Mar 08 - 14 , 2004






China's Prime Minister has opened the National People's Congress with a call to slow growth and help the rural poor.
Wen Jiabao acknowledged that a focus on industrial growth had left hundreds of millions in the countryside behind. The tax burden, he said, would shift from farmers, with reforms elsewhere aimed at rebalancing the economy. BBC Beijing correspondent Louisa Lim says Mr Wen's state of the nation address marked a clear shift of emphasis on economic issues.





Mr Wen also addressed the issue of Taiwan, restating China's opposition to independence for the island, but, in an overture of peace, also calling for renewed peace talks.

On economic matters, the speech was unusually frank. Mr Wen, in his first "state of the nation" speech since assuming office, said that the government was aware that work fell short of expectations. Among the problems he listed was the slow growth of incomes in the countryside, causing a rapidly-widening wealth gap between the richer coasts and the troubled hinterlands.

In addition, he said, people are complaining about the cost of schooling and medical care.

"Solving the problems of agriculture, villages and farmers is one of the most crucial parts of our entire work," Mr Wen said as he made his nearly two-hour speech to the 3,000 delegates with President Hu Jintao and former President Jiang Zemin by his side.

Addressing the economy, he said his government aimed to achieve 7% economic growth in 2004. The downgrade from last year's breakneck 9.1% figure indicates an attempt to head off rising discontent from those left behind by China's economic boom.


An influx of workers in the UK from the 10 Eastern Europe countries set to join the EU is necessary to alleviate the nation's growing labour shortages.

That is the conclusion of a report from the Ernst & Young Item Club, which says "modest increases of 70,000 migrants" would boost GDP by 10bn in a decade.

The economic forecasting group was speaking ahead of Poland and nine other nations joining the EU on May 1.

It says the UK needs Eastern European migrants to fill unpopular jobs.

And it adds that the people from countries, also including Hungary and the Czech Republic are well educated by international standards. The conclusions of the Ernst & Young Item Club are however in marked contrast to that of some politicians and pressure groups who have been calling for restrictions on the number of people coming to the UK from the new members states.

Home Secretary David Blunkett has said people from the new EU nations would not need work permits but would need to be on a work register.

But Peter Spencer, chief economic advisor to Ernst & Young Item Club, believes the current scare stories are "missing the point".

He said: "Migration from central Europe has actually been falling in recent years as wage differentials with the UK have moderated somewhat."

And a recent study by the European Commission shows only 1% of the working population of the 10 countries set to join the EU would be likely to migrate to existing member states, even if they enjoyed full freedom of movement, the report says.


The European Union has imposed escalating tariffs on US companies that will cost American business hundreds of millions of dollars.

It is the first time that the EU has hit US firms with sanctions as part of a trade dispute.

The EU is imposing a 5% increase in duty on a range of goods, from honey to roller skates to nuclear reactors.



The aim is to force the US Congress to change a law that gives an unfair tax advantage to US exporters. The EU sanctions will increase by a further 1% each month until they affect US exports worth $666m (356m) a year. John Disharoon, of the American Chamber of Commerce, said that it was "a sad day for trade relations between the US and Europe".

The trade row is just one of a growing number of disputes between the EU and the US, the world's largest trading partners. The US was forced to withdraw sanctions against EU and other steel producers after the World Trade Organisation (WTO) ruled them illegal in the autumn.


Italy's budget deficit was 2.4% of gross domestic product (GDP) in 2003, well within the European Union's 3% limit broken by France and Germany.

But state debt was 106.2% of GDP, more than the government had predicted, and raised concerns about the balance of Europe's fourth-biggest economy.

Prime Minister Silvio Berlusconi said the country must now focus on boosting growth to aid "economic recovery".

He repeated his calls for tax cuts, and said there had to be more investment. According to figures released by the statistical office Istat, the budget deficit was 2.4% of gross domestic product last year. That is up on the previous year's total of 2.3%, but less than the 2.5% goal set by the Treasury. As part of its so called stability-and-growth pact, the EU has set a limit of 3% for budget deficits in countries that are part of the region's single currency.


The Japanese government's debt pile could nearly double by the 2017/18 fiscal year to top 900 trillion yen ($8.3 trillion), according to calculations by Japan's postal service body.

Japan Post, in a business plan presented before a ruling Liberal Democratic Party subcommittee, projected the outstanding volume of ordinary government bonds to balloon to 903.68 trillion yen in fiscal 2017/18 from 482.63 trillion in 2004/05, starting April 1.

The document said the projection was based on a Ministry of Finance analysis of the future impact of revenue and spending patterns in fiscal 2004/05.

