Rare protest in Beijing appears to involve disgruntled soldiers

More than 1,000 protesters gathered in front of China’s defence ministry on Tuesday, the latest apparent demonstration by soldiers as the world’s largest standing military modernises and downsizes.

The protesters stood for several hours in front of the Bayi building in central Beijing, home of the Ministry of National Defence. Many wore green fatigues bearing the hammer-and-sickle logo of the Communist Party.

The purpose of their demonstration was unclear. Protesters declined to be interviewed and censors blocked searches on social media about retired soldiers or the defence ministry.

China’s PLA reforms slash political posts as part of a 300,000 cut in non-combat personnel by 2017

Hundreds of police and plainclothes security officers surrounded the protesters, hemming them in with buses and police vehicles.

While Chinese authorities routinely suppress discussions about the military and soldiers’ issues, one human-rights activist, Huang Qi, said that veterans had staged more than 50 protests this year alone. However, demonstrations on such a large scale are extremely rare in the centre of the heavily policed capital.

Two demonstrators said they were veterans who wanted the government to address military pensions, but they did not want to discuss the issue with foreign media. The protesters declined to give their names.

Liu Feiyue, editor of the website Minsheng Guancha, which monitors civil rights issues, said he was told by retired soldiers that other ex-soldiers were present.

“They protested because they don’t have a job now after serving a long period of time in the army, some for a dozen years,” Liu said. “They are asking for employment.”

China’s armed forces are undergoing a large-scale modernisation to become a nimble organisation that can better handle conflicts at sea and in the air.

Those measures have gained pace as China builds up its presence in the South China and East China seas amid territorial disputes.

Setbacks at hands of war-tested neighbour inspired PLA reform

President Xi Jinping announced last year that the 2.3-million-strong People’s Liberation Army would cut 300,000 personnel but little has been said about the cost or where the surplus troops would go.

Veterans have staged sit-ins and protests for several years over low or absent pensions and an inability to find work outside the military.

It wasn’t clear if anyone had been arrested on Tuesday. Local police did not respond to faxed questions, and no one answered the phone at the press office of the defence ministry.

Chinese couple jailed for selling handicapped baby grandson left in their care

A farming couple in eastern China were jailed for up to 51/2 years on Saturday for selling their grandson, the Yangtze Evening News reports.

In November, 2013, when the boy was four months old, Xu Daqiang and his wife Wang Xiaoying of Xuzhou, Jiangsu, decided to sell him to a family in a neighbouring county, the Tongshan district court heard.

Earlier that year, their son brought home a young pregnant woman, whom he said was his girlfriend, and he left her in the care of Xu and Wang.

The woman died giving birth, and the boy was born with defects that required costly medical treatment. Xu and Wang were unwilling to raise the child.

With the help of middlemen, they sold the boy in Pei county for 60,000 yuan (HK$70,000).

Xu received a five-year jail term and Wang received six months more, partly because she refused to admit that she had committed a crime, while evidence including witness accounts confirmed her involvement.

The child’s foster parents received suspended sentences because they genuinely treated the child as a “treasure” and willingly assisted the police investigation, the court said.

The transaction came to light in 2014 when Xu filed to divorce Wang and, to support his petition, told the authorities that Wang had sold his grandson.

Deadly drug used by Russian forces in 2002 hostage crisis available for worldwide sale online

It’s one of the strongest opioids in circulation, so deadly an amount smaller than a poppy seed can kill a person. Until July, when drug users in the United States started overdosing on carfentanil, the substance was best known for knocking out moose and elephants – or as a chemical weapon.

Despite the dangers, Chinese vendors offer to sell carfentanil openly online, for worldwide export, no questions asked, an investigation has found. The investigation identified 12 Chinese businesses that said they would export carfentanil to the United States, Canada, Britain, France, Germany, Belgium and Australia for as little as US$2,750 a kilogram.

China fast becoming Europe’s drug wholesaler, report warns

Carfentanil burst into view this summer as the latest scourge in an epidemic of opioid abuse that has killed tens of thousands in the US alone. In China, the top global source of synthetic drugs, carfentanil is not a controlled substance. The US government is pressing China to blacklist it, but Beijing has yet to act.

