Three Chinese CHICOM (CHICOM'S=CHINA COMMUNISTS) institutions were among the world's top four banks at the end of 2007 at a time when the market capitalisation of Western banks was suffering from a global financial crisis, a study showed Wednesday. The number one spot in the rankings, compiled by the Boston Consulting Group, was occupied by the Industrial and Commercial Bank of China, with market capitalisation of nearly 340 billion dollars (218 billion euros). In second place was China Construction Bank, followed by HSBC of Britain, Bank of China, Bank of America and Citigroup of the United States. The study found that banks in North America and Western Europe had suffered a loss of 695 billion dollars in market capitalisation at the end of 2007 while their counterparts in emerging market countries Brazil, Russia, China and India had seen their market capitalisation increase by 753 billion dollars. Major US and European banks have suffered losses and asset writedowns stemming from the near collapse of US subprime -- high risk -- mortgage sector, which undermined the value of billions of dollars' worth of their mortgage-backed securities.

Worldwide protests over China's crackdown in Tibet are spreading, putting pressure on Beijing's Communist leaders just months ahead of their showpiece Olympic Games in August.Tibet's exiled leaders say about 100 people have been killed in a crackdown on anti-Chinese protests and have called for an international investigation. China has denied wrongdoing and blamed Tibetans for the unrest. Growing numbers of people are taking to the streets worldwide to protest against the crackdown, and rights groups have urged foreign governments to respond by keeping their officials away from the Beijing Olympics.European Parliament President Hans-Gert Poettering said Tuesday political leaders would reconsider attending the opening ceremony if the "repression" continued."It will cause political leaders who plan to attend the opening of the Olympic Games, as I plan to, to consider whether such a trip is a responsible move," he said. French Foreign Minister Bernard Kouchner suggested the European Union may consider a boycott of the opening ceremony and in Rome, the Italian government called on the European Union to send a mission to Beijing immediately to discuss the crisis. But China's ambassador to the United Nations, Wang Guangya, said there was little support for an EU boycott of the August 8 ceremony. "What he (Kouchner) said is not shared by most people in the world," the Chinese envoy said. Chinese authorities have responded to the unrest with a virtually total lockdown of Tibet and other areas of China with large Tibetan populations. Activist groups said Wednesday hundreds of people have been arrested across Tibet following the deadly riots in the region. Further protests against Beijing's handling of the crisis were planned Wednesday, including one outside the Chinese embassy in Bangkok, after a series of demonstrations were held worldwide on Tuesday.Hundreds of demonstrators, many holding banners and Tibetan flags, gathered at the seat of the International Olympic Committee (IOC) in the Swiss city of Lausanne for a procession led by monks in traditional robes.Belgian police used pepper spray to disperse a crowd of Tibetan protesters who hurled projectiles at the Chinese mission to the European Union and in London, two protesters hung a sign that read "Stop killing Tibetans" around the necks of the terracotta warriors on loan from China to the British Museum.Meanwhile, demonstrators in Australia burned Chinese flags and chanted "Free Tibet" as they protested outside Beijing's consulate in Sydney.Also Tuesday, White House hopeful Senator John McCain called on China to allow international access to Tibet and open talks with the Himalayan territory's exiled spiritual leader, the Dalai Lama. He said reports of Beijing shutting down the popular video website YouTube and confiscating mobile phone SIM cards were "disturbing," adding, "reports of multiple deaths are far more so, especially in a year when China is preparing to host the Olympic Games." China refuses to hold negotiations with the Dalai Lama, who said Tuesday he would resign as Tibet's spiritual leader if the unrest in his homeland worsened.

