

He voiced support for the G20 Summit theme and agenda set by China and said he hoped the summit will be a success.

This year marks the 20th anniversary of the countries’ establishing a strategic partnership of coordination, as well as the 15th anniversary of the signing of the China-Russia Treaty of Good Neighborly Friendship and Cooperation.

Contact between the top leaders of China and Russia has been frequent in recent years, sometimes five or six meetings a year, which reflects the strategic importance of bilateral ties, said Jin Yong, deputy head of the School of Foreign Studies at Communication University of China.

Chen Yurong, director of Eurasian studies at the China Institute of International Studies, added that cooperation in infrastructure and energy industries are at the top of the agenda for China-Russia exchanges.

“Beijing is pushing forward the Belt and Road Initiative, aimed at improving connectivity in Eurasia, while Moscow needs support to counter declining oil prices,” she said.

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Health insurance to see robust growth

China’s private health insurance market will grow five fold to 1.1 trillion yuan ($167 billion) by 2020, fueled by fast-growing demand from the emerging middle class, a report showed on Wednesday.

As wealthy Chinese look for alternatives to the public insurance system, private healthinsurance has been growing at a compound annual growth rate of 36 percent since 2010 andhit 241 billion yuan as of 2015, according to the report, which was jointly compiled by TheBoston Consulting Group and Munich Re.

The fastest growth in the private health insurance sector is expected to be in reimbursementpolicies, which are more expensive but more flexible than the critical-illness policies that manyChinese have today.

Critical-illness insurance pays a lump sum if an insured person is diagnosed with a coveredmedical condition, while reimbursement insurance pays on an ongoing basis if a healthproblem requires multiple medical consultations or hospital visits.

“Private reimbursement insurance makes tremendous sense in China. There isn’t yet a massmarket for it because of the cost. But there is a lot of interest and we expect to see many newproducts in the next few years,” said Luo Ying, a partner at BCG’s Beijing office and a co-author of the report.

For Doris Hoepke, a member of Munich Re’s board of management and responsible forMunich Health, insurers have enormous opportunities if they start formulating the appropriatestrategies now.

“To participate in the reimbursement market, organizations need to have a clearunderstanding of target customers and their needs, which should be reflected in innovativeproducts tailored for these segments.”

The joint study by BCG and Munich Re revealed that the most likely purchaser ofreimbursement insurance today is aged 35 to 55, married with children, with a minimumannual household income of 200,000 yuan. This group is expected to grow in China to morethan 40 million people by 2020.

Currently, private reimbursement policies are generally sold through group insurance.

“Purchases by individuals remain rare, and pure reimbursement players in China simply haven’t been able to make money due to the small size of the market. This is set to change,”said John Wong, head of BCG’s healthcare practice in China.

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Chinese ‘Red Notice’ fugitive hit with largest forfeiture in NZ

A Chinese millionaire with New Zealand citizenship and three other people have been ordered to hand over 42.85 million NZ dollars ($31.2 million) to the New Zealand and Chinese governments to settle money laundering charges.

The New Zealand Police said Tuesday that a court order against controversial millionaire William Yan and Wei You, and two of Yan’s acquaintances, was the single largest court-ordered forfeiture ever in New Zealand.

It was also the first that related to crimes alleged to have occurred in China, said a statement from the Police.

The activity underlying the forfeiture orders was alleged money laundering and the settlement was full and final without any admission of criminal or civil liability.

The proceedings against Yan and You began in August 2014, when police officers raided their luxury penthouse apartment in the largest city of Auckland.

Restraining orders were obtained over assets associated with the couple, including the apartment, several luxury vehicles and substantial shareholdings.

Related proceedings were initiated in December 2013 against Yingzi Zeng and Shui Yong Huang, who were associates of Yan, said the statement.

They were alleged to have assisted in money laundering and property associated with them was restrained, including three Auckland properties, a Porsche and Maserati, and more than 4.5 million NZ dollars ($3.27 million) in bank funds.

Once the settlement sum was paid, the restrained properties, vehicles, shareholdings and third party assets would be released, said the statement.