“We can supply carfentanil . for sure,” a saleswoman from Jilin Tely Import and Export Co. wrote in broken English in a September email. “And it’s one of our hot sales product.”

The investigation did not include ordering drugs and the products offered were not tested to find out if they were genuine.

China’s Ministry of Public Security declined multiple requests for comment.

For decades before being discovered by drug dealers, carfentanil and substances like it were researched as chemical weapons by the US, Britain, Russia, Israel, China, the Czech Republic and India, according to publicly available documents. They are banned from the battlefield under the Chemical Weapons Convention.

“It’s a weapon,” said Andrew Weber, US assistant secretary of defence for nuclear, chemical and biological defence programmes from 2009 to 2014. “Companies shouldn’t be just sending it to anybody.”

Carfentanil is 100 times more powerful than fentanyl, a related drug that is itself up to 50 times stronger than heroin.

Forms of fentanyl are suspected in an unsuccessful 1997 attempt by Mossad agents to kill a Hamas leader in Jordan, and were used to lethal effect by Russian forces against Chechen separatists who took hundreds of hostages at a Moscow theatre in 2002.

Drug used to sedate elephants is the new overdose threat on US streets, and it’s 100 times as potent as fentanyl

The theatre siege prompted the US to develop strategies to counter carfentanil’s potential use as a tool of war or terrorism, according to Weber. “Countries that we are concerned about were interested in using it for offensive purposes,” he said. “We are also concerned that groups like ISIS could order it commercially.”

Later, dealers discovered that vast profits could be made by cutting fentanyl into illicit drugs. In fiscal year 2014, US authorities seized just 3.7kg of fentanyl. This fiscal year, through mid-July alone, they seized 134.1kg, Customs and Border Protection data shows. Overdose rates have been skyrocketing.

The DEA has “shared intelligence and scientific data” with China about controlling carfentanil, according to Russell Baer, a DEA special agent in Washington.

“I know China is looking at it very closely,” he said. Delegations of top Chinese and US drug enforcement officials met in August and September to discuss opioids, but failed to produce a substantive announcement on carfentanil.

China is not blind to the key role its chemists play in the opioid supply chain. Most synthetic drugs that end up in the US come from China, according to the DEA.

China already has controlled fentanyl and 18 related compounds but despite periodic crackdowns, people willing to skirt the law are easy to find in China’s vast, freewheeling chemicals industry. Vendors said they lied on customs forms, guaranteed delivery to countries where carfentanil is banned and volunteered strategic advice on sneaking packages past law enforcement.

“The government should impose very serious limits, but in reality in China it’s so difficult to control because if I produce 1 or 2kg, how will anyone know?” said Xu Liqun, president of Hangzhou Reward Technology, which offered to produce carfentanil to order. “They cannot control you – so many products, so many labs.”

Last October, China added 116 synthetic drugs to its controlled substances list. Acetylfentanyl, a weak fentanyl variant, was among them. Six months later, monthly seizures of acetylfentanyl in the U.S. were down 60 per cent, DEA data obtained by the AP shows.

Legal drug 50 times stronger than heroin behind an ‘unprecedented’ overdose deaths in the US

Several vendors contacted in September were willing to export carfentanil but refused to provide the far less potent acetylfentanyl.

Seven companies, however, offered to sell acetylfentanyl despite the ban. Five offered fentanyl and two offered alpha-PVP, commonly known as flakka, which are also controlled substances in China.

Several vendors recommended shipping by EMS, the express mail service of state-owned China Postal Express & Logistics Co.

“EMS is a little slower than Fedex or DHL but very safe, with more than a 99 per cent pass rate,” a Yuntu Chemical representative wrote in an email.

EMS declined to comment. A Yuntu representative hung up the phone when contacted by the AP and did not reply to emails. Soon after, the company’s website vanished.

Carfentanil used in 2002 Moscow theatre hostage crisis

In 2002, Russian Special Forces turned to carfentanil after a three-day stand-off with Chechen separatists, who had taken more than 800 people hostage in a Moscow theatre. They used an aerosol version of carfentanil, along with the less potent remifentanil, sending it through air vents, according to a paper by British scientists who tested clothing and urine samples from three survivors.

