Long-term European loan to invest in China environment projects

European Investment Bank will offer 500 million euro loans to some 10 projects in China to reduce greenhouse gas emission, said Mr. Philippe Maystadt, President of the EIB in Beijing Thursday, one day after he signed the agreement with the Ministry of Finance of China during the China-EU Summit.

With a maturity of 25 years, the Climate Change Framework Loan will be granted through the Ministry of Finance to projects jointly selected by the EIB and China National Development and Reform Commission, according to Mr. Maystadt.

He stressed that there was no obligation to use European technologies in those projects because environment was a global issue.

Priorities will be given to projects which will significantly reduce the greenhouse emission or have the potential to produce carbon credit through CDM (clean development mechanism) in China. They will involve renewable energy, clean energy and energy efficiency, for example, wind energy, carbon capture or biomass energy.

The contract has also specified the "formula" of calculating the interest rate of the loan, said Mr. Maystadt.

He added that he had also discussed with the Chinese authorities about future cooperation, on transport, for example. In those fields the use of European technologies may be a requirement.

Besides the Climate Change Framework Loan, the EIB has so far invested four projects in China. One of them was the 500 million euro loan for the extension of Beijing Capital Airport in 2005.

The Ministry of Finance announced on Nov. 26 to earmark 23.5 billion yuan ($3.2 billion) to improve energy efficiency and cut pollutant emission.

Chinese Premier Wen Jiabao declared at the China-EU Business Summit on Nov.28 that China would invest 300 billion USD on energy-efficiency and environmental protection in the next five years, which is 30% of the total on the world market. He encouraged expansion of the cooperation between China and EU on energy-efficiency and environmental protection.

Energy use per unit of GDP decreases 3%

In what central government officials called a "turning point" in environmental protection, energy use per unit of gross domestic product (GDP) dropped 3 percent in the first nine months, compared to 2.78 percent in the first half.

Xie Zhenhua, vice-minister of the National Development and Reform Commission, said Thursday that the latest figure shows that "the efforts we have made are starting to take effect, although there are demanding tasks ahead".

When revealing the figures to international environmental experts on Wednesday, Vice-Premier Zeng Peiyan also said that during the first nine months, there was a 1.81 percent fall in sulfur dioxide emissions, and a 0.28 percent fall in chemical oxygen demand (COD), a key measure of water pollution.

It was the first time in recent years that the country witnessed the "double fall".

Most heavy industries, from steelmakers to construction material producers, reduced their energy bills.

Zhu Hongren, an NDRC official, told China Daily that larger enterprises had been leading the energy conservation campaign.

In first half, he said, energy use per unit of industrial output for companies with annual sales over 5 million yuan ($670,000) dropped by up to 3.87 percent.

At the same time, the official said, large batches of small iron and steel works, coking mills, paper mills, and chemical and dying plants have either been shut down or are being closed.

The government plans to lower energy use per unit of GDP by 20 percent during the 2006-10 period, or 4 percent each year. But last year, it could only manage to lower the index by 1.33 percent.

Xie vowed that Beijing will take more economic, legal and administrative measures to make sure that the country meets the target.

According to the Xinhua News Agency, in terms of energy use per unit of industrial output, coal mining saw an annualized fall of 7.76 percent; steel industry, 6.49 percent; construction materials makers, 7.84 percent; chemical industry, 5.17 percent; and power companies 2.57 percent.

But the oil and petrochemical industry saw a rise of 1.27 percent; and nonferrous metal producers, 1.58 percent.

CMEC wins tender to build Laotian power station

China National Machinery and Equipment Import and Export Corporation (CMEC) has won a tender to act as general contractor of a Laotian Hongsa thermo-power station.

With a total investment of US$1.35 billion, the project, with a capacity of three 600 megawatt generators, will be finished within 60 months. The first generator will start operation in 51 months, according to a report in Thursday's Shanghai Securities News.

The Hongsa power station is a pithead project with three 600 mw subcritical ignite-powered generators. It was the first time CMEC had sold such generators to the international market, the report said.

CMEC had tracked the project since 2005, a company spokesman said. It had been recognized over several large international project contractors to win recognition from the Laotians, international credit conglomerates and the project owner, according to a company spokesman.

He said the project had been launched as the backdrop of a joint development between China and six other countries along the Mekong River, which is called by Chinese Lancang River. It would play a significant role in Laotian and Thai power supply and economic development.

CMEC is one of China's major state-owned companies engaged in machinery and equipment foreign trade.

China ratifies protocol amending WTO's TRIPS agreement

China notified the World Trade Organization (WTO) on Wednesday that it had ratified the Protocol Amending the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Chinese Ambassador Sun Zhenyu sent a notification letter to WTO Director-General Pascal Lamy together with the instrument of ratification signed by President Hu Jintao and Foreign Minister Yang Jiechi, said the Chinese mission to the WTO.

The Protocol Amending the TRIPS Agreement, done at Geneva on December 6 2005, means to allows WTO members to export patented medicines to third countries with no manufacturing capacity in the pharmaceutical sector, by making use of compulsory licenses.

"China believes that this amendment of the TRIPS Agreement is part of the wider national and international actions to address the public health problems afflicting many developing countries, particularly the least-developed countries," the Chinese mission said in a statement.

"In ratifying the protocol, China has showed its consistent commitment to the WTO's development objective and its support for developing members' legitimate right to protect public health and gain improved access to medicines," the statement said.

The protocol will only enter into force once two thirds of the WTO's 151 members have accepted it. China is the 13th WTO member to have accepted it.

Industrial database under way

The State Environmental Protection Administration (SEPA) is developing an information platform for industrial companies to help them identify the technologies they need to meet strict new emission standards, an official said yesterday.

Zhang Huatian, an official with the science, technology and standards department of the SEPA, said by 2020, the database should be available to firms in dozens of industries, mostly heavy polluting ones, such as steel, power, printing and papermaking.

The project was launched at the end of last year but is still in the primary stage, she said.

Speaking at a symposium in Beijing on new environmental protection technologies from Italy, Zhang said: "The job will take a long time, but it is very meaningful. Currently, a lot of companies simply don't know which technologies can actually meet the emission demands, despite the claims of manufacturers and developers.

"Also, the cost of the technology is crucial, especially to small and medium-sized companies," she said.

With the new database, companies will be able to get instant access to detailed information on the latest technologies and who provides them by simply inputting details of their industry, scale and location.

"It will help firms across the country to meet their specific needs for environmental protection facilities," she said.

For example, a sewage handling technology that requires a lot of water might be suitable for a factory in East China, where the resource is readily available, but impractical for an equivalent firm in Northwest China, where water is scarce, Zhang said.

The problem facing the SEPA is that it lacks up-to-date, usable information about the technologies available, she said.

The first job for her team is to identify those technologies that meet current emission standards, and also those with the potential to meet stricter demands in the future, she said.

The second stage will be for the SEPA to draft a set of guidelines for use by experts in assessing the technologies and selecting the best ones.

"This is what we need to learn from the US and Europe, because they have many years' experience," Zhang said.

As well as helping experts to compare existing technologies and select the best ones, the guidelines will enable them to evaluate new technologies and those introduced from abroad.

Once all these elements are in place, the platform will provide an invaluable resource for end-users and developers to promote applications and exchange information on the latest technologies, she said.

At yesterday's symposium, four new environmental protection technologies from Italy, including using wetland cane for sewage purification and asbestos removal, were introduced to Chinese research institutes and businesses.

Energy consumption falls in first three quarters

China's energy consumption per unit of gross domestic product (GDP) dropped three percent year-on-year in the first three quarters of 2007, a senior economic planning official said on Thursday.

China has vowed to cut the energy consumption used to generate per unit of GDP by 20 percent and major pollutants emissions by 10 percent between 2006 and 2010.

The nation will take economic, legal and necessary administrative measures to reach the mandatory targets, a government's solemn promise to the people, Xie Zhenhua, deputy chief of the National Development and Reform Commission (NDRC), told a press conference in Beijing.

During the three quarters, sulfur dioxide emissions in China fell 1.81 percent and the chemical oxygen demand, a measure of water pollution, dropped 0.28 percent, the State Environmental Protection Administration said on November 14.

VisionChina uses ad boom to lure investors

The out-of-home advertising network operator has launched its roadshow with the aim of raising $155 million from a Nasdaq listing.

China-based VisionChina Media has launched the roadshow for an initial public offering and listing on Nasdaq. The offer is being marketed with a price range of $9.50 to $11.50, which will allow the company to raise up to $155.3 million.

VisionChina delivers content and advertising in the form of real-time mobile digital television broadcasts on mass transportation systems, primarily buses. According to the prospectus, the company believes it is running the largest out-of-home advertising network using this mode of communication in China, with a total of 33,000 digital television displays and a network covering 14 cities.

However, disregarding the type of screens and their location, the listing candidate lags larger rival Focus Media which, at the end of June this year, had a network of 89,687 LCD flat panel displays in various commercial locations.

To read the original, lengthy and detailed article click on Source. The illustration is of a future possibility in this area. A shopper can see how an item looks when worn by just looking at the screen. Magic.

China's East Star Air orders six Airbus A320s

Privately owned Chinese carrier East Star Airlines said it has placed an order for six Airbus A320 planes for more than RMB3 billion ($404.8 million).

The order will be funded by loans from the Royal Bank of Scotland.

East Star, which made its maiden flight in May 2006, currently operates five single-aisle Airbus A320s connecting the central city of Wuhan with major Chinese cities as well as Hong Kong and Macau.

The six new A320s, scheduled for delivery starting from 2009, will increase the carrier's fleet size to 28 aircraft. These are single aisle, mid-range aircraft with a sample interior - not East Star - shown in our illustration.

HTC Plans to Lead Smartphone Mkt Within 2yrs

Taiwanese cell phone manufacturer High Technology Corp (HTC) expects to lead the Brazilian smartphone market within the next two years, local news agency Ag阯cia Estado reported the company's marketing director for Latin America, Allan Macintyre as saying.

HTC announced in October it had chosen Brazil as the first place outside Asia to start producing smartphones. HTC reached an agreement with local company Celestica to produce the handsets at Celestica's factory in Campinas, S鉶 Paulo state.

HTC specializes in smartphones based on the Windows Mobile operating system and by year-end the company expects to be producing handset models in Brazil.

To start up operations, HTC invested an initial US$10mn, according to the report. Local company Simm will be in charge of sales and distribution of HTC's phones, while technical and post-sales support will be offered by Grupo Picolli.