The settlement followed a complex three-year investigation focusing on money laundering of large sums of funds allegedly derived from a series of alleged frauds perpetrated in China from 1999 to 2001.

“This is a significant success for New Zealand Police,” Detective Inspector Paul Hampton said in the statement.

“The outcome in this case reflects the effective working relationship between Chinese and New Zealand law enforcement agencies.”

The next process would be determining how the recovered monies would be shared between the New Zealand and Chinese governments.

The court order was made under the Criminal Proceeds (Recovery) Act, which essentially forces someone to prove how an asset was paid for – even if they were acquitted or criminal charges are not laid.

Yan – also previously known as Bill Liu, Yang Liu and Yong Ming Yan – reportedly had a reputation for spending millions in Auckland’s biggest casino.

Yan stood trial in the High Court at Auckland in May 2012 after pleading not guilty to five charges relating to false declarations on immigration and citizenship papers. Justice Timothy Brewer found him not guilty despite saying the evidence put before him “proves a situation that is highly suspicious.”

Yan has been a permanent resident in New Zealand since 2002. In 2005, he applied for citizenship, but this was opposed by the Department of Internal Affairs because his true identity was not known.

He was then granted citizenship by then Internal Affairs Minister Shane Jones against the advice of officials.

In June 2005, Chinese authorities reportedly posted a “red notice” with Interpol, claiming Yan was born Yong Ming Yan and stole the identity of Yang Liu in 1999, obtaining two false passports. He was wanted for embezzlement.

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China a booster, not a burden, for world economy

BEIJING – China and its role in avoiding the “new mediocre” that threatens the global economy are again in the spotlight as the country prepares to hold the 11th G20 summit in Hangzhou.

Recent news about China’s economy has not all been good. Economic growth has slowed,and expansion in retail sales, industrial output and investment have decelerated.

For those who cannot see the forest for the trees, pessimism and worries may persist aboutthe state and future of the Chinese economy. Some have even pointed to China as a potentialburden on the global economic recovery.

The anxiety is understandable, given the huge role China plays in the world economy. Theslowing Chinese economy contributed over a quarter of global economic growth and addedan equivalent of the Swedish economy in 2015. Any faltering of the second-largest economywould ripple throughout the world.

However, if one looks a bit deeper, it is clear the transforming Chinese economy will onlyimprove the lackluster global situation.

Sure, the slowdown may linger, at least for the near future, as it will take time to digest thelegacy of a long economic boom. And China, the largest developing and most populouscountry, has to strike a balance between remaking the economy and securing growth tocreate jobs.

From slashing industrial overcapacity to shutting down polluting factories, the short-termeffects of China’s efforts to nurture consumer-driven growth and reduce reliance oninvestment, low-end exports and energy consumption will be felt acutely.

In addition, new problems, such as high debt levels, industrial overcapacity, environmentaldegradation and sluggish global demand, mean the economy must be directed along a moresustainable path.

However, global investors are poised to reap gains from a more robust market.

As David Dollar, a senior research fellow at the Brookings Institution, put it, China’s continuedstrong growth in recent years, despite slowed investment, was achieved thanks to increasingconsumption.

China’s economic growth is entering a positive cycle, as domestic consumption grows due torising wages, leading to the expansion of services, which generate more jobs and higherspending power, said the former official of the World Bank.

For China’s massive economy, the transition to a service and consumption-driven economy,accompanied by an improved social security system, will unleash huge demand and businessopportunities.

From Uzbek cotton to Chilean wines, from Brazilian soybeans to Ecuadorian seafood, fromJapanese robots to American movies, more and more countries are discovering the growingmarket for their exports as China’s 1.3 billion people become more prosperous and start toconsume more.

As China transitions from being the world’s workshop to an influential global consumer ofgoods and services, its economy will boost developing and developed countries alike.

The transition is already under way, with the service sector expanding 7.5 percent in the firsthalf of 2016, accounting for 54.1 percent of the overall economy, up 1.8 percentage pointsfrom a year earlier.

