The free trade area should be completed in 2010
between China and the six original ASEAN members — Brunei, Malaysia,
Indonesia, the Philippines, Singapore and Thailand and eventually create
a trade area with an economy worth almost two trillion dollars.
The deadline for the less developed ASEAN nations —
Cambodia, Laos, Myanmar and Vietnam — was pushed back until 2015.
Zhu said the agreement gave a "forceful
impetus" to his nation's relations with ASEAN and "exerted a
positive impact in the region and the world". "This will also
contribute to faster progress of East Asia cooperation," he said.
"The China-ASEAN relationship has reached unprecedented heights in
Tariff cuts on selected farm products under an
"early harvest package" will start as early as next year,
Products covered under the early harvest package
include live animals, meat, fish, dairy produce, other animal products,
live trees, vegetables, fruit and nuts.
Zhu said China would faithfully deliver its
commitments and implement the early harvest and other arrangements on
schedule. "We stand ready to make joint efforts with all ASEAN
countries to move forward our all-round economic cooperation through the
establishment of the Free Trade Area," he said.
LOW US PRICES WORRIED FED
US Federal Reserve policymakers were concerned at a
meeting in September that falling prices would limit their ammunition to
boost the US economy.
This insight into the Fed's monetary policy was
revealed in the minutes of meeting held on 24 September to decide on US
As a result of that meeting, interest rates were left
on hold at 1.75% — although the Fed has since cut rates at its most
recent meeting by half a percentage point to 1.25%.
The minutes, which were released, provide vital clues
as to why the Fed left interest rates unchanged at the September
meeting, following a 10-2 vote.
The minutes showed that Fed policymakers were
conscious of a slow labour market and various forecasts pointing to a
further decline in prices.
"Some observed that a significant decline in
inflation... could imply an unwelcome tightening of monetary policy in
real terms," added the minutes of the Federal Open Market Committee
In other words, the Fed was concerned that a decline
in the price of goods would counteract the benefits of any further cuts
in interest rates.
Falling inflation — or deflation — was one
ingredient in Japan's decade of stagnation, as it was in the Great
Depression of the 1930s.
Businesses that are forced to lower prices to remain
competitive generally, as a result, have less money to repay debts.
In turn, this means they are less inclined to borrow
money to invest in expanding, which has a knock-on effect on the
The only two members of the FOMC who voted for a cut
in September were Fed Board Governor Edward Gramlich and Dallas Fed Bank
President Robert McTeer.
TURKISH LEADERS HOLD FIRST MEETING
The leader of Turkey's Justice and Development (AK)
Party has met the country's president for the first time since winning a
landslide election victory on Sunday — but the two men did not discuss
who will become prime minister.
Recep Tayyip Erdogan cannot occupy the post himself
because a conviction for inciting religious hatred excludes him from
parliament although the BBC Ankara correspondent says Mr Erdogan already
acts as if he is the prime minister.
He said after meeting that his party — a successor
to the Islamist Virtue Party would nominate a candidate at the earliest.
"We did not go into that issue at all, that
comes after the establishment of the parliament speaker and his
office," Mr Erdogan said.
President Ahmet Necdet Sezer has insisted that the
choice of prime minister is his prerogative, and has hinted he does not
want a puppet who would be controlled by Mr Erdogan behind the scenes.
EUROPE LEAVES RATES UNCHANGED
The European Central Bank (ECB) has left its main
interest rate steady at 3.25%, despite intense pressure for a cut that
could spark an economic recovery.
The ECB has resolutely left rates unchanged for a
year, mainly because it remains concerned that European inflation could
Hefty rate cut by the US Federal Reserve did not
persuade the ECB governing committee to budge.
But many analysts predict that the ECB will reduce
its rates eventually, although possibly not until early in the New Year.
The European economy has performed sluggishly, and
the Fed cut has now opened up a yawning two-percentage-point gap between
US and ECB rates.
UK INTEREST RATES LEFT ON HOLD
The Bank of England's monetary policy committee (MPC)
has left UK interest rates on hold at 4%, despite growing pressure for a
The decision is likely to have been one of the MPC's
most finely balanced ever.
Sluggish economic growth overseas and a weak UK
manufacturing sector have supported the case for a rate cut.
The US Federal Reserve's decision to slash borrowing
costs by half a percentage point is likely to have put the MPC under
pressure to follow suit.
But persistently strong growth in house prices and
consumer borrowing has raised fears that a cut in interest rates could
fuel inflationary pressures.
UK interest rates have now been left on hold for a
full year, the longest period of interest rate stability since 1966.
BUSH TRIUMPHS IN CONGRESS ELECTIONS
Republicans have scored a dramatic victory in
mid-term elections to the US Congress, winning control of the Senate and
increasing their majority in the House of Representatives.
The sweep means President George W Bush should find
it easier to push through his agenda of tax cuts and enhanced homeland
security, as well as giving him stronger backing in the "war on
Republicans hold at least 51 seats in the 100-member
Senate, with just Louisiana to declare, where Democratic Senator Mary
Landrieu faces a 7 December runoff.
Walt Disney, the entertainment behemoth still managed
to meet analyst forecasts with a profit of $222m for its quarter ending
in September. This compares with $188m during the same period a year
CHINA OPENS WATERSHED CONGRESS
China's ruling Communists have begun their most
important Congress in a decade with an invitation to capitalists to join
President Jiang Zemin said it was time to welcome
"progressive elements of social strata" other than the
traditional workers and peasants.