The strategy worked, but more than 120 hostages died from the effects of the chemicals.

It was such a horror just to look at it. Nobody was moving. They put the people there like dolls.

Olga Dolotova

Olga Dolotova, an engineer who survived the attack, remembers seeing white plumes descending before she lost consciousness. When she awoke, she found herself on a bus packed with bodies. “It was such a horror just to look at it,” she said. “Nobody was moving. They put the people there like dolls.”

The theatre siege raised concerns about carfentanil as a tool of war or terrorism, and prompted the US to develop strategies to counter its use, according to Weber, the former Defence Department chemical weapons expert.

The US, Russia, China, Israel, the Czech Republic, Britain and India are among the countries that have assessed carfentanil and related compounds for offensive or defensive applications, according to publicly available documents and academic studies.

“Countries that we are concerned about were interested in using it for offensive purposes,” Weber said. “We are also concerned that groups like ISIS could order it commercially.”

Weber considered a range of alarming scenarios, including the use of carfentanil to knock out and take troops hostage, or to kill civilians in a closed environment like a train station. He added that it is important to raise awareness about the threat from carfentanil trafficking.

“Shining sunlight on this black market activity should encourage Chinese authorities to shut it down,” he said.

Fentanyls also have been described as ideal tools for assassination — lethal and metabolized quickly so they leave little trace.

Agents from Israel’s secret intelligence service, Mossad, sprayed a substance believed to be a fentanyl analog into the ear of Hamas leader Khaled Mashaal as he walked down a street in Amman, Jordan, in a botched 1997 assassination attempt.

The US began researching fentanyl as an incapacitating agent in the 1960s and, by the 1980s, government scientists were experimenting with aerosolied carfentanil on primates, according to Neil Davison, the author of ‘Non-Lethal’ Weapons, who now works at the International Committee of the Red Cross.

The US says it is no longer developing such chemical agents. But two state-owned companies in China have marketed “narcosis” dart guns, according to Michael Crowley, project coordinator at the University of Bradford’s Non-Lethal Weapons Research Project. He said the ammunition “might very well be fentanyl or an analog of fentanyl,” adding that in the 1990s, the US explored similar guns loaded with a form of fentanyl.

Among the problems with fentanyls is that the line between life and death is too thin.

“There is no incapacitating chemical agent that can be used in a tactical situation without extreme risk of injury or death to everybody in the room,” Crowley said.

Unprecedented cooperation from China

DEA officials say they are getting unprecedented cooperation from China in the fight against fentanyls, noting unusually deep information sharing in what can be a fractious bilateral relationship.

The DEA has “shared intelligence and scientific data” with Chinese authorities about controlling carfentanil, according to Russell Baer, a DEA special agent in Washington.

“I know China is looking at it very closely,” he said. “That’s been the subject of discussion in some of these high-level meetings.”

Last October, China added 116 synthetic drugs to its controlled substances list, which had a profound impact on global narcotics supply chains. Acetylfentanyl, for example, is a weaker cousin of carfentanil that China included on last year’s list of restricted substances. Six months later, monthly seizures of acetylfentanyl in the US had plummeted by 60 per cent, DEA data shows.

Several vendors contacted in September were willing to export carfentanil, but refused to ship the far less potent acetylfentanyl. A Jilin Tely Import & Export Co. saleswoman offered carfentanil for $3,800 a kilogram, but wrote, with an apologetic happy face, that she couldn’t ship acetylfentanyl because it “is regulated by the government now.”

Contacted, the company said it had never shipped carfentanil to North America and had offered to sell it just “to attract the customer.”

Seven companies offered to sell acetylfentanyl despite the ban, however. Five offered fentanyl and two offered alpha-PVP, commonly known as flakka, which also are controlled substances in China.

China records big rise in number of addicts taking synthetic drugs

Liu Feng, deputy general manager of Zhejiang Haiqiang Chemical Co., said his company sent a large order of carfentanil to India last year and has sold smaller amounts to trading companies in Shanghai. He said they also had put false labels on packages for customers.

“Everyone in the industry knows it,” he said. “But we just do not say it.”

