Google turns Page on Schmidt, names co-founder CEO (Update)

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 Google announced Thursday that co-founder Larry Page, pictured in 2007, would replace Eric Schmidt as chief executive of the Internet giant in April.

When Google Inc. went public in 2004, the three men running the company promised each other they would remain a ruling triumvirate for at least 20 more years.

Although their commitment to work together until 2024 hasn't changed, Google CEO Eric Schmidt and company co-founders Larry Page and Sergey Brin are being reassigned in an attempt to recapture the free-wheeling spirit of the company's youth.

The surprise shake-up announced late Thursday will return Page, 37, to the CEO job he filled in Google's early days. The move ends Schmidt's decade-long reign in a position that also stamped him as the "adult supervisor" of a company that once seemed like a romper room filled with technological wunderkinds.
Schmidt, 55, will stay on as executive chairman. The new role turns him into Page's consigliere as well as a liaison for Google's business partners and government officials.

Brin, also 37, will be freed up to work on pet projects aimed at expanding Google's empire.
The changes take effect April 4, leaving the current hierarchy intact through the current quarter.

Google can only hope the new pecking order pans out as well as the old chain of command has. The formula turned Google's search engine into a moneymaking machine, with the latest reminder of the company's prosperity coming Thursday with the announcement that it earned $2.5 billion in the fourth quarter - the most for any three-month period in its 12-year history.

Page started out as Google's CEO when he and Brin started the business in a Silicon Valley garage and kept the top job until the venture capitalists backing the company insisted on bringing in a new leader.

That led to the 2001 hiring of Schmidt, a professorial engineer who was previously chief technology officer at Sun Microsystems Inc. and CEO of Novell Inc., both much bigger than Google at the time. After initially resisting Google's overtures, Schmidt bonded with Page and Brin to form a brain trust that proceeded to build the Internet's main gateway and most powerful company.

Google now boasts a market value of more than $200 billion, a success story that has placed Page, Brin and Schmidt among the world's wealthiest people. The three men are Google's largest individual shareholders, stakes that turned them all into multibillionaires.

But as Google has grown into a company with more than 24,000 employees, its decision-making increasingly has bogged down into a bureaucracy. The managerial constipation threatened to put Google at a competitive disadvantage as younger, more nimble Internet services such as Facebook pounce on new trends to lure away users and advertisers. At Facebook, 26-year-old founder and CEO Mark Zuckerberg calls the shots in an entrepreneurial culture that has enticed dozens of engineers to leave Google to work for the social networking company.

"My goal is to run Google at the pace and with the soul and passion of a startup," Page said in a Thursday interview. "I think I will have time to do that given the way we have split up our responsibilities."
Schmidt concurred in the same interview, saying it had started to become clear the company needed to be run more crisply.

"I am not as concerned about the titles as I am winning," Schmidt said. "I am quite certain that this change will result in faster decision making and better value for the shareholders."

Google's stockholders have had little to complain about, not that it would have made a major difference because Schmidt, Page and Brin combined own a controlling stake in the company. Google is coming off a year in which its earnings climbed 30 percent to $8.5 billion and, although its stock price remains below its all-time high reached in 2007, it has more than doubled from its lows during the recession.

Google shares rose $8.23, or 1.3 percent, to $635 in extended trading after Thursday's announcement. In the regular session earlier, the stock fell $4.98, or 0.8 percent, to close at $626.77. The stock peaked at $747 before the recession.

Although Schmidt has publicly acknowledged bickering with Page and Brin through the years, the management reshuffling appears to be amicable. Both Page and Schmidt heaped praise on each other in Thursday's interview and a conference call with analysts, with Schmidt describing Google's co-founders as his "best friends."

"I believe Larry is ready" to be CEO, Schmidt said during the call. "It's time for him to have a shot at running this."

Page hailed Schmidt as a "tremendous leader" whose contributions exceeded all expectations. "There is really no one else in the universe that could have accomplished what Eric has done," Page said.

Enlarge

In this Nov. 15, 2010 file photo, Google CEO Eric Schmidt speaks at the Web 2.0 Summit in San Francisco. Google Inc. co-founder Larry Page is taking over as CEO in an unexpected shake-up that upstaged the Internet search leader's fourth-quarter earnings Thursday, Jan. 20, 2011. Page, 37, is reclaiming the top job from Schmidt, who had been brought in as CEO a decade ago because Google's investors believed the company needed a more mature leader. (AP Photo/Paul Sakuma, File)

Although he tried to debunk the idea in Thursday's interview, Schmidt may have been growing weary of all the attention and prosaic duties that come with running one of world's most scrutinized companies. "I don't think Eric was pushed. I think he jumped," said Ken Auletta, author of "Googled: The End of the World As We Know It." "I think Eric is burned out."

