Beijing Capital International Airport Co.'s third terminal, bigger than all five terminals at London's Heathrow, opens today, helping the city expand its air-passenger capacity as it prepares for the summer Olympics.

The terminal, designed to evoke Chinese icons such as the flying dragon and the imperial capital's Forbidden City, is the world's biggest building, housing 1.3 million square meters (14 million square feet) of floor space, according to a release from the designer, London-based architecture firm Foster & Partners.

The Chinese government has hired architects from Europe and Australia to design marquee projects to present an international image in the lead-up to this summer's Games. The terminal, like most of the Olympic venues, was completed ahead of schedule.

``Remarkably, it was commissioned and completed in a little over four years, less than the time it took to organize and conduct the public inquiry for Terminal 5 at Heathrow,'' Norman Foster, one of the architects, said in a statement.

The terminal cost 27 billion yuan ($3.8 billion) to complete, more than double what the city spent to build and refurbish sporting venues for the games.

Beijing is investing more than $67 billion on infrastructure projects including roads, subways, sports stadiums and the new terminal ahead of the country's first Olympics. The games will be held Aug. 8 to 24.

City Image

Its 360,000 square meters of gold roof are intended to echo the imperial color used to top the buildings of Beijing's 600- year-old Forbidden City complex. Inside, skylights set into the ceiling allow natural light to illuminate and heat the interior.

Measuring 2.95 kilometers (1.83 miles) from end to end, the terminal will double aircraft stands and will enable the entire airport to handle 76 million passengers a year by 2015, according to the National Development and Reform Commission.

The facility will host 26 airlines, according to Beijing Capital International. The first six including Sichuan Airlines and Qantas Airways Ltd. will start using it immediately, while the rest begin on March 26.

The first passengers of the day, from a Shandong Airlines flight from Ji'nan, 200 miles south of Beijing, disembarked at 8:50 a.m., the official Xinhua News Agency reported.

``The new terminal will help change people's view on Beijing airport, known for congestion and flight delays,'' said Roslyn Ji, an analyst at Core Pacific-Yamaichi International Ltd. in Hong Kong. ``The capital's airport really needs more space.''

Extra Visitors

Beijing is expected to host an additional 1.5 million visitors during the Olympic Games. A third runway opened in October 2007.

The third terminal and runway will triple the annual landings and takeoffs to 600,000 aircraft, according to the airport operator. A metro line connecting the airport with downtown Beijing will open before the Olympics, the General Administration of Civil Aviation said in a statement today.

Construction took three years and nine months and used 50,000 workers, according to the National Development and Reform Commission. Nine villages and 10,000 people were displaced in the process, it also said.

The terminal will adopt an automated people mover system which connects buildings for the first time in mainland China, according to General Administration of Civil Aviation. With four- kilometer-long rails, the system is able to transport 8,200 passengers per hour.

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Feb. 27 (Bloomberg) -- China Railway Construction Corp. drew about 3 trillion yuan ($420 billion) in the fourth-most popular initial public share sale in Shanghai, said two people with direct knowledge of preliminary numbers.

Demand for the sale was 135 times the offering, said the people, who declined to be identified before an announcement tonight. The Beijing-based independent builder of more than half of the country's rail links since 1949 may raise as much as 22.25 billion yuan in the Shanghai IPO.

The orders reaffirm demand for new stocks after China's benchmark CSI 300 Index dropped 21 percent from its peak in October. That prompted the China Securities Regulatory Commission on Feb. 25 to vow to tighten scrutiny of additional share sales by listed companies.

``Investors are moving their money to the primary market to hedge against the decline on the secondary market, as the returns are quite secure,'' said Wu Kan, who manages the equivalent of $41 million at Dazhong Insurance Co. in Shanghai. ``The first-day gain of China Railway Construction won't be amazing, but at least investors won't be running the risk of losing money.''

Li Tingzhu, board secretary of China Railway Construction, and Raymond Tang, a Beijing-based spokesman for Citic Securities Co., which is managing the sale, couldn't be reached in their Beijing offices.

Best-Performing Market

Companies that sold shares on the Shanghai and Shenzhen stock exchanges since the beginning of last year have gained at least 14 percent, according to data compiled by Bloomberg. That makes China the best-performing of the world's five-largest IPO markets last year, according to Bloomberg data.

Institutions, whose bids helped set the price range for China Railway Construction's Shanghai share sale, demanded more than 340 billion yuan of stock, said the people, citing preliminary numbers. Investors, including individuals and institutions, ordered about 2.67 trillion yuan of shares through the portion of the offering open to all buyers, they added.

