Posts tagged "China"

British firm suspends funding for Chinese foie gras factory

Creek Project Investments says it will investigate animal welfare concerns raised by the public over the project

A British company which had been funding a large foie gras factory farm in China has suspended the project after pressure from animal welfare campaigners.

Cambridgeshire-based Creek Project Investments, which has been investing in what could prove to be China’s biggest facility for production of the controversial delicacy, had been urged by organisations including Compassion in World Farming (CIWF) and the Humane Society International to drop the project.

It has now announced it is suspending the operation until a review is carried out into concerns raised by the public. “The directors have called for the review to include input from animal welfare and environmental experts to address any issues which may or may not exist,” Creek said in a statement on its website.

Production of foie gras, which is made by force-feeding geese or ducks until their livers become enlarged, is banned in the UK, as well as many other countries in Europe, although it remains a prized product in France.

In China, where demand is growing for an item still considered to have luxury credentials, more than 200 hectares of land have been set aside in the east-central Jiangxi province for the new facility. The location is at Poyang Lake, the country’s largest freshwater lake and an important overwintering habitat for migratory waterfowl. On its website, Creek said 3 million geese had been delivered to the farm by December. The company, it added, had contracted for the delivery of 15 million birds over a five-year period.

The plan had enraged many campaigners, who do not believe the process of force-feeding by tube can be anything other than cruel. The campaign group Four Paws International has recently released video footage from inside a Chinese foie gras farm showing geese in cages being apparently restrained with clamps while a tube is placed inside their throat.

On Friday campaigners celebrated the company’s decision to suspend the project. Dil Peling, director of public affairs at CIWF, said: “Animal welfare has prevailed. The suspension of this factory farm has effectively saved 100 million geese from the horrifying practices of foie gras farming. We are elated that our voice of reason and concern was heard.”

Mark Jones, the executive director of Humane Society International, said the organisation hoped “that, in reviewing the disastrous animal welfare, environmental and human health impacts of this project, they [Creek] abandon their plans indefinitely”.

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Eurozone crisis live: China slowdown rattles markets

• China slows more quickly than expected
• Markets open down
• Spanish cabinet meets to discuss banking reforms

8.11am: Good morning and welcome to the live blog. The action today promises to be mainly in Spain where the cabinet is meeting to discuss banking reforms and how much taxpayer money might be needed to support the country’s creaking banking system. See here for an excellent summary of how things have gone wrong there.

Otherwise the markets are set to open sharply down after figures from China showed that its economy is still slowing down. Story coming on that soon. Could be a big day for “hard landing/soft landing” debates.

We’ve also got UK producer prices at 9.30am to look forward to.

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Weetabix to China? We must be in decline… | Hephzibah Anderson

It is our very own breakfast icon. Or rather, it was until the Chinese gobbled it up

You needn’t hike to Woo-woo land and start buying into auras and chakras to concede that there are such things as bright foods. I’m thinking foods with nutritional zing or visual zip – acai berries, iced buns, or maybe just those MSG-laden leftovers from last night’s takeaway. What I’m not thinking is Weetabix. And yet, thanks to a deal worth £1.2bn, that quintessentially British breakfast cereal, so evocative of murky, drizzle-drenched mornings, is now owned largely by China’s Bright Food Group Co.

As Dr John Harvey Kellogg well knew, breakfast is never just breakfast. Those golden flakes that tumble from the box with such crisp promise only to wilt in the milk were part of the Seventh-day Adventist’s lust-reducing plan, a plan that entailed not only eliminating booze and caffeine, cigarettes and waltzing, but stripping his diet of all things sweet and spicy, too. (Good job he’s not around to sample the queasy delights of wasabi chocolate.)

Likewise, Weetabix stands for much more than the cereal that’s always to be found lurking at the back of an otherwise bare cupboard. It is the ultimate comfort food, its texture – its very taste – recalling nothing so strongly as baby food. In fact, many of us were weaned on the stuff. Moreover, it seems to hark back to a chapter in British culinary history that we’re far enough removed from to feel nostalgic for, a time when it was always Spam sandwiches for tea. We Brits love an underdog, and as a Savoy chef once pointed out, Weetabix even looks a little like dog biscuits. There’s also this: while being relatively low in sugar, salt and fat, it tastes pretty good. No wonder Nigella chucked it in a recipe for brownies.