There have been signs Schmidt would prefer doing something else. For the first time last year, he started to sit out of Google's quarterly calls to discuss its earnings. More recently, he has expressed irritation about how some of his public remarks have been picked apart to support the idea that Google is an arrogant company that can't be trusted to protect people's privacy as its search engine and other services collect vast amounts of personal information.

In October, Schmidt drew fire for responding to a hypothetical question posed at a forum in Washington, D.C., about an implant that would let Google know what its users were thinking. He responded that Google's policy is to "get right up to the creepy line and not cross it," and an implant would cross the line.

He also said that as users voluntarily share information online, it doesn't need users to type in search queries for the company to tailor the results. "We don't need you to type at all. We know where you are. We know where you've been. We can more or less know what you're thinking about," he said.

Such comments have been repeated in online musings that portrayed Schmidt and Google as "creepy."
"The biggest thing I wonder is after a year or so of having various gaffes and statements taken out of context if he decided he no longer wanted to play that front-man role," said Danny Sullivan, the editor-in-chief of the SearchEngineLand news site.

Schmidt's role as a government ambassador could be particularly important because the company is increasingly wrangling with regulators and lawmakers as it tries to expand into new markets even as it faces complaints that it has been abusing its dominance of Internet search to thwart competition.

Schmidt, who has been called upon to give economic advice to President Barack Obama before and after he was elected, could be well suited to defuse the concerns in the U.S. He is also expected to play a key role in identifying Google's takeover targets, which makes sense if he is also going to be addressing antitrust concerns.

Google has plenty of ammunition left to finance its ambitions for this year and beyond. It ended December with $35 billion in cash.

The change in command seemed long overdue to longtime Silicon Valley analyst Rob Enderle.
"Whenever you have a caretaker CEO, they're supposed to stay in place until the founders have enough experience," he said. "Larry had enough experience about four years ago."

©2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Blog postings can backfirfe, collide!

Blog postings can backfire

PUTIK LADA By FOONG CHENG LEONG

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Social media influence has hit court proceedings, with lawyers trolling blogs and Wikipedia in search of material that can help them argue the case for their clients.

LAST year brought further interesting development to social media and laws all around the world. Cases making references to social media tools saw an increase.

Social media was a tool for lawyers and litigants to help parties to fight their cases. Social media was also the cause of some parties’ mortification and incarceration.

In one High Court judgment last year, the judge recognised the publication of defamatory blog postings by a husband as one of the grounds to present a divorce petition before the expiry of two years from the date of marriage.

He also recognised that a defamatory statement in a blog posting operated in a borderless realm, and would continue to exist until the maker of the blog removed it.

The challenge against the constitutionality of S. 233 of the Communications and Multimedia Act 1998, the provision commonly used against Internet users, was dismissed by the High Court.

In this case, the defendant was charged with making disparaging remarks against the Sultan of Perak during the struggle between Barisan Nasional and Pakatan Rakyat. The court held, among other things, that the section did not impede freedom of expression. S. 233 is to ensure that the freedom given by the Constitution is exercised responsibly.

The use of Wikipedia as a reference is increasingly recognised in Malaysia, notwithstanding that the reliability of Wikipedia is questionable, as anyone can add or edit an entry in Wikipedia.

Nevertheless, the reliance on Wikipedia by our courts can be traced in reported cases as early as 2007.

Last year Wikipedia was referred to in Etonic Garment Manufacturing Sdn Bhd v Kunn-G Freight System (M) Sdn Bhd [2010] 1 LNS 13 (for the meaning of freight forwarder), PP v Murugan a/l Arumugam [2009] 1 LNS 1759 (for the meaning of atherosclerosis) and Thai Long Distance Telecommunication Co Ltd & Anor v Malaysian Maritime Dredging Corpo­ration Sdn Bhd (Kuala Lumpur Suit No: D-22-352-2005, for the meaning of chart datum).

Social media influence had also hit court room proceedings. It is common in Malaysia for people, in particular reporters, to tweet live from the courts. In the United Kingdom, the Lord Chief Justice issued a guideline for the use of live text-based forms of communication from court.

In this guideline, the Lord Chief Justice approved the use of Twitter for court reporting. However, in the US, certain courts ban the use of social media by juries.

In the US case of Romano v. Steelcase Inc, 2006-2233 (N.Y. Super. Sept. 21, 2010), Kathleen Romano sued Steelcase Inc for injuries she suffered after she fell off an allegedly defective desk chair manufactured by Steelcase Inc.

As a result of the fall, she claimed, she suffered restricted movement of her neck and back and “pain and progressive deterioration with consequential loss of enjoyment of life”.

