Stubborn Shanghai residents hold a line drawn in rubble

A night view of the old houses surrounded by new apartment buildings at Guangfuli neighbourhood in Shanghai, China, April 10,

By Pete Sweeney

SHANGHAI (Reuters) – In a corner of Shanghai, surrounded by a cement wall, lies one of the world’s most valuable fields of debris and garbage.

On paper, the Guangfuli neighborhood is a real estate investor’s dream: a plot in the middle of one of the world’s most expensive and fast-rising property markets.

But the reality is more like a developer’s nightmare, thanks to hundreds of people living there who have refused to budge from their ramshackle homes for nearly 16 years as the local authority sought to clear the land for new construction.

The stalemate highlights a fundamental and unresolved problem in China’s half-liberalized property regime: who owns the land?

Even as the fields around Guangfuli have bloomed million-dollar condominium towers, the residents live a scrappy existence. The plot is ramshackle and looks bombed out. Residents grow vegetables in Styrofoam boxes wedged between rubble and refuse. They freeze in the winter and boil in the summer as many windows lack glass and the walls are perforated with holes.

Most houses have the Chinese character for “tear down” spray painted on them by demolition teams, although the paint has faded as the standoff between the residents and the developer dragged on.

Long-time resident Luo Baocheng lives with his brother and family in a small three-story apartment building, which he said he inherited from his mother.

Luo said the property developer, Xinhu Zhongbao, refuses to pay the 4.2 million yuan ($649,150) he says the house is worth.

“They told me, I don’t have a property right certificate,” he said. “I’ve lived here 32 years, does that or does that not mean it’s my property?”

Local real estate agents say average prices in the area around Guangfuli are now closing on $12,000 per meter ($1,115 per sq ft). As Shanghai property prices accelerate – they rose 25 percent in March from a year earlier – the conflict over Guangfuli has intensified.

The residents said the developer has offered to swap their homes for new apartments in the distant Jiading district, but the catch is that they would have to pay.

Luo said he was asked to fork out 1.18 million yuan ($182,380) for two apartments for him and his brother; he wanted four apartments and balked at the price tag.

“Where are we going to find 1.18 million yuan? I’m retired and my brother is laid off,” he said.

The local authority, the Putuo district government, said in response to faxed questions that it wanted to demolish the neighborhood and “make residents’ lives better” by relocating them.

The developer, Xinhu Zhongbao, did not answer repeated calls requesting comment.

WHERE ARE YOU GOING?

As a rule, the average Chinese person’s wealth is held in the form of cash and real estate. But real estate wealth in China rests on a tenuous definition of ownership, particularly so when it comes to the old houses granted to people by their work units in the days before a property market existed as such.

When China implemented property rights, these people were allowed to continue using the houses they lived in, with the caveat that the local government could relocate them later, with some sort of compensation.

But widespread dissatisfaction with the compensation offered by local governments led to protests by residents and engendered the “nail house” phenomenon: residents who refuse to accept the buyout offer and stay put, boarding up their homes to fend off attempts to remove them.

The result has often been architectural absurdities: small houses standing in the midst of freeways, pedestrian malls, perched on concrete islands in the middle of pits excavated for underground parking lots.

But time, the great bulldozer, has seen most “nail house” residents in China bought out, pushed out, or, given that many are elderly, carried out.

(Additional reporting by the Shanghai Newsroom; Editing by Neil Fullick)

South Korea warns of risk North may abduct citizens abroad

Flags of North Korea and China

SEOUL (Reuters) – South Korea said on Monday it was on guard for the possibility North Korea may try to snatch its citizens abroad or conduct “terrorist acts” after the North accused it of abducting North Korean workers from a restaurant in China.

“All measures of precaution” were in place for the safety of South Koreans abroad including an order to beef up security at diplomatic missions, said the South’s Unification Ministry, which handles issues related to the North.