Pro-Tibet activists said Wednesday they have been bombarded with abusive phone calls and virus emails as they try to contact witnesses in Tibet and nearby amid a clampdown following anti-Chinese riots. Matt Whitticase, from the Free Tibet Campaign, said he had received calls every two minutes from 4:00 am to 7:00 am Tuesday in London to his mobile number and also at his work number. "The content was crude, abusive and highly anti-Tibetan in nature. The calls also contained the sort of patriotic Chinese music you used to hear on Chinese trains and in public places. "It seemed that the intention was to stop me from working and from making calls," he said. Lhadon Tethong, director of Students for a Free Tibet, told AFP that their New York office had also received abusive calls from people speaking Chinese, and added that they had received viruses via email. "We are getting virus attacks that are just shameless... claiming to be desperate people inside Tibet. The emails are well-written and emotional pleading for us to open the images," she told AFP. One other group, which did not want to be identified, told AFP its computers had been compromised by virus attacks over the last few days. China blanketed restive Tibetan areas Thursday with a huge buildup of troops, turning small towns across a wide swath of western China into armed encampments. Beijing acknowledged that last week's anti-government protests had spread far beyond Tibet's borders and that police opened fire on protesters. It warned foreign tourists and journalists to stay away from a huge expanse of territory across four provinces. In an overture of peace, the Dalai Lama offered to meet with Chinese President Hu Jintao and other leaders, reiterating that he was not asking for Tibetan independence. China has repeatedly ignored calls for dialogue, accusing the exiled Tibetan leader and his supporters of organizing violence in hopes of sabotaging the upcoming Beijing Olympics and promoting Tibetan independence. Hundreds of paramilitary troops aboard at least 80 trucks were seen traveling along the main road winding through the mountains into southeastern Tibet. Others set up camp and patrolled streets in riot gear, helmets and rifles in the town of Tiger Leaping Gorge, a tourist attraction in Yunnan province bordering Tibet. Farther north, the largely Tibetan town of Zhongdian, renamed Shangri-la a decade ago, was swarmed by 400 armed police. Many carried rifles and what appeared to be tear gas launchers. Residents walked freely among the military, and there was no sign of a daytime curfew. The troop mobilization was helping authorities reassert control after the broadest, most sustained protests by Tibetans against Chinese rule in decades. Demonstrations had flared across Tibetan areas of Sichuan, Gansu and Qinghai provinces in support of protests that started in the Tibetan capital of Lhasa. Led by Buddhist monks, protests had begun peacefully in Lhasa early last week but erupted into rioting on March 14, drawing a harsh response from Chinese authorities.

The crackdown drew worldwide attention to China's human rights record, threatening to overshadow Beijing's attempts to project an image of unity and prosperity in the lead-up to the Aug. 8-24 Olympics. On Thursday, a group of 26 Nobel laureates said they "deplore and condemn the Chinese government's violent crackdown on Tibetan protesters," calling for Beijing to exercise restraint."We protest the unwarranted campaign waged by the Chinese government against our fellow Nobel Laureate, his holiness the Dalai Lama," the group said in a statement released by the Elie Wiesel Foundation. Tibetan exile groups have said 80 people were killed in the protest and its aftermath, while Beijing maintains that 16 died and more than 300 were injured. Tibetan television in Lhasa showed video Thursday of black-clad police arresting 24 men. Handcuffed against a wall, the men — some young, some old — were charged with "endangering national security, beating, smashing, looting and burning." The two remaining foreign journalists in Tibet — Georg Blume of Germany and Kristin Kupfer of Austria — were forced to leave Lhasa on Thursday, according to Reporters Without Borders. Earlier this week, Economist correspondent James Miles and a group of 15 Hong Kong reporters were forced out. Speaking from the seat of his government-in-exile in Dharmsala, India, the Dalai Lama offered to meet with Hu and other Chinese leaders but said he would not travel to Beijing unless there was a "real concrete development." "The whole world knows the Dalai Lama is not seeking independence, one hundred times, thousand times I have repeated this. It is my mantra — we are not seeking independence," the 72-year-old Dalai Lama told reporters. "The Tibet problem must be solved between Tibetan people and Chinese people," he said. The Chinese Foreign Ministry, meanwhile, expressed "grave concern" over a planned meeting between British Prime Minister Gordon Brown and the Dalai Lama, telling Brown not to offer support to the Tibetans' exiled spiritual leader. China says the riots and protests were organized from abroad by the Dalai Lama and his supporters.

Reinforcing that claim, state broadcaster China Central Television aired a 15-minute program Thursday night, showing how Tibetan rioters rampaged through Lhasa last week but none of the ensuing police crackdown. Video from security cameras showed burned shops, wounded Chinese and a knife-wielding Tibetan standing atop a police car. Buddhist monks were shown throwing sticks and other debris at riot police in a scuffle on March 10, in an attempt to portray the protests as having been started by monks. But authorities have moved to clamp down on unrest in Tibet and surrounding provinces, where more than half of China's 5.4 million Tibetans live. Moving from town to town, police have set up blockades and checkpoints to keep Tibetans in and reporters out. Foreign Ministry spokesman Qin Gang said China is "suggesting" foreigners stay out of Gansu and Sichuan provinces for safety reasons. But tour operators in the provinces said foreigners were barred from traveling in those areas and tour groups were banned from Tibet, isolating a region about four times the size of France. An employee at the Nine Lakes Travel Agency in Lanzhou, Gansu province, said she had heard about recent protests and unrest in many counties around the province. "Tourists are not allowed to enter the seven counties affected because it considered dangerous at the moment. It is not safe to travel here at this time," she said, refusing to give her name for fear of reprisal. Despite the massive security, protests have continued to crop up in towns in Qinghai, Sichuan and Gansu provinces.

