the rebate system, which he said had put pressure on
swelling government spending and spawned economic imbalances.
"The cuts will push up costs of exports and weaken
their competitiveness on international markets," said Zheng Weigang,
a senior capital market analyst at Shanghai Securities. "As a result,
it will help relieve pressure for a revaluation of the yuan, a direct
result of strong trade surpluses." The State Council, China's
cabinet, also decided tax rebates would be divided into five categories to
better manage shipments of different commodities, officials and state
media said recently. "It is a milestone in China's trade
reform," said an official with the Ministry of Finance, which along
with the State Administration of Taxation is responsible for working out
export tax rebate policies.
China exported nearly $266 billion of goods in the
first eight months, a jump of nearly 33 percent over the same period a
year earlier. That has brought a flood of dollars into the country,
putting pressure on the yuan, which is fixed at about 8.28 to the dollar,
to rise in value.Analysts said the cuts would not push China's trade
balance into serious deficit. "China's exports are competitive due to
the country's cheap labour," said economist Wang Chuanglian at China
Southern Securities. "The cuts are unlikely to drive China's exports
into deficit, or at most the deficit would be tiny." Some state media
put current export tax rebates at 15 percent while others have reported a
17 percent figure. The official said calculating averages was complex but
that those reported figures were "about right". He declined to
give further details. State media said the cuts were in line with state
policies to support exports of certain goods and restrict others.
US RECOVERY 'GATHERS PACE'
A tentative revival in the US economy accelerated last
month, according to a closely-watched survey. The US Federal Reserve said
it its 'beige book,' a snapshot of economic conditions around the country,
that the pace of economic expansion had picked up in most regions, helped
by robust consumer spending and an increasingly buoyant manufacturing
sector. "On balance, the pace of economic expansion has picked up
since the last report," the Fed said. The report, which will feed
into the Fed's interest rate decision later this month, will be welcomed
by investors looking for confirmation that a recovery is under way after
three years of patchy growth.
However, most analysts still expect the Fed to leave
interest rates on hold at their current 45-year low of 1% at their meeting
on 28 October. The latest report, one of eight compiled every year, said
prices and wages were stable across the country, in a sign that
inflationary pressures remain weak. It also held out a glimmer of hope
that the depressed jobs market may be improving, highlighting an increase
in demand for temporary workers in New York, Chicago, Dallas and other
cities. An increase in temporary job vacancies is sometimes seen as a sign
that companies are starting to hire again. US unemployment has surged to
its highest level in a decade in the past three years, fuelled by a swathe
of lay offs as firms rush to cut costs in the face of a protracted
downturn. The Fed also highlighted evidence that the manufacturing sector,
which has been hit harder than any other part of the economy, may also be
beginning to emerge from the doldrums.
BUSH BEGINS ASIAN TOUR
US President George W Bush has arrived in Japan at the
start of a tour of Asia which will take in six countries. Mr Bush will
spend the next few hours in Tokyo where the issue of North Korea and its
nuclear ambitions is likely to be high on the agenda. The president said
he and Japanese Prime Minister Junichiro Koizumi would discuss ways to
strengthen multi-party talks over Pyongyang's nuclear programme. "I
will talk to the prime minister about... what we need to do to keep the
process alive and strong and to keep the coalition of the peaceful united
so that we have one message and one voice," he said. Mr Bush has
described Mr Koizumi as a true friend, and the two men are likely to build
on a relationship cemented during the Japanese leader's trip to Texas
earlier this year.
TRICKY EU TALKS RESUME
European leaders are holding a second day of meetings
in Brussels in an attempt to forge a future for the European Union.It
follows a day of tough negotiations by 25 heads of state and government
representing existing member countries and those soon to join — on a new
constitution for the EU. French President Jacques Chirac is due to speak
on behalf of the German Chancellor Gerhard Schroeder who has had to return
home for a crucial parliamentary vote. It is a very public display of
closeness between two of the EU's most powerful countries, says the BBC's
Tim Franks in Brussels. The talks have been marked by divisions as leaders
stuck to their positions set out two weeks ago in Rome, raising doubts
about whether a new constitution can be agreed before the end of the year.
The draft constitution envisages important changes to the status quo, and
what one country sees as a good idea, a handful of others see as a
catastrophe in waiting.
KOIZUMI PROMISES ECONOMIC SHAKEUP
Japan's prime minister is banking on his fragile reform
credentials to carry his government through a snap election next month. In
a policy platform for the poll launched last week, Junichiro Koizumi
promised 3 million new jobs by 2005. He also aimed for 2% economic growth
in 2006 and a halving of the bad debt burden crippling Japan's banks. Many
of the reforms repeat pledges made when he became premier in 2001, but
have since run into the sand. Mr Koizumi has faced repeated opposition
from within his Liberal Democratic Party to his more extreme plans to
shake up the struggling economy. The LDP is riddled with factions who rely
on industries which might face closures or financial pain from reform for
election funding. But Mr Koizumi said all the party's MPs would be backing
the platform, a new development in a political system where MPs have
traditionally rewritten party policy to match local biases.
