China's slowing growth not good for anybody, U.S. say(Reuters) - China's slowing growth is not good for anybody but it will not affect U.S. efforts to build business ties, U.S. Commerce Secretary Penny Pritzker said on Wednesday after Beijing announced its weakest quarter of growth in six years.
Pritzker, leading a trade mission to China with more than 20 U.S. companies, told reporters she believed the Chinese leadership saw opportunity in the "new normal" of slower gross domestic product expansion to invest in sustainable, long-term growth. Pritzker met Chinese officials in Beijing before traveling to Shanghai.
"The fact that China is not growing as fast as it would like, that's not good for anybody. But that has not changed our engagement with the Chinese, because we are in this for the long haul and our businesses are in this for the long haul," she told reporters.
"As China is adapting they have the opportunity to change the way they are doing business and we are hearing that from Chinese leadership."
China's GDP grew an annual 7.0 percent in the first quarter - its slowest pace since 2009 - slowing from 7.3 percent in the fourth quarter of 2014, China's statistics bureau said earlier. [ID:nL4N0XC35R]
The three-city trade mission, focused largely on green technology, comes amid trade frictions with China over issues including solar equipment and other high tech gear.
On Tuesday, the Wall Street Journal quoted unidentified sources as saying Premier Li Keqiang had urged Pritzker and other visiting U.S. officials to drop limits on high-tech exports or it would seek alternatives from Russia or other countries.
Pritzker defended a February decision by the Department of Commerce's Bureau of Industry and Security to bar exports of certain items to four Chinese entities she said were suspected of producing supercomputers for "nuclear explosive activities".
"The U.S. has a long-standing policy against allowing the export to most countries, including China, of items that are used for nuclear explosive activities. The entities that were put on that list, they can still apply for a license for those exports and they can appeal," Pritzker told reporters when asked about the report.
"But we have to protect our national security ... In looking at the items that have dual use, we make sure that they are not going to be used for purposes that could hurt our national security."s,
Wednesday, 15 April 2015
China growth slowest in six years, more stimulus expected soon
China growth slowest in six years, more stimulus ex(Reuters) - China grew at its slowest pace in six years at the start of 2015 and weakness in key sectors suggested the world's second-largest economy was still losing momentum, intensifying Beijing's struggle to find the right policy mix to shore up activity.
Measures to support the property sector and a series of cuts in interest rates and bank reserve requirements look to have delivered less support to the economy than hoped, apart from feeding a stock market surge, raising expectations of more stimulus soon.
Gross domestic product (GDP) grew an annual 7.0 percent in the first quarter, slowing from 7.3 percent in the fourth quarter of 2014, China's statistics bureau said. While matching the median forecast in a Reuters poll, some analysts said it seemed stronger than data on the components of growth suggested.
"Despite a headline growth rate in line with expectations, underlying economic activities appear to have softened further," Qu Hongbin, HSBC's co-head of Asian Economic Research, said in a note.
Video
RELATED VIDEO
Chinese economy shifts into lower gear
"We expect policy makers to deploy further monetary easing and other growth-supporting measures in the coming weeks."
Analysts calculated the GDP deflator had fallen 1.2 percent, a six-year low, indicating broad deflationary pressures.
Monthly retail sales, industrial output and fixed asset investment data released with the GDP figures all missed analyst expectations. Growth in fixed-asset investment (FAI), a key economic driver, was the slowest since 2000, while industrial output grew at its weakest since the global financial crisis in 2008.
Power output, which some analysts use as a proxy for economic activity, fell an annual 3.7 percent in March, the biggest fall since the 2008 crisis.
RELATED COVERAGE
› China's slowing growth not good for anybody, U.S. says
› Beijing boasts economic predictive power, markets more skeptical
› SLIDESHOW China growth slowest in six years, more stimulus expected soon
More bad news came from the real estate sector, a major economic pillar and where investment rose an annual 8.5 percent in the first quarter, the weakest rate since 2009.
"If you look at Q1, exports were poor, industrial production was poor, FAI was much slower, retail sales soft, so how can GDP in real terms still be 7 percent?" said Kevin Lai, senior economist at Daiwa in Hong Kong.
The National Bureau of Statistics did not release a breakdown of the GDP data, saying the final figures were not yet available.
WEAKEST SINCE GLOBAL CRISIS
It was China's weakest expansion since the first quarter of 2009, when the global financial crisis saw growth tumble to 6.6 percent. A massive stimulus package pulled China out of the slump, but saddled local governments with a mountain of debt.
Sheng Laiyun, the spokesman at the statistics bureau, sought to allay fears that the slowdown was getting out of hand.
"The risk of the Chinese economy having a 'double dip' or a 'hard landing' is very small," he told reporters, adding that China would meet its 2015 GDP growth target of around 7 percent.
