Beijing – praag.org

China ready to shut down foreign NGOs

New law that would allow Beijing to filter out foreign funding of groups, seen as a matter of national security

After years of operating in a precarious legal limbo, foreign non-governmental organizations in China are facing a moment of truth that could force many of them to close their doors.

The Chinese government is drafting a new foreign NGO law that is widely expected to make work more difficult, if not impossible, for many of the 6,000 overseas non-profits that operate here in a broad range of fields from education and the environment to HIV-Aids and legal education.

Under the new law, foreign non-profits would not be allowed to open more than one office, or to raise funds locally, or be allowed to fund projects deemed counter to what is being called “Chinese society’s moral customs,” according to excerpts seen by The Christian Science Monitor of the still unpublished bill.

At the heart of the proposed law is a view that foreign non-profits are a potential threat to national security.

“We need to protect their legitimate interests, to let them play a greater role, but on the other hand they need more effective management, to sufficiently protect our national security and social stability,” said Fu Ying, spokeswoman for the National People’s Congress (NPC), China’s parliament, before it opened its annual session last week.

The bill was presented last December to the Standing Committee of the NPC by Yang Huanning, Vice Minister of Public Security. It came on the heels of a survey of foreign-funded NGOs ordered last summer by the National Security Commission, headed by President Xi Jinping.

The Ministry of Civil Affairs, traditionally responsible for non-governmental organizations, appears to play no role in the drafting of the legal text, according to people familiar with the situation.

The draft law puts the Ministry of Public Security in charge of registering foreign NGOs, which are obliged to find a government agency to sponsor them. They would also have to submit annual work plans, including all funding proposals, in advance to their sponsoring agency such as a ministry or local government authority.

NGO’s, especially those who work in politically sensitive areas such as gay rights, journalism training or labor relations fear that the new law will be used to shut them down. “This law, from what we have heard, gives unprecedented power to the police,” says one activist with a foreign NGO in Beijing. “They want to show a heavy hand.”

The new bill, now under closed-door discussion, is expected to pass by the end of this year.

Source: csmonitor.com

Will China enter the heart of global finance?

The issue of whether the Chinese should be part of the International Monetary Fund’s Special Drawing Right, the composite reserve currency used in official financing, is highly technocratic, but the political questions at stake go to the core of world money and power – and will be discussed, in the background, at the annual meetings of the IMF and World Bank in Washington this week.

China is bidding to enter the heart of global finance by establishing its currency, the renminbi, as part of an ubiquitous monetary unit used in official transactions around the world.

The decision on a new SDR structure, to be made in the next 15 months, will influence how China and its currency can play a bigger part in driving world trade, investment and capital flows. The renminbi could eventually challenge the dollar and its pivotal position in world money — which is why the U.S. government and Federal Reserve are examining this with intense interest.

China is unlikely to mount an open campaign to enter the SDR, grouping the main reserve currencies, the dollar, the euro (linking countries in European monetary union led by Germany and France), the Japanese yen and British pound, and is valued at around $1.5.

Beijing would prefer the question of recalculating the composition of the SDR, which comes up for review in 2015, to follow market developments, reflecting a big increase in demand for renminbi financing from private banks, central banks, traders, corporations and asset managers.

Many hurdles remain. These include the renminbi’s lack of formal convertibility for transactions that shift capital inside and outside the country, where Beijing is reluctant to abolish all controls. In addition, China still has to release more statistics to the Fund about its monetary reserves and other matters. However, Chinese measures over the past three years to liberalize and internationalize its currency, and a big increase in financial market interest in China, are pointing toward a broadening of the SDR’s composition from January 2016.

An additional factor is China’s own action to galvanize emerging market economies toward reforming word monetary arrangements. This includes the five-nation Brics group’s decision to set up the New Development Bank in Shanghai, potentially challenging the IMF and the World Bank.

