Category Archives: China

The People’s Republic of China (PRC), established in 1949, commonly known as China, has control over mainland China and the largely self-governing territories of Hong Kong (since 1997) and Macau (since 1999).

China: GMC and Horton Wison Deepwater Develop Buoyant Towers for Shallow Water Fields

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GMC and Horton Wison Deepwater confirmed their Joint Venture established to design and supply innovative Buoyant Towers for shallow water fields.

Kevin Chell, CEO of the joint venture, stated “The Buoyant Tower concept draws on the proven technology of the cellspar and the design provides multiple benefits for fields where other concepts would be problematic requiring high capital costs and expensive crane barges for installation. The buoyant tower can operate in water depths up to 600 feet and can be relocated allowing small marginal plays to be exploited in a cost effective manner. The design allows for hydrocarbon storage if needed, can eliminate separate shallow water drilling units and provides a high level of flexibility for the operator.”

First Project

The benefits of the design were recognized and adopted by BPZ Energy for their new platform at the Corvina field offshore Peru. The tower is composed of four cylindrical cells and is connected to the seabed by a single suction pile which is integral to the hull structure. The tower and decks with the production equipment will be transported from the fabrication yard to Corvina on a submersible heavy lift ship. After upending, fixed and variable ballast will be pumped into the hull to provide stability for the platform.

The CX-15 shallow water tower is well on track for a summer 2012 installation and will be the first application of this design. The platform is designed for 12,200 barrels of oil per day, gas compression capacity of 12.8 million standard cubic feet per day and produced water handling and injection capacity of 3,500 barrels per day. A total of 24 drill slots will be available, some of which will be used for gas and water reinjection wells. The CX-15 platform will be located about one mile from the existing CX-11 Corvina platform, with both platforms interconnected via a series of subsea pipelines.

The JV completed the FEED scope in 2011 which led to detailed design for the buoyant tower. Fabrication is underway at Wison Offshore and Marine’s yard in Nantong, China. GMC are also providing project management and installation services for the CX-15 platform.

Jim Maher, COO of the JV, commented “We are pleased to be working with BPZ Energy on this important project which draws upon deepwater technology and applies it in the shallow water arena.”

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China top military paper warns of armed confrontation over seas

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By Chris Buckley
BEIJING | Sat Apr 21, 2012 2:21am EDT

(Reuters) – China‘s top military newspaper warned the United States on Saturday that U.S.-Philippine military exercises have fanned risks of armed confrontation over the disputed South China Sea.

The commentary in China’s Liberation Army Daily falls short of a formal government statement, but marks the harshest high-level warning yet from Beijing about tensions with the Philippines over disputed seas where both countries have recently sent ships to assert their claims.

This week American and Filipino troops launched a fortnight of annual naval drills amid the stand-off between Beijing and Manila, who have accused each other of encroaching on sovereign seas near the Scarborough Shoal, west of a former U.S. navy base at Subic Bay.

The joint exercises are held in different seas around the Philippines; the leg that takes place in the South China Sea area starts on Monday.

“Anyone with clear eyes saw long ago that behind these drills is reflected a mentality that will lead the South China Sea issue down a fork in the road towards military confrontation and resolution through armed force,” said the commentary in the Chinese paper, which is the chief mouthpiece of the People’s Liberation Army.

“Through this kind of meddling and intervention, the United States will only stir up the entire South China Sea situation towards increasing chaos, and this will inevitably have a massive impact on regional peace and stability.”

Up to now, China has chided the Philippines over the dispute about the uninhabited shoal known in the Philippines as the Panatag Shoal and which China calls Huangyan, about 124 nautical miles off the main Philippine island of Luzon.

China has territorial disputes with the Philippines, Vietnam, Brunei, Malaysia and Taiwan in the South China Sea, which could be rich in oil and gas and is spanned by busy shipping lanes.

REGIONAL TENSIONS

Beijing has sought to resolve the disputes one-on-one but there is worry among its neighbors over what some see as growing Chinese assertiveness in staking claims over the seas and various islands, reefs and shoals.

In past patches of regional tension over disputed seas, hawkish Chinese military voices have also emerged, only to be later reined in by the government, and the same could be true this time.

Since late 2010, China has sought to cool tensions with the United States over regional disputes, trade and currency policies, human rights and other contentious issues. Especially with the ruling Chinese Party preoccupied with a leadership succession late in 2012, Beijing has stressed its hopes for steady relations throughout this year.