KOREAN TRADE UNDER NUCLEAR SHADOW
South Korean officials are reported to have told
their North Korean counterparts joint economic projects could suffer if
North Korea does not address international concerns over its nuclear
Economic delegates from the two Koreas are currently
meeting in the North Korean capital, Pyongyang.
YET MORE GERMANS OUT OF WORK
German unemployment — one of the country's main
economic headaches — has increased further, piling the pressure on
Chancellor Gerhard Schroeder to take action.
Seasonally adjusted joblessness rose 22,000 in
October, far more than average market forecasts, and taking the overall
figure to 4.119 million.
US ECONOMY HINTS AT GROWTH
US productivity grew by a healthy 4% over the summer,
but this was still below market expectations.
Productivity data records the amount of output per
hour of work, and is largely seen as a key part of the economy's health.
In the three months from July to September,
productivity was 4% higher than in the previous three months and 5.3%
higher than in the same period a year earlier, according to figures from
the US Labor Department.
While these are the strongest figures for the year so
far, analysts had hoped for a lift of nearer 4.3%.
AUSTRALIA'S RESOURCES 'RUNNING OUT'
Australia must manage its resources better if its
economy is to remain healthy until 2050, an official report on
population growth warns.
The report by the Commonwealth Scientific and
Industrial Research Organisation (CSIRO), which was commissioned by the
government, predicts fuel shortages even if Australia's population of 20
million remains unchanged.
The report focuses attention once again on the
government's controversial tough asylum policy, highlighting the debate
about whether Australia can afford to let in more immigrants, which some
analysts say is necessary to spur economic growth.
WILDFIRES BLAMED FOR GREENHOUSE GAS RISE
New research has shown that the forest fires which
ravaged South East Asia five years ago caused a massive increase in
levels of the greenhouse gases which cause global warming.
Scientists from Indonesia and Europe believe that 2.6
million tons of carbon entered the atmosphere after the fires in
Indonesia — contributing to the biggest annual increase in carbon
emissions since records began.
MODEST SHARE LAUNCH FOR CHINA TELECOM
China Telecom is raising about US$1.4bn (£895m) from
its long-awaited share flotation, confirming reports that poor investor
would force it to slash the size of the offering.
The state-owned phone company, which operates in
Shanghai and three of China's richest provinces, has priced its shares
at HK$1.48 (£0.12; US$0.19) each, the bottom of the predicted range.
The German car maker BMW's pre-tax profits rose 1.5%
on the back of a 19% rise in sales during the three months to September.
BMW has been going from strength to strength since
achieving record profits in 2001 of 2.720bn euros (£1,741bn; $2,721bn).
SRI LANKA TACKLES DEBT CRISIS
The Sri Lankan government has raised taxes in its new
budget in a desperate attempt to stave-off a debt crisis.
Sri Lanka's debt servicing costs — the cost of
paying off debt — were greater than the government's revenues last
And Prime Minister Ranil Wickremesinghe has
previously warned the country is on the edge of bankruptcy.
Now, finance minister K.N. Choksy is hoping the peace
process, together with economic reforms, will boost the economy by 5.5%
MEXICO PREDICTS MODEST GROWTH
Mexico's economy is to grow at a 3% rate next year,
the government has said in a budget proposal to Congress.
Earlier this year, Mexico officially entered
recession after its economy shrank during the last six months of 2001,
though it has since enjoyed a mild recovery.
But some observers said even such a moderate growth
estimate may be too optimistic.
"The 3% figure is a reasonable one, but it is in
no way certain because it depends on the United States," said Raul
Feliz, an analyst with the Mexican think tank CIDE.
About 85% of Mexico's exports go to the US, so a
downturn there would quickly spread south.
GERMANY BRACES FOR BUDGET CRITICISM
Germany is facing the humiliation of a formal
reprimand from the European Commission for its growing budget deficit.
German finance minister Hans Eichel has admitted that
Europe's biggest economy will this year exceed the 3% budget deficit
allowed under the EU rules.
And next week it will be formally warned by the
European Commission to mend its ways or face economic sanctions.
The news is ironic, given that Germany was the main
architect of the Stability and Growth Pact, a set of rules designed to
prevent countries like Italy from overspending after the euro was
German finance minister Hans Eichel may lose his
smile. The Commission says that Germany's deficit could be as high as
3.7%, and it has already warned Portugal, with a 4.7% deficit, that it
faces fines that could ultimately amount to 5% of its GDP.
UK SERVICES BUOY ECONOMY
The UK economy showed further signs of growth in
October, although confidence remains weak, according to new figures.
A survey of the private service sector, which makes
up about two thirds of the UK economy, from the Chartered Institute of
Purchasing and Supply (CIPS) showed higher levels of activity than
And the CBI said high street shop sales had rallied
to their highest level since May.
But the relatively robust figures contrasted strongly
with official figures for manufacturing industry, which showed continued
falls in output.
Manufacturing output was down 0.4% in September
according to figures from the Office for National Statistics (ONS) and
is now 2.6% lower than at the same time last year.
Car output saw the biggest fall, down 12.2% in
September. Warm weather meant a 5.7% drop in electricity and gas output.