China Strengthens Military Ties With Sudan

Chinese officials say they will push forward with military cooperation with Sudan, despite accusations Khartoum supports militias that have killed hundreds of thousands of civilians in Sudan's Darfur region. Daniel Schearf reports from Beijing.

Western nations have long urged Beijing to use its influence with Sudan to get U.N. peacekeepers into the war-torn Darfur region, but China has instead used its veto power in the U.N. Security Council to prevent stronger condemnation of Khartoum.

Qin Gang (File photo)

This week, Beijing moved to strengthen ties with Sudan. During a visit by Sudan's military chief to Beijing, China's minister of defense said his government is willing to further develop cooperation between the two militaries in "every sphere."

China's Foreign Ministry spokesman Qin Gang Tuesday urged Sudan to be more flexible on the deployment of U.N. troops. But he indicated China would not support tougher measures against Khartoum.

"We think Sudan's territorial integrity and sovereignty should be respected and a political solution should be found to the Darfur issue through equal dialogue and discussions," he said.

China is the biggest buyer of Sudan's oil and a major source of weapons for Khartoum.

U.N. reports say the Sudanese government supports militias that have raped and killed about 200,000 people in Darfur and driven millions from their homes during a four-year civil war.

Washington and London want stronger sanctions imposed against Khartoum for atrocities committed in Darfur, which the United States has called genocide.

Omar al-Bashir, 01 Mar 2007

Sudan's President Omar al-Bashir agreed in November to gradually allow 20,000 U.N. peacekeepers into Darfur to support overwhelmed African Union troops. But Mr. al-Bashir has delayed negotiations on the deployment and now indicates he will only accept technical and logistical support from the United Nations.

On Sunday gunmen killed five AU peacekeepers along the border between Darfur and Chad. It was the deadliest attack since the peacekeepers were deployed to Darfur.

China's relationship with Sudan has prompted human rights activists to call for a boycott of the Summer Olympics being held in Beijing in 2008.

China Warns US WTO Complaint Could Damage Trade

The Chinese government says the United States' complaints to the World Trade Organization over product piracy could damage trade relations between the two countries. The U.S. government says illegal copying of books, movies and software in China costs American companies billions of dollars a year. VOA's Kate Pound Dawson reports from Hong Kong.

Pirated materials from China are displayed during a news conference in Washington by U.S. Trade Representative Susan Schwab, not in picture, 9 Apr 2007

China's Commerce Ministry expressed "great regret" at the U.S. decision. Ministry officials say Washington has not fully taken into account China's efforts to fight copyright piracy and said the U.S. action could cause a "negative impact" on trade.

The United States plans to file complaints with the World Trade Organization over illegal copying of U.S. products in China, and over Chinese restrictions on imports of U.S. books, music and movies.

China's trade surplus with the United States hit a record $232 billion last year.

Many U.S. business leaders, labor activists, and politicians say the surplus means lost jobs in the United States. They argue it is caused, at least in part, by China's restrictive import practices, its weak currency, and its pirating of intellectual property such as movies.

Despite tough talk on both sides, the vice president of the U.S. China Trade Council in Beijing, Robert Poole, says the relationship between the two countries is strong enough to withstand such disagreements.

"A mature or a broad trading relationship has plenty of room for there to be disputes that ideally can be settled through dialogue... but if necessary can go to a third party, an objective party like the WTO, without it being a trade war or a political development," he said.

China reports its global trade surplus in March plunged almost 72 percent, to $6.9 billion, from February's level of $24 billion. The trade figure for the United States was not released.

But trade experts say the March drop probably was a one-time event that may be linked to China's plans to cut tax rebates for exports - factories may have rushed orders out early to be eligible for the rebates.

Poole says while China is trying to cut its trade surplus, it is a slow process.

"The consensus among economists seems to be that China's trade surpluses are likely to continue to grow for some time ahead," he added. "The country wishes to stimulate more domestic consumption, but that is a process that will take more time."

Poole notes that China is sending a delegation to the United States in the coming months specifically to purchase U.S. goods. He says that may help reassure U.S. businesses that China is open to imports.

Chinese Premier Urges Japan, China to Work Together, Put History Behind Them

Chinese Premier Wen Jiabao says Japan and his own country should heal the long-festering wounds of war and work toward more cooperation. Mr. Wen made the appeal in a speech to Japan's parliament on the second day of his visit to the country. VOA's Luis Ramirez has more from Tokyo.