“We are on alert for the possibility that the North may try to abduct our citizens or conduct terrorist acts abroad,” ministry spokesman Jeong Joon-hee told a briefing.

The two Korea’s have been fierce rivals since the 1950-53 Korean War and tension on the peninsula has been high since January when North Korea conducted its fourth nuclear test. It followed that with a string of missile tests in defiance of U.N. Security Council resolutions.

South Korea said in April 13 North Korean workers at a restaurant run by the North in China had defected. North Korea accused the South of a “hideous abduction”.

North Korea proposed sending family members of the 13 to South Korea for face-to-face meetings but the South rejected the suggestion.

About 29,000 people have left North Korea and arrived in the South since the Korean war, including 1,276 last year, with numbers declining since a 2009 peak. In the first quarter of this year, 342 North Koreans arrived in the South.

(Reporting by Jack Kim; Editing by Robert Birsel)

World ‘greatly worried’ on China’s maritime expansion, says Japan

Still image from United States Navy video purportedly shows Chinese dredging vessels in the waters around Mischief Reef in the disputed Spratly

TOKYO (Reuters) – Japanese Foreign Minister Fumio Kishida, speaking ahead of a visit to Beijing, said on Monday China was making the world “worried” with its military buildup and maritime expansion in the East and South China Seas.

Ties between China and Japan, the world’s second- and third-largest economies, have long been plagued by a territorial dispute, regional rivalry and the legacy of Japan’s World War Two aggression.

China and Japan dispute sovereignty over a group of uninhabited East China Sea islets, while in the South China Sea, Beijing is building islands on reefs to bolster its claims.

China has rattled nerves with its military and construction activities on the islands in the South China Sea, including building runways, though Beijing says most of what it is building is for civilian purposes, like lighthouses.

“Candidly speaking, a rapid and opaque increase in (China’s) military spending and unilateral attempts to change the status quo in the East and South China Seas under the aim of building a strong maritime state are having not only people in Japan, but countries in the Asia-Pacific region and the international community worried greatly,” Kishida said in a speech to business leaders.

China claims almost the entire South China Sea, believed to have huge deposits of oil and gas. Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims to parts of the waters, through which about $5 trillion in trade is shipped every year.

Kishida plans to visit China as early as Japan’s “Golden Week” extended holiday, which starts on Friday.

“Through candid dialogue with the Chinese side, I want to get the wheel turning to create the Sino-Japanese relations that are suitable for a new age,” he said.

(Reporting by Kiyoshi Takenaka; Editing by Nick Macfie)

China could build nuclear plants for South China Sea, paper says

China Made Island in South China Sea

By Ben Blanchard

BEIJING (Reuters) – China is getting closer to building maritime nuclear power platforms that could one day be used to support projects in the disputed South China Sea, a state-run newspaper said on Friday, but the foreign ministry said it had not heard of the plans.

China has rattled nerves with its military and construction activities on the islands it occupies in the South China Sea, including building runways, though Beijing says most of the construction is meant for civilian purposes, like lighthouses.

The Global Times, an influential tabloid published by the ruling Communist Party’s official People’s Daily, said the nuclear power platforms could “sail” to remote areas and provide a stable power supply.

China Shipbuilding Industry Corp, the company in charge of designing and building the platforms, is “pushing forward the work”, said Liu Zhengguo, the head of its general office.

“The development of nuclear power platforms is a burgeoning trend,” Liu told the paper. “The exact number of plants to be built by the company depends on the market demand.”

Demand is “pretty strong”, he added, without elaborating.

Chinese Foreign Ministry spokeswoman Hua Chunying played down the story as a media report, however.

“I’ve not heard here of the relevant situation,” Hua told a daily news briefing, without elaborating.

In January, two Chinese state-owned energy companies, China National Offshore Oil Corporation (CNOOC) and China General Nuclear Power Corporation (CGN), signed a strategic cooperation framework pact on offshore oil and nuclear power.

