INTERNATIONAL

 

June 28 - July 04, 2004

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF

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US CALLS FOR CHINA MARKET REFORMS

US Commerce Secretary Don Evans has urged China to halt government intervention in the economy and fully open its markets to foreign firms.
Speaking during a visit to Beijing, Mr Evans also criticised China's policy of maintaining a low yuan-dollar exchange rate, seen as a barrier to US imports.
"US industry feels that many of China's policies place American companies at a competitive disadvantage," he said.

 

 

 

 

Mr Evans warned that without reforms, China's economic boom may falter.

He said China must tackle the bad loans crisis facing the country's banks as a matter of urgency.

"China's leaders realise that treating the symptoms may buy time, but it won't cure the structural flaws that are inviting insolvency, and only grow worse with time," he told the American Chamber of Commerce in Beijing.

"China must significantly reduce government micromanagement of its economy and introduce a far higher level of transparency before it can achieve a full transition to a market-driven economy."

The US government is under pressure to win better access to the country's fast-growing markets for American firms.

Washington claims China's exchange rate policy has contributed to America's burgeoning trade deficit with China, estimated at $124bn last year.

Separately, US trade unions have accused China of luring manufacturing jobs from the rest of the world by neglecting workers' rights so as to keep labour costs low.

Tensions between the two countries spilled over into a full-blown trade dispute last year when the US imposed restrictions on Chinese textile imports.

JAPAN TRADE SURPLUS RISES AGAIN

Official figures have revealed a further jump in Japan's trade surplus, in a sign that the country's export-led recovery is still going strong.

The value of Japan's exports exceeded that of its imports by 934 billion yen ($8.6bn) in May, a 35% increase on the year, the finance ministry said.

Japan's trade surplus has now risen for 11 months running, helped by a recovering world economy.

The latest increase reflects strong demand for cars and digital cameras.

The figures for May confirmed the importance of other Asian countries to Japan's export-oriented economy.

The value of Japan's exports to the rest of Asia rose by 17.5% on the year to 2.3 trillion yen, or 49% of total export revenues.

Exports to Europe also grew, rising 5.6% to 729 billion yen.

Exports to the US, meanwhile, fell 7% on the year to just over 1 trillion yen.

The decline in the value of US-bound exports reflected a growing trend for Japanese companies to export to the US via their subsidiaries in China.

Analysts said the export boom would continue for the next few months, buoyed by sustained demand from China and other fast-growing Asian economies.

However, they warned that credit-tightening measures introduced by the Chinese government in an effort to prevent the economy from overheating could hinder Japan's export performance towards the end of the year.

ARMS TRADE 'HURTING DEVELOPMENT'

The irresponsible sale of weapons to the developing world is diverting money from development and promoting global insecurity, Oxfam says.

Major arms-exporting governments are not respecting their agreements to take account of weapons trading's impact on development, according to the group.

Oxfam has called for an international treaty to regulate and control the multi-billion dollar industry.

It says up to $900bn is spent each year on defence, but only $60bn on aid.

In 2002, 90% of all arms deliveries to Asia, the Middle East, Latin America and Africa report by the international campaigning group.

The largest arms-trading nations globally are the US, the United Kingdom, France, Russia and China, according to Oxfam.

Many countries have signed up to voluntary agreements drawn up the European Union or the Organization for Security and Co-operation in Europe (OSCE), committing themselves to assessing arms sales against their impact on sustainable development.

But these agreements are not legally binding and therefore rarely adhered to, Oxfam says.

The net result is developing nations whose health and education budgets are spent on weapons caches.

Pakistan's total defence expenditure in 2002, it says, consumed half of the country's GDP.

And in 1999 South Africa purchased $6bn worth of aircraft, helicopters and submarines whose value would have covered the cost of treatment with combination therapy for all five million Aids sufferers for two years.

EURO PACT RULES TO BE REVIEWED

The European Commission is planning to alter the rules that govern budget deficits in eurozone member states.