China Railway Group Ltd., PetroChina Co. and China Coal Energy Co. attracted more money for their first-time Shanghai share sales, according to company statements.

At least 11 of the 90 major global indexes tracked by Bloomberg lost more than 13 percent of their value this year as a U.S. housing market collapse and banking losses triggered concerns of a global economic slowdown. The CSI 300, the best- performing index globally in 2007, has shed 13 percent this year.

Worst-Performing New Stocks

Last year's biggest first-time share sales in China, the world's fourth-biggest stock market, including those of China Pacific Insurance Group Co. and China Coal, were among its worst-performing newly listed stocks, according to Bloomberg data.

China Coal had the slimmest first-day gain of newly listed stocks in the country since the beginning of 2007 when its shares started trading in Shanghai on Feb. 1.

China Railway Construction is also selling 1.706 billion shares in Hong Kong for as much as HK$18.25 billion ($2.3 billion). The shares are scheduled to be priced March 6.

Bloomberg

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Feb. 27 (Bloomberg) -- GD Midea Electric Appliances Co., China's largest publicly traded maker of household goods, bought a 24 percent stake in Wuxi Little Swan Co. to become the washing-machine maker's biggest shareholder.

Midea paid 1.68 billion yuan ($235 million) for 87.7 million Little Swan shares, raising its stake to 29 percent, it said in a Shenzhen Stock Exchange statement today. The stock was bought from Guolian Group.

Foshan, Guangdong-based Midea plans to expand as higher wages and China's surging real-estate market boosts demand for refrigerators, washing machines and air conditioners. Retail sales in China, the world's fastest-growing major economy, rose 17 percent last year.

Midea bought the stake at an average price of 19.16 yuan a share, according to Bloomberg calculations. That's a 13 percent discount to Shenzhen-listed Little Swan's 21.90 yuan closing price on Jan. 11. The stock has been suspended since then.

Midea, whose 2007 net income more than doubled to 1.2 billion yuan, also plans to start a venture with Toshiba Carrier Corp. to make compressors used in appliances. It will hold a 95 percent stake.

The company more than quadrupled in Shenzhen trading in the year ended Feb. 15, when its shares were halted, beating the benchmark index. It will resume trading tomorrow. Little Swan, based in eastern Wuxi city, more than tripled in the year ended Jan. 11.

Bloomberg

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Feb. 27 (Bloomberg) -- Hong Kong reported a record budget surplus and announced tax cuts and increased spending aimed at supporting the economy as a global slowdown spreads.

Financial Secretary John Tsang, in his first annual budget speech to city lawmakers, announced both one-time giveaways and permanent cuts in company, personal, alcohol and hotel taxes to redistribute the surplus, especially to poorer people.

Hong Kong is trying to contain inflation near a nine-year high, while providing jobs as global demand falters. The city's economic growth will probably slow to 4 percent to 5 percent this year, after dropping to 6.3 percent last year from a revised 7 percent in 2006, Tsang said today.

``When things turn for the worst, at least they won't burden themselves with extra long-term spending commitments,'' said Kelvin Lau, an economist at Standard Chartered Bank Plc in Hong Kong. One-time spending means that the government hasn't committed to expensive programs that it can no longer pay for in the event of fiscal problems, Lau said.

Public spending will rise to 19.2 percent of gross domestic product next financial year, from 15.9 percent this year, Tsang said.

Singapore, which reported its biggest budget surplus in at least a decade earlier this month, announced a package of cash handouts and rebates to help cushion the effect of inflation, running at the fastest in 25 years.

The island-nation held off on tax cuts for workers and companies, contrasting with Hong Kong.

Tax Cuts

Tsang proposed a few permanent tax cuts. He dropped all taxes and administrative controls on wine and beer at an annual cost of HK$560 million ($72 million).

To aid tourism, Hong Kong will drop its hotel room tax. It also cut the salaries and company profits taxes by one percentage point to 15 percent and 16.5 percent respectively, losing HK$5.36 billion in revenue per year.

``This is a 360 degree budget, the first that actually benefits everybody,'' said Agnes Chan, a partner at Ernst & Young Tax Services Ltd. in Hong Kong. ``Who won't be unhappy? The government has enough to spare.''

The government will also change depreciation rules to encourage spending on environmentally friendly facilities, and offer a tax concession on environmentally friendly vehicles.

The American Chamber of Commerce and other business groups have cited Hong Kong's air quality as a concern, and Chief Executive Donald Tsang has promised to make pollution a priority.

The government will raise the ceiling on charitable deduction to 35 percent of income from 25 percent, and has set aside HK$1.2 billion a year to pay for the extension of free schooling to 12 years from 9 years.