In short, it is our very own breakfast icon. Or rather, it was until the Chinese gobbled it up. But the reality of these stories is always more complicated than their narrative allows. Weetabix was actually invented in Australia in the 1920s and until the 1970s was made from imported wheat. Its sell-off really began in 2004, when the secretive family firm who then still owned it flogged a controlling stake to a Texan private equity firm.

It made for a faintly amusing news item. Selling to China in 2012 is another matter altogether, tapping into a profound anxiety that the west might be tilting towards irreversible decline.

Tellingly, Weetabix hasn’t received the attention that Cadbury sale to Kraft drew in 2010. Feared job losses, the inherent drama of hostile takeover bids, chocolate – those ingredients all made for a much bigger story, but a certain pessimism seems to have set in since then, too. It’s somehow not in the least bit surprising that China has bought one of our best-loved national brands. And indeed, news of the sale came on the same day that the respected National Institute of Economic and Social Research forecast stagnation for the UK’s economy this year.

Maybe this very British breakfast cereal contains some philosophical value in addition to its iron and B-vitamins. After all, its defining characteristic is an ability to absorb magical quantities of liquid, be it full-fat or soy milk. Now is the time to suck up our chagrin and start building the next national brand, even if we have to go to Australia for it.

Weetabix deal highlights China’s shifting tastes

The country’s middle classes are consuming more western foods than ever – although Tesco still stocks chicken feet

There is no breakfast cereal aisle in Chinese supermarkets; shoppers who want Bran Flakes must visit expensive imported goods shops in big cities. Otherwise, they start the day with something like salty congee (rice porridge) served with a cup of soymilk or a deep-fried dough stick. But the sale of Weetabix to the Shanghai-based Bright Foods highlights the shifting tastes of the Chinese middle classes, who are consuming more western foods than ever – especially beef, pork and dairy foods.

In 2007, Premier Wen Jiabao said he dreamed of the day when every child in the country could drink a pint of milk a day. In 2010, the Chinese retail dairy market totalled £23bn, and it is expected to grow by 80% by 2016. China can’t produce enough milk to keep up with demand, and imports of dairy products have more than doubled in the past five years, even though milk is not traditionally part of Chinese diets.

Though chocolate barely existed in China 20 years ago, in 2011 the total market was worth £4.7bn, and is rising by 20% each year.

Shopping habits are shifting, too. Tesco has 124 stores in China and is expanding; Carrefour and Wal-Mart are following suit. Yet all these companies have had to adjust to the Chinese market. The Tescos have no cheese counters or fresh hummus; the meat counters sell chicken feet to be chewed whole, complete with claws.

Chinese food firm wolfs down Weetabix for £720m

Majority stake in the Northamptonshire makers of the nation’s favourite breakfast product is sold to state-owned Chinese company

You can’t say we weren’t warned. Lord Digby Jones, a former director-general of the CBI, has long cautioned that “if we don’t watch out, China will eat our lunch”. On Thursday, it got started, with breakfast. A state-owned Chinese company is gobbling up a majority stake in Weetabix for £720m.

“I have been waking people up for years to the fact that China and India wanted our lunch, but I never thought they would want our breakfast as well,” Jones, who is now a UK trade ambassador, said.

Weetabix, made in Northamptonshire and exported to more than 80 countries, is the nation’s favourite breakfast product – we get through 3.4m biscuits a day.

Sources close to the Shanghai-based buyer, Bright Food, said China’s second biggest food company had its sights set on taking over a string of household names. “They won’t stop here,” one source said. “I’d be very surprised if this was the last British brand they take over.”

One City analyst suggested the cereal deal underlined the “global power shift from the west to the east”.