Announcing a review of the Stability and Growth Pact, economic affairs commissioner Joaquin Almunia said the Commission had been "too stringent".

The pact is meant to keep the deficits of eurozone states below 3% of GDP, but many most notably France and Germany have breached it.

Mr Almunia said six of the 10 new EU countries also had excessive deficits.

The six are Cyprus, the Czech Republic, Hungary, Malta, Poland and Slovakia.

All new entrants are committed to joining the eurozone at some point, and should bring their deficits in line by 2008.

Mr Almunia said it was "probably necessary" to clarify the definitions of the pact's rulebook.

EUROPE PLANS SUGAR SUBSIDY CUTS

The European Union is planning a major shakeup of sugar subsidies to answer charges that they hurt poor countries.

The plans will curtail subsidies and guaranteed prices, factors which campaigners say allow European farmers to undercut poorer competitors.

The result, a spokesman said, could be to cut exports by a third as well as opening up space for imports to Europe.

But some poorer producers now exporting to Europe could suffer, and the EU's sugar firms are likely to resist.

Germany's Suedzucker, the biggest sugar refiner in Europe, warned that farm and refinery closures may well be the result.

"Such proposals will make it of critical importance to produce in the best beet areas of Europe," a spokesman told Reuters.

US 'TO FIGHT BACK' IN COTTON WAR

The US has said it intends to appeal against a World Trade Organisation ruling that US cotton subsidies harm poor farmers from Brazil.

The WTO last week said it had decided to uphold an initial decision made in April after a complaint from Brazil.

Brazil had objected that US farmers got cotton subsidies of almost $4bn (2.2bn) from 2001 and 2002 for a crop that was worth $3bn.

"We are very satisfied," a Brazilian Foreign Ministry official said.

 

 

But a spokesman for US Trade Representative Robert Zoellick said the US had "serious concerns" and would appeal.

Mr Zoellick's spokesman, Richard Mills said: "We will defend US agriculture in every forum we need to and have no intention of unilaterally disarming."

The US believes that US farm aid was "fully consistent" with its obligations to fair, open trade under WTO treaties.

IMF APPROVES MOZAMBIQUE $16M LOAN

The International Monetary Fund is loaning Mozambique $16.6m (9.2m) to support its budget till 2006.

The Washington-based Fund said Mozambique's economic performance has been "favourable", even though inflation increased to 13.8% in 2003.

"The authorities remain committed to strengthening the financial system," said deputy IMF head Takatoshi Kato.

Mozambique is trying to become an investment destination despite having been one of the world's poorest states.

The first, $2.4m tranche of the new money is due to be paid once the World Bank conducts a survey of poverty reduction efforts in early July.

UK MANUFACTURING RECOVERY 'SLOWS'

The pace of Britain's manufacturing recovery slowed in June, with total order books and output expectations falling back, according to the CBI.

In its latest monthly industrial trends survey, 22% of firms said their order books were above normal, while 28% said they were below.

However, the CBI said the weaker figures were not enough to pose a threat to the sector's recovery.

Export orders remained broadly unchanged in June, it added.

Some 23% of firms said export orders were above normal, while 28% said they were below.

Meanwhile, companies expect output to change slightly over the next three months, with the balance falling back to +15 from +22 in May, the CBI said.

AFRICAN COTTON FARMERS GO ONLINE

A new website, CottonAfrica.com, has been launched to boost cotton trade in Africa.

The electronic trade link will allow cotton traders and manufacturers from the Eastern and Southern African region to do business on the net.

Buyers and sellers of cotton and textile products in Africa will be able to access information on cotton prices, international grade standards, policy updates and a directory of all major players in the cotton industry in the continent.

Traders will also be linked to other cotton and textiles related websites such as the New York Cotton Futures Exchange and Cotton International.

The idea is to increase cotton trade within the region, according to cotton specialist Barry Fisher.

RAILWAY SPENDING AT ALL-TIME HIGH

The Strategic Rail Authority has urged operators to "redouble efforts" to improve punctuality after record spending on the railways.