In 2015, consumption accounted for over 66 percent of China’s gross domestic product, up15.4 percentage points from 2014.

As heavy industry and traditional manufacturing wrestle with slowing demand overseas andovercapacity at home, new engines are humming: social media, cinemas, travel and R&D aredriving consumption, services and the high-tech sector.

Growing demand from Chinese consumers is set to continue, bringing more services, importsand new investment opportunities for the world economy.

China’s economic transition will continue and will be positive overall for the global economy,the International Monetary Fund (IMF) said in a report earlier in August.

“Many countries could only dream of achieving growth rates that China has and is likely to achieve, which also reflects positively on the reforms that Chinese policymakers have undertaken,” said James Daniel, the IMF mission chief for China.

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Ningbo becomes first pilot city to implement Made in China 2025

Ningbo, a manufacturing powerhouse in southeastern Zhejiang province, became the first pilot city in China to implement Made in China 2025, the high-end manufacturing drive.

The move came as China’s top industry regulator warned that enterprises and provinces needto refrain from rash action when stepping up efforts to advance the use of cutting-edgetechnology in factories and plants.

Xin Guobin, the vice-minister of the Ministry of Industry and Information Technology, said ithas somehow become a tradition in China that enterprises always rush headlong into actionwhenever enacting initiatives of national importance.

“We must guard against this trend when it comes to the Made in China 2025 drive,” Xin said, “because it will affect our capability to upgrade manufacturing power and boost the quality ofindustrial products.”

According to him, each province should base its own unique edge and current developmentstatus to implement the plan, rather than involving all industries as their priorities.

To prevent the trend, China picked Ningbo, which has good industrial foundations, as the pilotcity to test what is the best way to promote smart manufacturing.

Tang Yijun, acting mayer of Ningbo, said the city will focus on smart equipment, hardware,services and self-driving systems to transform its current industrial structure.

In 2015, the industrial output of Ningbo reached 1,670 billion yuan, with strength in cars,petrochemicals, home appliances, clothing and other industries.

It is the country’s largest processing base for refined oil products and houses the factories ofleading car manufacturers Zhejiang Geely Holding Group Co and Shanghai Volkswagen.

Xin said the central government will give enough effort to help Ningbo achieve its industrial transformation.

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China’s full-year exports expected to go down again

China’s full-year exports are likely to see a bigger drop than last year as downward economic pressures remain in place, a senior analyst at a government think tank said on Friday.

“Besides weak external demand, the country is suffering a hard time now,” Long Guoqiang, deputy director of the Development Research Center of the State Council, told a news conference in Beijing.

China's full-year exports expected to go down again
He indicated traditional advantages enjoyed in previous years, such as relatively low-costlabor-intensive manufacturing industries, were losing traction in a weaker global economywhile emerging advantages from expansion of the country’s high-tech sector are still evolving.

“Export growth will remain slow in the coming years,” Long said.

China’s exports dropped 1.8 percent last year to 14.14 trillion yuan ($2.14 trillion), whileimports plunged 13.2 percent to 10.45 trillion yuan, according to data from the GeneralAdministration of Customs.

That was the first time China saw declines in both exports and imports since 2009. In the firstseven months of the year, exports were down 1.6 percent and imports decreased 4.8 percent.

An economist said that seasonal trends, shown in the GAC data, indicate that total yearlyexports will be down even more in the remaining part of the current year.

In the January-July period, foreign trade was 3 percent lower than a year earlier.

Long said, however, the structure of China’s foreign trade was getting better and the long-term outlook was promising.

Long said the development of new business formats such as cross-border e-commerce andbuying from international markets, as well as the increasing number of exports withindependent intellectual property rights, all showed structural upgrades.

Assistant Commerce Minister Zhang Ji told the news conference that China still retained itsglobal leading position on trade in goods, with a rise in the global market share of its exportsfrom 11.2 percent in 2013 to 13.8 percent in 2015.

“After three decades of high-speed growth, we should treat the issue more objectively and rationally,” Zhang said.