Another company went out of its way to recommend acetylfentanyl. “Our customer feedback that the effect is also very good,” Wonder Synthesis emailed in broken English. The company says it has warehouses in the US, Europe, Russia and India.

Wonder Synthesis did not respond to emails seeking comment and the phone number provided did not work. Its published address in Beijing leads to a beauty parlour.

The problem with carfentanil is not limited to the US. In late June, Canadian authorities seized a kilogram of carfentanil shipped from China in a box labelled printer accessories.

The powder contained 50 million lethal doses, according to the Canada Border Services Agency – more than enough to wipe out the entire population of the country. It was hidden inside bright blue cartridges labelled as ink for HP LaserJet printers. “Keep out of reach of children,” read the labels, in Chinese.

Royal Canadian Mounted Police officers in Vancouver sealed themselves inside hazmat suits, binding their wrists, ankles, zippers, and face masks with fat yellow tape. With large oxygen containers on their backs and chunky respirators, it looked as if they were preparing for a trip to the moon.

“Cocaine or heroin, we know what the purpose is,” said Allan Lai, an officer-in-charge at the Royal Canadian Mounted Police in Calgary, who is helping oversee the criminal investigation. “With respect to carfentanil, we don’t know why a substance of that potency is coming into our country.”

In August and September, high-level delegations of Chinese and US drug enforcement authorities met to discuss joint efforts on synthetic opioids, but neither meeting produced any substantive announcement on carfentanil.

Nonetheless, some Chinese vendors are already bracing for a new wave of controls. In an email, Wonder Synthesis wrote, “If you need any chems, just hurry to buy.”

Beijing ‘unshakeable’ on ‘one China’ principle as Taiwan’s Tsai Ing-wen refuses to bow to pressure

The mainland is determined to safeguard national sovereignty and the “one China” principle claimed a Beijing official after Taiwan’s President Tsai Ing-wen said on Wednesday that the island would not bow to pressure from the mainland.

Taiwan will neither give in to pressure nor resume confrontation with Beijing, says Tsai Ing-wen

An Fengshan, a spokesman for the mainland Taiwan Affairs Office – responding to Tsai’s comments in an interview with The Wall Street Journal – said that the “1992 consensus” is unshakable.

“Our position is steadfast on opposing any ‘Taiwan independence’ activities,” An said.

Our position is steadfast on opposing any ‘Taiwan independence’ activities. No forces nor anybody should underestimate the resolution of more than 1.3 billion people on the mainland

An Fengshan, a spokesman for the mainland Taiwan Affairs Office

“No forces nor anybody should underestimate the resolution of more than 1.3 billion people on the mainland,” An said.

Relations between mainland and Taiwan have deteriorated since Tsai, of the pro-independence Democratic Progressive Party become the island’s president.

She has refused to acknowledge the “1992 consensus” – a tacit understanding reached between the Chinese Communist Party and Taiwan’s then-ruling Kuomintang leadership that there was one China, although either side was free to interpret what that meant.

Beijing has given a furious response to Tsai, cutting down cross-strait exchanges and snubbing Taiwan’s international presence.

To secure seat at world table, Taiwan pushes past Beijing but tactic seen as risky

Taiwan was denied official participation in a meeting of the International Civil Aviation Organisation – a decision believed to reflect pressure from Beijing.

Tsai told the Journal that the island’s economic ties with the mainland had become increasingly competitive rather than complementary, adding that Taipei would neither budge under political pressure from Beijing nor revert to a confrontational attitude towards it.

“Recently, mainland China seems to have gone back to the old path of suppression and dividing [Taiwan society],” Tsai said.

Alexander Huang Chieh-cheng, a professor of strategic studies at Taiwan’s Tamkang University, said Taiwan was being “choked in its throat” as it was squeezed out of international participation.

“Taiwan’s participation in international health or aviation agency is seen by the Taiwanese people as reasonable pursuit, and should not be politicised,” Huang said.

Trade between Chinese mainland, Taiwan drops 9.8pc year on year in first seven months

Huang said Tsai had remained restrained in her attitude towards Beijing, and that her emphasis that Taiwan would not “revert to its old path of confrontation” was to provide reassurance to the international society, including its ally the US, that Taiwan was not a “trouble maker”.

