China widens yuan trading range

BEIJING (Reuters) - China's central bank widened the yuan's trading band against non-dollar currencies Friday in a move analysts said was aimed at responding to overseas pressure for greater flexibility while keeping the yuan on a tight leash against the dollar.

The People's Bank of China said it would now let the yuan range as much as 3.0 percent a day against non-dollar currencies such as the yen and the euro instead of 1.5 percent.

The bank said the reform, announced ahead of a G7 meeting of finance chiefs later Friday, marked a further liberalization of the foreign-exchange market following China's shift from a dollar peg to a managed float of its currency on July 21, when it revalued the yuan, also known as the renminbi, by 2.1 percent.

"The goal of the foreign exchange reforms is to keep the renminbi basically stable at a rational and balanced level. This will make the exchange rate more market-oriented," a senior monetary official said.

Significantly, the bank made no change to the yuan's theoretically permitted trading range against the dollar of 0.3 percent a day. In practice, the currency has appreciated by less than 0.3 percent in the entire two months since it was depegged.

"It is technical adjustment to existing policy, not another policy change," said David Simmonds, head of currency research at Royal Bank of Scotland in London.

Because the euro and yen can easily swing more than 1.5 percent a day against the dollar, the central bank could theoretically have found itself intervening to buy or sell dollars just to protect the value of the yuan against other currencies if it had not widened the band, economists said.

"Clearly their overriding priority is to maintain control of the dollar/China exchange rate," Simmonds said.

Sean Callow with Westpac Institutional Bank in Singapore was struck by the timing of the announcement; China's finance minister and central bank governor meet their counterparts from the Group of Seven rich nations later on Friday in Washington.

The United States has welcomed China's move towards greater currency flexibility but has said it wants the currency to be allowed to rise more quickly. U.S. officials argue that the yuan is undervalued in light of China's ballooning trade surplus.

"The timing of this move -- just hours before China's top officials meet with their U.S. counterparts in Washington, D.C. -- is presumably designed to cool criticism over the lack of flexibility in renminbi trade," Callow said.

Sebastien Barbe of Calyon in Paris agreed. "Ahead of the G7 meeting of finance ministers, it is a way to respond to political pressure without changing significantly the system," he said.

The central bank also announced that banks, in dealings with customers, could now set their own bid/ask spreads in trading the yuan against non-dollar currencies.

It also widened to 4 percent the bid/ask spread that banks are permitted to quote in spot dollar-yuan deals for clients.

Previously, banks were allowed to quote no more than 1 percent above or below the middle rate.

"The rules are aimed at developing the foreign exchange market and perfecting the renminbi exchange rate formation mechanism and improving the banks' ability to price and their ability to avoid exchange rate risk," the central bank said in statement

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China: Hiking the Great Wall

JINSHANLING, China (AP) -- The Mongol attackers are long gone, but the vast brick-and-stone barrier that helped China repel them and other invaders still stands -- and awaits a new horde of travelers who can explore and even camp out on the centuries-old fortification.

Crumbling in some areas and neatly restored in others, the Great Wall -- actually a patchwork of walls -- snakes over hills and through craggy ravines covering thousands of miles of Chinese countryside, dotted by watchtowers once manned by Ming dynasty sentinels.

Some of the towers, where enterprising Chinese today guard only souvenir stands, have sprung back to life as something akin to modern-day hostels, sheltering hikers who come for overnight trips to soak up history and vistas of former battlefields now carpeted with vegetation.

Sun Hailong, a Chinese guide of Mongol ancestry, rents one of the towers about 87 miles northeast of the Chinese capital, Beijing, and takes visitors who want to spend the night -- by pitching a tent or simply unfurling a sleeping bag -- in its crenelated confines.

Visiting mainland China for the first time with my father, who had flown in from the United States, I arranged through a Beijing-based friend to meet Sun near Jinshanling, the section of the wall where he lives with his family.

We arrived late one afternoon after riding for three hours in a minibus crowded with cigarette-puffing locals. Along the way, we passed scenes of rural life -- ruddy-faced farmers sitting on their haunches outside brick houses, firewood stacked high, herds of sheep.

The van left us on a desolate stretch of highway, at the mouth of a road spanned by an immense stone gateway that marked the entrance to Jinshanling. Sun greeted us there, grinning and urging my father and I to climb into the back of his three-wheeled motorcycle.

