TODAY'S BRIEFS 23 June 2008

TODAY'S BRIEFS 23 June 2008

Cnooc parent in talks to buy Norwegian oil driller Awilco
China National Offshore Oil Corp is leading a group to buy Norwegian oil driller Awilco Offshore for US$2 billion, the Wall Street Journal reported. The oil services arm of China National Offshore Oil, China Oilfield Services, would provide most of the funding for the acquisition, likely using proceeds from a September public offering in Shanghai. The paper cited sources who said the deal could still fall through, and that a formal bid requires approval from China Oilfield Services' board and the Chinese government. Awilco's market capitalization is US$2.1 billion and an offer will probably be priced at a premium. Its shares have been rising due to speculation over an acquisition.

PBOC: Tighter policies may be needed to fight inflation
Central bank governor Zhou Xiaochuan said his organization may implement stronger policies to fight inflation caused by last week's fuel-price hike, Bloomberg reported. "Surely higher energy prices will send some pressure to the consumer price index, so we may have stronger policies against inflation,'' he said in New York. He also said that although inflation in China had slowed last month, it was unclear whether the trend would continue. "It's hard to say whether inflation will continue to ease for the rest of the year." Zhou was in the US to attend the US-China Strategic Economic Dialogue in Maryland.

China Mobile given 100m TD-SCDMA subscriber target
The central government has set a target of more than 100 million TD-SCDMA subscribers in three years for China Mobile, the South China Morning Post reported. China Mobile was asked to submit a detailed business plan and budget for the next round of tender, worth US$4.36 billion, for extending the TD-SCDMA network. TD-SCDMA is China's homegrown standard for third-generation mobile communications. The news was delivered by Li Yizhong, the new information industry minister, when he met China Mobile and industry executives. Li said that the number of TD-SCDMA users should surpass Xiaolingtong users at their peak in 2006, which was more than 93 million, according to an anonymous source. Xiaolingtong is a fixed-line technology that provides limited mobile service. China Mobile currently has 3,000 paying TD-SCDMA subscribers and 20,000 users who were invited to use the service for free. The firm is operating trial networks in eight cities, including Beijing and Shanghai.

Also see CER April 2008's cover story on China's telecom industry restructuring

Regulator: Airlines must collaborate to cut costs
The Civil Aviation Administration of China (CAAC) said Chinese airlines must collaborate to cut costs arising from higher fuel prices, Bloomberg reported. Jet fuel prices were hiked 25% on Friday and Chinese airlines are already facing lower demand for air travel. The head of the CAAC, Li Jiaxiang, has in the past called for the creation of a "super carrier" to compete against foreign airlines. Analysts said this idea could be the only solution for Chinese airlines in the current situation. China's three biggest carriers - China Southern, Air China and China Eastern - are all indirectly controlled by the government. An offer by Air China's parent company to buy a stake in China Eastern was rejected in January.

Higher import duties for Chinese steel pipe
The US International Trade Commission (ITC) allowed significantly higher import duties on standard steel pipe from China, the Wall Street Journal reported. The US ITC found Friday that US producers are being harmed by subsidized imports, thus allowing countervailing duties as high as 616%, set by the Commerce Department last month, to be charged on the pipe. Antidumping duties of up to 85.55% would also be levied. The US ITC was required to make a ruling before the duties could take effect. The US ITC ruling is a major change in American trade policy toward China, the paper said.

Police detain parents protesting quake-hit school collapses
Police detained and also beat up some parents who tried to stage a protest outside a city hall in the quake-hit city of Dujiangyan, Reuters reported. The parents were demanding to know why schools had collapsed during the quake, killing their children. Eight people were detained. The parents had to tried to enter city hall but were stopped by a police cordon. Some 9,000 children died in the quake and many parents blame flimsy school buildings for the deaths. The Dujiangyan government could not be reached for comment. The central government has said it would probe school building safety. The Sichuan provincial government also has set up working teams to address parents' concerns.

Beijing announces Olympics plan to take half of cars off roads
Half of Beijing's cars will be taken off the roads in a plan announced Friday by officials, the Wall Street Journal reported. Beijing's Environmental Protection Bureau said cars will be allowed on roads on alternating days, depending on even- or odd-numbered license plates, starting July 20 and ending September 20. The measures are being implemented to ensure clean air for the Olympics. As a result, about 45% of Beijing's 3.29 million cars will be taken off the roads and an estimated 4 million extra public-transportation users will be added. The plan had been rumored for several months.