The official Xinhua News Agency said police shot and wounded four rioters "in self-defense" during violent protests Sunday in Aba County in Sichuan. It is the first time the government has acknowledged shooting any protesters during the unrest. A Tibetan resident in Aba County said Thursday she had heard of numerous arrests of protesters. "There are many, many troops outside. I'm afraid to leave the house," said the woman, who refused to give her name for fear of retaliation by authorities. Police could be heard shouting from loudspeakers for protesters to turn themselves in. Troops blocked roads in nearby Sertar, also in Sichuan, confining residents to their homes, said a woman reached there by phone. The London-based Free Tibet Campaign reported that troops had been sent to the county after residents blew up a bridge near the village of Gudu. A hotel worker in central Luqu County, in neighboring Gansu province, said she had not left the hotel in four days because she was afraid. "On the 16th, hundreds of Tibetan protesters marched in the streets, throwing rocks and breaking windows. The streets are now filled with police officers," she said, refusing to give her name for fear of reprisal. "Our hotel is booked out with tourists, but no one feels safe enough to set foot outside." Champa Phuntsok, the taciturn chairman of Tibet's government, left no doubt Monday morning on whose shoulders the Communist Party places blame for the violent Tibetan protests that have become a domestic political crisis and an Olympic-year public relations nightmare: the Dalai Lama, Tibet's exiled spiritual leader, and "splittist" forces colluding to splinter China. Speaking at a hurriedly organized news conference, Phuntsok described the violence that erupted Friday in Lhasa and is still spreading to other Tibetan regions as if it were a meticulously orchestrated surprise attack. But to many Tibetans and their sympathizers, the unleashed fury is sad and shocking yet not a complete surprise. Tibetan anger has simmered over Chinese policies on the environment, tightening religious restrictions and a harder political line from Beijing. Ethnic tensions and economic anxiety have also sharpened as Chinese migrants have poured into Lhasa, the capital of Tibet. "Why did the unrest take off?" asked Liu Junning, a liberal political scientist in Beijing. "I think it has something to do with the long-term policy failure of the central authorities. They failed to earn the respect of the people there." For now, Beijing's hard line on Tibet is only likely to get harder. Military police officers are pouring into Tibetan regions to stifle new protests.

Nor are the demonstrations winning sympathy in a nation that is 94 percent Han Chinese. State media have tightly controlled coverage to focus on Tibetans burning Chinese businesses or attacking and killing Chinese merchants. No mention is made of Tibetan grievances or reports that 80 or more Tibetans have died. Chinese leader accuses Dalai Lama of being behind Tibet protestsTibetan exiles in India join in protestsChina takes steps to thwart reporting on Tibet protests Today in Asia - Pacific China's tough line in Tibet is seen to have brought only resentmentChina takes steps to thwart reporting on Tibet protestsPakistani Parliament opens with a power shift With less than five months before the opening of the Olympics, Beijing is acutely worried about an international backlash and is arguing that its response to the protests has been reasonable. No one mentions the bloody 1989 crackdown against pro-democracy protesters in Tiananmen Square, but its shadow is obvious. Phuntsok said the military police and other officers were not carrying lethal weapons and had not fired a single shot - despite many witnesses reporting gunshots. "What democratic country in the world could tolerate this violent behavior?" Phuntsok asked Monday, framing the crisis as a law-and-order issue.

Eventually, the protests will be extinguished and China's leaders will be left with a shattered Tibet. One foreigner who witnessed the violence in Lhasa said Tibetans were covering the streets in white toilet paper. Traditionally, Tibetans offer white silk scarves to welcome guests. But the toilet paper was intended to symbolize that the Chinese were no longer welcome - even though there is no possibility they will leave. In recent years, China tried to soften its image on Tibet by holding back-channel reconciliation talks with emissaries of the Dalai Lama. The Dalai Lama, in turn, has explicitly stated that he is interested only in greater autonomy for Tibet within China, not independence. But some analysts believe China's true goal was simply to keep talking and wait for the Dalai Lama, 72, to die. The talks broke down last summer, and Beijing infuriated many Tibetans by inserting itself into the metaphysics of Buddhism: It announced that the Communist Party held the authority to approve incarnations - the divine process by which a "living Buddha" is chosen in boyhood. Beijing had already selected a boy as its own Panchen Lama, the second-ranking figure in Tibetan Buddhism, and reportedly jailed a boy chosen by the Dalai Lama. Last November, the Dalai Lama countered with his own surprise. He proposed altering the ancient practice of choosing his own reincarnation. Usually, this would happen after his death; senior religious figures would search out his incarnation following proscribed guidelines. But the Dalai Lama has raised the possibility that he can choose his own reincarnation - a possibility that has enraged Beijing. Meanwhile, Beijing has steadily been taking a tougher line on religious practices and cultural expressions of Tibetan pride. In November 2005, Zhang Qingli was appointed Communist Party secretary of the Tibet Autonomous Region. Zhang came from the Communist Youth League organization that forms the political base of President Hu Jintao, and has made no attempt to disguise his paternal attitude toward his charges. "The Communist Party is like the parent to the Tibetan people, and it is always considerate about what the children need," Zhang said last year. He later added: "The Central Party Committee is the real Buddha for Tibetans." Robert Barnett, a Tibet specialist at Columbia University in New York, said Zhang had overseen a tough crackdown on many facets of Tibetan life.