"In the first stage, 100% of production will be sold in the local market. However, in the short term, we will use Brazil as a base to export to the rest of Latin America," HTC's Latin America director Cesar Keller said, according to the report.

Keller also said that the Brazilian smartphone market is expected to grow "well above" the world annual average rate of 30% over the next years.

The firm's global sales for fiscal year 2006 were US$3.2bn.

Shanghai Electric to Sell Bonds for Upgrade, Mine

Shanghai Electric Power Co., supplier of a third of the electricity in China's richest city, plans to sell bonds to raise 1.5 billion yuan ($203 million) for a plant upgrade and a mine investment.

The power producer will use 200 million yuan to revamp a coal-fired power plant and spend 400 million yuan on a coalmine, Shanghai Electric said in a statement to the city's stock exchange today. The rest of the funds will be used to settle bank loans.

The sales are part of plans to raise as much as 3 billion yuan in bonds that Shanghai Electric unveiled Oct. 13. The utility wants to expand capacity and fuel supplies to benefit from surging power demand in the world's fastest-growing major economy.

Chinese power utilities' output increased 16 percent in the first 10 months of this year to 2.643 billion megawatt-hours, the Beijing-based China Electricity Council said Nov. 16. Power consumption rose 15 percent to 2.637 billion megawatt-hours during the period, according to the council, which represents 194 power industry members.

Taiwan Power Buys 1.05 Million Tons of Coal for Dec. to April

Taiwan Power Co., the island's biggest electricity producer, bought 1.05 million metric tons of power station coal to be delivered starting December until April 2008, a trader involved in the transactions said.

The company bought 15 panamax-sized cargoes of Indonesian coal mostly from PT Bumi Resources, said the trader who asked not to be identified because of company rules. He declined to give the price. A panamax vessel on average can carry 70,000 tons.

Thermal coal prices for fuel shipped from Australia's Newcastle port, an Asian benchmark, reached a record $88.63 a ton last week, according to the globalCOAL weekly index, amid rising demand from power utilities and export bottlenecks. Consumption is being buoyed by China's increasing imports.

Rakuten, President set up shopping JV

President Chain Store Corp., Taiwan's biggest convenience store operator, announced yesterday that it will form a NT$174 million (US$5.4 million) online retailing joint venture with Japan's Rakuten Ichiba (Rakuten Internet shopping mall).

President Chain, operator of 7-Eleven stores in Taiwan, will hold a 49 percent stake in the venture and Rakuten, one of Japan's top Web-based shopping mall operators, will take the rest.

Lin Chang-sheng, president of the Uni-President Group, the parent of President Chain Store Corp., signed the joint venture pact with his Japanese counterpart Hiroshi Mikitani in Taipei yesterday afternoon.

Lin said that the proposed joint online shopping mall will become officially operational in the second quarter of 2008, when individuals, shops and business conglomerates can all set up e-shops in the online shopping mall. "Consumers will also have more choices on the Web, expanding the overall scope of Taiwan's online shopping sector."

Lin continued that the proposed online shopping mall takes aim at a Taiwan online shopping market valued at around NT$180 billion. The mall is expected to turn profitable during the second operating year, and is estimated to have around 3,000 e-shops by its third year.

Hiroshi Mikitani said cooperating with Taiwan is his firm's first step towards internationalization, adding that Rakuten aims to become the world's No. 1 online shopping mall operator.

The online shopping mall marks the first venture of its kind for Rakuten outside its domestic market, and it is also President Chain's first online retailing joint venture with a major foreign partner.

Founded in 1997, Rakuten online shopping mall has witnessed over 20,000 e-shops, selling more than 20 million items including clothes, footwear, foodstuff, interior decoration and tourism, with annual trading value totaling over 500 billion Japanese yen.

In response to the cooperation project, Wu Wan-ju, public relations manager of Yahoo Kimo, said Taiwan's online shopping market is growing at an annual clip of over 50 percent, and the said project can help further expand the market pie.

Wu said that currently online shopping accounts for only 5 percent of Taiwan's consumer market, thus leaving great room for further growth.

Meanwhile, Lin Mu-ping, manager of the electronic business department of PChome, said the firm's online transaction business has entered its 10th year of operation, with an annual revenue now reaching NT$6 billion after experiencing an annual growth of 100 percent over the past years.

Lin welcomed the joint venture between President and Rakuten, saying that the project will prompt local operators of online shopping businesses to upgrade their services for customers.

China encourages insurers to invest abroad, take advantage of domestic market

Domestic insurers plan to expand overseas through investment over the long term, but they should ensure they are prepared for global competition, a senior official said in Beijing on Friday.

The comments by Yuan Li, the spokesman for China's Insurance Regulatory Commission, followed the sector's first overseas purchase of a global financial institution.

Yuan also urged Chinese insurers to take full advantage of domestic opportunities.

On Thursday, Ping An announced that it had purchased 4.18 percent of Fortis for 1.81 billion euros, becoming the largest shareholder of the Belgium-based financial institution.

Fortis' market capitalization was 48.6 billion euros on Oct. 31,making it one of the top 15 European financial institutions.

In another development, Yuan disclosed that the commission had provided an opinion letter to securities authorities on the listing plans of China Pacific Insurance, which will involve 1 billion yuan-denominated A-shares on the Shanghai bourse and no more than 900 million HK dollar-denominated H-shares on Hong Kong stock market.

China Reinsurance Group, the country's largest reinsurer with a market share of 80 percent, might also list in the future, he said.

The spokesman said that 20 insurers had acquired qualified domestic institutional investor (QDII) status, and many have targeted the Hong Kong stock market.

Yuan declined to disclose the quotas for these insurers but confirmed that no limits had been set on their investment on the Hong Kong bourse. Another three insurers were under consideration for QDII status, he said, without giving further details.

To ease the pressure from China's massive foreign exchange reserves, China launched the QDII scheme last July, allowing mainland institutions and residents to invest overseas through mainland commercial banks. The program also allows insurance institutions to invest some of their assets in foreign fixed-income and money market instruments.

Yuan said that China's insurance market has grown solidly. Between January and October, premium income rose 24.2 percent year-on-year, to 583.54 billion yuan (about 79.07 billion U.S. dollars).

From the time the Insurance Law was enacted in 1995 through the end of October this year, insurance companies had put 2.63 trillion yuan into capital markets. The 1995 law expanded insurers' investment options, which had previously been limited to bank deposits and government bonds.

Of the total invested to date, the biggest share of 41 percent or 1.07 trillion yuan went to bonds. Stocks, equities and funds accounted for 683.09 billion yuan, while bank deposits totaled 733.2 billion yuan.

Insurers' capital market investments were up 34.9 percent during the first 10 months of 2007. The insurance fund generated 242.185 billion yuan in operating proceeds during that period, registering an average yield of 10.87 percent, Yuan said.

Yuan played down the negative impact of rising interest rates on life insurance products. The one-year benchmark deposit rate had risen five times this year to 3.87 percent as of late September, well above the 2.5 percent fixed rate that life insurance products offer.

"The impact is not much overall. After all, life insurance products are not solely for investment, as bank deposits and equities are," he said.

He reaffirmed that regulators were still pondering an adjustment in the fixed interest rate for life insurance products.

Chinese chemical giant tenders winning bid for Saudi phosphorus project

Guizhou Hongfu Industry and Commerce Co., Ltd. has won the bid for a Saudi Arabia beneficiation project, the company announced on Thursday.

The Chinese phosphorus chemical giant successfully tendered to construct a concentrator capable of processing 12.5 million tons of ore to form an annual phosphorus concentrate production capacity of 5.3 million tons. The 350 million U.S. dollar contract has a construction period of 28 months.

After the project's completion, the phosphate concentrate would be sent to an Arab Gulf industrial base via rail for the production of 1.5 million tons of phosphoric acid annually. It would then be used to product diammonium phosphate (DAP).

The project is part of a 5 billion U.S. dollar phosphorus project invested by Saudi Arabia mining company Ma'aden. It is the world's largest in terms of one-time investment.

Guizhou Hongfu is the only Chinese company involved in the project. Hongfu and Ma'aden will sign a formal contract on December 9 in the Saudi capital Riyadh, according to Hongfu Chairman He Haoming.

"The project marks the entry of China's phosphate fertilizer industry into a phase of technology export," He said.

Hongfu is a large state-owned enterprise involved in phosphorus mining, phosphate and compound fertilizer production.

Known as the world's largest oil producer, Saudi Arabia's phosphate reserves were estimated at 3 billion tons. After the completion of first phase of the Ma'aden project in 2011, the annual DAP production capacity was expected to reach 3 million tons.

At present, China is the world's largest producer of and market for phosphate fertilizer. This year, the country was expected to consume 6 million tons of DAP. Total global sales of DAP was forecast to hit about 20 million tons.

Google's China chief sees internet boom

If US internet companies are maturing, China's are still reveling in the kind of party atmosphere their US rivals enjoyed during the late 1990s, with copious capital and enough engineering talent to keep growing for a while.

Executives including Kai-Fu Lee, president of Google Greater China, warned participants in an industry conference in Beijing this week against a get-rich-quick mentality.

But the executives said that between strong investor interest and an education system churning out information technology graduates by the thousand, the groundwork is solid for years of continued steady growth in China.

"For many Chinese young people and young students, they have a very strong desire for innovation, for being successful, for starting their own businesses," said Lee.

About 300,000 students receive high-tech degrees in China annually, said Zhang Ya-Qin, chief executive of Microsoft in China and its research development group. But he said Chinese graduates need more curiosity and more ideas.

Pony Ma, whose QQ system dominates the Chinese market for instant messaging, said China's internet and mobile information industries are just getting off the ground, leaving plenty of room for growth in the more traditional web fields.

Most of the internet businesses developing in China are likely to cater to local interests and local online needs, which remain largely unmet, the executives said.

BMW 1 series to be introduced to China by the middle of next year, CEO says

BMW one series will be introduced to Chinese market by the middle of next year, BMW China president Dr. Christoph Stark told a press conference today.

"BMW one series will come to China by means of importing," said Dr. Stark. "As to whether or not it would be locally produced in China and when, our decision will be based on market response."

BMW one series will be priced at about 250,000 yuan ($33,813) in Chinese market, Beijing News reported.

Earlier this week, BMW unveiled plans to add its new 6-Series to China portfolio and will sell the model at 1.07 million yuan ($144,670) in Chinese market.

In the first ten months of the year, Brilliance BMW sold 24,254 BMW vehicles, up 35 percent from last year; in the same period, imported BMW vehicles sold 14,329 units in Chinese market.

