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  DEPARTMENTS
 

IN THE NEWS
. INTERNATIONAL
. PAKISTAN
 

 

 

 

 
  INTERNATIONAL

Dec 12 - 18, 2005

FOREIGN BANKS TO GET CHINA LEEWAY

Beijing is taking further steps to make it easier for foreign banks to do business in China.

The proposals - including freedom to process yuan transactions in more Chinese cities - are part of plans to liberalise the industry by 2007.

China's banking regulator said that foreign banks would be permitted to conduct yuan transactions in 25 cities including Harbin, Nanning and Ningbo.

Beijing has also said it will stop subsidising its own loss-making banks.

Foreign banks have been building their presence in China, where they are currently authorised to operate in 18 cities.

The government will no longer pay for the losses made by commercial banks

The capital threshold for foreign bank branches wanting to open in China is also set to be reduced from $62m (53m) to $50m.

Beijing is keen to encourage new banking services in the west, north-east and central region of the country.

China is obliged to open its banking sector to foreign competition as part of its admission to the World Trade Organization.

"With the grace period provided by China's WTO agreement approaching the end, the CBRC has - with the fostering of a strategic global vision - been actively pushing forward the opening up of the Chinese banking sector," said Liu Mingkang, head of the China Banking Regulatory Commission (CBRC).

Mr Liu said the state would no longer prop up ailing domestic banks, a strategy used to make them attractive to foreign investors.

"The government will no longer pay for the losses made by commercial banks," he said.

UK OFFERS MORE FUNDS TO EU BUDGET

UK Foreign Secretary Jack Straw has said Britain is ready to pay an extra 1bn euros (680m) per year into the European Union budget.

The offer is part of a package aimed at ending deadlock over the 2007-13 EU budget before the end of the year.

Mr Straw said Britain wanted to pay its fair share of the costs of enlargement.

But the President of the European Commission, Jose Manuel Barroso, said the UK deal was "unacceptable" and left the EU with insufficient funds.

The proposed deal cuts development aid to the 10 new member states but makes it easier for them to get the money.

Key points of uk proposal:

The UK pays 8bn euros more over seven years
Total budget of 847bn euros over the period
Spending goes below 1% of EU gross national income by 2013
Cut in development aid to new member states
Cuts in rural development payments to older members
Cut in funding for EU bureaucracy
Major review of all spending, including CAP, in 2008

The overall size of the budget would also be reduced to 847bn euros from the 871bn euros proposed by the Luxembourg EU presidency earlier this year.

Mr Barroso said the UK proposal was more suited to a "mini-Europe, not the strong Europe that we need".

"As it is, the UK presidency proposal is unacceptable. It is simply not realistic," he said. He added that it needed to become "fairer" to the new member states.

SAUDI ECONOMY 'EXPANDING RAPIDLY'

Saudi Arabia will see strong economic growth this year, fuelled by rocketing oil prices, according to the International Monetary Fund (IMF).

The world's biggest oil producer should see its current account surplus reach 30% of gross domestic product this year, the IMF's annual review said.

And government debt levels should drop to about 45.5% of GDP.

The country has enjoyed a 34% leap in oil revenues this year as crude prices have hit record levels.

The IMF praised the Saudi government for its "prudent macroeconomic management" and its effective use of oil revenues to invigorate the private sector.

The Fund said Saudi Arabia now faced challenges in how to manage the boost in domestic revenues without derailing reforms to the non-oil sector.

These reforms have created jobs and improved the country's resistance to any potential shocks in the oil market.

OIL PRICES SLIP ON RISE IN US STOCKS

Oil prices fell on Wednesday last after news that US stockpiles of crude oil and refined products rose sharply over the past week, easing concerns about a supply crunch, dealers said.

Wednesday's weekly snapshot of energy inventories from the Department of Energy (DoE) helped to reverse earlier gains, made amid concerns over heating fuel supplies during the northern hemisphere winter.

New York's main contract, light sweet crude for delivery in January, lost 54 cents to 59.40 dollars per barrel in pit trading.

In London, the price of Brent North Sea crude for January delivery shed 47 cents to 57.14 dollars per barrel in electronic deals.

AIRCRAFT DEAL

China signed its biggest-ever deal with European aircraft maker Airbus, ordering 150 mid-range planes with a value of nearly $10 billion during a visit by Prime Minister Wen Jiabao.

The contract, signed by Airbus chief executive Gustav Humbert and the president of the China Aviation Supplies Import and Export Group, Li Hai, covers aircraft from Airbus's A320 family of single-aisle planes, which typically seat up to 185 passengers.

It is nominally worth around $9.7 billion based on catalogue prices but an undisclosed discount was applied, as often occurs for large orders.

ASIAN STATES AGREE TO POOL ENERGY ASSETS

Asian countries, including central Asian republics, China and Russia, agreed to pool their vast energy resources and enhance regional cooperation by uniting financial resources and technical expertise to counter a looming energy crisis in the world.

They also jointly asked the United States not to follow destructive policies in different regions of the world for its own energy security and stressed that Asian countries comprised energy producers as well as consumers and should cooperate with each other for economic benefits.

BUSH SAYS IRAQ ECONOMY IMPROVING

US President George W Bush has said "tangible progress" has been made in rebuilding Iraq's economy, but this had "not always gone as well as we hoped".

In a speech aimed at winning US public support ahead of the Iraqi general election next week, Mr Bush focused on the rehabilitation of public services.