China believes it is close to earning the status of a reserve money, the first time that an emerging market currency would attain this position. Chinese entry into the “magic circle” has been advanced by the British government’s September decision to issue renminbi-denominated bonds, the first big government to take such a step, and allow the proceeds to be held as reserves by the Bank of England.

The main conditions for the renminbi to pass the SDR test are that it should be widely used in trade and be “freely usable” in international payments and asset management. Although a long way behind the dollar, the renminbi has made impressive strides recently and is challenging the euro in several key fields.

Next year’s planned review will touch, too, on the opportunity for the SDR to play a greater role on financial markets, for example in denominating bond issues. The SDR has lost ground as a financial vehicle in the past two decades, reflecting the surging importance of international private sector capital markets. But with the addition of the renminbi, it may be about to make a comeback.

Source: USA Today

China Gold Congress in Beijing

The China Gold Congress is currently in full flight in Beijing. The three day Congress is China’s biggest gold industry event of the year, drawing in participants from across the Chinese and international gold sectors including central banks, mining companies, bullion banks and refiners.

The event, co-sponsored by the World Gold Council (WGC) and the China Gold Association, showcases China’s gold industry and acts as a focus point for what is now the world’s largest gold market in terms of demand and product innovation.

Discussions and forums during the event cover everything from reserve asset management for the official or central banking sector, through to investment products and mining supply. One of the key themes this year is the internationalisation of the gold market.

China’s gold market accounts for one third of global demand, and according to the WGC, is expected to grow another 20% cumulatively from now until the end of 2017.

In what is still a very centrally planned economy despite many market related reforms, nearly all reported gold activities in China flow through the Shanghai Gold Exchange (SGE) in one form or another.

Both the China Gold Association and the Shanghai Gold Exchange were established with government backing and their growth and success reflect a very deliberate pro-gold strategy on the part of the Chinese Government.

Even though the China Gold Association is a non-for-profit member association, it still primarily acts as a conduit and coordination group between the government and the gold producers.

The Shanghai Gold Exchange is the government’s second central hub in China’s gold market.

SGE approved refiners take in production from China’s fragmented gold mining industry and in imports from Hong Kong and other countries.

The gold then flows through the Exchange after which SGE deliveries flow out to the banking sector, the official government sector, and additionally to the jewellery and technology industries.

The development of the Shanghai Futures Exchange also provides an additional venue for hedging and gold price discovery.

In China gold is money and is accepted as such by the general population.

There really does not seem to be a debate about this in Chinese government circles, and another part of the government’s strategy has been to advocate the increased innovative usage of gold by the Chinese banking sector.

This is quite a simple strategy for the government to implement since the four big Chinese commercial banks and many other Chinese banks are state-controlled.

Gold is now used widely in the banking sector in structured products, as gold collateral, and in gold leasing. The presence of the Chinese bullion banks in the market via the Shanghai Gold Exchange (SGE) provides the necessary liquidity that is turning the Exchange into a world player on the global gold market.

For example, the large Chinese banks such as Industrial and Commercial Bank of China (ICBC), Bank of China and Agricultural bank of China all offer gold accumulation plans to the investing public and the WGC estimates that these products currently represent between 100 and 200 tonnes of gold. The large banks are also active in gold trading on a proprietary basis via the SGE.

Earlier this year, ICBC via its purchase of some of Standard Bank of South Africa’s assets had been rumoured to be interested in buying a seat on the London gold fixing panel when Deutsche Bank left the panel, but a buyer of this seat never materialised.

ICBC is not yet a market making member of the London Bullion Market Association (LBMA), which would be a prerequisite to becoming part of the gold fixing panel, but given that the Chinese gold market is beginning to overtake that of London in terms of physical flows and probably price formation, there may not be a need for ICBC to bother being such an active participant in the London market as gold business continues to migrate to the East.

The Chinese government is also responsible for granting gold import licenses to international bullion banks and has supported the establishment of the Shanghai free trade zone where a gold trading platform has been set up for international banks and trading houses.