Aston Martin comes to China

Aston Martin yesterday openned its first dealer in China in Shanghai's Xin Tian Di District, according to a Chinese newspaper, citing the company's press release.

The Shanghai Aston Martin Retail Center, franchised by GruppeM, extends Aston Martin's global dealership network into China for the first time in the company's 94-year history. The center is designed to hold five sleek models including the DB9 Volante, DB9 coupe and V8 Vantage. These models went on sale yesterday with prices costing between two million yuan (US$270,270) and three million yuan each, Shanghai Daily reported.

There will also be an exclusive Aston Martin service facility located close to Hongqiao airport, and another showroom for three Aston Martin cars will be located in the Beijing's Central Business District early next month.

China's luxury car market in China has been developping rapidly in recent years. However, Dr Ulrich Bez, Aston Martin's Chief Executive Officer, explained that it was important to wait until the right partner was found.

"Aston Martin has been carefully monitoring the growth of the luxury sports car market in China," he said, "but it was vital that we found the right partner who not only understood Aston Martin's brand values but also the luxury market. We are confident that GruppeM have the expertise and knowledge to help us develop Aston Martin in China."

Aston Martin currently has 120 dealers in 28 countries around the world and in addition to Shanghai and Beijing, recent openings include Cape Town and Bordeaux.

Chinese automaker Geely to launch "Panda" by August next year

China's largest private carmaker Geely Automobile plans to launch a mini-car with its front part resembling a giant panda, the national emblem for China, by August next year, said a company official.

"Geely will launch a model that looks like a giant panda in appearance and that may be the first model to use our new logo," said Geely's vice president Wang Ziliang.

The model under the codename Lc-1 will be equipped with Geely's self-developed engine and it offers two-door or four-door options. Earlier this month the company just launched its new logo designed by a college student.

In the first ten months of the year, Geely sold 149,843 vehicles, up 12.4 percent from one year earlier. The automaker said on Monday it aims to sell 20,000 vehicles this year and 40,000 vehicles by 2008.

FAW Toyota aims to sell 280,000 vehicles this year and 400,000 next year

FAW Toyota Motor Co., a joint venture between Toyota and the Chinese automaker FAW, has raised its sales target from 260,000 from 280,000 this year, and it plans to sell 600,000 next year.

"During the first ten months this year, FAW Toyota sold 179,000 vehicles, exceeding sales volume of the whole 2006," said Wang Fachang, deputy executive general manager of FAW Toyota. "The company will surely reach the 280,000 sales targets by the end of this year."

Toyota recently unveiled plans to sell one million vehicles and to grab a ten percent market share in Chinese market by 2010. Under the plan, FAW Toyota will sell two thirds of the total sales or 600,000 vehicles; Guangzhou Toyota and Lexus will each account for 300,000-350,000 and 50,000-100,000 vehicles respectively.

Wang did not reveal any details about its fourth plant but said its production capacity can meet its growth demand within one and a half years. Asked whether the new Yaris to be produced at Guangzhou Toyota will undercut the sales of new Vios, Wang said, "both brands have their selling points, and we are confident to achieve sales target for both."

LP OxoSM Technology Licensed to PetroChina Sichuan Petrochemical Co., Ltd.

PetroChina Sichuan Petrochemical Co., Ltd. (PetroChina) has chosen LP OxoSM SELECTORSM 10 Technology for its new facility in Chengdu, capital city of Southwest China's Sichuan Province, Peoples Republic of China. LP Oxo Technology is cooperatively offered by Dow Technology Licensing, a business unit of The Dow Chemical Company and its consolidated affiliates and Davy Process Technology Limited, a Johnson Matthey company.

China Sets Guidelines for Coal Projects

China has drawn up guidelines for new coal projects, the latest move to control expansion, raise efficiency and cut emissions by the industry, the country's top planning body said on Thursday.

The guidelines, published on the Web site of the National Development and Reform Commission, also support development of large-scale coal miners and consolidating medium and small-sized miners, as well as encouraging long-term contracts among coal miners, transporters and consumers.

The guidelines came as Chinese miners and power generators began negotiating 2008 prices for coal, which are expected to rise as much as 10-20 percent, partly due to other fees and a railway bottleneck.

China will stabilise the scale of coal production in the eastern part of the country and strengthen construction of large-sized coal bases in the central region, while speeding up the exploration and modest development in the western part, the guidelines said.

New and upgraded coal mining projects in Shanxi, Inner Mongolia and Shaanxi regions should have an annual capacity of at least 1.2 million tonnes, the guidelines said.

The projects in Chongqing municipality and Sichuan, Guizhou, and Yunnan provinces should have annual capacity of at least 150,000 tonnes, the guidelines said.

Taiwan sees LED output rising to 540 bln twd by 2015 from 21 bln in 2006

The output of Taiwan's light-emitting diode (LED) industry should reach 540 bln twd by 2015, equivalent to a 23 pct global market share, the Taiwan External Trade Development Council said.

Taiwan's LED production of 21 bln twd last year accounted for 10 pct of the world market, ranking it second among producers, according to the council.

The industry expects to achieve production value of 93 bln twd for a 14 pct global market share in 2010, it said.

(1 usd = 32.30 twd)

Shanghai home price drops 7% in November

SHANGHAI home prices dropped an average of seven percent this month from October, according to Shanghai Youwin Real Estate Information Service Co Ltd.

The average price in the first 28 days of this month reached 10,724 yuan (US$1,453) per square meter, compared with October's 11,539 yuan and September's 10,507 yuan, the company said.

Growing transactions in the suburbs and shrinking volume downtown pulled down the average price, said Xue Jianxiong, research head of the company.

Nearly 1.5 million square meters of residences were estimated to have been sold this month, about 10 percent less than October's 1.64 million square meters, the company said.

In downtown Jing'an, Huangpu, Luwan and Hongkou districts, no new properties hit the market in the 28 days, which led to transactions dropping 50 percent inside the Middle Ring Road.

"A rising down payment ratio, exhausted mortgage quotas and stricter checks on land cooled off the property market, but transactions began rebounding at the end of this month," Xue said.

Average housing prices in Shanghai rose 7.9 percent last month from a year earlier, the National Development and Reform Commission said earlier this month.

The Shanghai government will spend two billion yuan to buy 8,000 low-rent homes for needy people and expand the market supply.

The country has issued a string of policies to cool down the real estate boom, such as tightening credit to developers, increasing supervision over land use and enforcing tax policies.

Last month's average housing price in the mainland's 70 major cities jumped 9.5 percent on a yearly basis, compared with September's 8.9-percent growth rate.

China auto parts exports hit $1.79 billion, up 30 percent in the first ten months

In the first ten months of the year, China exported a total value of 13.25 billion yuan ($1.79 billion), up 30 percent from one year earlier, according to a report from Ministry of Commerce.

The total value of auto parts exports in the first nine months this year has reached the amount of the whole last year, the report said.

Global auto giants like Chrysler, BMW and Toyota has recently unveiled plans to increase their China sourcing targets. The portfolios they are purchasing from China have expanded to include electronic system, chassis and engines in recent years.

China 3C Group gets 3C800.com exclusive

China 3C Group, parent of Zhejiang Yong Xin Digital Technology Co. Ltd, has signed a letter of intent to be the exclusive supplier of 3C800.com, which specializes in business-to-consumer products.

The Zhejiang-based company, a wholesale distributor and retailer computers, communication products and consumer electronics, reported year-on-year revenue growth of 36% in the third quarter of 2007, while net profit for the Jan-Sept period leaped 190% to US$18.5 million, from US$6.4 million in 2006. China 3C currently has 900 retail outlets in Eastern China and counts leading institutions such as Zhejiang University among its clients.

China 3C's CEO Wang Zhenggang said the partnership is likely to expand the company's customer base by leveraging on existing retail, logistics and distribution capabilities, while enhancing its reputation as a leader in the 3C products market. Owned by Hangzhou Xituo Network Technology Ltd, a leading Chinese e-commerce retailer of 3C products, 3C800.com aims to revolutionize the virtual retail shopping experience by using 3D technology.

Wang also said that the cooperation with 3C800.com has greatly minimized the capital risk that comes with building a retail site from scratch, as 3C has been exploring options to build a stronger online presence to complement retail outlets, which are numbering close to 1,000.

Chalco to invest US$1.2bln in Saudi Arabic

China Aluminum Corporation (Chalco)<601600><2600>, the country's largest aluminum producer, got the approval from Saudi Arabian government to launch a US$3 billion plant with Malaysia's MMC and local company SBG in Saudi Arab, according to China's Ministry of Commerce.

Chalco will hold 40% stake in the plant by investing US$1.2 billion. The plant is capable of producing 1 million tons of electrolytic aluminum annually, part of which will be exported to China. The Chinese aluminum giant will manage the production of the plant.

Construction of the new plant is scheduled to start in next year and be built in three stages. The Saudi Arabian governments will ensure the energy supply to the new plant.

Shares of Chalco continued to rise for two days, despite the slump of domestic stock markets, as the company announced to raise the price for alumina to RMB 3, 800 per ton, up 8.5% from current RMB 3, 500 per ton.

Komatsu to build 3 new plants in China

Komatsu Ltd, one of the world's leading manufacturers of earth-moving equipment, has disclosed its plan to set up three new plants in China, fuelled by the region's robust demand for excavators and mining machinery, market sources reported.

The three new plants will include two construction machinery plants and one casting parts factory. Analysts estimated that the firm would invest at least ? billion for new plants' construction work, which is expected to begin in April 2009.

"We expect continued growth in infrastructure and construction demand in China, and sooner or later our production capacity will hit the limit," said the firm's spokesman. Currently, Komatsu has entered into talks with local companies to buy land for one of the new plants.

Amid of the rapid urbanization in China, the company aims to increase its annual production capacity for hydraulic excavators to at least 16,000 units by 2010-11 in the region.

Headquartered in Tokyo, Komatsu Ltd has 146 subsidiaries and 42 associated companies worldwide. Its businesses are primarily engaged in construction, mining and industrial equipment.

China's 4th largest airline opens

China has officially launched its fourth largest airline, Grand China Airlines Holding Co., Ltd, after groundwork for the merger was laid slightly over three years ago.

With a registered capital of RMB 3.085 billion, the new airlines is a consolidation of four carriers – Hainan Airlines<900945><600221>, Xinhua Airlines, Chang'an Airlines and Shanxi Airlines. Its first flight commenced on Nov. 29 from Beijing to Dalian.