Wen Jiabao came to Tokyo to mend relations scarred by China's memories of Japanese aggression during the first half of the twentieth century.

Mr. Wen was greeted by applause from Japanese lawmakers when he entered to the room deliver the first speech to the Japanese parliament by a Chinese leader in more than two decades.

Chinese Premier Wen Jiabao addresses Japanese Parliament, 12 Apr 2007

He told Japanese lawmakers that Japan's invasion of China in the 1930's and 40's left indescribable scars and pain in the hearts of the Chinese people. But in a significant overture to Japanese sensibilities, he said the war also caused enormous suffering among the people of Japan. He said the blame went to a handful of militarists, not the Japanese people, and he said China credits Japan for the apologies it has offered.

Despite his overture, Mr. Wen indicated the memory of war has not been erased, and he urged Japan to confront its past openly - something successive Japanese governments have been reluctant to do.

"In our hearts we hope Japan will take the opportune momentum to reflect on its relevant positions and promises," he said.

Relations between the two Asian powers were badly strained during the 2001-2006 tenure of Japanese Prime Minister Junichiro Koizumi, who repeatedly visited the Yasukuni shrine in Tokyo, where convicted war criminals are among those honored.

China has repeatedly urged Japanese Prime Minister Shinzo Abe not to visit Yasukuni. Japan sees the religious shrine as a place where the country pays tribute to all of its war dead, while China, along with South Korea, views it as a symbol of Japanese militarism.

Another source of bitterness between the two nations has been a dispute over control of potential oil and gas reserves in the East China Sea.

Mr. Wen told Japanese lawmakers it is clear his visit will not fix all of the problems between the two countries, and he said the focus now should be on building cooperation on trade and other issues.

"It should be acknowledged that China and Japan still have differences on some issues of concrete interests and on views of some issues," he noted.

Protesters block busy Tokyo intersection briefly, 12 Apr 2007

The Chinese premier's visit triggered loud protests Thursday by nationalist groups, who are angry at what they see as Prime Minister Abe's bowing to China's communist government.

One protest tied up traffic briefly in a major intersection of the capital.

China´s forex reserve tops 1.2 trillion USD

BEIJING, April 12 (Xinhua) -- China's foreign exchange reserve reached 1.2 trillion U.S. dollars by the end of March, up 37.36 percent from the same period last year, the People's Bank of China announced here Thursday.

"I'm not surprised at the figure," Cai Zhizhou, an economist with Beijing University, said and added that forex sharp rise has become "normal".

China's forex reserve came to 609.9 billion U.S. dollars by 2004, 818.9 billion U.S. dollars by 2005 and 853.6 billion U.S. dollars by the end of last February, making the country overtake Japan to become the biggest foreign reserve holder of the world.

"The rising trade surplus is the major factor contributing to the forex reserve boom," Cai said and pointed out that low prices of Chinese goods contributed to the rising trade surplus.

"China needs forex reserve to avoid financial risks as the country's dependence on foreign trade is going up," said Cai.

China's foreign trade has risen by more than 20 percent annually since 2002 while the ratio of foreign trade to GDP has risen from 30 percent to nearly 70 percent during the same period.

The country's trade surplus reached 46.44 billion U.S. dollars in the first quarter, nearly double the 23.3 billion U.S. dollars surplus in the same period last year.

However, the rising trade surplus has brought increasing trade frictions between China and its trade partners.

To balance, the country has lowered and is considering to further lower export rebates on certain goods, ranging from steel to textile.

The trade surplus in March went down to 6.87 billion U.S. dollars, cracking the 10 billion mark for the first time since March 2006 and showing a downward trend.

"A large-scale forex reserve may backfire," said Cai. "It is the major reason leading to the excess liquidity in China."

The central bank has to spend quantities of basic money to purchase foreign exchange, thus aggravating the problem of surplus fluidity

On the other hand, continuous growth of forex reserve has in fact increased the pressure on appreciation of the Chinese currency, which in turn has exerted greater pressure on value preservation of China's forex reserve.

It is estimated that by 2010, China's forex reserve will reach 2.9 trillion U.S. dollars. China thus plans to launch a state forex investment company.

The investment company will issue 200 billion to 250 billion U.S. dollars of RMB-denominated bonds. Money to be raised will be firstly used as strategic investment for energy enterprises like CNOOC, earlier reports said.