Tibetan government employees faced requirements to write denunciations of the Dalai Lama. Zhang reintroduced a policy that forbade Tibetan students and government workers to visit monasteries or participate in religious ceremonies. By 2006, Zhang had revived an "anti-Dalai" campaign and intensified "patriotic education" at Buddhist monasteries. Monks are now required to attend long sessions listening to recitations of China's interpretation of Tibetan history and to denounce the Dalai Lama. "The party must surely know these monks are not going to change their minds" about the Dalai Lama, said Tsering Wangdu Shakya, a Tibet specialist at the University of British Columbia. "So the whole point of the meetings is to intimidate the monks." Last Monday, the anniversary of a failed Tibetan uprising against Chinese rule, an estimated 400 monks left the Drepung Monastery and marched toward Lhasa to protest the religious restrictions. The police arrested 40 or 50 monks while the rest of the group held the equivalent of a sit-down strike. Hours later, the episode ended, but it helped spark other protests that ultimately led to the violence Friday. Shakya said Beijing must be stunned by the Lhasa riots because Tibet, under Zhang's firm hand, was thought to be pacified. In 2006, China opened the world's highest railroad, which cost $4.1 billion and traverses the Tibetan plateau to connect isolated Lhasa with the rest of the country. Beijing described the railroad as a vital tool in developing the Tibetan economy, the poorest in China. But many Tibetans regard the railroad as a threat. China has poured money into Tibet in hopes that economic development would dilute Tibet's religious fervor and win over a younger generation. For many Tibetan families, life has improved; trade and tourism are also rising. But Beijing has also encouraged huge numbers of Chinese migrants and traders whose presence has diluted the Tibetan majority. "That is one of the biggest sources of resentment," Shakya said of the Chinese migration.

He said Tibetans believe Chinese are given more opportunities for jobs and Tibetan unemployment is high. Beijing surely noticed that the younger generation it hoped to entice with its economic policies was rampaging on the streets of Lhasa. Economic development has also raised fears of environmental exploitation. The railroad is regarded as a critical spur for China to extract rich deposits of copper, iron, lead and other minerals in Tibet. Faced with limited natural resources, China has hailed Tibet's minerals as critical to national development. Environmental pressures are already being felt in other Tibetan regions. Last year, Tibetans in Ganzi in Sichuan Province held angry protests to stop a mining company that was shearing off a mountain considered sacred by Buddhists. That tension never dissipated. Eleven days ago, before the Lhasa riots, about 100 monks and other Tibetans attacked Chinese cars and shops and clashed with the police - an incident censored in the Chinese press. Today, the obvious question is what sort of policy Beijing will pursue next. Demands from overseas pro-Tibet groups for independence do not even get consideration. Several analysts say Beijing cannot win the hearts of Tibetans if it continues to demonize the Dalai Lama - but Beijing's rhetoric about a sinister "Dalai clique" is only hardening. Shakya said restricting the flow of Chinese migrants would be a major concession. But few analysts believe Beijing is in any mood to make concessions. Chu Shulong, a political scientist at Tsinghua University, said the leadership truly believes that a "Dalai clique" or other overseas groups are coordinating to overthrow its authority. He said Beijing regards the timing of the pro-Tibet independence marches in India - only days before the Lhasa uprising - as proof. "The government's interpretation is that this is organized activity from inside India," Chu said, referring to the India headquarters of the Tibetan government-in-exile. He added that Beijing's leaders were probably also mystified at any suggestion that their policies have been unfair.

"They think they are doing something right, something good, because they give a lot of financial aid to the Tibetan region," he said. The crackdown, while the Dalai Lama decried what he called the "cultural genocide" taking place in his homeland. Demonstrations widened to Tibetan communities in Sichuan, Qinghai and Gansu provinces, forcing authorities to mobilize security forces across a broad expanse of western China. In Qinghai province, riot police sent to prevent protests set off tensions when they took up positions outside a monastery in Tongren. Dozens of monks, defying a directive not to gather in groups, marched to a hill where they set off fireworks and burned incense in what one monk said was a protest, according to an Associated Press reporter at the scene. In a sign that authorities were preparing for trouble, AP and other foreign journalists were ordered out of the Tibetan parts of Gansu and Qinghai provinces by police who told them it was for their "safety." Meanwhile, police in the Tibetan capital, Lhasa, searched buildings as a Monday deadline loomed for people who took part in a violent anti- Chinese uprising last week to surrender or face severe punishment. Tibet's governor Champa Phuntsok said Monday that 16 people died and dozens were wounded in the violence, which broke out in Lhasa on Friday. He described 13 as "innocent civilians," and said another three people died jumping out of buildings to avoid arrest. China's state media said earlier that 10 civilians were killed. He also said security forces did not carry or use weapons.