Hu Benliang, a researcher at the Institute of Taiwan Studies at the Chinese Academy of Social Sciences, said Tsai’s remarks had reflected “inconsistency” in her approach to cross-strait relations.

“Although [Tsai] said she wanted to maintain interaction with the mainland, she would not acknowledge the 1992 consensus, and shirk the responsibility on the mainland,” he said.

“Now, the mainland has an overwhelming advantage over Taiwan and is in control [of Taiwan’s room for international participation].”

Razer starts US$30 million fund to seek out startups in robotics, virtual robotics, e-sports

Razer Inc., which has 20 million gamers worldwide using its controllers, keyboards, high-performance laptops and other paraphernalia for computer games, has launched a US$30 million fund to invest in technology companies, as it looks to add new businesses to its customer base.

Launched in September, the zVentures fund will seek out promising startups in virtual reality, robotics and the Internet of Things, focusing on locations where it already has a presence, such as in China, said co-founder and chief executive Tan Min-Liang. The California-based company will provide businesses with funds, and advice gleaned from its own experience in hardware and software.

“What we would like to do is to find start-ups that can also potentially add value to our customer base, bringing new products and software to our users,” Tan said in an interview with the South China Morning Post. “It’s a bit of a symbiotic relationship where we will be able to help the start-up become successful and at the same time provide them with a user base.”

Razer was founded in 2005 and produces systems, software and hardware for gamers. Earlier this year, the company raised US$75 million in funding from Hangzhou Liaison Interactive Technology, bringing its valuation to a reported US$1.5 billion.

The zVentures fund will make investments ranging from US$100,000 to US$1 million, Tan said, adding that there is no current time frame for the fund.

The fund will focus on startups that develop technology around the Internet of Things , or connected devices, virtual reality, alternate reality, robotics, analytics and e-sports, an area Tan said is a natural fit for the gaming company.

Research firm Juniper predicts VR hardware market will be worth US$50 billion by 2021, up from the expected US$5 billion revenues for this year.

Earlier this year, Razer launched its own VR platform called Open Source Virtual Reality (OSVR) providing a set of open hardware and software designs developed by Razer and its partners to facilitate VR functions.

Competitive gaming, known as e-sports, is drawing interest from investors including the US basketball team the 76ers which bought two e-sports teams. The number of people watching e-sports has grown to 292 million this year, according to e-sports data tracker Newzoo, with revenue hitting US$463 million, up from US$194 million in 2014.

Tan said the company’s expertise in both hardware and software makes it able to assist start-ups developing a wider range of products and to add value as they grow.

He expects to see an increasing number of U.S. start-ups developing hardware, an area that is currently more familiar to Chinese start-ups.

“We’re seeing a lot of start-ups, not just in China, but in Silicon Valley trying to figure out how to make great hardware,” Tan said. “That’s something that we have a huge amount of experience in and we think we can help these start ups by educating them on manufacturing processes.”

Razer’s business is split evenly between the U.S., Europe and Asia, Tan said, adding this will allow it to assist the start-ups it invests in to become global players ‘pretty much overnight’.

Consulate wants action after Chinese university student found dead in US following gunshots

The Chinese government expressed concern on Tuesday about the death of a Syracuse University student from Beijing whose body was found behind an apartment complex near the campus.

Yuan Xiaopeng, 23, was found dead after residents nearby reported hearing gunshots on Friday.

The local sheriff’s office said on Saturday that no suspects had been identified.

Syracuse University, in New York state, said in a statement that Yuan was a junior studying mathematics, and that his death appeared to be an “isolated incident.”

‘Formula for disaster’: Chinese teens jailed for kidnap and torture of fellow ‘parachute kid’

In a statement issued Tuesday, the Chinese consulate in New York said it had received assurances that local authorities “attached great importance” to Yuan’s case.

Officials “also requested that the police ensure that the personal safety and legitimate rights and interests of Chinese students not be infringed,” the statement said.

The consulate called on Syracuse University to assist relatives of Yuan who were going to the United States.

According to Syracuse.com, authorities found Yuan’s car in the parking lot of the complex in DeWitt, a Syracuse suburb.