Chinese Premier Wen, Abe open economic dialogue

Chinese Premier Wen Jiabao shakes hands with Japanese Prime Minister Shinzo Abe at the start of the Japan-China High-level Economic Dialogue at the foreign ministry's Iikura guest house in Tokyo April 12, 2007. [Reuters]

TOKYO: China and Japan revitalized their high-level economic dialogue Thursday, with Premier Wen Jiabao and Japanese Prime Minister Shinzo Abe being keen to build strategic and mutually beneficial relations.

The dialogue is a big boost to the two countries' economic ties and is seen as one of the highlights of Wen's three-day visit to Japan.

Wen and Abe co-chaired the inaugural economic dialogue at Japanese Foreign Ministry's Iikura guesthouse and agreed to hold its first session in Beijing later this year.

Wen said the dialogue is to create a forum for the two sides to exchange their economic development strategy and macro-economic policy and enhance mutual understanding.

The move is aimed at coordinating and pushing forward cooperation in the key economic fields of energy, the environment, finance, hi-tech, communication and intellectual property right (IPR) protection, he said.

It will serve as a platform for the two countries to exchange policies on regional and international economic issues and help expand cooperation in wider sectors.

The dialogue is a key mechanism, Wen said, for building strategic and mutually beneficial ties between China and Japan, and it complements already established cooperative mechanisms.

Abe corroborated Wen and underscored the two countries' dependence on each other's economy, calling the dialogue a "new step forward in Japan-China economic ties",

Abe said the two sides have the responsibility of helping resolve global issues, such as climate change, IPR and the WTO's Doha Round of multilateral trade negotiations.

Chinese Premier Wen Jiabao (L) and his Japanese counterpart Shinzo Abe attend the establishment of a mechanism of high-level economic dialogue, in Tokyo, capital of Japan on April 12, 2007. (Xinhua Photo/Fan Rujun)

There is a need for the top economic leaders of both countries to personally meet and frankly talk to deal with those issues properly.

Wen and Abe appointed Chinese Vice-Premier Zeng Peiyan and Japanese Foreign Minister Taro Aso, respectively, the co-chairs of the economic dialogue.

Foreign Minister Li Zhaoxing, minister in charge of the State Department and Reform Commission Ma Kai and Commerce Minister Bo Xilai are among the senior officials to join Zeng.

The core members of the Japanese team are Economy, Trade and Industry Minister Akira Amari, Finance Minister Koji Omi and Economic and Fiscal Policy Minister Hiroko Ota.

Before the dialogue, Wen had lunch with businessmen from major Japanese trade and commerce organizations to get more business for the country.

He reiterated China's determination on currency reform and IPR protection and said the government wants to take bilateral economic ties to a new high.

China is Japan's No 1 trading partner, with the two-way trade volume being US$207.3 billion last year. But the volume was only US$1.1 billion 35 years ago, when the two countries normalized relations.

Chinese Premier Wen Puts History Aside, Visits Japan

A smiling Chinese Premier Wen Jiabao sipped green tea and declared his trip to Japan a success Friday, wrapping up a three-day tour aimed at cementing rejuvenated ties and drawing Japanese investment in China.

Wen, putting finishing touches on the first visit by a Chinese premier in nearly seven years, traveled to the ancient capital of Kyoto after two days in Tokyo during which he called for improved relations between Asia's top two economies.

"Many Japanese people have said that the objective of the ice-melting trip has been achieved," Wen said before leaving for Kyoto. Kyodo News agency quoted him as adding, however: "I cannot say all problems have been solved. We need more time."

Indeed, Wen's trip was heavy on broad statements of goodwill and atmospherics, but short on concrete solutions to the two countries' enduring conflicts over wartime history and maritime territory.

The visit followed Japanese Prime Minister Shinzo Abe's groundbreaking trip to Beijing in October, a major step by Tokyo to repair ties that had seriously deteriorated during the 2001-2006 term of his predecessor, Junichiro Koizumi.

Wen managed to set a relaxed, friendly tone for the talks. He went for morning jogs while in Tokyo, performed tai chi poses for the cameras and used every opportunity to declare a new era of cooperation with Japan.

Arriving in Kyoto, Wen attended a traditional Japanese tea ceremony in a parlor with the phrase "Mutual Respect" written in calligraphy on the wall. Later he laid flowers at a memorial to late Chinese Premier Zhou En-lai in Kyoto, proclaiming him a "pioneer" in forging ties between the two nations.

"Relations between our two countries will continue to strengthen," Wen said. "I hope that soon the flower of friendship will bloom."