Japan Post, a transitional body that Prime Minister Junichiro Koizumi wants to eventually privatise, inherited the postal savings and insurance systems from the former Postal and Telecommunications Agency a year earlier and is a huge investor in government bonds.

Japan's broader public sector debt, at just under 700 trillion yen at the end of March, is already worth some 140 per cent of the nation's gross domestic product the highest ratio among industrial countries.


South Korean firms will be able to start work later this year in a joint industrial park in North Korea.

The agreement marks a fresh milestone in the economic rapprochement between Seoul and Pyongyang. But four days of talks to bring the impoverished north and rich south closer after half a century of division made little progress on other issues.

Construction at the park just across the border has stalled amid concerns over North Korea's nuclear programme. The planned park in Kaesong is the result of a ground-breaking economic summit in 2000.

The agreement to complete preparations comes after months of negotiation and could see five firms who can choose whether to take power from the south or the north initially setting up shop on a 33,000 square metre site. The final size is intended to be 100 times larger.


Malaysia's central bank said it was on track to issue up to three Islamic banking licences to foreign firms this year as part of plans to become a regional Islamic financing hub.

"Yes, why should we delay?" central Bank Negara Malaysia assistant governor Mohd Razif Abdul Kadir said in reply to reporters' questions on whether licences would be out in 2004.


Major new field tests should be done before any genetically modified crops are allowed to be grown commercially in Britain, MPs said.

The Environmental Audit Committee report comes just days before the government is expected to approve a type of GM maize for planting. The crop is believed less damaging to wildlife than its conventional version. But the unanimous cross-party committee report will say trials on the maize are invalid and new tests are needed.

The committee says the ordinary maize used as a comparison in tests with its GM equivalent was sprayed with a powerful weed killer which is about to be banned. But BBC environment correspondent Tim Hirsch said a series of new experiments would delay any GM planting for years.


The cost of borrowing in the 12-nation eurozone is to stay at 2% for March despite calls for reduced rates to help kick-start economic growth.

The European Central Bank made the announcement at a governing council meeting last week. Some political leaders such as German Chancellor Gerhard Schroeder had called for a rate reduction to cool the high flying euro against the dollar.


Tesco is close to winning a foothold in the fast-growing Chinese market, the Financial Times (FT) has reported.

The company is in 'advanced' talks to buy a 50% stake in Chinese food retail group Ting Hsin International for some $200m, according to the FT.

Ting Hsin operates a total of 25 supermarkets, including 10 in Shanghai, China's pre-eminent commercial centre. Tesco, which currently does not have a presence in China, would not confirm the newspaper report.




International Monetary Fund chief Horst Koehler has confirmed that he is leaving the post of managing director to run for president of Germany.

He was nominated for the position by the country's centre-right opposition.

The liberal FDP and the conservative Christian Union alliance control a special assembly that will choose a president on May 23.


Royal Dutch/Shell chairman Sir Philip Watts has bowed to shareholder pressure and resigned, after the firm slashed the estimate of its oil reserves.


The Bank of England has decided to keep UK interest rates on hold at 4%.

In February the bank's Monetary Policy Committee voted to increase rates from 3.75% in a bid to rein in the housing market and temper consumer spending.

But evidence that the manufacturing sector is still struggling appears to have prevented another rise this time.


Laws to prevent money laundering in the UK are being extended to a number of new business sectors.

Lawyers, accountants, casino bosses and estate agents could all now face prison if they fail to report suspected fraud. It comes under an extension to the Proceeds of Crime Act, that previously only applied to banks, to further clamp down on money laundering.

Under the act, anyone with suspicions is obliged to contact the National Criminal Intelligence Service (NCIS).


The long boom in Australia's housing market seems to be coming to an end.

For the fourth straight month, the number of approvals for new building slid in January.

The 3.3% seasonally adjusted fall means housing starts were down in the year to January, showing recent interest rate rises may be having an effect.

Australia's central bank has been trying to take the housing market off the boil while not harming the country's strong economic growth.

The government said it welcomed the slowdown, which followed revelation that in part thanks to the Rugby World Cup the country's economy expanded 4% in 2003.


Korean Air is to spend 10.6 trillion won (4.8bn; $9bn) over the next 10 years, in an attempt to upgrade its fleet and boost its global profile.


The US dollar has hit its highest levels in almost three months against most of the world's major currencies.

Increasing evidence that the US economy is adding jobs has fuelled speculation that interest rates may now rise. The dollar has added 6% since falling to record lows against the euro and some traders are predicting more gains.

On March 3, the US currency rose to 1.2186 per euro and also strengthened versus the British pound, Japanese yen, Swiss franc and Australian dollar.