1. NYT: U.S. and China argue over contested islands
2. WP: U.S., China differences are clear, even as Hagel stresses cooperation in Beijing visit
3. WSJ: U.S., China defense chiefs trade barbs over regional ambitions
4. Reuters: U.S. defense chief gets earful as China visit exposes tensions
5. WSJ: China is in no rush to halt yuan's fall
6. WSJ: IMF trims global economic growth forecast
7. FT: IMF cuts downturn danger to near zero
8. FT: WTO chief Roberto Azevêdo warns on trade recovery
9. WSJ - China Realtime: Growth not good enough: Chinese city changes the rules
 

10. Xinhua: Chinese, U.S. defense chief vow to boost new type military ties
11. Xinhua: China's defense minister vows no territorial compromise
12. CD: China to continue grain imports
13. CD: China to close nearly 2000 small coal mines
14. Caixin: New gov't report shows China's air pollution worries going from bad to worse
15. CD: Shanghai top spot for graduates
16. SD: Banks, Alibaba spar over Internet finance services
 

1. NYT: U.S. and China argue over contested islands 
The United States and China clashed over Japan on Tuesday, as the Chinese defense minister asserted that Beijing had “indisputable sovereignty” over a group of islands in the East China Sea and that his country’s military stood ready to protect its interests in territorial disputes. The minister, Gen. Chang Wanquan, said that China would not be first to launch an attack over the territorial dispute. But he accused Japan of “confusing the right with the wrong” in its assertion of control over the disputed islands in the East China Sea, which are known as the Senkaku in Japan and as the Diaoyu in China. “China has indisputable sovereignty over the Diaoyu Islands,” General Chang said. He added that on the issue of what he called “territorial sovereignty,” China would “make no compromise, no concession, no treaty.” He continued, “The Chinese military can assemble as soon as summoned, fight any battle and win.” General Chang made his comments at a news conference with the United States defense secretary, Chuck Hagel, after a morning of meetings at the Ministry of National Defense. It is Mr. Hagel’s first trip to China as defense secretary.

Defense Secretary Chuck Hagel at a news conference in Beijing on Tuesday with the Chinese defense minister, Gen. Chang Wanquan. New York Times photo.
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2. WP: U.S., China differences are clear, even as Hagel stresses cooperation in Beijing visit 
Near a banner offering him a “warm welcome,” Defense Secretary Chuck Hagel urged officers at China’s premier military university to work toward a new era of cooperation between the world’s top military rivals. But during his first trip to China as Pentagon chief, icy body language and barbs telegraphed a relationship utterly devoid of warmth and very much saddled by suspicion. Chinese Defense Minister Chang Wanquan offered a defiant defense of Beijing’s territorial claims over two sets of islands contested by Japan and the Philippines, disputes that are particularly vexing for Washington because it has defense treaties with both nations. “On this issue, we will make no compromise, no concession — not even a tiny violation is allowed,” the Chinese minister warned sternly. “We are prepared at any time to cope with any type of threats and challenges.” Chinese officials have long viewed the Obama administration's policy to expand military and diplomatic engagements as an effort to contain Beijing's military rise and bolster its rivals in the region. American officials have made a concerted effort to dispel that narrative, saying they welcome a rising China, as long as it acts in a way they deem constructive. That effort has a long way to go.
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3. WSJ: U.S., China defense chiefs trade barbs over regional ambitions 
Chang Wanquan tells Chuck Hagel: China 'can never be contained."
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4. Reuters: U.S. defense chief gets earful as China visit exposes tensions 
Tensions between China and the United States were on full display on Tuesday as Defense Secretary Chuck Hagel faced questions in Beijing about America's position in bitter territorial disputes with regional U.S. allies. Chinese Defense Minister Chang Wanquan, standing side-by-side with Hagel, called on the United States to restrain ally Japan and chided another U.S. ally, the Philippines. Then, Hagel was sharply questioned by Chinese officers at the National Defense University. One of them told Hagel he was concerned that the United States was stirring up trouble in the East and South China Sea because it feared someday "China will be too big a challenge for the United States to cope with." "Therefore you are using such issues ... to make trouble to hamper (China's) development," the officer said. Hagel assured the audience that America had no interest in trying to "contain China" and that it took no position in such disputes. But he also cautioned repeatedly during the day that the United States would stand by its allies. "We have mutual self defense treaties with each of those two countries," Hagel said, referring to Japan and the Philippines. "And we are fully committed to those treaty obligations."
