BEIJING (Reuters) – China is willing to help Europe — its largest export market — to deal with its debt crisis and get back on a recovery path, but there are limits to what it can actually deliver, Cheng Siwei, a former top Chinese lawmaker, said on Saturday.

“China certainly hopes the debt crisis could be resolved. If the crisis spreads, it could lead to a break-up of the euro zone and affect the global monetary system as the euro is the second-largest reserve currency,” Cheng told reporters.

“But don’t pin high hopes on China. China cannot be a hero to the rescue,” said Cheng, who remains an influential adviser to the government. “China will lend a helping hand within its capacity but Europe must rely on itself.”

Although China has a war chest of $3.2 trillion in foreign exchange reserves, the world’s largest, the amount of free cash it could invest in Europe could be limited, Cheng said.

For example, China cannot easily dump its holdings of U.S. Treasuries of around $1.14 trillion, because such a step could send U.S. bonds prices tumbling, he said.

“If we sell U.S. bonds, the U.S. economy could be in trouble,” he said.

Cheng, previously a vice chairman of parliament with a rank equivalent to a vice premier, rattled financial markets in 2006 when he said China should trim its holdings of U.S. debt.

Analysts believe at least 70 percent of China’s foreign currency reserves have been channeled into dollar-denominated assets, including Treasuries, and a quarter into euro assets.

Buying European bonds would be one of the available options for China to help Europe, Cheng said, adding that China could boost trade with the region and spur direct investment.

China may have bought some bonds issued by the heavily indebted European countries — Portugal, Ireland, Greece and Spain — but it’s too risky to continue such buying, said Cheng.

Common euro zone bonds still being discussed by European leaders could be attractive for China as long as they are backed by European powers such as Germany and France, he said.

Europe should recognize China’s market economy status as a “friendly gesture,” he said.

Chinese leaders have pledged their support for Europe, although Premier Wen Jiabao has pushed for the European Union to recognize it as a market economy.

Turning to China’s economy, Cheng said the government should keep policy stance tight to help bring inflation under control while allowing “selected easing” to support growth.

The yuan may have reached a “reasonable level” after gaining about 30 percent against the dollar since the landmark revaluation in July 2005, Cheng said, echoing recent remarks by Chinese Commerce Minister Chen Deming at a G20 Summit in France.

He hit back at foreign calls for faster appreciation of the Chinese currency.

“The yuan has already gained 30 percent. Where is an end? You cannot blindly demand the yuan to rise,” he said.

The U.S. Senate recently passed a bill that aims to pressure Beijing to raise the value of the yuan more quickly.

Group of 20 leaders on Friday agreed to accelerate a move toward market-driven exchange rates and mentioned China for the first time in that context.

Cheng said China should let the yuan be more flexible and speed up the process of yuan internationalization but refrain from committing itself to a specific timeframe for freeing up the currency.

To match China’s rise as a world economic power, Beijing wants to turn the yuan into a convertible currency, and one day have it join the dollar and the euro as a reserve currency.

Some analysts suggest the yuan could become convertible on the capital account by 2015, but Cheng sounded a wary note.

“We cannot announce a timetable (on yuan convertibility). We need to find an appropriate time to achieve it and also consider our ability to manage foreign exchange risks,” he said

“More importantly, if we announce a timetable, it could provide an opportunity for speculators,” he said.

(Reporting by Kevin Yao; Editing by Susan Fenton)

KANO, Nigeria (Reuters) – At least 65 people were killed in the northeast Nigerian city of Damaturu, an aid agency said Saturday, after Islamist insurgents bombed churches, mosques and police stations and fought hours of gun battles with police.

China has acquired a space tracking station in Australia, its first such facility in a close US ally, a news report said on Saturday.

The station in remote Dongara, about 350 kilometres (217 miles) north of Perth in western Australia, was used during Tuesday’s launch of the Shenzhou VIII mission, Hong Kong daily the South Morning China Post reported.

