China's growth has taken many observers by surprise and
has been blamed in part for the recent surge in commodity prices.
The country's economy expanded by 9.7% in the first
three months of this year, after expanding by 9.1% last year.
Premier Wen Jiabao has warned that the pace is
unsustainable and his government has been looking at ways of slowing
growth without slamming on the brakes.
Earlier this month, China's banking regulator told
lenders to vet borrowers more thoroughly as part of its drive on reckless
Economists said that they expect the rate of inflation
to slow in coming months and explained that May's surge probably was down
to last year's low base level.
Prices in 2003 were hit by, among other things, the
outbreak of the killer SARS virus.
According to Chris Leung, an economist at DBS Bank,
"government measures are working, especially on money supply and
fixed-asset investment". "The economy is OK," he said.
JAPANESE GROWTH SET TO BEAT US
Japan's economic growth forecasts have been revised
upwards as the recovery gathers steam.
Bulging demand has pushed estimates to 6.1% for the
full year, up from the previous estimate of 5.6%.
Gross Domestic Product (GDP) grew 1.5%, in real terms,
in the first quarter up from the previous estimate of 1.4%.
Japan is the world's second biggest economy and now
looks set to outstrip US growth of 4.4% annualised for the same period of
It is welcome news for Prime Minister Junichiro
Koizumi, attending the G8 summit, as he faces another election in just a
few weeks time.
Mr Koizumi returned to power with a majority government
in November's general election and now faces upper-house elections in
July, which could make or break his current second-term premiership.
A strong economy in Japan was also welcomed by
President Bush attending the G8 summit.
Showering Mr Koizumi with praise Mr Bush said,
"The first thing, of course, I will do is congratulate him on the
fact that the Japanese economy is improving under his leadership."
In a meeting between the two leaders Mr Koizumi claimed
the recovery in Japan was a result of his policy of "no growth
His administration has made reforms at government
agencies and urged the same at private-sector firms since Mr Koizumi took
office three years ago.
BUDGET DAY DAWNS IN EAST AFRICA
Kenya, Uganda and Tanzania have unveiled budgets aimed
at modernising their cash-strapped economies while keeping hefty deficits
All three east African nations are also keen to reduce
their reliance on aid.
Uganda faces the added expense of fighting a
long-running war against northern rebels.
The new tax and spending plans will be closely
scrutinised by foreign donors, who account for a high proportion of
revenues in all three countries.
The centrepiece of Kenya's budget is an 86.7 billion
Kenyan shilling ($1.09bn) programme to upgrade the country's roads and
power network in an effort to boost economic growth.
Finance Minister David Mwiraria said the public deficit
would rise to 57.9 billion shillings this financial year, up from 47
billion shillings last year.
He said he hoped to narrow the budget gap by widening
the tax net and selling off some state-owned companies, but warned that
some projects would have to be postponed if the money did not come
An additional 50.7 billion shillings is expected from
international donors, of which about half would be spent on poverty
In previous years, Kenya's supply of cash from foreign
donors has been curtailed because of worries over corruption.
In Uganda, finance minister Gerald Sendaula said
government spending would rise by 7.8% in the new financial year to 3,381
Ugandan shillings ($1.83bn), including a 12.5% increase in the military
DAIMLER JOINS INVESTORS IN CHINA
DaimlerChrysler has said it will pump $1.2bn into China
over the next few years in order to double its capacity to produce cars.
Earlier this week, US car maker GM said it would invest
another $3bn in China.
Big investments and a string of new models highlight
that China has come of age in the world of automobiles.
The Beijing AutoChina show, which opens officially on
Thursday, is the showcase for a market where sales jumped by 75% last
China is the world's third largest car market with
sales of over 2 million cars in 2003.
DaimlerChrysler will "invest in passenger cars,
jeeps and commercial vehicles," according to Roman Fischer, chairman
and chief executive of DaimlerChrysler China.
BIGGEST EU POLL GETS UNDER WAY
People in Britain and the Netherlands have begun voting
in elections for representatives to the EU parliament.
Twenty-five EU member states will take part in the
world's biggest trans-national polls over the next four days, with results
due on June 13.
The war in Iraq and the degree of European control over
local affairs look set to dominate the polls.
But there are fears that up to half of the 350
million-odd people eligible to vote will ignore the exercise.
The EU extended its frontiers to include 10 new members
on 1 May this year.
In the UK, the elections are likely to be the last test
of public opinion before general elections are held next year.
BAD NIGHT AT THE POLLS FOR LABOUR
Labour is suffering heavy losses in local elections in
England and Wales, with several councils changing hands.
So far Labour has lost about 210 seats. David Blunkett
said he was "mortified" by the results and blamed the Iraq war
for "damaging" the Labour vote.
The Tories have gained 101 seats and won Trafford and
Tamworth. Charles Kennedy said Lib Dem gains showed the UK now had true
three party politics.
The turnout across England and Wales is running at 40%,
up an average of 9% on last year — an increase not confined to the four
regions piloting all-postal ballots.