Sources reported that the venture has three shareholders, with the Hainan government owning 48.6%, U.S. financier and chairman of Soros Fund Management, George Soros, owning 18.6% and Hainan Airlines's parent HNA group with 32.8% stakes in Grand China.

News of Grand China's plans to list in Hong Kong broke as early as March this year, with RMB 5 billion set as the target for the stock sale, according to Grand China chairman Chen Feng.

China's travel boom is set to continue for the next few years, as the country seeks overseas business partners, as well as a steady influx of foreign investors. Aviation regulators are predicting that its flight passenger numbers will hit 270 million by 2010, based on an annual average of 14.5% growth. Grand China is reportedly planning to base itself at Beijing Capital International Airport to operate international, domestic and cargo air transport flights.

China Railway Ministry issues RMB 45 bln bonds

China's Ministry of Railway started issuing new batch of fixed-rate corporate bonds, totaling RMB 45 billion, from Nov. 28 to Dec. 4 this year, which was RMB 10 million more than the proposed RMB 35 billion due to the surging demand in railway construction.

The bonds include RMB 9 billion of 7-year bonds, RMB 26 billion of 10-year bonds and RMB 10 billion of 15-year bonds with annual yield rate of 5.38%, 5.6% and 5.75% respectively.

The bonds were priced on Tuesday, based on the average 1-year Shanghai Interbank Offered Rate (Shibor) of 4.41% prior to 5 days.

The Ministry has issued totally 14 batches of corporate bonds so far, amounting to RMB 113.7 billion. The bonds will fund the construction of 21 railway projects and purchase of new trains, to meet the target of China's eleventh 5-year plan (2006-1010).

China's toy export rebounds in October

Toy export from East China's Guangdong Province, a major toy manufacturing hub in the country, saw surging growth in October, despite the stronger Chinese currency and large volume of recalls earlier this year.

The province has exported US$749 million worth of toys in October alone, up 27.6% over the same period last year, though the export slumped 5.4% to US$170 million in September, according to the official statistics. As Christmas is approaching, export volume to the European Union (EU) surged 51.5%.

Toy export from Guangdong amounted to US$4.94 billion in the first 10 months, up 22.9% year-on-year, while 79% of the total went to the U.S and EU. From January to October, the U.S. has imported US$2.31 billion worth of Chinese toys, up 15.4% year-on-year, while export to Latin American countries was up 53.6%.

Earlier this year, Mattel recalled batches of China-made toys over lead-contaminated surface paint, however, it apologized that 87% of the recalled toys had design defect from the company itself and only 13% contained polluted lead.

The toy production in Guangdong accounts for 70% of China's total and 50% of global toy output. The provincial government carried month-long safety inspection over the local toy producers in September. Licenses from 423 toy makers were canceled, licenses of 341 toy firms were suspended and 690 other firms were required to improve their production quality, as they were found unqualified paint and parts in the products.

Peugeot Citroen recalls 68 cars in China

PSA Peugeot Citroen, French automobile giant, is recalling 68 cars in China due to gearbox flaws, said China's General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ).

The cars subjected to recall were made in France, including 34 Peugeot 206CC convertibles produced between Feb. 2 to Feb. 27, and 34 Citroen C5R 2.0 sedans manufactured between Jan. 30 and March. 3 this year. With the recall, torque converters and heat exchangers will be replaced for free.

Dongfeng Peugeot Citroen Auto Co, a venture jointly established by French car maker and local Chinese company, has recalled 5,609 units of 206 models made in China between Jan. 22 to Jul. 5 2006.

In 2006, global sales revenue of auto giant slumped 42% to EUR 1.12 billion, while its net profit dropped to EUR 176 million, the lowest reported net profit figures since 1997.

Slippery as an eel but exports resume to Japan

CHINA has resumed exports of grilled eels to Japan after a four-month suspension triggered by reports saying banned drugs had been found in the fish.

Inspection and quarantine authorities in south China's Guangdong Province, the country's leading eel exporter, said exports to Japan resumed in mid-November. In addition, several Japanese importers had visited the province over the past two weeks to place orders.

Chinese grilled eel products were taken off Japanese shelves in July amid concerns about the use of antibiotics and some banned substances, said Huang Weiming, Guangdong inspection and quarantine bureau vice director.

He said Guangdong had not received a single order for grilled eel from Japanese importers over the past four months.

Many Japanese love grilled eels from China. They make up about 80 percent of the market and are sold at prices 40 percent cheaper than similar Japanese products, Huang said.

The bureau sent an investigation team to Japan and South Korea last month. The trip aimed to exchange views with representatives from the Japanese fishery industry association and the country's press to clarify misunderstandings about Chinese products, he said.

During the visit, the Japanese expressed a willingness to enhance communication with the Chinese side to remove misunderstandings and end the trade impasse that had been detrimental to both sides.

Huang said joint meetings would be held between Japanese eel importers and exporters from the Chinese mainland and Taiwan. "The outlook of Chinese eel exports is quite optimistic."

Demand for toy exports rebounds

CUSTOMS authorities in Guangdong Province, a major base for the toy-making industry in southern China, said demand for exported toys has rebounded despite a spate of recall dramas earlier this year.

Latest statistics obtained from the Huangpu Customs show the value of toys exported by the province fell 5.4 percent in September compared to the same period last year, but it rebounded to post a year-on-year rise of 27.6 percent in October.

Customs analysts said the rebound was spurred by rising demand in the Christmas retail season, and it also shows that toy recalls, staged by United States toy maker Mattel Inc. But the row over lead-contaminated surface paint since summer seemed to have had limited impact on the province's toy exports.

Mattel apologized to China in September that 87 percent of the recalled toys were found to have loose magnets - a design defect by Mattel - and 13 percent of which contained excessive lead.

China is the world's biggest toy exporter. In 2006, it sold 22 billion sets of toys overseas, about 60 percent of the global total.

In order to address safety concerns over toys and other products, the Chinese government introduced a landmark recall system in the summer, launched a four-month-long nationwide product quality campaign, and offered intensive training courses to domestic toy manufacturers.

In the first 10 months, Guangdong exported toys worth a total of US$4.94 billion, up 22.9 percent over the same period last year. About US$3.92 billion, or 79 percent of the total, were exported to the US and the European Union.

Exports to the US alone were worth US$2.31 billion, a jump of 15.4 percent over the same period last year, while a 53.6-percent hike was seen in exports to Latin American countries.

The provincial Quarantine and Inspection Bureau announced at the end of October that it discovered problems like substandard paint and loose parts in toys. The bureau withdrew production licenses from 423 toy makers, suspended licenses of 341 toy firms, and ordered 690 others to improve their working practices.

R&D investment to top US$5.2b

BOSCH Group said its investment in research and development will reach about 3.5 billion euros (US$5.2 billion) this year, Perter Pang, president of Bosch China, said.

Most of the money will be spent on five main areas of innovation for automotive industry, Pang said at the first China International Auto Parts Expo in Beijing yesterday adding R&D investment will remain high in future.

The latest global innovations will be also used in China to benefit the local automotive industry, especially in the field of fuel saving, CO2 reduction and car safety.

The world's leading auto parts supplier displayed several advanced energy saving, clean and safe automotive technology at the expo, including clean diesel technology and second generation of direct gasoline injection.

China's first offshore wind power generator ready

China's first offshore wind power station, located in Liaodong Bay in the northeast Bohai Sea, was officially put into operation on Wednesday.

The wind power station was built by the China National Offshore Oil Corp (CNOOC), the country's largest offshore oil producer, with an investment of 40 million yuan ($5.4 million).

It kicked off trial operation on November 8, and has generated 200,000 kilowatt-hours of electricity by November 26.

The generating unit was fixed to a jacket structure of the CNOOC's Suizhong 36-1 oil field, which is 70 kilometers offshore in the Bohai Sea, with a five-meter-long submarine cable linking the unit with the central platform of the oil filed for power supply.

"This is the first wind power station in the world designed for power supply of offshore oil and gas fields," said Zhou Shouwei, CNOOC's deputy general manager.

The unit is expected to reach an annual output of 4.4 million kilowatt-hours, which is equal to saving 1,100 tons of diesel oil annually and also the reduction of 3,500 tons of carbon dioxide and 11 tons of sulfur dioxide, according to Zhou.

The Chinese government has been promoting the use of renewable energy, including wind power and solar power, amid efforts to shift from heavy reliance on coal consumption.

China's installed capacities of wind power reached 2.3 million kilowatt-hours in 2006, and is expected to hit 5 million by the end of 2007.

The country's installed capacities of wind power are set to reach 30 million kilowatt-hours by 2020, according to the government plan.

China's offshore wind power capacities are almost three times that of onshore capacities, said Wang Jingquan, an academician with the Chinese Academy of Sciences.

Citroen recalls 68 cars for gearbox flaws

French auto maker PSA Peugeot Citroen is recalling 68 cars sold in China because of gearbox flaws, China's quality watchdog said here on Wednesday.

The cars, all manufactured in France last year, include 34 Peugeot 206CC convertibles made between Feb. 2 and Feb. 27 and 34 Citroen C5R sedans (2.0 liters) produced between Jan. 30 and March 3.

The French auto giant will replace the torque converters and heat exchangers free of charge, the General Administration of Quality Supervision, Inspection and Quarantine said.

Earlier this month, the Chinese joint venture between the French auto maker Dongfeng Peugeot-Citroen Auto Co., recalled 5,609 of its 206 automatics for the same problems.

Recalled were Chinese-made 206 models produced between Jan. 22 and July 5 2006.

SK Tel to sell handset business to China

SK Telecom Co, South Korea's top mobile service operator, is in talks to sell its handset manufacturing business in China to a Chinese firm, a South Korean daily reported on Wednesday.

The sale could be completed by the year-end, depending on the outcome of due diligence, the Dong-A Ilbo quoted industry sources as saying.

An SK Telecom spokesman declined to comment.

The company had invested 26 billion won (US$28 million) in the Chinese plant earlier this year to produce an annual 250,000 handsets for sale in China and eastern Europe.

ASB Expects Double-digit Growth Next Year

Alcatel Shanghai Bell (ASB), a joint venture telecom equipment manufacturer based in Shanghai, announced on November 27 that it signed EUR 750- million contracts with China Mobile and China Unicom to provide them with telecom equipment and telecom solutions.

In the meanwhile, the telecom gear maker vowed to be one of the top two telecom equipment brands in China in the near future.

Besides its achievements in China's mainland, the company also made a big headway in the international markets this year by gaining a couple of big orders in Malaysia, Indonesia, Vietnam, White Russia, and New Zealand.