In fact, in an announcement that coincides with the China Gold Congress today, the Shanghai Gold Exchange just announced that it is launching an internationally tradable yuan denominated physical gold contracts to be traded in the free trade zone for the popular retail 1kg gold bar, the Good Delivery 12.5kg (400 oz) bar popular with central banks, and a smaller 100 gram bar contract.

The US based CME Group that runs the Comex gold futures exchange also appears to have used this week’s China Gold Congress to announce the launch of their competitor product in the form of a 1kg gold contract to be traded in Hong Kong.

With increased regulatory scrutiny on the London gold and silver fixings and what looks like a defensive attempt by the LBMA in London to protect their proprietary gold and silver price discovery auctions via the recently introduced CME/Thomson platform for silver and probably soon to be introduced similar CME platform for gold, it will be interesting to see how the Chinese government’s pro-gold strategy pans out.

We may soon see global gold hub wars between London and New York on the one hand and the increasingly powerful eastern hubs of Singapore, Shanghai and Beijing on the other.

Source: GoldCore

Paris as polluted as Beijing

Public transport will be free from Friday until Sunday evening in Paris as the authorities try to encourage drivers to leave their cars at home, as much of France suffers severe air pollution caused by unusually warm weather.

The French capital and 30 other regions of France have been on maximum pollution alert for several days, with conditions set to continue until the end of the weekend.

The European Environment Agency says the pollution is the worst since 2007, and almost three-quarters of France is affected.

The air pollution has also affected neighboring Belgium where authorities have introduced a maximum speed limit to reduce the concentration of polluting particles. Free public transport has also been introduced in Belgium’s southern Wallonia region.

Jean-Paul Huchon, head of the STIF organization that manages Paris’s complex transport network, said that public transport would be free from Friday morning until Sunday evening.

“I am asking all residents in Paris and neighboring areas to favor the use of public transport,” Huchon said.

Subways, buses and trains will be free, as will bike-shares and one-hour sessions in electric cars.

The cities of Caen, Reims and Rouen, all in northern France, are following Paris’s lead and also offering free transport.

As air quality dipped Thursday to the same as Beijing, Ecology Minister Philippe Martin admitted that air quality was “an emergency and a priority for the government.”

A lack of wind and cold nights followed by balmy days have conspired to create conditions where polluting particles, most of them emitted by vehicle exhaust fumes, have been stuck under a warm layer of air.

Monitoring centers have been reporting a particularly strong concentration of so-called PM10 particles, which have a diameter of less than 10 microns.

Pollution alerts in France are issued when these PM10 particles reach 80 micrograms per cubic meter.

These tiny particles are also some of the most dangerous to public health and can cause asthma, allergies and other respiratory ailments.

Source: RT

Beijing watches sun rise… digitally

You know it’s bad when…The smog has become so thick in Beijing that the city’s natural light-starved masses have begun flocking to huge digital commercial television screens across the city to observe virtual sunrises.

Following this week’s practical shutdown of the city of “beyond index” levels of pollution, as The Mail Online reports, residents donned air masks and left their homes to watch the only place where the sun would hail over the horizon that morning…

It’s grim…

The futuristic screens installed in the Chinese capital usually advertise tourist destinations, but as the season’s first wave of extremely dangerous smog hit, ths happened…

The air took on an acrid odor, and many of the city’s commuters wore industrial strength face masks as they hurried to work.

‘I couldn’t see the tall buildings across the street this morning,’ said a traffic coordinator at a busy Beijing intersection who gave only his surname, Zhang. ‘The smog has gotten worse in the last two to three years. I often cough, and my nose is always irritated. But what can you do? I drink more water to help my body discharge the toxins.’

The density of PM2.5 was about 350 to 500 micrograms Thursday midmorning, though the air started to clear in the afternoon. It had reached as high as 671 at 4 a.m. at a monitoring post at the U.S. Embassy in Beijing.

That is about 26 times as high as the 25 micrograms considered safe by the World Health Organization, and was the highest reading since January 2013.