In defence, Steelcase applied to access Romano’s current and historical Facebook and Myspace pages and accounts which are believed to be inconsistent with her claims in the action concerning the extent and nature of her injuries, especially for loss of enjoyment of life. The court granted Steelcase’s application.

Similarly, in McMillen v Hummingbird Speedway Inc, et al, Court of Common Pleas of Jefferson County, Pennsylvania, Civil Division, No. 113-2010 CD, Opinion on Defendants’ Motion to Compel Discovery (Sept. 9. 2010), the plaintiff sued the defendants for injuries suffered.

The defendants claimed that posts on the public portion of his Facebook page showed that he had exaggerated his injuries. The court granted the defendants access to the plaintiff’s private portion of his Facebook and Myspace account to determine whether or not the plaintiff had made any other comments which impeached and contradicted his disability and damages claims.

Closer to home, in a reported Industrial Court case, an employee claimed that she was forced by her employer to resign.

In response, her employer argued that the resignation was voluntary and they produced extracts of the claimant’s blog which showed the claimant had written about her feelings regarding her employment with the employer.

In it, she stated that she wanted to leave the company and admitted that she went for job interviews as she had already decided to go away.

The Industrial Court chairman relied on the blog entries to find that the employee had intended to leave and found that she had gladly tendered her resignation to take on new employment.

In Australia, a hairdresser won compensation for wrongful dismissal after losing her job for making unflattering remarks about her employer on her Facebook.

In Miss Sally-Anne Fitzgerald v Dianna Smith T/A Escape Hair Design [2010] FWA 7358, Commissioner Michelle Bissett for Fair Work Australia said that posting comments about an employer on a website (Facebook) that can be seen by an uncontrollable number of people is no longer a private matter but a public comment.

It would be foolish of employees to think they may say as they wish on their Facebook page with total immunity.

This year brings another exciting watershed to Malaysia’s social media legal sphere. The Personal Data Protection Act 2010, which governs the processing of personal data, is pending enforcement.

Proposed amendments to the Copyright Act 1987 have been drawn up in the form of a Bill to exempt Internet service providers from liability for copyright infringement under certain circumstances.

The Bill also empowers the court to order an Internet service provider to disable access to infringing material.
Furthermore, the so-called Internet Service Providers Liability Act may be passed to compel Internet service providers to take action against their users if they download songs or movies illegally.

The writer is a young lawyer. Putik Lada, or pepper buds in Malay, captures the spirit and intention of this column – a platform for young lawyers to articulate their views and aspirations about the law, justice and a civil society. For more information about the young lawyers, visit www.malaysianbar.org.my.

When blogs and big business collide

OPTIMISTICALLY CAUTIOUS By ERROL OH

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REMEMBER a blog called Sime Darby Watch (SDW)? It has been completely wiped out when the mysterious blogger he never revealed his identity on the blog abruptly called it quits in April 2009. It's therefore hard to pinpoint when it was created, but early 2008 seems to be a safe bet.

One news report puts it as March 2008. That was not long after the completion of the mega-merger that saw Sime Darby Bhd, Kumpulan Guthrie Bhd and Golden Hope Plantations Bhd becoming a single entity we now know as Sime Darby Bhd.

It was apparent that the blogger had not come from the old Sime Darby. In fact, he explained that the blog was “for employees of the now-defunct Kumpulan Guthrie and Golden Hope to voice their views and concerns”. The blogger clearly had access to a lot that was going on at the new Sime Darby and was decidedly critical of its management, which was dominated by executives from the old Sime Darby. He often brought to light major developments and issues at the company that had not been publicly available.

SDW was easily the most well-known among the blogs that targeted local businesses. Sime Darby was (and still is) one of Malaysia's biggest companies, and the merger had enlarged it further although not everyone thought the exercise was a good idea. And as a government-linked company, there was (and still is) a political dimension to many of its actions and decisions. These factors guaranteed a ready audience for dirt on Sime Darby.

The blogger's ability to consistently expose alleged wrongdoings and his writing skills in lambasting his target, also helped SDW garner a significant following.

No other anti-corporation blogs have so far come close to SDW's influence. Most have been short-lived, seldom lasting beyond a handful of entries after the bloggers had run out of things to say or have simply exhausted their motivation to blog.

However, another blog has recently surfaced, promising to go on “for months to come to weed out corporate misconducts (sic) as a service to the taxpayers and Malaysians in general”. The blog's title, zarinahtakesapaycut, is a swipe at Securities Commission chairman Tan Sri Zarinah Anwar, but the principal target is actually professional services firm PricewaterhouseCoopers (PwC).