Bright Food has already splashed out on a 75% stake in Australia’s Manassen Food for more than $500m and a 51% stake in New Zealand dairy producer Synlait. Last year it offered more than £1.2bn for United Biscuits, the name behind British snacks such as Hula Hoops, Twiglets and Jaffa Cakes.

It has also attempted to take over French yoghurt group Yoplait and been linked with Campbell’s Soups and Premier Foods, the company behind Mr Kipling cakes, Bisto gravy and Loyd Grossman sauces.

Jones, who admitted to eating Weetabix for breakfast every other day – alternating with porridge – said he had “no problem” with China gobbling up great British brands, but just wished that they would be “similarly open to British investment in China”.

Bright Foods’ chairman, Zongnan Wang, who sealed the deal with a couple of celebratory Weetabix, said in a statement that he was “excited” about bringing the 80-year-old wheat biscuits to breakfast tables across China and Asia, where western eating habits are slowly catching on as wealthier citizens begin to shun traditional rice and steamed bread.

Despite Weetabix being derided by a head chef at the Savoy as “cakes that you give to dogs”, Weetabix’s chief executive, Giles Turrell, said he believed there were “substantial opportunities to further grow the business internationally, in North America, Asia and beyond”.

Industry experts warned that Weetabix may find breaking into the Chinese market difficult because of high levels of lactose intolerance among the population. However, Marcia Mogelonsky, an expert on food and drink at the market researcher Mintel, said there was “huge growth potential” for breakfast cereals in China, where just $665m was spent on them last year, compared with $2.3bn in the UK.

Mogelonsky said Bright Foods, which makes a huge range of products including canned meats, alcohol and sweets and even runs a taxi firm in Shanghai, had an “endless pot of money” to fund other takeovers. But she expected the company to be selective over which brands it poaches next. “I don’t think it’s going to be like Supermarket Sweep with them stripping the shelves of everything in a hurry.”

She said Weetabix would give the Chinese a “toehold in the UK, which will open up western Europe, which will in turn open up eastern Europe and then the world,” she said. “There’s a whole bunch more out there they can go after.”

Clive Black, an analyst at Shore Capital, said the acquisition of 60% of Weetabix was “just one example” of the “global power shift from the west to the east. It’s similar to how the bourgeoisie took over from the aristocracy 200 years ago,” he said.

“Asia and Latin America have got capital but lack experience and gravitas of brands – that new money is looking for old wealth. I think we’re going to see a lot more of it as the old world continues to get poorer and the new gets richer.”

Weetabix, which also makes Alpen and Ready brek, left British control nine years ago when Sir Richard George, whose family had run it since before the second world war, sold the family firm to the flamboyant venture capitalist Lyndon Lea for £642m. Lea, the 41-year-old son of a Lancashire hairdresser and engineer who is known for hosting parties featuring Cirque de Soleil dancers and sushi served off the bodies of near-naked women at his Californian beach house, was blasé about the fivefold return his private equity firm made on the deal. “It’s been a good return for us,” he said.

Lea’s Lion Capital firm will retain a 40% stake in the company. Bright Foods has committed itself to safeguarding production at the Weetabix factories in Burton Latimer and Corby, Northamptonshire, where 2,000 workers are employed.

The deal came on the same day as a Chinese retailer sealed the acquisition of Gieves & Hawkes from a Hong Kong company, which bought the Savile Row tailor from its British shareholders in 2002 for about £10m.

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Hackers have breached top secret MoD systems, cyber-security chief admits

Major General Jonathan Shaw says ‘it was a surprise to people quite how vulnerable we are’

Computer hackers have managed to breach some of the top secret systems within the Ministry of Defence, the military’s head of cyber-security has revealed.

Major General Jonathan Shaw told the Guardian the number of successful attacks was hard to quantify but they had added urgency to efforts to beef up protection around the MoD’s networks.

“The number of serious incidents is quite small, but it is there,” he said. “And those are the ones we know about. The likelihood is there are problems in there we don’t know about.”

Government computer systems come under daily attack, but though Shaw would not say how or by whom, this is the first admission that the MoD’s own systems have been breached.