In the far northeastern city of Harbin, some monitoring sites reported PM 2.5 rates of up to 1,000micrograms in October, when the winter heating season kicked off.

Beijing reported 58 days of serious pollution last year, or one every six to seven days on average, Xinhua quoted Zhang Dawei, director of the Beijing Municipal Environmental Monitoring Center, as saying.

China has drawn up dozens of laws and guidelines to improve the environment but has struggled to enforce them in the face of powerful enterprises.

On Wednesday, China’s commercial capital, Shanghai, introduced emergency measures, allowing it to shut schools and order cars off the road in case of severe smog.

China warns US as Republicans vow to stand and fight

China, the biggest foreign creditor of the United States, has waded into the American budget crisis, warning Congress that it must resolve the political impasse over the debt ceiling without further delay.

The Chinese Vice Foreign Minister, Zhu Guangyao, told America’s deadlocked politicians on Monday that “the clock is ticking” and called on them to approve an extension of the national borrowing limit before the federal government is projected to run out of cash on 17 October.

“We ask that the United States earnestly takes steps to resolve in a timely way the political issues around the debt ceiling and prevent a US debt default to ensure the safety of Chinese investments in the United States,” Mr Zhu told reporters in Beijing. “This is the United States’ responsibility,” he added.

The American government entered its seventh day of shutdown on Monday, following the failure of Congress to approve the national budget a week ago. And there was little sign of progress on the still more crucial issue of the fast-approaching “debt ceiling” deadline. Yet rather than indicating a willingness to negotiate, the Republican Speaker of the House of Representatives, John Boehner, stated on Sunday that it was “time for us to stand and fight” over the budget. He added that a default was “the path we’re on”. American stock markets opened down in response to the belligerent comments yesterday, with the S&P 500 Index of leading shares shedding 0.5 per cent.

In September 2008 China eclipsed Japan to become the biggest single foreign creditor of the US federal government. The US administration estimates that the China government holds at least $1.3 trillion of its bonds. The total could be higher because Beijing is known to hold American debt through intermediaries. And, in total, the Beijing authorities have $3.5trn of dollar-denominated assets, which would also be hit hard in the event of a default.

These vast foreign exchange holdings are a by-product of China’s closed financial system and persistent current account surplus, which means that most foreign currency that enters the country accumulates with the central bank. The central bank then invests the money in normally “safe” dollar assets. The vast dollar reserves are also a legacy of China’s policy in recent decades of artificially holding down the value of its currency, the renminbi, in order to boost the overseas sales of its politically influential export industry.

However, economists have criticised the popular idea that China could exert political or economic leverage over Washington by threatening to sell its dollar investments, since such a drastic shift would ultimately serve to undermine the paper value of Beijing’s own vast investment portfolio. Nevertheless, China’s creditor position and its status as the world’s second largest economy gives its voice some authority in Washington and Mr Zhu made it clear that private representations had already been made. “The US is clearly aware of China’s concerns about the financial stalemate and China’s request for the US to ensure the safety of Chinese investments,” he said yesterday.

Since the global financial crisis, which led to a sharp depreciation in the value of the dollar against the renminbi, the authorities in Beijing have been concerned about the fact that so much of their national reserves are held in the form of the American currency. China has been promoting the idea of a new reserve currency to replace the greenback, with some analysts suggesting that the renminbi could one day take its place.

Mr Zhu stressed that it was vital, not only for China but the wider global economy, for America to resolve its budget impasse. “Safeguarding the debt is of vital importance to the economy of the US and the world,” he said. Referring to a similar deadlock in 2011, which led to a downgrade of the US AAA credit rating by the Standard & Poor’s agency, Mr Zhu said: “We hope the United States fully understands the lessons of history.”

The concerns over the stability of the dollar come at a time of geo-political flux. Barack Obama has sought to “pivot” his foreign policy to Asia to counter China’s growing military influence. But the shutdown has forced the US President to cancel his visit to Asia this week to attend a summit. – The Independent