News & Reports 2011-03-05

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In This Edition

China says it plans to raise the defense 1 budget by 12.7 percent this year to ensure a balance between national defense and economic development.

36-thousand Chinese citizens in the riot-torn Libya have all been moved out of the North African nation.

Survivors 2 in Christchurch struggle to meet their basic needs in the wake of last week's earthquake, and some 2-dozen Chinese nationals remain missing.

And a recent report by the World Travel and Tourism Council says China's travel industry is expected to account for 2.5 percent of World's GDP this year.

Hot Issue Reports

China's defense budget to grow 12.7 pct in 2011: spokesman

China says it plans to raise the defense budget by 12.7 percent this year to around 91 billion U.S. dollars.

This compares to the 7.5 percent rise last year.

Spokesman for the annual session of the National People's Congress, former Foreign Minister Li Zhaoxing, says the Chinese government has set the defense spending at a reasonable level to ensure a balance between national defense and economic development.

"The increases in the 2011 budget will be mainly spent on appropriate armament development, military training, human resource development, infrastructure 4 construction of grassroots units and increasing allowances and other subsidies 5 that are closely related to the living condition of servicemen."

Despite the increase, Li Zhaoxing argues the ratio of military spending to GDP is quite low, saying defense spending will account for 6-percent of the country's overall budget for the year.

He also says the central government's defense spending is transparent 7 and defensive 8 in nature.

"The defense budget is listed in the national budget every year and is reviewed and approved by the National People's Congress, it is then implemented 10 according to due procedure and subject to auditing 11 from the government and military. China's defense budget is transparent and there is no such thing as the so-called hidden military expenditure 12."

The proposed budget is to be submitted to the annual legislative 13 session of the NPC, which opens on Saturday.

China Air Force Transporters Bring Evacuees 14 Home from Libya

Four Chinese Air Force transport planes have arrived back in China, brining with them close to 300 people who have been evacuated 15 from riot-torn Libya.

Liu Wenzhong is one of the evacuees.

"The air force staff is very considerate to us. We are provided with all life necessities. What's more, there are doctors walking around to check our physical conditions."

Zheng Yuanlin, an assistant to the Chinese Air Force Chief of Staff, says they've done all they can to try to ensure a smooth evacuation.

"It's a difficult and emergent mission for the air force to pick up Chinese citizens abroad. We have done a lot of preparation before flying. You know, the living conditions on our transporters are very bad. For example, we had to install make-shift toilets to make the journey a little easier for the evacuees."

The four transport planes were also used to transport the last of the Chinese citizens from Libya.

The roughly 16-hundred were flown out from southern Libya to Sudan.

Some 36-thousand Chinese citizens in the country when the rioting escallated have all been moved out of Libya.

Chinese Companies May Lose Billions in Libya

Anchor: With the unrest in Libya worsening, the status of Chinese businesses, contracts, and projects worth billions of dollars in the north African nation are now in limbo 16.

Larry Chen has more.

Reporter:

Although the uprising in Libya is happening halfway 17 around the world, Chinese companies and enterprises stand to lose billions of dollars if the situation worsens.

According to the Ministry 18 of Commerce, over 36,000 Chinese nationals work for 75 Chinese companies in Libya, including 13 State-owned enterprises.

Just last year, some $1.8 billion US dollars worth of contracts were signed between Chinese firms and Libya. However, their status is now in jeopardy 19.

He Wenping, Director of African Studies at the Institute of West Asia and Africa Studies with the Chinese Academy of Social Sciences, says Libya had been considered as a safe place for investment.

"But before, countries like Libya, Egypt, Tunisia, all of them were regarded as very stable countries because those strongmen have been in power for decades long. So it has been ranked as very stable, political stable, social stable. So before, nobody had realized that even in those so-called stable countries there are actually high risks."

In a statement from the China Railway Construction Corporation, the state owned company says it has suspended its projects in Libya, worth a total of $4.2 billion US dollars.

Meanwhile, China National Petroleum 20 Corporation, who's parent listed company PetroChina has been present in Libya since 2002, says some of its projects and operating sites have been attacked during the upheaval 21.

He Wenping says the situation in Libya may change the way Chinese enterprises enter foreign markets in the future.

