INTERNATIONAL

 

Aug 26 - Sep 01, 2002

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

CHINA FLOOD VICTIMS FLEE THEIR HOMES

Chinese authorities have begun evacuating 600,000 people living near Dongting Lake in Hunan province, which is threatening to overflow and engulf surrounding cities and farmland.

 

In a race against time, hundreds of thousands of villagers are continuing to reinforce flood defences around the lake.

Its level has risen again overnight, and in some places water has begun to crest over the dykes.

Torrential rains have raised water levels in recent weeks, threatening a disaster on the scale of 1998, when the lake and the Yangtze river that flows into it burst their banks.

Rupert Wingfield-Hayes, reporting from Dongting Lake, says the next 24 hours are likely to be critical in this massive battle with nature.

Every village along the lake shore has turned out in force to fill sandbags and plug any holes that appear.

With the water levels still rising and a strong breezes now blowing across the lake, waves have begun crashing into the tops of the dykes and even with the main dykes holding, the cost has already been high.

Sixteen people have been killed and 27,000 houses have collapsed as a result of flooding in the area, according to Chinese officials.

Nearly 500,000 hectares (1,250,000 acres) of crops have already been ruined.

If any of the dykes were to burst, the damage could be many times greater.

Large stretches of farmland and two cities Changsha and Wuhan, with a combined population of 13 million are at risk.

JAPAN'S TRADE SURPLUS SOARS

Japan's trade surplus soared by more than 80% in July compared with the same month of last year, official figures showed.

But analysts warned that rise was powered by exports, while sluggish imports showed the world's second biggest economy remains still risks stagnation at home.

The overall rise in the trade surplus was less than expected, and the surplus with the United States, Japan's biggest trading partner shrank.

The trade surplus was 752bn yen ($6.3bn: 4.1bn) in July, the Finance Ministry said.

Turning to Asia exports rose 8.9% to 4,395bn yen, but imports were up by a mere 0.6% to 3,643bn yen.

Trade with other Asian countries was behind the jump in exports.

Japan's trade surplus with the rest of Asia rocketed upwards by more than 300%, boosted by rising sales to fast-growing China.

As well as shipping IT parts to China for processing into finished goods, Japanese firms are increasingly selling finished consumer goods such as cars to China.

Rapid growth in sales to Asia was "likely to continue", said Koji Hiiragi, an economist at the UFJ Institute.

"The current period of high growth is likely to last through this year," he said.

Exports to the rest of Asia were up 19% to 1,929bn yen while imports from Asian countries rose 0.4% to 1,526bn yen.

Analysts said that the slant towards Asia revealed by the data reflected the weakness of the US economy, and reflected an ongoing trend,

Soichi Okuda, senior economist at Aozora Bank, said: "The yen is getting stronger and the US economy is not in particularly good shape, which had an impact, and this may well continue in the future."

EUROPE REJECTS SUGAR 'EXCLUSION' CHARGE

The European Union has rejected an accusation from the British development charity, Oxfam, that it is unfairly excluding sugar farmers in developing countries from European markets.

Oxfam says the EU's sugar policy makes profits for Europeans while keeping developing countries poor, and is calling for an immediate 25% cut in EU sugar quota production.

But an EU spokesman, Thorsten Muench, said the bloc was taking the lead in opening its sugar markets to the Third World.

He said the EU had imported 850m euros ($833m) of sugar from developing countries in the year 2000, more than the combined total imported by the United States, Japan, Australia and Canada.

US ECONOMY TRAPPED IN TRADE GAP

The United States has reported its second-largest trade deficit on record.

During June, the trade gap narrowed only slightly, as demand for imports reached its highest level for 15 months.

The US Commerce Department said June's trade deficit came in at $37.2bn (24.4bn), compared with May's record deficit of $37.8bn.

Imports of goods and services increased by 0.5% to $119.2bn, as imports of consumer goods, such as clothing and electrical goods, reached a record high of $26.2bn.

US exports grew by 1.7% to $82bn, helped by increased sales of agricultural products.

The biggest trade gap was recorded with China, where a deficit of $8.5bn emerged, even though US exports to China climbed to a record $2.2bn.

The latest figures mean the US trade gap grew by 8.1% to $206bn during the first six months of the year, compared with the first half of 2001.

SIGN OF STRENGTH IN GERMAN ECONOMY

Germany's economy, the biggest in Europe, has shown stronger than expected growth in April, May and June.

Healthy spending by consumers helped spur growth of 0.3% during the three months, the Federal Statistics Office said.

The German finance ministry said the figures showed that the country's fragile economy was recovering well.

But analysts warned that 0.3% growth was still feeble, and some continued to be nervous of prospects for the second half of the year.

The German economy and the high level of unemployment has been under the spotlight ahead of the general elections on 22 September.

There have been growing fears that the impact of this month's damaging floods may tip the economy, which suffered recession during the last half of last year, back into a downturn.

Promised tax-cuts have already been delayed in order to pay for the clean-up operations.

US ANNOUNCES STEEL WAR EXEMPTIONS

The United States has decided to exclude a further 178 steel products from its controversial protective tariffs.

The move is being seen as an attempt to head off a damaging trade war.

The tariffs were imposed in March in an attempt to protect the US steel industry but now nearly a quarter of the steel covered on the original order is exempt from the tariffs.

The US has denied that its decision was influenced by threats of retaliation from the European Union and Japan but steelmakers in the US already fear that the tariffs will no longer be effective.

The European Union (EU) has said it is examining the new exclusions and would offer an appraisal on Friday. The EU will decide in late September whether it will put retaliatory duties on goods from the US. The exemptions now cover 25% of Japan's exports to the US.