JEWS RULE THE WORLD: MAHATHIR
Malaysian Prime Minister Mahathir Mohamad has called on
Muslims to use brains as well as brawn to fight Jews who "rule the
world". However, Dr Mahathir also called on Muslims to build their
military might. "The Europeans killed six million Jews out of 12
million. But today the Jews rule this world by proxy... 1.3 billion
Muslims cannot be defeated by a few million Jews," he said, speaking
at the opening of the Organisation of the Islamic Conference in the
Malaysian administrative capital Putrajaya.Dr Mahathir, who is renowned
for using such conferences to make scathing attacks on the West, bows out
as prime minister in a week's time after a 22-year rule.
EBAY PROFITS JUMP, SHARES SLUMP
Online auction site eBay has reported an almost 70% in
profits. The dot.com success story made $103.3m (£61.5m) over the past
three months compared to $61m made in the same period a year earlier.
FORD ANNOUNCES CHINA EXPANSION
Ford, the world's second largest car maker, has
announced a $1bn expansion into China the day after reporting narrower
losses over the past three months.
Samsung made a net profit of 1.84 trillion won ($1.6bn)
in the three months between July and September, well ahead of expectations
and 6.6% higher than during the same period a year earlier.
UK INDUSTRY FACES SLOWDOWN
UK manufacturing is at its weakest level since late
2001, a survey by the British Chambers of Commerce (BCC) suggests. Its
survey of UK plc's performance during the third quarter of 2003, from July
to September, has confirmed the UK is "a two speed economy, with the
gap between manufacturing and services widening". The survey suggests
recent signs of a pick up in the UK economy during the second quarter of
2003 were a one-off.
CHINA HAILS SPACE HERO
China's first astronaut has landed back on Earth to a
hero's welcome after an historic mission in which he orbited the globe 14
times. The Shenzhou 5 craft touched down on Thursday morning in northern
China, 21 hours after being rocketed into space. Astronaut Yang Liwei
emerged from the capsule saying: "I'm feeling good. I'm proud of my
motherland," before being whisked away to meet political leaders in
the capital Beijing.
Computing giant IBM has turned in results in line with
Wall Street forecasts, while warning that it is still too early to
celebrate the start of a tech sector revival. The company said profits for
the July to September quarter had come in at $1.8bn (£1bn), up from
$1.3bn during the same period last year, and precisely in line with
EU SAYS SCIENCE BACKS ITS BEEF BAN
The European Union (EU) says it now has scientific
evidence to support its ban on imports of beef raised using growth
promoting hormones. The ban is the subject of a long standing dispute with
the United States, which currently has retaliatory sanctions on some
imports from Europe. A European Union spokeswoman says it can prove that
growth promoting hormones used by cattle farmers in some countries can
cause cancer and should therefore be banned. She said the evidence is
being shared with the US. Washington made a complaint to the World Trade
Organisation about the EU's hormone ban in 1996.
UK JOBLESS TOTAL RISES SLIGHTLY
The number of UK workers out of a job has risen
slightly during the three months to August, but levels of people claiming
benefit is at its lowest since 1975. The so-called ILO jobless survey, the
government's preferred measure for unemployment rose unexpectedly by 5,000
people to 1,479,000. This equates to a jobless rate of 5%, which was
unchanged from the previous month.
INTEL IN PROFIT
Intel, the world's biggest semiconductor maker, has
turned in higher than expected profits, helped by record sales. The
California-based firm said net income for the July to September quarter
had come in at $1.7bn (£1.02bn), or 25 cents a share, up from $686m
during the same period last year.
SONY ERICSSON SEES FIRST PROFIT
Mobile phone maker Sony Ericsson has reported a
quarterly profit, the first time it has done so since being created in
October 2001. Sony Ericsson reported a pre-tax profit of 39m euros
($45.7m; £27.2m) for the third quarter of 2003, which compared with a
loss of 116m euros in the same period of 2002.
US car giant General Motors (GM) has reported better
than expected profits thanks to a strong performance from its financial
services business. GM, the world's biggest carmaker, said profits for the
three months to September came in at $425m (£255m), or 79 cents per
share, compared with a loss of $804m during the same period last year.
BANK CHIEF SOUNDS NOTE OF CAUTION
Bank of England governor Mervyn King has warned that
Britain faces a more challenging economic climate over the next few years.
Speaking to business leaders in Leicester, Mr King said the UK had
benefited from favourable economic circumstances over the last decade, but
that these would not persist.
He said the economy had grown above its trend rate
during the 1990s because there had been enough unused resources in the
system to absorb inflationary pressures, making big interest rate
UK INFLATION DIPS TO 2.8%
The annual rate of inflation dipped slightly to 2.8%
last month, its lowest level since June, official figures show. A drop in
the price of clothes and shoes — especially for women were the biggest
downward influences on the figures, the Office for National Statistics (ONS)
said. But the impact was minimised by the hot summer which pushed food
costs, especially the price of fresh vegetables, higher.
BUSINESSES 'PAY TOO MUCH TAX'
Excessively high business taxes are harming the UK's
international competitiveness, the CBI has warned. The CBI said the
cumulative tax bill faced by firms was on track to hit £54bn by
2005/06.That means the total annual levy on businesses will be some
£7.6bn higher in 2006 than it was when the Labour government first took
office in 1997.