The United States and the European Space Agency have long had tracking facilities in Australia, including the joint US-Australian Pine Gap satellite station established decades ago near the central outback town of Alice Springs.

Reaction to the Chinese station, its first in a key US ally’s territory, will be closely watched to see whether Washington will raise objections.

Chinese officials reportedly see Dongara as a major step forward for the rising power’s ambitious space programme, which it holds as a symbol of its growing global stature.

Xie Jingwen, deputy chief designer of the tracking and command system for Beijing’s manned space programme reportedly lauded the move, saying China had “added Australia to its global network of ground stations”.

The Dongara station is its fifth outside China, with one each in Pakistan and Chile, another in Kenya and one in Namibia.

The facility was built by the Swedish Space Corporation (SSC) and has been leased to Beijing, with key components shipped from China, according to the newspaper.

A senior SSC official in China told the Post that the Chinese space authorities were renting the site, including buildings and equipment, after Australian authorities had inspected the facility and approved the deal.

The Australian defence ministry had no comment on Dongara.

SSC could not be immediately reached for comment but on its website the company said the location of the Dongara Satellite Station was “particularly advantageous for accessing low-inclination orbiting satellites”.

“It is also frequently used for geostationary orbit raising operations, and very frequently is used for first acquisition of launch vehicle and spacecraft telemetry at orbit insertion/deployment,” it said.

The Shenzhou VIII spacecraft successfully docked with the Tiangong-1 experimental module on Thursday, a crucial step for China towards its goal of setting up a manned space station by 2020.

China has acquired a space tracking station in Australia, its first such facility in a close US ally, according to a report.

The station in remote Dongara, about 350 kilometres (217 miles) north of Perth in western Australia, was used during Tuesday’s launch of the Shenzhou VIII mission, Hong Kong daily the South Morning China Post reported.

The United States and the European Space Agency, have long had tracking facilities in Australia, including the joint US-Australian Pine Gap satellite station established decades ago near the central outback town of Alice Springs.

Reaction to the Chinese station, its first in a key US ally’s territory, will be closely watched to see whether Washington will raise objections.

Chinese officials reportedly see Dongara as a major step forward for the rising power’s ambitious space programme, which it holds as a symbol of its growing global stature.

Xie Jingwen, deputy chief designer of the tracking and command system for Beijing’s manned space programme reportedly lauded the move, saying China had “added Australia to its global network of ground stations”.

The Dongara station is its fifth outside China, with one each in Pakistan and Chile, another in Kenya and one in Namibia.

The facility was built by the Swedish Space Corporation (SSC) and has been leased to Beijing, with key components shipped from China, according to the newspaper.

A senior SSC official in China told the Post that the Chinese space authorities were renting the site, including buildings and equipment, after Australian authorities had inspected the facility and approved the deal.

The Australian defence ministry had no comment on Dongara.

SSC could not be immediately reached for comment but on its website the company said the location of the Dongara Satellite Station was “particularly advantageous for accessing low-inclination orbiting satellites”.

“It is also frequently used for geostationary orbit raising operations, and very frequently is used for first acquisition of launch vehicle and spacecraft telemetry at orbit insertion/deployment,” it said.

The Shenzhou VIII spacecraft successfully docked with the Tiangong-1 experimental module on Thursday, a crucial step for China towards its goal of setting up a manned space station by 2020.

China opened a new post office Thursday (Nov. 3) with a street address that is 213 miles (343 km) above the Earth.

Coinciding with the country achieving its first ever docking in space between the unmanned Shenzhou 8 spacecraft and Tiangong-1 space lab module, the “China Post Space Office” opened for business both on the ground in Beijing Aerospace City and, at least virtually, on board the newly established orbital complex.

Located on the ground near China’s mission control, the Beijing Aerospace Command and Control Center (BACC), the new space post office even has its own zip code that extends into orbit: 901001.