The cities of Najaf and Mosul had seen improvement, he said, but poor security had hampered reconstruction efforts.

Mr Bush has come under growing pressure from Democrats on the issue of Iraq.

Opinion polls give him the lowest approval of his presidency and suggest waning public support for the Iraq mission.

EXXON RETURNS TO LIBYA

ExxonMobil, the world's largest energy producer, is returning to Libya after an absence of almost 25 years.

It has signed a deal with Libya's state oil company to explore offshore energy deposits.

Both Exxon and Mobil once had significant business interests in Libya, producing the country's first oil field and shipping oil to market.

WORLD BANK BACKS $100M IRAQ LOAN

The World Bank has approved a $100m (57.8m) loan to Iraq to help reduce overcrowding in the country's schools.

The loan, the international lender's first to Iraq in more than 30 years, will finance the building of some 82 primary and secondary schools.

It will also be used to support Iraqi government educational reforms in the worn-torn country.

The World Bank evacuated its staff from Iraq in 2003 after the United Nations headquarters were bombed in Baghdad.

UK INTEREST RATES

UK interest rates are expected to be kept on hold at 4.5% when the Bank of England announces its latest monthly decision at midday.

Such a move by the bank's Monetary Policy Committee (MPC) would mean the core rate remaining unchanged for the fourth month in succession.

'SURGE' IN UK CONSUMER CONFIDENCE

UK consumer confidence is bouncing back in the run up to Christmas, according to a survey from the Nationwide building society.

Its consumer confidence index rose by nine points in November to 101, the largest monthly increase recorded since the survey began last year.

This followed three successive monthly falls which saw the index fall in October to its lowest level yet. Confidence is now back to levels seen in the summer, Nationwide said.

SOUTH KOREA FINES MICROSOFT $32M

Microsoft has been fined 33bn won ($32m; 18.4m) following an antitrust ruling by South Korean regulators.

The US software giant was ordered to unbundle its messaging service from its Windows software by South Korea's Fair Trade Commission.

Regulators ordered Microsoft to introduce a version of Windows which enables the embedding of services by other software companies. The news came as Microsoft announced plans to invest $1.7bn in India.

UN URGES CLOSE CENTRAL ASIAN TIES

The five ex-Soviet republics of central Asia could double their incomes over the next 10 years through improved regional cooperation, according to a United Nations report.

The region's 60 million people face massive challenges from high trade costs, poverty, natural disasters and disease, the United Nations Development Programme (UNDP) says.

But more open borders could significantly reduce these challenges, the UNDP says.

The new report focuses on what is arguably central Asia's biggest problem - the harmful effects of the illogical Soviet era borders which now divide the region.

MICROSOFT INVESTS $1.7BN IN INDIA

The US software giant Microsoft has unveiled plans to invest $1.7bn (981m) in India over the next four years.

The company said it would create 3,000 new jobs in the country and pump more money into research and development.

Microsoft is keen expand its operations in India, a country where well-trained workers are available at a fraction of what they cost in the West.

Last week, the world's largest chipmaker Intel announced plans to invest $1bn in India.

Intel said it planned to substantially boost research and development in the country over the next five years.

US CONSUMER CREDIT AT 15-YEAR LOW

US consumer borrowing fell by $7.2bn (4.1bn) in October, the steepest monthly decline in 15 years, a Federal Reserve report has shown.

This represented a 4% drop, caused in part by a big drop in car loans.

As a result, total US consumer debt totalled $2.157 trillion in October, compared to $2.164 trillion in September.

The figures took analysts by surprise as they had expected consumer credit to rise by $5bn in October.

AIRCRAFT LIFT US FACTORY ORDERS

New orders at US factories rose 2.2% in October, fuelled by high demand for aircraft and aerospace parts.

The 142% jump in orders for military aircraft and parts, and 51% rise for civilian jets, helped offset a 1% decline for cars and car parts.

When the transport sector is removed, factory orders were up a smaller 0.6%, said the US Commerce Department.

October's 2.2% rise to $400bn (230bn) came after September's 1.4% decline caused by the recent hurricanes.

The October increase was in line with market expectations.

Computer orders fell 0.8%, while demand for electrical equipment and appliances declined by 3.4%.

CHINESE CAR EXPORTS TOP IMPORTS

Chinese car exports are exceeding imports for the first time, figures show, but officials have warned of possible over-production in the sector.

Exports more than doubled to 135,000 units between January and October while imports fell 1.6% to 128,000.

However, exports were largely trucks or low-cost vehicles while imports were far more valuable, tending to be luxury models from the US, Japan and Europe.

The Ministry of Commerce said there was a glut of about two million vehicles.

Domestic overcapacity could increase further, it said, as new car plants were continuing to be built.

Ma Kai, minister in charge of the State Development and Reform Commission, said no new steel factories would be approved in principle next year in an effort to stem output.

UK DEFICIT WIDENS AS GROWTH SLOWS

The Chancellor has admitted that the UK economy is growing more slowly than he had hoped after a "tough year".

Mr Brown said it was the doubling of oil prices and high house prices that had put pressure on the economy.

He predicted that the economy would grow by just 1.75% this year - half the rate he had forecast six months ago.

And he has accepted that the public finances will be 5bn worse off as a result - and extended the economic cycle by another two years.

But his tone remained upbeat as he claimed credit for keeping the economy on an even keel.

 
 

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