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SINGAPORE: China and the United States plan to set up a defense hotline aimed at improving military relations, a top Chinese general said over the weekend. Zhang Qinsheng, deputy chief of the general staff of the People's Liberation Army, made the remarks at the plenary session of a three-day security summit known as the Shangri-La Dialogue. He said the issue of the hotline between the Chinese military and the US Defense Department would be settled when he visits the United States in September for the ninth Sino-US defense talks. Zhang also told the summit that China's defense budget is authentic. As the Chinese military gradually modernizes, some have raised questions over "military transparency", and voiced suspicions on China's defense budget. So it is necessary to clarify the matter, Zhang said. "In China, defense budgeting must follow a set of strict legal procedures, and the published budget is true and authentic," he said. He added that the increased proportion of the defense budget is mostly used to make up for inflation, improve the welfare of military personnel and logistics support. "Given the multiple security threats, the geo-political environment, the size of the territory, and per-capita expense, the Chinese defense expenditure is small by any yardstick," he added. He stressed that "China is gradually making progress in military transparency following the principles of trust, responsibility, security and equality". The annual Shangri-La Dialogue, named after the Singapore hotel at which the event has been held since its launch in 2002, and organized by the London-based International Institute for Strategic Studies, opened on Friday. It gathered defense ministers and top officials from 26 countries and regions in the Asia-Pacific region and Europe to address major regional security issues and defense cooperation. Also at the meeting, the US and China turned down the heat on a dispute over Beijing's military build-up, with US Defence Secretary Robert Gates expressing optimism about future relations. Gates downplayed past US rhetoric on China's military might. "As we gain experience in dealing with each other, relationships can be forged that will build trust over time," Gates said. China Daily - Agencies

KUNMING - Altogether 248 students fell sick after eating a school lunch including kidney beans in Southwest China's Yunnan Province on Thursday, local authorities confirmed early on Friday.Investigators suspected the beans were undercooked.The students, from Zhuyuanzhen Township High School in Fuyuan County, complained of vomiting and nausea late Thursday afternoon and were put under medical observation at night, a spokesman with the Fuyuan County government said.By 8:00 am on Friday, about 170 students were still under observation at four local hospitals.Hospital sources said none of the cases was critical.Kidney beans contain lectin, a toxic agent that can cause diarrhea if the beans aren't heated thoroughly, according to health officials.

Four people were sentenced to between 15 and 24 months' imprisonment Tuesday in Shanghai for money laundering in the first such case since the anti-money laundering law took effect in January.The Shanghai Hongkou District People's Court sentenced Pan Rumin to two years in jail and fined him 60,000 yuan (,000) for the crime. Accomplices Zhu Suzhen, Li Daming and Gong Yuan were sentenced to between 15 and 16 months in prison and fined 20,000 yuan each.The case was the first in the country to turn on the new anti-money laundering law. Before the law took effect, suspects in money-laundering cases were charged with operating illegal businesses or disordering financial markets.The four parties had collectively laundered more than 1 million yuan by withdrawing money and transferring funds over the Internet, through ATMs and over the counter at bank branches.The Shanghai branch of the Industrial and Commercial Bank of China eventually grew suspicious, and police arrested the suspected launderers in Hongkou on July 24 last year.The authorities have been drawing up legislation to fight money laundering. The National People's Congress Standing Committee passed the new anti-money laundering law in October, last year.

A pedestrian walks past a branch of China Construction Bank in Shanghai June 3, 2007. [newsphoto]China's central bank is considering establishing a deposit insurance system in a bid to promote financial stability, news reports said on Monday. The People's Bank of China (PBoC) aims to push forward legislation on deposit insurance, the Xinhua News Agency reported, citing information from a central bank meeting. PBoC has carried out research looking into this matter, according to the report. Deposit insurance is a measure introduced by policy makers to protect deposits, in full or in part, in the event of banks being unable to pay deposits. The insurance can maintain public confidence in the financial system and prevent bank runs, thus helping promote financial stability. The United States was the first country to establish an official deposit insurance scheme, during the Great Depression in 1934. Currently, nearly 100 countries have such an arrangement in place. The lack of deposit insurance in China is related to the fact that most of the banks in the country are State-owned, which offer confidence to depositors, analysts said.

Chairman of the US Joint Chiefs of Staff Marine Gen. Peter Pace inspects the guard of honor during a welcome ceremony at the Defence Ministry in Beijing March 22, 2007. [Reuters]"Clearly, both the United States and China have enormous military capacity, but equally clearly neither country has the intent to go to war with the other. So absent of intent, I don't find threat," General Peter Pace, chairman of the Joint Chiefs of Staff said. "We should not focus on how to fight each other but how to prevent military action. That is what my government is focused on, and that is what my Chinese counterparts here have said their government is focused on." Pace arrived in Beijing Thursday for a four-visit which as he said is aimed at boosting military ties Pace said he had discussed the sensitive topic of Taiwan with the Vice Chairman of the Central Military Commission, Guo Boxiong, Defence Minister Cao Gangchuan and Foreign Minister Li Zhaoxing. "It is not surprising that in each of the meetings, the issue of Taiwan came up. It is clearly a fundamental issue with China," he said. Asked about the possibility of a conflict over Taiwan, he said: "I believe there are good faith efforts among all the leadership to prevent that." Pace said he had repeated US President George W. Bush's position that the US leader "would not support Taiwan independence" and that Washington wanted the issue to be handled peacefully. Pace's visit follows a US announcement last month that it plans to provide over 400 missiles to Taiwan.China's military is proposing officer exchanges and other confidence-building measures with the US Army and may be inching closer to setting up a "hotline" for emergency communication with Washington, according to Pace. Pace said he immediately agreed to study the proposals put forward Friday by Gen. Liang Guanglie, chief of the PLA's General Staff Department. "To me this was a very good, open discussion and one that I found very encouraging," Pace told reporters in Beijing. Liang's proposals included sending Chinese cadets to the Army academy at West Point as well as participating in joint exercises and humanitarian and relief-at-sea operations "that might be able to build trust and confidence amongst our forces." Military exchanges were largely suspended following a collision between a US spy plane and a Chinese jet fighter over the South China Sea in 2001.  Pace said the sides agreed to keep discussing setting up a "hotline" between either military or civilian leaders that would help ease any future friction. "The Chinese military understands as well as I do that the opportunity to pick up the phone and talk to somebody you know and smooth out misunderstandings quickly is a very important part of relations between two countries," Pace said.