The vehicle, a black Chevrolet Camaro sports car with the license plate “SWAG PIP,” was seen being hauled away on Friday.

Yuan posted a photo of himself sitting atop the car on Chinese social media site Weibo.

Children of rich Chinese home alone in Canada face challenges

Yuan also posted an August 2015 letter from Syracuse University that indicated he had been removed from the university but allowed to return under disciplinary probation.

The letter did not say why Yuan was on probation, and university officials did not immediately respond to a request for comment on Tuesday.

More than 300,000 Chinese are estimated to be enrolled in American universities.

Wife of suspect in Yunnan mass murder says he had been acting strangely

The wife of a man accused of killing 19 people in the village of Yema, Yunnan said he had been “acting abnormally”, but that she has no clue why her husband would murder anyone.

The suspect, 27-year-old Yang Qingpei, had been eking out a quiet living before the alleged mass murder on September 28, the news portal Caixin.com reported on Monday.

The 19 victims were said to have come from six families, and included a three-year-old toddler and Yang’s parents. The bodies were reportedly found in different locations in the village on September 29.

Yang was arrested in Kunming, the capital of Yunnan, on September 29.

Hard lives and bad deaths: rural murders put spotlight on China’s wealth gap

It is alleged that Yang killed his parents after failing to get money from them on the night of September 28, and then killed 17 people who lived near the crime scene in a gruesome effort to cover his trail.

Yang’s wife, who was not identified, was quoted as saying that he had only been giving her 500 yuan (HK$580) each month for household expenses in the past few months, instead of more than 1,000 yuan as usual.

“He also became cold to me and his children,” she said, but added that she had no idea why he might have killed anyone.

“I would definitely ask him why he would do that when I got a chance to see him.”

China’s notorious ‘serial killer’ left ample evidence in rape-murder spree but escaped capture for decades

Villagers in Yema were also shocked to hear that Yang was a suspect, saying he was a quiet man and had little contact with others.

A relative of one of the slain people said it had been “quite rare” for the suspect to even quarrel with any of the victims.

Yang’s cousin said he could not understand how someone as skinny and short as the suspect could have killed 19 people in one night.

“How can a man who was always posting photos of his daughter on Wechat be capable of murdering his own parents?” he asked.

China’s worst serial killers: a litany of evil through history

According to a source close to the police, Yang said he thought no one would reveal the crime if he killed everyone near the crime scene, the report said.

The village of Yema is located high in the mountains and known for growing lilies and strawberries. Most of its residents are elderly.

How scientists studying China’s distant past helped police finally catch ‘one of nation’s most notorious serial killers’

Murderers have become a hot topic in China recently, dominating discussion on social media platforms. The interest in the grim topic was sparked when a serial killer who had been at large since 1988 was brought to justice in August in Gansu province. He allegedly killed 11 women and girls, including an eight-year-old.

Milestone inclusion as IMF reserve currency only one step to Chinese yuan becoming truly international

When Mao Zedong was running the Chinese Soviet Republic in rural Jiangxi province as a rebel regime, he appointed his younger brother, Mao Zemin, in 1931 to head the regime’s “central bank”, hiding gold and silver in caves as reserves for China’s revolutionary course.

Eighty-five years later, the Chinese currency with Mao’s portrait on every note has become a component currency in an International Monetary Fund accounting unit, giving the yuan, also known as the renminbi, a nominal international reserve currency status alongside the US dollar, the euro, the British pound and the Japanese yen.

Yuan joins IMF’s elite reserve currency club in a milestone moment for China

It is in this historical context that Zhou Xiaochuan, China’s central bank governor for the past 14 years, has secured a sign of national pride and another legacy that could have long-lasting implications for the country and the world, on top of his achievement of retooling China’s central banking architecture from a system tailored for a command economy into an apparatus suited for an open market economy.

When Zhou published an essay on the website of the People’s Bank of China in 2009 arguing that the Special Drawing Rights, a concept more familiar for academics than traders, could potentially serve as a basis to develop a super-sovereign currency, he had few avid supporters at home or abroad. Even when the IMF officially announced it would add the yuan to the SDR last year, Ben Bernanke, the former chairman of the Federal Reserve, called the inclusion a symbolic recognition of China’s economic heft and said the yuan had a long way to go to challenge the dollar.

