China This Week: Hu Visits Canada, The Currency Issue, Building Ties with Australia

Hu's Canadian visit & G20 summit: Chinese President Hu Jintao left Beijing for Canada on Wednesday to pay a state visit and to attend the 4th Group of 20 (G20) summit scheduled for 26-27 June in Toronto.

Strained ties between Beijing and Ottawa started to warm when Canadian Prime Minister Stephen Harper visited China last December. Ottawa had aggressively criticized Beijing for its human rights record, but after the financial meltdown last year, its tone softened slightly. The Harper Government, asserting that "new global realities demand a modernized Canada-China relationship", began to downplay rights-related issues.

Sources said the two countries are expected to sign contracts on energy, telecommunication industries, and tourism.

Looking towards the G20 summit, China said the meeting should focus on the recovery of world economy rather than a specific issue such as the RMB (yuan) exchange rate.

The fluctuations of the Chinese currency: The yuan rose by more than 0.4 percent --- the biggest rise in a day since it was revalued in 2005 --- on Monday, close to hitting its trading limit of 0.5 percent. But the currency on Tuesday then went through its biggest decline since December 2008, weakening 0.23 percent to 6.8136 per dollar.

"The dollar has been strong on the international markets in the past two days and it's normal for the yuan to weaken against the dollar today," said Liu Dongliang, currency analyst of China Merchants Bank. The yuan will not rise continually and strongly, contrary to the expectations of some US politicians and industry players, Liu added.

The Fair Currency Coalition, an alliance of US industry, agriculture, and worker organizations, urged the US Congress to pass effective legislation on the yuan issue, despite China's pledge to make its currency more flexible.

Brenda L. Foster, President of American Chamber of Commerce in Shanghai, warned that the yuan policy move will not significantly reduce the US trade deficit with China.

Chinese VP wants trade deal with Australia: China is keen to strike a free trade pact with Australia soon and opposes any return to protectionism in response to the global economic crisis, China's vice-president, Xi Jinping, said Monday.

His visit to Australia has focused on its burgeoning exports of iron ore, coal and natural gas that are supporting the expansion of Chinese manufacturing.

China has been quick to fill a slump in investment in the Australian resource sector since the global downturn. But Australia is cautious about allowing Beijing-controlled companies to buy the mines that are commanding record prices because of Chinese demand.

China is Austria's biggest trading partner, biggest export market and biggest importer. Despite the global financial crisis, Australia's exports to China rose by 31 percent in 2009.

South China floods toll continues to rise: Heavy rains and floods in south and central China killed 211 people and left 119 others missing as of 4 pm Wednesday, according to the Ministry of Civil Affairs.

More than 29 million people in southern and central provinces have been affected by the inclement weather, with about 2.4 million people evacuated, a statement from the ministry said.

The floods have caused economic losses of around 42.12 billion yuan ($6.2 billion), with more than 1.6 million hectares of farmland flooded and about 195,000 houses collapsing.

China’s auditors find local misuse of  funds: According to a report to the 15th session of the Standing Committee of the 11th National People's Congress, the country's local governments had run up bank loans totaling 2.79 trillion yuan ($410.3 billion) by the end of last year, most of it to fund infrastructure construction and to help pay for government stimulus package projects.

Auditors also found more than 20 billion yuan ($2.9 billion) of policy loans were misused by policy-based financial institutions

Funds embezzled from public finances totaling more than 94.116 billion yuan ($ 13.82 billion) had been recovered or returned. More than 790 people in connection to the cases had been investigated.

Tariff concessions for 33 countries: The Ministry of Finance said  that China would grant zero tariff status to 4,762 categories of commodities now imported from 33 of the world's least developed countries from 1 July.

The list include 26 African countries and seven from other regions. Aquatic products, textiles, farm produce, glass products, steel, and minerals are to be exempted from tariffs.

Since 2001, China has put 41 of the world's least developed countries on the zero-tariff list.

Hong Kong, Ireland sign tax pact

Hong Kong signed its 13th comprehensive agreement for the avoidance of double taxation (CDTA) with Ireland on Tuesday.

Hong Kong's Secretary for Financial Services and the Treasury, K C Chan, said: "The agreement will encourage Hong Kong enterprises to leverage on the success of Irish companies in the areas of technology, research and development, while facilitating Irish enterprises to tap into the Asian market, particularly the vast Mainland market, using Hong Kong as a gateway."

Hong Kong is actively seeking to establish a network of CDTAs with major trading and investment partners, and has concluded them with partners including Belgium, Thailand, Vietnam and the United Kingdom.

