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POLITICAL ECONOMY
Russia seeks 'guarantees' on Euro shield
by Staff Writers
United Nations, N.Y. (UPI) Sep 29, 2011

Entrepreneurs flee Chinese city over debts
Beijing (AFP) Sept 29, 2011 - At least one entrepreneur has killed himself and dozens of others are on the run in China after borrowing money from private lenders at very high interest rates, state media reported Thursday.

The private business owners were based in the eastern city of Wenzhou, which gained nationwide fame in the 1980s for its free-wheeling entrepreneurs and factories specialising in everything from cigarette lighters to badges.

A shoe factory owner facing "debt problems" jumped to his death on Tuesday and another 29 have fled the wealthy city since April after borrowing money at exorbitant rates, the 21st Century Business Herald said.

The entrepreneurs owned factories, restaurants and printing businesses. One of them owes two billion yuan ($312 million), the report said.

China's banks -- which are not allowed to charge higher interest on riskier loans -- mainly lend to other large state-controlled enterprises and shun small- and medium-sized enterprises.

So a growing number of independent business owners in China are resorting to the informal lending market where they pay as much as 70 percent interest on loans.

Tighter lending restrictions were also exacerbating the problem, Credit Suisse said this week, estimating that the informal lending market could be worth four trillion yuan and growing 50 percent year-on-year.

Credit Suisse said the surge in private lending over the past 12 months "threatened financial stability" in China.

Unless local authorities make it easier for private businesses to get loans and cut taxes, 40 percent will close by early next year, the Wenzhou Small and Medium-sized Enterprise Development Association was quoted as saying.

Moscow needs "solid legal guarantees" that a European missile defense shield wouldn't alter the balance of power, Russian Foreign Minister Sergei Lavrov says.

Speaking Tuesday before the 66th session of the U.N. General Assembly in New York, the top Russian diplomat said the potential of a U.S.-backed missile defense system in Europe to compromise Moscow's security is "far too serious" to gloss over.

Dismissing verbal assurances by the United States and NATO that such a European system wouldn't undermine the continent's strategic stability as "not enough," Lavrov declared Moscow needed such assurances in writing.

"We need solid legal guarantees that missile defense potential will actually be adequate to the declared objectives and will not disrupt global and regional balances," he said.

"This equally holds true both for Europe and for the Asia-Pacific region, where ballistic missile defense is becoming a factor that affects the strategic environment."

Lavrov reiterated Russian fears that a missile defense based in Eastern Europe and Turkey -- which the West says is needed to counter threats from Iran and the Middle East -- could be used to target its own nuclear deterrent force of intercontinental ballistic missiles.

Russia and NATO have been talking since last year to reconcile conflicting visions of European missile defense.

Moscow prefers a single system covering all of Europe that would be operated jointly by Russia and NATO with full interoperability. NATO, however, backs two independent systems that would exchange information.

Lavrov said it is ultimately the halt of the spread of nuclear weapons that will bring security to Europe and elsewhere. To that end, he called for the "universalization" of the 1970 Treaty on Non-Proliferation of Nuclear Weapons, to which Israel, Pakistan, India and North Korea aren't signatories.

He also called for a strengthening of International Atomic Energy Agency's safeguards system and the adoption of the Comprehensive Nuclear-Test-Ban Treaty, which Indonesia, Iran, Egypt, China, Israel and the United States have signed but not ratified.

The Russian foreign minister's speech came only hours after the country's deputy defense minister reported continued slow going in negotiations between Moscow and NATO in the missile shield talks.

Deputy Defense Minister Anatoly Antonov said in New York that although Russia was "ready for compromises within reason" on the issue, "no breakthrough decisions" had been made, RIA Novosti reported.

"Our U.S. partners continue implementing their plans to create the European segment of the U.S. missile defense system," Antonov said.

NATO Secretary-General Anders Fogh Rasmussen said last week he expected Russia and the Western military alliance to agree on missile defense at its May 2012 summit in Chicago.

Antonov claimed Washington, rather than NATO, is quickly driving the establishment of the anti-missile shield at "a pace that strongly exceeds the discussions between Russia, NATO and the United States."

Turkey has agreed to host an early warning radar as part of the missile defense shield against and Poland will install other elements by 2018. Romania and the Czech Republic would also host parts of the system under the "European Phased Adaptive Approach" plans.

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Japan retail sales fall in August
Tokyo (AFP) Sept 29, 2011 - Japan's retail sales fell for the first time in three months during August, data showed on Thursday, amid concerns sagging demand could weigh on the country's fragile post-quake recovery.

Retail sales fell 2.6 percent in August from a year earlier, the Ministry of Economy, Trade and Industry said. It was the steepest decline since March, when the country was battered by a huge earthquake and tsunami.

The latest data illustrates the fragile state of Japan's economy and will mean further scrutiny of the government's plan to raise taxes to help fund reconstruction from the March 11 disasters, say analysts.

Opposition to tax hikes has come from lawmakers charging that such a move could threaten Japan's economy, with exporters facing a soaring yen and as demand softens both at home and abroad and fears grow of a global slowdown.

A drop in private consumption helped push the world's third-largest economy into recession following the earthquake, tsunami and the nuclear disaster at the Fukushima Daiichi atomic power plant.

Consumer sentiment remained shaken in April and May, before sales saw a rebound in June and July.

The decrease in August came as electrical appliance and machinery sales fell 19.3 percent from a year earlier.

Sales of digital televisions had previously been spurred by the ending of analogue broadcasts in Japan in late July.

Auto-related sales plunged 18.8 percent, in an illustration of softer consumer sentiment and the inability of dealers to cope in the wake of a parts crunch caused in the aftermath of the disasters, when crucial factories were shuttered.

The Democratic Party of Japan (DPJ) aims to raise taxes to secure 9.2 trillion yen ($120 billion) in emergency funds to finance an extra budget.

The government is now aiming to submit a 12 trillion yen budget -- designed to finance recovery efforts -- to parliament in late October.





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POLITICAL ECONOMY
Entrepreneurs flee Chinese city over debts
Beijing (AFP) Sept 29, 2011
At least one entrepreneur has killed himself and dozens of others are on the run in China after borrowing money from private lenders at very high interest rates, state media reported Thursday. The private business owners were based in the eastern city of Wenzhou, which gained nationwide fame in the 1980s for its free-wheeling entrepreneurs and factories specialising in everything from cigare ... read more


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