The Serious Organised Crime Agency, took its website offline on Wednesday night after becoming the target of a cyber-attack. A spokesman said the attack did not pose a security risk to the organisation.

Shaw, a veteran of the Falklands and Iraq wars, also said the MoD had to be prepared to embrace unconventional and “whacky” ideas if the military wanted to catch up with, and then stay ahead of, rivals in the cybersphere. Getting “kids on the street” to help the military was vital, he said.

“My generation  … we are far too old for this; it is not what we have grown up with. Our natural recourse is to reach for a pen and paper. And although we can set up structures, we really need to be on listening mode for this one.”

He added: “If we want to work the response, if we want to know really what is happening, we really have to listen to the young kids out in the street. They are telling us what is happening out there.

“That will pose a real challenge to us. This thing is moving too fast. The only people who spot what is happening are people at the coal face and that is the young kids. We have to listen to them and they have to talk to us.”

A former director of UK special forces, Shaw, 54, said he thought the military could learn a trick or two from firms such as Facebook.

The company has a “white hat” programme in which hackers are paid rewards for informing them when they have found a security vulnerability.

Nine people in the UK have been paid a total of $11,000 (£6,785) for working with Facebook. Shaw said this was the kind of “whacky idea we need to bring in”.

Shaw has spent the last year reviewing the MoD’s approach to cyber-security, and the kind of cyber-capability the military will need in the future.

He says next year’s MoD budget is expected to include new money for cyber-defence – an acknowledgment that even during a time of redundancies and squeezed budgets, this is now a priority.

The general said the MoD wasn’t “doing badly … but we could do a hell of a lot better. We will get there, but we will have to do it fast. I think it was a surprise to people this year quite how vulnerable we are, which is why the measures have survived so long in the [budget] because people have become aware of the vulnerabilities and are taking them seriously.”

China and Russia have been accused of being behind most of the sophisticated cyber-attacks, with state-sponsored hackers targeting military secrets from western governments, or intellectual property from British and American defence firms.

Shaw refused to point the finger at any nation, but admitted the UK was “trying to engage the Chinese on rules of the road in cyberspace”, pressing the argument that new international treaties are not necessary to stop this kind of theft and espionage.

Shaw said the number of attacks was “still on an upward curve … and the pace of change is unrelenting”.

In his last interview before retiring, Shaw said the UK had to develop an array of its own cyber-weapons because it was impossible to create entirely secure computer systems.

“It is quite right to say that pure defence, building firewalls, will not keep the enemy out. They might be inside already … there is no such thing as total security. You have to learn to live with certain insecurities.

“One needs to engage in internal defence and be quite aggressive about it. And if you are going to manoeuvre in cyberspace, that is something that obviously involves action across the spectrum.”

Shaw said he intended to “mainstream” cyber-capabilities across the MoD by 2015. This included ensuring military commanders had a range of cyber-options to use from a “golf bag” of weapons systems.

But he thought cyber-weapons would complement rather than replace more conventional weapons.

“As new capabilities come on the block, you reassess whether you need the old ones, whether they are complimentary or duplicatory.

“People have asked me whether cyber-weapons will make conventional weapons redundant. Absolutely not. A hard bomb is actually quite a good cyber-weapon because it can take out a broadcasting station, take out a server.”

The military top brass, he said, had been the “hardest to convince” about the cyber-threat, because high-ranking officers tend to be set in their ways. “We are the wrong guys to deal with this.”

Shaw said it still surprised him that the MoD’s headquarters in Whitehall “is the only building, main defence security establishment, where you don’t leave your mobile phones and Ipad in a box outside your office … people’s personal behaviours are not good enough. When we look at cyber-security in the MoD, we are looking at preserving intellectual property and our networks and stopping people spying on us.

“The real challenge is how we secure our supply chains. We are dependent on industry for our technological edge … and preserving that intellectual property is absolutely vital.”

He added: “Cyber implies something technical. To the average person in the street, cyber means it is someone else’s problem. But it is everyone’s problem. We can’t just leave it to the techies.”