Speaking from India, the Dalai Lama, the spiritual leader of Tibetans, called for an international investigation into China's crackdown on demonstrators in Lhasa, which his exiled government claims left 80 people dead. "Whether intentionally or unintentionally, some kind of cultural genocide is taking place," the Dalai Lama said, referring to an influx of Chinese migration into Tibetan areas and restrictions on Buddhist practices—policies that have generated deep resentment among Tibetans. Tensions also boiled over outside the county seat of Aba in Sichuan province when armed police tried to stop Tibetan monks from protesting, according to a witness who refused to give his name. The witness said a policeman had been killed and three or four police vans had been set on fire. Eight bodies were brought to a nearby monastery while others reported that up to 30 protesters had been shot, according to activist groups the Tibetan Center for Human Rights and Democracy and the London-based Free Tibet Campaign. The claims could not be confirmed. Sunday's demonstrations follow nearly a week of protests in Lhasa that escalated into violence Friday, with Tibetans attacking Chinese and torching their shops, in the longest and fiercest challenge to Chinese rule in nearly two decades. Complicating Beijing's task, the spreading protests fall two weeks before China's celebrations for the Beijing Olympics kick off with the start of the torch relay, which will pass through Tibet. Though many were small in scale, the widening Tibetan protests are forcing Beijing to pursue suppression while on the run, from town to town and province to province across its vast western region. Sunday's lockdown in Tongren required police imported from other towns, the locals said. The Chinese government attempted to control what the public saw and heard about protests that erupted Friday.

Access to YouTube.com, usually readily available in China, was blocked after videos appeared on the site Saturday showing foreign news reports about the Lhasa demonstrations, montages of photos, and scenes from Tibet-related protests abroad. Television news reports by CNN and the BBC were periodically cut during the day, and the screens went black during a live speech by the Dalai Lama carried on the networks. China's communist government had hoped Beijing's hosting of the Aug. 8-24 Olympics would boost its popularity at home as well as its image abroad. Instead the event already has attracted the scrutiny of China's human rights record. Thubten Samphel, a spokesman for the Dalai Lama's government, said multiple people inside Tibet had counted at least 80 corpses since the violence broke out Friday. He did not know how many of the bodies were protesters. The figures could not be independently verified because China restricts foreign media access to Tibet. In Lhasa, hundreds of armed police and soldiers patrolled the streets on Sunday. Hong Kong Cable TV reported some 200 military vehicles, carrying 40 to 60 armed soldiers each, drove into the city center. Footage showed the streets were mostly empty other than the security forces. Messages on loudspeakers warned residents to "discern between enemies and friends, maintain order" and "have a clear stand to oppose violence, maintain stability." James Miles, a BBC correspondent in Lhasa, said troops carrying automatic rifles were "letting off the occasional shot."

He said people were scared to come out of their homes for fear of being hit by a bullet. Westerners who were told to leave Lhasa and arrived by plane in the city of Chengdu said they heard gunshots and explosions throughout Saturday and overnight. "The worst day was yesterday. It was completely chaotic. There was running and screaming in the street," said Gerald Scott Flint, director of the medical aid group Volunteer Medics Worldwide, who had been in Lhasa four days. Flint said he could see fires burning six or more blocks away. Tashi Wangdi, president of the Office of Tibet that represents the Dalai Lama in New York, called the departure of tourists worrisome. "I think there will be total blackout of information to the outside world," he said. "Our worry is they will be more brutal and will use more force now." The unrest in Tibet began March 10 on the anniversary of a 1959 uprising against Chinese rule of the region. Tibet was effectively independent for decades before communist troops entered in 1950. The Tibetan communities living far outside what China calls modern Tibet are parts of former provinces of past Tibetan kingdoms, and many inhabitants still revere the Dalai Lama. "We want freedom. We want the Dalai Lama to come back to this land," said a monk from Rongwo in Tongren. The monks display his pictures, though they have been ordered to remove them. Inspired by the protests in Lhasa, monks and Tibetans in the town of Xiahe in Gansu province staged two days of protests, one peaceful in which they raised Tibetan national flags, the other in which government offices were smashed and police tear-gassed the crowd of more than 1,000. Authorities clamped a curfew on Xiahe overnight. Patrols of riot police, in black uniforms, helmets and flak jackets, and armed police in green uniforms carrying batons marched through the town Sunday in groups of 10 and 20. Smaller protests were reported in two other nearby towns, witnesses said, in both cases drawing truckloads of armed police.