China Daily

State Council nods new opening-up pilot zone in Southwest China

BEIJING – China’s State Council has approved Pingxiang, a city of Guangxi Zhuang autonomous region on the border with Vietnam, to be a new opening-up pilot zone, a statement said on Friday.

The plan for the new zone will be published by the National Development and ReformCommission, the top economic planner, according to the cabinet website.

Pingxiang is Guangxi’s second “key pilot zone for development and opening-up” afterDongxing, approved in August 2012.

Southwestern Yunnan Province’s Mengla bordering Laos, and Ruili, a major border crossingbetween China and Myanmar, as well as northern Inner Mongolia’s Manzhouli city andnortheastern Heilongjiang Province’s Suifenhe-Dongning zone in the neighborhood of Russia,are also on the pilot zone list.

The pilot zones were expected to play a positive role in promoting the Belt and Road Initiative,boosting opening-up and facilitating the mutually beneficial cooperation with neighboring countries.

China Daily

China’s regional growth stable, but uneven in first half

BEIJING – China’s regional economies grew stably in the first half (H1) of 2016, but were marked by performance divergence, said the National Development and Reform Commission(NDRC), the top economic planner.

The underdeveloped western region posted the fastest growth rate of 8 percent year on year,well above the national average of 6.7 percent; the central and east regions grew by 7.8percent and 7.6 percent respectively; while the northeast rust belt increased by 2.2 percent,said the NDRC.

Meanwhile, fixed asset investment and industrial value-added output in the west regionexpanded by 13.5 percent and 7.2 percent.

In the first six months, Chongqing and Tibet in the west led the growth at the provincial level,both posted growth speed of 10.6 percent.

In sharp contrast, the northeastern steel-making province of Liaoning saw its economy shrinkby 1 percent in the first half of 2016 from the same period last year, the only province to reporta contraction.

Liaoning was one of the last of China’s 31 provincial regions to announce its gross domesticproduct (GDP) data. Figures are yet to be published by highly industrialized Heilongjiang inthe northeast.

The provincial growth imbalance came as China tries to restructure its economy from one thatis export driven to consumer driven.

China’s economy grew 6.7 percent year on year in Q2, aided by infrastructure investment, ahousing boom and bank lending. Although the growth rate is the country’s slowest quarterlygrowth since the first quarter of 2009, it remains within the government’s target range of 6.5-7percent for 2016.

To bolster economic growth, the top economic planner has suggested more policy tools toboost private investment rather than relying on government spending.

The private sector will be important to supporting economic growth, generating about 60percent of China’s GDP and around 80 percent of jobs.

However, private investment has been slowing. It increased by only 2.8 percent in H1, down from 3.9 percent in the first five months of the year.

China Daily

China sets R&D targets for 2020

BEIJING – China expects knowledge-intensive services to contribute 20 percent of its gross domestic product (GDP) by 2020, up from 15.6 percent in 2015, according to the country’s five-year plan for science and technology progress by 2020.

The State Council plan, published on Monday, lists targets for science and technology from2016 to 2020 as well as government action to help realize the targets.

Total factor productivity, of which technology is a sub-set, aims to account for 60 percent ofgrowth in 2020, up from 55.3 percent last year.

The number of patent applications in 2020 is expected to be double that of 2015, according tothe plan.

By 2020, out of every 10,000 workers, 60 will be engaged in research and development, upfrom 48.5 in 2015, the plan said.

Priorities for the government over the next five years include directing resources to strategicareas, fostering creativity, creating a favorable policy environment and removing barriers toinnovation.

The country will spend more resources in research areas key to its national strength andsecurity, including computer chip, integrated circuit equipment, broadband mobiletelecommunication, digital machinery, nuclear power, genetic modification, water pollutioncontrol, new medicines, manned space programs and lunar exploration.

China also hopes to make breakthroughs in areas such as deep-sea exploration, quantumcomputing and brain science. Agriculture, computing, green energy, biology andenvironmental protection will also receive more attention. The government promises greatersupport for basic research, science labs and international research.

China will take an active part in the International Thermonuclear Experimental Reactor (ITER)project and the Square Kilometer Array (SKA) telescope project, according to the plan.