Deficit Forecast

Hong Kong's government is forecasting a HK$7.5 billion consolidated deficit for the 2008-09 financial year, compared with the record HK$115.6 billion surplus this year.

``Financial policies should be sustainable,'' Tsang said. ``I will continue to manage public finances prudently by keeping expenditure within the limits of revenue.''

Some of the cuts and payments are aimed at reducing the impact of inflation, to accelerate to about 3.4 percent in 2008 from 2 percent last year on rising food costs, Tsang said.

The government will waive 75 percent of salary and profit taxes of as much as HK$25,000, forego as much as HK$25,000 on annual taxes on real-estate rental income and forgive HK$5,000 each quarter of tax on residential property.

Electricity Grant

Tsang will also inject HK$1,800 into every residential electricity account in the city, to ease the impact of rising power costs on low-income households. CLP Holdings Ltd. and Hong Kong Electric Holdings Ltd. supply power to most of the city.

Standard Chartered's Lau said that while the one-time grants can be justified, they may have a negative effect.

``With all these tax concession and low interest rates, I am worried that the driver of the inflation rate will gradually shift from food to domestic sectors later on in the year,'' Lau said. Still, ``it's reasonable and justifiable given that Hong Kong people are likely to face higher cost of living.''

Tsang expressed concern that health-care costs are climbing, saying the government needs to set up a new system that would require individuals to pay more of the costs, and pledged HK$50 billion for a fund that will aid the change.

Old age pensioners and welfare recipients will receive extra one-time payments this year.

The budget measures are not expected to ``impair the government's financial position in the medium term,'' rating company Standard & Poor's said in a release today.

Bloomberg

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Taiwan's Economy grows beyond expectation, Bloomberg said.

Taiwan's economy expanded faster than forecast in the fourth quarter, buoyed by the biggest increase in exports in almost two years.

Gross domestic product advanced 6.39 percent from a year earlier after gaining a revised 6.86 percent in the third quarter, the statistics bureau said today in Taipei. That beat the median estimate of 5.65 percent in a Bloomberg News survey of 14 economists.

Stronger-than-expected growth may stoke optimism that shipments to China and other emerging markets will cushion Asia's export-dependent economies against a slowdown in demand from the U.S. and Europe. Japan and South Korea also reported expansions in the fourth quarter that beat economists' estimates.

``Exports will continue to be the driving force in 2008,'' said Cheng Cheng-mount, chief economist at Citibank Taiwan Ltd. in Taipei.

The outcome marked a 18th consecutive quarter of growth in Asia's fifth-largest economy. Overseas shipments are equivalent to about 50 percent of Taiwan's GDP.

Taiwan Semiconductor Manufacturing Co., the world's largest custom-chip maker, is among exporters posting increased sales.

Other economies in the Asian region are reporting resilient demand even as the U.S. slows. Japan's export growth quickened in January as rising sales of cars and steel to China and Russia made up for falling U.S. shipments, the nation's Finance Ministry reported today.

Emerging Markets

The International Monetary Fund last month forecast emerging economies will expand 6.9 percent in 2008, compared with 1.5 percent growth in the U.S. China will expand 10 percent.

Taiwan's GDP report was released after the close of trading on the stock exchange. The Taiex index rose 2.4 percent today.

The stock index has dropped almost 5 percent this year on concern the U.S. economic slump will damp global growth, curbing sales for the island's exporters.

The government today lowered its forecast for the economy's expansion in 2008. Standard Chartered Bank Plc, Goldman Sachs Group Inc. and UBS AG all cut their growth estimates last month.

Taiwan's economy will grow 4.32 percent this year, lower than November's estimate of 4.53 percent, the government said. The economy expanded 5.7 percent in 2007.

``China's rising income is helping lift demand'' for Taiwan products, said Lucas Lee, an economist at Mega Securities Co. in Taipei. Still, ``the trade contribution in the first quarter has apparently declined, with the U.S. slowdown being a factor.''

Exports Surge

Exports climbed 12.9 percent in the fourth quarter from a year earlier, the biggest gain since the first quarter of 2006, today's report showed.

The contribution to Taiwan's fourth-quarter growth from net exports increased to 5.3 percentage points compared with 3.3 points in the third quarter.

Taiwan's exports to China, the world's fastest growing major economy, have helped compensate for the U.S. slowdown. There was a 12.6 percent increase in goods bound for China and Hong Kong combined in 2007. Shipments to the U.S. dropped 0.9 percent last year.