This is another reason why the US government shouldn't be spending borrowed money to finance extra-constitutional spending. The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation. Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies. Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels. It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds. When the federal government is asked to do things the Constitution doesn't tell it to do, and when more and more money flows through it, and with that more and more power, it's hard to stop spending. And with that comes borrowing. And with that comes slavery. The same thing could happen even if spending were kept in the context of the Constitution, but once you escape its limits, there is then no limit. The rich rule over the poor, and the borrower is servant to the lender. - Proverbs 22:7 (NIV)

China's oil giant Sinopec Group has signed a US$70 billion oil and natural gas agreement with Iran, which is China's biggest energy deal with the No. 2 OPEC producer. Under a memorandum of understanding signed Thursday, Sinopec Group will buy 250 million tons of liquefied natural gas over 30 years from Iran and develop the giant Yadavaran field. Iran is also committed to export 150,000 barrels per day of crude oil to China for 25 years at market prices after commissioning of the field. Iran's oil Minister Bijan Zanganeh, who is on a two-day visit to Beijing pursuing closer ties, said Iran is China's biggest oil supplier and wants to be its long-term business partner. Official figures show that China imported 226 million tons of oil in2003, about 13 percent of which coming from Iran. Beijing expects to secure foreign energy supplies by the deals for its economy, which has turned China into a major oil importer but suffers severe power shortages.A former KGB officer said to be close to President Vladimir Putin was selected at a shareholders meeting Monday to head Transneft, the state-owned monopoly pipeline operator. Nikolai Tokarev had run state-owned oil exporting firm Zarubezhneft since 2000, the year Putin became president. He previously had served a brief stint at Transneft as vice president. Tokarev will replace Semyon Vainshtok, who was picked to head the state-run corporation overseeing construction of sports facilities and infrastructure in Sochi for the 2012 Winter Games.

The choice of a former KGB officer to run Transneft, which is 75 percent state owned, comes ahead of parliamentary and presidential elections in Russia and fits a Kremlin pattern of putting trusted people in key government and corporate positions. "This is part of the configuration around the presidential succession," said Vladimir Pribylovsky, a political analyst.Bulgaria and Russia signed a deal Friday to build a natural gas pipeline that would undercut a rival project backed by the U.S. and European Union and strengthen the Kremlin's dominance over EU energy supplies.The agreement came after visiting Russian President Vladimir Putin pushed hard to secure Bulgaria's crucial participation in the projected South Stream pipeline, which would cross from Russia under the Black Sea to Bulgaria and then branch off for delivery deeper in Europe. Putin brushed off concerns about Russia's increasing influence, saying after the signing ceremony that the pipeline agreement and other deals would "seriously increase the energy security of the Balkans, Europe as a whole and, of course, Bulgaria." The deal required last-minute negotiations, amid tough bargaining by Bulgaria and wariness about Russia's clout. The Bulgarian Cabinet approved the agreement at an extraordinary meeting only a few hours before it was signed.Bulgaria's interests are fully protected, because the company which will be set up to construct and run the pipeline on Bulgarian soil will be with 50 percent Bulgarian and 50 percent Russian ownership," Bulgarian Prime Minister Sergei Stanishev said. Russia's state-controlled gas monopoly, OAO Gazprom, had previously been offering a minority stake in the part of the pipeline that would run through Bulgaria.

"Until yesterday, the Russian side insisted on holding a 51-percent stake," Stanishev said. He said Putin himself deserved most of the credit for the progress in the late-night negotiations. But despite the concession, the imminent deal was a victory for Putin and Russia, which is already Europe's dominant gas and oil supplier and is seeking to increase its control over westward routes for its energy supplies from the former Soviet Union. "It's very important that the parties have shown their ability to compromise, and the draft that has been was prepared reflects a balance of interests," Gazprom chairman Dmitry Medvedev, who is likely to succeed Putin after the March 2 presidential election, said after meeting with Stanishev. He said agreements on South Stream "will work for decades and make it possible to ensure stable conditions for future energy deliveries for Bulgaria, Russia and EU nations."