An MoD spokesman said: “The MoD takes all possible precautions to defend our system from attack from both unsolicited, for example ‘spam’ email, and targeted sources. It would be both misleading and naïve to assume that any system is 100% secure against all possible threats which is why we take additional steps to detect suspicious activity within our own systems.

“We also ensure that our most sensitive networks are not connected to the internet and have additional physical and technical measures in place to defend them.”

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China buys Weetabix majority stake

Weetabix valued at £1.2bn after China’s state-owned Bright Food buys 60% stake in cereal produced in Northamptonshire

China has gobbled up a majority stake in Weetabix. China’s state-owned Bright Food announced on Thursday that it had bought a 60% stake in the 80-year-old breakfast cereal.

The deal values Weetabix, which is produced in the small town of Burton Latimer, near Kettering, Northamptonshire, at £1.2bn.

Zongnan Wang, chairman of Bright Food, said he was “excited” about bringing Weetabix to breakfast tables across China and Asia, where western eating habits are slowly catching on as wealthier citizens begin to shun traditional rice and steamed bread.

“We are excited by the many growth opportunities for the business, especially in international markets, and Asia in particular. With Bright Food’s strong resources and our expertise in both the Chinese and broader international markets, we are excellently placed to develop the Weetabix business,” Wang said.

Despite Weetabix being derided by a head chef at the Savoy as “cakes that you give to dogs”, Weetabix’s chief executive, Giles Turrell, said he believed there were “substantial opportunities to further grow the business internationally, in North America, Asia and beyond”.

Lyndon Lea, a partner at Lion Capital, said: “We are excited to continue our journey with the Weetabix brand, which has been an enormously successful investment, as we extend the business into China in partnership with Bright Food.”

The nation’s favourite breakfast cereal, which accounts for 7% of UK cereal sales, was family owned until 2004, when it was bought by a Texas private equity firm. It was later sold to another private equity firm, Lion Capital, which will retain a 40% stake in the company, which also owns Alpen and Ready brek.

Weetabix is exported to more than 80 countries, employs nearly 2,000 people and generates annual sales of more than £420m. Britons are still its biggest fans eating an average of 336 Weetabix a year each.

The cereal is the latest in a long line of western food groups that have fallen prey to the Chinese. Last year Bright Food bought a 75% stake in Australia’s Manassen Food for more than $500m and its dairy business bought a 51% stake in New Zealand diary Synlait.

Bright Food had also tried to buy stakes in United Biscuits, which makes Jaffa Cakes and Hula Hoops, and French yoghurt group Yoplait.

The deal comes as a Chinese retailer sealed the acquisition of Savile Row tailor Gieves & Hawkes from another Chinese firm.

From Chongqing to Chipping Norton, money and politics have got too cosy | Timothy Garton Ash

Scandals in Britain and China show the need for the separation of powers and the independence of professions

Let us consider the tale of Murdoch Xilai and little Bo James. I mix them up like this since both Britain and China are roiled by scandals involving corruption, spying, intimidation, cover-up and collusion at the highest levels.

Of course such affairs do not unfold in quite the same way in one of the world’s oldest democracies and in the world’s oldest autocracy. Imagine a fiercely independent judicial inquiry, a cross-party parliamentary committee and a largely free press all investigating the Bo Xilai case in Beijing. Imagine opposition politicians interrogating president Hu Jintao in angry parliamentary exchanges at what, by analogy with Westminster’s PMQs we might call CPGSQs (Communist party general secretary’s questions). They order things differently in China.

Yet any complacency in Britain would be entirely out of place. What has happened over the decades during which Rupert Murdoch became the second most powerful person in Britain has been profoundly corrosive, not only of our domestic politics but also of our foreign (especially European) policy, our media and our public morality. Far too many of our politicians have been craven lickspittles, cowed not just by hope of office and fear of political attacks in powerful mass media, but by personal fears of tabloid-style exposure of real or alleged features of their private lives.

It should never have happened here. It must never happen again.