It calculates 5bn of public money was spent on trains and stations last year.

The call by SRA chairman Richard Bowker to give passengers "the standard of service they deserve" comes despite recent improvements in punctuality.

GLAZER RAISES STAKE IN MAN UNITED

Billionaire American tycoon Malcolm Glazer has raised his stake in Manchester United football club.

Mr Glazer said he had bought a further 2.41 million shares, taking his holding to 50.27 million shares or 19.2% of the English Premiership club.

The move is likely to renew speculation of a possible takeover bid for the world's richest football club.

Mr Glazer, who owns American football's Tampa Bay Buccaneers, has said he has no plans to mount a bid for United.

HSBC 'BUYS STAKE IN CHINESE BANK'

Banking giant HSBC has reportedly agreed to take a 20% stake in Shanghai-based Bank of Communications.

The two banks agreed the deal at a board meeting on Sunday, the Asian Wall Street Journal reported, citing a senior Chinese bank regulator.

The stake has an estimated worth of $1bn and, as such, would be the largest foreign investment into a local bank.

Meanwhile, China's second biggest life insurer, Ping An, part-owned by HSBC, had a muted share debut in Hong Kong.

EXPERTS DIVIDED ON HOUSE PRICES

More than two-fifths of economy experts believe house prices will be lower in three years' time, a survey commissioned by the BBC has suggested.

And nearly one in five (18%) think values will have dropped by more than 10% by the middle of 2007.

While over half of those surveyed by Radio 4's Today programme did not think prices would fall, most agreed they would stop booming over that period.

BOE UNITED ON INTEREST RATE RISE

The decision to raise UK interest rates to 4.5% earlier this month was approved unanimously by the Bank of England's rate-setting body, minutes have shown.

The quarter percentage point rise was the fourth announced by the Monetary Policy Committee (MPC) since November.

However, unlike the MPC's May meeting, there was no discussion of a half point rise with one member saying the decision was "finely balanced".

Experts now predict the Bank will delay a further rate rise until August.

BARCLAYS TRIUMPH IN TELEGRAPH BID

The Barclay brothers have ended months of uncertainty by buying the Daily and Sunday Telegraphs and the Spectator magazine for 665m.

Telegraph group chief executive Jeremy Deedes welcomed the move, saying it would bring the newspapers and staff a "period of certainty and stability".

NORWAY OIL STRIKE STARTS TO BITE

A strike by offshore rig workers is biting into petroleum output in Norway, the world's third-biggest oil exporter.

After five days of strikes, Norway has lost 375,000 barrels per day of output, or 12% of its usual total.

The dispute, over pension rights and temporary labour, has spread from state oil firm Statoil to affect ExxonMobil and ConocoPhilips.

Gunnar Gjerde, of the Petroleum and Energy Ministry, said the loss would have little effect on the economy.

 

 

TREO SALES BOOST PALMONE PROFITS

Strong sales of Treo 600 combination mobile and digital organisers have led to a surge in profits at PalmOne.

The firm reported fourth-quarter net income of $13m (7m), which was more than twice analysts' estimates.

CHINA'S BOOM AIDS AUSTRALIA TRADE

Australia's export earnings from commodities such as coal, metals, and farm goods will jump 14% in the next 12 months, official forecasters said.

A weaker Australian dollar and China's boom will bolster commodity sales, the Australian Bureau of Agricultural and Resource Economics (Abare) predicted.

Abare said commodity exports would be worth a record A$93.4bn ($64.2bn; 35bn) in the year to 30 June 2005.

That is a 5.9% increase on its last prediction, made in March.

BOEING TO BUILD INDIA SATELLITE

The US government has granted Boeing a licence to build communications satellites with India's space agency.

Kenneth Juster, US Under Secretary for Commerce, made the announcement at a space conference in Bangalore.

The export of some hi-tech equipment to India is restricted by sanctions imposed after it carried out nuclear tests in 1998.

The Indian Space Research Organisation said it plans to build a commercial communications satellite by mid-2006.