CGN has been developing a small modular nuclear reactor for maritime use, called the ACPR50S, to provide power for offshore oil and gas exploration and production. It expects to begin building a demonstration project in 2017.

Xu Dazhe, head of China’s atomic safety commission, told reporters in January the floating platforms were in the planning stage and must undergo “strict and scientific demonstrations”.

Chinese naval expert Li Jie told the Global Times the platforms could power lighthouses, defense facilities, airports and harbors in the South China Sea. “Normally we have to burn oil or coal for power,” Li said.

It was important to develop a maritime nuclear power platform as changing weather and ocean conditions presented a challenge in transporting fuel to the distant Spratlys, he added.

China claims almost the entire South China Sea, believed to have huge deposits of oil and gas, and is building islands on reefs to bolster its claims. Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims to parts of the waters, through which about $5 trillion in trade is shipped every year.

(Additional reporting by David Stanway; Editing by Clarence Fernandez)

IEA expects OPEC production will fall this year

An oil pump jack can be seen in Cisco, Texas, August 23, 2015. REUTERS/Mike Stone

By Sarah McFarlane

LONDON (Reuters) – Crude prices firmed on Thursday after the International Energy Agency (IEA) said non-OPEC production would fall this year by the most in a generation and help rebalance a market dogged by oversupply.

IEA chief Fatih Birol said low oil prices had cut investment by about 40 percent over the past two years, with sharp falls in the United States, Canada, Latin America and Russia.

Benchmark Brent crude futures were up 12 cents at $45.92 a barrel by 1204 GMT. U.S. crude futures were 4 cents higher at $44.22. Both have gained about 70 percent from lows hit between January and February.

“It looks very strong at the moment, sentiment is bullish, technicals look fine, so I rather see prices rising further from here,” Commerzbank analyst Carsten Fritsch said.

The drop in supply from some producers, however, could be offset by increased output in countries such as Russia and Iran.

Russia’s energy minister said it might push oil production to historic highs and Iran has reiterated its intention to reach output of 4 million barrels per day after a global deal to freeze output collapsed and Saudi Arabia threatened to flood markets with more crude.

Libya could also rapidly ramp up oil production as soon as stability returns, the head of Libya National Oil Corporation (NOC) told an oil summit in Paris.

Nigeria will hold talks with Saudi Arabia, Iran and other producers by May, hoping to reach a deal on an output freeze at the next OPEC meeting in June, where it is expected to be a key item on the agenda.

“The focus of the market is primarily on price-supportive news and that’s just an indication of how sentiment is,” Saxo Bank senior manager Ole Hansen said.

Hansen said fund flows into commodities had been strong this week, driven by a weaker dollar.

The U.S. currency hit 10-month lows against some commodity-related currencies earlier this week. The Thomson Reuters Core Commodity Index rose to its highest since early December. [MKTS/GLOB]

“This whole recovery has been driven by supply being capped and supply is price sensitive and again we’re back to levels where we could see some of these producers breathe again,” Hansen said.

French bank BNP Paribas said any hope of the oil market rebalancing from the current surplus relied on a predicted decline in U.S. oil production.

“The U.S. accounts for the bulk of non-OPEC’s 2016 oil supply contraction of 700,000 barrels per day forecast. If the decline in the U.S. oil supply proves insufficient to tighten balances, then … the oil price will remain low,” it said.

In refined products, China’s exports of diesel and gasoline soared, spilling surplus fuel onto a market that is already well supplied, and threatening to cut Asian benchmark refining margins further.

(Additional reporting by Henning Gloystein in Singapore and Osamu Tsukimori in Tokyo; editing by David Evans and David Clarke)

China urges U.N. ‘back draft resolution on poison gas’

Women, affected by what activists say was a gas attack, receive treatment inside a makeshift hospital in Kfar Zeita village in Hama

BEIJING (Reuters) – China on Thursday urged U.N. Security Council members to back a draft resolution demanding states report when militants are developing chemical weapons in Syria.