In addition to profits, ASB has attached much importance to environment protection in China by optimizing the sizes and energy consumption of its products.

Its latest products launched this year have reduced 30% to 50% in energy consumption from that one year before in line with the micro-control policy of the Chinese government.

Prices of telecom equipment are expected to fall 10% to 20% next year, so ASB has to keep an increase pace of 20% to make its end meet. It forecasts a double-digit growth for 2008.

ASB and Datang Mobile have been working together to roll out the core network solution for the bidding, but both parties will bid for the huge project in the name of ASB. In June 2005, both parties co-invested a TD-SCDMA base station production line with a monthly capacity of 2,000 units.

Since 2001, ASB started the fundamental research for TD- SCDMA. In November 2004, it wrapped up the strategic cooperation agreement with Datang Mobile and injected CNY 250 million into the latter.

ASB announced that it had established an integrated sales system and built offices across China. At the same time, its spare part center in Beijing can provide 24-hour spare part support service. Moreover, ASB has created a maintenance center in Shanghai. Its technology support team for the TD-SCDMA project has as many as 1,800 engineers.

Datang Mobile has assigned more than 1,000 research and development engineers for the study of TD-SCDMA.

ASB is the first joint-stock telecom equipment company with foreign investment in China. Alcatel Lucent holds 50% stake plus 1 share, and the Chinese party holds the remaining. ASB stresses that its next-generation core network solution has been widely used in the 2G and 3G networks at home and abroad, and have been fully authenticated with maturity, telecom-grade security, and reliability.

ASB also stresses its international background. Alcatel Lucent owns rich 3G experience in the world, and has advantages in 130 countries.

Trade surplus hits US$27 billion in October

The latest figures show China's trade surplus reached a record US$27 billion in October. This will give added fuel for US Treasury Secretary Henry Paulson, seen here, who is preparing for an economic summit in Beijing next month and will no doubt bang the drum about the under-valued yuan.

The trade surplus increased 13.5% from a year earlier.

The yuan's appreciation versus the dollar had its fastest acceleration last week since China ditched a fixed exchange rate in July 2005.

The 0.6% gain took the appreciation since then to 11.6%.

Imports jumped to US$80.7 billion, while exports rose 22.3% to US$107.7bilion.

Wang Qian, an economist at JPMorgan Chase & Co in Hong Kong said global oil and commodity prices contributed to the import surge.

Where will it all end? Previously reported estimates suggest a total surplus of US$257 billion in 2007, and US$308.4 billion in 2008.

Guangzhou seeks investment to develop air cargo hub

Chen Mingde, vice-mayor of Guangzhou and seen here, is encouraging more foreign companies to help in developing the city's air transportation industry. Guangzhou has mapped out a strategy to expand its postion as an international cargo aviation transportation and logistics hub.

Chen Mingde said the strategy offers a myriad of investment and business opportunities for foreign investors and business representatives. He said the room for foreign investment in the city's airport-related economy is big enough and he promised foreign investors and businesspeople would earn profits if they participated. Which is a fairly large promise to make.

Guangzhou Baiyun International Airport, one of the country's three busiest airports, has been determined to become the world's 15th largest in terms of cargo volume before 2015.


To achieve this the airport has been urged to expand c-ooperation with neighbouring airports in the Hong Kong and Macau special administrative regions, as well as in Shenzhen and Zhuhai special economic zones, to increase the region's cargo transportation business.

Construction of a new runway will start early next year to accommodate growing passenger and cargo transportation volumes.

The runway, the airport's third, has been scheduled to be put into use in 2010 when the city holds the 16th Asian Games. The airport plans to operate 50 international flights that year.

Aeromexico eyes China in time for Olympics

Aeromexico, Mexico's top airline which was recently privatized, will begin flying to China in March of next year in time for the Olympics.

The Mexican government sold Aeromexico to U.S. bank Citigroup and its Mexican partners in October after a heated bidding war for the carrier which was then deeply in debt.

The flight from Mexico City to Shanghai will connect through the Mexican border city of Tijuana. There is sense in this in that Tijuana is the biggest border crossing point with the United States - it is only 30 miles from San Diego as you might be able to see on our map - handling some 100 million travelers a year. And it has a major international airport.

Thus routing the flight through there makes it possible that it will become a hub for Americans coming to Shanghai. And the flights will be inexpensive.

Ukrainian winegrower delegation explored Yantai

Today, Ukrainian winegrower delegation had an informal discussion with the related principals of Wine Chamber of Yantai Food Industry Association in ChangYu Wine Culture Museum. They discussed the technologies and culture exchanges of grape and wine industry as well as signing up the letter of intention. In addition, they thoroughly discussed how to use effectively their production, economy, assets, culture and other resources.

The discussion was good for both of Yantai and Ukrainian to know more about the winegrower industry each other. And it could also improve Yantai's international competitiveness.

China Investment Wants to Stabilize Global Markets, Lou Says

China Investment Corp., the nation's $200 billion sovereign wealth fund, wants to stabilize financial markets, which have been rocked by subprime mortgage defaults.

"CIC wants to be a stabilizing force in the international capital markets," Chairman Lou Jiwei told a conference in Beijing today. He cited a "recent example" in which a sovereign wealth fund invested in a financial institution with subprime losses.

Abu Dhabi Investment Authority this week agreed to buy a $7.5 billion stake in Citigroup Inc., the biggest U.S. bank by assets. China Investment, which formally began operations in September, was set up to help improve returns on China's $1.4 trillion of reserves.

Banks, battered by credit losses and bad debts triggered by the mortgage market collapse, are becoming targets for sovereign funds. The MSCI World Finance Index has lost 11 percent this year, the worst performance among 10 industry group on the MSCI World Index.

Abu Dhabi's investment followed purchases by U.A.E. fund Dubai International Capital LLC in companies including London- based HSBC Holdings Plc, Europe's biggest bank by market value, and New York-based hedge fund Och-Ziff Capital Management LLC.

China Investment plans to set up overseas branches in major financial centers and will mainly invest in publicly traded securities. The fund must pay annual interest of 5 percent on its funds, making investments in long-term infrastructure projects "impossible," Lou said at a conference in Beijing.

"CIC's purpose is to achieve reasonable, longterm returns and also to improve the corporate governance of domestic banks," said Lou.

State-run investment funds will grow to $7.9 trillion in combined size from $1.9 trillion now as currency reserves keep accumulating in countries including China and Russia, Merrill Lynch economists wrote in a report last month.

TSEC seeks capital market reforms

Wu Rong-i, chairman of the Taiwan Stock Exchange Corp., discussed developments in Taiwan's capital markets at the American Chamber of Commerce luncheon held at Shangrila Far Eastern Plaza Hotel in Taipei yesterday. Wu said he wants to push integration of Taiwan's exchanges and reform the TSEC.

"We need to keep up with trends in global exchanges, namely demutualization, IPOs and strategic alliances," Wu said. "Of the top 20 stock exchanges, 12 have gone IPO, and exchanges like TSE and KRX (Korea) have been planning them." Taiwan's stock exchange, he observed, ranked 21st in terms of market capitalization.

Mergers and acquisitions of stock exchanges have also escalated both in terms of volume and valuation. "In 2004, the value of such activity was merely US$200 million. In 2007, to date, it is US$19.6 billion," he said.

"All of the public North American stock exchanges have been involved in strategic activity over the past 18 months," he continued. The same thing is happening in Europe. "Strategic activity in Asia is taking longer to evolve," stressed Wu, "with minority investments and alliances more prevalent than outright acquisitions."

He touched upon a proposed "Four-in-One" integration framework. In Phase I, the Taiwan Stock Exchange (TSEC), Taiwan Futures Exchange (TAIFEX), Gre-Tai Securities Market (GTSM) and Taiwan Depository & Clearing Corp. (TDCC) are to be transformed into subsidiaries of a new holding company (TWX Holdings) through a share swap.

"We want to enlarge the market scale so that it becomes an attractive market with regional characteristics. We also seek to meet international competition by following global practices through cross-border cooperation or strategic alliances," noted Wu.

To strengthen market supervision, Wu wants to restructure the Gre-Tai securities market. "The GTSM will be merged with the Securities and Futures Institute (SFI). Alternatively, it will be transformed into a market think tank that donates periodically to the SFI for research expenditures."

The GTSM is currently a non-profit organization, he explained. "This will be spun off to establish the Gre-Tai Corp., which will be a shareholder of TWX Holdings through a share swap. Cash dividends from the TWX will be injected into the GTSM operational expenditures of the market think tank to enhance research on capital markets and promote international competitiveness."

"An organization will be set up to enforce day-to-day market supervision before the listing of TWX Holdings."

"Having a specific institution responsible for clearing will facilitate flow of funds and thereby benefit securities firms, futures firms and investors," continued Wu. "Integration of trading and clearing systems on a common platform will also improve services and reduce access cost of market participants.

By jointly monitoring market risk and cross-market information, we can effectively prevent illegal events and upgrade market operational safety, while ensuring the independence of market oversight and supervising efficiency."

Reform is very much needed, said Wu. "While the number of listed companies at TSEC and GTMS went from 518 in 1997 to about 1,259 in 2007, we have not kept pace with other exchanges. In terms of market capitalization and value of share trading, Taiwan's exchange went from 14th in 2003 to 21st in 2007. In addition, the number of newly listed companies has been decreasing."

Increasingly, he added, Taiwanese companies are seeking to list overseas. Another worrying trend can be seen with regard to flows of portfolio investments. The net outflow in 2006, he explained, was up substantially to US$19 billion.

Despite these challenges, Wu believes Taiwan has many advantages. "We have a relatively good profit-earnings ratio. In September 2007, the P/E of Taiwan stocks was 19.51. Compare this with Tokyo at 30.4, Hong Kong 22.3, Korea 16.99 and Singapore 16.25."

Taiwan has a high velocity when it comes to share turnover, the ratio between domestic share turnover and their market capitalization. The level of shareholding and trading among foreigners is also quite high. "Foreigners held US$246.9 billion worth of Taiwan's stocks at the end of October 2007 or 33.57 percent of total market capitalization," said Wu. "Moreover, total trading value by foreigners was US$161.2 billion at the end of October, and in 2007, they accounted for 19 percent of total value traded."

Excellent yields and generous distribution of dividends are another advantage. "In 2006, Taiwan yields were at 4.2, Singapore 3.5, Korea 1.7, Hong Kong 2.2 and Tokyo 1.1."