The anonymous blogger has been prolific so far. The blog kicked off on Dec 1 last year with four postings. Until yesterday, there have been 34 more. That's an average of one posting every 36 hours! He has also been persistent (and somewhat pesky), compiling an email list to ensure that all those on the list including this columnist and some colleagues are notified whenever the blog has a new entry.

The blogger definitely knows a thing or two about grabbing attention. The headlines for the blog entries are usually cleverly crafted and compelling. The blogger has been creative and resourceful in generating angles and themes that suggest that the blog is constantly introducing fresh information and highlighting new players and developments. For example, a Dec 31 entry cited a May 2009 article by this columnist to back up the blog's claims about PwC.

The truth is, zarinahtakesapaycut is a relentless attempt to discredit PwC by harping on the same few issues. The bias is obvious. Only the hopelessly clueless will think that the blogger is being objective. Even so, we can't dismiss the blog with the wave of a hand, partly because the blogger is insistent in bombarding readers with details.

This is not the place to dwell on how much of the blog is factual. The point here is that the blogosphere has become part albeit a small one for now of the corporate landscape. However, we have yet to properly understand how we treat the information we get from the blogs. The idea of regulating blogs is an incendiary matter and we may not even have to go there but there ought to be more discussion and engagement within the business community about this subject.

How can we not be ambivalent about these anonymous bloggers who attack listed companies, Big Four firms and business regulators? On one hand, we are thrilled by the pugnacious muckraking and the whiff of scandal, and we cheer the notion of the lone guy, armed with a PC and Internet connection, going up against the deep-pocketed, soulless corporation? Yet, can we really afford to ignore the questions about the bloggers' motives and integrity, and the veracity of the information they put up in cyberspace?

Sure, we can agree that everybody ought to take the content of these blogs with a pinch of salt, but that does nothing to address the lack of fairness and transparency that can occur. Besides, if the bloggers are indeed accurate and have revealed stuff that the companies had intended to hide, our scepticism may well work against us. And what if the bloggers are way off the mark, or worse, are deliberately spreading lies? In such cases, sometimes, no amount of salt can undo the damage suffered by the targets. And when the businesses suffer, their stakeholders (such as the minority shareholders) feel the pain as well.

Yes, legal action is an option, and yes, the mainstream media isn't perfect either. We know this, but what we need to learn next is how to effectively deal with irresponsible blogging. In business, as in politics, one of the worst things that can happen to us is when our ability to choose what to believe in, is weakened by bad information.

● Deputy executive editor Errol Oh doesn't have a blog.

The happiness index

THINK ASIAN By ANDREW SHENG

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A new metric of human well-being should capture areas such as job security, health and education


ARE we happy with our quality of life? GDP seems to be growing, but most people feel that the quality of life has become a rat race.

In 2008, just as the financial crisis deepened, French President Sarkozy asked Nobel laureate Joseph Stigliz to form the Commission on the Measure of Economic Performance and Social Progress, comprising well known social thinkers and philosophers, such as Indian Nobel laureates Amartya Sen and Kenneth Arrow, Turkish economist Kemal Dervis, former World Bank chief economist Francois Bourguignon and other leading Western professors to come up with fresh thinking on measuring the quality of life.

The commission report came out in late 2008, but its important conclusions and messages were perhaps overshadowed by the financial crisis.

Nevertheless, as governments and companies prepare for the recovery, it is more timely than ever to think beyond GDP (gross domestic product), namely not the quantity of how much we produce or consume, but its quality.

It is interesting that a French President has commissioned such a study, not the British, American or Japanese.
The French don't have the macho precision engineering of the German car nor Japanese technical perfection, but you know a French car when you see one for its individualistic and sometimes idiosyncratic design, but more for its comfortable ride.

You only have to look at the way Asia has rushed head long at full speed on pushing growth to realise that this may not be what the new middle class (and indeed everyone) would be caring about.

I was impressed when one senior Asian professional economist started to talk about beauty and happiness as one measure of economic aspiration.

The Stiglitz Commission started with the premise that GDP has increasingly become an inadequate measure to gauge the human sense of well-being over time in respect of its economic, environmental, and social dimensions, particularly sustainability.

Thus a new metric of human well-being should capture these dimensions economic and job security, health, education, personal and work environment, a sense of equality and respect, connectivity with family and friends, a pleasant natural environment, and physical security.

There is of course a whole generation who seems to care more and more about Chanel handbags, iPhones, Chateau Lafite and all the icons of material wealth. Others are going into yoga, qigong or religion.

There is the digital generation who communicate to their parents through Facebook, Youtube and Twitter, rather than talking face to face.

Social change is happening when governments shake when SMSes start flying with news of another piece of social agitation. But the bulk of Asian society is still struggling with making ends meet.