Some diplomats have dismissed the proposed resolution as a bid to distract from accusations the Syrian government uses such weapons.

Russia and China circulated a draft resolution to the 15-member body on Wednesday, which Russian U.N. Ambassador Vitaly Churkin said could serve as a deterrent to “terrorist” groups such as Islamic State from using chemical weapons.

Islamic State militants are believed to be responsible for sulfur mustard gas attacks in Syria and Iraq last year, the United States has said. Russia has also said it sees a high probability that Islamic State is using chemical weapons.

Chinese Foreign Ministry spokesman Lu Kang called on “all relevant parties to strengthen coordination, cooperate and jointly oppose and punish any party’s move to use chemical weapons”.

“We also hope all parties on the Security Council can support this Russia-China draft resolution,” Lu told reporters at a regular press briefing.

“We resolutely oppose anyone, for whatever purpose, under any circumstances, using chemical weapons,” Lu said.

The Organization for the Prohibition of Chemical Weapons (OPCW) concluded in a confidential report that at least two people were exposed to sulfur mustard in Marea, north of Aleppo, in August.

The draft resolution, seen by Reuters, would demand that states, particularly those neighboring Syria, “immediately report any actions by non-State actors to develop, acquire, manufacture, possess, transport, transfer, or use chemical weapons and their means of delivery to the Security Council”.

Some council diplomats, speaking on condition of anonymity, said the draft resolution was a ploy by Russia to divert attention from allegations that the Syrian government continued to use chemical weapons. Churkin denied it was a distraction.

Syria agreed to destroy its chemical weapons in 2013 under a deal broker by Moscow and Washington, but the OPCW has since found chlorine has been “systematically and repeatedly” used as a weapon. Government and opposition forces have denied using chlorine.

(Reporting by Michael Martina; editing by Robert Birsel)

U.S. Navy Officer faces espionage charges

HONOLULU (Dec. 3, 2008) Lt. Edward Lin, native to Taiwan, shares his personal stories about his journey to American citizenship to a group of 80 newly nationalized citizens

WASHINGTON (Reuters) – A U.S. Navy officer with access to sensitive U.S. intelligence faces espionage charges over accusations he passed state secrets, possibly to China and Taiwan, a U.S. official told Reuters on Sunday.

The official, speaking on condition of anonymity, identified the suspect as Lieutenant Commander Edward Lin, who was born in Taiwan and later became a naturalized U.S. citizen, according a Navy profile article written about him in 2008.

A redacted Navy charge sheet said the suspect was assigned to the headquarters for the Navy’s Patrol and Reconnaissance Group, which oversees intelligence collection activities.

The charge sheet redacted out the name of the suspect and the Navy declined to provide details on his identity.

It accused him twice of communicating secret information and three times of attempting to do so to a representative of a foreign government “with intent or reason to believe it would be used to the advantage of a foreign nation.”

The document did not identify what foreign country or countries were involved.

The U.S. official said both China and Taiwan were possible but stressed the investigation was still going on.

The suspect was also accused of engaging in prostitution and adultery. He has been held in pre-trial confinement for the past eight months or so, the official added.

USNI News, which first reported Lin’s identity, said he spoke fluent Mandarin and managed the collection of electronic signals from the EP3-E Aries II signals intelligence aircraft.

The U.S. Navy profiled Lin in a 2008 article that focused on his naturalization to the United States, saying his family left Taiwan when he was 14 and stayed in different countries before coming to America.

“I always dreamt about coming to America, the ‘promised land’,” he said. “I grew up believing that all the roads in America lead to Disneyland.”

The Navy’s article can be seen here: http://1.usa.gov/1SIEJDe

Chinese Foreign Ministry spokesman Lu Kang said he was not aware of the details of the case. He did not elaborate. China’s Defence Ministry did not immediately respond to a request for comment.

Taiwan’s Defense Ministry said it had no information on the case. Taiwan’s Foreign Ministry declined to comment.