The plan lists measures to improve legislation on research and development, streamline fundraising and raise the efficiency of governance.

The government will encourage enterprises to invest more in R&D and offer preferentialpolicies to knowledge-intensive startups while pushing universities and research institutes toimprove efficiency.

China will also expand cooperation in science and technological development with othercountries, especially those along the Belt and Road.

The government will encourage joint research projects between Chinese and foreign institutesand enterprises to attract more high-level foreign experts to work in China.

G20 nations to revive recovery via pro-growth strategies, innovation

BEIJING – Less than one month before the kickoff of a Group of 20 (G20) summit, G20countries are envisioning global economic recovery through pro-growth strategies andinnovation.

Since China took over the G20 presidency on Dec 1, 2015, the country has hosted a series ofhigh-level meetings to set the stage for the summit, which is scheduled for Sept 4-5 inHangzhou, the capital city of east China’s Zhejiang province.

Pro-growth strategies

Over the past few months, several meetings of finance ministers and central bank governorshave focused on concrete economic and financial problems, laying the foundation for aconsensus to be reached at the leaders’ summit.

Prior to the Hangzhou summit, three meetings of finance ministers and central bankgovernors and four meetings of finance and central bank deputies have been held to giveadvice and suggestions to promote global economic growth.

On July 23-24, G20 finance ministers and central bank governors met in Chengdu, insouthwest China’s Sichuan province, and issued a statement on the global economicsituation, saying they would use “all policy tools” at their disposal to boost confidence in theglobal economy and promote growth.

“The global economic environment is challenging and downside risks persist,” the officialssaid, citing fluctuating commodity prices, low inflation in many economies and marketvolatility, as well as conflicts around the globe and the resulting refugee crisis and terrorism,and Brexit.

“In light of recent developments, we reiterate our determination to use all policy tools –monetary, fiscal and structural — individually and collectively to achieve our goal of strong,sustainable, balanced and inclusive growth,” they said.

The top-level design of structural reform is one of the important fruits yielded at the financeministers and central bank governors’ meetings.

Through China’s push, the G20 has pledged to actively adopt measures to promoteinvestment in infrastructure and expand global demand, laying the foundation for mid- andlong-term economic growth.

G20 countries have approved the Global Infrastructure Connectivity Alliance initiative andencouraged private investment in infrastructure.

Besides, China has for the first time put forward a fair, inclusive and ordered new internationaltax system on the G20 platform.

The finance ministers and central bank governors’ meetings have set up an inclusiveframework for the Base Erosion and Profit Shifting project — to fight tax avoidance strategiesthat exploit gaps and mismatches in tax rules to artificially shift profits to low or no-taxlocations — as well as governance entities for the implementation of the project.

The meetings also encouraged involved countries and international organizations to helpdeveloping countries enhance capacity building in taxation.

After becoming G20 president, China also restarted the International Financial ArchitectureWorking Group to promote international economic governance reform under the theme ofpushing emerging markets to play a bigger role in the global financial system.

Innovation

China is working with fellow members to draw a G20 blueprint for innovation-driven growththat highlights the concept of inclusive innovation and a concrete action plan for building anew industrial revolution and the digital economy, which may help shore up people’sconfidence in global economy.

The consensus on innovation has been a hard-won achievement under the Chinesepresidency, especially given the severe market volatility in the first quarter of 2016, saidProfessor Zhu Jiejin of Fudan University.

“It is not easy for China to stay focused on a long-term agenda when some are calling forshort-term stimulus packages,” Zhu said.

Swiss Finance Minister Ueli Maurer underlined China’s emphasis on fostering innovation andother structural reforms, which, he said, were important to raise productivity and ensure thequality and sustainability of growth.

“In this respect, the G20 Blueprint on Innovative Growth represents an ambitious agendatoward a new paradigm for growth based on knowledge and on new and cleanertechnologies,” he told Xinhua. “Many countries have, since the global financial crisis of2008/09, relied too heavily on monetary and fiscal easing.”

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