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China: Will the New iPad Head to the Mainland Soon?


News of a US-recruited spy in China threatens Sino-US relations.

Sino-US diplomatic ties came under pressure today as news broke that China had arrested a Communist Party official earlier this year on suspicions of spying for the US.

The spy, who was an aide to a vice minister in China's security ministry, allegedly had been passing details on China's espionage activities abroad, three sources told Reuters. The CIA had recruited him to provide "political, economic, and strategic intelligence" and reportedly he had been paid hundreds of thousands of US dollars.

So far, the Chinese foreign ministry has yet to comment on the matter, but we can expect more to come from this story in the coming week.

Onward to business news:
Chinese Economy: More bad news for the Chinese economy this week, with the official manufacturing Purchasing Managers' Index (or PMI) falling from 53.3 in April to 50.4 in May. This was an indication that manufacturing activity was suffering thanks to weakened demand both domestically and abroad.

A separate HSBC China manufacturing PMI, which tracks smaller private sector firms, revealed an even gloomier picture, dropping from April's 49.3 to 49.4 in May.

The PMI is measured on a 100-point scale, with a number above 50 indicating an improvement in manufacturing activity and one below 50 revealing a fall.

Economic experts are now calling for the government to step up with stimulatory policies to prevent a drastic slowdown in the Chinese economy.
Apple (AAPL): Apple fanboys in China, get ready for the latest round of overnight queues. It seems the new iPad will soon reach the mainland.

The Wall Street Journal reported earlier in the week that Chinese regulators have given the thumbs up to an Apple device that contains high-speed wireless data functionalities, which likely is the new iPad. The device would work with the network of China Unicom (CHU), which has released Apple's iPhones and previous iPads.

On the website of China's Telecommunication Equipment Certification Center, the 3G device is listed as "model number A1430."
Kraft (KFT): Second only to Nestle in the global food business in terms of revenue, Kraft is preparing to mount a sustained assault on the China market. Leading the charge is the unveiling of a slate of new products, redesigned to better suit Chinese taste buds.

These include cookies that "taste like the sort of white cake eaten at birthday parties" and Ritz crackers in beef stew and spicy chicken flavors. The company is also redesigning its product packaging, with Ritz crackers and Chips Ahoy cookies soon to come in portable packs similar to ramen cup noodle packages.

Currently, Kraft is not in the top 10 of snack food sellers by market share. Chinese companies make up most of the list, with PepsiCo (PEP) coming in at No. 5.
Comac: If there's one company that threatens to break up the long-established duopoly of Boeing (BA) and Airbus in the aviation industry, it's Chinese company, Comac. So says Jim Albaugh, president of Boeing Commercial Airplanes.

Albaugh, speaking at the Aviation Club of the UK on Thursday, pointed out that China was pumping $5 billion into developing its regional jet, and another $30 billion into its C919 narrowbody program.

"If that's going to be the airplane or not, I don't know, but eventually, they will get it right," he said.

What can Boeing do in the face of such emerging competition? "The answer is simple: You have to evolve the airplane and produce more value for the customer. The things that Willie Walsh [CEO of International Airlines Group] and others want is fuel efficiency, environmentally friendly aircraft and low maintenance costs."

Twitter: @sterlingwong
No positions in stocks mentioned.
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