UK MANUFACTURING 'GROWING FAST' (BOX)
Manufacturing output and orders are growing at their
fastest rate in more than seven years, according to the Engineering
The EEF's latest survey also showed that the sector
stopped shedding jobs in the three months to the end of May.
A net balance of +17% of firms said output rose, up
from +14% in the previous three-month period.
The news could add pressure on the Bank of England to
raise interest rates when it meets this week.
The EEF's study is the latest manufacturing survey to
give a more optimistic picture than official data.
The Office for National Statistics reported a 0.3% fall
in manufacturing output in March. The figures for April are due to be
released on June 16.
OIL PRICES TO HIT AIRLINE PROFITS
Surging oil prices could dash the air travel industry's
hopes of turning a profit in 2004 after three years of steep losses, a
conference has heard.
International Air Travel Association (IATA) chief
Giovanni Bisignani said high fuel costs could push the industry into the
red yet again.
He told IATA's annual meeting that its earlier
forecasts looked optimistic.
"Our projections of a $3bn profit were based on an
average oil price of $30 a barrel," he said.
"If oil prices average $33, we break even. At $36,
we could expect three billion dollar losses."
Light sweet crude for July delivery — the benchmark
for US oil prices — was trading at $38.36 last week, having touched
record highs of over $42 earlier week.
RUSSIA AGREES TO LIFT EU MEAT BAN
Russia has lifted a ban on meat imports from the
European Union, while setting a new deadline for EU food safety
Moscow says the suspension will be re-introduced on 1
October if there is no agreement over veterinary certificates.
Last week Russia suspended imports from up to half of
EU countries, including France and Germany, over the issue.
Russia had told the EU it wanted a single food safety
certificate to cover all EU meat imports.
SHELL ADMITS FUELLING CORRUPTION
Oil giant Shell has admitted it inadvertently fed
corruption, poverty and conflict through its oil activities in Nigeria.
The news comes amid newspaper reports that Shell may
pull out of Nigeria due to conflicts in the country.
Nigeria contributes to about 10% of Shell's global
production and is home to some of its most promising reserves.
Shell says it has been difficult to operate with
integrity in areas of conflict like Nigeria.
CHINA CREATES WEB VIGILANTE SITE
The Chinese authorities have begun a new website for
people to report on what officials describe as illegal or unhealthy
information on the Internet.
The site claims it will protect Chinese web users, set
to number 100 million by 2005 — a tally second only to the US.
It is the latest move by Beijing to try to control the
use of the Internet.
UK BANK LIFTS INTEREST RATES TO 4.5%
The Bank of England has increased interest rates by a
quarter of a percentage point for the second month in a row, taking them
The move is the Bank's latest attempt to rein in
consumer spending and cool down the housing market, which has so far been
resistant to rate increases.
In addition to buoyant house prices, data shows retail
sales are growing and the manufacturing sector is recovering.
The rise comes despite the fact that inflation remains
below the 2% target.
CHINA FINDS MORE WILD PANDAS
The world's most famous endangered species, the Chinese
giant panda, appears to be in much better shape than previously thought.
The Chinese Government has released the results of the
most comprehensive survey of giant pandas ever.
It found that there were around 1,600 of the creatures
left in the wild, 40% more than previously thought.
But the figures may reflect the fact that the survey
was so thorough, rather than a genuine recovery in numbers.
COCA-COLA PRESIDENT TO STAND DOWN
The president and chief operating officer at Coca-Cola
is to stand down, after being passed over for the top job earlier this
Steven Heyer will leave the world's largest soft-drinks
company after a transitional period of a few months.
There had been speculation he might leave after Neville
Isdell was named the replacement for departed chairman and chief executive
BAILOUT FOR DEBT-LADEN EURODISNEY
Eurodisney, the French outpost of the global theme-park
empire, has struck a deal with its creditors that staves off the immediate
threat of insolvency.
The preliminary deal, most details of which remain
secret, will restructure debts of 2.4bn euros (£1.6bn; $2.9bn).
The firm's two main stakeholders, the US Disney
Corporation and French state bank CDC, have pledged their support.
French Finance Minister Nicolas Sarkozy promised that
taxpayers' money would not be used to bail out the park.
GERMANY REJECTS SUNDAYS SHOPPING
Germany's highest court has upheld the country's
restrictive retail opening hours, disappointing consumers hoping to shop
on Sundays and public holidays.
The Federal Constitutional Court said the principle of
rest on Sundays and public holidays was "sacrosanct."
The decision came as a blow to department store Galeria
Kaufhof, which had argued for a relaxation of the law.
It said it was losing out unfairly to small shops in
stations and airports, which are exempt from the restrictions.
ASDA MOVE SPARKS PETROL PRICE WAR
Asda has triggered a petrol price war after moving to
cool prices by cutting unleaded and diesel to 79.9p a litre.
BP swiftly followed suit announcing it would slash
prices by an average of 2p a litre pushing the cost of unleaded to 81p and
diesel to 82p a litre.