Like any postal facility, the office will process letters and, in this case, e-mails, making it possible for the public to write Chinese astronauts, or “taikonauts,” on the ground and in space. The space post office will offer domestic and international delivery as well as philatelic products, with more services expected to be introduced as China’s aerospace industry eventually expands.

Yang Liwei, who in 2003 became China’s first taikonaut in space, will serve as the post office’s honorary chief.

A partnership between the China Post Group Corporation and the China Manned Space Engineering (CMSE) Office, the post office will also sell philatelic collectibles depicting China’s major events in space. Among the first souvenirs offered are cancelled envelopes, or “covers,” celebrating the Shenzhou 8 and Tiangong 1 docking complete with a commemorative postmark. [Photos From China's 1st Space Docking Mission]

China’s postal service has issued other commemoratives for its country’s previous space accomplishment but not through a dedicated “space” post office.

Shenzhou 8, which launched on Oct. 31 EDT, caught up with and docked at the Tiangong 1 space lab module on Nov. 2 EDT. The two unpiloted spacecraft will remain linked for 12 days before the Shenzhou detaches, backs away, and then approaches again. After the second demonstration of docking techniques, Shenzhou 8 will return to Earth.

In addition to demonstrating docking, Shenzhou 8 is also flying space life science experiments for both China and Germany.

The first docking established China as the third nation to achieve such a space feat with spacecraft designed to carry astronauts, after the United States and Russia. The orbital hookup marked a step forward toward China’s plans to deploy a manned space station by 2020.

Russia has operated a makeshift post office on its space stations since the 1970s and continues to operate such a service on the International Space Station.

The Russian space office consists primarily of a postmark device that is only used in space. Cosmonauts use the ink stamp to mark letters and postcards as having flown in orbit, but also use it to mark other space souvenirs including crew notebooks, equipment and patches.

Follow collectSPACE on Facebook and Twitter @collectSPACE and editor Robert Pearlman @robertpearlman. Copyright 2011 collectSPACE.com. All rights reserved.

• Photos: China Launches First Space Lab, Tiangong 1
• Inside China’s Space Rendezvous Success (Infographic)
• China’s 1st Space Docking Inspires Love Poetry

November 04, 2011, 4:25 PM EDT

By Stephanie Tong

Oct. 29 (Bloomberg) — Agricultural Bank of China Ltd. Chairman Xiang Junbo and China Construction Bank Corp. Chairman Guo Shuqing resigned amid speculation that the government plans to appoint new financial regulators.

Both resigned to do “state financial work,” the two government-owned banks said in separate statements to the Shanghai and Hong Kong stock exchanges yesterday, without giving details. Xiang may be appointed chairman of the China Insurance Regulatory Commission, and Guo the head of the China Securities Regulatory Commission, Reuters reported yesterday, citing three people it didn’t identify.

Naming new personnel at the regulators would be part of the broader leadership changes expected in China over the next 1 1/2 years as the ruling Communist Party selects officials to replace President Hu Jintao and Premier Wen Jiabao. Older leaders will step down from positions in local governments, the military and cabinet ministries.

“This isn’t the first time for this kind of management reshuffle in China’s bureaucracy,” Ronald Wan, a managing director at China Merchants Securities (Hong Kong) Co., said by phone. “From past experience, we know that these finance company heads can actually pick up their new jobs quite fast.”

Liu Mingkang, chairman of the China Banking Regulatory Commission, may be replaced by China Securities Regulatory Commission Chairman Shang Fulin, Reuters said. Jiang Jianqing, chairman of Industrial Commercial Bank of China Ltd., is also a contender to head the banking regulator, Reuters said.

ICBC and Construction Bank are the world’s two largest banks by market value.

Bad Debts

Shares of China’s five biggest banks have dropped an average 16 percent in Hong Kong trading this year on investor concern that bad debts may mount as economic growth slows and triggers defaults by manufacturers, local governments and property developers.

