The Wall Street Journal leads its China coverage with an article on China’s increasingly complex inflation problem. Policymakers are worried because price rises have begun to spread from food, where they were previously concentrated, to other goods and services. Although headline inflation declined from its peak of 8.7% in February to 8.3% in March, the increase in China's consumer-price index excluding food accelerated to 1.8% after hovering at 1% or less for almost all of 2006 and 2007. Economists expect the headline rate to remain above 8% for April while J.P. Morgan economists expect nonfood inflation to continue to speed up to an average 2.5% for all of 2008.

In a related story, the majority of economists in the latest WSJ forecasting survey said the global surge in food and energy prices is being driven primarily by fundamental market conditions rather than an investment bubble. Soaring demand from China and India, particularly for energy, was singled out as a key factor.

According to the Financial Times, food is likely to join energy on China’s international shopping list, which could put further pressure on rising global food prices. Under a new proposal drafted by the Ministry of Agriculture, government support for offshore land acquisition by domestic agricultural companies will be a central government policy, similar to those already in place for state-owned banks, manufacturers and oil companies,. Africa and South America are key targets. China has about 40% of the world’s farmers but just 9% of the world’s arable land and is losing its ability to be self-sufficient in food as its rising wealth triggers a shift away from traditional staples towards meat.

The Journal also dissects a recent trend whereby Chinese companies are increasingly asking Western firms operating in China to resolve disputes through arbitration. Although private arbitration is becoming increasingly common internationally for resolving cross-border disputes, China is putting a unique spin on the issue. Rather than arbitration taking place in a neutral third country, as per the industry norm, Chinese companies are pushing western businesses to agree in contract negotiations to arbitration on the mainland.

PetroChina and China Petroleum & Chemical, or Sinopec, are the focus of a Journal story on the profit squeeze hitting China’s integrated oil companies amid soaring global crude costs and government-set price controls on oil products sold on the domestic market. Sinopec, which has to buy 72% of the oil it refines from other producers at international prices, is particulalry hard hit, and state policies also prevent it selling fuel offshore for higher prices to offset some losses. The company's net profit fell 69% from a year earlier in the first quarter as a result, and it would have posted a loss if not for a US$1.04 billion (RMB7.3 billion) government subsidy. First-quarter net profits fell just 31% at PetroChina, China's biggest oil producer by volume, because it pumps most of the crude it refines and sells. The Journal recommends investors instead back China-based oil production and exploration companies that aren't involved in refining or retailing fuel, such as CNOOC, China's main offshore-oil producer, or Citic Resources Holdings, whose primary asset is an oil field in Kazakhstan.

Sinopec is also in trouble on the trading front after a business unit received a three month ban from trading stocks of companies listed on the Shanghai exchange because it violated an April 20 rule restricting the sale of previously nontradable shares, the Journal reports. The ban came after Sinopec Shanghai Oil Products Co's retail arm sold 1.6% of the now-tradable shares of Shanghai Kaikai Industry Co on the exchange between April 21 and Wednesday. The South China Morning Post adds that it is the third company to be penalized under the new rules in the first three weeks, and that stiffer penalties may be introduced if the habit continues.

The Post reports that China Mobile Communications Corp, the parent of Hong Kong-listed China Mobile (0941.HK), is still interested in opportunities in Africa despite not bidding for leading telecommunications operator MTN Group. However, market watchers told the newspaper that if the company was serious about acquisitions in Africa then it missed the boat by not bidding for the company. MTN, which has a market capitalisation of US$40 billion, has operations in 20 markets, including its home base South Africa, Swaziland, Uganda, Zambia, Benin, Ghana and Cyprus. It had 44 million subscribers at the end of March.

The paper also reports on rising tensions with the US after the country levied a duty of as much as 133% on Chinese-made lightweight paper used to produce credit card and automatic teller receipts. The duty is in addition to a countervailing duty of up to 60% imposed in March to offset Chinese subsidies. China hit back by revealing a list of tainted US food imports, including illegal additive potassium bromate in imports of Pringles crisps in Zhuhai, and an overdose of the preservative benzoic acid in Fanta grape soft drinks in Shanghai.

A SCMP salary survey of state-owned enterprises and red chips - mainland firms incorporated abroad and listed in Hong Kong - shows that five senior executives at Ping An Insurance (Group) and Citic Pacific last year made more money than HSBC Holdings chairman Stephen Green, who earned £3.01 million (US$5.88 million). More than 30 top executives at leading Chinese corporations each took home pay cheques in excess of US$1.42 million (RMB10 million), a clear sign that mainland executive salaries are catching up with levels in Wall Street and the City of London.

Citic Pacific is featured in a second story in the SCMP after chairman Larry Yung Chi-kin, who pocketed HK$66.99 million (US$8.59 million) as his firm achieved HK$10 billion (US$1.28 billion) in profit for the first time in history, outlined his plans to have recurrent income in excess of HK$10 billion a year in the future, mainly driven by its special steel, mining and mainland property businesses. Most expects expect the Hong Kong-listed arm of China's biggest state-owned investment firm to report a decline in profit this year because it would be difficult to replicate the huge exceptional gains it made last year. Yung said recurrent income from solid investments rather than non-recurrent income from exceptional gains would be the companies focus going forward.

The paper also reports on the search for a replacement for outgoing chief executive Paul Chow Man-yiu at Hong Kong Exchanges and Clearing. The replacement will not need to be a Chinese national, but preference wil be given to a Mandarin speaker. However, there is no hurry. Chow last month said he would not renew his contract when it expires in April 2010, giving HKEx chairman Ronald Arculli two years to conduct a search for a successor.

Finally, the Post looks at upcoming Hong Kong listings after E-Land Fashion China Holdings, a spin-off of South Korea's largest fashion retailer, scrapped its listing plan in Hong Kong due to a disagreement with the sponsors on a selling price. Eleven other companies have also withdrawn offerings in the first four months of the year amidst uncertainty the market has peaked recently and is heading for a fall, although Xtep China, a mainland sports casual apparel maker and distributor, is trying to buck the trend. It began a two-week pre-marketing session for its US$400 million initial public offering Thursday despite the withdrawal of E-Land.

Today’s Papers covers key China business stories carried by major international and Chinese dailies, sourced from their web editions. It concentrates on original stories rather than wire news. Other news and breaking stories are carried on The China Perspective's homepage or in the Daily Briefs section.