Wen also had plans to toss a baseball around with college students and have dinner with business executives in the area before heading back to Beijing in the evening.

The two countries' problems were never far below the surface, however.

In a speech to parliament on Thursday, Wen urged lawmakers not to forget their past aggressions, referring to Japanese invasions of China in the 1930s and 40s that left the country a shambles.

At the same time, Wen appeared more conciliatory than previous visiting Chinese leaders, acknowledging Japan's past apologies over the war, while urging Tokyo to turn that contrition into concrete actions.

Koichi Nakano, political scientist at Tokyo's Sophia University, said the two sides had more work to do, but that the trip appeared to have kept the momentum moving in the right direction.

"Both the Chinese and the Japanese sides wanted to turn the visit into a success in the sense that they didn't want any major disruptions," he said. "At the same time, I don't think it's accurate to say that good will is completely restored or that both sides fully trust one another."

FOOD FROM CHINA POSES THREAT

Like so many of the other products sold in its stores, Wal-Mart imports much of its food from overseas, including China. As this Wall Street Journal article explains, China has different, often lax food inspection policies. The recent pet food recall is just one example of how importing poorly-regulated food can harm consumers.

Who’s Monitoring Chinese Food Exports?

Tainted foods from China are becoming a growing problem as the country plays a greater part in the global food chain. Chemical use is high, regulations are lax, and while the U.S. Food and Drug Administration has the authority to check imports for contaminants that are in violation of U.S. law, it is able to physically inspect only a small fraction of them.

Late last month, the FDA said it had traced the culprit in the deaths of more than a dozen cats and dogs in the U.S. to contaminated wheat gluten produced thousands of miles away in Jiangsu province, China. The wheat gluten ended up in pet foods sold in stores across America run by Kroger Co., Safeway Inc., Wal-Mart Stores Inc. and others. It is far from clear how many pets have been affected, but the number could rise. The FDA says it has received more than 10,000 complaints.

The Chinese wheat gluten was contaminated by an industrial chemical called melamine, which is used to make plastics, glue and fire retardants but is also used as a fertilizer in Asia, according to the FDA. It may have led to kidney failure in the animals, although the FDA says it isn’t yet certain how exactly the pets died. The Chinese company, Xuzhou Anying Biologic Technology Development Co., has denied shipping wheat gluten to the U.S.

Contaminated foods from China have shown up overseas before. In 2002, frozen spinach shipped to Japan was found to have high levels of the pesticide chlorpyrifos. Late last year, Hong Kong health officials halted imports of turbot from mainland China that contained a banned substance called malachite green, an antifungal agent that may cause cancer.

Over the years, foreign governments have also found and rejected Chinese exports of honey containing the antibiotic chloramphenicol, crushed peppers with pesticides and seafood contaminated with veterinary drugs, to name only a few examples, according to Helen Jensen, professor of economics who works on food safety issues and international trade at Iowa State University. The pet-food case, she says, shows how, as the food system has become global in sourcing, “we’re vulnerable to what goes on throughout the world.”

China’s contamination problems stem in large part from its loose regulations and highly fragmented food production. Hundreds of millions of small farmers grow its food, and they rely heavily on chemicals to coax production out of intensively cultivated soils and to fight pests.

The result: “China has one of the world’s highest rates of chemical fertilizer use per hectare, and Chinese farmers use many highly toxic pesticides, including some that are banned in the United States,” according to a report published last November by the economic-research service of the U.S. Department of Agriculture.

More than a dozen government agencies are responsible for ensuring the safety of China’s food supply, and coordination and communication among them is a often a problem, notes Henk Bekedam, the World Health Organization’s chief representative in China. “Despite many efforts, food regulations and standards have been developed in an ad hoc way without the benefit of a basic food law,” he adds.

The FDA has the power to stop shipments at the border and collect samples and test for certain contaminants that may be in violation of U.S. regulations. Last month, it refused 215 shipments from mainland China for various reasons. A shipment of dried red dates from Chongqing was considered filthy, frozen swordfish from Shandong contained a poisonous substance and ginseng from Changsha had unsafe pesticides.

But the food shipments that get tested are the exception, not the rule. “The volume of food imports from overseas is approaching 10 million per year, and the number that FDA inspectors physically examine is in the single digit thousands—making it virtually certain that any given food shipment will enter the United States with no FDA inspection,” William Hubbard, a retired associate commissioner of the FDA, said in Senate testimony in July 2006. “I could provide many more similar statistics, all of which paint a picture of an FDA regulatory structure that is under-resourced, understaffed and essentially incapable of meeting” many of its responsibilities on ensuring food safety.