Meanwhile, Tesco vowed not to be beaten "in any
location" on fuel prices.
VODACOM FIRST FOR 3G IN AFRICA
South Africa's Vodacom has won the continent's first
licence to provide new generation, or '3G', mobile telecommunication
The firm said the new service, which provides
high-speed internet access from mobile phones, would be available in parts
of South Africa within a week.
Chief executive Alan Knott-Craig said he was confident
3G would deliver "significant growth" in the years ahead.
The 3G launch comes as Vodacom is facing tough
Although it remains South Africa's dominant mobile
phone company, its share of the market slipped to 54% in the year to late
March, down from 57% one year earlier.
NEW YORK HQ FOR VIRGIN US AIRLINE
Virgin is to base the corporate offices of its new US
low-cost airline, which will rival Southwest, in New York City.
The airline will create 600 jobs in the first five
years and 700 in the next 10, in a 15 year commitment worth $69m(£37.6m)
to the local economy.
Operations will be based in San Francisco, hiring 1,800
workers in two years, and will be the first airline to have operations
The airline, due to launch in 2005, will be US-owned
US DIY STORE IN CHINA EXPANSION
US DIY chain Home Depot has announced plans for an
aggressive push into the fast-growing Chinese market.
Home Depot, the world's biggest home improvements
retailer, said it would set up an office in China to explore opportunities
to buy or build stores.
The company said it had chosen to expand in China
because the DIY market there was fragmented and offered only limited
competition. The market, fuelled by rising incomes, is valued at up to
$50bn a year.
An attempt by Vodafone to reduce its German tax bill
has reignited controversy over the firm's takeover of local telecoms
Vodafone wants to offset a 50bn euro ($61.5bn,
£33.25bn) write-down in the value of its German business against tax,
depriving the state of up to 20bn euros.
INDIA REFORMS 'TO HELP THE POOR'
India's new government will aim for economic reforms
that will benefit the poor, President APJ Kalam has said in a ceremonial
address to parliament.
The pledge came in a speech drafted by the new
administration led by Prime Minister Manmohan Singh.
Mr Kalam said the Congress party-led government would
maintain 7-8% growth every year and generate employment.
He said the new government was committed to a
"high degree of financial discipline".
The government wanted to "make Indian people
smile" and make this "India's century", the president said.
India's presidency has a largely ceremonial role, one
of its duties being the traditional address to parliament of a new
government's legislative programme.
GERMAN UNEMPLOYMENT CLIMBS
German unemployment has risen for a fourth month in
May, signalling that a recovery in Europe's largest economy is still too
weak to create new jobs.
Labour Office data showed the number of unemployed
climbing by a seasonally adjusted 9,000 to 4.374 million.
US OPENS ROADS TO MEXICO'S TRUCKS
Mexican trucks may soon be allowed free access to North
American roads, despite opposition from US pressure groups.
The US Supreme Court has dealt a blow to a 22-year-old
rule that restricts the movements of Mexican trucks, and undermines the
Nafta free-trade zone.
In 2002, the Bush administration tried to open the
market, but a court ruled Mexican trucks could enter only after a study
into their environmental impact.
HOUSE PRICE RISE 'GATHERS PACE'
Britain's housing boom continued to flourish in May
according to Halifax, the UK's biggest mortgage lender.
The bank's latest survey showed prices jumped by 2.2%
in May, slightly up on the 1.8% rise in April, with prices up 20.4% on
The rise means that the average property now costs
Low interest rates and too few homes being built has
driven prices higher.
ALSTOM FUELS FRANCO-GERMAN SPAT
A war of words has broken out between France and
Germany over a rescue plan for troubled engineering firm Alstom.
France has been blocking attempts by German company
Siemens to buy a stake in Alstom, preferring a state bail out.
German Chancellor Gerhard Schroeder is alleged to have
called the strategy annoying and nationalistic, according to the Financial
He reportedly went on to say France's stance risked
damaging cooperation between the two European states.
JAPAN DIVIDED ON PENSION REFORM
Pension reform has taken centre stage in Japanese
politics, after a crucial government bill was pushed through parliament
over the weekend.
Despite raucous opposition complaints, the upper house
finally agreed to curb benefits and increase premiums.
The bill came after the news that many politicians —
including Prime Minister Junichiro Koizumi — had missed paying into the
system for months at a time.
JAPANESE STOCK MARKET ROARS AHEAD
The Japanese stock market has posted its biggest
one-day rise so far this year, buoyed by positive jobs figures issued on
June 11 in the US.
The benchmark Nikkei share index closed 312 points
higher at 11,440, an increase of 2.8%.
The rally came as investors digested news that the US
created nearly a quarter of a million new jobs in May.
The better-than-expected data boosted hopes of an
economic turnaround in the US, a major importer of Japanese goods.
Carmaker Toyota, which depends on the US for a high
proportion of its revenues, closed more than 2% higher at 4,150 yen.
Consumer electronics giant Sony also benefited, closing
nearly 3% higher at 4,060.