(Reporting by Phil Stewart, additional reporting by Ben Blanchard in Beijing and J.R. Wu in Taipei; Editing by Michael Perry)

Chinese National’s Seed Theft in Iowa Exposes Vulnerability

File photo of a U.S. and Iowa state flag are seen next to a corn field in Grand Mound, IOWA

ARLINGTON, Iowa (Reuters) – Tim Burrack, a northern Iowa farmer in his 44th growing season, has taken to keeping a wary eye out for unfamiliar vehicles around his 300 acres of genetically modified corn seeds.

Along with other farmers in this vast agricultural region, he has upped his vigilance ever since Mo Hailong and six other Chinese nationals were accused by U.S. authorities in 2013 of digging up seeds from Iowa farms and planning to send them back to China.

The case, in which Mo pleaded guilty in January, has laid bare the value — and vulnerability — of advanced food technology in a world with 7 billion mouths to feed, 1.36 billion of them Chinese.

Citing that case and others as evidence of a growing economic and national security threat to America’s farm sector, U.S. law enforcement officials are urging agriculture executives and security officers to increase their vigilance and report any suspicious activity.

But on a March 30 visit to Iowa, Justice Department officials could offer little advice to ensure against similar thefts, underlining how agricultural technology lying in open fields can be more vulnerable than a computer network or a factory floor.

“It may range down to traditional barriers like a fence and doing human patrols to making sure you get good visuals on what’s occurring,” Assistant Attorney General John Carlin, head of the Justice Department’s national security division, said when touring Iowa State University.

But agriculture sector executives say fences and guards are not feasible, due to the high cost and impracticality of guarding hundreds of thousands of acres.

Tom McBride, intellectual property attorney at Monsanto — one of the firms whose seeds were targeted by Mo — said it safeguards its genetically modified organism (GMO) technology by protecting its computers, patenting seeds and keeping fields like Burrack’s unmarked. Monsanto says it is not considering physical barriers like fences or guards.

The FBI and the U.S. Justice Department say cases of espionage in the agriculture sector have been growing since Mo was first discovered digging in an Iowan field in May 2011. Over the past two years, U.S. companies, government research facilities and universities have all been targeted, according to the FBI.

Although prosecutors were unable to establish a Chinese government link to Mo’s group, the case adds to U.S.-China frictions over what Washington says is increasing economic espionage and trade secret theft by Beijing and its proxies.

A U.S. law enforcement official told Reuters the agency looked for a connection between the Chinese government and the conspiracy carried out by Mo.

“In cases like this, we can see connections, but proving to the threshold needed in court requires that we have documents that the government has directed this,” the official said. “It’s almost impossible to get.”

A Chinese embassy spokesman in Washington, Zhu Haiquan, said he did not have detailed information on the Mo case but that China “stands firm” on the protection of intellectual property and maintains “constant communication and cooperation” with the U.S. government on the issue.

On his visit to Washington last September, President Xi Jinping reiterated China’s denial of any government role in the hacking of U.S. corporate secrets.

Mo, an employee of Chinese firm Kings Nower Seed, pleaded guilty to stealing seed grown by U.S. firms Monsanto, Dupont Pioneer and LG Seeds.

Prosecutors say he specifically targeted fields that grow the parent seeds needed to replicate GMO corn. The FBI says it suspects he was given the location by workers for the seed companies, but did not charge any employees.

DuPont Pioneer and LG Seeds declined to comment for this story.

Mo, whose case was prosecuted by the Justice Department as a national security matter rather than a simple criminal case, now faces a sentence of up to five years in prison. Five others charged in the case are still wanted by the FBI and are believed to have fled to China or Argentina. Charges were dropped against a sixth Chinese suspect.