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5. WSJ: China is in no rush to halt yuan's fall 
U.S. pressure unlikely to cause policy shift, interviews with PBOC official, bankers suggest.
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6. WSJ: IMF trims global economic growth forecast 
Poor European, Japanese growth and struggling emerging markets undermine global recovery.

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7. FT: IMF cuts downturn danger to near zero 
The International Monetary Fund on Tuesday said a stronger recovery in rich countries such as the US and UK had sharply reduced the risks of another global downturn. Although the fund forecast global growth of 3.6 per cent in 2014, rising to 3.9 per cent next year, it warned that the world still faced “years of slow and subpar growth” unless countries embarked on structural reforms to improve their growth. The fund’s World Economic Outlook now estimates only a 0.1 per cent probability of global recession in 2014, compared with a 6 per cent chance last October, with similarly reduced risks for 2015. Most of the IMF’s forecasts were little changed, with expectations of stronger growth in the US, the UK and Germany boosting the outlook. Olivier Blanchard, chief economist of the IMF, said: “I think the recovery is strongest in the US in that, for the most part, the brakes are gone. People can borrow at low rates and the fiscal consolidation is now fairly slow . . . In a way it is pulling the world.”
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8. FT: WTO chief Roberto Azevêdo warns on trade recovery 
Global trade has failed to rebound as sharply as expected in the first three months of this year because of the eurozone’s fragile recovery and slowing growth in emerging economies, the head of the World Trade Organisation has warned. The WTO is widely expected to lower its projections for 4.5 per cent growth in world trade in 2014 when it releases its latest trade statistics next week. It will also say commerce expanded only around 2 per cent in 2013, down from a previously forecast 2.5 per cent. In an interview with the Financial Times, Roberto Azevêdo, who took over as director-general of the Geneva-based organisation last September, declined to discuss the forthcoming forecasts. But he said world trade had yet to see the buoyant recovery anticipated by the WTO. “I don’t sense any big rebound [in world trade] or indeed any big downward cycle at this time,” he told the FT. While the US upturn appeared to be gaining strength, Europe’s recovery was still uncertain, Mr Azevêdo said. Growth was slowing in emerging economies such as his native Brazil and China, he added.
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9. WSJ - China Realtime: Growth not good enough: Chinese city changes the rules 
Fast growth is no longer the fast track on the official career path.  At least that’s what the city of Shenyang is trying to tell its Communist Party cadres. According to the People’s Daily, the Shenyang government is changing its rating system for officials, lowering the scores for economic development and GDP growth while adding points for “reform and innovation” and  environmental protection (in Chinese). Shenyang, the capital of Liaoning province and the largest city in northeastern China, used to be the home of the nation’s iron and steel industry and was best known for its forest of smokestacks and chimneys. Now the city is hoping to reduce its dependence on heavy industry and erase its reputation for soot and smog. The newspaper said that “food and drug safety” and “public health and safety” will be added to improving people’s livelihood, increasing employment and ensuring housing security in the calculations of which officials get promoted – and which fall behind. An official at the municipal government confirmed that the change had been made though he was unable to provide further details on the actual scoring system. China’s Communist Party chief Xi Jinping said in November last year that China could no longer “choose its heroes according to economic growth records alone.” Improvements in daily life, social progress, environmental protection and other indicators all had to be taken into account, he added.