Underlying these very different stories is a deeper lesson about two universal keys to good and open government. The first is the separation of powers: not just the classic public powers of executive, legislature and judiciary but also the separation of private from public power, including that of the media (“the fourth estate”) from ruling parties and the state. The second is the independent ethos, codes and self-confidence of separate professions – lawyers, journalists, politicians, civil servants, soldiers, academics – without which even the most elaborated formal separation of powers is not worth the paper it is written on.

Britain does not have the classic separation of powers seen in the US. Government and parliament are too closely intertwined, although the House of Commons has recently reasserted a little more independence, especially through select committees such as the one that just produced its damning report on the Murdoch phone-hacking scandal. The judiciary, however, has largely kept its independence through these murky times. If you want a great example, just watch Lord Leveson, head of the judge-led inquiry into part of this scandal, treating Rupert Murdoch as if he were just another unreliable witness.

With the fourth estate it’s a mixed picture. One peculiarity of contemporary Britain is that it can plausibly claim to have some of the world’s worst and some of the world’s best journals and journalists. (Beside “journalist” perhaps only the word “dancer” covers such a wide range.) It’s for others to assess the performance of papers like the Guardian, or public service broadcasters like the BBC. But there have been moments when even the Murdoch-owned Times has been quite brave in reporting the scandal dragging down its proprietor and the grotesque wrongdoings of its tabloid sister papers.

The heart of darkness in Murdoch’s Britain has been the incestuous relationship between private and public power: more specifically, between money and politics. (The same is true in the US, with a significant part played by Murdoch-owned Fox News.) Both Britain’s largest parties, Labour and Conservative, have been craven in their wooing of Murdoch and other media barons.

In this, as in so much else, following the trail blazed by Tony Blair, David Cameron, while leader of the opposition, flew specially to meet Murdoch off the island of Santorini, on a yacht called Rosehearty. (So when someone makes the Murdoch version of the movie Citizen Kane, the weary newspaper mogul must die with the mysterious word “Rosehearty” slipping from his lips.) Cameron’s subsequent criticisms of the BBC bore an uncanny resemblance to those advanced by the Murdochs, who supported his election bid. With all we have now learned, I personally find it impossible to believe that his culture secretary Jeremy Hunt was then rigorously impartial in assessing News Corp’s strategic bid for control of BSkyB.

The interwining of private and public power, of money and politics, is also at the heart of China’s scandal. There are intriguing small connections between the two countries’ affairs.

One question in the Bo Xilai case is how he and his wife Gu Kailai got their son Bo Guagua – the James Murdoch of Chongqing – into Harrow school and then Oxford university, and how they paid the fees. If a report in the Daily Mail is to be believed, Gu Kailai approached a British company called Vistarama to supply a giant helium balloon observatory for the city of Dalian, of which her husband was then mayor. She suggested an “extra payment” of £150,000 for the air freight, explaining: “We pay the company, you pay the school.” Vistarama reportedly declined the unconventional offer. One trusts they word things more delicately in Chipping Norton, where Murdochs and Camerons used to hang out together – and where, more seriously, the political, legal and economic context is quite different.

The Chinese-British connections also run the other way. For the first decade of this century, Murdoch’s strategic dream was to break into the China market. According to a superb book on the Chinese Communist party by the Financial Times’s Richard McGregor, Murdoch wooed the then Communist propaganda chief Ding Guan’gen as assiduously as he himself was being wooed by Blair and Cameron. Later, and here’s the most revealing part: “Murdoch joined forces in an expensive business venture with Ding’s son in an effort to find a way around China’s tight restrictions on foreign broadcasting, all to no avail.”

In Britain and the US, the problem is an incestuous relationship between money and politics, but at least these are still recognisably two separate powers. In China, after 30 years of Leninist capitalism, the two seem to have become deeply intertwined – often in the same families. That, when taken together with the lack of the classical separation of public powers, and the enforced weakness of China’s media, is obviously a much larger obstacle on the road to open, good government.