In many parts of Asia, we are struggling with crumbling social infrastructure, overcrowding, environmental pollution and social disquiet.

Social injustice is being expressed even in very wealthy and successful Asian cities.

This month, we were stunned by the random and violent shooting of politicians and the crowd in Arizona.
All of a sudden, we are reminded that in addition to our material living standards, such as income, most of us care a lot about our personal and physical security. What can governments and civil societies do?

The Stiglitz Report is a very useful reminder that we should begin by measuring what people care about, not just in terms of the quantity of production or consumption, but the quality of well-being.

The report reminds us that GDP is a very narrow concept and does not measure many qualitative issues that human beings care about.

For example, most people feel that official statistics, such as CPI, do not reflect their own perception of inflation.

The GDP as a concept does not measure or under-count what households and civil society produce.

They certainly do not incorporate any measure of inequalities, since the average per capita GDP can disguise the sense of growing disparity.

Most of all, GDP statistics do not measure at all environmental degradation or the decay of physical infrastructure around us.

As Asia is going through rapid changes in demographics, urbanisation and social change, it is not surprising that the metrics that we are using to measure our economic success or failure is not up-to-date.

It is as if we are driving a car whose speedometer shows that we are accelerating at 70 miles per hour, but there is no indication that we may be going into a bad neighbourhood or that the car may be falling apart.
Indeed, if we focus on speed, we may neglect the direction that we are heading towards. Speed comes before a crash.

Globalisation has created huge opportunities as well as threats. Governments need to appreciate that in the global competition for talent, people can easily walk with their feet.

But they will not walk if they love the city or country-side they live in. We all want a sense of liveability clean air, good health, great culture, nice people, no fear of physical security.

Well-being is a sense of community that people care for each other, a feeling of being more equal and mutual respect.

We should not see strangers as another mugger, nor a policeman as a person to be feared.

We want good governance in our society, most of all a caring community that looks after the poor, the weak and the under-privileged.

As governments struggle with how to deliver better governance, we need to begin with better measures of social well-being than GDP.

Unfortunately, the Stiglitz Report is only a beginning, by pointing out the weaknesses of GDP; but it has not operationalised how we arrive at a better measure.

Now that Asia has reached the head table, one Asian government or statesperson should take the leadership of chairing a roundtable of statistical experts to arrive at a better measure of social well-being than just GDP.
We need Stiglitz Report 2.0, with more Asian input. Welcome back, Joe.

Andrew Sheng teaches at Tsinghua University and is author of the book “From Asian to Global Financial Crisis”.

Common interests shared

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President Hu Jintao meets US Senate Majority Leader Harry Reid on Capitol Hill in Washington on Thursday. [Photo/Agencies]

WASHINGTON - President Hu Jintao and his US counterpart Barack Obama agreed to "share expanding common interests" while pledging closer cooperation in areas that included trade, energy, the environment and protection of intellectual property rights, as they held a summit in the White House on Wednesday.

"We both agreed to further push forward the positive, cooperative and comprehensive China-US relationship and commit to work together to build a partnership based on mutual respect and mutual benefit, so as to better benefit people in our own countries and the world over," Hu told a post-summit news briefing.

Special Coverage: President Hu visits United States Related readings: US exports to China set to rise  China, USA both part of 'family of man'  China, US need co-op to solve trade imbalance: Chinese minister  China, US reach $45 billion export deals

Obama said he "absolutely" believes "China's peaceful rise is good for the world, and it's good for America.

"We've shown that the US and China, when we cooperate, can receive substantial benefits," he said.

Hu said China will continue to provide a level playing field for US investors and urged the US to relax its restrictions on high-tech exports and offer a fair environment to Chinese enterprises investing in the US.

He also asked Washington to recognize China's full market economy status.

With increased partnership a priority for both countries, Hu touched on the subject when he addressed a welcoming luncheon hosted by the US-China Business Council and the National Committee on US-China Relations in Washington on Thursday before leaving for Chicago.

"The China-US relationship is not one in which one side's gain means the other side's loss," Hu said, addressing concerns expressed by some people in the US over the increasing economic and political competitiveness of China.

It is only normal, in any relationship, to have disagreement and friction, Hu said. But he added that a strategic and long-term perspective will ensure relations will not be affected or held back by any individual incident at any particular time.

A joint statement was issued after the summit, which was also used to unveil a series of deals, including China's purchase of 200 Boeing aircraft. US officials said the $45 billion deals would support an estimated 235,000 American jobs.

During the post-summit news briefing, the two leaders spoke glowingly about cooperation while trying to seek a more mature and respectful relationship. They also shared some unexpected laughs. 