"Today, the sunset will be beautiful," said Sun, a mustachioed 37-year-old who wore a T-shirt, dark blue trousers and traditional black cotton shoes.

After riding uphill for several miles, we arrived at Sun's house and souvenir shop, dropped off our bags and continued on foot to the wall, which stood like a medieval fortress in the distance.

We clambered up stone stairs, traversed a sagebrush-covered hillside and entered a keyhole-like door in the base of the Jinshanling wall, which is partially restored but less touristed than areas such as Badaling, which former U.S. President Richard Nixon visited in 1972.

Inside the rampart, we could see the wall's hodgepodge construction over many centuries: older brown bricks were nested in gritty mortar alongside clean dark gray ones used by restorers in recent decades.

Ming dynasty rulers began construction of the Jinshanling wall -- roughly as it exists today, with strategic holes and chutes for weaponry and watchtowers -- in response to raids by bow-and-arrow-wielding Mongols in the 1500s.

Their soldiers and artisans used bricks as a facing for a stone-and-mortar wall erected after a 1550 attack by Mongol horsemen, according to David Spindler, an independent scholar who has been researching the wall around Beijing for several years. It was bolstered by brick ramparts.

But the wall's history likely stretches back further.

"Another section of wall in the Jinshanling area, parallel to the current wall, may have been built by the Northern Qi dynasty," which ruled from 550 to 577 A.D., Spindler added.

The Jinshanling wall, now almost silent except for the squawks of pheasants, was once the scene of a historic battle between Chinese forces and Mongol fighters in October 1554.

But the Chinese overwhelmed the Mongols in just three days.

"The Mongols and their horses ran out of food and had to call off their attack," said Spindler, who added that Jinshanling was vulnerable to enemy raids because it was a low-lying area.

The ascent to Jinshanling took us less than an hour, though the climb was at times steep and the footing shaky. From one point, we watched the sun set behind mountaintops before hiking back to Sun's house for a meal of dumplings, stir-fried vegetables and glasses of beer.

Then we pulled on fleece jackets as the night got colder and, with flashlights beaming, headed into darkness to return to the wall for the night.

Under a nearly full moon, we traipsed along some of the wall's narrow walkways, through shadowy passageways and over several steep humps along the wall's spine. It was eerily still, except for the flashes of a photographer's camera in the distance.

We arrived at Sun's watchtower, where we decided to sleep under the stars, outside the tower's box-like stone house.

Sun laid out a tarpaulin and sleeping bags for us while we brushed our teeth by leaning over the crenels where Chinese sentries might have hurled stones at marauders below.

We slept -- somewhat uncomfortably in the chill air -- until the sun rose early the next morning over the saw-tooth horizon. Sun made us a simple breakfast of instant noodles, which we slurped down eagerly.

We spent half the next day hiking 6.2 miles of the Great Wall -- over loose stones and along paths that skirted weak or collapsed sections -- to Simatai, another stretch with steeper inclines -- and more tourists.

Although annoyingly persistent hawkers followed us at times, trying to peddle bottled water and postcards, we were virtually alone on the Jinshanling wall. Like a narrow and dilapidated cobbled street, it led us through tumbledown watchtowers and over small mountain peaks.

But the enchanting solitude of Jinshanling ended abruptly at Simatai, where crowds of tourists were disembarking from tour buses and swarming around amusements such as a trolley across a river gulch, restaurants and a cable car that carries passengers up a mountainside.

With the widely touted 2008 Beijing Olympics on the horizon and bigger crowds expected, the seclusion we experienced at the Jinshanling wall -- with its sweeping views, abandoned battlements and pristine countryside -- may become harder to find.

Better to visit before the next invasion.

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United looks to China for repairs

NEW YORK (CNN/Money) - United Airlines' heavy maintenance of its entire fleet of Boeing 777s will be handled by a Chinese firm for the next five years, an industry trade publication reported Tuesday.

Under the deal, Ameco Beijing will handle maintenance and repairs of United planes starting as early as October, according to a report published on the Web site of Flight International , an aerospace industry trade publication.

The deal, which is the largest North American contract secured by the Chinese firm, is estimated at more than $30 million, the publication reported.

Ameco Beijing, which was created by German airlines Lufthansa and Air China, currently handles maintenance for the Chinese air carrier.

The trade publication reported that maintenance work on United's 52 Boeing 777s will be carried out in Beijing.

The U.S. airline, which is currently emerging from bankruptcy , is expected to make as many as 80 maintenance visits over the course the contract.

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