Wu sees Taiwan's exchange as presenting excellent potential. "Earnings growth at the top 10 industries in Taiwan (Q1-Q3, 2007 year-on-year before taxes) was very high," said Wu. "Taiwan has many other attractive qualities as well," namely, massive insurance and pension funds. "The wealth of the rich in Taiwan ranks third in Asia, next only to Japan and China. In 2005, more than 210,000 households in Taiwan held assets of more than US$1 million; total domestic and offshore assets amounted to US$585 billion."

Other advantages are the island's high-tech, China-savvy talent, expertise in high-tech development, cluster of world-leading technology companies and long-term relations with the U.S., Japan, China and Southeast Asia.

TSEC seeks capital market reforms

Wu Rong-i, chairman of the Taiwan Stock Exchange Corp., discussed developments in Taiwan's capital markets at the American Chamber of Commerce luncheon held at Shangrila Far Eastern Plaza Hotel in Taipei yesterday. Wu said he wants to push integration of Taiwan's exchanges and reform the TSEC.

"We need to keep up with trends in global exchanges, namely demutualization, IPOs and strategic alliances," Wu said. "Of the top 20 stock exchanges, 12 have gone IPO, and exchanges like TSE and KRX (Korea) have been planning them." Taiwan's stock exchange, he observed, ranked 21st in terms of market capitalization.

Mergers and acquisitions of stock exchanges have also escalated both in terms of volume and valuation. "In 2004, the value of such activity was merely US$200 million. In 2007, to date, it is US$19.6 billion," he said.

"All of the public North American stock exchanges have been involved in strategic activity over the past 18 months," he continued. The same thing is happening in Europe. "Strategic activity in Asia is taking longer to evolve," stressed Wu, "with minority investments and alliances more prevalent than outright acquisitions."

He touched upon a proposed "Four-in-One" integration framework. In Phase I, the Taiwan Stock Exchange (TSEC), Taiwan Futures Exchange (TAIFEX), Gre-Tai Securities Market (GTSM) and Taiwan Depository & Clearing Corp. (TDCC) are to be transformed into subsidiaries of a new holding company (TWX Holdings) through a share swap.

"We want to enlarge the market scale so that it becomes an attractive market with regional characteristics. We also seek to meet international competition by following global practices through cross-border cooperation or strategic alliances," noted Wu.

To strengthen market supervision, Wu wants to restructure the Gre-Tai securities market. "The GTSM will be merged with the Securities and Futures Institute (SFI). Alternatively, it will be transformed into a market think tank that donates periodically to the SFI for research expenditures."

The GTSM is currently a non-profit organization, he explained. "This will be spun off to establish the Gre-Tai Corp., which will be a shareholder of TWX Holdings through a share swap. Cash dividends from the TWX will be injected into the GTSM operational expenditures of the market think tank to enhance research on capital markets and promote international competitiveness."

"An organization will be set up to enforce day-to-day market supervision before the listing of TWX Holdings."

"Having a specific institution responsible for clearing will facilitate flow of funds and thereby benefit securities firms, futures firms and investors," continued Wu. "Integration of trading and clearing systems on a common platform will also improve services and reduce access cost of market participants.

By jointly monitoring market risk and cross-market information, we can effectively prevent illegal events and upgrade market operational safety, while ensuring the independence of market oversight and supervising efficiency."

Reform is very much needed, said Wu. "While the number of listed companies at TSEC and GTMS went from 518 in 1997 to about 1,259 in 2007, we have not kept pace with other exchanges. In terms of market capitalization and value of share trading, Taiwan's exchange went from 14th in 2003 to 21st in 2007. In addition, the number of newly listed companies has been decreasing."

Increasingly, he added, Taiwanese companies are seeking to list overseas. Another worrying trend can be seen with regard to flows of portfolio investments. The net outflow in 2006, he explained, was up substantially to US$19 billion.

Despite these challenges, Wu believes Taiwan has many advantages. "We have a relatively good profit-earnings ratio. In September 2007, the P/E of Taiwan stocks was 19.51. Compare this with Tokyo at 30.4, Hong Kong 22.3, Korea 16.99 and Singapore 16.25."

Taiwan has a high velocity when it comes to share turnover, the ratio between domestic share turnover and their market capitalization. The level of shareholding and trading among foreigners is also quite high. "Foreigners held US$246.9 billion worth of Taiwan's stocks at the end of October 2007 or 33.57 percent of total market capitalization," said Wu. "Moreover, total trading value by foreigners was US$161.2 billion at the end of October, and in 2007, they accounted for 19 percent of total value traded."

Excellent yields and generous distribution of dividends are another advantage. "In 2006, Taiwan yields were at 4.2, Singapore 3.5, Korea 1.7, Hong Kong 2.2 and Tokyo 1.1."

Wu sees Taiwan's exchange as presenting excellent potential. "Earnings growth at the top 10 industries in Taiwan (Q1-Q3, 2007 year-on-year before taxes) was very high," said Wu. "Taiwan has many other attractive qualities as well," namely, massive insurance and pension funds. "The wealth of the rich in Taiwan ranks third in Asia, next only to Japan and China. In 2005, more than 210,000 households in Taiwan held assets of more than US$1 million; total domestic and offshore assets amounted to US$585 billion."

Other advantages are the island's high-tech, China-savvy talent, expertise in high-tech development, cluster of world-leading technology companies and long-term relations with the U.S., Japan, China and Southeast Asia.

Taiwan's Oct. LNG imports decline 5.7% as costs rise

Taiwan, Asia's third-biggest liquefied natural gas importer, trimmed purchases by 5.7 percent in October while costs rose, government data shows.

CPC Corp., Taiwan's only LNG importer, cut purchases to 1.64 million kiloliters, or about 743,000 metric tons, last month from 1.74 million kiloliters a year earlier, the island's Taipei-based energy bureau said in an e-mail Wednesday. Taiwan paid 11 percent more for each unit of the fuel.

"Until Taiwan's LNG-powered power plants come on-stream, the demand for LNG will be quite flat," Wei Juen-shen, section chief for energy statistics at the bureau of energy in the Ministry of Economic Affairs, said. Wei declined to comment on the decline in LNG imports.

LNG meets more than 95 percent of Taiwan's natural gas needs. Prices of the fuel have climbed in recent months after an accident in March at a Tokyo Electric Power Co. nuclear plant increased demand for LNG to run gas-fired generators, according to consultant Facts Inc.

Taiwan's government forecasts the island's LNG demand will rise 31 percent to 10.5 million tons in 2010, and double by the end of the next decade.

Shinkong Synthetic gains on government investment

Shinkong Synthetic Fibers Corp. climbed on the Taiwan Stock Exchange after a government fund said it will buy one-third of the company's cellulose film unit.

Shinkong Synthetic climbed 5.2 percent to NT$11.10 at the close of trade in Taipei Wednesday, the largest gain since Sept. 26, compared with a 1.2 percent decline in the benchmark Taiex index.

The maker of fibers and fabrics will sell a 33.3 percent stake in its TacBright cellulose film unit to the Taiwan government's National Development Fund for NT$1 billion (US$31 million), the fund said in a statement Tuesday. The company's shares have climbed 33 percent this year, outpacing the Taiex index's 8 percent advance.

China plans to build new oil reserve base in southwest

China will build a new strategic petroleum reserve in Wanzhou, a district in Chongqing Municipality in the southwest, once final approval is obtained from the central government.

Wanzhou District Government and the Sichuan Bureau of Material Reserve signed an investment agreement last Friday over launching a joint venture for building a new oil reserve base in Wanzhou, about 300 km away from Chongqing.

Liu Shuxin, chief of Sichuan Bureau of Material Reserve, said the preparatory work for the proposed oil reserve base had gone smoothly, and Wanzhou had been selected for its unique geographic position and advantages for transport.

"As an important town on the mainstream of the Yangtze, Wanzhouis accessible by means of waterway, railways, highways and air, sooil distribution can be guaranteed if emergencies occur," said Liu.

In accordance with the construction plan, Wanzhou oil reserve base will be designed as a facility that will guarantee oil supply in case of emergencies, so in ordinary time, no big transactions will be conducted here.

Yuan Changmo, deputy chief of Sichuan Bureau of Material Reserve, declined to provide more details about the project, saying the proposed venture will have to get approval from the National Development and Reform Commission before it can be materialized.

Upon completion, Wanzhou oil reserve base will be the first of the kind in the interior areas of the Chinese mainland and is of strategic value that can not be neglected for safeguarding internal oil safety, according to Yuan.

China started a state strategic oil reserve base program in 2004 as a way to offset oil supply risks and reduce the impact of fluctuating energy prices on the international market on China's internal market of processed oils.

The state strategic oil reserve base program will be completed in three phases. For the first phase, the country has built or been constructing four reserve bases in Zhenhai, Zhoushan, Dalianand Huangdao, all on its coast.

Situated along the Three Gorges Reservoir, Wanzhou, some 321 upstream Yichang, the nearest city to the Three Gorges Project, the world's largest water control facility, is one of ten major ports on the mainstream of the Yangtze River. It has a history of 1,900 years and a population of 1.68 million.

Officials call for more economic cooperation

Chinese and European officials yesterday called for more cooperation on trade, investment, energy and the environment and to tackle issues like the trade imbalance.

"China and the European Union nations are great markets for each other," Vice-Minister of Commerce Yu Guangzhou told the fourth China-EU Business Summit in Beijing yesterday. "The two sides will enjoy great opportunities in the next 10 years."

Bilateral trade between the two economies was $272.29 billion last year, while China's trade surplus against the European Union hit $91.7 billion, sparking concern from both sides.

"The EU exports less to China than to Switzerland, a country of 7 million people," said European Commission President Jose Manuel Barroso.

"It (more balanced trade) will require further work on both sides and this is in the interests of both sides," he said.

Officials at the business summit also called for joint efforts on energy-saving, environmental protection and climate change, areas in which some European companies have leading technologies.

European Trade Commissioner Peter Mandelson expects China to grant more access to European Union players in the service sectors, in which they are comparatively competitive, in a bid to offset the economic bloc's trade deficit in goods.

The European Union is not only China's largest trading partner and its biggest export market, but also one of its major foreign investment sources. European Union members have invested $44.5 billion in China over the past 10 years, including the nation's largest joint venture project.

Meanwhile, European companies have shown strong interest in investing in China's research and development (R&D).

A survey conducted by the European Union Chamber of Commerce in China showed 31 percent of surveyed companies with more than 100 employees have already set up R&D centers in China, and 32 percent want to open or enlarge their R&D facilities in the next two years.