"We want to sell you all kinds of stuff," the US president said, drawing laughter from the packed room. "We want to sell you planes. We want to sell you cars. We want to sell you software." 

While there were few signs the leaders had ended disagreements on issues such as the yuan - which Obama said is undervalued - and human rights, both sides, however, promised to seek further cooperation on the world's most pressing problems and embrace an era of "friendly competition".

After an event-packed day that also included a meeting with business executives, Hu was hosted at a gala state dinner, sprinkled with stars such as action hero Jackie Chan and singer Barbra Streisand, in White House rooms bathed in purple and red lights.

"While it is easy to focus on our differences, in cultures and perspective, let us never forget the values that our people share," Obama said in a toast to Hu, pointing to mutual hard work, sacrifice and love of family.

Experts hailed achievements made by Hu during his second day of the US visit.

Yuan Peng, an expert on US studies with the China Institutes of Contemporary International Relations, said the joint statement was a guideline for relations in the next decade and beyond.

But he noted "it is important to implement the statement through pragmatic mechanisms and concrete actions".

Jamie Metzl, executive vice-president of the Asia Society, said it is a positive sign that the two presidents addressed differences in areas such as human rights and the yuan exchange rate.

"Both sides are discussing areas for collaboration. And the issues that divide us are being explored in a positive and constructive way." 

Philip Levy, resident scholar at the American Enterprise Institute, said there has been a shift in the Obama administration's China policy.

"The House Committee on Ways and Means has made it clear that they are less interested in denunciations of currency practices than in practical attempts to solve trade problems," he told China Daily.

"It is not that the US is any less interested in seeing a currency appreciation ... rather, it seems to be a constructive attempt to find those issues where cooperative action is possible." 

Charles Freeman, at the Center for Strategic and International Studies, said the Obama administration's tactic to reduce strategic mistrust has led to greater emphasis on cooperation in global affairs.

"It now recognizes that China is a considerable ... mover in that architecture. By elevating its assessment of China's role in global affairs, however, the US expects China to play an active role and reduce threats to the (US-led) international architecture," said Freeman.

Yukon Huang, senior associate in the Carnegie Asia Program at the Carnegie Endowment for International Peace, said the two countries are trying to find common ground for more productive dialogue.

"The economic woes of the US only exacerbate the tension (over the yuan exchange rate). But China's economy is growing at an average 10 percent per year. It has more flexibility to find a win-win solution."

This year will see more high-level exchanges between the two countries.

Both presidents will meet again at the 2011 Asia-Pacific Economic Cooperation meeting in Hawaii.

US Vice-President Joe Biden will visit China later this year to meet Vice-President Xi Jinping, who will pay a return visit.

Source: Zhang Yuwei and Ariel Tung in New York, Li Xiaokun in Beijing, AP, and Reuters contributed to this story

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China to cut reliance on US dollar

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Yuan to Trade With Australian, Singapore Dollars

By Emma O’Brien, Blooberg

 

China will allow direct trading of the yuan against the Australian and Singaporean dollars as the world’s largest exporter strives to reduce the role of the greenback in trade, Standard Chartered Plc says.

Spot trading of the yuan versus Malaysia’s ringgit started in August and Russia’s Micex exchange has traded the yuan against the ruble since Dec. 16. HSBC Holdings Plc plans to offer spot trading between the yuan and the Turkish lira in March, according to a Jan. 11 statement.

“The yuan internationalization process is clearly accelerating and I would expect this to continue, particularly in Asia,” Callum Henderson, global head of currency research in Singapore at Standard Chartered, the U.K. bank that generates more than three quarters of its earnings from Asia, said in an e-mail interview yesterday. “We expect more countries, such as Singapore and Australia, to see this kind of bilateral currency agreement in due course.”

China is allowing greater use of the yuan outside its borders as it seeks to reduce its reliance on the dollar, particularly in trade transactions with neighboring countries. Asian exchanges that trade palm oil derivatives and gold are already starting to accept Chinese currency for payment and collateral. The central bank in Beijing is considering allowing yuan held outside of mainland China to be used for inward investment, Zhang Jianjun, president of the Shenzhen arm of the regulator said Jan. 18.
Extending Trading

The ringgit weakened 0.3 percent to 0.4648 per yuan by 5:58 p.m. in Kuala Lumpur, according to prices compiled by Bloomberg. The ruble lost 0.3 percent to 45.55 per 10 yuan by the end of the one hour trading session in Moscow, which Micex chief Ruben Aganbegyan said last month would be extended should volumes increase.