Nonetheless, experts have said that China remains wary of U.S. military intentions across the Asia-Pacific, especially in the wake of the Obama administration’s vows to “pivot” to the region, reinvigorating diplomatic and security ties with allies.

The Liberation Army Daily commentary echoed that wariness.

“The U.S. strategy of returning to the Asia-Pacific carries the implication of a shift in military focus, and there is no better strategic opening than China’s sovereignty disputes with the Philippines and other countries in the South China Sea,” said the newspaper.

“The United States’ intention of trying to draw more countries into stirring up the situation in the South China Sea is being brandished to the full,” it said.

(Editing by Sanjeev Miglani)

Tokyo Is Planning To Piss Off China By Buying These Disputed Islands In The East China Sea

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AP

TOKYO (AP) — Tokyo‘s outspoken governor says the city has decided to buy a group of disputed islands in the East China Sea to bolster Japanese claims to the territory, a move that could elevate tensions with China.

Gov. Shintaro Ishihara said the city is close to reaching an agreement with the private Japanese owner of three of the four islands in the group known as Senkaku in Japanese and Diaoyu in Chinese.

The islands, surrounded by rich fishing grounds, are also claimed by China and Taiwan. They have been a frequent flash point in diplomatic relations between Japan and China.

A collision between a Chinese fishing boat and Japanese coast guard vessels in 2010 near the islands set off a serious diplomatic spat, with Beijing temporarily freezing trade and ministerial talks.

“Tokyo has decided to buy the Senkaku islands. Tokyo will protect the Senkakus,” Ishihara said in a speech Monday at the Heritage Foundation, a conservative think tank in Washington. “The Japanese are acquiring the islands to protect our own territory. Would anyone have a problem with that?”

Ishihara, a strong nationalist, said the idea is to block China from taking the islands from Japanese control, as the central government is reluctant to upset China.

He did not indicate how much the city would pay, but said the deal would be finalized while he is visiting the United States.

In Beijing, Liu Weimin, a spokesman for China’s Ministry of Foreign Affairs, reacted harshly to Ishihara’s comment and reiterated China’s claim over the islands.

“Any unilateral measure taken by Japan is illegal and invalid, and will not change the fact that those islands belong to China,” he said in a statement.

Tokyo city official Tatsuo Fujii said details of the deal could not be released immediately and further discussions would be held with Okinawa prefecture, which has jurisdiction over the islands, and other related authorities.

The government currently pays rent to the owners of the four islands in the Senkaku group so they won’t be sold to any questionable buyer. It pays 24.5 million yen ($304,000) a year to the owner of the three islands, which are unused. The fourth island is used by the U.S. military for drills.

Chief Cabinet Secretary Osamu Fujimura reiterated on Tuesday that Japan has sovereignty over the Senkaku islands and said the central government might purchase them.

Japan and China also have disputes over undersea gas deposits in the East China Sea and Japan’s wartime history.

Ishihara previously helped to erect a lighthouse on one of the Senkaku islands, which a group of nationalists later replaced with a larger one recorded on navigation charts.

Ishihara’s comments about the disputed islands are also seen as politically motivated to discredit Prime Minister Yoshihiko Noda‘s government, which is struggling to gain public support.

 

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The Chinese Yuan May Become A World Currency

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By Eliot Elwar
Apr 15, 2012

China seeks to replace the diminishing U.S. dollar as the world reserve and trade currency, and efforts are underway in Beijing to set up the Chinese yuan for global currency.

Global economic analysis shows that China’s yuan inches closer to global currency, dollar tumbles as jobs data disappoints many, dollar falls after fed comments, disappointing Italy bond auction weighs on European stocks, and China’s central bank governor suggests creating super-sovereign reserve currency.

According to Forbes, China’s yuan may be two years away from becoming a global trade currency. By 2014, an economic system may be created to settle cross-border yuan transactions, which could increase currency convertibility in Beijing and elsewhere. When this economic system is developed, it will permit nations to settle expenses with Chinese merchandises or in yuans rather than dollars. Over time, the yuan usage, mainly in Asian trade markets, would take demand away from the dollar along with its status as world’s reserve and trade currency.

According to Business Week, the dollar fell among its major peers as data showed the number of Americans filing for jobless benefits since January, making the argument for monetary policy. Additionally, In China, Australia’s largest trading partner, local- currency-denominated loans were 1.01 trillion yuan ($160.1 billion) in March, the People’s Bank of China. This exceeded all 28 estimates in a Bloomberg News survey, reassuring investors the nation may avoid a deep slowdown.