Gazprom has set up a parity joint venture with Italy's ENI SpA to develop a feasibility study for the 900-kilometer (550-mile), $10 billion pipeline. The project is a direct rival to the Nabucco pipeline, sponsored by the United States and the European Union, which would also come through Bulgaria. Taking advantage of the clashing pipeline offers, Bulgaria has bargained with the Kremlin. On Thursday, Bulgarian President Georgi Parvanov underlined his nation's support for the EU's efforts to diversify energy supply routes -- and for Nabucco -- in a speech at a ceremony marking the opening of a Russian cultural festival in Bulgaria. After Parvanov had spoken, a clearly annoyed Putin, standing next to him, said Bulgaria was free to chose its direction but warned it to make sure it "works to its benefit." ENI CEO Paolo Scaroni played down the rivalry between South Stream and Nabucco following meetings with Gazprom CEO Alexei Miller, saying both would be needed because of growing demand. But South Stream would undercut Nabucco and dash the European Union's hopes of reducing its growing reliance on Russia, which now supplies up to 40 percent of Europe's gas and up to a third of the oil imports of some European countries. South Stream would have an estimated annual capacity of 30 billion cubic meters (1.15 trillion cubic feet), roughly equivalent to 60 percent of the natural gas consumed annually in The Netherlands. The Kremlin's plans have upset opposition parties and non-governmental organizations in Bulgaria, who fear the former Soviet satellite's increasing dependence on Russian energy supplies and criticize Moscow's human rights record. With Putin and Parvanov looking on, officials also signed a $5.9 billion contract to build Bulgaria's second nuclear plant near the northern town of Belene.

Also signed was an agreement for a joint company, also including Greece, to build the Burgas-Alexandroupolis oil pipeline, which will channel Russian oil from the Black Sea to the Aegean, bypassing Turkey's busy Bosporus. As part of its energy blitz, Russia has promised to extend South Stream into Serbia and build a huge gas storage facility there -- moves that would turn the Balkan nation into a major hub for Russian energy supplies to Europe. Miller said Gazprom and Serbian officials were close to a final agreement on a deal that would envisage a South Stream branch reaching Serbia, and would also foresee Gazprom taking a controlling stake Serbia's state oil company NIS. Belgrade has turned increasingly away from the West and toward Russia, which has supported Serbia in the debate over independence for Serbia's Kosovo province.

With the official launch of the Chinese Investment Corp, China's new financial juggernaut will be both a formidable opportunity and challenge for the west. The Chinese Investment Corp. (CIC) has been officially launched, and with an initial endowment of US$200 billion the new state-controlled company is tasked to invest abroad China's huge foreign reserves. In the shopping bag there will be natural resources from developing countries as well as foreign technologies, research and development (R&D) establishments and brand names from developed economies. For the west, China's new financial juggernaut will be a formidable opportunity, and a formidable challenge. After various announcements, on 27 September, the Chinese authorities officially unveiled the CIC. Under the direct supervision of the State Council, the nation's cabinet, the CIC is mandated to invest abroad the huge reserves accumulated by Beijing over the last years. China's forex topped US$1.33 trillion at the end of June and are expected to reach US$1.5 trillion by the end of the year, the largest in the world. Lou Jiwei, a deputy-secretary general of the State Council and former finance minister, will be the director of the new company.

China's investment corporation has been under preparation for some time. At the conclusion of the annual session of the National People's Congress in March, the Chinese government announced that it would set up a State Foreign Exchange Investment Company (SFEIC) aimed at improving the yield of the country's foreign exchange reserves and generating the largest returns possible. In May, the new company, while still in preparation, invested US$3 billion of its reserves in non-voting shares of the Blackstone Group, the New York-based private equity firm that recently went public. With the establishment of the CIC at the end of September, the contours of China's investment strategy have become clearer. The CIC strategy
The CIC is modeled on the Singapore investment company, Temasek Holdings. Temasek is an investment firm incorporated in 1974 and headquartered in Singapore. Its portfolio spans various industries including telecommunications and media, financial services, real estate, transportation and logistics, energy and resources, infrastructure, engineering and technology as well as bioscience and healthcare. The Chinese sovereign wealth fund will also be a private equity vehicle, operating on a flexible investment horizon with the option of taking concentrated risks. Lou Jiwey, the CIC's director, declared that the new company would "invest, manage and add value to the Chinese portfolio" as an owner of its assets and investments. Beijing currently holds its reserves in US treasury bonds and other safe but low-yielding, instruments. According to Chinese sources, the CIC will likely be "equity-heavy." Analysts at Morgan Stanley also expect the Chinese company to hold a substantial share of its assets in equities, not sovereign bonds. "The company's principal purpose is to make profits," Li Yang, director of the finance research institute at the Chinese Academy of Social Sciences (CASS), told ISN Security Watch. The CIC has an initial capital of US$ 200 billion, but presumably the amount will be increased according to the investments that the company will support. In practice, the CIC will issue RMB-denominated bonds and sell these bonds on the market to buy foreign exchange funds from the central bank. It will then use the foreign exchange funds for investment. In June, China's legislature approved a special issuance of RMB 1.55 trillion (US$200 million) in treasury bonds for the new investment company. The CIC will operate in both the domestic and global markets. Internally, the investment channels of the new vehicle will include another Chinese state-owned company founded in 2003, the Central Huijin Investment Corp., which has been merged into the CIC as a wholly owned subsidiary company. Central Huijin holds shares in China's four leading commercial banks and in 2005 injected US$60 billion into three of them. While Central Huijin will be one of the financial vehicles adopted as the central bank's investment arm to improve the balance sheets of Chinese state-owned banks, the CIC will be more of a strategic investment fund focused on industry and private equity. Internationally, the CIC will be Beijing's investment arm in a range of sectors and countries. Its initial endowment and future prospects make it one of the biggest in the world.