China is Malaysia’s largest trading partner after Singapore and is tied with the Netherlands as Russia’s biggest, overtaking Germany last year. China became the largest trading partner of Australia, the world’s biggest iron-ore and coal exporter, in 2007, according to trade ministry figures. It is Singapore’s third-largest trading partner after Malaysia and the European Union.

Citigroup Inc. in Moscow is about to start offering yuan- ruble trading to its clients, according to Head of Foreign Exchange Trading, Denis Korshilov. “Currently it’s 95 percent customer orders, importers mostly,” he said by e-mail yesterday.

Dollar Settlement Reduction

The expansion of direct yuan trading outside of China will remain mainly for “trade settlement” in the medium-term, Standard Chartered’s Henderson said.

Should more countries introduce direct trading of the yuan and companies that trade with China start to utilize it, “the yuan internationalization process may be part of a more general reduction in dollar settlement,” he said.

President Barack Obama has criticized what the U.S. sees as China’s policy of keeping the yuan weak during Chinese President Hu Jintao’s visit to the country this week. The yuan is “undervalued” because of Chinese intervention, and contributes to the U.S.’s record $28 billion trade deficit with the Asian nation, Obama said after a meeting between the two leaders in Washington yesterday.

Chinese Premier Wen Jiabao said in March he was “worried” about holding assets denominated in the greenback.

American companies see hopes for future in China

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The American Chamber of Commerce in Shanghai said US companies have achieved great success in the past year in China, and are optimistic about the two nations' closer ties and win-win prospects.

The report was released on Wednesday as President Hu Jintao is paying a state visit to the United States.

The Chamber said despite challenging market conditions and an increasingly competitive business environment, 87 percent of the 346 US companies in China reported revenue growth, surging from 47 percent in 2009 and 77 percent in 2008.

Seventy-nine percent of them said they are in the black, up from 65 percent in 2009 and 70 percent in 2008.

The report, entitled China Business Report 2010-2011, showed 61 percent of the US companies increased their market share in China, up from 40 percent in 2009 and 52 percent in 2008.

Brenda Foster, president of the Chamber, said there are clear challenges to doing business in China, but reiterated a statement last week from US Treasury Secretary Timothy Geithner that "the economic strings of US and China are in many ways complementary".

"And although China faces a complicated set of challenges, it is very much in the interests of not only the American business community, but in the interests of the United States to well manage China's business event," Foster said.

"The result of this year's survey shows that the financial performance of American companies in China improved in 2010, following what had been an uneven growth between 2008 and 2009. Not only have US companies recovered, they are reporting all-time performance highs and remain optimistic about their business prospects," said Foster.

Although showing impressive financial results, US companies report that China remains a challenging business environment for a host of reasons. Finding enough qualified staff is the No 1 business challenge, and competition is picking up not only between US and other foreign companies but between US and Chinese companies - both private and State-owned enterprises.



"This year's survey results indicate that US companies in China have come to expect challenges in the China market and have weighed them against the opportunities and have found a way to succeed despite them," said Foster. "Nonetheless, it is essential that the US continues to aggressively engage China to address key business challenges that hinder market access and impact future investment."

New additions to this year's report are the Chamber's China Business Climate Indices, which measure business performance across the three broad measures of success, confidence and the welcoming environment for US companies in China.

Businesses in China's quickly growing retail sector top the success index, auto companies ranked as the most confident about their future opportunities, and chemicals and electronics companies are among the industries that feel the most welcome.

"US companies in China are performing at a high level and will continue to do so," said Michael Klibaner, national director and research head at Jones Lang LaSalle China, a leading global property service firm. "But what we show in this year's report is that just as there is no one 'China market', the challenges and opportunities for US companies vary by market sector and by industry."

Optimism regarding the China market continued in 2010. About nine out of 10 US companies in China forecast a revenue increase for 2011. China is the No 1 priority for 20 percent of US companies, and the percentage of companies expecting to increase investment in China by more than 15 percent more than doubled in 2010.

"There has always been a great deal of optimism about the China market, mostly based on the hope of future opportunity," said Steven Ganster, managing director of Technomic Asia, a market strategy consulting firm based in Shanghai.

"But now we're seeing a more mature or seasoned optimism, grounded in the reality that succeeding in China is critical to the future of the company no matter the challenges it presents," he said.

This year's survey was conducted online from mid-November to early December. A total of 346 companies participated, yielding a response rate of 25 percent.

The American Chamber of Commerce in Shanghai is the largest and fastest growing American Chamber in the Asia-Pacific region.

Source: China Daily: 
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China overtakes U.S. as biggest economy?

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Though China is yet to release its annual economic data, a U.S. economist has already crowned China as the world's biggest economy in terms of purchasing power parity (PPP).