According to Market Watch, the U.S. dollar declined after a second Federal Reserve official emphasized dangers to U.S. financial development, remaining lower against the euro after Italy managed to trade benchmark three-year bonds and other debt. The Australian dollar performed very well after stronger-than-expected Australian jobs data. The euro grew to $1.3199, from the lower $1.3102 during North American trading. The 17-nation shared currency also advanced on the Japanese yen up 0.3% to ¥106.58.

According to Xinhua, Zhou Xiaochuan, China’s central bank governor, has propositioned to make a super-sovereign backup currency to support the international monetary system reform. He said the international monetary system seeks to fashion an international reserve exchange that is disengaged from distinct nations with ability to remain unwavering in overtime, thus eliminating the characteristic insufficiencies produced by operating credit-based national currencies.

Finally, although a super sovereign currency is not currently on the horizon, China still has high objectives for the yuan. China’s ability to internationalize the yuan would give it another way to inflict damage on the US economy and begin gradually replacing the shaky U.S. dollar with the Chinese yuan.

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Shadow Banks on Trial as China’s Rich Sister Faces Death

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By Bloomberg News – Apr 11, 2012 2:24 AM CT

When a Chinese court sentenced 28- year-old Wu Ying, known as “Rich Sister,” to death for taking $55.7 million from investors without paying them back, it sparked an unexpected firestorm that has drawn in China’s top leadership.

Her crime involved a common, illegal practice in China: raising money from the public with promises to pay back high interest rates. Known as shadow banking, these underground lending and investing networks are estimated to total $1.3 trillion, according to Ren Xianfang, an economist with IHS Global Insight Ltd. (IHS) in Beijing. That’s the size of the 2011 U.S. government deficit.

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Chinese businesswoman Wu Ying who was accused of illegally raising funds and defrauding investors weeps during a trial at the Intermediate Peoples Court of Jinhua in Jinhua city, east Chinas Zhejiang province, 16 April 2009. Photograph: Imaginechina via AP Images

Operating outside the banking system or government regulation, the informal networks provide an important source of economic growth, capital for private companies and return for investors seeking to beat inflation. Premier Wen Jiabao, in an unusual move, weighed in on the Wu case at a March 14 news conference. His comments highlighted a public debate over the importance of shadow banking to the Chinese economy, government efforts to bring it under control — and whether capital punishment is an effective means to do so.

“Chinese companies, especially small ones, need access to funds,” Wen said when asked about Wu’s case. “Banks have yet to be able to meet those companies’ needs, and there is a massive amount of idle private capital. We need to bring private finance out into the open.”

Unfairly Singled Out

Wu’s lawyer says his client, now 30, was unfairly singled out and is no different from the estimated 42 million Chinese business owners who rely on the shadow-banking system for financing when they cannot get loans from state-owned banks. The Supreme People’s Court is reviewing the 2009 verdict and will decide as early as this month whether Wu Ying lives or dies.

“Entrepreneurs are paying attention to it because today’s Wu Ying could be any of them tomorrow,” the lawyer, Yang Zhaodong, said in an interview in Beijing last month. “There are so many of them doing the same thing Wu Ying did. This case not only relates to Wu’s life, but to whether China’s legal and judicial system is fair.”

Shadow banking has been fueled by a two-year credit squeeze in China and by large, state-owned banks’ preference for lending to government-run companies rather than small businesses. Private entrepreneurs account for 60 percent of China’s total economic activity and provide jobs for 80 percent of its urban population, according to China’s National Development and Reform Commission.

Meteoric Rise

“Underground banking filled the hole left by China’s state-owned banks, which have this long-term bias toward big enterprises,” said IHS’s Ren. “Even though it is an extremely opaque market and has a lot of hidden problems, the government needs it to meet the basic financing needs of small businesses.”

Wu’s rise and fall have been meteoric. The daughter of a farmer in Zhejiang province, south of Shanghai, Wu dropped out of technical school as a teenager to work at her aunt’s beauty salon and later opened two of her own, according to the state- run Global Times newspaper. She branched out into a foot-massage parlor and bought 10 cars which she rented out. An entertainment center and a boutique featuring Korean clothes followed, as did investments in real estate and copper, the report said.

Wu collected 770 million yuan ($122 million) from private investors between May 2005 and February 2007, according to government prosecutors. She also accumulated more than 100 properties and 40 cars, including a $500,000 Ferrari, the Global Times said.