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10. Xinhua: Chinese, U.S. defense chief vow to boost new type military ties 
Chinese Defense Minister Chang Wanquan on Tuesday held talks with his U.S. counterpart Chuck Hagel on promoting the sound and stable development of a new type of military relations. Chang said this year marks the 35th anniversary of the establishment of bilateral relations, and it is also a crucial year for the two sides to build the new type of major-country relations. Chinese President Xi Jinping described the content of this kind of relationship with "no conflict and no confrontation, mutual respect and win-win cooperation", which revealed the characteristics of bilateral relations, said Chang. He called on the two countries to steadily and unswervingly push forward the construction of the new type of major-country relations, which is in line with the fundamental and long-term interests of the two sides as well as the lasting peace and stability of Asia-Pacific region and the world.
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11. Xinhua: China's defense minister vows no territorial compromise 
China will not compromise on issues regarding territory and sovereignty, Defense Minister Chang Wanquan said on Tuesday after he held talks with visiting US Defense Secretary Chuck Hagel. "China's stance on the East Sea and the South Sea is consistent and clear," Chang, also a state councilor, told reporters as he and Hagel held a joint press briefing. As a guest of Chang, Hagel arrived in China on Monday for a four-day visit. "China has indisputable sovereignty over the Diaoyu Islands, the Nansha Islands and their surrounding seas," Chang said, adding that China hopes to appropriately resolve disputes through negotiations and consultations with countries directly concerned. He reiterated that territory and sovereignty are among China's core interests. "We will neither compromise on, concede or trade on territory and sovereignty, nor tolerate them being infringed on even a little bit," the defense minister sai
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12. CD: China to continue grain imports 
Farmers in the United States will continue to be big beneficiaries of China's surging demand for international agricultural products this year, soybeans, corn and meat in particular. "China's policies have pushed the country to purchase more agricultural products from the US, and this trend will be maintained over the next several years," said Peng Yufa, a researcher at Beijing-based Chinese Academy of Agricultural Sciences. The US became China's biggest supplier for agricultural products in 2013, shipping $23.5 billion worth of grain, meat, fruit and dairy products to China, according to the US Department of Agriculture.
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13. CD: China to close nearly 2000 small coal mines 
China will close 1,725 small-scale mines with a total capacity of 117.48 million tons in 2014 as part of its programme to phase out low-quality coal production, its energy administration said on Friday. Smog-hit China has been desperate to reduce coal consumption, a major source of pollutants, including hazardous airborne particulate matter in the country's cities. Beijing hopes to close old and depleting mines in the east and consolidate output in a series of "coal energy bases" in remote parts of the country, including the vast northwestern regions of Inner Mongolia and Xinjiang. The National Energy Administration said in a notice posted on its website (www.nea.gov.cn) that local governments must also encourage mergers and technological upgrades in a fragmented coal sector long plagued by poor safety standards.
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14. Caixin: New gov't report shows China's air pollution worries going from bad to worse 
The country knew its air pollution problem was bad, then a new Ministry of Environmental Protection report showed just how bad air in most major cities is.
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15. CD: Shanghai top spot for graduates 
Shanghai has eclipsed Beijing as the No 1 place of employment for Chinese university graduates, a recent survey concludes. The report was released by the career consulting company Universum earlier this month. It polled more than 51,000 soon-to-graduate students from 103 universities across the country to discover their career expectations and preferences and how they perceive employers. Beijing, Shanghai and Guangzhou, the best known economic engines for China's development, unsurprisingly remained the top three destinations for aspiring graduates. But Shanghai replaced Beijing at the top spot. "Shanghai occupies a pivotal position in China's economy, and also has more job opportunities. That attracts more talent here," said Wen Jun, director of the Institute of Sociology at East China Normal University.
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16. SD: Banks, Alibaba spar over Internet finance services 
The war of words between China’s top bankers and entrepreneur Jack Ma, executive chairman of e-commerce giant Alibaba Group, continues to swirl around the issue of Internet finance. The Internet finance sector includes companies that provide lending, wealth management, payments and money transfers over the Internet. China’s Big Four banks — Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, and Bank of China — have long dominated the nation’s finance sector. Alibaba, one of the top three Internet companies on the mainland, wants to encroach on their turf. “If Steve Jobs were still alive, many people might hate him” as innovative ideas that challenge the status quo will always be vilified, Ma said. The People’s Bank of China halted Alipay’s virtual credit card business while it was still in the pipeline, stating that Alibaba didn’t advise the central bank of the new business and didn’t provide a plan of risk controls. Offline payments effected by scanning Quick Response Code were also stopped due to security concerns.