Foreign Firms to Pay Land-use Tax Next Year

Foreign developers and corporations will start to pay a land-use tax starting from next year in Shanghai, according to a notice issued by the city government yesterday.

The land-use tax will range between 1.50 yuan to 30 yuan (US$4.06) per square meter, per year depending on the size and location of the property, the notice said.

Foreign companies are exempted from the tax before the notice takes effect but they still need to pay certain fees for land use. Domestic companies have been paying the tax since 1988.

Individuals are exempt from the tax on their residences.

The new policy means that developers have to pay tax for the land approved by authorities for construction of property projects.

The move is widely expected to add costs to developers which are hoarding land in order to fetch higher selling prices in the future.

"The tax won't affect the city's housing prices since it has been imposed for many years," said Xue Jianxiong, head of research at Shanghai Youwin Real Estate Information Service Co Ltd.

"Foreign firms mainly use office buildings, which account for less than one percent of the city's land," Xue said.

The notice ruled that land inside the Inner Ring Road will be levied 12 yuan to 30 yuan per square meter and land between the Inner Ring Road and Outer Ring Road will be levied six yuan to 20 yuan per square meter.

China has imposed a variety of taxes on developers, such as a land value-added tax and land-transfer fees.

The country will also levy a property tax in 10 regions on a trial basis next year, including Beijing, Shenzhen and Liaoning.

Analysts said that the property tax can reduce the number of idle properties, boost supply and slash housing prices.

Last month's average housing price in the mainland's 70 major cities jumped 9.5 percent on a yearly basis, compared with September's 8.9-percent growth rate.

CNOOC Launches Nation's First Offshore Plant

China National Offshore Oil Corp (CNOOC), the nation's largest offshore oil producer, announced yesterday it had commenced operating the nation's first offshore wind power plant.

The wind power plant has an installed capacity of 1.5 megawatts (MW). It is located at the company's Bohai Suizhong 36-1 oilfield, 70 kilometers off the coast.

The plant can generate 4.4 million kilowatt-hours (kwh) of electricity a year. It will save carbon dioxide emissions by 3,500 tons and sulfur dioxide by 11 tons per year, according to CNOOC.

"CNOOC has great advantages in the development of offshore wind power, an important area in renewable energy," said Fu Chengyu, president of the company, adding that CNOOC will pay much attention to clean and renewable energy in the future.

Construction of the plant only took seven months, and its operation could signal even larger scale offshore wind power projects in the near future, Zhou Shouwei, vice-president of the company said.

China has the potential of 750,000-MW wind energy offshore, Shi Pengfei, vice-chairman of the Chinese Wind Energy Association, told China Daily.

The country also has the potential of 250,000-MW wind energy on land, mainly in the northwest and the east coast, he said.

"This year the nation's wind power sector will continue to see quick growth. In 2007, the installed capacity is expected to be increased by another 1,000 MW," he said.

Wind power presently still accounts for a small part of the nation's total power supply. By the end of 2006 the total installed capacity of wind power in the country was about 2,600 MW. In 2006 China developed a total of 1,300 MW of installed wind power capacity.

Determined to promote sustainable development, the government has set a goal of 30,000 MW of wind power capacity by 2020.

This April, China Energy Conservation Investment Corp, a large State-owned enterprise, began construction on China's first million-kilowatt wind power project in Zhangbei, in the highlands between Beijing and Inner Mongolia.

Once completed, the project will generate 440 million kwh of electricity a year. A total of 1.6 billion yuan has been earmarked for the project.

Analysts said wind power has drawn more attention because of soaring crude oil prices.

According to statistics from HSBC, wind energy is the most cost-effective energy resource when oil is above US$49 a barrel.

Shougang Unveils Steel Venture Plan

Beijing Shougang Co Ltd has revealed plans to set up a 6.4 billion yuan (US$865.5 million) venture to produce cold-rolled steel in the capital's eastern fringe Shunyi.

Beijing Shougang and parent Shougang Corp will set up the venture with Beijing Automobile Investment Co, the Chinese partner of Hyundai Motor Co. The company will have registered capital of 2.6 billion yuan, Beijing Shougang said in a statement to the Shenzhen stock exchange yesterday.

Beijing Shougang will take a 70.28 percent stake in the venture by contributing fixed assets and capital and its parent will take a 9.72 percent by contributing land. Beijing Automobile will hold the remaining 20 percent stake by offering the cash, the statement said.

Shareholders of Beijing Shougang will meet on December 13 to vote on the joint venture plan, it said.

A new cold-rolled steel plant under the venture will start production this year.

Mainland Fuels HK Export Growth

Hong Kong's exports for the first 10 months rose 9.6 percent year-on-year, helped by strong demand from the mainland, the city's largest export destination, and other emerging markets in Asia, and offsetting losses from the US market.

During the period, goods imports increased by 10.4 percent, reflecting a trade deficit of HK$137.6 billion, the Census and Statistics Department (C&SD) of Hong Kong said early this week.

The C&SD said that in October alone, the total value of goods exports increased by 9.8 percent over a year earlier to HK$253 billion. In the same month, imports increased by 12.1 percent over a year earlier to HK$261.7 billion.

"Merchandise exports saw vibrant growth in October. The robust mainland market continued to be the main force driving Hong Kong's exports," said a government spokesman.

Many other emerging markets in Asia such as Vietnam and Thailand remained fairly strong, while exports to the European market saw solid growth.

"All these are very favorable factors helping offset the softness of the US market, weakened by a sharp slowdown in the economy and the subprime or credit market crisis," he said.

The spokesman also said the outlook for the external trading environment has become more uncertain. "The repercussions of the credit market turbulence have yet to be fully played out. The weakness of the US market will be the main downside factor in the period ahead," the spokesman said.

FAW-VW expects to produce 450,000 vehicles this year, up 28 percent

FAW-VW, a joint venture of China's First Automobile Works and German automaker Volkswagen, expects to produce 450,000 automobiles this year, which represent a rise of 28 percent from one year earlier, a senior company official told a group of Chinese reporters yesterday.

"We can produce 100,000 more vehicles than last year," said Wang Zeyi, Communist party chief of FAW-VW.

Currently FAW-VW has two production lines in Changchun. Jetta, Bora, Golf, Audi A4 and A6 are produced in the first production line, whereas Sagitar and Magotan are produced in the second production line. The second production line has annual output capacity of 330,000 units and will have a capacity to assemble 1,200 units a day next year.

FAW-VW's third production line will start production in Chengdu next year, Wang said.

In the first ten months of the year, FAW-VW sold 383,296 vehicles, up 42.9 percent from one year earlier. FAW-VW's mainstay product, Jetta sold 169,272 units in the first ten months, up 22.6 percent from last year.

Last month, VW raised this year's sale target to 900,000 vehicles in Chinese market. "We are confident to achieve this revised sales target based on our strong sales performance and surging profits in China since the beginning of the year," said Winfried Vahland, chief executive officer of Volkswagen China.

BYD plans to sell hybrid vehicles in U.S. market next year

BYD Auto Co. plans to start volume exports of its own-brand cars to U.S. and European markets in the second half of next year or early 2009, according to an Automotive News report.

The automaker says it will display plug-in hybrids and electric cars at the Detroit auto show in January. Both BYD and Chery have bold intentions to enter the United States. But the safety and emissions standards are stiff, and the automakers are small with inexperienced engineers and marketers.

BYD Auto, based in Shenzhen, has a history of brash predictions. For instance, BYD Auto has said it will be China's biggest-selling automaker by 2015. But this year its sales will reach about 100,000, about one-half the production of one assembly plant in the United States.

The company sells gasoline-powered cars now but is targeting hybrids and battery-powered cars. Its parent company, BYD Co., is a leading rechargeable battery maker in the global market.

The company plans to produce a plug-in hybrid model in the second half of 2008 and bring purely electric-powered cars to market in 2009.

BYD Auto makes startling claims about its hybrids. The company says its first plug-in hybrid, the F6DM, will have a range of 267 miles (430 kilometers) on one tank of fuel, with a maximum speed of about 99 mph (160 kph). The car will be able to go 62 miles (100 kilometers) powered by batteries alone, the company says.

BYD Auto says that the battery pack can be recharged about 2,000 times, sufficient for seven to 10 years of operation. It needs nine hours for a full recharge by home power but only about 10 minutes for a 50 percent recharge with a special power station.

Xia says the F6DM may sell for about 200,000 yuan ($26,700).

The company hasn't announced details about its planned electric cars. The company says its battery and hybrid cars are powered by a type of lithium-based battery called lithium iron phosphate.

A source at a company also working on batteries in China - and a competitor of BYD's - said lithium iron phosphate batteries have various problems. They are heavy, costly and difficult to mass-produce with consistent quality.

Nissan Infiniti to triple dealerships in China by 2008

Infiniti plans to open six franchised dealers by the end of this year and aims to increase the number to fifteen by 2008, a senior company official told Shanghai Securities News.

"We opened the first franchised dealer in China at Shanghai Yongda in July, but we are determined to expand our business and will have fifteen dealers by the end of next year," said Yasuaki Hashimoto, Corporate Vice President of Nissan Motor Co., Ltd.

"The operation in China is crucial to Infiniti's global expansion and the smooth implementation of Nissan Value-Up, and we promise to introduce more Infiniti models to China in the future," said Hashimoto.

Infiniti M35 has made its China debut at the Guangzhou Motor Show this month; in August the automaker launched the Infiniti G35 and FX SUV in the Chinese market.

Though BMW and Mercedes-Benz has gained a foothold in China's luxury car market, Infiniti has many strong advantages over its competitors in terms of performance and driving experience. The brand currently offers a full portfolio of luxury performance automobiles, including the G sports coupe and sedan, M luxury performance sedan, FX premium crossover SUV, QX full-size luxury SUV, and the EX personal luxury crossover, which will go on sale in December.

Higher import tax may affect Chinese-made cars in Venezuela

The Venezuelan government may raise tax on imported vehicles and Chinese-made car may be impacted, according to a report posted on China's Ministry of Commerce.

The report says that Venezuela government may raise automobile import tax by 5 percent. After the tax hike, the prices of imported vehicles will go up 20 percent to 40 percent.

Currently Venezuela has four tax items on imported cars: import duty, financial transaction tax, value-added tax and luxury consumption tax (applicable only to imported vehicles worth $30,000). These four tax items will constitute 55 percent of the total price of an imported car.

Venezuela currently has 4 million vehicles in use and 60 percent of these vehicles are imported. The country imported 170,000 vehicles in the first seven months of the year, whereas it imported just 18,500 units last year.

