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Worries grow for Chinese economy amid global downturn
2008-12-10
BEIJING (AFP) - Chinese exports fell for the first time in seven years in November, data showed Wednesday as the global economic crisis caught up with the Asian powerhouse. Elsewhere, Japan received more bad news as a gauge of business investment fell sharply and US investors eyed negotiations between lawmakers on a rescue plan for the vital auto sector which could go to a vote Wednesday. Senator Carl Levin from Michigan, the base for the US auto industry, said he understood that an "agreement has been reached" between Democratic congressional leaders and the White House. "This gets us to the 20-yard line, but getting over the goal line will take a major effort," he said, referring to the vote needed in the US Congress where Republicans have voiced objections. In Japan , fears of a return to deflation in Asia's largest economy grew as prices at the factory gate dropped by the most on record, reflecting recent plunges in oil and raw material costs as the global economy worsens. But the most eye-catching data emerged from Beijing where the customs bureau reported a 17.9-percent decline in imports of foreign goods and a 2.2-percent decline in exports in November. The figures showed that China, whose growth has been fuelled by its role as the world's workshop where imported goods are assembled and then exported, is slowing rapidly with job losses already causing concern about social unrest. China's top leaders wrapped up the annual Central Economic Work Conference, chaired by President Hu Jintao and Prime Minister Wen Jiabao, on Wednesday, promising a macroeconomic policy blueprint for next year. "The development of our nation's economy faces many challenges in 2009, but also many opportunities," said a communique issued by the conference and carried on state television. Amid a deluge of bad economic news in recent months, Australia bucked the trend on Wednesday where figures showed consumer confidence rising. A leading confidence indicator surged 7.5 percent in December in a sign that aggressive efforts to stimulate the economy, including two sharp interest rate cuts, may be working, analysts said. Anglo-Australian mining giant Rio Tinto pointed the way for the jobs market in most countries, however, when it said it would slash 14,000 jobs globally to cut its debt by 10 billion US dollars. "Given the difficult and uncertain economic conditions, and the unprecedented rate of deterioration of our markets, our imperative is to maximise cash generation and pay down debt," chief executive Tom Albanese said. On Tuesday, the World Bank had offered a grim forecast for global growth next year. The bank forecast slowing growth of just 0.9 percent for the world economy next year and said global trade volume would fall 2.1 percent, as the financial crisis takes its toll on rich and poor nations around the world. "The outlook for the world economy has deteriorated significantly and the global recession will be broader and deeper than previously anticipated," the bank said in a statement. Economies in developing countries would likely expand at a reduced annual pace of 4.5 percent while wealthier, developed economies are expected to contract 0.1 percent, it said. On global stock markets Wednesday, Japan's Nikkei stock index ended up 3.15 percent on bargain-hunting. Hong Kong ended the morning 3.6 percent higher and Australian shares closed up 1.0 percent. In Europe, London's stock market was down 0.85 percent nearing midday. Frankfurt lost 0.33 percent, Paris dropped 0.54 percent and Rome shed 0.37 percent. Italy's economy shrank 0.5 percent in the third quarter, putting the country in recession, official data showed Wednesday, confirming figures released in mid-November. Gross domestic product in the eurozone's third largest economy after Germany and France contracted 0.4 percent in the second quarter, with recession counted as two successive quarters of falling output. On Wall Street Tuesday, the Dow Jones Industrial Average sank 2.72 percent on Tuesday, ending a two-session winning streak. The Nasdaq shed 1.55 percent and the Standard & Poor's 500 index lost 2.31 percent. US stock index futures were modestly higher Wednesday, buoyed by progress toward a bailout program for the troubled auto makers. "Agreement appears to be forming between the Bush administration and Democrats on providing federal loans to General Motors and Chrysler -- this has been supportive of equities overnight," wrote strategists at HBOS. -- Dow Jones Newswires contributed to this report --
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