In many cases, the burden of ensuring that food shipped out of China is safe falls on the foreign buyers, who negotiate with Chinese producers over what quality standards the food must meet.

A spate of poisoning cases in China has forced the government to publicly address the problem at home, even though it is unclear how much progress has been made towards improving safety. One of the most high-profile incidents occurred in 2004, when more than a dozen infants died after their mothers unknowingly fed them fake milk powder that had little or no nutritional value. Chinese television stations broadcast images of sick and dead babies that were fed the counterfeit formula.

Last November, Chinese authorities found that poultry farmers in Hebei province were adding Sudan B, a cancer-causing red dye used in industrial manufacturing, to the feed of their ducks. The dye caused the ducks to lay eggs with a reddish yolks instead of yellow ones, fetching a higher price.

“Food safety is a problem for China,” says Mao Qunan, spokesman for China’s Ministry of Health in Beijing. However, he adds that “So many times the media says the problem is so big, so huge. But I don’t agree with these comments on the safety of the food.”

In 2005, the Ministry of Health reported that 9,021 people were stricken by food poisoning, according to the state-run Xinhua news agency. Of the 235 deaths that year, around half were caused by poisonous chemicals in the food. The rest were from bacterial contamination and other causes.

But those numbers may understate the problem because it is often difficult to pinpoint the cause of such illnesses in rural China. At least 300 million people are estimated to be affected by food-borne disease in China each year, according to Mr. Bekedam of the WHO. The WHO estimates that food-borne disease costs China between $4.7 billion and $14.0 billion a year in medical-care expenses and loss of productivity.

Meanwhile, China’s food problems are becoming the world’s problems, as agriculture exports surge. As of last year, China accounted for about 12% of global trade in fruits and vegetables, challenging U.S. producers in three main areas, including apple juice, fresh apples and fresh vegetables, according to a USDA report published last year. The U.S. is China’s largest market for exports of apple juice. China’s agricultural exports to the U.S. have soared over the past three decades, rising to $2.26 billion in 2006 from $133 million in 1980, according to the USDA.

The current problems with pet foods began in mid-March. Ontario-based Menu Foods Inc., which produces major brands like Eukanuba and Iams, recalled its “cuts and gravy” style pet food in cans and pouches after receiving information that pets that ate the product had fallen ill. The recall was later extended to more products. Within nearly a week of the recall, the company received complaints or expressions of concern from about 200,000 consumers.

The FDA suggested that ChemNutra Inc., a Las Vegas-based supplier of wheat gluten to Menu Foods, had received contaminated gluten from Xuzhou Anying Biologic Technology Development Co. in Jiangsu. The U.S. government halted shipments of wheat gluten to ChemNutra and is now requiring that all shipments of wheat gluten from China be scrutinized.

China is carrying out a nationwide inspection on the quality of its wheat gluten, a report from state-run Xinhua news agency said Friday.

A manager of Xuzhou Anying, surnamed Mao, told Reuters last week that his company never sold any wheat gluten to the U.S. “I don’t understand how come they are blaming us,” he said. But when representatives from ChemNutra met with Mr. Mao on March 31 in China to discuss the alleged contamination, he “was apologetic and embarrassed and promised to do an investigation,” said a person familiar with the matter. This person said that the wheat gluten was shipped through an intermediary before arriving in the U.S.

Reached at the company on Friday, a manager who gave his name as Mao Lijun, who may or may not have been the same Mr. Mao, said that he was busy and hung up his phone when asked about the allegations.

Wheat gluten—a mixture to two proteins—is used as a thickening agent in pet food gravy and is in many products for humans, from cereals to pasta. Exports from China have been brisk, with demand exceeding supply this year, according to Li Wenxin, sales manager at Qingdao Wansheng Chemical Co., a trading company in Shandong province that exports wheat gluten to several countries, including Australia, India, Italy and Russia. The FDA says there is no evidence that any of the wheat gluten imported from Xuzhou Anying Biologic has entered the human food supply.

Marc Ullman, a lawyer for ChemNutra, said that at this point, it is still not completely clear how the wheat gluten became contaminated. The wheat gluten that was imported from China wasn’t tested for melamine, and testing for the chemical isn’t routinely done in the industry, he said. “There’s no way to test every container of food for every potential toxin coming into the United States.”