"I think at least one lesson we can draw from this new round of turbulent in those countries that is in the future, for Chinese companies, even for other commercial activities, so before you move in, the risk analysis should be done very carefully. Not only the economic costs, risks, but also social political risks."

However, she does not expect Chinese companies to leave Libya for good, despite the current situation.

"They can do nothing, actually, frankly 22 speaking. they can do nothing about situation like now in Libya. ... but I'm pretty sure no matter what kind of situation happening in Libya, and no matter who is in power, one thing is necessary, and that is economic development. ... so i think they will come back again, to negotiate, and to count the economic loses with whoever in power"

On top of the loss of business, the employment future of the nearly 36-thousand Chinese citizens who had been working in Libya also remains 23 an open question.

For CRI, I'm Larry Chen.

NZ Trying to Meet Basic Needs of Quake Survivors

Survivors in Christchurch are struggling to meet their basic needs in the wake of last week's earthquake.

Energy supplier Orion New Zealand now says it has restored power to 95 percent of Christchurch, with about 14-thousand customers still without electricity.

However, many residents have been without water since the quake, and repairing the damaged sewage and water pipes will take longer.

New Zealand's prime minister John Key they are doing everything they can to try to meet people's basic needs.

"Civil Defence, who run the operation, are of the view that they've done everything they can as best they can but, that doesn't mean we can't do more and in the perfect world we'd click our fingers and there would be tens of thousands of port-a-loos and all the things that we want but we don't live in the perfect world."

Recovery teams have pulled the last two bodies from the rubble 24 of the Pyne Gould Guinness building, one of the worst-hit buildings in last week's earthquake, raising the confirmed death toll 25 to 163.

Many more people, including some 2-dozen Chinese citizens, remain missing, and officials expect the final number of dead to come in at around 220.

Authorities say their main task now is to recover bodies still jammed in the wreckage 26 of broken buildings and clean up and restore the downtown area of the city.

Food Prices Reach Record High

The United Nations' Food and Agriculture Organization says world food prices have risen 2.2% in February from the previous month to a record high.

The organization is also warning that the volatility 27 in the oil markets could push prices even higher.

The FAO's price index has now risen for an eighth consecutive 28 month, and is at its highest level since the organization started monitoring global food prices in 1990.

Global cereal supplies are also expected to tighten 29 sharply this year.

Even though the FAO is seeing an increase in global cereals production, consumption is going to exceed it.

For more on the situation with global food prices we spoke 3 earlier Professor Michiel Keyzer, director of the center for World Food Studies based in Amsterdam, and asked him whether there was a clear cut solution to the problem.

Professor Michiel Keyzer from the Centre for World Food Studies in Amsterdam.

Local governments are ordered to peg 30 subsidies to CPI

China's top economic planner has ordered local governments to peg low-income subsides 31 to current price levels, to try to ensure the living standards of low-income families are not adversely 32 affected 33 by rising costs.

Yingying has more.

Reporter:

Xu Yunbo, from Nanjing, Jiangsu Province, has been receiving low-income subsides since 2007. He complains that since 2010, his 700 Yuan monthly subsidy 34 can barely cover his family's needs.

"Everything is rising in price, water, electricity, gas, and even toilet paper. The price of green beans has hit 20 Yuan per kilogram, a three-fold increase over the past year."

Statistics show that more than 70 million people in China are receiving low-income subsides from the government.

With the country's CPI rising 3.3 percent in 2010 and exceeding the government's target of 3 percent, low income families are feeling the pinch.

Tang Jun is a researcher at the Chinese Academy of Social Sciences.

"Low-income people are very sensitive to price fluctuations 35, because they rely heavily on their subsidies which are defined by the basic price level of consumer goods and services. If the prices especially food prices go up, low-income families are the first to feel the impact."

To help these people get through these difficult times, the National Development and Reform Commission (NDRC) has ordered local governments to establish a mechanism 36 to peg low-income subsides to price levels by the end of this year.

Under the mechanism, if the consumer price index, or CPI, rises to a certain limit to be decided 37 by local governments, extra money will be given to low-income families in addition to their monthly benefits.

If the CPI rises over several consecutive months, local governments then have to revise previous standards.

Researcher Tang Jun says that it would be better for local governments to calculate a CPI especially for low-income families.