JAPAN'S SHARES, YEN STRENGTHEN

Japanese share prices surged upwards last week, and the yen hit a six-week high against the US dollar.

Traders said optimism about Japan's economic growth was fuelling demand for stocks among foreign investors, who were therefore buying yen.

The yen gained too from growing expectations that Japanese interest rates may rise soon.

Tokyo's Nikkei index jumped 2.2%, then closed up 1.9% at 11,600 points; one dollar was buying 108.30 yen.

AIRBUS' 13BN MOD DEAL UNDER FIRE

A consortium led by Franco-German defence giant EADS is working to keep a 13bn contract to refuel UK warplanes, after complaints arose about its cost.

The AirTanker consortium which proposes using Airbus aircraft for the project won UK approval in January.

But a leaked defence ministry letter published in the Financial Times newspaper said it may be scrapped.

Head of defence procurement Sir Peter Spencer reportedly wants 130m knocked off the cost of the deal.

INDIA SPELLS OUT AID FOR FARMERS

India's new coalition government has announced a package of measures to help farmers in distress.

Credit to the farm sector will go up by nearly one-third.

Finance chief Palaniappan Chidambaram said farm credit would reach 1.05 trillion rupees ($23bn) in the year to March 2005, up from 800bn rupees.

The newly-elected Congress-led government had vowed to help farmers, who account for about 70% of the population of more than one billion.

GREECE 'TO AID NORTHERN CYPRUS'

Greece has pledged to provide economic aid to Turkish-controlled northern Cyprus, according to a report.

"We will not spare any effort to support them financially," the AFP news agency quoted President Konstandinos Stefanopoulos as saying.

Greece and the international community refused to recognise the Turkish-held Republic of Northern Cyprus created when Turkey seized the area in 1974.

But the region is opening up after residents voted to reunify the island.

US SLAPS TARIFFS ON CHINESE BEDS

The US Commerce Department has slapped anti-dumping duties on imports of wooden furniture from China after ruling they are unfairly cheap.

The duties range from 4.9% to 198% on imports of bedroom furniture currently worth $1.2bn a year.

US furniture makers have been lobbying the Bush Administration for months to take action against Chinese furniture firms, saying they cost US jobs.

Their campaign has been supported by US labour unions.

The Commerce Department said its investigation had found that Chinese exporters "have sold wooden bedroom furniture in the US market at less than fair value".

US PASSES TAX BILL TO CALM EU ROW

The US House of Representatives has passed a corporate tax bill aimed at patching up a long-running dispute with the European Union.

The bill repeals export tax breaks worth about $5bn a year which Brussels says are a subsidy for US firms.

The money saved is to be used to fund a tax cut for manufacturers, who are losing ground in global markets.

The bill also seeks to channel cash raised by closing tax loopholes into a round of fresh tax breaks.

The European Union imposed retaliatory import duties on a range of US goods in March this year after the World Trade Organisation ruled that the export tax breaks were illegal.

SLOWDOWN IN UK MORTGAGE LENDING

Mortgage lending slowed sharply in May, figures from the British Bankers' Association (BBA) have shown.

Lending rose by 4.9bn, the lowest rise since November last year, and significantly lower than April's record 6.4bn increase.

The news was supported by the Council of Mortgage Lenders latest data which showed advances fell by 1bn in May.

Despite the apparent slowdown, the BBA said it would be "premature" to conclude that the market was cooling.

Recent surveys from the UK's biggest mortgage lenders showed house prices still charging ahead.

RUSSIAN OIL GIANT SACKS BOSS

Russian oil giant Yukos has sacked its chief executive Simon Kukes.

 

 

A Russian-born American, Mr Kukes had been in the position since November after he took over from founder Mikhail Khodorkovsky, who remains in prison.

Mr Khodorkovsky, Russia's wealthiest man, is facing trial on a number of fraud and tax evasion charges.

Yukos, which itself faces a $3.4bn tax bill from the Kremlin, has replaced Mr Kukes with the company's chief operating officer, Steven Theede.