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17. WSJ: Ford's SUVs propel its China gains 
Combination of good timing and investment have U.S. auto maker outpacing rivals.
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18. Reuters: Nokia wins Chinese approval for Microsoft deal 
Nokia has won approval from Chinese competition authorities to sell its mobile phone business to Microsoft Corp without having to change its main technology patent practices, it said on Tuesday. The Finnish company agreed in September to sell its flagship business to Microsoft in a 5.4 billion euro ($7.4 billion) deal. However, it kept its patent portfolio, viewed by analysts as a promising source of future growth. Nokia's announcement on Tuesday sent its shares up 3.1 percent to 5.49 euros as investors had feared Chinese regulators could demand tough future conditions for Nokia's patents business. Nokia said it still expected the Microsoft deal to close this month but would not comment on which approvals were still needed before that. The deal has received the green light from other regulators including in the United States and European Union. Such approvals are needed due to the size of the transaction and the companies' presence in the different markets.
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19. NYT: Imax selling 20 percent of its China business 
China Media Capital, a state-run entertainment investment fund that has already done business with Time Warner, DreamWorks Animation and 21st Century Fox, added Imax to its deal portfolio on Tuesday. Imax, the Canadian large-screen movie company, said it would sell a fifth of its Chinese subsidiary to China Media Capital and the private equity firm FountainVest Partners for $80 million. The Chinese investors in turn plan to help Imax China complete a public offering of shares to finance expansion. The investors will pay in two equal installments, with the first expected to close on Tuesday and the second coming in 2015, Imax said. Nasdaq-listed Imax shares fell slightly in Tuesday trading. “At this juncture, it makes sense to bring in Chinese investors to help us better address local market dynamics and further optimize our business in China,” Richard Gelfond, Imax’s chief executive, said in a statement. Imax China operates about 150 theaters and is trying to build a home theater business.
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20. WSJ: China, Brazil sign corn-supply deal 
Country is trying to lower dependence on U.S., which supplies more than 90% of its imports.
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21. FT - Martin Wolf: Chinese savers can scorch the world 
We have had enough fun with financial crises. Beijing needs to reform first and then open up.
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22. WSJ - Yukon Huang and Canyon Bosler: The debt surge will not ruin China 
Worries that China's rapidly rising debts will lead to a financial crisis are likely overblown.
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23. RCM - Douglas Elliott: There won't be any sort of 'hard landing' in China 
It is difficult to go a day without reading scary headlines about China's economy. The reality is that it is going through major adjustments, and has some serious structural flaws, but that its even greater strengths will almost certainly prevent economic calamity. Troubles will come, and they will be handled with greater or lesser effectiveness, but the system, and those who run it, have the capability to manage the problems without serious risk of the disaster scenarios that some purvey. The reason I am not pessimistic overall is because the Chinese central government has the financial capability and administrative skills to deal with the problems as they arise. The central government has a debt level that is about a quarter of the size of China's annual output, which is a ratio about three times better than ours. They have organized financial bailouts of the banks in the past and they can rescue both the formal and informal financial sector if necessary. Equally importantly, the authorities are well aware of the need to rebalance the economy, and to fix weaknesses in the financial system, and have an active program of reforms to do this. There will undoubtedly be resistance to the reforms, mistakes in their execution, and problems of all kinds. However, China's strengths are formidable and I am confident that the problems will be overcome without disaster. Growth may well suffer for awhile, but without the kind of "hard landing" that many prophesy.
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24. LAT - Timothy Garton Ash: The challenge for China's Leninist emperor 
Can President Xi Jinping keep the country economically growing and politically under control?

China's President Xi Jinping, left, and his wife Peng Liyuan wave to the crowd at the Burg square in Bruges, Belgium. Associated Press photo.
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