China, which regards Taiwan as one of its provinces, is increasing trade and investment links with the island in spite of a ban on direct transport across the 100-mile Taiwan Strait that separates them.

Taiwan Semi posted its first profit gain in five quarters on higher sales of products used in mobile phones and computers.

``Mainland China is growing very quickly,'' Chief Executive Officer Rick Tsai told reporters on Jan. 31.

U.S. Fallout

``We're still assessing the full impact of the subprime crisis and the economic slowdown,'' Tsai said. ``But if you look at GDP per capita in the U.S. compared with Europe or Japan, it's still very high, so spending power is still very high.''

Chi Mei Optoelectronics Corp., Taiwan's second-biggest maker of liquid-crystal displays, plans to invest an additional $131 million in its three China units to tap rising demand for slim screens used in LCD televisions and mobile phones.

Taiwan's private consumption climbed 2.2 percent in the fourth quarter from a year earlier, slower than the third quarter's 3.6 percent increase, today's report showed. Corporate investment fell 2.4 percent in the fourth quarter.

The government said it expects private consumption to rise 2.9 percent in 2008, the biggest gain in four years, as record cash dividends paid by listed companies buoy spending.

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China needs up to $5 billion to repair power lines, Bloomberg said.

State Grid Corp. of China, the bigger of the country's two electricity distributors, said it needs 39 billion yuan ($5 billion) to restore power links after heavy snowstorms damaged transmission lines.

The Beijing-based company had a ``direct economic loss'' of 10.5 billion yuan after the worst snowstorms in five decades disrupted power networks, it said in an e-mailed statement today.

China shut 7 percent of its coal-fired power plants last month as snowstorms hampered transportation. The government last week ordered authorities to restore all power grids by the end of March after the ``extremely bad weather'' caused damage in 21 provinces. State Grid's spending to repair networks is in addition to an original 2008 budget of 253.2 billion yuan.

``The snowstorm has caused severe losses to State Grid, and we face huge difficulties to restore power lines in such a short time,'' President Liu Zhenya said in the statement.

China's worst snowstorms since 1954 hit the southern provinces of Guangdong, Hunan, Guizhou and Jiangxi where sub- zero temperatures are rare. Millions of people were left without electricity and water, while road, rail and air routes were closed as an estimated 200 million migrant workers headed home for the New Year holidays that ended Feb. 12.

Ninety-five percent of people affected by power cuts had had their supplies switched back on by Feb. 14, State Grid said in today's statement.

State Grid supplies electricity to more than 1 billion people through a network that covers 88 percent of China's territory.

Bloomberg

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Bloomberg's report about China's inflation in 11 years:

China's inflation accelerated to the quickest pace in more than 11 years after the worst snowstorms in half a century disrupted food supplies.

Consumer prices rose 7.1 percent in January from a year earlier, the statistics bureau said today, after gaining 6.5 percent in December. That was more than the 7 percent median estimate of 23 economists surveyed by Bloomberg News.

Accelerating inflation adds to evidence the world's fastest-growing major economy is at risk of overheating after the trade surplus rose more than forecast and money supply grew at the quickest pace in 20 months. Interest-rate increases risk triggering a sudden slowdown as U.S. demand for exports weakens and the blizzards curb first-quarter production.

``The economy faces a serious short-term inflationary threat,'' said Stephen Green, senior economist at Standard Chartered Bank Plc in Shanghai. ``The central bank will have to move on rates before too long.''

The yuan traded at 7.1540 versus the dollar at 10:35 a.m. in Shanghai from 7.1544 before the data. The yield on a two-year bond didn't change.

Food prices jumped 18 percent in January from a year earlier and non-food prices rose 1.5 percent. Pork soared 59 percent, edible oil 37 percent and vegetables 14 percent. Those increases add to the risk of social unrest in a nation where 300 million people live in poverty, according to the World Bank.

Inflation Tools

The impact from the snowstorm's disruptions may be more pronounced in February's data because of the extra eating associated with this month's Lunar New Year celebrations.

Central banks across Asia face the choice of tackling slowing growth or rising inflation. Lehman Brothers Holdings Inc. last week cut its forecast for 2008 growth in the region, excluding Japan, to 7.3 percent from 7.6 percent and raised its inflation estimate to 4.6 percent from 4.2 percent.

``China's central bank has relaxed monetary policy a bit but it will be forced to tighten again because inflation will go higher and outweigh concerns on economic growth,'' said Ma Jun, chief China economist at Deutsche Bank AG in Hong Kong. ``We are looking for two more interest-rate increases this year.''