Chinese boat seized by Indonesia: A Chinese fishing boat, registered to South China's Guangxi Zhuang autonomous region, and its crew of nine were detained by an Indonesian gunship Tuesday in the South China Sea.

After negotiations, the boat was released the same day. However, eight fishermen who had been taken aboard the Indonesian ship were injured, with one seriously. A preliminary investigation by the region's border defense department showed there might be abuse involved, said Qin Yongjun, spokesman with Guangxi's public security department.

China This Week: Pipelines to Myanmar, US Penalties, Google's Concession

New EA correspondent Shan Shan launches our China This Week feature:

China Starts Pipelines to Myanmar

China National Petroleum Corporation (CNPC), the country's largest oil and gas producer and supplier, has announced that work has started on construction of two oil and gas pipelines between China and Myanmar.

In a statement posted on its website, the CNPC said that the pipelines, each of 1100 kilometres, are expected to run from the Kyaukpyu port on Myanmar's west coast and enter China at Ruili in Yunnan Province. The oil pipeline has a designed transport capacity of 22 million tonnes per year, while the natural gas pipeline has capacity of 12 billion cubic meters annually.

The statement did not say when the project would be finished.

US Sets Penalties on Chinese Drill Pipe: The US Commerce Department Tuesday set preliminary duties on imports of $119.2 million drill pipe from China. The department said in a statement that it "determined that Chinese exporters of drill pipe have received countervailable subsidies of 15.72 percent”. Based on these rates, the department will instruct US Customs and Border Protection to collect a cash deposit or bond.

The department said that it will make its final determination in August.

Agricultural Bank of China's Share Plan Approved: Agricultural Bank of China (ABC) has been given the go-ahead by Chinese regulators for what could be the world's largest share flotation. China's securities regulators Wednesday approved the initial public offering as the lender finalized preparations for its dual listing in Shanghai and Hong Kong.

ABC plans to sell up to 22.24 billion A-shares on the Shanghai Stock Exchange and up to 25.41 billion shares in Hong Kong.

However, analysts cannot agree on the likely amount Agbank will raise. It is considered the weakest of China's "big four" banks because its main customer base is within China's poorer rural communities. The offer is also complicated by the continuing uncertainly in global financial markets.

Natural disasters kill 157 in China in May: Natural disasters in China in May left 157 people dead and 22 missing, and caused about 45.17 billion yuan ($6.61 billion) in direct economic losses, the Ministry of Civil Affairs said on Wednesday.

Disasters, including floods, storms, landslides, droughts, snowfalls, freezing temperatures, and earthquakes, caused the evacuation of 842,000 residents and affected the lives of more than 64.57 million people, the ministry said in a statement on its website. Natural disasters hit 5.17 million hectares of farmland in May, destroying about 956,000 hectares of crops.

The damage caused by natural disasters in May was much more severe than in previous years. Yunnan, Guizhou, Hunan, Jiangxi, Guangdong and Chongqing were the provincial-level regions worst hit.

Shenzhen to Raise Minimum Wage: The minimum wage in Shenzhen City in south China's Guangdong Province will increase in July by 10 percent to 1,100 yuan per month ($161.04), municipal authorities said Wednesday.

"The pay rise will increase costs for labor-intensive companies, but I hope those companies will take this as an opportunity to speed up their technological innovation and industrial upgrading to boost their competitiveness," said Wang Min, head of the city's Human Resources and Social Security Bureau.

Shenzhen's move comes after a series of pay rises in China. Beijing will increase its minimum wage by 20 percent to 960 yuan from July 1.

The most dramatic rise has been at Foxconn, an IT contract manufacturer which will raise salaries for assembly workers at its production base in Shenzhen by 66 percent to 2,000 yuan per month from October 1.

Google agrees not to collect Wi-Fi data in Hong Kong: Google has ceased operating its Street View cars in Hong Kong and undertaken that, when the cars recommence driving, they will not collect Wi-Fi data, Hong Kong's   Privacy Commissioner for Personal Data said on Tuesday.

Google has agreed to provide the Commissioner access to the payload data collected by the Street View cars and shall render such assistance as may be required to facilitate the Commissioner's understanding of the process of the collection and the interpretation of such data.

In the meantime, Google shall securely store the data, including any backup, archives, or copies and shall not tamper with same or allow anyone to have unauthorized use or access which may contravene the laws of Hong Kong. Google has also assured to completely delete the payload data at the direction of the Commissioner and to provide the Commissioner with an independent third party's verification of the deletion.