The stock market .SSEC .CSI300, which has surged about 70 percent since Beijing began cutting rates in November, ceded early gains to be down 0.9 percent. Mainland investors have tended to see weak data as strengthening the case for easier policy and cash injections, some of which flow into shares.
And many analysts did see further easing as imminent, as Wednesday's data followed figures showing a fall in exports in March and slower-than-expected growth in money supply."We maintain our forecasts of one interest rate cut in the second quarter and two additional reserve requirement ratio cuts, with the risk of more," economists at Barclays said in a note.
DEFLATION RISKS
Chinese leaders, while emphasizing the need for slower but better-quality growth, have made clear they would not tolerate widespread job losses, a danger that is contained for now. A survey-based unemployment rate was flat at 5.1 percent, Sheng from the statistics agency said, unchanged from 2014.
Yet some analysts warned this could change if deflationary risks push firms to shed more jobs, and if Beijing carries out threats to allow more companies fighting overcapacity to fail.
"This is an economy in need of substantially easier financial conditions," Westpac economists said in a note.
"Lower benchmark lending rates, in addition to a more energetic quantitative effort from the People's Bank of China, should come into play without undue delay."pected soon,
Measures to support the property sector and a series of cuts in interest rates and bank reserve requirements look to have delivered less support to the economy than hoped, apart from feeding a stock market surge, raising expectations of more stimulus soon.
Gross domestic product (GDP) grew an annual 7.0 percent in the first quarter, slowing from 7.3 percent in the fourth quarter of 2014, China's statistics bureau said. While matching the median forecast in a Reuters poll, some analysts said it seemed stronger than data on the components of growth suggested.
"Despite a headline growth rate in line with expectations, underlying economic activities appear to have softened further," Qu Hongbin, HSBC's co-head of Asian Economic Research, said in a note.
Video
RELATED VIDEO
Chinese economy shifts into lower gear
"We expect policy makers to deploy further monetary easing and other growth-supporting measures in the coming weeks."
Analysts calculated the GDP deflator had fallen 1.2 percent, a six-year low, indicating broad deflationary pressures.
Monthly retail sales, industrial output and fixed asset investment data released with the GDP figures all missed analyst expectations. Growth in fixed-asset investment (FAI), a key economic driver, was the slowest since 2000, while industrial output grew at its weakest since the global financial crisis in 2008.
Power output, which some analysts use as a proxy for economic activity, fell an annual 3.7 percent in March, the biggest fall since the 2008 crisis.
RELATED COVERAGE
› China's slowing growth not good for anybody, U.S. says
› Beijing boasts economic predictive power, markets more skeptical
› SLIDESHOW China growth slowest in six years, more stimulus expected soon
More bad news came from the real estate sector, a major economic pillar and where investment rose an annual 8.5 percent in the first quarter, the weakest rate since 2009.
"If you look at Q1, exports were poor, industrial production was poor, FAI was much slower, retail sales soft, so how can GDP in real terms still be 7 percent?" said Kevin Lai, senior economist at Daiwa in Hong Kong.
The National Bureau of Statistics did not release a breakdown of the GDP data, saying the final figures were not yet available.
WEAKEST SINCE GLOBAL CRISIS
It was China's weakest expansion since the first quarter of 2009, when the global financial crisis saw growth tumble to 6.6 percent. A massive stimulus package pulled China out of the slump, but saddled local governments with a mountain of debt.
Sheng Laiyun, the spokesman at the statistics bureau, sought to allay fears that the slowdown was getting out of hand.
"The risk of the Chinese economy having a 'double dip' or a 'hard landing' is very small," he told reporters, adding that China would meet its 2015 GDP growth target of around 7 percent.
The stock market .SSEC .CSI300, which has surged about 70 percent since Beijing began cutting rates in November, ceded early gains to be down 0.9 percent. Mainland investors have tended to see weak data as strengthening the case for easier policy and cash injections, some of which flow into shares.
And many analysts did see further easing as imminent, as Wednesday's data followed figures showing a fall in exports in March and slower-than-expected growth in money supply."We maintain our forecasts of one interest rate cut in the second quarter and two additional reserve requirement ratio cuts, with the risk of more," economists at Barclays said in a note.
DEFLATION RISKS
Chinese leaders, while emphasizing the need for slower but better-quality growth, have made clear they would not tolerate widespread job losses, a danger that is contained for now. A survey-based unemployment rate was flat at 5.1 percent, Sheng from the statistics agency said, unchanged from 2014.
Yet some analysts warned this could change if deflationary risks push firms to shed more jobs, and if Beijing carries out threats to allow more companies fighting overcapacity to fail.
"This is an economy in need of substantially easier financial conditions," Westpac economists said in a note.