China's economy, the world's fourth largest, may grow 10 percent this year, according to the International Monetary Fund, down from 11.4 percent in 2007, as export growth weakens.

The financial system is flooded with cash from record trade surpluses, threatening to stoke inflation that has soared since last year on food and fuel. The surplus jumped 23 percent in January from a year earlier to $19.5 billion, even as the U.S. appetite for Chinese goods weakened. Money supply rose 18.9 percent.

Shuttered Factories

Snowstorms from mid-January closed factories and boosted prices by destroying crops and disrupting deliveries.

Accelerating producer prices show pressure for inflation to stay high. Producer prices, the cost of goods as they leave the factory, jumped 6.1 percent in January, the biggest gain in more than three years, on oil and raw materials.

Currency gains and curbs on bank lending may be favored this year as tools to curb inflation, according to Sun Mingchun, an economist at Lehman Brothers in Hong Kong. The government has also imposed food and energy price controls.

So far, the government is letting the yuan gain at a faster pace versus the dollar than it did last year. The currency has climbed nearly 2 percent after rising 7 percent in 2007. A stronger currency would push up the price of exports and make imports cheaper.

Economists expect the government to keep raising banks' reserve requirements, a Bloomberg News survey last month showed. The central bank has ordered lenders to set aside more deposits as reserves on 11 occasions since the start of last year, pushing the ratio to 15 percent, the highest ever.

Economists are split on whether interest rates will rise this year after six increases in 2007, the survey showed.

January's consumer prices climbed 1.2 percent from December.

[Bloomberg]

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Feb. 19, Bloomberg claimed that Oil-Rig Maker struggling for a big sum of money in IPO:

Honghua Group Ltd., the world's second-largest maker of land oil rigs, may raise as much as HK$3.75 billion ($481 million) in a Hong Kong initial public offering, said two people familiar with the sale.

Chengdu, southwestern China-based Honghua is offering about 833.4 million new shares at HK$3.16 to HK$4.50 each, said the people who declined to be identified because the information is not public yet. The sale of the 25 percent stake values the company at as much as $1.9 billion, or more than 17 times its estimated profit this year, they added.

About 60 companies pulled or delayed IPOs worldwide as stocks slid this year amid mounting financial industry losses linked to U.S. mortgages to people with poor credit. At least 10 of the 90 equity indexes tracked by Bloomberg fell more than 15 percent this year, according to data compiled by Bloomberg.

New Media Group Holdings Ltd.'s HK$102 million offering is the only first-time public stock sale that was completed in Hong Kong this year, the slowest start in the city's IPO market in eight years, the data shows.

``The liquidity crunch is severe and no doubt investors prefer cash to risky assets now,'' said Winson Fong, who manages about $600 million of China stocks for SG Asset Management in Hong Kong.

Honghua is the first company to start taking orders for a Hong Kong IPO after the Chinese New Year on Feb. 7. It and China Railway Construction Corp. could help revive the city's stock fundraising scene, Fong said.

Right Industries

``Both are in the right sectors, with minimal policy risks,'' he added. ``Global oil exploration investments and domestic Chinese railway investments are the least affected areas under the current environment.''

China Railway Construction is expected to set price ranges later this week for Shanghai and Hong Kong share sales that may collect as much as $5.6 billion, said two people familiar with the sale.

Credit Suisse Group and Morgan Stanley are arranging the public offering of Honghua, which will be 5 percent owned by buyout funds managed by the Carlyle Group after the IPO, according to a draft share sale document.

Liu Gangqiang, Chengdu-based board secretary for Honghua, is traveling and couldn't be reached in his office. Godwin Chellam, a Credit Suisse spokesman in Hong Kong, and Nick Footitt, a Hong Kong-based Morgan Stanley spokesman, declined to comment.

[Bloomberg]

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Feb. 5 (Bloomberg) -- The estimated $7.5 billion economic loss from China's devastating snowstorms -- not to mention the loss of at least 60 lives -- underscores the need for weather derivatives in China.

Encouragement of (or, for that matter, tolerance for) financial innovation may have fallen to a new low following the unraveling of securities tied to U.S. subprime mortgages. Which emerging-market central banker can now be blamed for taking a hawkish stance on credit derivatives?

However, as the scale of devastation in China has demonstrated, the case for using modern finance to deal with the consequences of adverse weather remains strong, especially with scientists warning us of the link between climate change and a dramatic increase in the frequency of disasters.

Asia has so far been a minor player in the 10-year-old, $19 billion annual trade in contracts linked to climatic conditions such as temperatures and precipitation. The Asian market is dominated by Japan, which even has products linked to typhoons. In October 2004, the Taiwanese monetary authority allowed banks to trade weather options.