In the first nine months of the year, Venezuela is the fifth largest importer of Chinese-made cars world wide. Geely, Chery, Great Wall, BYD and Chang'an Auto are major Chinese automakers selling cars in Venezuela.

The tax hike may have a negative impact on Chinese-made cars in Venezuela, the Ministry of Commerce report says.

China tells state firms to supply private oil refiners

The Chinese government has ordered the two largest state-controlled oil companies to supply crude to privately owned refineries and buy their fuel products to help end shortages of diesel and gasoline.

China National Petroleum and China Petrochemical were told to provide crude to private processing plants, so-called "teapot refineries," in northern and eastern provinces, the National Development and Reform Commission said Tuesday.

The largest energy consumer in the world after the United States is trying to ease its worst fuel shortages in more than two years that started in August during the summer peak demand period. Some nonstate refiners reduced output to avoid losses caused by rising crude oil costs and state curbs on gasoline and diesel prices.

China National and Sinopec, as China Petrochemical is known, must buy fuel products meeting state specifications from the privately run refineries, the top economic planning body said in a statement Tuesday. The government restricts the number of nonstate refiners allowed to import crude under current government rules and these companies typically process fuel oil into low-quality oil products.

The two state oil companies stopped rationing fuel at filling stations in Beijing, Shanghai, the southern province of Guangdong, and along major cross-province highways on Saturday, the commission said.

The authorities have "maintained market order" by cracking down on fuel hoarding and pricing irregularities. Once these measures take effect, the fuel supply will get back to normal "very soon," it said.

The commission fined six filling stations in the provinces of Sichuan, Guizhou, Ningxia, Shaanxi, Hunan and Hebei that sold diesel at higher prices than allowed by the central government, according to a statement posted on the commission's Web site on Wednesday.

China unexpectedly raised gasoline, diesel and jet fuel benchmark prices by as much as 10 percent effective Nov. 1 in what it called an "urgent" step to end fuel shortages. China controls fuel prices to limit their impact on inflation.
Santos approves gas venture

Santos, the third-biggest oil and gas producer in Australia, and its partners in the Henry natural gas field approved the 275 million Australian dollar, or $241 million, project to expand sales in the southeastern states.

The field, off the southeast coast, will supply fuel to the TRUenergy unit of CLP starting in the first half of 2009, Santos said in a statement to the Australian Stock Exchange. The project will include work to allow the connection of future discoveries at the Netherby and Pecten East wells, it said.

The Henry field will be connected into Santos's Casino gas project, which started production in February last year. The partners, including Australian Worldwide Exploration and Mitsui, started engineering work on the Henry development last December, when Australian Worldwide estimated the cost at 140 million dollars, about half of the budget given Wednesday.

"Henry is relatively high-margin despite those capital costs," said Andrew Blakely, an oil and gas analyst at Macquarie in Sydney. "The beauty of Casino and the upside capability of the asset is really Netherby and Pecten East. If they find anything there, then there's continuous upside to the availability of additional contracts."

"The Henry development will facilitate higher gas sales volumes and extend the production plateau from the Casino project facilities by several years," the chief executive of Santos, John Ellice-Flint, said.

The increase in the project budget was determined after design and engineering studies and comes amid a surge in costs for pipe-laying vessels, drilling rigs and other equipment, said Matthew Doman, a spokesman for the company in Adelaide.

"Industry cost pressures are well documented," he said.

Santos is due to drill the Netherby well in mid-2008, while the timing of Pecten East has yet to be determined, Doman said.

The Henry project is "a logical expansion of the Casino gas system," Bruce Wood, the managing director of Australian Worldwide, said in a separate statement.

Santos has 50 percent of Henry and is the operator, while Australian Worldwide and Mitsui, a Japanese firm, each have 25 percent. The field holds about 150 petajoules, or 141 billion cubic feet, of proven and probable dry gas reserves. Once the field starts up the combined production of Casino and Henry will be about 120 terajoules, or 113 million cubic feet, a day, Santos said.

CNOOC: Iran Gas Not Critical to Supplies

CEO of Chinese offshore oil producer CNOOC Ltd. said Wednesday that a deal to buy natural gas from Iran would help the state-owned company's development but is not critical to securing its supply needs.

CNOOC President Fu Chengyu's comments indicate that CNOOC hasn't yielded fully to outside pressure to scrap plans to invest in Iran's Northern Pars gas field. Reports have said CNOOC could invest as much as $16 billion in Iran.

CNOOC's confirmation last year that it wanted to invest in the gas field triggered a forceful response from the United States, which called it a "bad time to be initiating major new commercial deals with Iran," as the Islamic republic hadn't halted its nuclear program.

Iran, which has some of the world's largest gas reserves, has been unable to develop most of its fields _ or build any terminals to ship liquefied natural gas _ because of diplomatic pressure on potential foreign partners and differences over pricing.

CNOOC has been negotiating with Iran while talking at the same time to potential suppliers in Qatar and Australia, as it seeks long-term contracts to supply LNG to the terminals it wants to build along China's coastline.

So far, only the Dapeng terminal in the southern province of Guangdong is operational, receiving LNG from a North West Shelf venture in Australia under a 25-year supply agreement.

CNOOC also operates the Fujian terminal, which is under construction and has contracted LNG supplies from the BP PLC-led Tangguh project in Indonesia.

In addition, Cnooc is leading the consortium building the receiving terminal at Shanghai, which struck a deal last year with Malaysia's state oil company Petroliam Nasional Bhd., or Petronas, for LNG supplies.

However, CNOOC's other planned terminals remain without supplies so far, including Ningbo in the eastern province of Zhejiang, which is close to several affluent cities.

Demand for natural gas in many regions of China is outstripping supply, especially as the fuel is cheaper than synthetic gas and liquefied petroleum gas, and has led CNOOC's rival PetroChina Co. to agree to pay market prices to secure future supplies.

In September, PetroChina agreed to separate deals for Australian LNG supplies from Royal Dutch Shell PLC and Woodside Petroleum Ltd.

Fu told reporters that CNOOC was waiting for its LNG business to become more profitable before injecting the assets into its CNOOC Ltd. unit, which is listed in Hong Kong and has its American Depositary Receipts traded in New York.

"When the time is right the parent company will inject these assets," said Fu, adding that "big profits" were needed for it to be worth doing so.

China says oil supply soon back to normal

China's oil supply will soon be back to normal after the government took measures to boost output and crack down on hoarding and illegal price hikes, state media said Wednesday.

Top Chinese oil producers PetroChina and Sinopec have been ordered to expand the supply of crude to small refineries, the Shanghai Securities News reported, citing China's top economic planning agency.

Experts estimated that this would help boost output of local refineries across the country by at least 20 percent, the report said.

The two firms have also agreed to provide sufficient oil to filling stations in major cities such as Beijing and Shanghai, and some other areas that see heavy traffic, said the National Development and Reform Commission.

Filling stations across the nation had felt a supply shortfall since October, with producers including Sinopec and PetroChina withholding stock in an apparent protest against government-set domestic fuel prices.

The two companies are now running at full capacity after the government on November 1 made a concession by raising prices of some oil products by about 10 percent, according to previous reports.

Meanwhile, the commission has told local governments to step up a crackdown on retailers that engage in hoarding and raise prices without government permission, the newspaper said.

A list of six filling stations who have been penalised for such practices was published on the commission's website on Wednesday.

West Hawk Focused on Coal Gasification and New Technology Developments

West Hawk Development Corp. (TSX VENTURE:WHD)(FRANKFURT:H5N) (the "Company") is pleased to provide an update on its gasification technology initiatives. The company continues to be focused on clean energy coal gasification technology to develop pipeline quality gas, liquids, power and the associated co-products.

The Company continues to work on a contractual relationship with New York Energy Group. Since the announcement September 24, 2007, West Hawk has had several discussions with other gasification technology suppliers. To bring the best coal gasification technology to the Company and its shareholders, West Hawk continues evaluating different gasification designs and technologies from various suppliers throughout Europe, North America and Asia.

These technology suppliers are in many cases supplying various new state of the art design concepts using catalytic gasification, molten media, plasma, highly efficient catalysts, isomerization reforming, CO2 control, and several other designs.

Many of these new technologies require substantially reduced capital cost structures that management believes will advance West Hawk and the industry. They can be smaller in size and can be fit to the market requirements. Much of this new coal gasification technology is more efficient in terms of feedstock cold gas efficiency and carbon conversion efficiency when compared to traditional coal gasification technologies. Most of these new technologies also offer enhanced environmental performance and is projected to be the cleanest form of creating energy amongst the technologies that exist today.

"With these new technologies focusing on dramatically improved efficiencies, environmental performance, increased capacity and availability factors, delivered at a lower capital cost investment it will surely drive the world to a greater use, independency, and security of our most precious coal feedstock," said Dr. Wm. Mark Hart, President and CEO of West Hawk Development Corporation.

The Company is focusing on coal gasification in relation to its coal assets in British Columbia, North West Territories, and Nunavut. The Company is currently negotiating to close its first coal asset in the US. In China, West Hawk is continuing to work with Luan to develop two coal gasification projects, but no clear decision has been made on the technology at this point, in light of the various technologies that have been made available. West Hawk and Luan are continuing to evaluate constructing two coal IGCC plants as well as possibly two circuits with coal to liquids.

On behalf of the Board of Directors,

Dr. Wm. Mark Hart, President and Chief Executive Officer

Cautionary Note: This report contains forward looking statements, particularly those regarding cash flow, capital expenditures and investment plans. Resource estimates, unless specially noted, are considered speculative. The Company has filed a National Instrument 51-101 Report on the Figure Four property. The Company has filed National Instrument 43-101 Reports for each of the Tulita coal property in the Northwest Territories, the Nunavut Coal property and the Groundhog Coal property. Any and all other resource or reserve estimates are historical in nature, and should not be relied upon. By their nature, forward looking statements involve risk and uncertainties because they relate to events and depend on factors that will or may occur in the future. Actual results may vary depending upon exploration activities, industry production, commodity demand and pricing, currency exchange rates, and, but not limited to, general economic factors. Cautionary note to U.S. investors: The U.S. Securities and Exchange Commission specifically prohibits the use of certain terms, such as "reserves" unless such figures are based upon actual production or formation tests and can be shown to be economically and legally producible under existing economic and operating conditions.

The TSX Venture Exchange has not yet reviewed and does not take responsibility for the adequacy or accuracy of the content of this news release.