"Lower benchmark lending rates, in addition to a more energetic quantitative effort from the People's Bank of China, should come into play without undue delay."pected soon,
China calls on Dalai Lama to 'put aside illusions' about talks
China calls on Dalai Lama to 'put aside illusi(Reuters) - China on Wednesday urged the exiled Tibetan spiritual leader, the Dalai Lama, to "put aside his illusions" about talks on Tibet's future and accused him of insincerity and covertly pushing for independence, rather than autonomy.
China has ruled Tibet with an iron fist since troops "peacefully liberated" the region in 1950. The Dalai Lama fled into exile in India in 1959 after an abortive uprising against Chinese rule.
Representatives of the Nobel Peace laureate held rounds of talks with China until 2010, but formal dialogue has stalled amid leadership changes in Beijing and a crackdown in Tibet.
In a lengthy white paper released by the official Xinhua news agency, the government said that having failed to use violence to achieve their goals, the Dalai Lama and his supporters had little understanding of modern Tibet and "a sentimental attachment to the old theocratic feudal serfdom".
"The only sensible alternative is for the Dalai Lama and his supporters to accept that Tibet has been part of China since antiquity, to abandon their goals of dividing China and seeking independence for Tibet," it said.
"The central government hopes that the Dalai Lama will put aside his illusions in his remaining years and face up to reality," the government said in the white paper, released in both English and Chinese.
Beijing has been disappointed that the Dalai Lama remains committed to the Middle Way - which he says merely seeks genuine autonomy for the Himalayan region - and this is something China cannot accept as its real goal is still independence, it added.
"None of the negotiations were conducted in good faith - it was always the intention of the Dalai Lama and his supporters to divide China and achieve independence for Tibet," it added.
The Tibetan government in exile, based in India, said in an emailed statement that condemning the Middle Way showed Beijing's failure to come up with an alternative.
"The Middle Way Policy seeks genuine autonomy within the framework of the constitution of the People's Republic of China which is a win-win proposition for all parties and one lauded throughout the world including various governments," it said.
The Dalai Lama denies espousing violence and says he only wants genuine autonomy for Tibet, though China has repeatedly said he is insincere.
China has recently stepped up its rhetoric against the Dalai Lama. He is being received by fewer and fewer foreign leaders in recent years, because of the anger it draws from China, the world's second-largest economy.ons' about talks,
China has ruled Tibet with an iron fist since troops "peacefully liberated" the region in 1950. The Dalai Lama fled into exile in India in 1959 after an abortive uprising against Chinese rule.
Representatives of the Nobel Peace laureate held rounds of talks with China until 2010, but formal dialogue has stalled amid leadership changes in Beijing and a crackdown in Tibet.
In a lengthy white paper released by the official Xinhua news agency, the government said that having failed to use violence to achieve their goals, the Dalai Lama and his supporters had little understanding of modern Tibet and "a sentimental attachment to the old theocratic feudal serfdom".
"The only sensible alternative is for the Dalai Lama and his supporters to accept that Tibet has been part of China since antiquity, to abandon their goals of dividing China and seeking independence for Tibet," it said.
"The central government hopes that the Dalai Lama will put aside his illusions in his remaining years and face up to reality," the government said in the white paper, released in both English and Chinese.
Beijing has been disappointed that the Dalai Lama remains committed to the Middle Way - which he says merely seeks genuine autonomy for the Himalayan region - and this is something China cannot accept as its real goal is still independence, it added.
"None of the negotiations were conducted in good faith - it was always the intention of the Dalai Lama and his supporters to divide China and achieve independence for Tibet," it added.
The Tibetan government in exile, based in India, said in an emailed statement that condemning the Middle Way showed Beijing's failure to come up with an alternative.
"The Middle Way Policy seeks genuine autonomy within the framework of the constitution of the People's Republic of China which is a win-win proposition for all parties and one lauded throughout the world including various governments," it said.
The Dalai Lama denies espousing violence and says he only wants genuine autonomy for Tibet, though China has repeatedly said he is insincere.
China has recently stepped up its rhetoric against the Dalai Lama. He is being received by fewer and fewer foreign leaders in recent years, because of the anger it draws from China, the world's second-largest economy.ons' about talks,
Toyota ends expansion freeze with new plants in Mexico, China
Toyota ends expansion freeze with new plants in Mexico, China, (Reuters) - Toyota Motor Corp (7203.T) said on Wednesday it will build new factories in Mexico and China, ending a self-imposed expansion freeze and putting more pressure on its global rivals.
The world's largest automaker by sales volume said it would build a $1 billion plant with an annual production capacity of 200,000 cars in the central Mexican state of Guanajuato, increasing its overall North American production capacity by about the same number of vehicles.[ID:nL4N0XB17S][ID:nL2N0WZ2B0]
That plant, Toyota's first in Mexico, would have about 2,000 workers, the company said.