"The calculation of the general CPI covers many aspects, such as housing and household appliances. But these are not the major concerns for low-income families. What affects them the most is the CPI regarding food, water, electricity and gas, which have been rising faster than the general CPI. The government should refer to this CPI when raising subsidy standards."

Tang Jun says before the National Development and Reform Commission issued this order, many big cities including Beijing, Shanghai and Guangzhou had already established similar rules to increase subsidies for low-income families. He suggests that the central government provides more financial support to less-developed areas so as to better implement 9 this mechanism throughout the country.

For CRI, I'm Yingying.

China's Tourism Share in World GDP to Rise

A new report says China's travel industry is expected to account for 2.5 percent of World's GDP this year, and that share is also set to grow in the next decade.

A report from the World Travel and Tourism Council contends that tourism will be the major propeller 38 for economic development in the next decade, saying the industry will generate 120 million jobs worldwide during that time.

Professor Adrian Cooper from Oxford 39 Economics, which conducted the research, and says China is set to lead the increase.

"The travel and tourism industry in China contributing about directly about 2.5 percent of total GDP this year, and we expect it to rise by 9 percent every year next ten years, so by 2021, it will account for 2.7 percent of China's GDP, overall, travel and tourism supporting about 8.6 percent of Chinese GDP, rising to 9.2 percent by 2021."

Over 65 million people are currently working in the tourism sector 40 in China.

Can Groupon.com Win in China?

US-based daily discount website groupon.com has formally launched its Chinese edition, provoking a new round of competition in the booming industry.

Our Liu Min has more.

Reporter:

Groupon.com has paved its way to China after a period of struggles, and given itself a Chinese name, Gaopeng.com, which means a host's party that has attracted many distinguished 41 friends.

The company chooses two powerful Chinese partners, one is Yunfeng Fund sponsored by Ma Yun, Chairman of Alibaba Group, and the other is Tencent.com, which owns a huge number of its online messenger users. Vice 6 President of another group purchase website 58.com Xu Guipeng says some of its Chinese counterparts have already smelled strong gunpowder 42 in the competition.

"They are already poaching our staff from our branches across the country. They are such a large leading website on the global market, and we hope that they could behave according to the rule in the industry."

But many Chinese group purchase websites say they don't worry too much, since they still need time to see what kind of tricks the foreign newcomers will play in future competition.

Many say the issue of profit splits alone will give Groupon a big headache. In the U.S., such websites like Groupon.com usually split profits with partners by half-and-half, but here in China, most group purchase websites only get 10 percent of the profits, leaving 90 percent to their partners. Internet Researcher, Qu Xiaodong, says it'd be quite difficult for Groupon to maintain a high profit like before.

"There are huge regional disparities across the country, especially in the way of doing business. I don't think the company will see explosive growth like what it achieved in the U.S."

Recently, domestic group purchase websites have been going full blast to secure a larger share of the market. Kaixin001.com introduced a third-party group purchase project to meet various demands from consumers. Meituan.com, has launched business in another 15 cities across the country. Manzuo.com even established their billboard 43 in front of the office building of Gaopeng.com.

Confronting the powerful foreign newcomer, many domestic websites say they wouldn't be pressured within a short period of time.

"Groupon is one year late to enter the Chinese market. The domestic market has changed much compared to one year ago. Many online consumers have generated their own shopping habits, which, I believe, is quite different from the U.S. model."

"I think they need at least one year to test the market, and then they could establish their own brand name after the period of exploration."

By the end of 2010, the number of domestic group purchase websites has already accumulated up to 2,600 in China. One analysis says many smaller businesses will be elbowed out of the market and Chinese online consumers will benefit from fierce competition.

For CRI, I'm Liu Min.

Media Digest

A PREGNANT woman from Nanjing, capital of Jiangsu Province, was told by a hospital that they would not deliver her baby until a relative donated blood.

The woman went to Meishan Hospital to give birth on February 28. However, the hospital demanded her family donate blood at a local center first, and the surgery was delayed for one day while her husband gave blood.

But the hospital's demand was later questioned by many people, as such obligatory 44 donations are not supported by the Law on Blood Donation, which only "encourages" patient's relatives to donate blood before operations.

An official from the Najing Blood Center told the Newspaper - "The bottom line is we are short of blood"