GERMANY STRUGGLES TO CONTAIN RIVERS

The battle to shore up dams along the swollen River Elbe and its tributaries is continuing in Germany despite flood waters receding in some southern parts of the country.

Thousands of relief workers, including some sent by foreign governments, are taking part in the sandbagging effort in central and northern Germany.

The high water is now approaching the mouth of the Elbe in Hamburg, but officials say sodden dikes could still burst upstream, where waters are still higher than normal and moving fast.

STOCK MARKETS STEAM AHEAD

Shares on Wall Street have closed above a key psychological level, buoying hopes that a recovery is underway.

The Dow Jones Industrial Average closed 97 points higher at 9,054 points in low-volume trade, the first time it had closed above 9,000 since 9 July.

The technology-heavy Nasdaq index rose 13.69 points to 1,422.94, its highest close since 5 July.

ASIAN TYCOON SNAPS UP PHARMACY GIANT

Hutchison Whampoa, the ports to telecoms conglomerate controlled by billionaire Li Ka-shing, is to buy Dutch pharmacy giant Kruidvat. The 1.3bn euro ($1.2bn; 830m) takeover, which will give Hutchison control over the UK's Superdrug stores, will allow the formation of one of the world's largest health and beauty chains.

IVORY COAST INCREASES COCOA TAX

The world's leading cocoa grower, Ivory Coast, has raised export taxes on beans and other products to exploit high world prices.

The tax on cocoa beans has been raised by 22% to 220 CFA francs (0.20) per kilogramme.

ROLLS-ROYCE

Rolls-Royce has announced a sharp fall in profits. The engine-maker's pre-tax profits fell 45% to 104m ($158.6m) in the six months to the end of June.

ALVIS LEADS IN UK TANK RACE

Aero-engine manufacturer Rolls-Royce has sold its tank-making unit Vickers to Alvis, in a move that completes the consolidation of the British armoured vehicle industry.

The deal looks set to make Alvis the country's biggest manufacturer of armoured cars.

LUFTHANSA

Lufthansa's net loss came in at 27m euros for the January to June period, a sharp improvement on last year's 43m euros.

CITIES TO DRIVE WORLD ECONOMY

The World Bank has urged governments to act decisively at the Johannesburg summit to tackle global poverty and environmental deterioration.

But in an upbeat assessment, it says that in the next 50 years, the global economy could expand by four times, reaching $140,000bn compared with today's $35,000bn.

With world population stabilising at around 9 or 10 billion, compared with 6 billion now, average living standards could be much higher.

ANC URGES ECONOMIC BOOST FOR BLACKS

The South African government must step up its black economic empowerment initiatives to prevent a popular revolt, the African National Congress [ANC] has said.

This view is expressed in a document prepared by the ANC ahead of its policy conference next month.

Max Sisulu, head of the ANC's economic transformation committee, said without more emphasis on black economic ownership South Africa's democracy could be undermined.

ANGLO AMERICAN QUITS ZAMBIA

Anglo American has formally quit its mining operations in Zambia. In reaching a final agreement with the government, Anglo has offered $30m and a loan of $26.5m to keep the operations running at Konkola Copper Mines [KCM] while new investors are found.

Zambia's finance minister, Emmanuel Kasonde, told the BBC's World Business Report that the government remained committed to the privatisation programme and was determined that KCM should remain in private hands.

HSBC BUYS MEXICO'S BIGGEST BANK

British banking group HSBC has agreed to buy Mexico's biggest bank, Grupo Financiero Bital, in an all-cash deal worth more than $1bn.

The acquisition, which has been in the pipeline for several months, comes despite a new mood of caution towards Latin American investments in the wake of Argentina's economic meltdown.

QANTAS PROFITS FLY HIGH

Australia's flagship carrier Qantas has reported strong results, buoyed by a 40% jump in profits on domestic routes.

The firm saw its profits rise by 3% to Aus$428m during the financial year which ended in 30 June.

While pre-tax profits from international operations were more than halved, domestic profits rose to Aus$468m.

UNIONS PREPARE 'PRIVATISATION' ATTACK

Trade unions are preparing for the showdown over "privatisation" in public services postponed last year in the wake of the US terror attacks.

Leading unions are set to oppose the government over the role of private services in running schools and hospitals at next month's annual Trades Union Congress in Blackpool.

KPN HIT BY 3G LOSSES

KPN's joint venture KPNQwest filed for bankruptcy Dutch telecoms giant KPN has posted a $9.2bn (9.4bn euros) net loss for the second quarter but sought to reassure investors by promising that earnings were improving.

BRAZIL WOOS NERVOUS US BANKS

Brazil's top financial officials are pressing for a meeting with major American banks to ask them to continue to roll over loans to Brazilian firms.

Brazil's economy is suffering because overseas banks are cutting off loans or tightening their credit terms due to fears that Brazil may default on its foreign debts after the October presidential election.

MALAYSIA URGES STOCK MARKET SHAKE-UP

Ninety-nine Malaysian firms have been told to sort out their debt problems or face expulsion from the stock market.

The firms have until the end of this month to submit restructuring proposals to the country's Securities Commission, and avoid the watchdog's wrath.

UK PUBLIC FINANCES BACK IN THE BLACK

The UK's public finances enjoyed a return to positive territory in July, although the surplus was smaller than last year as spending increased, official figures have revealed.

Data from the Office for National Statistics (ONS) showed a public sector cash surplus of 7.1bn last month, compared with a deficit of the same amount in June.