It also will be the first built from the ground up under the Toyota New Global Architecture strategy, the automaker's new approach to engineering and building vehicles, Jim Lentz, head of Toyota's North American operations, said in an interview on Wednesday. [ID:nL3N0WR1M5]
Toyota said investment for the Guanajuato plant would likely be about 40 percent less than comparable investments in 2008. The Guanajuato site will be a model for other factories globally, Lentz said.
Toyota plans to move production of its Corolla compact car to the new Mexican plant in 2019 from a factory in Cambridge, Ontario.
That Canadian plant will get a new product, Lentz said, as part of a realignment of Toyota's North American manufacturing that will concentrate production of low-margin, small cars in Mexico and at a Mississippi factory currently building the Corolla.
Toyota plants in Canada and the central United States will focus on larger, expensive cars and sport utilities. Pickup truck production will remain in Texas and Mexico, Lentz said.
In China, Toyota said it would spend about 52.5 billion yen ($440 million) to add a new facility and a third line at its factory in Guangzhou, owned jointly with Guangzhou Automobile Group Co Ltd (601238.SS). The line could start production in 2017 with capacity to make about 100,000 cars a year.
Wednesday's moves officially end Toyota President Akio Toyoda's three-year moratorium on capacity expansion, and increase pressure on the Japanese automaker's rivals, including Volkswagen AG (VOWG_p.DE) and Detroit automakers General Motors Co (GM.N) and Ford Motor Co (F.N).
Toyota's sales took a hit during the 2007-2009 recession and after a 2010 recall scandal. Toyota says it is now using about 90 percent of its total manufacturing capacity, versus about 70 percent in 2009.
With the new Mexican plant, Lentz said, "We've expanded as much as we need to at this point."
The world's largest automaker by sales volume said it would build a $1 billion plant with an annual production capacity of 200,000 cars in the central Mexican state of Guanajuato, increasing its overall North American production capacity by about the same number of vehicles.[ID:nL4N0XB17S][ID:nL2N0WZ2B0]
That plant, Toyota's first in Mexico, would have about 2,000 workers, the company said.
It also will be the first built from the ground up under the Toyota New Global Architecture strategy, the automaker's new approach to engineering and building vehicles, Jim Lentz, head of Toyota's North American operations, said in an interview on Wednesday. [ID:nL3N0WR1M5]
Toyota said investment for the Guanajuato plant would likely be about 40 percent less than comparable investments in 2008. The Guanajuato site will be a model for other factories globally, Lentz said.
Toyota plans to move production of its Corolla compact car to the new Mexican plant in 2019 from a factory in Cambridge, Ontario.
That Canadian plant will get a new product, Lentz said, as part of a realignment of Toyota's North American manufacturing that will concentrate production of low-margin, small cars in Mexico and at a Mississippi factory currently building the Corolla.
Toyota plants in Canada and the central United States will focus on larger, expensive cars and sport utilities. Pickup truck production will remain in Texas and Mexico, Lentz said.
In China, Toyota said it would spend about 52.5 billion yen ($440 million) to add a new facility and a third line at its factory in Guangzhou, owned jointly with Guangzhou Automobile Group Co Ltd (601238.SS). The line could start production in 2017 with capacity to make about 100,000 cars a year.
Wednesday's moves officially end Toyota President Akio Toyoda's three-year moratorium on capacity expansion, and increase pressure on the Japanese automaker's rivals, including Volkswagen AG (VOWG_p.DE) and Detroit automakers General Motors Co (GM.N) and Ford Motor Co (F.N).
Toyota's sales took a hit during the 2007-2009 recession and after a 2010 recall scandal. Toyota says it is now using about 90 percent of its total manufacturing capacity, versus about 70 percent in 2009.
With the new Mexican plant, Lentz said, "We've expanded as much as we need to at this point."
China reef work could lead to new air exclusion zone: U.S. commander
China reef work could lead to new air exclusio(Reuters) - China could eventually deploy radar and missile systems on outposts it is building in the South China Sea that could be used to enforce an exclusion zone over the disputed territory, the U.S. military commander for Asia said on Wednesday.
Admiral Samuel Locklear, speaking at a congressional hearing in Washington, described as "aggressive" the land reclamation and construction projects China has been conducting at eight military outposts in the South China Sea.
The work involved "fairly massive" reclamation in the Spratley archipelago and upgrades to facilities in the Paracel Islands, he said.
The building in the Spratleys included better berthing space for ships, as well as what was presumed to be an airfield on the Fiery Cross Reef, Locklear, head of the U.S. Pacific Command, said in testimony to the House Armed Services Committee.
It would allow China to deploy more patrol ships in the area and to base and resupply them, he said.
"It allows them to exert basically greater influence over what's now a contested area. Expanded land features down there also could eventually lead to the deployment of things such as long-range radars, military, and advanced missile systems," he said.