NATIONAL SECURITY

The number of international economic espionage cases referred to the FBI is rising, up 15 percent each year between 2009 and 2014 and up 53 percent in 2015. The majority of cases reported involve Chinese nationals, the U.S. law enforcement official told Reuters. In the agriculture sector, organic insecticide, irrigation equipment and rice, along with corn, are all suspected to have been targeted, including by Chinese nationals, the official said.

Mo Hongjian, vice president of Kings Nower Seed’s parent company, Beijing Dabeinong Technology Group, declined to comment on the case or on the company’s connection with the Chinese government.

The parent firm is privately owned, but says it receives government money for research in “science and technology.”

China bans commercial growing of GMO grains due to public opposition to the technology and imports of GMO corn have to be approved by the agriculture ministry. Still, President Xi called in 2014 for China to innovate and dominate the technique, which promises high yields through resistance to drought, pests and disease.

In January, a Greenpeace report found some Chinese farmers are illegally growing GMO corn whose strains belong to companies including Monsanto, Syngenta and DuPont Pioneer.

Monsanto, which supplies Burrack’s seed, said it can block foreign groups who request to tour their lab and learning center in Huxley, Iowa. For the past few years, Monsanto says it has run its own background checks on Chinese delegations that ask for a tour, and, if they are approved, boosts security to be sure they do not steal anything or take pictures.

In Washington, U.S. senators have called for a review of the $43 billion deal by state-owned ChemChina to buy Swiss seed group Syngenta, which generates nearly a quarter of its revenue from North America.

Acquiring GMO seed and successfully recreating a corn plant would allow Chinese companies to skip over roughly eight years of research and $1.5 billion spent annually by Monsanto to develop the corn, the company says.

Burrack’s farm itself was not targeted by Mo, though he grows the Monsanto parent seed that the Chinese national was digging for. Burrack grows the corn in two fields in front of and behind his house where he can watch them, a small part of his 2,800-acre farm.

He said he is told by Monsanto where and when to plant the parent seed, but has never been told to keep what he is planting a secret.

“What no one seems to understand is that they’re stealing from people like me,” Burrack said. “They’re stealing the research that farmers pay for when they buy Monsanto seed.”

(Reporting by Julia Edwards; Additional reporting by Shuping Niu in Beijing; Editing by Kevin Drawbaugh and Stuart Grudgings)

Trail in cyber heist suggests hackers were Chinese: senator

Bangladesh central bank

By Karen Lema

MANILA (Reuters) – A Philippine senator said on Wednesday that Chinese hackers were likely to have pulled off one of the world’s biggest cyber heists at the Bangladesh central bank, citing the network of Chinese people involved in the routing of the stolen funds through Manila.

Unidentified hackers infiltrated the computers at Bangladesh Bank in early February and tried to transfer a total of $951 million from its account at the Federal Reserve Bank of New York.

All but one of the 35 attempted transfers were to the Rizal Commercial Banking Corp (RCBC), confirming the Philippines’ centrality to the heist.

Most transfers were blocked, but a total of $81 million went to four accounts at a single RCBC branch in Manila. The stolen money was swiftly transferred to a foreign exchange broker and distributed to casinos and gambling agents in Manila.

“The hacking was done, chances are, by Chinese hackers,” Senator Ralph Recto told Reuters in a telephone interview. “Then they saw that, in the Philippines, RCBC particularly was vulnerable and sent the money over here.”

Beijing was quick to denounce the comments by Recto, vice chairman of the Senate Committee on Finance and a former head of the Philippines’ economic planning agency.

The suggestion that Chinese hackers were possibly involved was “complete nonsense” and “really irresponsible,” Chinese foreign ministry spokesman Lu Kang told reporters.

Recto said he couldn’t prove the hackers were Chinese, but was merely “connecting the dots” after a series of Senate hearings into the scandal.

At one hearing, a Chinese casino boss and junket operator called Kim Wong named two high-rolling gamblers from Beijing and Macau who he said had brought the stolen money into the Philippines. He displayed purported copies of their passports, showing they were mainland Chinese and Macau administrative region nationals respectively.