China, too, is very susceptible to volatile weather, as is India, the other emerging Asian economic powerhouse.

There was intense speculation last week over British Broadcasting Corp.'s forecast that the temperature in New Delhi would fall to zero degrees Celsius on Feb. 1. Finally, it didn't. Still, this year's bitingly cold winter is reported to have caused significant losses to farmers in northern India.

China's Risk

Speculators would have loved to have been able to take a view, giving businesses an opportunity to hedge their risk. Thanks to the meticulousness of the British colonial administration in record-keeping, India also has much more robust long-range climate data than China.

But China's need is greater. Its economy is 2.5 times bigger than India's, with businesses ranging from utilities and transportation companies to retail stores and insurers carrying very large exposures to inclement weather.

Public order, too, could come under strain as became evident this week. Millions of migrant workers in industrial hubs such as Shenzhen go to their villages during the Lunar New Year holidays, which have been ruined this year. Frustrated and angry, these workers are stranded. A woman was killed in a stampede at Guangzhou railway station.

It was the second death as a result of mass overcrowding at the platforms.

Black Swan

The Chinese authorities should make the Dalian Commodity Exchange quickly implement the plan that it announced in mid- 2006 to start trading weather futures. The government should even help generate interest in the market by asking China Investment Corp., the $200 billion sovereign wealth fund, to wager a small sum on behalf of the government.

The authorities should impose only one restriction on the fund manager. The bet should be on the occurrence of what former options trader Nassim Nicholas Taleb calls the ``negative Black Swan,'' a relatively rare, unfavorable outcome that -- like this year's snows, the most in 50 years -- may have a large impact.

And no, there won't be a firing squad waiting for the investment manager if the disaster never materializes. In fact, the bet should be small enough for the government to happily lose the money year after year.

The occasional winnings should be transferred to the government so it can repair the damage to public property from bad weather and to ease the people's suffering.

Risk Diversification

As word goes out that the wealth fund is expecting to see, say, temperatures that are substantially higher or lower than normal, there won't be a dearth of speculators willing to take the opposite bet.

Banks will lobby to play, too. But their participation should be carefully regulated.

They should, however, be allowed to hedge their own exposure to weather. The standard contracts would trade on exchanges, while companies that need more-complex solutions would find them in over-the-counter structured products where the counterparty risk is borne by non-bank companies.

Chinese equity investors stung by losses this year will be glad to have an asset class that offers them real risk diversification as the weather market probably won't get blown away either by a U.S. recession or China's inflation.

Commentary by Andy Mukherjee, Bloomberg

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Olympic Games offer unique path to China markets

When the world's greatest sporting and marketing event crosses paths with one of the best economic growth stories ever, the result could be the opportunity of a lifetime for corporate sponsors of the Beijing Olympics.

Companies are stepping up, with an eye on China's increasingly prosperous consumers.
US healthcare company Johnson & Johnson, sponsoring an Olympic Games for the first time as a global partner, ran a contest to reward acts of caring and community service with free trips to the Olympics in August. Owen Rankin, the company's vice president of Olympic sponsorship, said it was drawn by the size of China's market. "This is the right time to do it," said Rankin.

The Beijing Olympics and the Winter Olympics in Turin, Italy, in 2006 have already brought in about $4.4 billion in broadcasting rights and sponsorship deals alone. This figure is greater than the total revenues generated by the 2002 Winter Olympics in Salt Lake City and the 2004 Summer Games in Athens.

"This will be the most successful marketing program ever in the Games," said Christopher Renner, president of sporting consultant Helios Partners in China. "No question about it."

German sports shoe maker Adidas, one of 11 Cooperative Partners of the Beijing Games, will pay $100 million to use the Olympics logo in China.

There are 12 global sponsors, who have marketing rights to use the Olympics logo globally, and 11 China sponsors, who have rights to use the Olympics logo in China.

While Adidas is paying a hefty sum for its sponsorship, some companies pay in kind.

Atos Origin, a global sponsor building the computer network for the Olympics, is believed to be paying a combination of cash and services for its sponsorship deal. The International Olympics Committee does not release details on how much sponsors pay.

Lenovo Group, China's top PC maker and the only Chinese company to be a global partner of the Beijing Games, aims to show off its technological power in computer products and build its brand globally much as Samsung did at its home Olympics in Seoul in 1988.

Lenovo designed the high-tech Olympic torch, which is constructed to burn brightly even on Mount Everest where it is scheduled to pass as part of the 137,000-km relay route around the world.