"And it might be a platform if they ever wanted to establish an air defense zone."
China drew condemnation from Japan and the United States when it imposed an Air Defense Identification Zone (ADIZ), in which aircraft are supposed to identify themselves to Chinese authorities, above the East China Sea in late 2013.
The United States responded by flying B-52 bombers through the zone in a show of force.
China has denied speculation that it plans to declare a new ADIZ in the South China Sea but its rapid reclamation work has alarmed other regional states with territorial claimants.
Last week, U.S. President Barack Obama accused China of using its "sheer size and muscle" to push around smaller nations after Beijing sketched out plans to use the Spratleys for military defense as well as to provide civilian services that would benefit other countries.
China claims most of the potentially energy rich South China Sea, through which $5 trillion in ship-borne trade passes every year. The Philippines, Vietnam, Malaysia, Brunei and Taiwan also have overlapping claims.
Western and Asian naval officials have expressed fears that China could also try to limit sea navigation once the reclaimed islands are fully established.n zone: U.S. commander,
Admiral Samuel Locklear, speaking at a congressional hearing in Washington, described as "aggressive" the land reclamation and construction projects China has been conducting at eight military outposts in the South China Sea.
The work involved "fairly massive" reclamation in the Spratley archipelago and upgrades to facilities in the Paracel Islands, he said.
The building in the Spratleys included better berthing space for ships, as well as what was presumed to be an airfield on the Fiery Cross Reef, Locklear, head of the U.S. Pacific Command, said in testimony to the House Armed Services Committee.
It would allow China to deploy more patrol ships in the area and to base and resupply them, he said.
"It allows them to exert basically greater influence over what's now a contested area. Expanded land features down there also could eventually lead to the deployment of things such as long-range radars, military, and advanced missile systems," he said.
"And it might be a platform if they ever wanted to establish an air defense zone."
China drew condemnation from Japan and the United States when it imposed an Air Defense Identification Zone (ADIZ), in which aircraft are supposed to identify themselves to Chinese authorities, above the East China Sea in late 2013.
The United States responded by flying B-52 bombers through the zone in a show of force.
China has denied speculation that it plans to declare a new ADIZ in the South China Sea but its rapid reclamation work has alarmed other regional states with territorial claimants.
Last week, U.S. President Barack Obama accused China of using its "sheer size and muscle" to push around smaller nations after Beijing sketched out plans to use the Spratleys for military defense as well as to provide civilian services that would benefit other countries.
China claims most of the potentially energy rich South China Sea, through which $5 trillion in ship-borne trade passes every year. The Philippines, Vietnam, Malaysia, Brunei and Taiwan also have overlapping claims.
Western and Asian naval officials have expressed fears that China could also try to limit sea navigation once the reclaimed islands are fully established.n zone: U.S. commander,
Google anti-trust foes see friend in new EU competition chief
Google anti-trust foes see friend in new EU competition chief, (Corrects spelling of Bruegel think tank and its expert Mario Mariniello in paragraph 24)
By Foo Yun Chee
(Reuters) - After waiting more than four years for Brussels to resolve his anti-trust complaint against Google while traffic to his website plunged by 80 percent, Michael Weber of German online mapping service Hot-Map.com held out little hope of success. Until now.
He says a meeting with the new competition chief of the European Commission has left him with newfound hope that Brussels will take action at last to curb behavior by the U.S. Internet giant, which he blames for hurting his business.
Danish politician Margrethe Vestager, who took over the EU competition portfolio in November, inherited an anti-trust complaint by more than a dozen companies against Google, left unresolved by her Spanish predecessor Joaquin Almunia.
Almunia launched an investigation in 2010 and initially concluded that Google may have hurt competitors by favoring its own products and services in search results and blocking advertisers from moving their campaigns to rival platforms.
Since then, Google has offered three settlement proposals to resolve the case. Most recently, just over a year ago, it offered to give competing products and services bigger visibility on its website, let content providers decide what material it can use for its own services and make it easier for advertisers to move their campaigns to rivals.
Almunia initially accepted that deal, only to reverse his decision six months later and demand more concessions, leaving the ultimate decision to his successor.
So far, Vestager has said nothing in public that would explicitly signal what course she is considering.
She has also indicated that she will not rush into a decision. Asked whether enforcement regulators should emphasize quick action in cases involving fast-moving technologies, Vestager told Reuters: "I don't think that speed should be the priority. We should be even handed and open minded in interpretation of the facts. Of course it is better to be fast than slow but it's even better to be just."
Nevertheless, executives from some of the companies that brought the complaint against Google say they are more optimistic now than they have been for years, and that they believe action is finally coming soon.
"With Almunia, there was no real dialogue. With Vestager, it is different. The questions she asked us show that she understands the complainants' problems," said Weber.
