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China, Japan eye new anti-crisis spending

by Staff Writers
Beijing (AFP) March 13, 2009
China and Japan said on Friday they were prepared to boost spending to fight the economic downturn, aligning themselves with the United States in a drive that has found little favour in Europe.

Statements by the Chinese and Japanese prime ministers highlighted a growing rift among world leaders that now threatens the outcome of a key anti-crisis meeting Saturday in London of top finance officials from the Group of 20.

That gathering, bringing together ministers from leading industrialised and emerging market nations, will set the stage for a G20 summit of heads of state and government on April 2.

Despite the perils threatening the global economy, there is little apparent unity on how best to turn back worldwide recession, with the United States pressing for stimulus spending to boost demand and the European Union -- apart from Britain -- arguing for tighter financial regulation.

"We want to make sure everybody is mindful that the decline in global demand is enormous and now is the time for us to provide some balance," US President Barack Obama said Wednesday.

But in a nod to Europe he added: "We think it is very important that there is coordination, not necessarily a super-regulator."

On Friday China and Japan appeared to line up behind Washington.

Chinese Premier Wen Jiabao said Beijing had set aside more money to pump into the economy if necessary, acknowledging that the global crisis was making this year's 8.0 percent growth target hard to achieve.

"We already have plans ready to tackle even more difficult times," Wen told a news conference at the end of the annual full session of parliament.

"To do that, we have reserved adequate ammunition, which means that at any time we can introduce new stimulus policies."

Japan's Prime Minister Taro Aso meanwhile ordered an additional economic stimulus to battle the country's worst recession in decades, warning that it would be "too late to act" after the full extent of the slump becomes clear.

Local reports put the size of the package at 200 billion dollars.

Japan and China have already unveiled huge stimulus packages aimed at propping up their economies in the face of collapsing exports.

The Japanese finance minister said in an interview published Friday that reviving the world economy should be the top priority at the G20 summit, while stricter regulations can wait.

"We all agree (on the need for better financial regulation), but I personally feel: are these actions necessary at a time of crisis? What we ask at this moment is to save the life of the world economy -- not to comment about its beard," Finance Minister Kaoru Yosano told the Financial Times.

That kind of talk stands in stark contrast to the line taken by eurozone leaders Germany and France.

"We have agreed that Germany and France will send a common signal at this summit" on April 2, German Chancellor Angela Merkel said at a joint press conference with French President Nicolas Sarkozy in Berlin on Thursday.

"The issue is not spending even more but to put in place a regulatory system to prevent the economic catastrophe that the world is experiencing from being repeated," Merkel maintained, a point she reiterated on Friday.

"We don't think a new package of (stimulus) measures is a good idea."

World stock markets soared on Friday, with Tokyo posting its biggest gain this year.

Tokyo's Nikkei index put on 5.15 percent by the close as Hong Kong jumped 4.4 percent and Sydney climbed 3.4 percent on news of Japan's fresh stimulus spending plans.

In morning European deals, London jumped 1.67 percent, Frankfurt won 1.22 percent and Paris advanced 1.95 percent.

The worldwide economic slide, triggered by the near collapse of the US housing market and a subsequent credit squeeze, has taken a heavy toll on key industries, such as automobiles and airlines, both of which reported more grim news on Friday.

European auto sales tumbled 18.3 percent in February, a sharp fall from a year earlier that could have been worse but for a strong performance in Germany, figures from the European Automobile Manufacturers Association said.

Austrian Airlines said high fuel prices and a slump in demand all contributed to a record net loss of 429.5 million euros (554 million dollars) in 2008 after a profit of 3.3 million euros in 2007.

The near moribund world economy has also sapped demand for oil. The Paris-based International Energy Agency on Friday forecast a 1.5 percent fall in global demand for oil this year, the sharpest single-year decline since the 1970s.

The IEA also warned the OPEC oil producers' cartel, which meets Sunday in Vienna, against any further output cuts that would drive up prices and impose additional economic strain.

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Gloom persists as China's factory output, retail sales slow
Beijing (AFP) March 12, 2009
China on Thursday said factory output and retail sales were slowing, but banks were also pumping more credit into the economy as the country battles the global downturn.







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