But I say it once again: no complacency please, we’re British. Let us put our own house in order before lecturing anyone else about the state of theirs.

Twitter: @fromtga

Boeing’s trade-in deal with Chinese airline

US planemaker to buy half of China Eastern’s fleet of 10 Airbus A340 jets as part of a $6 billion deal to sell 777s to the airline

Boeing may soon be looking for buyers for long-range passenger jets built by arch-rival Airbus under a rare trade-in deal with China’s third largest airline that underscores all-out competition between the planemakers.

The US planemaker has agreed to buy half of China Eastern’s fleet of 10 Airbus A340 jets as part of a $6 billion deal to sell 20 Boeing 777s to the airline, the Shanghai carrier said in a stock exchange filing.

Airbus has itself agreed to take back the other half of China Eastern’s A340 fleet as part of a separate deal to sell 15 A330 jets, but faces likely delays in getting the deal done due to a row between China and Europe over emissions.

The two deals lift a veil on an obscure corner of the jetliner industry, where planes are traded in like used cars.

Just like car dealerships, the world’s dominant aircraft manufacturers sometimes offer to take back their old models when trying to persuade airlines to upgrade to the latest models, in an industry with $100 billion in annual new sales.

But experts agree it is unusual for aircraft to cross over the barrier separating Airbus and Boeing in their combative duopoly, and when they do it stokes up emotions on both sides.

“It sometimes happens but it is not their preferred route at all,” said Karl Bruenjes, managing director of UK-based RPK Capital Management, a specialist in second-hand aircraft.

The deal echoes a move by Boeing to buy A340s from Singapore Airlines in the mid-1990s including some still in assembly. Back then, the aim was to support a blockbuster sale of 777s. When delivery came there was a brief spat over whether Airbus would support the A340s, according to people familiar with the deal.

The subsequent trading spawned a joke inside Boeing headquarters that Boeing had placed more A340s than Airbus that year – a source of irritation for Airbus that may be repeated if Boeing quickly sells the jets it plans to buy this time.

Airbus halted production of the slow-selling A340 last year.

In 1984, according to industry sources and web databases, Boeing bought a handful of brand-new Airbus A310 models assigned to Kuwait Airways to allow the airline to take Boeings instead.

In the European camp, in 2008 Air Algerie told the United States that Airbus had offered to buy its entire Boeing fleet to prise open a key Boeing client, according to an unconfirmed account in a cable marked “sensitive” and released by Wikileaks.

Airbus said its policy was not to buy Boeing airplanes.

“It is very rare in this industry that someone buys their competitor’s aircraft. We do not do it,” sales chief John Leahy told Reuters.

Boeing said it did not comment on specific transactions, but a spokesman added: “In general it is fair to say that at times we do take airplanes in trade, including occasionally non-Boeing airplanes, as part of our orders transactions.”

The A340 entered service boasting “four engines for long haul” in 1993, shortly before the 777 ushered in an era of two engines for all but the biggest aircraft or the longest routes.

While the 777 enjoyed record sales last year, Airbus decided to halt production of the A340, which was outsold four to one.

China Eastern’s A340 fleet includes five A340-600s, until recently the world’s longest jetliner and still relatively young at an average age of 8.3 years.

According to UK consultancy Ascend, the notional market value of these jets, which are due to be sold to Boeing, is $55 million each, but some dealers called the figure optimistic.

“The A340 is a difficult market and they will be competing with the manufacturer,” Bruenjes said, noting that Airbus already has nine A340s on its own list of trade-ins for sale.

“The value will mainly be in the engines, not so much the airframe. An existing operator might be interested in getting some at cheap prices, but we wouldn’t pay more than $30 million each, and that’s if we looked at them at all,” Bruenjes said.

Airbus faces an even tougher task if gets the green light from Beijing, since its half of the proposed A340 fleet trade-in is older at roughly 15 years and the model has less range.

Ascend’s market value for those five A340-300 jets is $15 million each, but Bruenjes estimated a seller would be lucky to get much more than the value of the engines – some $4 million.