Another of the complainants, who spoke on condition of anonymity because a meeting with Vestager was confidential, said: "The first thing she said at the meeting was that she understands the harm we have suffered."
The European Commission declined to comment on the case.
Asked to discuss anti-trust issues, Google spokesman Al Verney declined to comment.
HIGH STAKES
The stakes are high for Google which faces a fine of as much as $6.6 billion if found guilty of anti-competitive behavior. Even more disruptive, it may have to modify its business practices.
Google's dominant positions in markets like online search, advertising and smartphone operating systems have drawn regulatory scrutiny in various jurisdictions around the globe.
Its longstanding position is that competition is "just a click away" - a phrase meant to indicate that users have easy access to use rival services - and that its products are popular because people find them useful.
Vestager, 46, was a free-trading economy minister in Denmark who jolted Danes with deep cuts to the social welfare system, earning a reputation as a firm negotiator before coming to Brussels.
She has spoken in general terms of the need to keep fast-changing industries open and contestable and said both large and small players should be able to compete on the merits of their products, comments that some of the Google complainants have interpreted as sympathetic towards their case.
They also note that she met some of the complainants before seeing Google's executive chairman Eric Schmidt and general counsel Kent Walker last month.
In one sign of movement in recent weeks, the European Commission has asked some of the Google opponents to allow regulators to declassify some of the confidential data they submitted to justify their accusations, a step that would be necessary to present the data to Google for its response.
Wilko van Weert, a partner at law firm McDermott Will & Emery and specialist in the field, said Vestager could push for a settlement that would require Google to provide more information about its search ranking formula.
"Coming from a Scandinavian culture where transparency is very important, I would not be surprised if she pushes for maximum transparency in the way Google organizes and manages its search results," he said.
Any ruling by Vestager might have to be able to survive a potential court challenge from Google, which could be tougher to withstand because of Almunia's previous reversals.
Vestager may initially want to play hard ball, but that does not mean she will close the door to a settlement, said Mario Mariniello, a former economist at the Commission's competition unit and now an expert at think tank Bruegel.
“If at a certain point in the process effective remedies addressing her objections would be offered by Google, I guess it would be hard for her to say no,” he said.
By Foo Yun Chee
(Reuters) - After waiting more than four years for Brussels to resolve his anti-trust complaint against Google while traffic to his website plunged by 80 percent, Michael Weber of German online mapping service Hot-Map.com held out little hope of success. Until now.
He says a meeting with the new competition chief of the European Commission has left him with newfound hope that Brussels will take action at last to curb behavior by the U.S. Internet giant, which he blames for hurting his business.
Danish politician Margrethe Vestager, who took over the EU competition portfolio in November, inherited an anti-trust complaint by more than a dozen companies against Google, left unresolved by her Spanish predecessor Joaquin Almunia.
Almunia launched an investigation in 2010 and initially concluded that Google may have hurt competitors by favoring its own products and services in search results and blocking advertisers from moving their campaigns to rival platforms.
Since then, Google has offered three settlement proposals to resolve the case. Most recently, just over a year ago, it offered to give competing products and services bigger visibility on its website, let content providers decide what material it can use for its own services and make it easier for advertisers to move their campaigns to rivals.
Almunia initially accepted that deal, only to reverse his decision six months later and demand more concessions, leaving the ultimate decision to his successor.
So far, Vestager has said nothing in public that would explicitly signal what course she is considering.
She has also indicated that she will not rush into a decision. Asked whether enforcement regulators should emphasize quick action in cases involving fast-moving technologies, Vestager told Reuters: "I don't think that speed should be the priority. We should be even handed and open minded in interpretation of the facts. Of course it is better to be fast than slow but it's even better to be just."
Nevertheless, executives from some of the companies that brought the complaint against Google say they are more optimistic now than they have been for years, and that they believe action is finally coming soon.
"With Almunia, there was no real dialogue. With Vestager, it is different. The questions she asked us show that she understands the complainants' problems," said Weber.
Another of the complainants, who spoke on condition of anonymity because a meeting with Vestager was confidential, said: "The first thing she said at the meeting was that she understands the harm we have suffered."
The European Commission declined to comment on the case.
Asked to discuss anti-trust issues, Google spokesman Al Verney declined to comment.
HIGH STAKES
The stakes are high for Google which faces a fine of as much as $6.6 billion if found guilty of anti-competitive behavior. Even more disruptive, it may have to modify its business practices.
Google's dominant positions in markets like online search, advertising and smartphone operating systems have drawn regulatory scrutiny in various jurisdictions around the globe.
Its longstanding position is that competition is "just a click away" - a phrase meant to indicate that users have easy access to use rival services - and that its products are popular because people find them useful.
