The dispute between, on the one hand, CIETAC (China’s oldest arbitration body established in 1956) and, on the other, SHIAC (the new Shanghai International Arbitration Center) and SCIA (the new Shenzhen Court of International Arbitration), has recently come to a head. The two new international institutional arbitration bodies appear to have evolved out of CIETAC’s representative offices in those cities but are now trying to gain their independence. CIETAC adopted new arbitration rules which said CIETAC Beijing would have jurisdiction over arbitrations, unless the parties specifically provided for one of CIETAC’s representative offices to arbitrate. But CIETAC’s offices in Shanghai and Shenzhen refused to apply the new rules. The dispute also reflects competing financial interests and issues of independence in Shanghai and Shenzhen. During the course of 2012-13, CIETAC Beijing purportedly suspended CIETAC Shanghai and CIETAC Shenzhen and established new secretariats in the two cities. CIETAC Shanghai and CIETAC Shenzhen declared their independence. Both have their own websites, logos and branding, having been forbidden from using CIETAC’s. SHIAC adopted its own arbitration rules and panel of arbitrators, effective from May 1. SCIA adopted its own rules in December last year. CIETAC has refused to accept the legality of SHIAC and SCIA or their authority to determine arbitrations. CIETAC arbitration awards have generally received widespread recognition in the courts of China and overseas as a result of CIETAC’s reputation and China being a party to the New York Convention (Recognition and Enforcement of Foreign Arbitral Awards). It is not yet entirely clear whether arbitral awards arising out of SHIAC or SCIA will receive the same degree of recognition. Much may depend on whether the courts in Shanghai and Shenzhen recognize orders and awards arising out of arbitrations conducted by SHIAC or SCIA, the South China Morning Post reports.

A 10-year plan for Pudong, or the eastern part of Shanghai, that is grander and bolder than anything that has ever been conceived before, has been approved. The plan encompasses an area of 28 square kilometers, including the Waigaoqiao Free Trade Zone, Yangshan Free Trade Port Area and Pudong Airport Comprehensive Free Trade Zone. The area is almost the same size as Macao, and its trade volume topped USD100 billion last year. The Shanghai free trade zone is expected to have a bigger impact than development zones in Shenzhen or Tianjin. The project, mapped out at the beginning of this year and approved last week, is the first of its kind in China. It will be submitted to the central government later this month for final approval. The free trade zone plan is one of the Shanghai municipal government’s major tasks for 2013. Shanghai’s free trade zone is not expected to pose a threat to Hong Kong, which has still more open policies. Zheng Weimin, Researcher with the Chinese Academy of Social Sciences (CASS), said that Shanghai and Hong Kong play different roles in the Chinese economy and their functions are complementary.

Despite its efforts to boost grain yields for the 10th consecutive year, China is expected to become also the largest rice importer this year, overtaking Nigeria. Rice imports this year will surge to 3 million metric tons from 2.34 million tons a year ago, according to a report by the United States Department of Agriculture. Since 2012, “consumption demand for rice in China has exceeded supply”, the report said. China’s rice imports hovered around 450,000 tons per year over the five-year period that ended in 2011. Analysts said that the country has no shortage of rice supplies and blamed the expected surge in imports on the price discrepancy between the domestic and global markets. The discrepancy is a result of the government’s minimum grain purchase price, which aims to shore up domestic grain prices after they declined in the global market due to weak demand and increased rice yields in recent years, analysts added. “The government should allow the purchase price to have some flexibility, so that it fluctuates according to the international market,” said Ma Wenfeng, Senior Analyst at Beijing Orient Agribusiness Consultant, one of the industry’s largest specialist consultancies. Lured by low global prices, “Chinese companies are very willing to import”, Ma added. During the first three months of the year, China’s rice imports jumped 192% from a year earlier to 690,000 tons, Chinese official trade data showed. Imports of other agricultural commodities are also expected to increase. The country’s soybean imports are expected to rise by 10 million tons from a year ago to 69 million tons, according to the USDA forecast. China’s grain output reached 589 million tons in 2012, the ninth consecutive year of increased harvests, the China Daily reports.

China and Switzerland are to speed up negotiations to seal a free trade agreement (FTA). The most recent China-Switzerland FTA negotiations took place from May 9 to May 11 in Bern, and  Song Tao, Vice Minister of Foreign Affairs, said there was very positive progress in the negotiations. China is now Switzerland’s largest trade partner in Asia, and Switzerland is the seventh-largest trade partner of China in Europe and its sixth-largest source of foreign direct investment (FDI). In 2012, total trade between the countries reached USD26.31 billion, with China’s imports from Switzerland accounting for 87% of the total. Switzerland is one of the first countries that recognized China’s market economy status and initiated FTA talks with it. “The
FTA between the two countries could be considered a pilot program, because China and the EU may also launch FTA negotiations in the future,” said Blaise Godet, Switzerland’s Ambassador to China. Mei Xinyu, Researcher with the International Trade and Economic Cooperation Institute at the Ministry of Commerce (MOFCOM), said China and Switzerland have few competing areas so they would not need to make big industrial adjustments after the FTA takes effect.

A threat by the European Union to investigate claims that Chinese telecom companies have been unfairly paid subsidies is further inflaming trade tensions between the two sides, already at odds over solar panels and other products. Shen Danyang, Spokesman for the Ministry of Commerce (MOFCOM), warned the EU against taking measures that would benefit neither side. “The Chinese market is always open, and EU enterprises retain a larger share of the Chinese market than Chinese companies do in the EU,” Shen said. “If the EU resorts to a trade investigation with no right to reply, we really doubt its sincerity in resolving trade disputes through negotiations,” Shen said. “If the EU insists on launching the trade investigation, it will force China to resolutely defend its legal interests in accordance with World Trade Organization (WTO) rules and Chinese laws, and the consequences would have to be shouldered by the trade dispute initiator.” The EU said it is considering to levy duties on the Chinese telecom-gear makers because it claims they receive government subsidies and sell their equipment in the EU below cost. Huawei said it is disappointed that the European Commission has taken the unprecedented step of deciding in principle to open the first ever ex-officio dumping and subsidy investigations. Dai Shu, Spokesman for ZTE, said his company receives no illegal subsidies to do business in the region. Some European telecom companies, including Ericsson and Nokia Siemens Networks, also said they opposed the EU’s move. China exports telecom network equipment worth more than €1 billion a year to the European Union, giving it almost a quarter of the market, the China Daily reports.