The A340 averaged $250 million new at list prices before it was taken out of production. In practice jetmakers take trade-ins to facilitate new sales rather than make extensive profits.

Airbus says a future jet, the carbon-composite A350-1000, will leapfrog the 777 and wrest back one of the most lucrative parts of the global airliner market from Boeing. Pending that jet’s arrival in 2017, the smaller A330 is selling well and the 777 is said to compete on occasions with the much larger A380.

Boeing is considering revamping the 777 to protect its grip on the 300-400 seat market and try to pre-empt the challenge from the A350-1000, which is still trying to establish momentum.

China: is it a big bubble about to burst?

So who is right: the lone voice warning that the miracle growth is over, or others who claim this shows a deep misunderstanding of the country?

Diana Choyleva is the bear in the China shop. The analyst from Lombard Street Research says last week’s China GDP figures – which revealed growth slowing to a three-year low – are an early warning signal of the hard landing to come.

Dig deep into the data, she says, and you’ll find that Chinese exports are falling. All that is propping up the economy is gargantuan investment in infrastructure financed by state- directed banks that look more and more like Western banks just before the collapse of 2008. Except they are bigger and badder.

Choyleva radiates a pessimism that is almost unique among Hong Kong’s investment professionals. Westerners, she says, are so awed by the China dream they can’t see the coming China-geddon. The excesses that drove the West into a financial crisis and, in Europe, an economic depression, are gripping the Chinese economy, too. “It’s just that they have become bigger,” she says. The country’s vast pool of savings is being squandered on dead-end infrastructure projects that make Japan’s roads to nowhere look like prudent planning.

“China’s miracle growth is over,” she proclaims, saying that if Chinese policy makers get it right they might, just, see the country’s growth halve to 5% or below. Get it wrong, and the consequences could be devastating not just for China but for the rest of the world, too. “Building those roads to nowhere can go on for a long time, but ultimately financing it will become unbearable,” warns Choyleva.

As long as US and European consumers were accumulating colossal amounts of debt, much of it to pay for goods made in China, the merry-go-round worked just fine. But as western economies deleverage, the driver for growth has been extinguished.

“The financial crisis has changed everything,” she says. “It can no longer rely on abroad to buy its excess production. The US will consume less, and produce more. The years of current account surpluses are over, rendering the growth model obsolete.”

Meanwhile, the banks that have been the lynchpin of growth are insolvent, and their mountain of bad loans will eventually lead to a liquidity crisis.

But Choyleva’s is a lone voice. At brokerage CLSA, one of the region’s biggest investment banks, China macro strategist Andy Rothman, a former US diplomat, says the wall of worry comes from a fundamental misunderstanding.

The first myth to explode, he says, is that it is an export economy. It’s not. It assembles the likes of iPads (they are all made in China), but the value remains, mostly, in the US. Even Korean firms make more money from the iPad than China. Over the last decade, while it has enjoyed GDP growth of 10% per annum, only 1% of that was from exports. What we haven’t woken up to is that China is a domestic growth story.

It’s not an unbalanced export-only economy – instead, it’s the world’s best domestic consumption story, claims Rothman. It is being driven by “phenomenal” increases in wages for average workers; incomes are up 173% over the past 11 years. That also puts the so-called property bubble into perspective. The price per-square-foot of an apartment in a major Chinese city has leaped by nearly 10% a year, for many years. But as incomes are rising even faster – by around 13% a year – it’s not the issue it became in the west.

Better still, it’s not on the never-never. Mortgages are still in their infancy in China. One in five first-time buyers purchase entirely with cash. The average downpayment is 30% – a long way from the 100% loans that became common in the US and the UK.

“Even if prices fall by a third, almost no one will actually be underwater,” says Rothman. Westerners are also obsessed with startling property price rises in Shanghai and Beijing. But go into the interior and prices are “dramatically lower,” he says.

Patrick Collinson was a guest on a trip organised by Fidelity Investments. Fidelity’s China Special Situations investment trust is a holder of shares in Ping An, Master Kong and Wu Mart.

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