China’s yuan set to become the only IMF reserve currency that isn’t fully convertible

On Saturday, the yuan was officially included in the SDR basket of currencies. Before that, the World Bank had already issued SDR-denominated bonds in China’s onshore bond market, the PBOC had started to release its official reserves measured in SDR, and world leaders at the G20 summit in Hangzhou last month agreed in their communique that the role of the SDR should be further expanded as part of global financial system reform.

The yuan’s entrance into the elite currency club is “a key milestone in China’s integration into the global financial system and a new starting point for China’s financial reform and opening up,” the central bank said in an article hailing the event. At the same time, the PBOC said the yuan still has “a certain distance” from other international reserve currencies in trade, financing and payments and China must take advantage of the timing to further its market-oriented reforms.

However, the path for China to promote the use of the yuan, via the SDR, will be long and winding.

Scott Kennedy, a senior fellow of the Washington-based think tank Centre for Strategic and International Studies, said China needed to develop a deep bond market and a freer exchange rate mechanism to make the yuan more attractive.

Chinese yuan still far from being a global currency despite inclusion in IMF’s SDR basket

“Central banks are not active traders,” Kennedy said. “Ultimately it’s the market that will decide whether a currency can be truly international.”

Increased holdings of yuan at central banks in the post-inclusion era would be small, Kennedy said, and China Merchants Securities estimated in a report that the amount would be about $100 billion.

As the yuan faces depreciation pressure, demand from the private sector is dropping, at least for now. In the offshore yuan market in Hong Kong, for instance, deposits are shrinking as residents and individuals reduce their appetite for yuan assets.

“The yuan has been declining in usage internationally and even Chinese firms are reluctant to hold yuan,” said Christopher Balding, an associate professor at the HSBC Business School at Peking University in Shenzhen. “There is little evidence that central banks will rush into the yuan and even the amount of yuan they might hold is relatively small.”

The Chinese central bank’s intervention in the yuan exchange rate in past weeks, at the cost of squeezing yuan liquidity in offshore markets, for instance, is at odds with the long-term goal of creating a trustworthy and popular international currency.

To be sure, the challenge of a rising power’s currency to an existing one, as the historical process of the US dollar replacing the pound showed, can last for generations even if all factors are in favour of the challenger. While the PBOC’s Zhou has made the first step in what looks like being another long march, his followers will continue to face hurdles in making the yuan the next global currency.

“I believe Zhou would like to be much more reformist than he currently is,” Balding said, adding that he believed the next head would be just as constrained about pushing real reform and yuan liberalisation.

Jason Bourne film’s summer release fails to revive China’s box office

China’s worst box-office slump in at least five years deepened during the third quarter as a dearth of hit films kept filmgoers away from cinemas.

Third-quarter ticket revenues up to Thursday fell about 16 per cent from a year earlier, Chinese government data showed.

This decline is the second straight quarterly drop.

Chinese box office slows, after fewer blockbusters and an official clampdown on inflated prices

The shortage of successful films has prompted some analysts to push back projections that China would overtake the US as the world’s biggest film market. 

The slump in ticket sales contrasts with an almost 50 per cent jump in 2015.

That surge had Hollywood filmmakers targeting Chinese audiences and helped billionaire Wang Jianlin expand Dalian Wanda Group’s entertainment empire.

“The market is maturing, with Chinese consumers now becoming more discerning in their movie choices since the novelty of the new cinema environment [is[ finally wearing off to some extent,” said David Hancock, an analyst at IHS Markit.

Hancock estimates China will overtake the US film market in 2018, after previously predicting it would do so in 2017.

The number of filmgoers buying tickets has fallen about 12 per cent so far this quarter, heading for the first decline since at least 2011, figures from the government’s China Movie Data Information Network showed.

Chinese film fans tighten belts as domestic movies disappoint

Films such as Matt Damon’s Jason Bourne and the animation Ice Age: Collision Course – shown this year in a summer season normally reserved for locally made movies only – failed to draw enough fans to offset an overall drop in sales.