Vestager, 46, was a free-trading economy minister in Denmark who jolted Danes with deep cuts to the social welfare system, earning a reputation as a firm negotiator before coming to Brussels.
She has spoken in general terms of the need to keep fast-changing industries open and contestable and said both large and small players should be able to compete on the merits of their products, comments that some of the Google complainants have interpreted as sympathetic towards their case.
They also note that she met some of the complainants before seeing Google's executive chairman Eric Schmidt and general counsel Kent Walker last month.
In one sign of movement in recent weeks, the European Commission has asked some of the Google opponents to allow regulators to declassify some of the confidential data they submitted to justify their accusations, a step that would be necessary to present the data to Google for its response.
Wilko van Weert, a partner at law firm McDermott Will & Emery and specialist in the field, said Vestager could push for a settlement that would require Google to provide more information about its search ranking formula.
"Coming from a Scandinavian culture where transparency is very important, I would not be surprised if she pushes for maximum transparency in the way Google organizes and manages its search results," he said.
Any ruling by Vestager might have to be able to survive a potential court challenge from Google, which could be tougher to withstand because of Almunia's previous reversals.
Vestager may initially want to play hard ball, but that does not mean she will close the door to a settlement, said Mario Mariniello, a former economist at the Commission's competition unit and now an expert at think tank Bruegel.
“If at a certain point in the process effective remedies addressing her objections would be offered by Google, I guess it would be hard for her to say no,” he said.
Lovely airport, where are the planes? China's white elephants emerge
Lovely airport, where are the plan(Reuters) - When officials reopened the airport on the sparsely populated Dachangshan island off China's north-east coast after a $6 million refurbishment in 2008, they planned to welcome 42,000 passengers in 2010 and another 78,000 in 2015.
However, fewer than 4,000 passengers – or just a 10 a day - passed through its gates in 2013, data from China's civil aviation authority showed.
Since February last year, China has approved at least 1.8 trillion yuan ($290 billion) in new infrastructure projects to counter a slowing economy. The approvals come just as the full costs of the underused airports, expressways and stadiums built during the last spending binge are beginning to emerge.
While construction firms profited from the boom, it saddled China's provincial governments with $3 trillion worth of debt, with the most over-exuberant seeing their local economies weaken and become imbalanced towards the building sector.
The economy in Liaoning province, which includes Dachangshan island, was one of the slowest growing in China in 2014 - GDP expanded 5.8 percent, far undershooting its 9 percent target.
"There needs to be serious discussions over the economic rationality of large-scale engineering projects. Do we really need this many high-speed lines and airports?" said Lu Dadao, an academic at the Chinese Academy of Sciences.
A government official and economist estimated in November that China has wasted an approximate 42 trillion yuan on "ineffective investment" in the five years from 2009, with the problem worsening in the last two years.
AN AIRPORT, NO FLIGHTS
Despite its modern airport, finding a flight to Dachangshan island is not easy. Staff at Zhoushuizi International Airport in the port city of Dalian, the destination of the sole published route, said flights to the Changhai airport on Dachangshan have not operated for the last six months.
On a recent Wednesday morning, the airport's ticket counter was deserted apart from a female airport official. Still, its speckled grey marble floors were scrubbed shiny by a cleaning attendant, while the toilets were spotless.
"Call in two to three days to check if there's a flight," the official told Reuters. "The plane's under maintenance." A male colleague sat next to the baggage screening machine, head bent towards his knees, seemingly falling asleep.
Outside, there is little sign the small airport has had much impact on the island of about 30,000 inhabitants. Instead of shops or eateries, fishermen's homes surround the airport. Ferries are the preferred mode of transport to Dalian, locals said.
Undeterred, the Dalian government plans to spend 1.48 billion yuan ($238.9 million) this year to expand the airport to accommodate 250,000 by 2020, as part of its latest drive to spur the economy and to turn the fishing outpost into a holiday destination, according to local media reports.
Wu Hong, an official from Dalian Changhai County's publicity department, said the airport expansion was meant to keep up with the island's development, adding that it received 1.1 million tourists last year.
"In gross domestic product terms, none of this is bad. It generates growth, one way or another," said J Capital Research analyst Susannah Kroeber, who has been tracking China's infrastructure build-out since 2012.
"But is it useful and an efficient use of your resources? Absolutely not."
LARGEST, HIGHEST, LONGEST
Many of China's local governments set up corporations to obtain loans for massive infrastructure and real estate projects, skirting rules preventing direct borrowing while amassing a debt pile now seen as a key risk to the economy.
The results include the world's longest ocean-crossing bridge near the city of Qingdao and the highest railway track, which connects Qinghai province to Tibet. New districts built to house thousands have also been built, with some, such as Ordos in Inner Mongolia and Yujiapu in Tianjin, turning into ghost cities as China's residential property market slows.