China’s Communist Party held an annual meeting in Beijing earlier this month with top officials seeking to shape the core leadership that will run what may become the world’s biggest economy in the next decade. They aim to mold membership of the nine-person Politburo Standing Committee that will rule collectively under the leadership of Vice President Xi Jinping.

China’s economy, which has overtaken Japan to become the world’s second largest, may surpass the U.S. in size by 2020, according to estimates from Standard Chartered Plc and PricewaterhouseCoopers LLP. Gross domestic product grew 9.1 percent in the third quarter, the slowest pace since 2009.

Auditor, central banker

Xiang was a state auditor and deputy central bank governor before joining Agricultural Bank, the nation’s biggest by number of branches, in 2007 to lead the lender’s restructuring. An initial public offering three years later raised $22.1 billion in the world’s largest first-time sale.

Wu Dingfu, the current head of the insurance regulator, has reached the compulsory retirement age of 65, Reuters said.

Press officials at the three banks and the banking and securities regulators declined to comment on the Reuters report. Three calls to the insurance regulator’s press office went unanswered.

–With assistance from Dingmin Zhang and Chua Baizhen in Beijing. Editors: Chitra Somayaji, Joshua Fellman

To contact the reporter on this story: Stephanie Tong in Hong Kong at stong17@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

China agreed to promote greater flexibility of its currency at the G20 summit on Friday, earning praise from the biggest critic of its foreign exchange policy, the United States.

Speaking after the meeting of the world’s top economic powers in the French resort of Cannes, US President Barack Obama said the move by China would be critical in boosting global growth.

“We welcome China’s determination to increase the flexibility of the RMB (renminbi, or yuan, China’s currency),” Obama told reporters after the G20 summit.

“This is something we’ve been calling for for some time. And it will be a critical step in boosting growth,” he said.

In the final statement issued by the G20, China pledged “determination to increase exchange rate flexibility consistent with underlying market fundamentals.”

Beijing, together with other top exporters, also led efforts to keep the global economy moving by promising to “rebalance demand towards domestic consumption.”

The shift from its export-led economy will be made “by implementing measures to strengthen social safety nets, increase household income and transform the economic growth pattern,” the statement added.

Many in the West believe China keeps the yuan unfairly low to give its goods an export edge of as much as 30 percent over similar US products, driving a massive trade deficit and costing American jobs.

In October, US Secretary of State Hillary Clinton called for an international coalition to force Beijing to raise the value of its currency as one way of remedying global imbalances.

Responding to the complaints, Commerce Minister Chen Deming said Thursday that calls for the yuan to appreciate only served to “cause major difficulties” in China.

“When people talk about an appreciation of the renminbi, we see large capital inflows, causing major difficulties for us,” he told a small group of reporters.

Rather, he believed that from a trade perspective, “the recent renminbi exchange rate has reached a reasonable level, in a reasonable range.”

He also highlighted China’s efforts to shift its reliance away from exports to domestic demand.

Imports grew by up to 7.5 percent faster than exports in 2010, and between January and October 2011, imports are five percent ahead, he noted.

Some analysts also warned against a rapid appreciation of the yuan, saying that such calls were targeted at domestic political audiences and that in practice, it could hurt the world economy.

“The bulk of the pressure on China is purely political, particularly from the United States, because 2012 is an election year,” said Stephen Gallo, an analyst from Schneider FX.

With a weak world economy, the eurozone mired in debt and growth faltering in the United States, China has been keeping the wheels turning through its voracious demand for goods and services.

“The last thing we need now is a 10 to 15 percent revaluation of the yuan which causes a deterioration in the Chinese banking system, which causes a deterioration in the external sector of the Chinese economy,” Gallo said.

“Then basically you (would) have a global economy that is not firing on any cylinders at all. That’s a very dangerous situation. It’s a much more dangerous situation than we have now.”