The "generous" No. 1 title given by Arvind Subramanian, senior fellow at the Peterson Institute for International Economics in Washington, has drawn suspicion from Chinese scholars, who say such remarks are "pure fiction."

Chen Fengying, director of the World Economy Institute of China's Institute of Contemporary International Relations, said the title was an honor unfit for China.

The size of China's economy in 2010 was 14.8 trillion U.S. dollars, compared with 14.6 trillion U.S. dollars for the United States, when accounting for the countries' differing costs of living, Subramanian wrote in a note published on Jan. 13, a week before President Hu Jintao visits Washington.

Purchasing power parity calculates gross domestic product (GDP) using exchange rates and takes into account price differences of the same goods between nations.

However, statistics from the International Monetary Fund (IMF) and the World Bank (WB) tell another story to that of Subramanian's.

The IMF, for instance, estimates gross domestic product, in PPP terms, in the United States was about 14.6 trillion U.S. dollars in 2010, while China's was 10.1 trillion U.S. dollars. The World Bank estimates a similar gap.

That's why David Leonhardt, an economics journalist with the New York Times, said on Jan. 14 in his article "On the size of China's Economy, a dissenter" that "I was careful to say that, by most measures, the United States still has by far the largest economy in the world."

Ranjit Lall, the Financial Times' 2010 Peter Martin Fellow and also a senior statistician, said on Jan. 14 in his article "Has China already overtaken the U.S.?" that "one might wonder, if this were the case, why Chinese policymakers have made no effort whatsoever to correct the IMF's statisticians.

Subramanian's conclusion is far from scientific and his claim "highly overestimates the Chinese Yuan purchasing power," said Chen Fengying.

No wonder, David Leonhardt said Arvind Subramanian "remains very much in the minority."

"Even if China's economy surpasses the U.S. by economic scale one day, in terms of total economic scale, there is a long way to go before China becomes as strong as the U.S.," Chen said.

Concerning GDP per capita, IMF figures show that the average American is six times better off than the average Chinese person, however Subramanian thinks the difference is only four times, according to Ranjit Lall's article.

Subramanian's conclusion aims to make China bear responsibilities far beyond its ability, Chen said.

Chen also downplayed a poll by the Washington-based Pew Research Center for the People and the Press, which revealed last week some 47 percent surveyed Americans said China is the leading economic power with 31 percent naming the U.S., saying that the majority of Americans do not know China in depth, and their judgments are still influenced by both countries' performances during the global economic downturn. 

Source:Xinhua
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Penang Pulau Jerejak's RM30million Loss

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No time limit for Pulau Jerejak report, says PAC

By Asrul Hadi Abdullah Sani

January 19, 2011

Azmi said a formal request has been sent to the A-G. — file pic

KUALA LUMPUR, Jan 19 — The Public Accounts Committee (PAC) said that it will not set a deadline for the Auditor-General’s (A-G) report on the Pulau Jerejak island resort development, which Penang claims has cost the state RM30 million. Its chairman, Datuk Seri Azmi Khalid, confirmed that PAC has agreed to formalise the request today to the A-G.

“The committee has agreed today to get the Auditor-General to give us some info into what is going on in Pulau Jerejak. So the Auditor-General will have to do the auditing before giving it (the report) to PAC.
“We have not given a timeline. We don’t give them timeline,” he told reporters after chairing PAC meeting in parliament here.

The 362ha island off the eastern coast of Penang once served as a penal and leper colony but was turned into a resort by a joint-venture company approved by former Barisan Nasional (BN) Chief Minister Tan Sri Dr Koh Tsu Koon.

The remodelled island is now run by Tropical Island Resort (TIR), which owes the state RM10.6 million in unpaid land premium. UDA holds a 51 per cent stake in TIR with the balance owned by state-owned Penang Development Corporation (PDC).

Penang Chief Minister Lim Guan Eng, who is also PDC chairman, said besides the outstanding premium payments, the project had also caused the state agency to suffer a RM19 million loss which it cannot recoup.
Lim also said almost all usable land on the former leper colony had been handed over to UDA during Koh’s 15-year tenure as chief minister.

He was quoted in the local media today as saying the state government was willing to buy UDA’s stake in TIR if the federal agency paid for the land and land premium.

Earlier, Azmi had chaired an inquiry on Penang Port for malpractice and irregularities as underlined in the recent Auditor-General’s 2009 report.

Azmi said that the PAC was satisfied with the explanation given by the port’s chief executive officer, Datuk Ahmad Ibni Hajar, but refused to divulge any details under Dewan Rakyat’s Standing Order 85.
The Standing Order stipulates that any statement recorded before the legislative committee must be embargoed until its final report is tabled before Parliament.

Penang Port is a wholly government-owned subsidiary under the Finance Ministry.