Knowing the Risks

Wu borrowed money to fund her businesses and didn’t lie to anyone, her lawyer said. She never committed fraud, Yang said, adding that her investors, like anyone who took part in the private-banking business, knew the risks involved.

“Even her biggest creditor who she owed 320 million yuan doesn’t think Wu was lying to her,” said Yang. “These were real projects.”

The court in Wu’s home province of Zhejiang said she “brought huge losses to the nation and people with her severe crimes and should therefore be severely punished” when it upheld her death sentence in January, according to the Xinhua News Agency.

Nicknamed “Fu Jie,” or “Rich Sister,” in the media, Wu and her case were discussed at the annual legislative session in Beijing in March, where delegates debated the larger issues of shadow banking.

“You cannot try to stop this just by killing people,” Wang Yongzheng, a delegate to China’s People’s Political Consultative Conference and owner of a textile company, told a small group session at the meetings.

‘Public Outrage’

In a country where public criticism of government policy is rarely sanctioned, state-run media outlets such as Xinhua and the People’s Daily, both Communist Party mouthpieces, have run stories, editorials and online chat sessions airing public sympathy for Wu.

On Feb. 8, the China Daily newspaper ran an article noting “public outrage” and the “wide sympathy and pleas for the fair-skinned woman with a short haircut.” It quoted a legal expert as saying the government’s seizure and sell-off of her assets was illegal.

On the Defensive

As the public outcry surrounding Wu’s case began to swell, court officials and police took the rare step of publicly defending their verdict. The presiding judge in her case, Shen Xiaoming, appeared in a Feb. 7 Internet chat to explain that Wu Ying was sentenced to death because the court found she intended to defraud investors.

“This was more than just illegal fundraising,” Shen said in the chat.

China’s entire shadow-banking system is bigger than just underground borrowing and lending, totaling about $2.4 trillion, a third the size of China’s official loan market, according to Societe Generale SA economist Yao Wei. In addition to informal lending, it includes the off-balance-sheet activities of banks, trust companies, and businesses lending to each other, Yao said. The amount is almost the size of U.S. consumer debt, which exceeded $2.5 trillion as of January, according to the U.S. Federal Reserve.

Ordinary Chinese savers also fuel the country’s shadow- banking system. They have few legal options if they want to earn a return that beats inflation, which hit 5.4 percent in 2011. The government sets China’s current ceiling for savings account interest rates at 3.5 percent, a figure that has trailed inflation for two straight years as of January. Wu offered interest rates of as much as 0.5 percent a day to attract investors, according to Xinhua.

Bankruptcies and Suicides

Zhejiang province, where Wu’s home village of Dongyang is located, has been at the heart of private lending activity. Between April and September last year, more than 80 indebted businessmen committed suicide or declared bankruptcy in its boomtown manufacturing city of Wenzhou because they couldn’t repay informal lenders, according to Xinhua.

Bankruptcies and arrests continue to be reported almost daily. Today, the China Securities Journal reported that Hangzhou Glory Real Estate Co., also located in Zhejiang, had filed for bankruptcy after borrowing 2.5 billion yuan from individuals.

Pilot Program

The government has stepped in to deal with the troubles and bring some aspects of shadow banking under government control. In October, Premier Wen traveled to Wenzhou, a city of 9.1 million people 230 miles (370 kilometers) south of Shanghai, pledging help for troubled businesses. Then, on March 28, China’s State Council approved a pilot program for Wenzhou that would ease some restrictions on private lending.

Private capital will be encouraged to participate in “innovative financial organizations” such as credit unions, and banks will be encouraged to lend money to small enterprises, the State Council said.

“The Wenzhou trial program has started us on the right track,” Zhou Dewen, president of the Wenzhou Small and Medium Sized Enterprises Development Association, said by phone the day after the announcement. “The trial program is a step forward toward making private lending a practice that’s legal.”

By the time Wu was in her mid-twenties, she had founded the Bense Holding Group — the name means “original color” — and established 12 companies, according to a profile in the Guangzhou-based Southern Weekly before her arrest.

Drawing Attention

Wu’s success drew the attention of the Chinese media. In its Feb. 1, 2007 profile, the Southern Weekly said she drove to the interview in a BMW and couldn’t explain where her wealth had come from.

“I don’t launder money,” Wu said, according to the newspaper. “My money is clean.”

According to the article, Wu had a tattoo of a rose on her chest and once donated 6.3 million yuan to charity. Less than two weeks after the article was published, authorities announced that Wu had been arrested on suspicion of illegal fundraising.