China Mobile, the world's biggest mobile carrier, Bank of China, the country's largest foreign exchange bank, and Sinopec Corp, Asia's top refiner are all sponsors for the Beijing Games.

Global branding machines such as McDonald's Corp and Coca Cola Co -- which is celebrating its 80th year of continuous Olympic sponsorship -- will be out in force as expected.

But Adidas' rival Nike Inc has a policy of not being an official sponsor. Instead it supports individual athletes and sports federations, some of which also receive Olympic subsidies.

"Official sponsorship is for the world of advertisers," Nike said in an email. "When the Games begin, you will see athletes competing and winning in Nike products."

The Games' organizers have tried to bring the Olympics closer to more Chinese by scheduling events outside of the capital, an appealing prospect for merchants eyeing the country's third- and-fourth-tier cities.

Hong Kong will host the equestrian events, and Qingdao on the east coast will be the site of the rowing events. In addition, qualifying soccer matches will be played in other locations around the country.

China's size, and the money it is spending on the game, is making the Beijing Olympics particularly attractive to sponsors, after the last two Summer Games were held in small markets -- Australia and Greece.

Sponsorship is also having a bigger impact on the Chinese consumer, than it would in other countries that are more jaded to advertising.

"If you say I support your Chinese athletes in their quest for gold and glory, that means a hell of a lot more here," said Christopher Renner, the sports consultant.

In addition to its huge market, China's attraction also lies in the nascent, or nonexistent, brand loyalty of its consumers, a holy grail for advertisers.

"We will see most of the benefits over the next generation," said J&J's Rankin. "After the Games we will not pack up and go home."

By chinadaily agencies

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February 15, CNN Money reported that:

International Monetary Fund chief urges China to loosen valuations of yuan against the dollar in effort to address global imbalances.

BEIJING (AP) -- The managing director of the International Monetary Fund said Friday he is urging Chinese leaders to ease exchange rate controls to address global financial imbalances and their own economic challenges.

Slower U.S. economic growth should affect China but the IMF still expects the economy to expand about 10% this year, said Dominique Strauss-Kahn. He met Thursday with Premier Wen Jiabao and other Chinese leaders.

"What I am working at is trying to explain to Chinese authorities... that it's in their own interests to have more flexible exchange rates," Strauss-Kahn said. He said that would "help to address both China's economic challenges and global imbalances."

Beijing's trading partners complain that China's currency, the yuan, is kept undervalued, giving an unfair price advantage to Chinese exporters and adding to the country's swollen trade surplus.

Strauss-Kahn declined to say whether the yuan exchange rate is misaligned but said it is moving in the right direction. Beijing revalued the yuan by about 2% against the U.S. dollar in July 2005 and has allowed it to rise by more than 13% since then. But the United States and others want faster action, and some American lawmakers are calling for punitive steps if Beijing fails to act.

The multibillion-dollar influx of export revenues also is causing Chinese domestic economic problems, straining the central bank's ability to contain pressure for prices to rise. The bank drains billions of dollars a month from the economy through bond sales and has piled up $1.53 trillion in foreign reserves.

Strauss-Kahn's 10% growth estimate was in line with an IMF forecast issued last month. China's economy expanded by 11.4% in 2007 but economists expect a slight slowdown this year due to lower U.S. demand for exports and Chinese government efforts to cool a boom in credit and investment. Forecasts for 2008 range from 9.5% to 11%.

Strauss-Kahn said he stressed to Chinese planners that a more flexible exchange rate could help achieve their goal of reducing reliance on exports by encouraging China's own consumers to spend more.

"More domestic demand growth will be what China needs, not export-driven growth," he said.

Also Friday, the IMF said it will sign an agreement with Beijing to cooperate in development efforts in low-income countries. China has been expanding such cooperation with the IMF and other international bodies as its economic and political profile rises on the world stage.

1st annual trade gap drop in 6 years>>

WTO condemns China in auto parts dispute>>

[CNN Money]

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HONG KONG (XFN-ASIA) - Share prices closed sharply lower, falling for the fourth straight session as investors remained cautious ahead of key US economic data and results announcements from financial majors such as Citigroup. (NYSE:C)

The market opened higher after a rebound on Wall Street overnight, but quickly lost steam as worries over the US economy resurfaced.

The market opened higher after a rebound on Wall Street overnight, but quickly lost steam as worries over the US economy resurfaced.

HSBC was down after Goldman Sachs (NYSE:GS) cut its target price on the stock, citing possible US recession and continued subprime-loans related problems, while shipping firms tumbled amid worries over a drop in demand in the event of a US economic downturn.