Wang’s Legendary Entertainment is betting on another Damon film, The Great Wall, due out in December in China, co-starring Jing Tian and Pedro Pascal, to attract filmgoers.

The adventure film Time Raiders was the only title drawing at least 1 billion yuan (HK$1.16 billion) sales in the third quarter, compared with three reaching that milestone a year earlier, including Shrek-animator Raman Hui’s Monster Hunt, which racked up 2.4 billion yuan, China’s biggest-selling film ever after this year’s The Mermaid.

Box-office sales have also been hurt this year after a fall in discounts offered by mobile ticketing apps backed by e-commerce and internet companies, including Alibaba Group – which owns the South China Morning Post – and Baidu.

Subsidies were estimated to have contributed as much as 10 per cent of the total box office last year, and have fallen by 70 per cent this year, according to Richard Huang, an analyst at Nomura Holdings. “The effect of reduced subsidies is bigger than expected,” Huang said.

The mobile apps themselves have not disclosed how much they spent on discounting.

“Other than The Great Wall, few other films slated for this year would be likely to impress,“ said Jane Li, head of research at Beijing iMiner Data Technology, an information and consulting company that covers the entertainment industry.

Total China box office sales this year would “at best“ match last year’s US$44 billion, she said.

Nomura’s Huang forecasts an 8 per cent box-office growth this year, rising to 25 per cent in 2017 and 2018 as film franchises such as Transformers entice film audiences.

Growing property bubble is China economy’s biggest risk, warns Bank of China economist

The Bank of China has raised a red flag on the country’s growing property bubble.

“A property bubble is the biggest risk for China’s economy,” Zhou Jingtong, a senior economist with the state-owned commercial bank said at a briefing to release the bank’s quarterly economic outlook report on Thursday.

Skyrocketing home prices would “exacerbate the wealth gap and economic woes”, he said.

“Property speculation becomes common practice and everyone is dreaming about windfall profits overnight … these are very dangerous,” he said.

Residential prices in major Chinese cities, from Shanghai to Shenzhen, are rising at an annual pace of 30 or 40 per cent in 2016, sucking the majority of bank credit into the property market and pushing prices beyond what is affordable for most residents there.

Policymakers’ ‘misguided’ home-buying limits won’t keep lid on China’s surging property prices: economist

Municipal authorities in Nanjing and Hangzhou are trying to tame property price gains by imposing restrictions on home purchases, but the measures have proved futile amid frenzied buying, limited supply and ample monetary supply.

Bank of China economists wrote in its quarterly economic outlook that a red-hot property market would complicate policy decisions for Beijing, which is already struggling to pursue objectives that range from defending a stable yuan exchange rate to keeping growth on track at home.

“Macro policies are in urgent need to strike a balance between stabilising growth and curbing asset bubbles,” according to the bank, the country’s largest foreign exchange dealing bank.

A harsh crackdown on the property market would endanger an already fragile economy, but “unrestrained growth” of the property market would result in increasing leverage and signal greater financial risks, the bank said.

While a strong property sector can help investment and overall growth – the bank is forecasting a 6.7 per cent headline GDP growth rate for the fourth quarter, it could hurt the manufacturing and other sectors.

Risks of property bubble growing in China with policy options running out

Average investment returns in manufacturing dropped to 5.4 per cent in 2015 from 6.7 per cent in 2006, while the investment return of listed property firms rose to 13.6 per cent in 2013 from 8.2 per cent in 2006.

The property bubble could weaken China’s capabilities in handling possible impacts on yuan exchange rate from an interest rate increase at the Federal Reserve, according to the Bank of China report.

Fan Gang, an academic advisor at the People’s Bank of China, said at a forum in Tokyo that the yuan has weakened as a correction in recent years, Xinhua reported. It is natural for the Chinese currency to weaken against the dollar alongside the pound sterling and the euro, Fan said.

How to solve China’s property bubble

As China’s property bubble grows larger, the chance for China’s central bank to cut interest rates is lessening, according to Bank of China economists.

“The central bank has to give more weighting to asset price risks in its monetary policy operations,” said Wang Youxin, a Bank of China researcher.