Prosecutors later upgraded the charges against her to financial fraud, a crime punishable by death in the most severe cases, for losing 380 million yuan of investors’ money. Two years later, she was sentenced to die.

The court found that Wu raised her money by “fabricating facts, deliberately hiding the truth, and promising high returns as an incentive,” according to Xinhua.

Photographs of Wu in court show her sobbing as she stands at the dock, clad in a yellow prison jacket, her tattoo peeking from the neckline. She has been in prison appealing her conviction since her arrest in 2007. Xinhua reported in April 2011 that Wu was writing a book called “Black Swan,” a fictional account of her life, while in prison.

Not the First

Wu wouldn’t be the first shadow banker to be put to death in China. On Aug. 5, 2009, the Supreme Court approved the execution of two female entrepreneurs in separate cases. Si Chaxian, age unreported, was charged with defrauding 300 people of 167 million yuan over five years and promising returns of as much as 108 percent annually, while Du Yimin — who was 44 at the time her death sentence was upheld — was charged with defrauding 709 million yuan by promising to pay as much as 10 percent per month, the official CCTV reported. Both women were from Zhejiang province.

On Death Row

At least 17 people, including Wu, now sit on death row after being sentenced for illegally raising funds from individuals, according to Chinese media reports compiled by Bloomberg since 2009. Seven of them are women.

In the latest case, on April 6, 30-year-old Wang Caiping was sentenced to death for borrowing along with her brother more than 100 million yuan from 15 victims, according to the official Xinhua News Agency. Wang and her brother, who has fled, invested the money in gold and futures speculation and incurred losses, the report said. They had paid out 5.8 million yuan in interest as of the day Wang was arrested, with 94 million yuan unpaid, Xinhua added.

In Zhejiang, sentences handed out for various shadow- banking-related crimes rose to 75 last year, up from eight in 2007, the official Legal Daily reported, citing the provincial high court.

In Shanghai, police said March 29 they had arrested Gu Chunfang, a woman in her early forties who runs a trading company, for racking up 500 million yuan in underground-lending debts, China Daily reported. Her nickname: “Most Beautiful Businesswoman.”

Striking a Chord

Wu’s case, unlike the two executions, 16 other death sentences and numerous arrests, has struck a chord and spurred a broader national debate.

“She’s not some sort of privileged person who just had everything handed to her,” said Sarah Schafer, a Hong Kong- based researcher with Amnesty International. “People see her as someone who is closer to them than they care to admit.”

Amid the demands for change to China’s shadow-banking system, Wu’s case has also been taken up as part of a parallel debate about China’s death penalty.

Groups including Amnesty International that monitor capital punishment say attitudes toward it have begun to change in China — especially in cases of financial fraud. The government has allowed broader public debate on the death penalty, and government officials have talked more often of pushing China toward abolishing the practice, according to Schafer.

Accepting Abolition

“The argument from the Chinese government has always been that the public wouldn’t accept abolishing the death penalty,” Schafer said. “This case has shown that maybe the public isn’t ready for full abolition but we think they are ready for abolishing it for nonviolent crimes.”

The Chinese government does not release statistics on the number of executions it performs. Groups like Amnesty International, which track the cases in the media, say the reports may underestimate the total number of executions carried out, since the media tend to report only the most sensational crime and corruption cases.

Still, China has cut the number of executions it carries out every year from 8,000 in 2006 to 4,000 per year now, according to the San Francisco-based Dui Hua Foundation. Even so, it executes more people than every other government in the world put together. The next highest is Iran, with more than 360 in 2011, according to Amnesty International.

Starting in 2007, China’s Supreme Court decreed it must approve all the country’s executions. In a 2010 annual report, the court said it should “respect and protect citizens’ right to life, the most basic human right,” according to Xinhua.

Premier Wen’s remarks in March and the changes to the private banking system make Wu’s lawyer hopeful that the Supreme Court will commute her death sentence. On March 30, an editorial in the Financial News, a publication of the People’s Bank of China, said reforms in Wenzhou were a “turning point” for the development of private financing in China.

“Wu Ying’s case happened in a special time during China’s reform, where the financial system is hugely lagging behind economic development,” said Zhou, of the Wenzhou enterprise association. “Wu Ying won’t be executed now that the trial program has been announced. She can’t die before the dawn.”

To contact Bloomberg News staff for this story: Jun Luo in Shanghai at jluo6@bloomberg.net; Yidi Zhao in Beijing at yzhao7@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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