The Hong Kong Dollar is dieing away? --- The incredible shrinking currency

Ten years after political control of Hong Kong was returned to China, the island state's currency is facing a sea change of its own.

As the yuan, bolstered by China's hypergrowth, gathers strength against the once-dominant Hong Kong dollar, residents are being forced to make painful choices.
How best should inhabitants and investors alike try to preserve their wealth in the face of their incredible shrinking currency?
Looking at currency markets today, we seem to be at a polar opposite from a decade ago. Then when Thailand tipped off an Asian financial crisis, the Hong Kong dollar withstood intense gravitational pull to decline. Bow-tied Chief Executive Donald Tsang at the time was at the helm as financial secretary who audaciously spent HK$120 billion buying equities to stave off hedge funds attacking the currency.
Today just about all Asian currencies appear to be heading north, bar the HK dollar with its peg to the weakening greenback. This is having some unusual effects that portend change to come.
Significantly, as China has moved to allow a gradual appreciation of the yuan, it has now overtaken the HK dollar as it crawls upwards. It now takes 7.81 HK dollars to buy one greenback but just 7.72 yuan. Further moves upward are widely expected and being called for.
For many years the currencies had assumed a de facto peg to the HK dollar within a dual currency regime. But now it appears the HK dollar is being shunned.
The South China Morning Post recently ran stories that mainlanders over the immediate border no longer want the HK currency. Not just taxi drivers but Starbucks in Shenzhen are turning their noses up at it and the US dollar -- both of which were previously freely acceptable.
And in Hong Kong some shops are refusing to accept physical coins, due to higher bank charges for handling this depreciating tender.
Nomura Securities, in a recent strategy note, highlighted these anecdotal events to question if we could be seeing the demise of the HK dollar.
In a situation where people can opt for two currencies, according to Gresham's Law, bad money forces good money out of circulation. It may be early days, yet in January the Hong Kong Monetary Authority (HKMA) reported the biggest jump in yuan deposits since accounts were launched two years ago, rising to 24.2 billion, up from 22.7 billion in January. Nomura strategist Sean Darby notes "the perception that one currency will appreciate over another is enough to cause a self perpetuating cycle of appreciation."
For Hong Kong, one very noticeable impact is building inflationary pressures from being tied to a depreciating US dollar. This is likely to be further fanned as even goods from low cost China begin to cost more.
Money supply growth has been in the high teens this year and bank lending to deposit ratios are at record lows, leading banks to further cut mortgage rates below prime. The rapid creation of money has flowed into financial assets; bad if you are on fixed HK dollar wage and renting property, but it has been good for physical property and equities.
Today the peg is taking the strain of adjustment in reverse to 1997-1998. Then, while asset prices plummeted 60% or more in some cases, if you kept your job, avoided a wage cut and were renting rather than a property owner it was actually pretty good. Rents were cheaper, so were holidays with the baht at 50 to the dollar.
Borrowing in a weak HK dollar with funding rates below U.S. Libor makes the Hong Kong currency arguably one of the best funding vehicles for global currency traders, say Nomura.
Of course that prognosis still rests on the HK's peg to the U.S. dollar remaining intact as the currency of its largest trading partner powers ahead.
HKMA chief Joseph Yam said recently Hong Kong would retain its currency even if the yuan was stronger, although you would expect nothing else.
In private, you do begin to hear comments from economists that the HK dollar has at most five years to go and will be folded into yuan -- the HK yuan.
Of course for now the yuan is not a convertible currency and China has considerable work to do to clean up its financial system before that can change.
Arguably, the drift in the currency mirrors political drift as it becomes more apparent ultimate decision making always rests in Beijing. As Hong Kong's erstwhile competitor, Singapore sets out to attract regional corporates and expatriates with a vision for the future, the difference is starkly brought home. Politically, Hong Kong cannot really control its future; immigration for one is limited under an agreed policy of 100 Chinese a day never mind the lack of commitment to elections. And the pillars of its economy -- a cyclical property market and a venue for mainland companies listing overseas, both look vulnerable to China's own development.
Under the Donald Tsang government, Hong Kong is likely to stick to the past -- it was he who defended the peg last time around.
But if more Hong Kong inhabitants vote with their pocketbooks for the yuan, the HK dollar may well end up being little more than a relic from colonial times gone by. Much like Mr. Tsang and his bow ties.