According to a report by Chatham House published in September, the CIC soon will be the number two in the world, behind the Adia, the sovereign wealth fund of the United Arab Emirates, but ahead of both the Gic, the Singaporean fund, and the Norwegian Government Pension Fund. The central question is therefore where and in which sectors the CIC will invest its capital. According to sources, China's international investment strategy will take two directions. One the one hand, it will invest in natural resources in developing countries. On the other hand, it will concentrate on the acquisition of foreign technologies, R&D establishments and brand names in advanced economies. According to Li Rongrong, director of the China State Asset Management Commission (the agency that oversees government assets), the CIC may also help major state-owned companies expand overseas.

Taking the world by investment
Since the mid-1990s, the search for natural resources has continued to gain momentum as a result of China's high economic growth, with increasing emphasis on oil and industrial raw materials. In its 2006 World Investment Report, the United Nations Conference on Trade and Development (UNCTAD) indicated that China's outward foreign direct investment had more than quintupled in the first half of this decade, to reach US$11.3 billion in 2005. South-East Asia, Latin America and Africa have become the prime targets. For instance, in 2002, the China National Offshore Oil Corporation became the largest foreign oil producer in Indonesia after its takeover (for US$585 million) of Repsol Indonesia. In Africa, China's investment strategy has been directed mainly at sourcing natural resources, including oil. Moreover, increasing numbers of Chinese companies have recently established production bases to supply local markets with cheap products highly compatible with local demand and purchasing power. As a result, total trade between China and Africa nearly quadrupled in six years, from US$10.8 billion in 2000 to nearly US$40 billion in 2006. China is today Africa's biggest trading partner and the second most important investor. China's new investment company will further boost these trends. At the same time, China will invest more and more in developed countries, where its presence is often welcomed for the jobs, cash and infrastructure that it brings. In Australia, for example, China has become the biggest foreign investor in the mining sector. The CIC will place more emphasis on the acqui¬sition of advanced technologies, R&D establishments, managerial know-how, distribution networks and brand names. China's investment strategy will likely take the form of profitable participation in private equity funds as well as strategic participation in foreign investment companies running businesses considered of importance for China. While normally in the first case, the CIC would hold a minority stake or give up voting rights for the entitlement of a higher return (as in the Blackstone investment fund), in the event of acquisitions of strategic assets, China's investment company would presumably detain the majority of shares or in any case full control of the company. It is in this scenario that questions of corporate governance, transparency and strategic considerations will be unavoidable.

Eye on Europe: challenge and opportunity
While in the US protectionist tendencies may create difficulties for China investing in key strategic sectors, Europe is emerging as the most attractive place for China's technology-seeking shopping spree. China is eyeing Europe's IT, aerospace and defense sectors as investment opportunities, both in terms of profitable returns on its foreign reserves and in terms of acquisition of advanced technologies needed for China's industrial (and military) modernization. Chinese investments in European companies would be helped by the fact that EU-China relations are characterized by the conspicuous absence of issues that could provoke a confrontation between the two sides - such as the Taiwan question. Unlike the US and Japan, Europeans look at China almost exclusively in terms of business opportunities and not as a possible military competitor. Some EU policy makers - such as the Italian minister for the economy, Tommaso Padoa-Schioppa - have openly invited the CIC to invest in Europe. At the same time, French President Nicolas Sarkozy and German Chancellor Angela Merkel have called for a European "golden share" to protect industrial strategic assets from unwanted takeovers from sovereign wealth funds (SWFs). EU Economy Commissioner Joaquin Almunia added that "the EU might restrict investments by government funds unless they disclose more about what they invest in and why." The CIC will thus be, on the one hand, a great opportunity for some industrial sectors, as it will offer fresh money into tight markets after the sub-prime mortgage crisis. On the other hand, the Chinese investment vehicle could well succeed in gaining control of western assets and advanced technology that could be turned into military might in a situation where there could be future tensions in US-China relations, especially over Taiwan. In sum, for the west, the new Chinese investment corporation will be a great economic opportunity, but also a formidable strategic challenge to watch.