China Mobile fell over 4 pct after its parent ended talks with Apple Inc over bringing the iPhone to China, while HKEx also pressured the key index as it extended yesterday's 6 pct slide.

Oil stocks turned lower after early gains, with investors still fretting about China's fuel price freeze.

Among gainers, Lenovo (OOTC:LNVGY) was up after IBM (NYSE:IBM) announced better-than-expected preliminary results for the fourth quarter.

The Hang Seng index closed down 630.35 points or 2.38 pct at 25,837.78, off a low of 25,823.5 and high of 26,800.52.

[CNN]

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Feb. 13, Time:

Both the U.S. and China have announced intentions of returning humans to the moon by 2020 at the earliest. But right now, the two countries are already in the early stages of a new space race that appears to have some of the heat and skullduggery of the one between Washington and Moscow during the Cold War, when space was a proxy battleground for geopolitical dominance.

On Monday, the U.S. Department of Justice announced the indictment of a former Boeing engineer for passing sensitive information about the U.S. space program to the Chinese government. According to the indictment, Dongfan Chung, a 72-year-old California man who worked for Boeing until September 2006, gave China documents relating to military aircraft and rocket technology, as well as technical information about the U.S. Space Shuttle.

U.S. officials say the Chung case is part of a pattern of escalating espionage by China. "We're seeing this on all fronts," says Dean Boyd, a spokesman for the Justice Department's National Security Division. Since October 2006, the Justice Department has prosecuted more than a dozen high-profile cases involving China, including industrial espionage and the illegal export of military technology. In an unrelated case also announced Monday, a Defense Department employee was arrested in Virginia for passing classified information about the sale of U.S. military technology to Taiwan to alleged Chinese agents.

The scale of Chung's alleged espionage is startling. According to the Justice Department, Chung may have been providing trade secrets to Chinese aerospace companies and government agents since 1979, when he was an engineer at Rockwell International, a company acquired by Boeing in 1996. He worked for Boeing until his retirement in March 2003, and continued to work as a contractor for the company until September 2006. The indictment alleges that Chung gave China documents relating to the B-1 bomber and the Delta IV rocket, which is used to lift heavy payloads into space, as well as information on an advanced antenna array intended for the Space Shuttle.

According to the indictment, Chinese officials gave Chung a shopping list of information to acquire for them. In one instance, Chung said that he would send documents through an official in China's San Francisco consulate. In another, a Chinese contact suggested he route information through a man named Chi Mak, a naturalized U.S. citizen who also worked as an engineer in California and who was convicted last year of attempting to provide China with information on an advanced naval propulsion system.

The indictment charges that Chung was a willing participant. "Having been a Chinese compatriot for over thirty years and being proud of the achievements by the people's efforts for the motherland, I am regretful for not contributing anything," Chung allegedly wrote in an undated letter to one of his mainland contacts.

China's manned space program, codenamed Project 921, is indeed a matter of considerable national pride for a country that sees space exploration as confirmation of superpower status. China is pouring substantial resources into space research, according to Dean Cheng, an Asian affairs specialist at the U.S.-based Center for Naval Analysis. With a budget estimated at up to $2 billion a year, China's space program is roughly comparable to Japan's. Later this year, China plans to launch its third manned space mission — a prelude to a possible lunar foray by 2024. With U.S. President George W. Bush vowing to return American astronauts to the moon by 2020, some competition is perhaps inevitable.

China's space program lags far behind that of the U.S., of course. "They're basically recreating the Apollo missions 50 years on," says Joan Johnson-Freese, chair of the National Security Studies Department at the U.S. Naval War College and an expert on China's space development. "It's a tortoise and hare race. They're happy plodding along slowly and creating this perception of a space race."

But there may be more at stake than national honor. Some analysts say that China's attempts to access American space technology are less about boosting its space program than upgrading its military. China is already focusing on space as a potential battlefield. A recent Pentagon estimate of China's military capabilities said that China is investing heavily in anti-satellite weaponry. In January 2007, China demonstrated that it was able to destroy orbiting satellites when it brought down one its own weather satellites with a missile.

China clearly recognizes the significance of this capability. In 2005, a Chinese military officer wrote in the book "Joint Space War Campaigns", put out by the National Defense University, that a "shock and awe strike" on satellites "will shake the structure of the opponent's operations system of organization and will create huge psychological impact on the opponent's policymakers." Such a strike could hypothetically allow China to counterbalance technologically superior U.S. forces, which rely heavily on satellites for battlefield data. China is still decades away from challenging the U.S. in space. But U.S. officials worry espionage may be bringing China a little closer to doing so here on Earth.

Time

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