While little official information is available on user numbers, China's expressways bled $10 billion in 2013 on toll revenue shortfalls. China Railway, which oversees the expansion of the world's longest railway network, is now 3.4 trillion yuan in debt, it said in September.
Still, there are concerns that it will be difficult to wean authorities off the addiction to over-building, particularly as signs emerge of fast-accelerating construction activity in China's inland western regions, where almost 40 percent of approved airport, railway and road projects are located.
Cement production is growing at its fastest rate in places such as Guizhou and Yunnan, two of China's poorest provinces that are in the southwest of the country, according to government data.
In northern China, where local governments are now dealing with overcapacity of steel and cement after their building booms, "you get a window into what happens after you build out pretty much all that you can possibly build," J Capital Research's Kroeber said.
"The early development of those trends...we think are starting to play out in other parts of the country now." es? China's white elephants emerge,
However, fewer than 4,000 passengers – or just a 10 a day - passed through its gates in 2013, data from China's civil aviation authority showed.
Since February last year, China has approved at least 1.8 trillion yuan ($290 billion) in new infrastructure projects to counter a slowing economy. The approvals come just as the full costs of the underused airports, expressways and stadiums built during the last spending binge are beginning to emerge.
While construction firms profited from the boom, it saddled China's provincial governments with $3 trillion worth of debt, with the most over-exuberant seeing their local economies weaken and become imbalanced towards the building sector.
The economy in Liaoning province, which includes Dachangshan island, was one of the slowest growing in China in 2014 - GDP expanded 5.8 percent, far undershooting its 9 percent target.
"There needs to be serious discussions over the economic rationality of large-scale engineering projects. Do we really need this many high-speed lines and airports?" said Lu Dadao, an academic at the Chinese Academy of Sciences.
A government official and economist estimated in November that China has wasted an approximate 42 trillion yuan on "ineffective investment" in the five years from 2009, with the problem worsening in the last two years.
AN AIRPORT, NO FLIGHTS
Despite its modern airport, finding a flight to Dachangshan island is not easy. Staff at Zhoushuizi International Airport in the port city of Dalian, the destination of the sole published route, said flights to the Changhai airport on Dachangshan have not operated for the last six months.
On a recent Wednesday morning, the airport's ticket counter was deserted apart from a female airport official. Still, its speckled grey marble floors were scrubbed shiny by a cleaning attendant, while the toilets were spotless.
"Call in two to three days to check if there's a flight," the official told Reuters. "The plane's under maintenance." A male colleague sat next to the baggage screening machine, head bent towards his knees, seemingly falling asleep.
Outside, there is little sign the small airport has had much impact on the island of about 30,000 inhabitants. Instead of shops or eateries, fishermen's homes surround the airport. Ferries are the preferred mode of transport to Dalian, locals said.
Undeterred, the Dalian government plans to spend 1.48 billion yuan ($238.9 million) this year to expand the airport to accommodate 250,000 by 2020, as part of its latest drive to spur the economy and to turn the fishing outpost into a holiday destination, according to local media reports.
Wu Hong, an official from Dalian Changhai County's publicity department, said the airport expansion was meant to keep up with the island's development, adding that it received 1.1 million tourists last year.
"In gross domestic product terms, none of this is bad. It generates growth, one way or another," said J Capital Research analyst Susannah Kroeber, who has been tracking China's infrastructure build-out since 2012.
"But is it useful and an efficient use of your resources? Absolutely not."
LARGEST, HIGHEST, LONGEST
Many of China's local governments set up corporations to obtain loans for massive infrastructure and real estate projects, skirting rules preventing direct borrowing while amassing a debt pile now seen as a key risk to the economy.
The results include the world's longest ocean-crossing bridge near the city of Qingdao and the highest railway track, which connects Qinghai province to Tibet. New districts built to house thousands have also been built, with some, such as Ordos in Inner Mongolia and Yujiapu in Tianjin, turning into ghost cities as China's residential property market slows.
While little official information is available on user numbers, China's expressways bled $10 billion in 2013 on toll revenue shortfalls. China Railway, which oversees the expansion of the world's longest railway network, is now 3.4 trillion yuan in debt, it said in September.
Still, there are concerns that it will be difficult to wean authorities off the addiction to over-building, particularly as signs emerge of fast-accelerating construction activity in China's inland western regions, where almost 40 percent of approved airport, railway and road projects are located.
Cement production is growing at its fastest rate in places such as Guizhou and Yunnan, two of China's poorest provinces that are in the southwest of the country, according to government data.
In northern China, where local governments are now dealing with overcapacity of steel and cement after their building booms, "you get a window into what happens after you build out pretty much all that you can possibly build," J Capital Research's Kroeber said.
"The early development of those trends...we think are starting to play out in other parts of the country now." es? China's white elephants emerge,
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