“BEST LEAD”

Wong, a native of Hong Kong who holds a Chinese passport, received almost $35 million of the stolen funds through his company and a foreign exchange broker.

The two Chinese named by Wong “are the best lead to determine who are the hackers,” said Recto. “Chances are… they must be Chinese.”

The whereabouts of the two high-rollers were unknown, Recto added, saying the Senate inquiry “may” seek help from the Chinese government to find them.

Recto also questioned the role of casino junket operators in the Philippines, saying many of them have links in Macau, the southern Chinese territory that is the world’s biggest casino hub. “There are junket operators who are from Macau, so it (the money) may find its way back to Macau,” he said.

A senior executive at a top junket operator in Macau told Reuters there was “no reason” to bring funds from the Philippines to Macau.

“This seems more like a political story in the Philippines,” he said, speaking anonymously because he was not authorized to talk to the media.

The U.S. State Department said in a report last month that the gaming industry was “a weak link” in the Philippines’ anti-money laundering regime.

Philrem, the foreign exchange agent, said it distributed the stolen $81 million to Bloomberry Resorts Corp, which owns and operates the upmarket Solaire casino in Manila; to Eastern Hawaii Leisure Company, which is owned by Wong; and to an ethnic Chinese man believed to be a junket operator in Manila.

Wong has returned $5.5 million to the Philippines’ anti-money laundering agency and has promised to hand over another $9.7 million. A portion of the money he received, he said, has already been spent on gambling chips for clients.

Solaire has told the Senate hearing that the $29 million that ended up with them was credited to an account of the Macau-based high-roller but it has managed to seize and confiscate $2.33 million in chips and cash.

(Writing by Andrew R.C. Marshall; Additional reporting by Farah Master in Hong Kong; Editing by Raju Gopalakrishnan)

Chinese, Czech presidents forge strategic partnership on Prague visit

By Jason Hovet and Jan Lopatka

PRAGUE (Reuters) – China’s President Xi Jinping and his Czech counterpart Milos Zeman signed an agreement on a strategic partnership on Tuesday, meant to step up business ties and investments.

Zeman has been keen to forge stronger ties with China and Russia since his election in 2013, rather than with the ex-communist country’s partners in NATO and the European Union, although the Czech government not the president is chiefly responsible for foreign policy.

EU relations with both Beijing and Moscow are tainted by disputes over human rights.

The partnership agreement puts the Czechs among about 15 other European countries that have similar ties.

Xi was given a special welcome to mark the first ever visit of a Chinese leader, including a dinner at the presidential residence and 21 artillery salvos in a ceremony at the historic Prague Castle, courtesies not extended to other visitors.

But it drew protests from opposition parties and human rights activists.

Police on Monday detained more than a dozen people who replaced Chinese flags on the main road from Prague airport to the city center with those of Chinese-ruled Tibet. There was a scuffle between pro-Tibet activists and groups of Chinese supporters.

Two demonstrations by activists were called on Tuesday outside Prague’s Lichtenstein Palace, where Xi is to meet Prime Minister Bohuslav Sobotka, and at the Prague Castle.

Czech government officials told Reuters the agreement does not deviate from standard EU language on human rights, diplomatic or economic relations, and reflected Czech interests in continued business relations with Taiwan, which China sees as a wayward province.

The Czechs are hoping to become a financial and air travel hub in central Europe for China, where Czech firms such as financial group PPF and Volkswagen’s Skoda Auto have been active.

Chinese investments in the Czech republic have so far included several acquisitions of financial, airline and brewery companies by a company called CEFC China Energy, whose ownership has not been disclosed.

“I wish that Czech Republic becomes … an entry gate for the People’s Republic of China to the European Union,” he said.

While the Czechs maintain the EU line on China, Zeman has made gestures others have not. Zeman attended a military parade in Beijing last September marking the end of World War Two, the only Western leader to do so.

(Editing by David Holmes)