Lee Hardman, an analyst at Bank of Tokyo-Mitsubishi UFJ, also noted that on an adjusted basis, the yuan has in fact risen 20 percent against the dollar over five years, going some way to meeting the demands made on Beijing.

“If that was repeated again over another five-year period, that would be nearly a 50 percent adjustment … over a decade. That in forex terms is a substantial adjustment,” he said.

China on Friday denied abusing workers in Zambian copper mines, after a Human Rights Watch report accused Chinese firms of flouting health and safety laws while demanding up to 18 hours of labour a day.

“Regrettably, the relevant contents of the report is not faithful to the truth,” the Chinese embassy in Lusaka said in a statement.

Four Chinese-run copper mines in Zambia are units of the state-owned China Non-Ferrous Metals Mining Corporation, under the authority of China’s highest executive body.

Zambia, Africa’s biggest copper producer, has welcomed Chinese investment but workers have often complained of sub-standard labour conditions.

In the report, workers described poor ventilation in the shafts, which can cause lung disease, failure to replace damaged equipment, and threats to fire miners who refuse to work in dangerous places.

Many miners at Sino Metals are required to work 12-hour shifts, five days a week, with a sixth 18-hour shift — despite Zambian laws requiring a 48-hour work week, the report said.

The embassy said Chinese investors came to Zambia to create jobs for locals and to help develop the poor southern African nation.

“China has for a long time been investing in Zambia on the basis of mutual benefits, creating a large amount of job opportunities, and making great contributions to Zambia’s social and economical development,” the statement said.

“The Chinese companies concerned have always been closely following the local laws and regulations, actively undertaking their social responsibilities.”

“They attach great importance to employees’ legal rights, like safety, salary, and etc, and have taken serious measures to ensure the protection of those rights,” read the statement.

Zambia’s new President Michael Sata has vowed to clean up the mining industry and to improve the lives of the poor.

Resource-hungry China has invested an estimated $6.1 billion (4.3 billion euros) in the southern African nation since 2007, equivalent to more than one third of gross domestic product last year.

CANNES, France (Reuters) – Italy will allow the IMF to monitor its progress with long overdue reforms of pensions, labor markets and privatizations, European leaders announced on Friday, looking beyond the crisis in Greece to the far graver threat to the euro zone.

China‘s economy is “slowing visibly”, the chairman of mining giant Rio Tinto said Friday, but he expressed confidence that it will prove resilient to any sharp correction in other major economies.

The miner provides key materials for China’s growth, with the Asian powerhouse accounting for 28 percent of its global sales of materials including iron ore, coal, aluminium, copper and diamonds, worth about US$16.7 billion.

Chairman Jan du Plessis said the economic problems faced in the United States and Europe have led to greater scrutiny of China, but he remained upbeat about its prospects.

“While the Chinese economy continues to grow at over nine percent annually, it is slowing visibly,” he told a business lunch in Sydney.

“However, an important difference between China and Europe or the US, is that the slowdown in China is largely the result of a lengthy and deliberate effort to tighten money supply and credit growth.”

This, he said, was an intentional safety valve to manage inflationary pressures that have been building up in the economy.

“While the declining prospects in the West will undoubtedly contribute to the Chinese slowdown, domestic demand remains strong,” said du Plessis, who added that debt levels among Chinese banks were manageable.

“That is why at Rio Tinto we continue to believe that China would be fairly resilient to even a quite sharp correction in the (Organisation for Economic Cooperation and Development) economies,” he said.

“Furthermore, although it will probably avoid the ‘shock and awe’ style of stimulus that we saw in 2009, if needed, China remains well equipped to support growth through a combination of fiscal incentives and monetary policy adjustments.”

Last month, China said its economic growth slowed to 9.1 percent in the third quarter as government efforts to tame inflation and turbulence in Europe and the United States curbed activity.

Growth in the world’s second-largest economy slowed from 9.5 percent in the second quarter to its lowest rate in two years.